Document:

Pooling & Service Agreement

 Exhibit 4.1 
  
 EXECUTION VERSION 
  

  
 NOVASTAR MORTGAGE FUNDING
CORPORATION, 
 as Company 
  
 NOVASTAR MORTGAGE, INC., 
 as Servicer and as
Seller 
  
 WACHOVIA BANK, NATIONAL ASSOCIATION 
 as Custodian 
  
 JPMORGAN CHASE BANK, NATIONAL ASSOCIATION 
 as Trustee 
  
 and 
  
 J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION 
 as Co-Trustee 
  
 POOLING AND
SERVICING AGREEMENT 
  
 Dated as of September 1, 2005

  

  
 NovaStar Mortgage Funding Trust, Series 2005-3 
  
 NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3 
  

 TABLE OF CONTENTS 
  

							
	 ARTICLE I DEFINITIONS
	  	1
				
	 	  	Section 1.01	  	Defined Terms.	  	1
	 	  	Section 1.02	  	Accounting.	  	1
	 	  	Section 1.03	  	Allocation of Certain Interest Shortfalls.	  	2
	 	  	Section 1.04	  	Calculation of Interest on Certificates.	  	2
		
	 ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES
	  	2
				
	 	  	Section 2.01	  	Conveyance of Mortgage Loans and Other Trust Assets.	  	2
	 	  	Section 2.02	  	Acceptance of Mortgage Loans by Custodian, on behalf of the Trustee.	  	5
	 	  	Section 2.03	  	Repurchase or Substitution of Mortgage Loans by the Seller.	  	6
	 	  	Section 2.04	  	Acknowledgement of Trustee.	  	9
	 	  	Section 2.05	  	Representations, Warranties and Covenants of the Servicer.	  	9
	 	  	Section 2.06	  	Representations and Warranties of the Company.	  	10
	 	  	Section 2.07	  	Issuance of Certificates.	  	11
	 	  	Section 2.08	  	Conveyance of the Subsequent Mortgage Loans.	  	11
	 	  	Section 2.09	  	Designation Under REMIC Provisions.	  	11
		
	 ARTICLE III ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
	  	12
				
	 	  	Section 3.01	  	Servicer to Assure Servicing.	  	12
	 	  	Section 3.02	  	Subservicing Agreements Between Servicer and Subservicers.	  	13
	 	  	Section 3.03	  	Successor Subservicers.	  	14
	 	  	Section 3.04	  	Liability of the Servicer.	  	14
	 	  	Section 3.05	  	Assumption or Termination of Subservicing Agreements by the Trustee.	  	15
	 	  	Section 3.06	  	Collection of Mortgage Loan Payments.	  	15
	 	  	Section 3.07	  	Withdrawals from the Collection Account.	  	18
	 	  	Section 3.08	  	Collection of Taxes, Assessments and Similar Items; Servicing Accounts.	  	19
	 	  	Section 3.09	  	Access to Certain Documentation and Information Regarding the Mortgage Loans.	  	20
	 	  	Section 3.10	  	[Reserved].	  	21
	 	  	Section 3.11	  	Maintenance of Hazard Insurance and Fidelity Coverage.	  	21
	 	  	Section 3.12	  	Due-on-Sale Clauses; Assumption Agreements.	  	22
	 	  	Section 3.13	  	Realization Upon Defaulted Mortgage Loans.	  	23
	 	  	Section 3.14	  	Custodian to Cooperate; Release of Mortgage Files.	  	25
	 	  	Section 3.15	  	Servicing Compensation.	  	26
	 	  	Section 3.16	  	Annual Statements of Compliance.	  	26
	 	  	Section 3.17	  	Annual Independent Public Accountants’ Servicing Report.	  	27
	 	  	Section 3.18	  	Optional Purchase of Defaulted Mortgage Loans.	  	27
	 	  	Section 3.19	  	Information Required by the Internal Revenue Service Generally and Reports of Foreclosures and Abandonments of Mortgaged Property.	  	28

  

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	 	  	Section 3.20	  	[Reserved].	  	28
	 	  	Section 3.21	  	[Reserved].	  	28
	 	  	Section 3.22	  	Servicing and Administration of the MI Policies.	  	28
	 	  	Section 3.23	  	Determination Date Reports.	  	29
	 	  	Section 3.24	  	Advances.	  	30
	 	  	Section 3.25	  	Compensating Interest Payments.	  	30
	 	  	Section 3.26	  	Advance Facility.	  	31
		
	 ARTICLE IV FLOW OF FUNDS
	  	33
				
	 	  	Section 4.01	  	Distributions.	  	33
	 	  	Section 4.02	  	Distribution Account.	  	41
	 	  	Section 4.03	  	Statements.	  	42
	 	  	Section 4.04	  	Supplemental Interest Trust; Excess Cashflow.	  	46
	 	  	Section 4.05	  	Pre-Funding Account.	  	50
	 	  	Section 4.06	  	[Reserved].	  	51
	 	  	Section 4.07	  	Allocation of Realized Losses.	  	51
		
	 ARTICLE V THE CERTIFICATES
	  	52
				
	 	  	Section 5.01	  	The Certificates.	  	52
	 	  	Section 5.02	  	Registration of Transfer and Exchange of Certificates.	  	52
	 	  	Section 5.03	  	Mutilated, Destroyed, Lost or Stolen Certificates.	  	57
	 	  	Section 5.04	  	Persons Deemed Owners.	  	57
	 	  	Section 5.05	  	Appointment of Paying Agent.	  	57
		
	 ARTICLE VI THE SERVICER AND THE COMPANY
	  	58
				
	 	  	Section 6.01	  	Liability of the Servicer and the Company.	  	58
	 	  	Section 6.02	  	Merger or Consolidation of, or Assumption of the Obligations of, the Servicer or the Company.	  	58
	 	  	Section 6.03	  	Limitation on Liability of the Servicer and Others.	  	58
	 	  	Section 6.04	  	Servicer Not to Resign.	  	59
	 	  	Section 6.05	  	Delegation of Duties.	  	60
	 	  	Section 6.06	  	Servicer to Pay Trustee’s Fees and Expenses; Indemnification.	  	60
		
	 ARTICLE VII DEFAULT
	  	61
				
	 	  	Section 7.01	  	Servicing Default.	  	61
	 	  	Section 7.02	  	Trustee to Act; Appointment of Successor.	  	63
	 	  	Section 7.03	  	Waiver of Defaults.	  	64
	 	  	Section 7.04	  	Notification to Certificateholders.	  	65
	 	  	Section 7.05	  	Survivability of Servicer Liabilities.	  	65
		
	 ARTICLE VIII THE TRUSTEE
	  	65
				
	 	  	Section 8.01	  	Duties of the Trustee.	  	65
	 	  	Section 8.02	  	Rights of Trustee.	  	67
	 	  	Section 8.03	  	Individual Rights of Trustee.	  	68
	 	  	Section 8.04	  	Trustee’s Disclaimer.	  	68

  

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	 	  	Section 8.05	  	Notice of Servicing Default.	  	68
	 	  	Section 8.06	  	[Reserved].	  	69
	 	  	Section 8.07	  	Compensation and Indemnity.	  	69
	 	  	Section 8.08	  	Replacement of Trustee.	  	69
	 	  	Section 8.09	  	Successor Trustee by Merger.	  	69
	 	  	Section 8.10	  	Appointment of Co-Trustee or Separate Trustee.	  	70
	 	  	Section 8.11	  	Eligibility; Disqualification.	  	71
	 	  	Section 8.12	  	[Reserved].	  	71
	 	  	Section 8.13	  	Representations and Warranties.	  	71
	 	  	Section 8.14	  	Directions to Trustee.	  	72
	 	  	Section 8.15	  	The Agents.	  	72
	 	  	Section 8.16	  	Reports by the Trustee; Trust Fiscal Year.	  	72
	 	  	Section 8.17	  	Execution of the Novation, Swap Agreements, and Cap Agreements.	  	73
		
	ARTICLE IX [RESERVED]	  	73
		
	ARTICLE X REMIC ADMINISTRATION	  	73
				
	 	  	Section 10.01	  	REMIC Administration.	  	73
	 	  	Section 10.02	  	Prohibited Transactions and Activities.	  	76
		
	ARTICLE XI TERMINATION	  	76
				
	 	  	Section 11.01	  	Termination.	  	76
	 	  	Section 11.02	  	Additional Termination Requirements.	  	78
		
	ARTICLE XII MISCELLANEOUS PROVISIONS	  	79
				
	 	  	Section 12.01	  	Amendment.	  	79
	 	  	Section 12.02	  	Recordation of Agreement; Counterparts.	  	80
	 	  	Section 12.03	  	Limitation on Rights of Certificateholders.	  	80
	 	  	Section 12.04	  	Governing Law; Jurisdiction.	  	81
	 	  	Section 12.05	  	Notices.	  	82
	 	  	Section 12.06	  	Severability of Provisions.	  	84
	 	  	Section 12.07	  	Article and Section References.	  	84
	 	  	Section 12.08	  	Further Assurances.	  	84
	 	  	Section 12.09	  	Benefits of Agreement.	  	84
	 	  	Section 12.10	  	Acts of Certificateholders.	  	85
	 	  	Section 12.11	  	Confidentiality.	  	85
		
	APPENDIX A	  	 
	APPENDIX B	  	 

  

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 EXHIBITS: 
  

			
	Exhibit A-1	  	Form of Class A-1A Certificates
	Exhibit A-2	  	Form of Class A-2A Certificates
	Exhibit A-3	  	Form of Class A-2B Certificates
	Exhibit A-4	  	Form of Class A-2C Certificates
	Exhibit A-5	  	Form of Class A-2D Certificates
	Exhibit A-6	  	Form of Class M-1 Certificates
	Exhibit A-7	  	Form of Class M-2 Certificates
	Exhibit A-8	  	Form of Class M-3 Certificates
	Exhibit A-9	  	Form of Class M-4 Certificates
	Exhibit A-10	  	Form of Class M-5 Certificates
	Exhibit A-11	  	Form of Class M-6 Certificates
	Exhibit A-12	  	Form of Class M-7 Certificates
	Exhibit A-13	  	Form of Class M-8 Certificates
	Exhibit A-14	  	Form of Class M-9 Certificates
	Exhibit A-15	  	Form of Class M-10 Certificates
	Exhibit A-16	  	Form of Class M-11 Certificates
	Exhibit A-17	  	Form of Class M-12 Certificates
	Exhibit A-18	  	Form of Class I-1 Certificates
	Exhibit A-19	  	Form of Class I-2 Certificates
	Exhibit A-20	  	Form of Class I-3 Certificates
	Exhibit A-21	  	Form of Class C Certificates
	Exhibit A-22	  	Form of Class R Certificates
	Exhibit A-23	  	Form of Class M-11 DSI Certificate
	Exhibit A-24	  	Form of Class M-12 DSI Certificate
	Exhibit B	  	Mortgage Loan Schedule
	Exhibit C	  	Form of Addition Notice
	Exhibit D	  	Form of Subsequent Transfer Instrument
	Exhibit E	  	Request for Release
	Exhibit F-1	  	Form of Trustee’s Initial Certification
	Exhibit F-2	  	Form of Trustee’s Final Certification
	Exhibit G	  	Form of Investment Letter
	Exhibit H	  	Form of Residual Certificate Transfer Affidavit
	Exhibit I	  	Form of Transferor’s Certificate
	Exhibit J	  	Form of Notional Amount Test Event Notice
	Exhibit K	  	Form of Designation Under REMIC Provisions
	Exhibit L	  	Form of Advance Facility Notice

  

 iv 

 EXECUTION COPY 
  
 This Pooling and Servicing Agreement is dated as of September 1, 2005 (the “Agreement”), among NOVASTAR MORTGAGE FUNDING
CORPORATION, as company (the “Company”), NOVASTAR MORTGAGE, INC., as servicer (the “Servicer”) and as seller (the “Seller”), WACHOVIA BANK, NATIONAL ASSOCIATION, as custodian (the
“Custodian”), JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as trustee (the “Trustee”) and J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION, as co-trustee (the “Co-Trustee”). 
  
 ARTICLE I 
  
 DEFINITIONS 
  
 Section 1.01 Defined Terms. 
  
 Whenever used in this Agreement, except as otherwise expressly provided herein or unless the context otherwise requires, capitalized terms and phrases
used herein shall have the meanings assigned to such terms and phrases in the definitions attached hereto as Appendix A, which is incorporated herein by reference. Unless the context otherwise requires: 
  
 (a) a term has the meaning assigned to it; 
  
 (b) an accounting term not otherwise defined has the meaning assigned to it
in accordance with generally accepted accounting principles as in effect from time to time; 
  
 (c) “or” is not exclusive; 
  
 (d) “including” means including without limitation; 
  
 (e) words in the singular include the plural and words in the plural include the singular; 
  
 (f) any agreement, instrument or statute defined or referred to herein or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or supplemented and includes (in the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein; and 
  
 (g) references to a Person are also to such Person’s permitted
successors and assigns. 
  
 Section 1.02
Accounting. 
  
 Unless otherwise specified herein, for
the purpose of any definition or calculation, whenever amounts are required to be netted, subtracted or added or any distributions are taken into account such definition or calculation and any related definitions or calculations shall be determined
without duplication of such functions. 
  

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 Section 1.03 Allocation of Certain Interest Shortfalls. 
  
 For purposes of calculating the amount of the Monthly Interest Distributable
Amount for the Class A Certificates and the Mezzanine Certificates, for any Distribution Date, (1) the aggregate amount of any Net Prepayment Interest Shortfalls and any Relief Act Shortfalls incurred in respect of the Mortgage Loans for
any Distribution Date shall be allocated first to the Excess Cashflow, and second, on a pro-rata basis based on, and to the extent of, the gross Monthly Interest Distributable Amount for each such Class, among the Class A Certificates
and the Mezzanine Certificates and (2) the aggregate amount of any Available Funds Cap Carryforward Amounts incurred for any Distribution Date shall be allocated to the Class C Certificates to the extent of the gross Monthly Interest
Distributable Amount for that Class, after deduction of any Net Prepayment Interest Shortfalls and any Relief Act Shortfalls. 
  
 All Net Prepayment Interest Shortfalls and Relief Act Shortfalls shall be allocated on each Distribution Date among the classes of each of REMIC I, REMIC
II, REMIC III and REMIC IV in the proportion that Net Prepayment Interest Shortfalls and Relief Act Shortfalls are allocated to the related Master REMIC Regular Interests. 
  
 Section 1.04 Calculation of Interest on Certificates. 
  
 Unless otherwise specified, all calculations in respect of interest on the
Class A Certificates and the Mezzanine Certificates shall be made on the basis of the actual number of days elapsed in the related Accrual Period on the basis of a 360-day year and all other calculations of interest described herein shall be
made on the basis of a 360-day year consisting of twelve 30-day months. 
  
 ARTICLE II 
  
 CONVEYANCE OF MORTGAGE LOANS;

 ORIGINAL ISSUANCE OF CERTIFICATES 
  
 Section 2.01 Conveyance of Mortgage Loans and Other Trust Assets. 
  
 The Company, concurrently with the execution and delivery hereof, does hereby transfer, assign, set over and otherwise
convey in trust to the Trustee without recourse for the benefit of the Certificateholders all the right, title and interest of the Company, including any security interest therein for the benefit of the Company, in and to (i) each Initial
Mortgage Loan identified on the Mortgage Loan Schedule, including the related Cut-off Date Principal Balance, all interest accruing thereon on and after the Cut-off Date and all collections in respect of interest and principal due after the Cut-off
Date; (ii) property which secured each such Mortgage Loan and which has been acquired by foreclosure or deed in lieu of foreclosure; (iii) its interest in any insurance policies in respect of the Mortgage Loans; (iv) its interest in
the MI Policies; (v) the rights of the Company under the Purchase Agreement; (vi) its interest in the Swap Agreements and the Cap Agreements; (vii) all other assets included or to be included in the Trust Fund; and (viii) all
proceeds of any of the foregoing. Such assignment includes all interest and principal due to the Company or the Servicer after the related Cut-off Date with respect to the Mortgage Loans. 
  

 2 

 In connection with such transfer and assignment, the Seller, on behalf of the Company, does hereby
deliver to, and deposit with the Custodian, as the Trustee’s designated agent, the following documents or instruments with respect to each Initial Mortgage Loan so transferred and assigned and the Seller, on behalf of the Company, shall, in
accordance with Section 2.08, deliver or cause to be delivered to the Custodian, as the Trustee’s designated agent, with respect to each Subsequent Mortgage Loan, the following documents or instruments (with respect to each Mortgage Loan,
a “Mortgage File”): 
  
 (i) the
original Mortgage Note endorsed to “JPMorgan Chase Bank, National Association, as Trustee for the NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3”; 
  
 (ii) the original Mortgage with evidence of recording thereon, or, if the original Mortgage has not yet been
returned from the public recording office, a copy of the original Mortgage certified by the Seller or the public recording office in which such original Mortgage has been recorded, and if the Mortgage Loan is registered on the MERS System, such
Mortgage shall include thereon a statement that it is a MOM Loan and shall include the MIN for such Mortgage Loan; 
  
 (iii) unless the Mortgage Loan is registered on the MERS System, an original assignment (which may be included in one or more blanket
assignments if permitted by applicable law) of the Mortgage endorsed to “JPMorgan Chase Bank, National Association, as Trustee for the NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3”, and otherwise in recordable form;

  
 (iv) originals of any intervening assignments
of the Mortgage showing an unbroken chain of title from the originator thereof to the Person assigning it to the Trustee (or to MERS, if the Mortgage Loan is registered on the MERS System), and noting the presence of a MIN (if the Mortgage Loan is
registered on the MERS System), with evidence of recording thereon, or, if the original of any such intervening assignment has not yet been returned from the public recording office, a copy of such original intervening assignment certified by the
Seller or the public recording office in which such original intervening assignment has been recorded; 
  
 (v) the original policy of title insurance (or a commitment for title insurance, if the policy is being held by the title insurance
company pending recordation of the Mortgage); and 
  
 (vi) a true and correct copy of each assumption, modification, consolidation or substitution agreement, if any, relating to the Mortgage Loan. 
  
 If a material defect in any Mortgage File is discovered which may materially and adversely affect the value of the related Mortgage Loan, or the interests
of the Trustee or the Certificateholders in such Mortgage Loan, including if any document required to be delivered to the Custodian has not been delivered (provided that a Mortgage File will not be deemed to 
  

 3 

 contain a defect for an unrecorded assignment under clause (iii) above for 180 days following submission of the
assignment if the Seller has submitted such assignment for recording pursuant to the terms of the following paragraph), the Seller shall cure such defect or repurchase the related Mortgage Loan at the Repurchase Price or substitute an Eligible
Substitute Mortgage Loan for the related Mortgage Loan upon the same terms and conditions set forth in Section 3.01 of the Purchase Agreement as to the Initial Mortgage Loans and the Subsequent Mortgage Loans and Section 2.02(c) of the
Purchase Agreement as to the Subsequent Mortgage Loans for breaches of representations and warranties. 
  
 Promptly after the Closing Date in the case of an Initial Mortgage Loan or, in the case of a Subsequent Mortgage Loan, promptly after the Subsequent
Transfer Date (or after the date of transfer of any Eligible Substitute Mortgage Loan), the Seller at its own expense shall complete and submit for recording in the appropriate public office for real property records each of the assignments referred
to in clause (iii) above, with such assignment completed in favor of the Trustee, excluding any Mortgage Loan that is registered on the MERS System, if MERS is identified on the Mortgage, or on a properly recorded assignment of Mortgage as the
mortgagee of record. While such assignment to be recorded is being recorded, the Custodian shall retain a photocopy of such assignment. If any assignment is lost or returned unrecorded to the Custodian because of any defect therein, the Seller is
required to prepare a substitute assignment or cure such defect, as the case may be, and the Seller shall cause such substitute assignment to be recorded in accordance with this paragraph. 
  
 In instances where an original Mortgage or any original intervening
assignment of Mortgage is not, in accordance with clause (ii) or (iv) above, delivered by the Seller to the Custodian, on behalf of the Trustee, prior to or on the Closing Date in the case of an Initial Mortgage Loan or, in the case of a
Subsequent Mortgage Loan, promptly after the Subsequent Transfer Date, the Seller will deliver or cause to be delivered the originals of such documents to the Custodian, on behalf of the Trustee, promptly upon receipt thereof. 
  
 In connection with the assignment of any Mortgage Loan registered on the MERS
System, promptly after the Closing Date in the case of an Initial Mortgage Loan or, in the case of a Subsequent Mortgage Loan, promptly after the Subsequent Transfer Date (or after the date of transfer of any Eligible Substitute Mortgage Loan), the
Seller further agrees that it will cause, at the Seller’s own expense, the MERS System to indicate that such Mortgage Loan has been assigned by the Seller to the Trustee in accordance with this Agreement for the benefit of the
Certificateholders by including (or deleting, in the case of Mortgage Loans which are repurchased in accordance with this Agreement) in its computer files (a) the applicable Trustee code in the field “Trustee” which identifies the
Trustee and (b) the code “NovaStar 2005-3” (or its equivalent) in the field “Pool Field” which identifies the series of the Certificates issued in connection with such Mortgage Loans. The Seller further agrees that it will
not, and will not permit the Servicer to, and the Servicer agrees that it will not, alter the codes referenced in this paragraph with respect to any such Mortgage Loan during the term of this Agreement unless and until such Mortgage Loan is
repurchased in accordance with the terms of this Agreement. 
  
 Effective on the Closing Date, the Trustee, on behalf of the Certificateholders, hereby acknowledges its acceptance of all right, title and interest to the Initial Mortgage Loans and other property, existing on the Closing Date and
thereafter created and conveyed to it pursuant to this Section 2.01. 
  

 4 

 The Trustee, as assignee or transferee of the Company, shall be entitled to all scheduled principal
payments due after the Cut-off Date, all other payments of principal due and collected after the Cut-off Date, and all payments of interest on the Initial Mortgage Loans. No scheduled payments of principal due on or before the Cut-off Date and
collected after the Cut-off Date shall belong to the Company pursuant to the terms of the Purchase Agreement. Any late payment charges collected in connection with a Mortgage Loan shall be paid to the Servicer as provided in Section 3.15(b)
hereof. 
  
 The parties hereto intend that the transactions set
forth herein constitute a sale by the Company to the Trust on the Closing Date of all the Company’s right, title and interest in and to the Initial Mortgage Loans and other property as and to the extent described above. In the event the
transactions set forth herein shall be deemed not to be a sale, the Company hereby grants to the Trustee, on behalf of the Certificateholders, as of the Closing Date a security interest in all of the Company’s right, title and interest in, to
and under the Initial Mortgage Loans and such other property, to secure all of the Company’s obligations hereunder and this Agreement shall constitute a security agreement under applicable law and in such event, the parties hereto acknowledge
that the Custodian, in addition to holding the Initial Mortgage Loans on behalf of the Trustee for the benefit of the Certificateholders, holds the Initial Mortgage Loans as designee of the Company. The Seller agrees to take or cause to be taken
such actions and to execute such documents, including without limitation the filing of all necessary UCC-1 financing statements in the State of Virginia (which shall have been submitted for filing as of the Closing Date and each Subsequent Transfer
Date, as applicable), any continuation statements with respect thereto and any amendments thereto required to reflect a change in the name or corporate structure of the Seller or the filing of any additional UCC-1 financing statements due to the
change in the state of incorporation of the Seller, as are necessary to perfect and protect the interests of the Trust and its assignees in each Initial Mortgage Loan and the proceeds thereof and the interests of the Trust and its assignees in each
Subsequent Mortgage Loan and the proceeds thereof. 
  
 Section 2.02 Acceptance of Mortgage Loans by Custodian, on behalf of the Trustee. 
  
 (a) The Custodian, on behalf of the Trustee, acknowledges receipt of, subject to the review described below and any exceptions it notes pursuant to the
procedures described below, the documents (or certified copies thereof) referred to in Section 2.01 hereof and declares that it holds and will continue to hold those documents and any amendments, replacements or supplements thereto and all
other assets of the Trust Fund in trust for the use and benefit of all present and future Certificateholders. No later than 45 days after the Closing Date and each Subsequent Transfer Date (or, with respect to any Eligible Substitute Mortgage Loan,
within 5 Business Days after the receipt by the Custodian, on behalf of the Trustee, thereof and, with respect to any documents received beyond 45 days after the Closing Date or each Subsequent Transfer Date, promptly thereafter), the Custodian, on
behalf of the Trustee, agrees, for the benefit of the Certificateholders, to review each Mortgage File delivered to it and to execute and deliver, or cause to be executed and delivered, to the Seller an initial certification in the form 

 

 5 

 annexed hereto as Exhibit F-1. In conducting such review, the Custodian, on behalf of the Trustee, will ascertain whether
all required documents described in Section 2.01 hereof have been executed and received and whether those documents relate, determined on the basis of the Mortgagor name, original principal balance and loan number, to the Mortgage Loans it has
received, as identified in Exhibit B to this Agreement, as supplemented (provided, however, that with respect to those documents described in subclause (vii) of such section, the Custodian’s obligations shall extend only to documents
actually delivered pursuant to such subclause). In performing any such review, the Custodian, on behalf of the Trustee, may conclusively rely on the purported due execution and genuineness of any such document and on the purported genuineness of any
signature thereon. If the Custodian, on behalf of the Trustee, finds that any document constituting part of the Mortgage File not to have been executed or received, or to be unrelated to the Mortgage Loans identified in Exhibit B or Attachment B to
Exhibit 2 of the Purchase Agreement or to appear to be defective on its face, the Custodian, on behalf of the Trustee, shall promptly notify the Seller of such finding and the Seller’s obligation to cure such defect or repurchase or substitute
for the related Mortgage Loan. 
  
 (b) No later than 180 days
after the Closing Date, the Custodian, on behalf of the Trustee, will review, for the benefit of the Certificateholders, the Mortgage Files and will execute and deliver or cause to be executed and delivered to the Seller, a final certification in
the form annexed hereto as Exhibit F-2. In conducting such review, the Custodian, on behalf of the Trustee, will ascertain whether an original of each document described in subclauses (ii)-(iv) of Section 2.01 hereof required to be
recorded has been returned from the recording office with evidence of recording thereon or a certified copy has been obtained from the recording office. If the Custodian, on behalf of the Trustee, finds any document constituting part of the Mortgage
File has not been received, or to be unrelated, determined on the basis of the Mortgagor name, original principal balance and loan number, to the Mortgage Loans identified in Exhibit B or Attachment B to Exhibit 2 of the Purchase Agreement or to
appear defective on its face, the Custodian, on behalf of the Trustee, shall promptly notify the Seller and the Trustee of such finding and the Seller’s obligation to cure such defect or repurchase or substitute for the related Mortgage Loan.

  
 (c) Upon deposit of the Repurchase Price in the Collection
Account and notification of the Trustee, by a certification signed by a Servicing Officer (which certification shall include a statement to the effect that the Repurchase Price has been deposited in the Collection Account), the Trustee shall cause
the Custodian to release to the Seller the related Mortgage File and shall cause to be executed and delivered all instruments of transfer or assignment, without recourse, furnished to it by the Seller as are necessary to vest in the Seller title to
and rights under the related Mortgage Loan. Such purchase shall be deemed to have occurred on the date on which certification of the deposit of the Repurchase Price in the Distribution Account was received by the Trustee. The Custodian, on behalf of
the Trustee, shall amend the applicable Mortgage Loan Schedule to reflect such repurchase and shall promptly notify the Servicer, and the Rating Agencies of such amendment. 
  
 Section 2.03 Repurchase or Substitution of Mortgage Loans by the Seller. 
  
 (a) Upon discovery or receipt of written notice of any materially defective
document in, or that a document is missing from, a Mortgage File or of the breach by the Seller 
  

 6 

 of any representation, warranty or covenant under the Purchase Agreement in respect of any Mortgage Loan which materially
adversely affects the value of such Mortgage Loan or the interest therein of the Certificateholders, the Custodian shall promptly notify the Seller and the Servicer of such defect, missing document or breach and request that the Seller deliver such
missing document or cure such defect or breach no later than 90 days from the date of the discovery or receipt of written notice of such missing document, defect or breach, and if the Seller does not deliver such missing document or cure such defect
or breach in all material respects during such period, the Custodian shall notify the Trustee and the Trustee shall enforce the Seller’s obligation under the Purchase Agreement and cause the Seller to repurchase such Mortgage Loan from the
Trust Fund at the Repurchase Price on or prior to the Determination Date following the expiration of such 90 day period. 
  
 (b) The Repurchase Price for the repurchased Mortgage Loan shall be deposited in the Collection Account, and the Trustee, upon receipt of written
certification from the Servicer of such deposit, shall cause the Custodian to release to the Seller the related Mortgage File and the Trustee shall execute and deliver such instruments of transfer or assignment, in each case without recourse, as the
Seller shall furnish to it and as shall be necessary to vest in the Seller any Mortgage Loan released pursuant hereto and the Trustee and the Custodian shall have no further responsibility with regard to such Mortgage File (it being understood that
the Custodian shall have no responsibility for determining the sufficiency of such assignment for its intended purpose). In lieu of repurchasing any such Mortgage Loan as provided above, the Seller may cause such Mortgage Loan to be removed from the
Trust Fund (in which case it shall become a Deleted Mortgage Loan) and substitute one or more Eligible Substitute Mortgage Loans in the manner and subject to the limitations set forth in Section 2.03(d). It is understood and agreed that the
obligation of the Seller to cure or to repurchase (or to substitute for) any Mortgage Loan as to which a document is missing, a material defect in a constituent document exists or as to which such a breach has occurred and is continuing shall
constitute the sole remedy against the Seller respecting such omission, defect or breach available to the Trustee on behalf of the Certificateholders. 
  
 (c) Within 90 days of the earlier of discovery by the Servicer or receipt of notice by the Servicer of the breach of any representation, warranty or
covenant of the Servicer set forth in Section 2.05 which materially and adversely affects the interests of the Certificateholders in any Mortgage Loan, the Servicer shall cure such breach in all material respects. 
  
 (d) Any substitution of Eligible Substitute Mortgage Loans for Deleted
Mortgage Loans made pursuant to Section 2.03(a) must be effected prior to the last Business Day that is within two years after the Closing Date. As to any Deleted Mortgage Loan for which the Seller substitutes an Eligible Substitute Mortgage
Loan or Loans, such substitution shall be effected by the Seller delivering to the Custodian, for such Eligible Substitute Mortgage Loan or Loans, the Mortgage Note, the Mortgage, the Assignment to the Trustee, and such other documents and
agreements, with all necessary endorsements thereon, as are required by Section 2.01, together with an Officers’ Certificate providing that each such Eligible Substitute Mortgage Loan satisfies the definition thereof and specifying the
Substitution Adjustment Amount (as described below), if any, in connection with such substitution. The Custodian shall acknowledge receipt for such Eligible Substitute Mortgage Loan or Loans and, within ten Business Days 
  

 7 

 thereafter, shall review such documents as specified in Section 2.02 and deliver to the Servicer, with respect to
such Eligible Substitute Mortgage Loan or Loans, a certification substantially in the form attached hereto as Exhibit F-1, with any applicable exceptions noted thereon. Within one year of the date of substitution, the Custodian shall deliver to the
Servicer a certification substantially in the form of Exhibit F-2 hereto with respect to such Eligible Substitute Mortgage Loan or Loans, with any applicable exceptions noted thereon. Monthly Payments due with respect to Eligible Substitute Mortgage
Loans in the month of substitution are not part of the Trust Fund and will be retained by the Seller. For the month of substitution, distributions to Certificateholders will reflect the collections and recoveries in respect of such Deleted Mortgage
Loan in the Due Period preceding the month of substitution and the Seller shall thereafter be entitled to retain all amounts subsequently received in respect of such Deleted Mortgage Loan. The Seller shall give or cause to be given written notice to
the Certificateholders that such substitution has taken place, shall amend the Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage Loan from the terms of this Agreement and the substitution of the Eligible Substitute Mortgage Loan
or Loans and shall deliver a copy of such amended Mortgage Loan Schedule to the Custodian. Upon such substitution by the Seller, such Eligible Substitute Mortgage Loan or Loans shall constitute part of the Mortgage Pool and shall be subject in all
respects to the terms of this Agreement and the Purchase Agreement, including all applicable representations and warranties thereof included in the Purchase Agreement as of the date of substitution. 
  
 For any month in which the Seller substitutes one or more Eligible Substitute
Mortgage Loans for one or more Deleted Mortgage Loans, the Servicer will determine the amount (the “Substitution Adjustment Amount”), if any, by which the aggregate Repurchase Price of all such Deleted Mortgage Loans exceeds the
aggregate, as to each such Eligible Substitute Mortgage Loan, of the principal balance thereof as of the date of substitution, together with one month’s interest on such principal balance at the applicable Net Mortgage Rate. On the date of such
substitution, the Seller will deliver or cause to be delivered to the Servicer for deposit in the Collection Account an amount equal to the Substitution Adjustment Amount, if any, and the Custodian, upon receipt of the related Eligible Substitute
Mortgage Loan or Loans and certification by the Servicer of such deposit, shall release to the Seller the related Mortgage File or Files and the Custodian or the Trustee, as applicable, shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, as the Seller shall deliver to it and as shall be necessary to vest therein any Deleted Mortgage Loan released pursuant hereto. 
  
 In addition, the Seller shall obtain at its own expense and deliver to the Trustee an Opinion of Counsel to the effect that
such substitution will not cause (a) any federal tax to be imposed on the Trust Fund, including without limitation, any federal tax imposed on “prohibited transactions” under Section 860F(a)(l) of the Code or on
“contributions after the startup date” under Section 860G(d)(l) of the Code, or (b) any REMIC to fail to qualify as a REMIC at any time that any Certificate is outstanding. If such Opinion of Counsel can not be delivered, then
such substitution may only be effected at such time as the required Opinion of Counsel can be given. 
  
 (e) Upon discovery by the Seller, the Servicer, the Custodian or the Trustee that any Mortgage Loan does not constitute a “qualified mortgage”
within the meaning of Section 860G(a)(3) of the Code, the party discovering such fact shall within two Business Days 
  

 8 

 give written notice thereof to the other parties. In connection therewith, the Seller or the Company, as the case may be,
shall repurchase or, subject to the limitations set forth in Section 2.03(d), substitute one or more Eligible Substitute Mortgage Loans for the affected Mortgage Loan within 90 days of the earlier of discovery or receipt of such notice with
respect to such affected Mortgage Loan. Such repurchase or substitution shall be made by the Seller. Any such repurchase or substitution shall be made in the same manner as set forth in Section 2.03(a). The Custodian, on behalf of the Trustee,
shall reconvey to the Seller, the Mortgage Loan to be released pursuant hereto in the same manner, and on the same terms and conditions, as it would a Mortgage Loan repurchased for breach of a representation or warranty. 
  
 Section 2.04 Acknowledgement of Trustee. 
  
 The Trustee acknowledges that in the event that any of (i) the transfer
of the Initial Mortgage Loans and the MI Policies from the Seller to the Company, or from the Company to the Trustee on behalf of the Certificateholders, is determined to constitute a financing, or (ii) the transfer of the Subsequent Mortgage
Loans from the Seller to the Company or from the Company to the Trustee on behalf of the Certificateholders, is determined to constitute a financing, then in each case the Custodian, on behalf of the Trustee, and the Trustee hold the Initial
Mortgage Loans, the MI Policies and the Subsequent Mortgage Loans as the designee and bailee of the Company subject, however, in each case, to a prior lien in favor of the Certificateholders pursuant to the terms of this Agreement. 
  
 Section 2.05 Representations, Warranties and Covenants of the
Servicer. 
  
 The Servicer hereby represents, warrants and
covenants to the Trustee, for the benefit of each of the Trustee and the Certificateholders and to the Company that as of the Closing Date or as of such date specifically provided herein: 
  
 (i) The Servicer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Virginia and has the corporate power to own its assets and to transact the business in which it is currently engaged. The Servicer is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction in which the character of the business transacted by it or properties owned or leased by it requires such qualification and in which the failure to so qualify would have a material adverse effect on the
business, properties, assets, or condition (financial or other) of the Servicer or the validity or enforceability of the Mortgage Loans; 
  
 (ii) The Servicer has the corporate power and authority to make, execute, deliver and perform this Agreement and all of the transactions
contemplated under this Agreement, and has taken all necessary corporate action to authorize the execution, delivery and performance of this Agreement. When executed and delivered, this Agreement will constitute the legal, valid and binding
obligation of the Servicer enforceable in accordance with its terms, except as enforcement of such terms may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally and by the availability
of equitable remedies; 
  

 9 

 (iii) The Servicer is not required to obtain the consent of any other Person or any
consent, license, approval or authorization from, or registration or declaration with, any governmental authority, bureau or agency in connection with the execution, delivery, performance, validity or enforceability of this Agreement, except for
such consent, license, approval or authorization, or registration or declaration, as shall have been obtained or filed, as the case may be; 
  
 (iv) The execution and delivery of this Agreement and the performance of the transactions contemplated hereby by the Servicer will not
violate any provision of any existing law or regulation or any order or decree of any court applicable to the Servicer or any provision of the certificate of incorporation or bylaws of the Servicer, or constitute a material breach of any mortgage,
indenture, contract or other agreement to which the Servicer is a party or by which the Servicer may be bound; 
  
 (v) No litigation or administrative proceeding of or before any court, tribunal or governmental body is currently pending, or to the
knowledge of the Servicer threatened, against the Servicer or any of its properties or with respect to this Agreement or the Certificates which, to the knowledge of the Servicer, has a reasonable likelihood of resulting in a material adverse effect
on the transactions contemplated by this Agreement; 
  
 (vi) The Servicer is a member of MERS in good standing, and will comply in all material respects with the rules and procedures of MERS in connection with the servicing of the Mortgage Loans that are registered with MERS; and 
  
 (vii) With respect to the Group I Mortgage Loans, the
Servicer will accurately and fully report its borrower credit files to the three largest credit repositories in a timely manner. 
  
 The foregoing representations and warranties shall survive any termination of the Servicer hereunder. 
  
 Section 2.06 Representations and Warranties of the
Company. 
  
 The Company represents and warrants to the Trust
and the Trustee on behalf of the Certificateholders as follows: 
  
 (a) The Company is duly organized and validly existing as a corporation in good standing under the laws of the State of Delaware, with power and authority to own its properties and to conduct its business as such properties are currently
owned and such business is presently conducted. 
  
 (b) The
Company is duly qualified to do business as a foreign corporation in good standing and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of its property or the conduct of its business shall
require such 
  

 10 

 qualifications and in which the failure to so qualify would have a material adverse effect on the business, properties,
assets or condition (financial or other) of the Company and the ability of the Company to perform hereunder. 
  
 (c) The Company has the power and authority to execute and deliver this Agreement and to carry out its terms; the Company has full power and authority to
purchase the property to be purchased from the Seller and the Company has duly authorized such purchase by all necessary corporate action; and the execution, delivery and performance of this Agreement have been duly authorized by the Company by all
necessary corporate action. When executed and delivered, this Agreement will constitute the legal, valid and binding obligation of the Company enforceable in accordance with its terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally and by the availability of equitable remedies. 
  
 (d) The consummation of the transactions contemplated by this Agreement and the fulfillment of the terms hereof do not conflict with, result in any breach
of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a default under, the articles of incorporation or bylaws of the Company, or any indenture, agreement or other instrument to which the Company is a party
or by which it is bound; nor result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement or other instrument (other than pursuant to the Basic Documents); nor violate any law or,
to the best of the Company’s knowledge, any order, rule or regulation applicable to the Company of any court or of any federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the
Company or its properties. 
  
 Section 2.07
Issuance of Certificates. 
  
 The Trustee acknowledges
the assignment to the Trustee of the Mortgage Loans and the delivery to the Custodian, on behalf of the Trustee of the Mortgage Files, subject to the provisions of Sections 2.01 and 2.02, together with the assignment to it of all other assets
included in the Trust Fund, receipt of which is hereby acknowledged. Concurrently with such assignment and delivery and in exchange therefor, the Trustee, pursuant to the written request of the Company executed by an officer of the Company, has
executed, and authenticated and delivered to or upon the order of the Company, the Certificates in authorized denominations. The interests evidenced by the Certificates, constitute the entire beneficial ownership interest in the Trust Fund.

  
 Section 2.08 Conveyance of the Subsequent
Mortgage Loans. 
  
 The Trustee, or the Custodian on behalf
of the Trustee, shall purchase the Subsequent Mortgage Loans as set forth in Section 2.02 of the Purchase Agreement. The Seller shall deliver a Mortgage File (as described in Section 2.01) with respect to such Subsequent Mortgage Loans.

  
 Section 2.09 Designation Under REMIC
Provisions. 
  
 The Trustee shall comply with the provisions
set forth in Exhibit K. 
  

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 ARTICLE III 
  
 ADMINISTRATION AND SERVICING 
 OF THE MORTGAGE LOANS 
  
 Section 3.01 Servicer to Assure Servicing. 
  
 (a) The Servicer shall supervise, or take such actions as are necessary to ensure, the servicing and administration of the Mortgage Loans and any REO Property in accordance with this Agreement and its normal servicing practices, which
generally shall conform to the standards of an institution prudently servicing mortgage loans for its own account and shall have full authority to do anything it reasonably deems appropriate or desirable in connection with such servicing and
administration. The Servicer may perform its responsibilities relating to servicing through other agents or independent contractors, but shall not thereby be released from any of its responsibilities as hereinafter set forth. Subject to
Section 3.06(b), the authority of the Servicer, in its capacity as Servicer, and any Subservicer acting on its behalf, shall include, without limitation, the power to (i) consult with and advise any Subservicer regarding administration of
a related Mortgage Loan, (ii) approve any recommendation by a Subservicer to foreclose on a related Mortgage Loan, (iii) supervise the filing and collection of insurance claims and take or cause to be taken such actions on behalf of the
insured Person thereunder as shall be reasonably necessary to prevent the denial of coverage thereunder, and (iv) effectuate foreclosure or other conversion of the ownership of the Mortgaged Property securing a related Mortgage Loan, including
the employment of attorneys, the institution of legal proceedings, the collection of deficiency judgments, the acceptance of compromise proposals and any other matter pertaining to a delinquent Mortgage Loan. The authority of the Servicer shall
include, in addition, the power on behalf of the Certificateholders, the Trustee, or any of them to (i) execute and deliver customary consents or waivers and other instruments and documents, (ii) consent to transfer of any related
Mortgaged Property and assumptions of the related Mortgage Notes and Mortgages (in the manner provided in this Agreement) and (iii) collect any Insurance Proceeds and Liquidation Proceeds. Without limiting the generality of the foregoing, the
Servicer and any Subservicer acting on its behalf may, and is hereby authorized, and empowered by the Trustee when the Servicer believes it is reasonably necessary in its best judgment in order to comply with its servicing duties hereunder, to
execute and deliver, on behalf of itself, the Certificateholders, the Trustee, or any of them, any instruments of satisfaction, cancellation, partial or full release, discharge and all other comparable instruments, with respect to the related
Mortgage Loans, the insurance policies and the accounts related thereto, and the Mortgaged Properties. The Servicer may exercise this power in its own name or in the name of a Subservicer. 
  
 The Servicer, in such capacity, may not consent to the placing of a lien
senior to that of the Mortgage on the related Mortgaged Property. 
  
 The relationship of the Servicer (and of any successor to the Servicer as servicer under this Agreement) to the Trust and the Trustee under this Agreement is intended by the parties to be that of an independent contractor and not that of a
joint venturer, partner or agent. 
  

 12 

 (b) Notwithstanding the provisions of Subsection 3.01(a), the Servicer shall not take any action
inconsistent with the interests of the Trustee, or the Certificateholders or with the rights and interests of the Trustee, or the Certificateholders under this Agreement. 
  
 (c) The Trustee shall furnish the Servicer with any powers of attorney and other documents in form as provided to it
necessary or appropriate to enable the Servicer to service and administer the related Mortgage Loans and REO Property and the Trustee shall not be liable for the actions of the Servicer or any Subservicers under such powers of attorney. 

 
 (d) The Servicer further is authorized and empowered by the Trustee, on
behalf of the Certificateholders and the Trustee, when the Servicer believes it is appropriate in its best judgment to register any Mortgage Loan on the MERS System, or cause the removal from the registration of any Mortgage Loan on the MERS System,
to execute and deliver, on behalf of the Trustee and the Certificateholders or any of them, any and all instruments of assignment and other comparable instruments with respect to such assignment or re-recording of a Mortgage in the name of MERS,
solely as nominee for the Trustee and its successors and assigns. Any expenses incurred in connection with the actions described in the preceding sentence shall be borne by the Servicer with no right of reimbursement; provided, that if, as a result
of MERS discontinuing or becoming unable to continue operations in connection with the MERS System, it becomes necessary to remove any Mortgage Loan from registration on the MERS System and to arrange for the assignment of the related Mortgages to
the Trustee, then any related expenses shall be reimbursable to the Servicer by the Trust. 
  
 Section 3.02 Subservicing Agreements Between Servicer and Subservicers. 
  
 (a) The Servicer may enter into Subservicing Agreements with Subservicers for the servicing and administration of the Mortgage Loans and for the
performance of any and all other activities of the Servicer hereunder. Each Subservicer shall be either (i) an institution the accounts of which are insured by the FDIC or (ii) another entity that engages in the business of originating or
servicing mortgage loans comparable to the Mortgage Loans, and in either case shall be authorized to transact business in the state or states in which the related Mortgaged Properties it is to service are situated, if and to the extent required by
applicable law to enable the Subservicer to perform its obligations hereunder and under the Subservicing Agreement. Any Subservicing Agreement entered into by the Servicer shall include the provision that such Agreement may be immediately terminated
(i) (x) with cause and without any termination fee by the Servicer hereunder and/or (y) without cause, in which case the Servicer shall be solely responsible for any termination fee or penalty resulting therefrom and (ii) at the
option of the Trustee upon the termination or resignation of the Servicer hereunder, in which case the Servicer shall be solely responsible for any termination fee or penalty resulting therefrom. In addition, each Subservicing Agreement shall
provide for servicing of the Mortgage Loans consistent with the terms of this Agreement. The Servicer and the Subservicers may enter into Subservicing Agreements and make amendments to the Subservicing Agreements or enter into different forms of
Subservicing Agreements providing for, among other things, the delegation by the Servicer to a Subservicer of additional duties regarding the administration of the Mortgage Loans; provided, however, that any such amendments or different forms shall
be consistent with and not violate the provisions of this Agreement, and that no such amendment or different form shall be made or entered into which could be reasonably expected to be materially adverse to the interests of the Certificateholders,
without the consent of the Certificateholders holding at least 51% of the aggregate Voting Rights. 
  

 13 

 (b) As part of its servicing activities hereunder, the Servicer, for the benefit of the Trustee, and the
Certificateholders, shall enforce the obligations of each Subservicer under the related Subservicing Agreement. Such enforcement, including, without limitation, the legal prosecution of claims, termination of Subservicing Agreements and the pursuit
of other appropriate remedies, shall be in such form and carried out to such an extent and at such time as the Servicer, in its good faith business judgment, would require were it the owner of the related Mortgage Loans. The Servicer shall pay the
costs of such enforcement at its own expense, but shall be reimbursed therefor only (i) from a general recovery resulting from such enforcement only to the extent, if any, that such recovery exceeds all amounts due in respect of the related
Mortgage Loan or (ii) from a specific recovery of costs, expenses or attorneys’ fees against the party against whom such enforcement is directed. 
  
 Section 3.03 Successor Subservicers. 
  
 The Servicer shall be entitled to terminate any Subservicing Agreement that may exist in accordance with the terms and conditions of such Subservicing
Agreement and without any limitation by virtue of this Agreement; provided, however, that upon termination, the Servicer shall either act as servicer of the related Mortgage Loans or enter into an appropriate contract with a successor Subservicer
reasonably acceptable to the Trustee, pursuant to which such successor Subservicer will be bound by all relevant terms of the related Subservicing Agreement pertaining to the servicing of such Mortgage Loans. 
  
 Section 3.04 Liability of the Servicer. 
  
 (a) Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Servicer and a Subservicer or reference to actions taken through a Subservicer or otherwise, the Servicer shall under all circumstances remain obligated and primarily liable to the
Trustee and the Certificateholders for the servicing and administering of the Mortgage Loans and any REO Property in accordance with this Agreement. The obligations and liability of the Servicer shall not be diminished by virtue of Subservicing
Agreements or by virtue of indemnification of the Servicer by any Subservicer, or any other Person. The obligations and liability of the Servicer shall remain of the same nature and under the same terms and conditions as if the Servicer alone were
servicing and administering the related Mortgage Loans. The Servicer shall, however, be entitled to enter into indemnification agreements with any Subservicer or other Person and nothing in this Agreement shall be deemed to limit or modify such
indemnification. For the purposes of this Agreement, the Servicer shall be deemed to have received any payment on a Mortgage Loan on the date the Subservicer received such payment. 
  
 (b) Any Subservicing Agreement that may be entered into and any transactions or services relating to the Mortgage Loans
involving a Subservicer in its capacity as such and not as an originator shall be deemed to be between the Subservicer and the Servicer alone, and the Custodian, the Trustee and the Certificateholders shall not be deemed parties thereto and shall
have no claims, rights, obligations, duties or liabilities with respect to the Subservicer, except as set forth in Section 3.05. 
  

 14 

 Section 3.05 Assumption or Termination of Subservicing Agreements by the Trustee.

  
 (a) If the Trustee or its designee as the successor Servicer,
shall assume the servicing obligations of the Servicer in accordance with Section 7.02 below, the Trustee or its designee as the successor Servicer, to the extent necessary to carry out the provisions of Section 7.02 with respect to the
Mortgage Loans, shall succeed to all of the rights and obligations of the Servicer under each of the Subservicing Agreements. In such event, the Trustee or its designee as the successor Servicer shall be deemed to have assumed all of the
Servicer’s rights and obligations therein and to have replaced the Servicer as a party to such Subservicing Agreements to the same extent as if such Subservicing Agreements had been assigned to the Trustee or its designee as a successor
Servicer, except that the Trustee or its designee as a successor Servicer shall not be deemed to have assumed any obligations or liabilities of the Servicer arising prior to such assumption or as a result of the Trustee’s or its designee’s
terminating any Subservicer upon the Trustee or its designee becoming successor Servicer and the Servicer shall not thereby be relieved of any liability or obligations under such Subservicing Agreements arising prior to such assumption or as a
result of the Trustee’s or its designee’s terminating any Subservicer upon the Trustee or its designee becoming successor Servicer. 
  
 (b) The Trustee or its designee as the successor Servicer may terminate any Subservicer upon becoming successor Servicer. Any termination fees will be
paid by the terminated Subservicer. 
  
 (c) In the event that the
Trustee or its designee as successor Servicer assumes the servicing obligations of the Servicer under Section 7.02, upon the request of the Trustee or such designee as successor Servicer, the Servicer shall at its own expense deliver to the
Trustee, or at its written request to such designee, originals or, if originals are not available, photocopies of all documents, files and records, electronic or otherwise, relating to the Subservicing Agreements and the related Mortgage Loans or
REO Property then being serviced and an accounting of amounts collected and held by it, if any, and will otherwise cooperate and use its reasonable efforts to effect the orderly and efficient transfer of the Subservicing Agreements, or
responsibilities hereunder to the Trustee, or at its written request to such designee as successor Servicer. 
  
 Section 3.06 Collection of Mortgage Loan Payments. 
  
 (a) The Servicer will coordinate and monitor remittances by Subservicers to it with respect to the Mortgage Loans in
accordance with this Agreement. 
  
 (b) The Servicer shall make
its best reasonable efforts to collect or cause to be collected all payments required under the terms and provisions of the Mortgage Loans and shall follow, and use its best reasonable efforts to cause Subservicers to follow, collection procedures
comparable to the collection procedures of prudent mortgage lenders servicing mortgage loans for their own account to the extent such procedures shall be consistent with this Agreement. 
  

 15 

 Consistent with the foregoing, the Servicer or the related Subservicer may in its discretion (i) waive or permit to
be waived any late payment charge, prepayment charge, assumption fee, or any penalty interest in connection with the prepayment of a Mortgage Loan and (ii) suspend or reduce or permit to be suspended or reduced regular monthly payments for a
period of up to six months, or arrange or permit an arrangement with a Mortgagor for a scheduled liquidation of delinquencies; provided, however, that the Servicer or the related Subservicer may permit the foregoing only if it believes, in good
faith, that recoveries of Monthly Payments will be maximized; provided further, however, with respect to Mortgage Loans insured by an MI Policy, that the Servicer may not without the prior written consent of the MI Insurer permit any waiver,
modification or variance which would (a) reduce or eliminate the coverage provided under the MI Policy (b) change the loan rate, (c) forgive any payment of principal or interest, (d) lessen the lien priority or (e) extend
the final maturity date of a Mortgage Loan past 12 months after the original maturity date on such Mortgage Loan. In the event the Servicer or related Subservicer shall consent to the deferment of the due dates for payments due on a Mortgage Note,
the Servicer shall nonetheless make an Advance or shall cause the related Subservicer to make an advance to the same extent as if such installment were due, owing and delinquent and had not been deferred through liquidation of the Mortgaged
Property; provided, however, that the obligation of the Servicer or the related Subservicer to make an Advance shall apply only to the extent that the Servicer believes, in good faith, that such advances are not Nonrecoverable Advances. The Servicer
shall pay the amount of any waived prepayment charge at the time of payoff if such prepayment charge was waived for a reason other than that specified in this Section 3.06(b). 
  
 (c) Within five Business Days after the Servicer has determined that all amounts which it expects to recover from or on
account of a Liquidated Mortgage Loan have been recovered and that no further Liquidation Proceeds will be received in connection therewith, the Servicer shall provide to the Trustee a certificate of a Servicing Officer that such Mortgage Loan
became a Liquidated Mortgage Loan as of the date of such determination. 
  
 (d) The Servicer shall establish a segregated account (the “Collection Account”), which shall be an Eligible Account, which shall be titled “Collection Account, JPMorgan Chase Bank, National Association, as Trustee for
the registered holders of NovaStar Mortgage Funding Trust 2005-3, Home Equity Loan Asset-Backed Certificates, Series 2005-3”, in which the Servicer shall deposit or cause to be deposited any amounts representing payments on and any collections
in respect of the Mortgage Loans received by it after the Cut-Off Date or, with respect to the Subsequent Mortgage Loans, the Subsequent Cut-Off Date (other than in respect of the payments referred to in the following paragraph) within two Business
Days following receipt thereof, including the following payments and collections received or made by it (without duplication): 
  
 (i) all payments of principal or interest on the Mortgage Loans received by the Servicer directly from Mortgagors or from the respective
Subservicer; 
  
 (ii) the aggregate Repurchase
Price of the Mortgage Loans purchased by the Servicer pursuant to Section 3.18; 
  

 16 

 (iii) Net Liquidation Proceeds; 
  
 (iv) all proceeds of any Mortgage Loans repurchased by the
Seller pursuant to the Purchase Agreement, and all Substitution Adjustment Amounts required to be deposited in connection with the substitution of an Eligible Substitute Mortgage Loan pursuant to the Purchase Agreement; 
  
 (v) Insurance Proceeds, other than Net Liquidation Proceeds,
and MI Insurance Proceeds resulting from any insurance policy maintained on a Mortgaged Property; 
  
 (vi) any Advance and any Compensating Interest payments; and 
  
 (vii) any other amounts received by the Servicer, including all Foreclosure Profits, assumption fees,
prepayment penalties and any other fees that are required to be deposited in the Collection Account pursuant to this Agreement; 
  
 provided, however, that with respect to each Due Period, the Servicer shall be permitted to retain from payments actually collected in respect of interest on the Mortgage
Loans, the Servicing Fee for such Due Period. The foregoing requirements respecting deposits to the Collection Account are exclusive, it being understood that, without limiting the generality of the foregoing, the Servicer need not deposit in the
Collection Account late payment charges payable by Mortgagors, as further described in Section 3.15, or amounts received by the Subservicer for the accounts of Mortgagors for application towards the payment of taxes, insurance premiums,
assessments and similar items. In the event any amount not required to be deposited in the Collection Account is so deposited, the Servicer may at any time (prior to being terminated under this Agreement) withdraw such amount from the Collection
Account, any provision herein to the contrary notwithstanding. The Servicer shall keep records that accurately reflect the funds on deposit in the Collection Account that have been identified by it as being attributable to the Mortgage Loans and
shall hold all collections in the Collection Account for the benefit of the Trustee, and the Certificateholders, as their interests may appear. 
  
 Funds in the Collection Account may be invested in Eligible Investments with a maturity date no later than the Business Day immediately preceding the
Servicer Remittance Date, but shall not be commingled with the Servicer’s own funds or general assets or with funds respecting payments on mortgage loans or with any other funds not related to the Certificates. All such investments shall be
made in the name of the Trustee for the benefit of the Certificateholders, provided, however, that income earned on such Eligible Investments shall be for the account of the Servicer. Such funds shall be invested at the written direction of the
Servicer or if the Servicer does not provide such written direction such funds shall be retained by the Trustee uninvested. The Servicer shall be obligated to cover losses on such Eligible Investments. 
  
 (e) The Servicer will require each Subservicer to hold all funds
constituting collections on the Mortgage Loans, pending remittance thereof to the Servicer, in one or more accounts in the name of the Trustee meeting the requirements of an Eligible Account, and such 
  

 17 

 funds shall not be invested. The Subservicer shall segregate and hold all funds collected and received pursuant to each
Mortgage Loan separate and apart from any of its own funds and general assets and any other funds. Each Subservicer shall make remittances to the Servicer no later than one Business Day following receipt thereof and the Servicer shall deposit into
the Collection Account any such remittances received from any Subservicer within one Business Day following receipt by the Servicer. 
  
 Section 3.07 Withdrawals from the Collection Account. 
  
 (a) The Servicer shall, from time to time as provided herein, make withdrawals from the Collection Account of amounts on
deposit therein pursuant to Section 3.06 that are attributable to the Mortgage Loans for the following purposes (without duplication): 
  
 (i) to deposit in the Distribution Account, by the Servicer Remittance Date prior to each Distribution Date, all collections on the
Mortgage Loans required to be distributed from the Distribution Account on a Distribution Date; 
  
 (ii) to the extent deposited to the Collection Account, to reimburse itself or the related Subservicer for previously unreimbursed
expenses incurred in maintaining individual insurance policies pursuant to Section 3.11, or Liquidation Expenses, paid pursuant to Section 3.13, such withdrawal right being limited to amounts received on particular Mortgage Loans (other
than any Repurchase Price in respect thereof) which represent late recoveries of the payments for which such expenses were paid, or from related Liquidation Proceeds; 
  
 (iii) to pay to itself out of each payment received on account of interest on a Mortgage Loan as
contemplated by Section 3.15, an amount equal to the related Servicing Fee (to the extent not retained pursuant to Section 3.06); 
  
 (iv) to pay to itself or the Seller, with respect to any Mortgage Loan or property acquired in respect thereof that has been purchased by
the Seller, the Servicer or other entity, all amounts received thereon and not required to be distributed to Certificateholders as of the date on which the related Repurchase Price is determined; 
  
 (v) to reimburse the Servicer or any Subservicer for any
unreimbursed Advance of its own funds or any unreimbursed advance of such Subservicer’s own funds, the right of the Servicer or a Subservicer to reimbursement pursuant to this subclause (v) being limited to amounts received on a particular
Mortgage Loan (including, for this purpose, the Repurchase Price therefor, Insurance Proceeds and Liquidation Proceeds) which represent late payments or recoveries of the principal of or interest on such Mortgage Loan respecting which such Advance
or advance was made; 
  
 (vi) to reimburse the
Servicer or any Subservicer from Insurance Proceeds or Liquidation Proceeds relating to a particular Mortgage Loan for amounts expended by the Servicer or such Subservicer pursuant to Section 3.13: (x) in good faith in connection with the
restoration of the related Mortgaged 
  

 18 

 Property which was damaged by the uninsured cause, (y) in connection with the liquidation of such
Mortgage Loan, or (z) with respect to an MI Claim Payment Advance made by the Servicer with respect to such Mortgage Loan; 
  
 (vii) to reimburse the Servicer or any Subservicer for any unreimbursed Nonrecoverable Advance previously made, and otherwise not
reimbursed pursuant to this Section 3.07(a); 
  
 (viii) to withdraw any other amount deposited in the Collection Account that was not required to be deposited therein pursuant to Section 3.06; 
  

(ix) to reimburse the Servicer for costs associated with the environmental report handling the presence of any toxic or hazardous
substance on a Mortgaged Property as set forth in Section 3.13(c); 
  
 (x) to clear and terminate the Collection Account upon a termination pursuant to Section 7.08; 
  
 (xi) to pay to the Servicer income earned on Eligible Investments in the Collection Account; 
  
 (xii) to pay to the MI Insurer the monthly MI Premiums due
under each MI Policy from payments received (or Advances made) on account of interest due on the related Mortgage Loan; and 
  
 (xiii) to make an Advance with respect to a Mortgage Loan that is Delinquent from funds held in the Collection Account as contemplated by
Section 3.24, provided that the amount withdrawn for such an Advance is immediately deposited into the Distribution Account. 
  
 Withdrawals made pursuant to clause (xii) shall be made on a first priority basis. In connection with withdrawals pursuant to clauses (ii), (iii), (iv), (v) and
(vi), the Servicer’s entitlement thereto is limited to collections or other recoveries on the related Mortgage Loan, and the Servicer shall keep and maintain separate accounting, on a Mortgage Loan by Mortgage Loan basis, for the purpose of
justifying any withdrawal from the Collection Account pursuant to such clauses. 
  
 (b) Notwithstanding the provisions of this Section 3.07, the Servicer may, but is not required to, allow the Subservicers to deduct from amounts received by them or from the related account maintained by a
Subservicer, prior to deposit in the Collection Account, any portion to which such Subservicers are entitled as reimbursement of any reimbursable Advances made by such Subservicers. 
  
 Section 3.08 Collection of Taxes, Assessments and Similar Items; Servicing Accounts. 
  
 (a) The Servicer shall establish and maintain or cause the related
Subservicer to establish and maintain, one or more Servicing Accounts. The Servicer or a Subservicer will deposit and retain therein all collections from the Mortgagors for the payment of taxes, assessments, insurance premiums, or comparable items
as agent of the Mortgagors. 
  

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 (b) The deposits in the Servicing Accounts shall be held in trust by the Servicer or a Subservicer (and
its successors and assigns) in the name of the Trustee. Such Servicing Accounts shall be Eligible Accounts and, if permitted by applicable law, invested in Eligible Investments held in trust by the Servicer or a Subservicer as described above and
maturing, or be subject to redemption or withdrawal, no later than the date on which such funds are required to be withdrawn, and in no event later than 45 days after the date of investment; withdrawals of amounts from the Servicing Accounts may be
made only to effect timely payment of taxes, assessments, insurance premiums, or comparable items, to reimburse the Servicer or a Subservicer for any advances made with respect to such items, to refund to any Mortgagors any sums as may be determined
to be overages, to pay interest, if required, to Mortgagors on balances in the Servicing Accounts or to clear and terminate the Servicing Accounts at or any time after the termination of this Agreement. Amounts received from Mortgagors for deposit
into the Servicing Accounts shall be deposited in the Servicing Accounts by the Servicer within two days of receipt. The Servicer shall advance from its own funds amounts needed to pay items payable from the Servicing Accounts if the Servicer
reasonably believes that such amounts are recoverable from the related Mortgagor. The Servicer shall comply with all laws relating to the Servicing Accounts, including laws relating to payment of interest on the Servicing Accounts. If interest
earned by the Servicer on the Servicing Accounts is not sufficient to pay required interest on the Servicing Accounts, the Servicer shall pay the difference from its own funds. The Servicing Accounts shall not be the property of the Trust.

  
 Section 3.09 Access to Certain Documentation
and Information Regarding the Mortgage Loans. 
  
 The
Servicer shall provide, and shall cause any Subservicer to provide, to the Trustee, access to the documentation regarding the related Mortgage Loans and REO Property and to the Certificateholders, the FDIC, and the supervisory agents and examiners
of the FDIC (to which the Custodian and Trustee shall also provide) access to the documentation regarding the related Mortgage Loans required by applicable regulations, such access being afforded without charge but only upon reasonable request and
during normal business hours at the offices of the Servicer or the Subservicers that are designated by these entities; provided, however, that, unless otherwise required by law, the Servicer and any Subservicer shall not be required to provide
access to such documentation if the provision thereof would violate the legal right to privacy of any Mortgagor; provided, further, however, that the Trustee shall coordinate its request for such access so as not to impose an unreasonable burden on,
or cause an unreasonable interruption of, the business of the Servicer or any Subservicer. The Servicer, the Subservicers, the Trustee and the Custodian shall allow representatives of the above entities to photocopy any of the documentation and
shall provide equipment for that purpose at a charge that covers their own actual out-of-pocket costs. 
  

 20 

 Section 3.10 [Reserved]. 
  
 Section 3.11 Maintenance of Hazard Insurance and Fidelity Coverage. 
  
 (a) The Servicer shall maintain and keep, or cause each Subservicer to
maintain and keep, with respect to each Mortgage Loan and each REO Property, in full force and effect hazard insurance (fire insurance with extended coverage) equal to at least the lesser of the Principal Balance of the Mortgage Loan or the current
replacement cost of the Mortgaged Property, and containing a standard mortgagee clause, provided, however, that the amount of hazard insurance may not be less than the amount necessary to prevent loss due to the application of any co-insurance
provision of the related policy. Unless applicable state law requires a higher deductible, the deductible on such hazard insurance policy may be no more than $1,500 or 1% of the applicable amount of coverage, whichever is less. In the case of a
condominium unit or a unit in a planned unit development, the required hazard insurance shall take the form of a multi-peril policy covering the entire condominium project or planned unit development, in an amount equal to at least 100% of the
insurable value based on replacement cost. If the Servicer shall obtain and maintain a blanket policy consistent with its general mortgage servicing activities insuring against hazard losses on all of the Mortgage Loans, it shall conclusively be
deemed to have satisfied its obligations as set forth in this Section 3.11(a), it being understood and agreed that such policy may contain a deductible clause, in which case the Servicer shall, in the event that there shall not have been
maintained on the related Mortgaged Property a policy complying with this Section 3.11(a) and there shall have been a loss which would have been covered by such policy, deposit in the Collection Account the amount not otherwise payable under
the blanket policy because of such deductible clause without any right of reimbursement. Any such deposit by the Servicer shall be made on the last Business Day of the Due Period in the month in which payments under any such policy would have been
deposited in the Collection Account. In connection with its activities as servicer of the Mortgage Loans, the Servicer agrees to present, on behalf of itself, the Trust, and the Trustee, claims under any such blanket policy. 
  
 (b) Any amounts collected by the Servicer or a Subservicer under any such
hazard insurance policy (other than amounts to be applied to the restoration or repair of the Mortgaged Property or amounts released to the Mortgagor in accordance with the Servicer’s or a Subservicer’s normal servicing procedures, the
Mortgage Note, the Mortgage or applicable law) shall be deposited in the Collection Account. 
  
 (c) Any cost incurred by a Servicer or a Subservicer in maintaining any such individual hazard insurance policies shall not be added to the amount owing under the Mortgage Loan for the purpose of calculating monthly
distributions to Certificateholders, notwithstanding that the terms of the Mortgage Loan so permit. Such costs of maintaining individual hazard insurance policies shall be recoverable by the Servicer or a Subservicer out of related late payments by
the Mortgagor or out of Insurance Proceeds or Liquidation Proceeds or by the Servicer from the Repurchase Price, to the extent permitted by Section 3.07. 
  

(d) No earthquake or other additional insurance is to be required of any Mortgagor or maintained on property acquired with respect to a Mortgage other
than pursuant to such applicable laws and regulations as shall at any time be in force and shall require such additional insurance. When, at the time of origination of the Mortgage Loan or at any subsequent 
  

 21 

 time, the Mortgaged Property is located in a federally designated special flood hazard area, the Servicer shall ensure
that, with respect to such Mortgage Loan or such REO Property, flood insurance is acquired (to the extent available and in accordance with mortgage servicing industry practice). Such flood insurance shall cover the Mortgaged Property, including all
items taken into account in arriving at the Appraised Value on which the Mortgage Loan was based, and shall be in an amount equal to the lesser of (i) the Principal Balance of the related Mortgage Loan and (ii) the minimum amount required
under the terms of coverage to compensate for any damage or loss on a replacement cost basis, but not more than the maximum amount of such insurance available for the related Mortgaged Property under either the regular or emergency programs of the
National Flood Insurance Program (assuming that the area in which such Mortgaged Property is located is participating in such program). Unless applicable state law requires a higher deductible, the deductible on such flood insurance may not exceed
$1,500 or 1% of the applicable amount of coverage, whichever is less. 
  
 (e) If insurance complying with Subsections 3.11 (a) and (d) has not been maintained and there shall have been a loss which would have been covered by such insurance had it been maintained, the Servicer shall pay, or cause the
related Subservicer to pay, for any necessary repairs without any right of reimbursement. 
  
 (f) The Servicer shall present, or cause the related Subservicer to present, claims under any related hazard insurance or flood insurance policy. 
  
 (g) The Servicer shall obtain and maintain at its own expense, and shall cause each Subservicer to obtain and maintain at
its own expense, and for the duration of this Agreement, a blanket fidelity bond and an errors and omissions insurance policy covering the Servicer’s and such Subservicer’s officers, employees and other persons acting on its behalf in
connection with its activities under this Agreement. The amount of coverage shall correspond with the FNMA/FHMLC levels presently maintained by the Servicer. The Servicer shall promptly notify the Trustee of any material change in the terms of such
bond or policy. The Servicer shall provide annually to the Trustee a certificate of insurance that such bond and policy are in effect. If any such bond or policy ceases to be in effect, the Servicer shall, to the extent possible, give the Trustee
ten days’ notice prior to any such cessation and shall use its reasonable best efforts to obtain a comparable replacement bond or policy, as the case may be. Any amounts relating to the Mortgage Loans collected under such bond or policy shall
be deposited in the Collection Account. 
  
 Section 3.12
Due-on-Sale Clauses; Assumption Agreements. 
  
 (a) In
any case in which the Servicer is notified by any Mortgagor or Subservicer that a Mortgaged Property relating to a Mortgage Loan has been or is about to be conveyed by the Mortgagor, the Servicer shall enforce, or shall instruct such Subservicer to
enforce, any due-on-sale clause contained in the related Mortgage to the extent permitted under the terms of the related Mortgage Note and by applicable law. The Servicer or the related Subservicer may repurchase a Mortgage Loan at the Repurchase
Price when the Servicer requires acceleration of the Mortgage Loan, but only if the Servicer is satisfied, as evidenced by an Officers’ Certificate delivered to the Trustee, that such Mortgage Loan is in default or default is reasonably
foreseeable. If the Servicer reasonably believes that such due-on-sale clause 
  

 22 

 cannot be enforced under applicable law or if the Mortgage Loan does not contain a due-on-sale clause, the Servicer is
authorized, and may authorize any Subservicer, to consent to a conveyance subject to the lien of the Mortgage, and, with the consent of the MI Insurer, if applicable, to take or enter into an assumption agreement from or with the Person to whom such
property has been or is about to be conveyed, pursuant to which such Person becomes liable under the related Mortgage Note and unless prohibited by applicable state law, on condition, however, that the related Mortgage Loan shall continue to be
covered by a hazard policy. In connection with any such assumption, no material term of the related Mortgage Note may be changed. The Servicer shall notify the Custodian and Trustee, whenever possible, before the completion of such assumption
agreement, and shall forward to the Custodian the original copy of such assumption agreement, which copy shall be added by the Custodian to the related Mortgage File and which shall, for all purposes, be considered a part of such Mortgage File to
the same extent as all other documents and instruments constituting a part thereof. 
  
 (b) Notwithstanding the foregoing paragraph or any other provision of this Agreement, the Servicer shall not be deemed to be in default, breach or any other violation of its obligations hereunder by reason of any
assumption of a Mortgage Loan by operation of law or any conveyance by the Mortgagor of the related Mortgaged Property or assumption of a Mortgage Loan which the Servicer reasonably believes it may be restricted by law from preventing, for any
reason whatsoever or if the exercise of such right would impair or threaten to impair any recovery under any applicable insurance policy. 
  
 Section 3.13 Realization Upon Defaulted Mortgage Loans. 
  
 (a) The Servicer shall, or shall direct the related Subservicer to, foreclose upon or otherwise comparably convert the
ownership of properties securing any Mortgage Loans that come into and continue in default and as to which no satisfactory arrangements can be made for collection of delinquent payments pursuant to Section 3.06, except that the Servicer shall
not, and shall not direct the related Subservicer to, foreclose upon or otherwise comparably convert a Mortgaged Property if there is evidence of toxic waste or other environmental hazards thereon unless the Servicer follows the procedures in
Subsection (c) below. In connection with such foreclosure or other conversion, the Servicer in conjunction with the related Subservicer, if any, shall use its best reasonable efforts to preserve REO Property and to realize upon defaulted
Mortgage Loans in such manner as to maximize the receipt of principal and interest by the Certificateholders, taking into account, among other things, the timing of foreclosure and the considerations set forth in Subsection 3.13(b). The foregoing is
subject to the proviso that the Servicer shall not be required to expend its own funds in connection with any foreclosure or towards the restoration of any property unless it determines in good faith (i) that such restoration or foreclosure
will increase the proceeds of liquidation of the Mortgage Loan to Certificateholders after reimbursement to itself for such expenses and (ii) that such expenses will be recoverable to it either through Liquidation Proceeds (respecting which it
shall have priority for purposes of reimbursements from the Collection Account pursuant to Section 3.07) or through Insurance Proceeds (respecting which it shall have similar priority). The Servicer shall be responsible for all costs and
expenses constituting Liquidation Expenses incurred by it in any such proceedings; provided, however, that it shall be entitled to reimbursement thereof (as well as its normal servicing compensation) as set forth in Section 3.07. Any income
from or other funds (net of any income taxes) generated by REO Property shall be deemed for purposes of this Agreement to be Liquidation Proceeds. 
  

 23 

 Any subsequent collections with respect to any Liquidated Mortgage Loan shall be deposited to the
Collection Account. For purposes of determining the amount of any Liquidation Proceeds or Insurance Proceeds, or other unscheduled collections, the Servicer may take into account any estimated additional Liquidation Expenses expected to be incurred
in connection with the related defaulted Mortgage Loan. 
  
 In the
event that a Mortgage Loan would be properly classified as a Liquidated Mortgage Loan but for the fact that not all MI Insurance Proceeds claimed under the related MI Policy have been received, the Servicer may, from its own funds, make an advance
(an “MI Claim Payment Advance”) to the Collection Account in an amount not to exceed the claimed amount of such MI Insurance Proceeds not yet received. The Servicer shall not make any MI Claim Payment Advance with respect to a claim
under an MI Policy if an MI Insurer Insolvency Event has occurred and is continuing with respect to the related MI Insurer. In the event that the MI Claim Payment Advance equals the claimed amount on such MI Policy, then upon the deposit of such MI
Claim Payment Advance into the Collection Account the related Mortgage Loan shall be considered a “Liquidated Mortgage Loan.” 
  
 In the event that title to any Mortgaged Property is acquired in foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale shall be
issued to the Trustee and held by the Custodian, who shall hold the same on behalf of Trustee and the Trust in accordance with the Agreement. Notwithstanding any such acquisition of title and cancellation of the related Mortgage Loan, such Mortgaged
Property shall (except as otherwise expressly provided herein) be considered to be an outstanding Mortgage Loan held as an asset of the Trust until such time as such property shall be sold. 
  
 (b) The Servicer shall not acquire any real property (or any personal
property incident to such real property) on behalf of the Trust Fund except in connection with a default or reasonably foreseeable default of a Mortgage Loan. In the event that the Servicer acquires any real property (or personal property incident
to such real property) on behalf of the Trust Fund in connection with a default or imminent default of a Mortgage Loan, such property shall be disposed of by the Servicer on behalf of the Trust Fund as soon as reasonably practicable, but in no event
later than three years after its acquisition on behalf of the Trust Fund. 
  
 (c) With respect to any Mortgage Loan as to which the Servicer or a Subservicer has received notice of, or has actual knowledge of, the presence of any toxic or hazardous substance on the Mortgaged Property, the
Servicer shall promptly notify the Trustee, and shall act in accordance with any such directions and instructions provided by the Trustee. If the Trustee has not provided directions and instructions to the Servicer in connection with any such
Mortgage Loan within 5 days of a request by the Servicer for such directions and instructions, then the Servicer shall take such action as it deems to be in the best economic interest of the Trust Fund (other than proceeding against the Mortgaged
Property) and is hereby authorized at such time as it deems appropriate to release such Mortgaged Property from the lien of the related Mortgage. The parties hereto acknowledge that the Servicer shall not obtain on behalf of the Trust a deed as a
result or in lieu of foreclosure, and shall not otherwise acquire 
  

 24 

 possession of or title to, or commence any proceedings to acquire possession of or title to, or take any other action
with respect to, any Mortgaged Property, if the Trust could reasonably be considered to be a responsible party for any liability arising from the presence of any toxic or hazardous substance on the Mortgaged Property. 
  
 Section 3.14 Custodian to Cooperate; Release of Mortgage
Files. 
  
 (a) Upon payment in full of any Mortgage Loan, the
Servicer will immediately notify the Custodian and the Trustee by a certification signed by a Servicing Officer (which certification shall include a statement to the effect that all amounts received in connection with such payment which are required
to be deposited in the Collection Account have been so deposited) and shall request delivery to the Servicer or Subservicer, as the case may be, of the Mortgage File. Upon receipt of such certification and request, the Custodian, on behalf of the
Trustee, shall promptly cause to be released the related Mortgage File to the Servicer or Subservicer and the Trustee shall execute and deliver to the Servicer, without recourse, the request for reconveyance, deed of reconveyance or release or
satisfaction of mortgage or such instrument releasing the lien of the Mortgage (furnished by the Servicer), together with the Mortgage Note with written evidence of cancellation thereon. 
  
 (b) From time to time as is appropriate, for the servicing or foreclosure of any Mortgage Loan or collection under an
insurance policy, the Servicer may deliver to the Trustee and the Custodian a Request for Release signed by a Servicing Officer on behalf of the Servicer in substantially the form attached as Exhibit E hereto. Upon receipt of the Request for
Release, the Custodian, on behalf of the Trustee, shall deliver the Mortgage File or any document therein to the Servicer or Subservicer, as the case may be, as bailee for the Trustee. 
  
 (c) The Servicer shall cause each Mortgage File or any document therein released pursuant to Subsection 3.14(b) to be
returned to the Custodian when the need therefor no longer exists, and in any event within 21 days of the Servicer’s receipt thereof, unless the Mortgage Loan has become a Liquidated Mortgage Loan and the Liquidation Proceeds relating to the
Mortgage Loan have been deposited in the Collection Account or such Mortgage File is being used to pursue foreclosure or other legal proceedings. Prior to return of a Mortgage File or any document to the Custodian, the Servicer, the related insurer
or Subservicer to whom such file or document was delivered shall retain such file or document in its respective control as bailee for the Custodian, on behalf of the Trustee, unless the Mortgage File or such document has been delivered to an
attorney, or to a public trustee or other public official as required by law, to initiate or pursue legal action or other proceedings for the foreclosure of the Mortgaged Property either judicially or non-judicially, and the Servicer has delivered
to the Custodian and the Trustee, a certificate of a Servicing Officer certifying as to the name and address of the Person to which such Mortgage File or such document was delivered and the purpose or purposes of such delivery. If a Mortgage Loan
becomes a Liquidated Mortgage Loan, the Custodian, on behalf of the Trustee, shall deliver the Request for Release with respect thereto to the Servicer upon deposit of the related Liquidation Proceeds in the Collection Account. 
  
 (d) The Trustee shall execute and deliver or cause to be executed and
delivered to the Servicer any court pleadings, requests for trustee’s sale or other documents necessary (i) for the foreclosure or trustee’s sale with respect to a Mortgaged Property; (ii) for 
  

 25 

 any legal action brought to obtain judgment against any Mortgagor on the Mortgage Note or Mortgage; (iii) to obtain
a deficiency judgment against the Mortgagor; or (iv) to enforce any other rights or remedies provided by the Mortgage Note or Mortgage or otherwise available at law or equity. Together with such documents or pleadings the Servicer shall deliver
to the Trustee a certificate of a Servicing Officer in which it requests the Trustee to execute or cause to be executed the pleadings or documents. The certificate shall certify and explain the reasons for which the pleadings or documents are
required. It shall further certify that the Trustee’s execution and delivery of the pleadings or documents will not invalidate any insurance coverage under the insurance policies or invalidate or otherwise affect the lien of the Mortgage,
except for the termination of such a lien upon completion of the foreclosure or trustee’s sale. 
  
 Section 3.15 Servicing Compensation. 
  
 (a) As compensation for its activities hereunder, the Servicer shall be entitled to receive the Servicing Fee from full payments of accrued interest on
each Mortgage Loan. The Servicer shall be solely responsible for paying any and all fees with respect to a Subservicer, and the Trustee and the Trust Fund shall not bear any fees, expenses or other costs directly associated with any Subservicer.

  
 (b) The Servicer may retain additional servicing compensation
in the form of late payment charges, to the extent such charges are collected from the related Mortgagors and investment earnings on the Collection Account. The Servicer shall be required to pay all expenses it incurs in connection with servicing
activities under this Agreement and shall not be entitled in connection with servicing activities under this Agreement to reimbursement except as provided in this Agreement. Expenses to be paid by the Servicer without reimbursement under this
Subsection 3.15(b) shall include payment of the expenses of the accountants retained pursuant to Section 3.17. 
  
 Section 3.16 Annual Statements of Compliance. 
  

Within 90 days after December 31 of each year, the Servicer at its own expense shall deliver to the Trustee and the Rating Agencies, an
Officers’ Certificate stating, as to the signer thereof, that (i) a review of the activities of the Servicer during the preceding calendar year and of performance under this Agreement has been made under such officer’s supervision,
(ii) to the best of such officer’s knowledge, based on such review, the Servicer has fulfilled its obligations under this Agreement in all material respects for such year, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature and status thereof including the steps being taken by the Servicer to remedy such default; (iii) a review of the activities of each Subservicer during the
Subservicer’s most recently ended calendar year and its performance under its Subservicing Agreement has been made under such officer’s supervision; and (iv) to the best of the Servicing Officer’s knowledge, based on his review
and the certification of an officer of the Subservicer (unless the Servicing Officer has reason to believe that reliance on such certification is not justified), either each Subservicer has performed and fulfilled its duties, responsibilities and
obligations under this Agreement and its Subservicing Agreement in all material respects throughout the year, or, if there has been a default in performance or fulfillment of any such duties, responsibilities or obligations, specifying the nature
and status of each such default known to the Servicing Officer. 
  

 26 

 Copies of such statements shall be provided by the Servicer to the Certificateholders upon request or by the Trustee at
the expense of the Servicer should the Servicer fail to provide such copies. 
  
 Section 3.17 Annual Independent Public Accountants’ Servicing Report. 
  
 (a) Within 90 days after December 31 of each year, the Servicer, at its expense, shall cause a firm of independent public accountants who are members
of the American Institute of Certified Public Accountants to furnish a statement to the Servicer, which will be provided to the Trustee, and the Rating Agencies, to the effect that, in connection with the firm’s examination of the
Servicer’s financial statements as of the end of such calendar year, nothing came to their attention that indicated that the Servicer was not in compliance with Sections 3.06, 3.07 and 3.08 except for (i) such exceptions as such firm
believes to be immaterial and (ii) such other exceptions as are set forth in such statement. 
  
 (b) Within 90 days after December 31 of each year, the Servicer, at its expense, shall, and shall cause each Subservicer to cause, a nationally
recognized firm of independent certified public accountants to furnish to the Servicer or such Subservicer, as the case may be, a report stating that (i) it has obtained a letter of representation regarding certain matters from the management
of the Servicer or such Subservicer, as the case may be, which includes an assertion that the Servicer or such Subservicer, as the case may be, has complied with certain minimum mortgage loan servicing standards identified in the Uniform Single
Attestation Program for Mortgage Bankers established by the Mortgage Bankers Association of America with respect to the servicing of residential mortgage loans during the most recently completed calendar year and (ii) on the basis of an
examination conducted by such firm in accordance with standards established by the American Institute of Certified Public Accountants, such representation is fairly stated in all material respects, subject to such exceptions and other qualifications
that may be appropriate. Immediately upon receipt of such report, the Servicer shall or shall cause each Subservicer to furnish a copy of such report to the Trustee and the Rating Agencies. 
  
 Section 3.18 Optional Purchase of Defaulted Mortgage
Loans. 
  
 Subject to the limitations set forth in
Section 10.02 hereof, the Servicer shall have the right, but not the obligation, to purchase any Mortgage Loan which becomes 90 days or more delinquent at a purchase price equal to the Repurchase Price (a) within 29 days after the date the
Mortgage Loan becomes 90 days delinquent or (b) on the date the Servicer liquidates the related Mortgaged Property. The procedure for such purchase shall be the same as for a repurchase made by the Seller under the Purchase Agreement. With
respect to any Mortgage Loans being purchased pursuant to this Section 3.18, the Servicer shall purchase the most delinquent Mortgage Loans before purchasing other less delinquent Mortgage Loans. The Servicer or the related Subservicer may
purchase a Mortgage Loan at the Repurchase Price when the Servicer requires acceleration of the Mortgage Loan, but only if the Servicer is satisfied, as evidenced by an Officers’ Certificate delivered to the Trustee, that such Mortgage Loan is
in default or default is reasonably foreseeable. 
  

 27 

 Section 3.19 Information Required by the Internal Revenue Service Generally and Reports of
Foreclosures and Abandonments of Mortgaged Property. 
  
 The
Servicer shall prepare and deliver all federal and state information reports when and as required by all applicable state and federal income tax laws. In particular, with respect to the requirement under Section 6050J of the Code to the effect
that the Servicer or Subservicer shall make reports of foreclosures and abandonments of any mortgaged property, the Servicer or Subservicer shall file reports relating to each instance occurring during the previous calendar year in which the
Servicer (i) acquires an interest in any Mortgaged Property through foreclosure or other comparable conversion in full or partial satisfaction of a Mortgage Loan, or (ii) knows or has reason to know that any Mortgaged Property has been
abandoned. The reports from the Servicer or Subservicer shall be in form and substance sufficient to meet the reporting requirements imposed by Section 6050J, Section 6050H (reports relating to mortgage interest received) and
Section 6050P of the Code (reports relating to cancellation of indebtedness). 
  
 Section 3.20 [Reserved]. 
  
 Section 3.21 [Reserved]. 
  
 Section 3.22 Servicing and Administration of the MI Policies. 
  
 (a) The Servicer shall take all such actions on behalf of the Trustee as are necessary to service, maintain and administer the MI Policies and to perform
the Trustee’s obligations and enforce the Trustee’s rights under the MI Policies, which actions shall conform to the standards of an institution prudently administering MI Policies for its own account. Except as expressly set forth herein,
the Servicer shall have full authority on behalf of the Trust to do anything it reasonably deems appropriate or desirable in connection with the servicing, maintenance and administration of the MI Policies. The Servicer shall make its best
reasonable efforts to file all insured claims under the MI Policies and collect from the MI Insurer all Insurance Proceeds due to the Trustee under the MI Policies. The Servicer shall not take, or permit any subservicer to take, any action which
would result in non-coverage under any applicable MI Policy of any loss which, but for the actions of the Servicer or Subservicer, would have been covered thereunder. To the extent coverage is available, the Servicer shall keep or cause to be kept
in full force and effect each such MI Policy for the life of the Mortgage Loan; provided, however, that if a MI Insurer Insolvency Event has occurred and is continuing, the Servicer may terminate the MI Policy on any Mortgage Loan that is not then
past due. The Servicer shall cooperate with the MI Insurer and shall use its best efforts to furnish all reasonable aid, evidence and information in the possession of the Servicer or to which the Servicer has access with respect to any Mortgage
Loan. 
  
 (b) The Servicer shall deposit into the Collection
Account pursuant to Section 3.06(d)(v) hereof all MI Insurance Proceeds received from the MI Insurer under the terms of the MI Policies. The Servicer shall withdraw from the Collection Account and pay to the MI Insurer pursuant to
Section 3.07(a)(xii) hereof, the monthly MI Premiums due to the MI Insurer in accordance with the terms of the MI Insurance Agreements. In the event that the Trustee has actual knowledge that any MI Premiums have in fact not been paid, the
Trustee shall distribute such amounts (in such amounts as specified by the MI Insurer in writing) to the MI Insurer from the Interest Remittance Amount for the related Mortgage Loans, at the same level of priority as the Trustee Fee. 
  

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 (c) Notwithstanding the provisions of Subsection 3.22(a) and (b), the Servicer shall not take any action
in regard to the MI Policies inconsistent with the interests of the Trustee or the Certificateholders or with the rights and interests of the Trustee or the Certificateholders under this Agreement; provided, however, that payments of the monthly MI
Premiums to the MI Insurer pursuant to Subsection 3.22(b) above and Section 3.07(a)(xii) hereof shall be deemed not to be inconsistent with such interests. 
  
 (d) The Trustee shall furnish the Servicer with any powers of attorney and other documents in form as provided to it
necessary or appropriate to enable the Servicer to service and administer the MI Policies; provided, however, that the Trustee shall not be liable for the actions of the Servicer under such powers of attorney. 
  
 (e) If at any time during the term of this Agreement, a MI Insurer Insolvency
Event has occurred and is continuing, the Servicer agrees to review, not less often than monthly, the financial condition of the related MI Insurer with a view towards determining whether recoveries under the MI Policy are jeopardized for reasons
related to the financial condition of the related MI Insurer. In such event, the Servicer may obtain an additional MI Policy or a replacement MI Policy, the MI Premiums on which would be paid by the Servicer from the Collection Account pursuant to
Section 3.07(a)(xii) hereof. 
  
 (f) The Servicer shall
comply with all other terms, conditions and obligations set forth in the MI Policies. 
  
 Section 3.23 Determination Date Reports. 
  
 On the second Business Day following each Determination Date, the Servicer shall deliver to the Trustee a report, prepared as of the close of business on the Determination Date (the “Determination Date
Report”), and shall forward to the Trustee in the form of computer readable electromagnetic tape or disk a copy of such report in a format acceptable to the Trustee. The Determination Date Report and any written information supplemental
thereto shall include such information with respect to the Mortgage Loans that is reasonably available to the Servicer and that is required by the Trustee for purposes of making the calculations and providing the reports referred to in this
Agreement, as set forth in written specifications or guidelines issued by the Trustee from time to time. Such information shall include the aggregate amounts required to be withdrawn from the Collection Account and deposited into the Distribution
Account pursuant to Section 3.07. Such information shall also include (a) the number of Mortgage Loans that prepaid in the previous month; (b) the loan balance of each such Mortgage Loan; (c) whether a prepayment penalty was
applied to such Mortgage Loan; and (d) the amount of prepayment penalty with respect to each such Mortgage Loan. The Servicer agrees to cooperate with the Trustee in providing all information as is reasonably requested by the Trustee to prepare
the reports required under the Agreement. 
  

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 The determination by the Servicer of such amounts shall, in the absence of obvious error, be
presumptively deemed to be correct for all purposes hereunder and the Trustee shall be fully protected in relying upon the same without any independent check or verification. 
  
 Section 3.24 Advances. 
  
 If any Monthly Payment (together with any advances from the Subservicers) on a Mortgage Loan that was due on the immediately
preceding Due Date and delinquent on the Determination Date is delinquent other than as a result of application of the Relief Act, the Servicer will deposit in the Collection Account not later than the Servicer Remittance Date immediately preceding
the related Distribution Date an amount equal to such deficiency net of the related Servicing Fee for such Mortgage Loan, except to the extent the Servicer determines any such advance to be nonrecoverable from Liquidation Proceeds, Insurance
Proceeds or future payments on such Mortgage Loan. Subject to the foregoing and in the absence of such a determination, the Servicer shall continue to make such advances through the date that the related Mortgaged Property has, in the judgment of
the Servicer, been completely liquidated. 
  
 The Servicer may
fund an Advance from its own corporate funds, advances made by any subservicer or funds held in the Collection Account for future payment or withdrawal. 
  
 Advances made from funds held in the Collection Account may be made by the Servicer from subsequent collections of principal and interest received on
other Mortgage Loans and deposited into the Collection Account. Advances made from the Collection Account are not limited to subsequent collections of principal and interest received on the delinquent Mortgage Loan with respect to which an Advance
is made. If on the Servicer Remittance Date prior to any Distribution Date funds in the Collection Account are less than the amount required to be paid to the Certificateholders on such Distribution Date, then the Servicer shall deposit its own
funds into the Distribution Account in the amount of the lesser of (i) any unreimbursed Advances previously made by the Servicer with funds held in the Collection Account or (ii) the shortfall in the Collection Account, provided, however,
that in no event shall the Servicer deposit into the Collection Account an amount that is less than any shortfall in the Collection Account attributable to delinquent payments on Mortgage Loans which the Servicer deems to be recoverable and which
has not been covered by an Advance from the Servicer’s own corporate funds or any subservicer’s funds. If applicable, on the Servicer Remittance Date preceding each Distribution Date, the Servicer shall present an Officers’
Certificate to the Trustee (i) stating that the Servicer elects not to make an Advance in a stated amount and (ii) detailing the reason it deems the advance to be nonrecoverable. 
  
 Section 3.25 Compensating Interest Payments. 

 
 The Servicer shall deposit in the Collection Account not later than the
Servicer Remittance Date preceding the Distribution Date an amount equal to the Compensating Interest related to the related Determination Date. The Servicer shall not be entitled to any reimbursement of any Compensating Interest payment.

  

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 Section 3.26 Advance Facility. 
  
 (a) The Servicer on behalf of the Trust Fund, is hereby authorized to enter
into a facility (such an arrangement, an “Advance Facility”) with any Person which provides that such Person (an “Advancing Person”) may fund Advances and/or Servicing Advances under this Agreement, although no such
facility shall reduce or otherwise affect the Servicer’s obligation to fund such Advances and/or Servicing Advances. No consent of the Trustee, Certificateholders or any other party shall be required before the Servicer may enter into an
Advance Facility nor shall the Trustee or the Certificateholders be a third party beneficiary of any obligation of an Advancing Person to the Servicer. If the Servicer enters into an Advance Facility, the Servicer and the related Advancing Person
shall deliver to the Trustee at the address set forth in Section 12.05 hereof a written notice (an “Advance Facility Notice”) (in the form attached hereto as Exhibit L), stating (a) the identity of the Advancing Person and
(b) the identity of the Person (the “Servicer’s Assignee”) that will, subject to Section 3.26(b) hereof, have the right to make withdrawals from the Collection Account pursuant to Section 3.07 hereof to reimburse
previously unreimbursed Advances and/or Servicing Advances (“Advance Reimbursement Amounts”). If the Servicer enters into such an Advance Facility pursuant to this Section 3.26, the Trustee shall execute the acknowledgment of
the Advance Facility Notice, as prepared by the Servicer confirming its receipt of written notice of the existence of such Advance Facility. To the extent that an Advancing Person purchases or funds any Advance or any Servicing Advance and provides
the Trustee with written notice (in the form attached hereto as Exhibit L) acknowledged by the Servicer that such Advancing Person is entitled to reimbursement directly from the Trustee pursuant to the terms of the Advance Facility, such Advancing
Person shall be entitled to receive reimbursement pursuant to this Agreement for such amount to the extent provided in Section 3.26(b). Such notice from the Advancing Person must specify the amount of the reimbursement, the Section of this
Agreement that permits the applicable Advance or Servicing Advance to be reimbursed, the section(s) of the Advance Facility that entitle the Advancing Person to request reimbursement from the Trustee, on behalf of the Trust Fund, rather than the
Servicer, the Advancing Person’s wire transfer instructions, and include the Servicer’s acknowledgment thereto or proof of an Event of Default under the Advance Facility. The Trustee shall have no duty or liability with respect to any
calculation of any reimbursement to be paid to an Advancing Person and shall be entitled to rely without independent investigation on the Advancing Person’s notice provided pursuant to this Section 3.26. An Advancing Person whose
obligations hereunder are limited to the funding of Advances and/or Servicing Advances shall not be required to meet the qualifications of a Sub-Servicer pursuant to Section 6.06 hereof. 
  
 (b) Notwithstanding the foregoing, and for the avoidance of doubt,
(i) the Servicer and/or the Servicer’s Assignee shall only be entitled to reimbursement of Advance reimbursement amounts hereunder from withdrawals from the Collection Account pursuant to Section 3.07 of this Agreement and shall not
otherwise be entitled to make withdrawals or receive amounts that shall be deposited in the Distribution Account, and (ii) none of the Trustee or the Certificateholders shall have any right to, or otherwise be entitled to, receive any Advance
reimbursement amounts to which the Servicer or Servicer’s Assignee, as applicable, shall be entitled pursuant to Section 3.07 hereof. An Advance Facility may be terminated by the joint written direction of the Servicer and the related
Advancing Person. Written notice of such termination shall be delivered to the Trustee in the manner set forth in Section 12.05 hereof. None of the Company or the Trustee shall, as a result of the existence of any Advance Facility, 

 

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 have any additional duty or liability with respect to the calculation or payment of any Advance reimbursement amount,
nor, as a result of the existence of any Advance Facility, shall the Company or the Trustee have any additional responsibility to track or monitor the administration of the Advance Facility or the payment of Advance reimbursement amounts to the
Servicer’s Assignee. The Servicer shall indemnify the Company, the Trustee, any successor Servicer and the Trust Fund for any claim, loss, liability or damage resulting from any claim by the related Advancing Person, except to the extent that
such claim, loss, liability or damage resulted from or arose out of negligence, recklessness or willful misconduct on the part of the Company, the Trustee or any successor Servicer, as the case may be, or failure by the successor Servicer or the
Trustee, as the case may be, to remit funds as required by this Agreement or the commission of an act or omission to act by the successor Servicer or the Trustee, as the case may be, and the passage of any applicable cure or grace period, such that
an Event of Default under this Agreement occurs or such entity is subject to termination for cause under this Agreement. The Servicer shall maintain and provide to any successor Servicer and, upon request, the Trustee a detailed accounting on a
loan-by-loan basis as to amounts advanced by, pledged or assigned to, and reimbursed to any Advancing Person. The successor Servicer shall be entitled to rely on any such information provided by the predecessor Servicer, and the successor Servicer
shall not be liable for any errors in such information. 
  
 (c) If
an Advancing Person is entitled to reimbursement for any particular Advance or Servicing Advance as set forth in Section 3.26(a), then the Servicer shall not be permitted to reimburse itself therefor under Section 3.07, but instead the
Servicer shall include such amounts in the applicable remittance to the Trustee made pursuant to Section 3.06(d) to the extent of amounts on deposit in the Collection Account on the related Servicer Remittance Date. The Trustee is hereby
authorized to pay to an Advancing Person reimbursements for Advances and Servicing Advances from the Distribution Account to the same extent the Servicer would have been permitted to reimburse itself for such Advances and/or Servicing Advances in
accordance with Section 3.07, had the Servicer made such Advance or Servicing Advance. 
  
 (d) All Advances and Servicing Advances made pursuant to the terms of this Agreement shall be deemed made and shall be reimbursed on a “first in first out” (FIFO) basis. In the event the Servicer’s
Assignee shall have received some or all of an Advance reimbursement amount related to Advances and/or Servicing Advances that were made by a Person other than such predecessor Servicer or its related Advancing Person in error, then such
Servicer’s Assignee shall be required to remit any portion of such Advance reimbursement amount to each Person entitled to such portion of such Advance reimbursement amount. Without limiting the generality of the foregoing, the Servicer shall
remain entitled to be reimbursed pursuant to Section 3.07 for all Advances and/or Servicing Advances funded by the Servicer to the extent the related Advance reimbursement amounts have not been assigned, sold or pledged to such Advancing Person
or Servicer’s Assignee. 
  
 (e) In the event the Servicer is
terminated pursuant to Section 7.01, the Advancing Person shall succeed to the terminated Servicer’s right of reimbursement set forth in Section 7.02 to the extent of such Advancing Person’s financing of Advances or Servicing
Advances hereunder then remaining unreimbursed. 
  

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 (f) Any amendment to this Section 3.26 or to any other provision of this Agreement that may be
necessary or appropriate to effect the terms of an Advance Facility as described generally in this Section 3.26, including amendments to add provisions relating to a successor Servicer, may be entered into by the Trustee, the Company and the
Servicer without the consent of any Certificateholder, provided such amendment complies with Section 12.01 hereof. All reasonable costs and expenses (including attorneys’ fees) of each party hereto of any such amendment shall be borne
solely by the Servicer. The parties hereto hereby acknowledge and agree that: (a) the Advances and/or Servicing Advances financed by, sold and/or pledged to an Advancing Person under any Advance Facility are obligations owed to the Servicer
payable only from the cash flows and proceeds received under this Agreement for reimbursement of Advances and/or Servicing Advances only to the extent provided herein, and the Trustee and the Trust Fund are not, as a result of the existence of any
Advance Facility, obligated or liable to repay any Advances and/or Servicing Advances financed by the Advancing Person; (b) the Servicer will be responsible for remitting to the Advancing Person the applicable amounts collected by it as
reimbursement for Advances and/or Servicing Advances purchased or funded by the Advancing Person, subject to the provisions of this Agreement; and (c) the Trustee shall not have any responsibility to track or monitor the administration of the
financing arrangement between the Servicer and any Advancing Person. 
  
 ARTICLE IV 
  
 FLOW OF FUNDS 
  
 Section 4.01 Distributions. 
  
 (a) On each Distribution Date, the Trustee, will first distribute the
Prepayment Charges collected on the Group I Mortgage Loans and on the Group II Mortgage Loans during the prior Prepayment Period to the Holders of the Class C Certificates. After making that distribution, the Trustee, shall (based solely on the
information provided to the Trustee by the Servicer pursuant to Section 3.23 hereof) withdraw from the Distribution Account that portion of Available Funds for such Distribution Date consisting of the Interest Remittance Amount for such
Distribution Date, and make the following disbursements and transfers in the order of priority described below, in each case to the extent of the Interest Remittance Amount remaining for such Distribution Date: 
  
 (i) On each Distribution Date, the Trustee, will distribute,
pro-rata from the Group I Interest Remittance Amount and the Group II Interest Remittance Amount, the Trustee Fee and the Custodian Fee which are due on that Distribution Date to the Trustee and Custodian respectively. After making that
distribution, the Trustee will then apply the remaining Interest Remittance Amount to the payment of interest then due on the certificates in the following order of priority: 
  
 (A) first, on each Distribution Date on or prior to the Class I Termination Date, payable from the Group I Interest
Remittance Amount and the Group II Interest Remittance Amount, to the Holders of the Class I Certificates, the Class I Monthly Interest Distributable Amount; 
  

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 (B) second, concurrently, with equal priority of payment: 
  
 (I) payable solely from the Group I Interest Remittance
Amount for that Distribution Date or, to the extent that the Group I Interest Remittance Amount is less than the related aggregate Monthly Interest Distributable Amount for the Class A-1A Certificates, also from the Group II Cross
Collateralization Amount for that Distribution Date, to the Holders of the Class A-1A Certificates, the unpaid portion of the Monthly Interest Distributable Amount for the Class A-1A Certificates; 
  
 (II) payable solely from the Group II Interest Remittance
Amount for that Distribution Date or, to the extent that the Group II Interest Remittance Amount is less than the related aggregate Monthly Interest Distributable Amount for the Class A-2A, Class A-2B, Class A-2C and Class A-2D
Certificates, also from the Group I Cross Collateralization Amount for that Distribution Date, to the Holders of the Class A-2A, Class A-2B, Class A-2C and Class A-2D Certificates, the unpaid portion of the aggregate Monthly
Interest Distributable Amount for the Class A-2A, Class A-2B, Class A-2C and Class A-2D Certificates, pro-rata based on the amounts of interest each such Class is otherwise entitled to on such Distribution Date; 
  
 (C) third, payable from the remaining Group I Interest Remittance
Amount and the remaining Group II Interest Remittance Amount, to the Holders of the Class M-1 Certificates, the Monthly Interest Distributable Amount for the Class M-1 Certificates; 
  
 (D) fourth, payable from the remaining Group I Interest Remittance Amount and the remaining Group II Interest
Remittance Amount, to the Holders of the Class M-2 Certificates, the Monthly Interest Distributable Amount for the Class M-2 Certificates; 
  
 (E) fifth, payable from the remaining Group I Interest Remittance Amount and the remaining Group II Interest Remittance Amount, to the Holders of
the Class M-3 Certificates, the Monthly Interest Distributable Amount for the Class M-3 Certificates; 
  
 (F) sixth, payable from the remaining Group I Interest Remittance Amount and the remaining Group II Interest Remittance Amount, to the Holders of
the Class M-4 Certificates, the Monthly Interest Distributable Amount for the Class M-4 Certificates; 
  
 (G) seventh, payable from the remaining Group I Interest Remittance Amount and the remaining Group II Interest Remittance Amount, to the Holders of
the Class M-5 Certificates, the Monthly Interest Distributable Amount for the Class M-5 Certificates; 
  
 (H) eighth, payable from the remaining Group I Interest Remittance Amount and the remaining Group II Interest Remittance Amount, to the Holders of
the Class M-6 Certificates, the Monthly Interest Distributable Amount for the Class M-6 Certificates; 
  

 34 

 (I) ninth, payable from the remaining Group I Interest Remittance Amount and the remaining Group
II Interest Remittance Amount, to the Holders of the Class M-7 Certificates, the Monthly Interest Distributable Amount for the Class M-7 Certificates; 
  
 (J) tenth, payable from the remaining Group I Interest Remittance Amount and the remaining Group II Interest Remittance Amount, to the Holders of
the Class M-8 Certificates, the Monthly Interest Distributable Amount for the Class M-8 Certificates; 
  
 (K) eleventh, payable from the remaining Group I Interest Remittance Amount and the remaining Group II Interest Remittance Amount, to the Holders
of the Class M-9 Certificates, the Monthly Interest Distributable Amount for the Class M-9 Certificates; 
  
 (L) twelfth, payable from the remaining Group I Interest Remittance Amount and the remaining Group II Interest Remittance Amount, to the Holders of
the Class M-10 Certificates, the Monthly Interest Distributable Amount for the Class M-10 Certificates; 
  
 (M) thirteenth, payable from the remaining Group I Interest Remittance Amount and the remaining Group II Interest Remittance Amount to the Holders
of the Class M-11 Certificates, the Monthly Interest Distributable Amount for the Class M-11 Certificates; 
  
 (N) fourteenth, payable from the remaining Group I Interest Remittance Amount and the remaining Group II Interest Remittance Amount to the Holders
of the Class M-12 Certificates, the Monthly Interest Distributable Amount for the Class M-12 Certificates; 
  
 (O) fifteenth, payable from the remaining Group I Interest Remittance Amount and the remaining Group II Interest Remittance Amount, to the Holders
of the Class C Certificates for the benefit of the Supplemental Interest Trust, the Excess Cashflow (net of any amounts distributed pursuant to Section 4.04(d)(i)), to be distributed pursuant to Sections 4.04 (d)(ii); and 
  
 (P) sixteenth, payable from the remaining Group I Interest Remittance
Amount and the remaining Group II Interest Remittance Amount, to the Holders of the Class R Certificates, any remainder. 
  
 (ii) On each Distribution Date (a) prior to the Crossover Date or (b) on which a Trigger Event is in effect, the Trustee, shall
(based solely on the information provided to the Trustee by the Servicer pursuant to Section 3.23 hereof) withdraw from the Distribution Account that portion of the Available Funds relating to principal plus the Extra Principal Distribution
Amount (to be distributed pursuant to Section 4.04 (d)(i)) for such Distribution Date and make the following disbursements and transfers in the order of priority described below: 
  
 (A) first, concurrently, with equal priority of payment: 
  
 (I) payable solely from the Group I Principal Distribution
Amount, to the Holders of the Class A-1A Certificates, the entire amount of the Group I Principal Distribution Amount, until the Certificate Principal Balance of the Class A-1A Certificates has been reduced to zero; and 
  

 35 

 (II) payable solely from the Group II Principal Distribution Amount, to the Holders of
the Group II Certificates (to be distributed to such Certificates pursuant to Section 4.01(d)), the entire amount of the Group II Principal Distribution Amount, until the aggregate Certificate Principal Balance of the Group II Certificates has
been reduced to zero; 
  
 (B) second, 
  
 (I) if the Certificate Principal Balance of the
Class A-1A Certificates has been reduced to zero, then to the Holders of the Group II Certificates, the amount of any remaining Group I Principal Distribution Amount, until the aggregate Certificate Principal Balance of the Group II
Certificates has been reduced to zero; or 
  
 (II) if the aggregate Certificate Principal Balance of the Group II Certificates has been reduced to zero, then to the Holders of the Class A-1A Certificates, the amount of any remaining Group II Principal Distribution Amount, until
the Certificate Principal Balance of the Class A-1A Certificates has been reduced to zero; 
  
 (C) third, payable from the remaining Group I Principal Distribution Amount and the remaining Group II Principal Distribution Amount, to the
Holders of the Class M-1 Certificates, the entire remaining Principal Distribution Amount until the Certificate Principal Balance of the Class M-1 Certificates has been reduced to zero; 
  
 (D) fourth, payable from the remaining Group I Principal Distribution Amount and the remaining Group II Principal
Distribution Amount, to the Holders of the Class M-2 Certificates, the entire remaining Principal Distribution Amount until the Certificate Principal Balance of the Class M-2 Certificates has been reduced to zero; 
  
 (E) fifth, payable from the remaining Group I Principal Distribution
Amount and the remaining Group II Principal Distribution Amount, to the Holders of the Class M-3 Certificates, the entire remaining Principal Distribution Amount until the Certificate Principal Balance of the Class M-3 Certificates has been reduced
to zero; 
  
 (F) sixth, payable from the remaining Group I
Principal Distribution Amount and the remaining Group II Principal Distribution Amount, to the Holders of the Class M-4 Certificates, the entire remaining Principal Distribution Amount until the Certificate Principal Balance of the Class M-4
Certificates has been reduced to zero; 
  
 (G) seventh,
payable from the remaining Group I Principal Distribution Amount and the remaining Group II Principal Distribution Amount, to the Holders of the Class M-5 Certificates, the entire remaining Principal Distribution Amount until the Certificate
Principal Balance of the Class M-5 Certificates has been reduced to zero; 
  

 36 

 (H) eighth, payable from the remaining Group I Principal Distribution Amount and the remaining
Group II Principal Distribution Amount, to the Holders of the Class M-6 Certificates, the entire remaining Principal Distribution Amount until the Certificate Principal Balance of the Class M-6 Certificates has been reduced to zero; 
  
 (I) ninth, payable from the remaining Group I Principal Distribution
Amount and the remaining Group II Principal Distribution Amount, to the Holders of the Class M-7 Certificates, the entire remaining Principal Distribution Amount until the Certificate Principal Balance of the Class M-7 Certificates has been reduced
to zero; 
  
 (J) tenth, payable from the remaining Group I
Principal Distribution Amount and the remaining Group II Principal Distribution Amount, to the Holders of the Class M-8 Certificates, the entire remaining Principal Distribution Amount until the Certificate Principal Balance of the Class M-8
Certificates has been reduced to zero; 
  
 (K) eleventh,
payable from the remaining Group I Principal Distribution Amount and the remaining Group II Principal Distribution Amount, to the Holders of the Class M-9 Certificates, the entire remaining Principal Distribution Amount until the Certificate
Principal Balance of the Class M-9 Certificates has been reduced to zero; 
  
 (L) twelfth, payable from the remaining Group I Principal Distribution Amount and the remaining Group II Principal Distribution Amount, to the Holders of the Class M-10 Certificates, the entire remaining
Principal Distribution Amount, until the Certificate Principal Balance of the Class M-10 Certificates has been reduced to zero; 
  
 (M) thirteenth, payable from the remaining Group I Principal Distribution Amount and the remaining Group II Principal Distribution Amount to the
Holders of the Class M-11 Certificates, the entire remaining Principal Distribution Amount, until the Certificate Principal Balance of the Class M-11 Certificates has been reduced to zero; 
  
 (N) fourteenth, payable from the remaining Group I Principal
Distribution Amount and the remaining Group II Principal Distribution Amount to the Holders of the Class M-12 Certificates, the entire remaining Principal Distribution Amount, until the Certificate Principal Balance of the Class M-12 Certificates
has been reduced to zero; 
  
 (O) fifteenth, payable from
the remaining Group I Principal Distribution Amount and the remaining Group II Principal Distribution Amount, to the Trustee and the Custodian, pro-rata, any amounts owed to them under the Basic Documents remaining unpaid; 
  
 (P) sixteenth, payable from the remaining Group I Principal
Distribution Amount and the remaining Group II Principal Distribution Amount, to the Servicer, the amount of any reimbursement of indemnification owed to it by the Trust pursuant to Section 6.03 hereof; 
  
 (Q) seventeenth, payable from the remaining Group I Principal
Distribution Amount and the remaining Group II Principal Distribution Amount and any remaining Available Funds relating to principal, to the Holders of the Class C Certificates, for the benefit of the Supplemental Interest Trust, the entire
remaining Principal Remittance Amount up to the Overcollateralization Amount; and 
  

 37 

 (R) eighteenth, payable from the Group I Principal Distribution Amount and the Group II Principal
Distribution Amount, to the Holders of the Class R Certificates, for the benefit of the Supplemental Interest Trust, any remainder. 
  
 (iii) On each Distribution Date (a) on or after the Crossover Date and (b) on which a Trigger Event is not in effect, the
Trustee, shall (based solely on the information provided to the Trustee by the Servicer pursuant to Section 3.23 hereof) withdraw from the Distribution Account that portion of the Available Funds relating to principal plus the Extra Principal
Distribution Amount (to be distributed pursuant to Section 4.04 (d)(i)) for such Distribution Date and make the following disbursements and transfers in the order of priority described below: 
  
 (A) first, concurrently, with equal priority of
payment: 
  
 (I) payable solely from the Group I
Principal Distribution Amount, to the holders of the Class A-1A Certificates, the Group I Certificate Principal Distribution Amount, until the Certificate Principal Balance of the Class A-1A Certificates has been reduced to zero; and

  
 (II) payable solely from the Group II
Principal Distribution Amount, to the Holders of the Group II Certificates (to be distributed to such Certificates pursuant to Section 4.01(d)), the Group II Certificate Principal Distribution Amount, until the aggregate Certificate Principal
Balance of the Group II Certificates has been reduced to zero; 
  
 (B) second, concurrently, with equal priority of payment: 
  
 (I) if the Group I Principal Distribution Amount was insufficient to pay the Group I Certificate Principal Distribution Amount, then
payable from the remaining Group II Principal Distribution Amount, to the holders of the Class A-1A Certificates, the unpaid portion of the Group I Certificate Principal Distribution Amount based on the aggregate unpaid portion of the
Class A Principal Distribution Amount; or 
  
 (II) if the Group II Principal Distribution Amount was insufficient to pay the Group II Certificate Principal Distribution Amount, then payable from the remaining Group I Principal Distribution Amount, to the Holders of the Group II
Certificates (to be distributed to such Certificates pursuant to Section 4.01(d)), the unpaid portion of the Group II Certificate Principal Distribution Amount based on the aggregate unpaid portion of the Class A Principal Distribution
Amount; 
  
 (C) third, payable from the remaining Group I
Principal Distribution Amount and the remaining Group II Principal Distribution Amount, to the Holders of the Class M-1 Certificates, the Class M-1 Principal Distribution Amount, until the Certificate Principal Balance of the Class M-1 Certificates
has been reduced to zero; 
  

 38 

 (D) fourth, payable from the remaining Group I Principal Distribution Amount and the remaining
Group II Principal Distribution Amount, to the Holders of the Class M-2 Certificates, the Class M-2 Principal Distribution Amount, until the Certificate Principal Balance of the Class M-2 Certificates has been reduced to zero; 
  
 (E) fifth, payable from the remaining Group I Principal Distribution
Amount and the remaining Group II Principal Distribution Amount, to the Holders of the Class M-3 Certificates, the Class M-3 Principal Distribution Amount, until the Certificate Principal Balance of the Class M-3 Certificates has been reduced to
zero; 
  
 (F) sixth, payable from the remaining Group I
Principal Distribution Amount and the remaining Group II Principal Distribution Amount, to the Holders of the Class M-4 Certificates, the Class M-4 Principal Distribution Amount, until the Certificate Principal Balance of the Class M-4 Certificates
has been reduced to zero; 
  
 (G) seventh, payable from the
remaining Group I Principal Distribution Amount and the remaining Group II Principal Distribution Amount, to the Holders of the Class M-5 Certificates, the Class M-5 Principal Distribution Amount, until the Certificate Principal Balance of the Class
M-5 Certificates has been reduced to zero; 
  
 (H) eighth,
payable from the remaining Group I Principal Distribution Amount and the remaining Group II Principal Distribution Amount, to the Holders of the Class M-6 Certificates, the Class M-6 Principal Distribution Amount, until the Certificate Principal
Balance of the Class M-6 Certificates has been reduced to zero; 
  
 (I) ninth, payable from the remaining Group I Principal Distribution Amount and the remaining Group II Principal Distribution Amount, to the Holders of the Class M-7 Certificates, the Class M-7 Principal Distribution Amount, until
the Certificate Principal Balance of the Class M-7 Certificates has been reduced to zero; 
  
 (J) tenth, payable from the remaining Group I Principal Distribution Amount and the remaining Group II Principal Distribution Amount, to the Holders of the Class M-8 Certificates, the Class M-8 Principal
Distribution Amount, until the Certificate Principal Balance of the Class M-8 Certificates has been reduced to zero; 
  
 (K) eleventh, payable from the remaining Group I Principal Distribution Amount and the remaining Group II Principal Distribution Amount, to the
Holders of the Class M-9 Certificates, the Class M-9 Principal Distribution Amount, until the Certificate Principal Balance of the Class M-9 Certificates has been reduced to zero; 
  
 (L) twelfth, payable from the remaining Group I Principal Distribution Amount and the remaining Group II Principal
Distribution Amount, to the Holders of the Class M-10 Certificates, the Class M-10 Principal Distribution Amount, until the Certificate Principal Balance of the Class M-10 Certificates has been reduced to zero; 
  
 (M) thirteenth, payable from the remaining Group I Principal
Distribution Amount and the remaining Group II Principal Distribution Amount to the Holders of the Class M-11 Certificates, the Class M-11 Principal Distribution Amount, until the Certificate Principal Balance of the Class M-11 Certificates has been
reduced to zero; 
  

 39 

 (N) fourteenth, payable from the remaining Group I Principal Distribution Amount and the remaining
Group II Principal Distribution Amount to the Holders of the Class M-12 Certificates, the Class M-12 Principal Distribution Amount, until the Certificate Principal Balance of the Class M-12 Certificates has been reduced to zero; 
  
 (O) fifteenth, payable from the remaining Group I Principal
Distribution Amount and the remaining Group II Principal Distribution Amount, to the Trustee and the Custodian, pro-rata, any amounts owed to them under the Basic Documents remaining unpaid; 
  
 (P) sixteenth, payable from the remaining Group I Principal
Distribution Amount and the remaining Group II Principal Distribution Amount, to the Servicer, the amount of any reimbursement of indemnification owed to it by the Trust pursuant to Section 6.03 hereof; 
  
 (Q) seventeenth, payable from the remaining Group I Principal
Distribution Amount and the remaining Group II Principal Distribution Amount and any remaining Available Funds relating to principal, to the Holders of the Class C Certificates, for the benefit of the Supplemental Interest Trust, the entire
remaining Principal Remittance Amount up to the extent of the Overcollateralization Amount; and 
  
 (R) eighteenth, payable from the remaining Group I Principal Distribution Amount and the remaining Group II Principal Distribution Amount and any
remaining Available Funds relating to principal, to the Holders of the Class R Certificates, for the benefit of the Supplemental Interest Trust, any remainder. 
  

(b) Method of Distribution. The Trustee shall make distributions in respect of a Distribution Date to each Certificateholder of record on the
related Record Date (other than as provided in Section 11.01 respecting the final distribution), in the case of Certificateholders of the Regular Certificates, by wire transfer, or upon written request at least five Business Days prior to the
related Distribution Date by check or money order mailed to such Certificateholder at the address appearing in the Certificate Register. Distributions among Certificateholders shall be made in proportion to the Percentage Interests evidenced by the
Certificates held by such Certificateholders. 
  
 (c)
Distributions on Book-Entry Certificates. Each distribution with respect to a Book-Entry Certificate shall be paid to the Depository, which shall credit the amount of such distribution to the accounts of its Depository Participants in
accordance with its normal procedures. Each Depository Participant shall be responsible for disbursing such distribution to the Certificate Owners that it represents and to each indirect participating brokerage firm (a “brokerage firm” or
“indirect participating firm”) for which it acts as agent. Each brokerage firm shall be responsible for disbursing funds to the Certificate Owners that it represents. All such credits and disbursements with respect to a Book-Entry
Certificate are to be made by the Depository and the Depository Participants in accordance with the provisions of the Certificates. None of the Custodian, the Trustee, the Company, the Servicer or the Seller shall have any responsibility therefor
except as otherwise provided by applicable law. 
  

 40 

 (d) All principal amounts distributed to the Group II Certificates shall be distributed as follows:

  

	 	(i)	first, to the Class A-2A Certificates until its Certificate Principal Balance has been reduced to zero, 

  

	 	(ii)	second, after the Certificate Principal Balance of the Class A-2A Certificates has been reduced to zero, to the Class A-2B Certificates until its Certificate Principal
Balance has been reduced to zero, 

  

	 	(iii)	third, after the Certificate Principal Balances of the Class A-2A Certificates and the Class A-2B Certificates have been reduced to zero, to the Class A-2C
Certificates until its Certificate Principal Balance has been reduced to zero, and 

  

	 	(iv)	fourth, after the Certificate Principal Balances of the Class A-2A Certificates, the Class A-2B Certificates and Class A-2C Certificates have been reduced to zero, to
the Class A-2D Certificates until its Certificate Principal Balance has been reduced to zero. 

  
 However, if all of the mezzanine certificates are reduced or written down to zero, the related share of principal amounts from the Group II Mortgage Loans will be
distributed to the Group II Certificates pro rata, based on Certificate Balance until their Certificate Balances are paid to zero. 
  
 Section 4.02 Distribution Account. 
  
 (a) No later than the Closing Date, the Trustee, shall establish and maintain a segregated trust account that is an Eligible Account, which shall be
titled “Distribution Account, JPMorgan Chase Bank, National Association, as Trustee for the registered holders of NovaStar Mortgage Funding Trust 2005-3, Home Equity Loan Asset-Backed Certificates, Series 2005-3” (the “Distribution
Account”). The Trustee shall, promptly upon receipt, deposit in the Distribution Account and retain therein the Interest Remittance Amount and the Principal Remittance Amount remitted on each Servicer Remittance Date to the Trustee by the
Servicer. Funds deposited in the Distribution Account shall be held in trust by the Trustee for the Certificateholders for the uses and purposes set forth herein. 
  
 (b) The Trustee may invest funds deposited in the Distribution Account in Eligible Investments in accordance with the
written direction of the Servicer with a maturity date no later than the Business Day immediately proceeding the date on which such funds are required to be withdrawn from such account pursuant to this Agreement. All income or other gain from such
investments may be released from the Distribution Account and paid to the Servicer. The Servicer shall be obligated to cover losses on such Eligible Investments. If the Trustee does not receive such written investment direction it shall retain the
funds uninvested. 
  

 41 

 (c) Amounts on deposit in the Distribution Account shall be withdrawn by the Trustee as follows:

  
 (i) To fund the distributions described in
Section 4.01 hereof; 
  
 (ii) To withdraw
any amount not required to be deposited in the Distribution Account or deposited therein in error; 
  
 (iii) To clear and terminate the Distribution Account upon the termination of this Agreement, with any amounts remaining on deposit
therein being paid to the Holders of the Class R Certificates; and 
  
 (iv) To distribute any amounts of investment income to the Servicer. 
  
 (d) On each Distribution Date, the Trustee shall distribute all amounts on deposit in the Distribution Account (other than investment income) established
by it to Certificateholders in respect of the Certificates and to such other persons in the order of priority set forth in Section 4.01 hereof. 
  
 Section 4.03 Statements. 
  
 (a) On each Distribution Date, based solely on information provided to it by the Servicer in its Determination Date Report, the Trustee shall prepare and
make available to each Holder of the Regular Certificates, the Swap Counterparties, the Cap Counterparties, the Servicer and the Rating Agencies, a statement as to the distributions made on such Distribution Date: 
  
 (i) the amount of the distribution made on such Distribution
Date to the Holders of each Class of Regular Certificates, separately identified, allocable to principal and the amount of the distribution made to the Holders of the Class C Certificates allocable to Prepayment Charges; 
  
 (ii) the amount of the distribution made on such
Distribution Date to the Holders of each Class of Regular Certificates allocable to interest, separately identified; 
  
 (iii) the Pool Balance of the Group I Mortgage Loans and the Group II Mortgage Loans at the Close of Business at the end of the related
Due Period; 
  
 (iv) the number, aggregate
principal balance, and weighted average Mortgage Rate of the Mortgage Loans as of the related Determination Date and the number and aggregate principal balance of all Subsequent Mortgage Loans added during the preceding Prepayment Period;

  
 (v) the number and aggregate unpaid principal
balance of Mortgage Loans (identified by Group) that (A) were Delinquent (exclusive of Mortgage Loans in bankruptcy or foreclosure and REO Properties) (1) 30 to 59 days, (2) 60 to 89 days and (3) 90 or more days (B) as to
which foreclosure proceedings have 
  

 42 

 been commenced and that (i) are not Delinquent, and (ii) are Delinquent (1) 30 to 59 days,
(2) 60 to 89 days and (3) 90 or more days, (C) are related to a REO Property and that (i) are not Delinquent and (ii) are Delinquent (1) 30 to 59 days, (2) 60 to 89 days and (3) 90 or more days and
(D) are related to a Mortgagor that was subject to a bankruptcy proceeding and that (i) are not Delinquent and (ii) are Delinquent (1) 30 to 59 days, (2) 60 to 89 days and (3) 90 or more days, in each case on a
contractual and bankruptcy legal basis; 
  
 (vi)
the aggregate amount of Principal Prepayments made during the related Prepayment Period; 
  
 (vii) the aggregate amount of Realized Losses incurred during the related Prepayment Period and the cumulative amount of Realized Losses;

  
 (viii) the Certificate Principal Balance of
each class of the Class A Certificates and each class of the Mezzanine Certificates, after giving effect to the distributions made on such Distribution Date; 
  
 (ix) the Unpaid Interest Shortfall Amount, if any, with respect to each class of the Class A
Certificates and each class of the Mezzanine Certificates for such Distribution Date; 
  
 (x) the aggregate amount of any Prepayment Interest Shortfalls for such Distribution Date, to the extent not covered by payments by the
Servicer pursuant to Section 3.25; 
  
 (xi)
the Credit Enhancement Percentage for such Distribution Date; 
  
 (xii) the Available Funds Cap Carryforward Amount for each class of the Class A Certificates and each class of the Mezzanine Certificates (excluding the Class M-11 DSI Certificates and Class M-12 DSI
Certificates) if any, for such Distribution Date and the amount remaining unpaid after reimbursements therefor on such Distribution Date; 
  
 (xiii) the respective Pass-Through Rates applicable to each class of the Class A Certificates and each class of the Mezzanine
Certificates for such Distribution Date and the Pass-Through Rate applicable to each class of the Class A Certificates and each class of the Mezzanine Certificates for the immediately succeeding Distribution Date; 
  
 (xiv) the Supplemental Interest Payment for each Class on
such Distribution Date; 
  
 (xv) the difference
between (x) the sum of (i) the aggregate notional amount of the Swap Agreements and (ii) the aggregate notional amount of the Cap Agreements and (y) the aggregate Certificate Principal Balance of the Class A Certificates and
Mezzanine Certificates on such Distribution Date; 
  

 43 

 (xvi) the Required Overcollateralization Amount for such Distribution Date; 

 
 (xvii) the Excess Cashflow for such Distribution Date;

  
 (xviii) the aggregate amount of Scheduled
Principal Payments made during the related Due Period; 
  
 (xix) the aggregate amount of Principal Prepayments made during the related Due Period in which the related Mortgagor paid the related Mortgage Loan in full; 
  
 (xx) the aggregate amount of Principal Prepayments in part made during the related Prepayment Period;

  
 (xxi) the number and the aggregate principal
balance of all Liquidated Mortgage Loans for the related Prepayment Period; 
  
 (xxii) the aggregate amount of Net Liquidation Proceeds received during the related Prepayment Period; 
  
 (xxiii) the dollar amount of claims made, amounts paid by the MI Insurer in respect of claims made, and premiums due and paid under the MI
Policy; and 
  
 (xxiv) the amount equal to the
difference between (x) the Class I Monthly Interest Distributable Amount and (y) any amounts received by the Supplemental Interest Trust from the Swap Counterparties and Cap Counterparties in respect of the Swap Agreements and Cap
Agreements, respectively; provided, however, that if the resulting number is a negative number, then the absolute value of such negative number. 
  
 In the case of information furnished pursuant to subclauses (i) and (ii) above, the amounts shall be expressed in a separate section of the
report as a dollar amount for each Class for each $1,000 original dollar amount as of the Closing Date. 
  
 The Trustee may, in the absence of manifest error, conclusively rely upon the Determination Date Report of the Servicer in its preparation of the
statement to Certificateholders pursuant to this Section 4.03. 
  
 (b) Within a reasonable period of time after the end of each calendar year, the Trustee shall, upon written request, furnish to each Person who at any time during the calendar year was a Certificateholder of a Regular Certificate, if
requested in writing by such Person, such information as is reasonably necessary to provide to such Person a statement containing the information set forth in subclauses (i) and (ii) above, aggregated for such calendar year or applicable
portion thereof during which such Person was a Certificateholder. Such obligation of the Trustee shall be deemed to have been satisfied to the extent that substantially comparable information shall be prepared and furnished by the Trustee to
Certificateholders pursuant to any requirements of the Code as are in force from time to time. 
  

 44 

 (c) On each Distribution Date, the Trustee shall forward to the Residual Certificateholders a copy of the
reports forwarded to the Regular Certificateholders in respect of such Distribution Date with such other information as the Trustee deems necessary or appropriate. 
  
 (d) Within a reasonable period of time after the end of each calendar year, the Trustee shall deliver to each Person who at
any time during the calendar year was a Residual Certificateholder, if requested in writing by such Person, such information as is reasonably necessary to provide to such Person a statement containing the information provided pursuant to the
previous paragraph aggregated for such calendar year or applicable portion thereof during which such Person was a Residual Certificateholder. Such obligation of the Trustee shall be deemed to have been satisfied to the extent that substantially
comparable information shall be prepared and furnished to Certificateholders by the Trustee pursuant to any requirements of the Code as from time to time in force. 
  
 (e) On each Distribution Date, the Trustee shall post on its website at www.jpmorgan.com\sfr, which posting shall be
accessible to each Certificateholder, the Swap Counterparties, and the Cap Counterparties, the statement prepared pursuant to paragraph (a) of this Section 4.03. Assistance in using the website can be obtained by calling the Trustee’s
customer service desk at 1-877-722-1095. Such parties that are unable to use the website are entitled to have a paper copy mailed to them via first class mail by providing a written request of such to the Trustee at is Corporate Trust office. The
Trustee shall have the right to change the way such statements are distributed in order to make such distribution more convenient and/or accessible to the above parties and the Trustee shall provide timely and adequate notification to all above
parties regarding any such changes. The Trustee shall not have any responsibility to (i) verify information provided by the Servicer to be included in such statement or (ii) include any information required to be included in such statement
if the Servicer has failed to timely produce such information to the Trustee, as required pursuant hereto. 
  
 (f) No later than noon on the second Business Day prior to each Distribution Date, the Trustee will verify that no Notional Amount Test Event is scheduled
to occur on the related Distribution Date. In the event a Notional Amount Test Event would otherwise occur on the related Distribution Date, the Trustee will immediately provide notice in the form of Exhibit J to the appropriate NovaStar entity and
assign in $10,000,000 increments a portion of the related notional amount from the affected Swap Agreement or Cap Agreement on the day immediately preceding that Distribution Date until no Notional Amount Test Event will occur on the related
Distribution Date. The Trustee shall assign the applicable notional amount from the Swap Agreement or Cap Agreement, as applicable, in the priority set forth below. Once such Swap Agreement notional amounts have been assigned back to the appropriate
NovaStar entity, the related Swap Counterparty will have no obligation to, nor interest in, the Supplemental Interest Trust with respect to such notional amounts. Once such Cap Agreement notional amounts have been assigned back to the appropriate
NovaStar entity, the Cap Counterparty will have no obligation to the Supplemental Interest Trust with respect to such notional amounts. Furthermore, no distributions will be made from the Supplemental Interest Trust to the related Swap Counterparty
or Cap Counterparty in respect of notional amounts assigned under this Section 4.03 (f). 
  

 45 

 The Trustee will assign portions of the affected Swap Agreements or Cap Agreements as applicable in the
following order of priority: 
  
 (i) from the
Swap Agreement with the earliest maturity (until no Notional Amount Test Event would have occurred); 
  
 (ii) in the event that two or more Swap Agreements have the same maturity date, which date is the earliest maturity date of the
outstanding Swap Agreements, from the Swap Agreement with the lowest fixed rate (until no Notional Amount Test Event would have occurred); 
  
 (iii) in the event that no Swap Agreements are outstanding, from the Cap Agreement with the earliest maturity date (until no Notional
Amount Test Event would have occurred); and 
  
 (iv) in the event that two or more Cap Agreements have the same maturity date, which date is the earliest maturity date of the outstanding Cap Agreements, from the Cap Agreement with the lowest strike price (until no Notional Amount Test
Event would have occurred). 
  
 Upon the occurrence of a Failed
Reassignment (as defined in the applicable Swap Agreement or Cap Agreement) of all or a portion of the notional balance of a Swap Agreement or Cap Agreement, the affected portion of the notional balance of such Swap Agreement or Cap Agreement shall
be immediately terminated and a Failed Reassignment Termination Payment shall be calculated in accordance with the terms of the applicable Swap Agreement or Cap Agreement and shall be payable in accordance with this Article IV. Any right of a Swap
Counterparty or Cap Counterparty to receive a Failed Reassignment Termination Payment shall be subject to the condition precedent that the Class C Certificates are not then serving as collateral for any outstanding NIM Notes. 
  
 In no event shall the Trustee allow a Notional Amount Test Event to occur on
any Distribution Date. 
  
 Section 4.04
Supplemental Interest Trust; Excess Cashflow. 
  
 (a)
(i) The parties do hereby create and establish a sub-trust of the Trust Fund which shall hold an account, which, no later than the Closing Date, the Trustee shall, at the direction of the Servicer, establish and maintain, as a segregated trust
account that is an Eligible Account, which shall be titled “Supplemental Interest Trust, JPMorgan Chase Bank, National Association, as Trustee for the registered holders of NovaStar Mortgage Funding Trust 2005-3, Home Equity Loan Asset-Backed
Certificates, Series 2005-3.” On the Closing Date, the Trustee shall deposit an amount equal to the Initial Swap Amount (as identified on the settlement statement provided by the Seller) to the Supplemental Interest Trust. The Trustee shall,
promptly upon receipt, deposit in the Supplemental Interest Trust amounts of Excess Cashflow, if any, pursuant to Section 4.01 and each distribution of the Class I Monthly Interest Distributable 
  

 46 

 Amount pursuant to Section 4.01(a)(i)(A). Funds deposited in the Supplemental Interest Trust shall be held in trust
by the Trustee for the Certificateholders for the uses and purposes set forth herein. Neither the Supplemental Interest Trust nor the related Supplemental Interest Account shall be an asset of any of the REMICs created hereunder. 
  
 (ii) (a) On each Distribution Date prior to the Class I
Termination Date, the funds in the Supplemental Interest Trust (as reduced from time to time in accordance with this Section 4.04) will equal the sum of (x) any amounts received under any Swap Agreement or Cap Agreement pursuant to
Section 4.04(e), (y) the Class I Monthly Interest Distributable Amount and (z) any amounts of Excess Cashflow not used to maintain the Required Overcollateralization Amount. 
  
 On each Distribution Date commencing in August 2009, the funds in the
Supplemental Interest Trust (as reduced from time to time in accordance with this Section 4.04) will equal any amounts of Excess Cashflow not used to maintain the Required Overcollateralization Amount. 
  
 (b) The Trustee will invest funds deposited in the Supplemental Interest
Trust as directed in writing by the Servicer in Eligible Investments with a maturity date (i) no later than the Business Day immediately preceding the date on which such funds are required to be withdrawn from such account pursuant to this
Agreement, if a Person other than the Trustee or an Affiliate manages or advises such investment, and (ii) no later than the date on which such funds are required to be withdrawn from such account pursuant to this Agreement, if the Trustee or
an Affiliate manages or advises such investment. If the Trustee does not receive such written investment instructions it shall retain such funds uninvested. All income and gain realized from investment of funds deposited in the Supplemental Interest
Trust shall be credited to such Account, provided, however, that any income and gain realized during the period commencing on the Closing Date and ending on September 25, 2005 will be paid to the Servicer. The Trustee will not be liable for
investment losses on investments selected by the Servicer pursuant to this Section 4.04(b). The Supplemental Interest Trust will not be an asset of any of the REMICs created hereunder. 
  
 (c) On each Distribution Date, the Trustee shall distribute the funds (other
than funds relating to Excess Cashflow and, if such funds are insufficient, any Excess Cashflow remaining after the distributions set forth in Section 4.04(d)(i)) held in the Supplemental Interest Trust as follows: 
  
 (i) first, on each Distribution Date up to and
including the Class I Termination Date, to each Swap Counterparty and each Cap Counterparty, its related Swap Amount (including, on the Distribution Date in September, 2005, each Swap Counterparty’s related portion of the Initial Swap Amount)
or Cap Amount, as applicable, for such Distribution Date; 
  
 (ii) second, any remaining amounts to pay, pro-rata based on Certificate Principal Balance of each class of Class A Certificates and Mezzanine Certificates, the Supplemental Interest Payment for each class
of Class A 
  

 47 

 Certificates and Mezzanine Certificates (in each only up to the amount necessary to pay any such
Supplemental Interest Payment) and provided that (a) the Supplemental Interest Payment actually distributed to the Class M-11 Certificates will be the Non-Derivative Supplemental Interest Payment for the Class M-11 Certificates and the
Supplemental Interest Payment actually distributed to the Class M-12 Certificates shall be the Non-Derivative Supplemental Interest Payment for the Class M-12 Certificates, and (b) the Derivative Supplemental Interest Payment for the Class M-11
Certificates shall be paid to the Holders of the Class M-11 DSI Certificates and the Derivative Supplemental Interest Payment for the Class M-12 Certificates shall be paid to the Holders of the Class M-12 DSI Certificates. 
  
 (iii) third, any remaining amounts to pay each Swap
Counterparty or Cap Counterparty its related Hedge Termination Payment, if any; provided, however, that if such Hedge Termination Payment is a Failed Reassignment Termination Payment, then such Failed Reassignment Termination Payment shall only be
made if such Distribution Date is a Failed Reassignment Termination Payment Due Date; and 
  
 (iv) fourth, any remaining amounts, to the Holders of the Class C Certificates. 
  
 (d) On each Distribution Date, the Trustee shall distribute the funds
relating to Excess Cashflow as follows: 
  
 (i)
prior to any deposit to the Supplemental Interest Trust, to the Holders of the Class or Classes of Certificates then entitled to receive distributions in respect of principal, in an amount equal to any Extra Principal Distribution Amount,
distributable to such holders in the same order of priority as the Group I Principal Distribution Amount and the Group II Principal Distribution Amount as described in Section 4.01; and 
  
 (ii) to the Supplemental Interest Trust to distribute in
accordance with Section 4.04(c). 
  
 (e) On any Distribution
Date on which the Swap Amount for any Swap Agreement is a negative number, the absolute value of such negative number shall be paid by each related Swap Counterparty to the Supplemental Interest Trust. 
  
 (f) In the event that a Swap Counterparty or Cap Counterparty elects to post
collateral as provided in the related Swap Agreement or Cap Agreement, the Trustee shall establish and maintain an Eligible Account with respect to the related Swap Agreement or Cap Agreement (each, a “Hedge Collateral Account”) for
the benefit of such Swap Counterparty or Cap Counterparty, as applicable, and the Certificateholders, as their interests may appear, into which such collateral shall be deposited. The Trustee may or shall (as indicated) make withdrawals from the
related Hedge Collateral Account for the purposes of (i) entering into a substitute swap agreement or cap agreement, (ii) funding the amount of any payment due to be 
  

 48 

 made by such Swap Counterparty or Cap Counterparty under the related Swap Agreement or Cap Agreement, as applicable,
following the failure by such Swap Counterparty or Cap Counterparty to make that payment or (iii) as permitted pursuant to the related Swap Agreement, Cap Agreement or this Agreement. The Trustee shall make withdrawals from the related Hedge
Collateral Account and transfer the collateral (i) as required of the Trustee pursuant to the related Swap Agreement or Cap Agreement or (ii) if the circumstances which required the posting of collateral no longer exist; and to the extent
necessary to perform such obligation, the Trustee is required to liquidate any investments held in such Hedge Collateral Account. In the event that additional collateral is required to be posted by a Swap Counterparty or Cap Counterparty under the
related Swap Agreement or Cap Agreement, as applicable, the Trustee shall promptly make a demand on such Swap Counterparty or Cap Counterparty to post such additional collateral. To the extent cash makes up all or any portion of the collateral in a
Hedge Collateral Account, such cash shall be invested in Eligible Investments in accordance with the related Swap Agreement or Cap Agreement. Such funds shall be invested at the written direction of the Servicer, or if the Servicer does not provide
such written instructions such funds shall be retained by the Trustee uninvested. Any and all interest generated by such investment shall be transferred to the related Swap Counterparty or Cap Counterparty as provided in the related Swap Agreement
or Cap Agreement, as applicable, or where unspecified, on each Distribution Date. In connection with the maintenance and administration of a Hedge Collateral Account, the Trustee may request and rely on written instructions from the Servicer, which
the Servicer hereby agrees to provide, with respect to the maintenance and administration of such account. For the avoidance of doubt, the Trustee shall not have any right to apply any amounts or assets in any Hedge Collateral Account except in
accordance with the enforcement and realization of its security interest pursuant to the related Swap Agreement or Cap Agreement or otherwise in accordance with the related Swap Agreement or Cap Agreement. 
  
 The Trustee may designate an agent to maintain any Hedge Collateral Account,
provided that the following conditions are satisfied: (i) the agent’s long-term unsubordinated debt is rated at least “BBB+” by S&P and at least “Baa1” by Moody’s and (ii) the total assets of the agent
shall exceed $25,000,000. Under such circumstances, all references to the Trustee in this subsection (f) shall be to the Trustee’s agent appointed pursuant to this paragraph. 
  
 (g) Pursuant to each Swap Agreement and Cap Agreement, the related Swap Counterparty and Cap Counterparty has agreed to
require payment of related Failed Reassignment Termination Payments from the Supplemental Interest Trust on any Distribution Date, only if the Class C Certificates are not then serving as collateral for any outstanding NIM Notes; provided, however,
that if the Class C Certificates are so serving as collateral and no NIM Notes are outstanding, the related Swap Counterparty or Cap Counterparty shall have the right to require payment of such Failed Reassignment Termination Payment and the
foregoing limitation shall not apply. Any such Distribution Date with respect to which the related Swap Counterparty or Cap Counterparty informs the Trustee and the Company in writing that (a) a Failed Reassignment Termination Payment is due
and owing, (b) such Failed Reassignment Termination Payment has not otherwise so been paid and (c) on which the Class C Certificates are not so serving as collateral is a “Failed Reassignment Termination Payment Due Date.”
The Company shall give each Swap Counterparty and Cap Counterparty written notice at the time the Class C Certificates are serving as collateral for any NIM Notes, and at such time as the Class C Certificates are no longer subject to such
arrangement. 
  

 49 

 Section 4.05 Pre-Funding Account. 
  
 (a) No later than the Closing Date, the Trustee, at the direction of the
Servicer, shall establish and maintain, a segregated trust account that is an Eligible Account, which shall be titled “Pre-Funding Account, JPMorgan Chase Bank, National Association, as Trustee for the registered holders of NovaStar Mortgage
Funding Trust 2005-3, Home Equity Loan Asset-Backed Certificates, Series 2005-3” (the “Pre-Funding Account”). The Trustee shall, promptly upon receipt, deposit in the Pre-Funding Account and retain therein the Original
Pre-Funded Amount remitted on the Closing Date to the Trustee by the Company. Funds deposited in the Pre-Funding Account shall be held in trust by the Trustee for the Certificateholders for the uses and purposes set forth herein. 
  
 (b) The Trustee will invest funds deposited in the Pre-Funding Account as
directed by the Servicer in writing in Eligible Investments with a maturity date (i) no later than the Business Day immediately preceding the date on which such funds are required to be withdrawn from such account pursuant to this Agreement, if
a Person other than the Trustee or an Affiliate manages or advises such investment, and (ii) no later than the date on which such funds are required to be withdrawn from such account pursuant to this Agreement, if the Trustee or an Affiliate
manages or advises such investment. For federal income tax purposes, the Servicer shall be the owner of the Pre-Funding Account and shall report all items of income, deduction, gain or loss arising therefrom. If the Trustee does not receive such
written investment instructions it shall retain such funds uninvested. All income and gain realized from investment of funds deposited in the Pre-Funding Account shall be withdrawn and deposited in the Distribution Account. The Trustee shall treat
the Pre-Funding Account as an outside reserve fund within the meaning of Treasury Regulation Section 1.860G-2(h). At no time will the Pre-Funding Account be an asset of any REMIC created hereunder. The Trustee shall not be liable for investment
losses on investments selected by the Servicer pursuant to this Section 4.05(b). 
  
 (c) Amounts on deposit in the Pre-Funding Account shall be withdrawn by the Trustee as follows: 
  
 (i) On any Subsequent Transfer Date, the Trustee shall withdraw from the Pre-Funding Account an amount equal to 100% of the Principal
Balances of the Subsequent Mortgage Loans transferred and assigned to the Trustee for deposit in the Mortgage Pool on such Subsequent Transfer Date and pay such amount to or upon the order of the Company upon satisfaction of the conditions set forth
in Section 2.08 with respect to such transfer and assignment if such Subsequent Mortgage Loan is designated for inclusion in Group I, such amount shall reduce (but not below zero) the remaining Original Pre-Funded Amount allocated to Group I
and if such Subsequent Mortgage Loan is designated for inclusion in Group II, such amount shall reduce (but not below zero) the remaining Original Pre-Funded Amount allocated to Group II; 
  
 (ii) If the amount on deposit in the Pre-Funding Account has
not been reduced to zero on the day of the termination of the Pre-Funding Period, the Trustee shall deposit into the Distribution Account on such day any amounts remaining in the Pre-Funding Account relating to Group I for inclusion in the

  

 50 

 Group I Principal Remittance Amount and relating to Group II for inclusion in the Group II Principal
Remittance Amount for distribution in accordance with the terms hereof; 
  
 (iii) To withdraw any amount not required to be deposited in the Pre-Funding Account or deposited therein in error; and 
  
 (iv) To clear and terminate the Pre-Funding Account upon the earlier to occur of (A) the Distribution Date immediately following the
end of the Pre-Funding Period but not later than the Distribution Date in December 2005 and (B) the termination of this Agreement, with any amounts remaining on deposit therein being paid to the Holders of the Certificates then entitled to
distributions in respect of principal. 
  
 Withdrawals from the
Pre-Funding Account pursuant to clauses (i), (ii) and (iv) shall be treated as contributions of cash to REMIC I on the date of withdrawal. 
  
 Section 4.06 [Reserved] 
  
 Section 4.07 Allocation of Realized Losses. 
  

All Realized Losses on the Mortgage Loans shall be allocated by the Trustee on each Distribution Date as follows: first, to amounts of Excess
Cashflow, second, to the Overcollateralization Amount, third, to the Class M-12 Certificates, until the Certificate Principal Balance thereof has been reduced to zero; fourth, to the Class M-11 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero; fifth, to the Class M-10 Certificates, until the Certificate Principal Balance thereof has been reduced to zero; sixth, to the Class M-9 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero; seventh, to the Class M-8 Certificates, until the Certificate Principal Balance thereof has been reduced to zero; eighth, to the Class M-7 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero; ninth, to the Class M-6 Certificates, until the Certificate Principal Balance thereof has been reduced to zero; tenth, to the Class M-5 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero; eleventh, to the Class M-4 Certificates, until the Certificate Principal Balance thereof has been reduced to zero; twelfth, to the Class M-3 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero; thirteenth, to the Class M-2 Certificates; and fourteenth, to the Class M-1 Certificates, until the Certificate Principal Balance of each such Class has been reduced to zero. All
Realized Losses to be allocated to the Certificate Principal Balances of all Classes on any Distribution Date shall be so allocated after the actual distributions to be made on such date as provided above. All references above to the Certificate
Principal Balance of any Class of Certificates shall be to the Certificate Principal Balance of such Class immediately prior to the relevant Distribution Date, before reduction thereof by any Realized Losses, in each case to be allocated to such
Class of Certificates, on such Distribution Date. In no event shall Realized Losses be allocated to the Class A-1A Certificates, the Group II Certificates or the Class I Certificates. 
  
 Any allocation of Realized Losses to a Mezzanine Certificate Certificate on
any Distribution Date shall be made by reducing the Certificate Principal Balance thereof by the 
  

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 amount so allocated. Any Subsequent Recoveries will be allocated to the Overcollateralization Amount and Mezzanine
Certificates in the reverse order of the Realized Loss allocation set forth in the preceding paragraph, to the extent of the Realized Loss allocated to each related Certificate (or in the case of the Overcollateralization Amount, to the extent of
the Realized Loss allocated to such Overcollateralization Amount). 
  
 ARTICLE V 
  
 THE CERTIFICATES 

 
 Section 5.01 The Certificates. 
  
 Each of the Class A Certificates, the Mezzanine Certificates, the Class
M-11 DSI Certificates, the Class M-12 DSI Certificates, the Class C Certificates, the Class I Certificates and the Residual Certificates shall be substantially in the forms annexed hereto as exhibits, and shall, on original issue, be executed,
authenticated and delivered by the Trustee to or upon the order of the Company concurrently with the sale and assignment to the Trust of the Trust Fund. The Class A Certificates and Mezzanine Certificates shall be initially evidenced by one or
more Certificates representing a Percentage Interest with a minimum dollar denomination of $25,000 and integral dollar multiples of $1,000 in excess thereof, with a minimum investment of $100,000 (if the Certificates are Book-Entry Certificates),
except that one Certificate of each such Class of Certificates may be in a different denomination so that the sum of the denominations of all outstanding Certificates of such Class shall equal the Certificate Principal Balance of such Class on the
Closing Date. The Class M-11 DSI Certificates, the Class M-12 DSI Certificates, the Class C Certificates, the Class I Certificates and the Residual Certificates are issuable in any Percentage Interests; provided, however, that the sum of all such
percentages for each such Class totals 100% and no more than ten Certificates of each Class may be issued. 
  
 The Certificates shall be executed on behalf of the Trust by manual or facsimile signature on behalf of the Trustee by a Responsible Officer. Certificates
bearing the manual or facsimile signatures of individuals who were, at the time when such signatures were affixed, authorized to sign on behalf of the Trustee shall bind the Trust, notwithstanding that such individuals or any of them have ceased to
be so authorized prior to the authentication and delivery of such Certificates or did not hold such offices at the date of such Certificate. No Certificate shall be entitled to any benefit under this Agreement or be valid for any purpose, unless
such Certificate shall have been manually authenticated by the Trustee substantially in the form provided for herein, and such authentication upon any Certificate shall be conclusive evidence, and the only evidence, that such Certificate has been
duly authenticated and delivered hereunder. All Certificates shall be dated the date of their authentication. Subject to Section 5.02(c), the Class A Certificates and Mezzanine Certificates shall be Book-Entry Certificates. The other
Classes of Certificates shall be Definitive Certificates. 
  
 Section 5.02 Registration of Transfer and Exchange of Certificates. 
  
 (a) The Certificate Registrar shall cause to be kept at the Corporate Trust Office a Certificate Register in which, subject to such reasonable regulations
as it may prescribe, the Certificate Registrar shall provide for the registration of Certificates and of transfers and 
  

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 exchanges of Certificates as herein provided. The Trustee shall initially serve as Certificate Registrar for the purpose
of registering Certificates and transfers and exchanges of Certificates as herein provided. 
  
 Upon surrender for registration of transfer of any Certificate at any office or agency of the Certificate Registrar maintained for such purpose pursuant to the foregoing paragraph and, in the case of a Residual
Certificate, upon satisfaction of the conditions set forth below, the Trustee on behalf of the Trust shall execute, authenticate and deliver, in the name of the designated transferee or transferees, one or more new Certificates of the same aggregate
Percentage Interest. 
  
 At the option of the Certificateholders,
Certificates may be exchanged for other Certificates in authorized denominations and the same aggregate Percentage Interests, upon surrender of the Certificates to be exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange, the Trustee shall execute on behalf of the Trust and authenticate and deliver the Certificates which the Certificateholder making the exchange is entitled to receive. Every Certificate presented or surrendered for
registration of transfer or exchange shall (if so required by the Trustee or the Certificate Registrar) be duly endorsed by, or be accompanied by a written instrument of transfer satisfactory to the Trustee and the Certificate Registrar duly
executed by, the Holder thereof or his attorney duly authorized in writing. 
  
 (b) Except as provided in paragraph (c) below, the Book-Entry Certificates shall at all times remain registered in the name of the Depository or its nominee and at all times: (i) registration of such
Certificates may not be transferred by the Trustee except to another Depository; (ii) the Depository shall maintain book-entry records with respect to the Certificate Owners and with respect to ownership and transfers of such Certificates;
(iii) ownership and transfers of registration of such Certificates on the books of the Depository shall be governed by applicable rules established by the Depository; (iv) the Depository may collect its usual and customary fees, charges
and expenses from its Depository Participants; (v) the Trustee shall for all purposes deal with the Depository as representative of the Certificate Owners of the Certificates for purposes of exercising the rights of Holders under this
Agreement, and requests and directions for and votes of such representative shall not be deemed to be inconsistent if they are made with respect to different Certificate Owners; (vi) the Trustee may rely and shall be fully protected in relying
upon information furnished by the Depository with respect to its Depository Participants and furnished by the Depository Participants with respect to indirect participating firms and Persons shown on the books of such indirect participating firms as
direct or indirect Certificate Owners; and (vii) the direct participants of the Depository shall have no rights under this Agreement under or with respect to any of the Certificates held on their behalf by the Depository, and the Depository may
be treated by the Trustee, the Trustee and its agents, employees, officers and directors as the absolute owner of the Certificates for all purposes whatsoever. 
  

All transfers by Certificate Owners of Book-Entry Certificates shall be made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificate Owners. Each Depository Participant shall only transfer Book-Entry Certificates of Certificate Owners that it represents or of brokerage firms for which it acts as agent in accordance with
the Depository’s normal procedures. The parties hereto are hereby 
  

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 authorized to execute a Letter of Representations with the Depository or take such other action as may be necessary or
desirable to register a Book-Entry Certificate to the Depository. In the event of any conflict between the terms of any such Letter of Representation and this Agreement, the terms of this Agreement shall control. 
  
 (c) If (i)(x) the Depository or the Company advises the Trustee in writing
that the Depository is no longer willing or able to discharge properly its responsibilities as Depository and (y) the Trustee or the Company is unable to locate a qualified successor, or (ii) after the occurrence of a Servicing Default,
the Certificate Owners of the Book-Entry Certificates representing not less than 51% of the Voting Rights advise the Trustee and Depository through the Financial Intermediaries and the Depository Participants in writing that the continuation of a
book-entry system through the Depository to the exclusion of definitive, fully registered certificates (“Definitive Certificates”) to Certificate Owners is no longer in the best interests of the Certificate Owners. Upon surrender to
the Certificate Registrar of the Book-Entry Certificates by the Depository, accompanied by registration instructions from the Depository for registration, the Trustee shall, at the Seller’s expense, execute on behalf of the Trust and
authenticate the Definitive Certificates. Neither the Company nor the Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions. Upon the issuance of
Definitive Certificates, the Trustee, the Certificate Registrar, the Servicer, any Paying Agent and the Company shall recognize the Holders of the Definitive Certificates as Certificateholders hereunder. 
  
 (d) No transfer, sale, pledge or other disposition of any Class M-11
Certificate, Class M-12 Certificate, Class M-11 DSI Certificate, Class M-12 DSI Certificate, Class I Certificate, Class C Certificate or Residual Certificate shall be made unless such disposition is exempt from the registration requirements of the
Securities Act of 1933, as amended (the “1933 Act”), and any applicable state securities laws or is made in accordance with the 1933 Act and laws. In the event of any such transfer, except with respect to the initial transfers of
any Class M-11 Certificate, Class M-12 Certificate, Class M-11 DSI Certificate, Class M-12 DSI Certificate, Class I Certificate, Class C Certificate or Residual Certificates by the Company to NCFC, or by NCFC to Greenwich Capital Financial Products,
Inc., Wachovia Investment Holdings, LLC, or Newport Funding Corp., unless (i) such transfer is made in reliance upon Rule 144A under the 1933 Act and an investment letter, in substantially the form attached hereto as Exhibit G, is delivered by
the Transferee to the Trustee) or (ii) a written Opinion of Counsel (which may be in-house counsel) acceptable to and in form and substance reasonably satisfactory to the Trustee and the Company is delivered to them stating that such transfer
may be made pursuant to (x) the 1933 Act, or an exemption thereto, describing the applicable provision or exemption and the basis therefore, and (y) the Investment Company Act of 1940, or an exemption thereto, describing the applicable
provision or exemption and the basis therefore, which Opinion of Counsel shall not be an expense of the Trustee or the Company. The Holder of a Class M-11 Certificate, Class M-12 Certificate, Class M-11 DSI Certificate, Class M-12 DSI Certificate,
Class I Certificate, Class C Certificate or Residual Certificate desiring to effect such transfer shall, and the Trustee and the Company against any liability that may result if the transfer is not so exempt or is not made in accordance with such
federal and state laws. 
  

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 No transfer of a Class M-11 Certificate, Class M-12 Certificate, Class M-11 DSI Certificate, Class M-12
DSI Certificate, Class I Certificate, Class C Certificate or Residual Certificate or any interest therein shall be made to any Plan or to any Person acting, directly or indirectly, on behalf of any such Plan or acquiring such Certificates with
“plan assets” of a Plan within the meaning of the Department of Labor regulation promulgated at 29 C.F.R. § 2510.3-101 or otherwise (“Plan Assets”). Each Person who acquires any Ownership Interest in such classes of
Certificates shall be deemed, by the acceptance or acquisition of such Ownership Interest, to represent that it is not a Plan and is not acting, directly or indirectly, on behalf of a Plan or acquiring such Ownership Interest with Plan Assets. The
foregoing restrictions shall not apply to any Class M-11 Certificate or Class M-12 Certificate that has been sold pursuant to a Qualified Underwriting. 
  
 Prior to the expiration of the Pre-Funding Period, no transfer of Class A Certificates or Mezzanine Certificates or any interest therein shall be
made to any Person acquiring such Certificates with Plan Assets. Each Person who acquires any Ownership Interest in such class of Certificates prior to the expiration of such Pre-Funding Period shall be deemed, by the acceptance or acquisition of
such Ownership Interest, to represent that it is not acquiring such Ownership Interest with Plan Assets. 
  
 Each Person who has or who acquires any Ownership Interest in a Residual Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions and to have irrevocably appointed the Company or its designee as its attorney-in-fact to negotiate the terms of any mandatory sale under clause (v) below and to execute all
instruments of transfer and to do all other things necessary in connection with any such sale, and the rights of each Person acquiring any Ownership Interest in a Residual Certificate are expressly subject to the following provisions: 
  
 (i) Each Person holding or acquiring any Ownership Interest
in a Residual Certificate shall be a Permitted Transferee and shall promptly notify the Trustee of any change or impending change in its status as a Permitted Transferee. 
  
 (ii) No Person shall acquire an Ownership Interest in a Residual Certificate unless such Ownership Interest
is a pro-rata undivided interest. 
  
 (iii) In
connection with any proposed transfer of any Ownership Interest in a Residual Certificate, the Trustee shall as a condition to registration of the transfer, require delivery to it, in form and substance satisfactory to it, of each of the following:

  
 (A) an affidavit in the form of Exhibit H hereto from the
proposed transferee to the effect that such transferee is a Permitted Transferee and that it is not acquiring its Ownership Interest in the Residual Certificate that is the subject of the proposed transfer as a nominee, Trustee or agent for any
Person who is not a Permitted Transferee; and 
  
 (B) an affidavit
in the form of Exhibit I hereto from the proposed transferor to the effect that no purpose of the transfer is to impede the assessment or collection of any tax. 
  

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 (iv) Any attempted or purported transfer of any Ownership Interest in a Residual
Certificate in violation of the provisions of this Section shall be absolutely null and void and shall vest no rights in the purported transferee. If any purported transferee shall, in violation of the provisions of this Section, become a Holder of
a Residual Certificate, then the prior Holder of such Residual Certificate that is a Permitted Transferee shall, upon discovery that the registration of transfer of such Residual Certificate was not in fact permitted by this Section, be restored to
all rights as Holder thereof retroactive to the date of registration of transfer of such Residual Certificate. The Trustee shall be under no liability to any Person for any registration of transfer of a Residual Certificate that is in fact not
permitted by this Section or for making any distributions due on such Residual Certificate to the Holder thereof or taking any other action with respect to such Holder under the provisions of this Agreement so long as the Trustee received the
documents specified in clause (iii). The Trustee shall be entitled to recover from any Holder of a Residual Certificate that was in fact not a Permitted Transferee at the time such distributions were made all distributions made on such Residual
Certificate. Any such distributions so recovered by the Trustee shall be distributed and delivered by the Trustee to the prior Holder of such Residual Certificate that is a Permitted Transferee. 
  
 (v) If any Person other than a Permitted Transferee acquires
any Ownership Interest in a Residual Certificate in violation of the restrictions in this Section, then the Trustee shall have the right but not the obligation, without notice to the Holder of such Residual Certificate or any other Person having an
Ownership Interest therein, to notify the Company to arrange for the sale of such Residual Certificate. The proceeds of such sale, net of commissions (which may include commissions payable to the Company or its affiliates in connection with such
sale), expenses and taxes due, if any, will be remitted by the Trustee to the previous Holder of such Residual Certificate that is a Permitted Transferee, except that in the event that the Trustee determines that the Holder of such Residual
Certificate may be liable for any amount due under this Section or any other provisions of this Agreement, the Trustee may withhold a corresponding amount from such remittance as security for such claim. The terms and conditions of any sale under
this clause (v) shall be determined in the sole discretion of the Trustee and it shall not be liable to any Person having an Ownership Interest in a Residual Certificate as a result of its exercise of such discretion. 
  
 (vi) If any Person other than a Permitted Transferee
acquires any Ownership Interest in a Residual Certificate in violation of the restrictions in this Section, then the Trustee upon receipt of reasonable compensation will provide to the Internal Revenue Service, and to the persons specified in
Sections 860E(e)(3) and (6) of the Code, information needed to compute the tax imposed under Section 860E(e) of the Code on transfers of residual interests to disqualified organizations. 
  
 The foregoing provisions of this Section shall cease to apply to transfers
occurring on or after the date on which there shall have been delivered to the Trustee, in form and 
  

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 substance satisfactory to the Trustee, (i) written notification from each Rating Agency that the removal of the
restrictions on Transfer set forth in this Section will not cause such Rating Agency to downgrade its rating of the Certificates and (ii) an Opinion of Counsel to the effect that such removal will not cause any REMIC created hereunder to fail
to qualify as a REMIC. 
  
 (e) No service charge shall be made for
any registration of transfer or exchange of Certificates of any Class, but the Certificate Registrar may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of
Certificates. 
  
 All Certificates surrendered for registration of
transfer or exchange shall be cancelled by the Certificate Registrar and disposed of pursuant to its standard procedures. 
  
 Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates. 
  
 If (i) any mutilated Certificate is surrendered to the Certificate Registrar or the Certificate Registrar receives
evidence to its satisfaction of the destruction, loss or theft of any Certificate and (ii) there is delivered to the Trustee, the Company and the Certificate Registrar such security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Trustee or the Certificate Registrar that such Certificate has been acquired by a bona fide purchaser, the Trustee shall execute on behalf of the Trust, authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like tenor and Percentage Interest. Upon the issuance of any new Certificate under this Section, the Trustee or the Certificate Registrar may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee and the Certificate Registrar) in connection therewith. Any duplicate
Certificate issued pursuant to this Section, shall constitute complete and indefeasible evidence of ownership in the Trust, as if originally issued, whether or not the lost, stolen or destroyed Certificate shall be found at any time. 
  
 Section 5.04 Persons Deemed Owners. 
  
 The Servicer, the Company, the Trustee, the Certificate Registrar, any
Paying Agent and any agent of the Servicer, the Company, the Trustee, the Certificate Registrar or any Paying Agent may treat the Person, including a Depository, in whose name any Certificate is registered as the owner of such Certificate for the
purpose of receiving distributions pursuant to Section 4.01 and for all other purposes whatsoever, and none of the Servicer, the Trust, the Trustee nor any agent of any of them shall be affected by notice to the contrary. 
  
 Section 5.05 Appointment of Paying Agent. 
  
 (a) The Paying Agent shall make distributions to Certificateholders from the
Distribution Account pursuant to Section 4.01 and shall report the amounts of such distributions to the Trustee. The duties of the Paying Agent may include the obligation to distribute statements prepared by the Trustee pursuant to
Section 4.03 and provide information to Certificateholders as required hereunder. The Paying Agent hereunder shall at all times be an entity duly incorporated and validly existing under the laws of the United States of America or any state
thereof, authorized under such laws to exercise corporate trust powers and subject to 
  

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 supervision or examination by federal or state authorities. The Paying Agent shall initially be the Trustee. The Trustee
may appoint a successor to act as Paying Agent, which appointment shall be reasonably satisfactory to the Company. 
  
 (b) The Trustee shall cause the Paying Agent (if other than the Trustee) to execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee that such Paying Agent shall hold all sums, if any, held by it for payment to the Certificateholders in trust for the benefit of the Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders and shall agree that it shall comply with all requirements of the Code regarding the withholding of payments in respect of Federal income taxes due from Certificate Owners and otherwise comply with the provisions of this Agreement
applicable to it. 
  
 ARTICLE VI 
  
 THE SERVICER AND THE COMPANY 
  
 Section 6.01 Liability of the Servicer and the Company.

  
 The Servicer shall be liable in accordance herewith only to
the extent of the obligations specifically imposed upon and undertaken by Servicer herein. The Company shall be liable in accordance herewith only to the extent of the obligations specifically imposed upon and undertaken by the Company. 

 
 Section 6.02 Merger or Consolidation of, or Assumption of
the Obligations of, the Servicer or the Company. 
  
 Any
entity into which the Servicer or Company may be merged or consolidated, or any entity resulting from any merger, conversion or consolidation to which the Servicer or the Company shall be a party, or any corporation succeeding to the business of the
Servicer or the Company, shall be the successor of the Servicer or the Company, as the case may be, hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor Servicer shall satisfy all the requirements of Section 7.02 with respect to the qualifications of a successor Servicer. 
  
 Section 6.03 Limitation on Liability of the Servicer and Others. 
  
 Neither the Servicer nor any of the directors or officers or employees or
agents of the Servicer shall be under any liability to the Trust or the Certificateholders for any action taken or for refraining from the taking of any action by the Servicer in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Servicer or any such Person against any liability which would otherwise be imposed by reason of its willful misfeasance, bad faith or negligence in the performance of duties
of the Servicer or by reason of its reckless disregard of its obligations and duties of the Servicer hereunder. 
  
 The Servicer and any director or officer or employee or agent of the Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder. The Servicer and any director or officer or 
  

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 employee or agent of the Servicer shall be indemnified by the Trust and held harmless against any loss, liability or
expense incurred in connection with any legal action relating to this Agreement or the Certificates, including any amount paid to the Trustee pursuant to Section 6.06(b), other than any loss, liability or expense related to any specific
Mortgage Loan or Mortgage Loans (except as any such loss, liability or expense shall be otherwise reimbursable pursuant to this Agreement) and any loss, liability or expense incurred by reason of its willful misfeasance, bad faith or negligence in
the performance of its duties hereunder or by reason of its reckless disregard of its obligations and duties hereunder. The Servicer shall not be under any obligation to appear in, prosecute or defend any legal action which is not incidental to its
duties to service the Mortgage Loans in accordance with this Agreement, and which in its opinion may involve it in any expense or liability; provided, however, that the Servicer may in its sole discretion undertake any such action which it may deem
necessary or desirable in respect of this Agreement, and the rights and duties of the parties hereto and the interests of the Certificateholders hereunder. In such event, the reasonable legal expenses and costs of such action and any liability
resulting therefrom shall be expenses, costs and liabilities of the Trust, and the Servicer shall be entitled to be reimbursed therefor. The Servicer’s right to indemnity or reimbursement pursuant to this Section 6.03 shall survive any
resignation or termination of the Servicer pursuant to Section 6.04 or 7.01 with respect to any losses, expenses, costs or liabilities arising prior to such resignation or termination (or arising from events that occurred prior to such
resignation or termination). Any reimbursements or indemnification to the Servicer from the Trust pursuant to this Section 6.03 shall be payable in the priority set forth in Section 4.01 hereof. 
  
 Section 6.04 Servicer Not to Resign. 
  
 Subject to the provisions of Section 6.02, the Servicer shall not
resign from the obligations and duties hereby imposed on it except (i) upon determination that the performance of its obligations or duties hereunder are no longer permissible under applicable law or (ii) upon satisfaction of the following
conditions: (a) the Servicer has proposed a successor servicer to the Trustee in writing and such proposed successor servicer is reasonably acceptable to the Trustee; and (b) each Rating Agency shall have delivered a letter to the Trustee
prior to the appointment of the successor servicer stating that the proposed appointment of such successor servicer as Servicer hereunder will not result in the reduction or withdrawal of then current rating of the Certificates; provided,
however, that no such resignation by the Servicer shall become effective until such successor servicer or, in the case of (i) above, the Trustee or its designee as successor Servicer shall have assumed the Servicer’s
responsibilities and obligations hereunder or shall have designated a successor servicer in accordance with Section 7.02. Any such resignation shall not relieve the Servicer of responsibility for any of the obligations specified in Sections
7.01 and 7.02 as obligations that survive the resignation or termination of the Servicer. The Servicer shall have no claim (whether by subrogation or otherwise) or other action against any Certificateholder for any amounts paid by the Servicer
pursuant to any provision of this Pooling and Agreement. Any such determination permitting the resignation of the Servicer under clause (i) above shall be evidenced by an Opinion of Counsel to such effect delivered to the Trustee. 

 

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 Section 6.05 Delegation of Duties. 
  
 In the ordinary course of business, the Servicer at any time may delegate
any of its duties hereunder to any Person, including any of its Affiliates, who agrees to conduct such duties in accordance with the same standards with which the Servicer complies pursuant to Section 3.01. Such delegation shall not relieve the
Servicer of its liabilities and responsibilities with respect to such duties and shall not constitute a resignation within the meaning of Section 6.04. 
  
 Section 6.06 Servicer to Pay Trustee’s Fees and Expenses; Indemnification. 
  
 (a) The Servicer covenants and agrees to pay to the Trustee and any
co-trustee of the Trustee from time to time, and the Trustee and any such co-trustee shall be entitled to, reasonable compensation, including all indemnification payments (which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) for all services rendered by each of them in the execution of the trusts created hereunder and in the exercise and performance of any of the powers and duties and the Servicer will pay or reimburse the
Trustee and any co-trustee upon request for all reasonable expenses, disbursements and advances incurred or made by the Trustee or any co-trustee of the Trustee in accordance with any of the provisions of this Agreement except any such expense,
disbursement or advance as may arise from its negligence or bad faith. 
  
 (b) The Servicer agrees to indemnify the Trustee for, and to defend and hold, the Trustee harmless against, any claim, tax, penalty, loss, liability or expense of any kind whatsoever, incurred without gross negligence or willful misconduct
on the part of the Trustee as such and/or in its individual capacity, arising out of, or in connection with, the performance of the Trustee’s duties under this Agreement or the other Basic Documents, including the reasonable costs and expenses
(including reasonable legal fees and expenses) of defending itself against any claim in connection with the exercise or performance of any of its powers or duties hereunder, provided that: 
  
 (i) with respect to any such claim, the Trustee shall have
given the Servicer written notice thereof promptly after the Trustee shall have actual knowledge thereof; 
  
 (ii) while maintaining control over its own defense, the Trustee shall cooperate and consult fully with the Servicer in preparing such
defense; and 
  
 (iii) notwithstanding anything
in this Agreement to the contrary, the Servicer shall not be liable for settlement of any claim by the Trustee entered into without the prior consent of the Servicer, which consent shall not be unreasonably withheld. 
  
 No termination of this Agreement and resignation and removal of the Trustee
shall affect the obligations created by this Section 6.06 of the Servicer to indemnify the Trustee under the conditions and to the extent set forth herein. This section shall survive the termination of this Agreement and resignation and removal
of the Trustee. Any amounts to be paid by the Servicer pursuant to this Subsection may not be paid from the Trust Fund except as provided in Section 6.03. 
  

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 Notwithstanding the foregoing, the indemnification provided by the Servicer in this Section 6.06
shall not pertain to any loss, liability or expense of the Trustee including the costs and expenses of defending itself against any claim, incurred in connection with any actions taken by the Trustee at the direction of the Certificateholders, as
the case may be, pursuant to the terms of this Agreement. 
  
 (c)
The Servicer agrees to indemnify the Trust Fund in an amount equal to the amount of any claim made under a MI Policy for which coverage is denied by the MI Insurer because (and if the MI Insurer’s denial of coverage is contested by the
Servicer, a court or arbitrator finally determines that coverage is not available under the MI Policy because) of the Servicer’s failure to abide by the terms of the MI Policy or the MI Insurance Agreement or the Servicer’s failure to
abide by the NFI Underwriting Guidelines or the NFI Servicing Guidelines, as attached to the MI Insurance Agreement. 
  
 (d) In the event the Trustee becomes the Servicer pursuant to Section 7.02 hereof, the Trustee shall not be obligated, in its individual capacity, to
pay any obligation of the Servicer under clause (a), (b) or (c) above. 
  
 ARTICLE VII 
  
 DEFAULT

  
 Section 7.01 Servicing Default.

  
 (a) If any one of the following events (a “Servicing
Default”) shall occur and be continuing: 
  
 (i) Any failure by the Servicer to deposit in the Collection Account or Distribution Account (A) any Advances and Compensating Interest or (B) any other Deposit required to be made under the terms of this Agreement, which, in the
case of this clause (B), continues unremedied for a period of three Business Days after the date upon which written notice of such failure shall have been given to the Servicer by the Trustee or to the Servicer and the Trustee by the Holders of
Certificates evidencing at least 25% of the Voting Rights; or 
  
 (ii) Failure on the part of the Servicer duly to observe or perform in any material respect any other covenants or agreements of the Servicer set forth in this Agreement, which failure, in each case, materially and
adversely affects the interests of Certificateholders or the breach of any representation or warranty of the Servicer in this Agreement which materially and adversely affects the interests of the Certificateholders, and which in either case
continues unremedied for a period of 30 days after the date on which written notice of such failure or breach, requiring the same to be remedied, and stating that such notice is a “Notice of Default” hereunder, shall have been given to the
Servicer by the Trustee or to the Servicer and the Trustee by the Holders of Certificates evidencing at least 25% of the Voting Rights; or 
  

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 (iii) The entry against the Servicer of a decree or order by a court or agency or
supervisory authority having jurisdiction in the premises for the appointment of a trustee, conservator, receiver or liquidator in any insolvency, conservatorship, receivership, readjustment of debt, marshaling of assets and liabilities or similar
proceedings, or for the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; or 
  
 (iv) The Servicer shall voluntarily go into liquidation, consent to the appointment of a conservator,
receiver, liquidator or similar person in any insolvency, readjustment of debt, marshaling of assets and liabilities or similar proceedings of or relating to the Servicer or of or relating to all or substantially all of its property, or a decree or
order of a court, agency or supervisory authority having jurisdiction in the premises for the appointment of a conservator, receiver, liquidator or similar person in any insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of its affairs, shall have been entered against the Servicer and such decree or order shall have remained in force undischarged, unbonded or unstayed for a period of 60 days; or the Servicer
shall admit in writing its inability to pay its debts generally as they become due, file a petition to take advantage of any applicable insolvency or reorganization statute, make an assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations; or 
  
 (v) The
Cumulative Loss Percentage exceeds (a) with respect to the first 12 Distribution Dates, 1.65%, (b) with respect to the next 12 Distribution Dates, 2.65% (c) with respect to the next 12 Distribution Dates, 3.75%, (d) with respect
to the next 12 Distribution Dates, 4.50%, (e) with respect to the next 12 Distribution Dates, 5.50%, (f) and with respect to all Distribution Dates thereafter, 6.75%; or 
  
 (vi) Realized Losses on the Mortgage Loans over any twelve-month period exceeds 2.25% of the sum of the
aggregate Principal Balance of the Initial Mortgage Loans as of the Cut-off Date and the Original Pre-Funded Amount; or 
  
 (vii) The Rolling 90 Day Delinquency Percentage exceeds 20.00%. 
  
 (b) then, and in each and every such case, so long as a Servicing Default shall not have been remedied within the applicable
grace period, (x) with respect solely to clause (i)(A) above, if such Advance is not made by 5:00 P.M., New York time, on the Business Day immediately following the Servicer Remittance Date (provided the Trustee shall give the Servicer notice
of such failure to advance by 5:00 P.M. New York time on the Servicer Remittance Date), the Trustee shall terminate all of the rights and obligations of the Servicer under this Agreement and the Trustee, or a successor servicer appointed in
accordance with Section 7.02, shall assume, pursuant to Section 7.02, the duties of a successor Servicer and (y) in 
  

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 the case of (i)(B), (ii), (iii), (iv), (v) and (vi) and (vii) above, the Trustee shall, at the direction
of the Holders of Certificates evidencing at least 51% of the Voters Rights, by notice then given in writing to the Servicer (and to the Trustee if given by Holders of Certificates), terminate all of the rights and obligations of the Servicer as
servicer under this Agreement. Any such notice to the Servicer shall also be given to the Trustee, each Rating Agency, the Company and the Seller. On or after the receipt by the Servicer (and by the Trustee if such notice is given by the Holders) of
such written notice, all authority and power of the Servicer under this Agreement, whether with respect to the Certificates or the Mortgage Loans or otherwise, shall pass to and be vested in the Trustee or other Successor Servicer appointed in
accordance with Section 7.02. 
  
 Section 7.02
Trustee to Act; Appointment of Successor. 
  
 (a) Within
90 days of the time the Servicer (and the Trustee if notice is sent by the Holders) receives a notice of termination pursuant to Section 7.01, the Trustee (or such other successor Servicer as is approved in accordance with this Agreement) shall
be the successor in all respects to the Servicer in its capacity as servicer under this Agreement and the transactions set forth or provided for herein and shall be subject to all the responsibilities, duties and liabilities relating thereto placed
on the Servicer by the terms and provisions hereof arising on and after its succession. Notwithstanding the foregoing, the parties hereto agree that the Trustee, in its capacity as successor Servicer, immediately will assume all of the obligations
of the Servicer to make Advances; provided however, that the obligation of the Trustee to make Advances is subject to the standards set forth in Section 3.24 hereof. Notwithstanding the foregoing, the Trustee, in its capacity as successor
Servicer, shall not be responsible for the lack of information and/or documents that it cannot obtain through reasonable efforts. As compensation therefor, the Trustee (or such other successor Servicer) shall be entitled to such compensation as the
Servicer would have been entitled to hereunder if no such notice of termination had been given. Notwithstanding the above, (i) if the Trustee is unwilling to act as successor Servicer or (ii) if the Trustee is legally unable so to act, the
Trustee shall appoint or petition a court of competent jurisdiction to appoint, any established housing and home finance institution, bank or other mortgage loan or home equity loan servicer having a net worth of not less than $10,000,000 as the
successor to the Servicer hereunder in the assumption of all or any part of the responsibilities, duties or liabilities of the Servicer hereunder; provided, that the appointment of any such successor Servicer will not result in the qualification,
reduction or withdrawal of the ratings assigned to the Certificates by the Rating Agencies as evidenced by a letter to such effect from the Rating Agencies. Pending appointment of a successor to the Servicer hereunder, unless the Trustee is
prohibited by law from so acting, the Trustee shall act in such capacity as hereinabove provided. In connection with such appointment and assumption, the successor shall be entitled to receive compensation out of payments on Mortgage Loans in an
amount equal to the compensation which the Servicer would otherwise have received pursuant to Section 3.18 (or such other compensation as the Trustee and such successor shall agree, not to exceed the Servicing Fee). The appointment of a
successor Servicer shall not affect any liability of the predecessor Servicer which may have arisen under this Agreement prior to its termination as Servicer to pay any deductible under an insurance policy pursuant to Section 3.14 or to
indemnify the Trustee pursuant to Section 3.06, nor shall any successor Servicer be liable for any acts or omissions of the predecessor Servicer or for any breach by such Servicer of any of its representations or warranties contained herein or
in any related document or agreement. The Trustee and such successor shall take such action, consistent with this Agreement, as shall be 
  

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 necessary to effectuate any such succession. All Servicing Transfer Costs shall be paid by the predecessor Servicer upon
presentation of reasonable documentation of such costs, and if such predecessor Servicer defaults in its obligation to pay such costs, such costs shall be paid by the successor Servicer or the Trustee (in which case the successor Servicer or the
Trustee, as applicable, shall be entitled to reimbursement therefor from the assets of the Trust). 
  
 (b) Any successor, including the Trustee, to the Servicer as servicer shall during the term of its service as servicer continue to service and administer
the Mortgage Loans for the benefit of Certificateholders, and maintain in force a policy or policies of insurance covering errors and omissions in the performance of its obligations as Servicer hereunder and a Fidelity Bond in respect of its
officers, employees and agents to the same extent as the Servicer is so required pursuant to Section 3.14. 
  
 (c) In connection with the termination or resignation of the Servicer hereunder, either (i) the successor Servicer, shall represent and warrant that
it is a member of MERS in good standing and shall agree to comply in all material respects with the rules and procedures of MERS in connection with the servicing of the Mortgage Loans that are registered with MERS, in which case the predecessor
Servicer shall cooperate with the successor Servicer in causing MERS to revise its records to reflect the transfer of servicing to the successor Servicer as necessary under MERS’ rules and regulations, or (ii) the predecessor Servicer
shall cooperate with the successor Servicer in causing MERS to execute and deliver an assignment of Mortgage in recordable form to transfer the Mortgages from MERS to the Trustee and to execute and deliver such other notices, documents and other
instruments as may be necessary or desirable to effect a transfer of such Mortgage Loans or servicing of such Mortgage Loan on the MERS System to the successor Servicer. The predecessor Servicer shall file or cause to be filed any such assignment in
the appropriate recording offices. The predecessor Servicer shall bear any and all fees of MERS, costs of preparing any assignments of Mortgage, and fees and costs of filing any assignments of Mortgage that may be required under this subsection (c).
The successor Servicer shall cause assignment to be delivered to the Trustee promptly upon receipt of the original with evidence of recording thereon or a copy certified by the public recording office in which such assignment was recorded.

  
 Section 7.03 Waiver of Defaults.

  
 The Majority Certificateholders may, on behalf of all
Certificateholders, waive any events permitting removal of the Servicer as servicer pursuant to this Article VII by delivering written notice to the Trustee, provided, however, that the Majority Certificateholders may not waive a default in
making a required distribution on a Certificate without the consent of the Holder of such Certificate. Upon any waiver of a past default, such default shall cease to exist and any Servicing Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any subsequent or other default or impair any right consequent thereto except to the extent expressly so waived. Notice of any such waiver shall be given by the Trustee to
the Rating Agencies. 
  

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 Section 7.04 Notification to Certificateholders. 
  
 (a) Upon any termination or appointment of a successor the Servicer pursuant
to this Article VII, the Trustee shall give prompt written notice thereof to the Certificateholders at their respective addresses appearing in the Certificate Register and each Rating Agency. 
  
 (b) No later than 60 days after the occurrence of any event which constitutes
or which, with notice or a lapse of time or both, would constitute a Servicing Default for five Business Days after a Responsible Officer of the Trustee becomes aware of the occurrence of such an event, the Trustee shall transmit by mail to all
Certificateholders notice of such occurrence unless such default or Servicing Default shall have been waived or cured. 
  
 Section 7.05 Survivability of Servicer Liabilities. 
  
 Notwithstanding anything herein to the contrary, upon termination of the Servicer hereunder, any liabilities of the Servicer
which accrued prior to such termination shall survive such termination. 
  
 ARTICLE VIII 
  
 THE TRUSTEE 
  
 Section 8.01 Duties of the Trustee. 
  
 On the Closing Date, the Trustee will act as disbursement agent and will
distribute the proceeds from the sale of the Offered Certificates according to the closing settlement statement provided by the Seller. If a Servicing Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in
it by this Agreement and use the same degree of care and skill in its exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs. 
  
 (a) Except during the continuance of a Servicing Default: 
  
 (i) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement with respect to the Trustee and no implied covenants or obligations shall be read into this Agreement against the Trustee; and 
  
 (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Agreement; provided, however, that the Trustee shall examine the certificates and
opinions delivered to it to determine whether or not they conform to the requirements of this Agreement. 
  
 (b) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except
that: 
  
 (i) this paragraph does not limit the
effect of paragraph (9) of this Section 8.01; 
  

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 (ii) the Trustee shall not be liable for any error of judgment made in good faith by its
Responsible Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and 
  
 (iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction
received by it from the Majority Certificateholders. 
  
 The
Trustee shall not be liable for interest on any money received by the Trustee. 
  
 Money held in trust by the Trustee need not be segregated from other trust funds except to the extent required by law or the terms of this Agreement. 
  
 No provision of this Agreement shall require the Trustee to expend or risk its own funds or otherwise incur financial
liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it. 
  
 Subject to the other provisions of
this Agreement and without limiting the generality of this Section 8.01, the Trustee shall have no duty (A) to see to any recording, filing or depositing of this Agreement or any agreement referred to herein or any financing statement or
continuation statement evidencing a security interest, or to see to the maintenance of any such recording or filing or depositing or to any rerecording, refiling or redepositing of any thereof, (B) to see to any insurance, (C) to see to
the payment or discharge of any tax, assessment, or other governmental charge or any lien or encumbrance of any kind owing with respect to, assessed or levied against, any part of the Trust Fund other than from funds available in the Distribution
Account, or (D) to confirm or verify the contents of any reports or certificates of the Servicer delivered to the Trustee believed by the Trustee to be genuine and to have been signed or presented by the proper party or parties. 
  
 (c) The Trustee shall act as successor to the Servicer to the extent provided
in Section 7.02 hereof. 
  
 (d) For all purposes under this
Agreement, the Trustee shall not be deemed to have notice or knowledge of any Servicing Default unless a Responsible Officer assigned to and working in the Trustee’s corporate trust department has actual knowledge thereof or unless written
notice of any event which is in fact such Servicing Default is received by the Trustee at the Corporate Trust Office, and such notice references the Certificates generally, the Trust, or this Agreement. 
  
 The Trustee is hereby authorized to execute and shall execute this Agreement
and the Purchase Agreement and shall perform their respective duties and satisfy their respective obligations thereunder. Every provision of this Agreement relating to the conduct or affecting the liability of or affording protection to the Trustee
shall apply to the Trustee’s execution of this Agreement and the Purchase Agreement and the performance of their respective duties and satisfaction of its obligations hereunder and thereunder. 
  

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 Section 8.02 Rights of Trustee. 
  
 The Trustee may rely and shall be protected in acting or refraining from
acting on any resolution, officer’s certificate, opinion of counsel, certificate of auditors or other certificate, statement, instrument, or document believed by it to be genuine and to have been signed or presented by the proper person. The
Trustee need not investigate any fact or matter stated in the document. 
  
 Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel reasonably satisfactory in form and substance to the Trustee which Officers’ Certificate or Opinion of Counsel shall
not be at the expense of the Trustee or the Trust Fund. The Trustee shall not be liable for any action either of them takes or omits to take in good faith in reliance on an Officers’ Certificate or Opinion of Counsel. 
  
 The Trustee may execute any of its trusts or powers hereunder and the Trustee
may perform any of its respective duties hereunder either directly or by or through agents or attorneys or a custodian or nominee and the Trustee shall have no liability for any misconduct or negligence on the part of such agent, attorney or
custodian appointed by the Trustee with due care. 
  
 The Trustee
shall not be liable for any action either of them takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided, however, that the Trustee’s conduct does not constitute willful misconduct,
negligence or bad faith. 
  
 The Trustee may consult with counsel
chosen by it with due care, and the advice or opinion of counsel with respect to legal matters relating to this Agreement and the Certificates shall be full and complete authorization and protection from liability in respect to any action taken,
omitted or suffered by either of them hereunder in good faith and in accordance with the advice or opinion of such counsel. 
  
 The Trustee shall be under no obligation to exercise any of the trusts or powers vested in it by this Agreement or to institute, conduct or defend any
litigation hereunder or in relation hereto at the request, order or direction of any of the Certificateholders, pursuant to the provisions of this Agreement, unless such Certificateholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred therein or thereby (which in the case of the Majority Certificateholders will be deemed to be satisfied by a letter agreement with respect to such costs from such Majority
Certificateholders); nothing contained herein shall, however, relieve the Trustee of the obligation, upon the occurrence of a Servicing Default of which a Responsible Officer of the Trustee shall have actual knowledge (which has not been cured), to
exercise such of the rights and powers vested in it by this Agreement, and to use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own
affairs. 
  

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 The Trustee shall not be bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond or other paper or document, unless requested in writing to do by the Majority Certificateholders; provided, however, that if the payment
within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by
the terms of this Agreement, the Trustee may require reasonable indemnity against such cost, expense or liability as a condition to taking any such action. The reasonable expense of every such examination shall be paid by the Servicer or, if paid by
the Trustee, shall be repaid by the Servicer upon demand from the Servicer’s own funds. 
  
 The rights of the Trustee to perform any discretionary act enumerated in this Agreement shall not be construed as a duty, and the Trustee shall not be answerable for other than its negligence or willful misconduct in
the performance of such act. 
  
 The Trustee shall not be required
to give any bond or surety in respect of the execution of the Trust Fund created hereby or the powers granted hereunder. 
  
 Section 8.03 Individual Rights of Trustee. 
  
 The Trustee in its individual or any other capacity may become the owner or pledgee of Certificates and may otherwise deal with the Seller or its
Affiliates with the same rights it would have if it were not Trustee. Any Certificates Registrar, co-registrar or co-paying agent may do the same with like rights. However, the Trustee must comply with Section 8.11 hereof. 
  
 Section 8.04 Trustee’s Disclaimer. 
  
 The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Agreement or the Certificates, or of any Mortgage Loan or related document, or of MERS or the MERS System. The Trustee shall not be accountable for the use of the proceeds from the Certificates, and the Trustee shall
not be responsible for any statement of the Trust in this Agreement or in any document issued in connection with the sale of the Certificates or in the Certificates other than the Trustee’s or the Certificate Registrar’s certificate of
authentication. 
  
 Section 8.05 Notice of
Servicing Default. 
  
 The Trustee shall mail to each
Certificateholder notice of the Servicing Default within 10 days after a Responsible Officer has actual knowledge thereof unless such Servicing Default shall have been waived or cured. Except in the case of a Servicing Default in payment of
principal of or interest on any Certificate, the Trustee may withhold the notice if and so long as it in good faith determines that withholding the notice is in the interests of Certificateholders. 
  

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 Section 8.06 [Reserved]. 
  
 Section 8.07 Compensation and Indemnity. 
  
 The amount of the Trustee Fee and Custodian Fee shall be paid to the Trustee and Custodian, respectively, on each
Distribution Date pursuant to Section 4.01(a)(i) of this Agreement, and all amounts owing to the Trustee hereunder in excess of such amount shall be paid solely as provided in this Agreement. The Trustee’s compensation shall not be limited
by any law on compensation of a trustee of an express trust. 
  
 Section 8.08 Replacement of Trustee. 
  
 No resignation or removal of the Trustee and no appointment of a successor Trustee shall become effective until the acceptance of appointment by the successor Trustee pursuant to this Section 8.08. The Trustee may resign at any time by
so notifying the Company. The Majority Certificateholders may at any time remove the Trustee by so notifying the Company and the Trustee and the Company and may appoint a successor Trustee. The Company shall remove the Trustee if: 
  
 (a) the Trustee fails to comply with Section 8.11 hereof; 

 
 (b) the Trustee is adjudged a bankrupt or insolvent; 
  
 (c) a receiver or other public officer takes charge of the Trustee or its
respective property; or 
  
 (d) the Trustee otherwise becomes
incapable of acting. 
  
 If the Trustee resigns or is removed or
if a vacancy exists in the office of the Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Company shall promptly appoint a successor Trustee. 
  
 A successor Trustee shall deliver a written acceptance of its appointment to
the retiring Trustee, the Company, the Trustee and the Servicer. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee or under
this Agreement. The successor Trustee shall mail a notice of its succession to the Certificateholders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee. 
  
 If a successor Trustee does not take office within 60 days after the retiring
Trustee resigns or is removed, the retiring Trustee, the Company, the Trustee or the Majority Certificateholders may petition any court of competent jurisdiction for the appointment of a successor Trustee. 
  
 Section 8.09 Successor Trustee by Merger. 
  
 If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all of its corporate trust business or assets to, another corporation or banking 
  

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 association, the resulting, surviving or transferee corporation, without any further act, shall be the successor Trustee;
provided, that such corporation or banking association shall be otherwise qualified and eligible under Section 8.11 hereof. 
  
 If at the time such successor or successors by merger, conversion or consolidation to the Trustee, shall succeed to the trusts created by this Agreement
and any of the Certificates shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee and deliver such Certificates so authenticated; and if at that time
any of the Certificates shall not have been authenticated, any successor to the Trustee may authenticate such Certificates either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such
certificates shall have the full force as the Certificates or this Agreement provide that such certificates of the Trustee shall have. 
  
 Section 8.10 Appointment of Co-Trustee or Separate Trustee. 
  
 Notwithstanding any other provisions of this Agreement, at any time, for the purpose of meeting any legal requirement of any
jurisdiction in which any part of the Trust Fund may at the time be located, the Trustee shall have the power and may execute and deliver all instruments to appoint one or more Persons to act as a co-trustee or co-trustees, or separate trustee or
separate trustees, of all or any part of the Trust Fund, and to vest in such Person or Persons, in such capacity and for the benefit of the Certificateholders, such title to the Trust Fund, or any part hereof, and, subject to the other provisions of
this Section, such powers, duties, obligations, rights and trusts as the Trustee may consider necessary or desirable. No co-trustee or separate trustee hereunder shall be required to meet the terms of eligibility as a successor trustee under
Section 8.11 hereof and notice to, and no consent of the Certificateholders of the appointment of any co-trustee or separate trustee shall be required. The Trustee hereby appoints J.P. Morgan Trust Company, National Association as Co-Trustee
hereunder solely for the purpose of holding the MI Policies. 
  
 Every separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions: 
  

(a) all rights, powers, duties and obligations conferred or imposed upon the Trustee shall be conferred or imposed upon and exercised or performed by
the Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to act separately without the Trustee joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed the Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust
Fund or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Trustee; 
  
 (b) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; and

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

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

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

  
 Section 8.11 Eligibility; Disqualification.

  
 The Trustee shall be a corporation or association organized
and doing business under the laws of a state of the United States. The Trustee is subject to supervision or examination by federal or state authority. The Trustee shall at all times be reasonably acceptable to the Company and authorized to exercise
corporate trust powers. The Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition and it or its parent shall have a long-term debt rating of Baa3 or better by
Moody’s, BBB or better by Standard & Poor’s and BBB or F-2 or better by Fitch. The Trustee shall also have a short term rating of A-1 or better by Standard & Poor’s. 
  
 Section 8.12 [Reserved]. 
  
 Section 8.13 Representations and Warranties. 

 
 (a) The Trustee hereby represents that: 
  
 (i) The Trustee is duly organized and validly existing as a
national banking association in good standing under the laws of the United States with power and authority to own its properties and to conduct its business as such properties are currently owned and such business is presently conducted; 

 
 (ii) The Trustee has the power and authority to execute
and deliver this Agreement and to carry out its terms; and the execution, delivery and performance of this Agreement have been duly authorized by the Trustee by all necessary corporate action; 
  

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 (iii) The consummation of the transactions contemplated by this Agreement and the
fulfillment of the terms hereof do not conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a default under, the articles of organization or bylaws of the Trustee or any
agreement or other instrument to which the Trustee is a party or by which it is bound; and 
  
 (iv) To the Trustee’s best knowledge, there are no proceedings or investigations pending or threatened before any court, regulatory
body, administrative agency or other governmental instrumentality having jurisdiction over the Trustee or its properties: (A) asserting the invalidity of this Agreement, (B) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or (C) seeking any determination or ruling that might materially and adversely affect the performance by the Trustee of its obligations under, or the validity or enforceability of, this Agreement. 
  
 Section 8.14 Directions to Trustee. 
  
 The Trustee is hereby directed: 
  
 (a) to accept the Mortgage Loans and hold the assets of the Trust Fund in
trust for the Certificateholders; 
  
 (b) to authenticate and
deliver the Certificates of each Class substantially in the forms prescribed by Exhibits A-1, A-2, A-3, A-4, A-5, A-7, A-8, A-9, A-10, A-11, A-12, A-13, A-14, A-15, A-16, A-17, A-18, A-19 and A-20 in accordance with the terms of this Agreement;

  
 (c) to execute the Swap Agreements and Cap Agreements as
trustee on behalf of the Supplemental Interest Trust; and 
  
 (d)
to take all other actions as shall be required to be taken by the terms of this Agreement. 
  
 Section 8.15 The Agents. 
  
 The provisions of this Agreement relating to the limitations of the Trustee’s liability and to its indemnity shall inure also to the Paying Agent, and the Certificate Registrar. 
  
 Section 8.16 Reports by the Trustee; Trust Fiscal Year.

  
 The Trustee, on behalf of the Trust, shall: 
  
 (a) file with the Commission, on behalf of the Trust, the annual reports and
information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) that the Trust may be required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act. Such filings shall be as follows: within 15 days after each Distribution Date, the Trustee, on behalf of 
  

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 the Trust, shall file with the Commission via the Electronic Data Gathering, Analysis and Retrieval System, a Form 8-K
with a copy of the statement to Certificateholders for such Distribution Date as an exhibit thereto. Prior to January 31, 2006, the Trustee, shall file a Form 15 Suspension Notification with respect to the Trust Fund, if applicable. Prior to
March 31, 2006, the Trustee, on behalf of the Trust, shall file a Form 10-K, in substance conforming to industry standards, with respect to the Trust Fund. The Company will prepare and execute any certifications to be filed with the Form 10-K
as required under the Sarbanes-Oxley Act of 2002. The Trust hereby grants to the Trustee, a limited power of attorney to execute and file each such document on behalf of the Trust. Such power of attorney shall continue until the termination of the
Trust Fund. The Trustee, on behalf of the Trust, shall deliver to the Seller within three Business Days after filing any Form 8-K or Form 10-K pursuant to this Section 8.16 a copy of such Form 8-K or Form 10-K, as the case may be; and

  
 (b) file with the Commission (with copies to the Seller and
the Company) in accordance with rules and regulations prescribed from time to time by the Commission such additional information, documents and reports with respect to compliance by the Trust with the conditions and covenants of this Agreement as
may be required from time to time by such rules and regulations. 
  
 The fiscal year of the Trust shall end on December 31 of each year. 
  
 Section 8.17 Execution of the Novation, Swap Agreements, and Cap Agreements. 
  
 The Company hereby directs the Trustee to enter into and execute the Novation Agreements, the Swap Agreements, and the Cap Agreements on the Closing Date
on behalf of the Supplemental Interest Trust. The Seller, the Company, the Servicer and the Certificateholders (by their acceptance of such Certificates) acknowledge that JPMorgan Chase Bank, National Association is entering into the Swap Agreements
and Cap Agreements solely in its capacity as Trustee of the Trust Fund and not in its individual capacity. 
  
 ARTICLE IX 
  
 [Reserved] 
  
 ARTICLE X 
  
 REMIC ADMINISTRATION 
  
 Section 10.01 REMIC Administration. 
  
 (a) [Reserved]. 
  
 (b) September 22, 2005 is hereby designated as the “Startup
Day” of each REMIC within the meaning of Section 860G(a)(9) of the Code. 
  
 (c) The Servicer shall pay any and all tax related expenses (not including taxes) of each REMIC, including but not limited to any professional fees or expenses related to 
  

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 audits or any administrative or judicial proceedings with respect to each REMIC that involve the Internal Revenue Service
or state tax authorities, but only to the extent that (i) such expenses are ordinary or routine expenses, including expenses of a routine audit but not expenses of litigation (except as described in (ii)); or (ii) such expenses or
liabilities (including taxes and penalties) are attributable to the negligence or willful misconduct of the Servicer in fulfilling its duties hereunder. The Servicer shall be entitled to reimbursement of expenses to the extent provided in clause
(i) above from the Collection Account. 
  
 (d) The Trustee
shall (a) maintain (or cause to be maintained) the books of the Trust on a calendar year basis using the accrual method of accounting, (b) deliver (or cause to be delivered) to each Certificateholder as may be required by the Code and
applicable Treasury Regulations, including the REMIC Provisions, such information as may be required to enable each Certificateholder to prepare its federal and state income tax returns, (c) prepare and file or cause to be prepared and filed
such Tax Returns relating to the Trust as may be required by the Code and applicable Treasury Regulations (including timely making elections to treat specified assets of the Trust as one or more REMICs for federal income tax purposes and any other
such elections as may from time to time be required or appropriate under any applicable state or federal statutes, rules or regulations), (d) collect or cause to be collected any required withholding tax with respect to income or distributions
to Certificateholders and prepare or cause to be prepared the appropriate forms relating thereto and (e) maintain records as required by the REMIC Provisions. 
  
 (e) The Holder of the Residual Certificate at any time holding the largest Percentage Interest thereof shall be the
“tax matters person” as defined in the REMIC Provisions (the “Tax Matters Person”) with respect to each REMIC and shall act as Tax Matters Person for each REMIC. The Trustee, as agent for the Tax Matters Person, shall
perform on behalf of each REMIC all reporting and other tax compliance duties that are the responsibility of such REMIC under the Code, the REMIC Provisions, or other compliance guidance issued by the Internal Revenue Service or any state or local
taxing authority. Among its other duties, if required by the Code, the REMIC Provisions, or other such guidance, the Trustee, as agent for the Tax Matters Person, shall provide (i) to the Treasury or other governmental authority such
information as is necessary for the application of any tax relating to the transfer of a Residual Certificate to any Disqualified Organization or non-U.S. Person and (ii) to the Certificateholders such information or reports as are required by
the Code or REMIC Provisions. 
  
 (f) The Trustee, the Servicer
and the Holders of Certificates shall take any action or cause the REMIC to take any action necessary to create or maintain the status of each REMIC as a REMIC under the REMIC Provisions and shall assist each other as necessary to create or maintain
such status. Neither the Trustee, the Servicer nor the Holder of any Residual Certificate shall take any action, cause any REMIC created hereunder to take any action or fail to take (or fail to cause to be taken) any action that, under the REMIC
Provisions, if taken or not taken, as the case may be, could (i) endanger the status of such REMIC as a REMIC or (ii) result in the imposition of a tax upon such REMIC (including but not limited to the tax on prohibited transactions as
defined in Code Section 860F(a)(2) and the tax on prohibited contributions set forth on Section 860G(d) of the Code) (either such event, an “Adverse REMIC Event”) unless the Trustee and the Servicer have received an
Opinion of Counsel (at the expense of the party seeking to take such action) to the effect that the contemplated action will not endanger such 
  

 74 

 status or result in the imposition of such a tax. In addition, prior to taking any action with respect to any REMIC
created hereunder or the assets therein, or causing such REMIC to take any action, which is not expressly permitted under the terms of this Agreement, any Holder of a Residual Certificate will consult with the Trustee and the Servicer, or their
respective designees, in writing, with respect to whether such action could cause an Adverse REMIC Event to occur with respect to any REMIC, and no such Person shall take any such action or cause any REMIC to take any such action as to which the
Trustee or the Servicer has advised it in writing that an Adverse REMIC Event could occur. 
  
 (g) Each Holder of a Residual Certificate shall pay when due any and all taxes imposed on each REMIC created hereunder by federal or state governmental authorities. To the extent that such Trust taxes are not paid by
a Residual Certificateholder, the Trustee shall pay any remaining REMIC taxes out of current or future amounts otherwise distributable to the Holder of the Residual Certificate in the REMICs or, if no such amounts are available, out of other amounts
held in the Distribution Account, and shall reduce amounts otherwise payable to Holders of regular interests in the related REMIC. 
  
 (h) The Trustee, as agent for the Tax Matters Person, shall, for federal income tax purposes, maintain books and records with respect to each REMIC
created hereunder on a calendar year and on an accrual basis. 
  
 (i) After the Pre-Funding Period, no additional contributions of assets shall be made to any REMIC created hereunder, except as expressly provided in this Agreement with respect to Qualified Replacement Mortgages. 
  
 (j) Neither of the Trustee nor the Servicer shall enter into any arrangement
by which any REMIC created hereunder will receive a fee or other compensation for services. 
  
 (k) The Trustee will apply for an Employee Identification Number from the Internal Revenue Service via a Form SS-4 or other acceptable method for REMIC I, REMIC II, REMIC III and REMIC IV and the Master REMIC.

  
 (l) The Trustee shall treat the Supplemental Interest Trust as
an outside reserve fund within the meaning of Treasury Regulation Section 1.860G-2(h) that is owned by the holders of the Class C Certificates and that is not an asset of any REMIC. The Trustee shall treat the rights of the holders of the
Class A and Mezzanine Certificates to receive any interest payments in excess of the REMIC Pass-Through Rate on the Master REMIC Regular Interest corresponding to such Class of Certificates as rights in an interest rate cap contract written by
the Class C Certificateholders in favor of the holders of the Class A and Mezzanine Certificates. Thus, each Class A and Mezzanine Certificate shall be treated as representing not only ownership of a regular interest in the Master REMIC,
but also ownership of an interest in an interest rate cap contract. Furthermore, the Trustee shall treat the obligation of the Holders of the Class A and Mezzanine Certificates to make certain payments to the Supplemental Interest Account to
the extent that the payment on the Pass-Through Rate on the Master REMIC Regular Interest exceeds the interest payment on the corresponding Class of Certificates as an obligation to make payments pursuant to an interest rate cap contract written by
the Holders of the Class A and Mezzanine Certificates in favor of the Class C Certificateholder. Notwithstanding the 
  

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 priority and sources of payments set forth in Article IV hereof or otherwise, the Trustee shall account for all
distributions on the Certificates as set forth in this section. In no event shall any payments provided for in this section be treated as payments with respect to a “regular interest” in a REMIC within the meaning of Code
Section 860G(a)(1). 
  
 (m) Neither the Class M-11 DSI
Certificates nor the Class M-12 DSI Certificates will be treated as regular or residual interest in any REMIC created hereunder. 
  
 Section 10.02 Prohibited Transactions and Activities. 
  
 None of the Company, the Servicer nor the Trustee shall sell, dispose of, or substitute for any of the Mortgage Loans, if
such disposition, acquisition, substitution, or acceptance would (a) affect adversely the status of any REMIC created hereunder as a REMIC or (b) cause any REMIC created hereunder to be subject to a tax on prohibited transactions or
prohibited contributions pursuant to the REMIC Provisions. 
  
 ARTICLE XI 
  
 TERMINATION 
  
 Section 11.01 Termination. 
  
 (a) The respective obligations and responsibilities of the Seller, the
Servicer, the Company and the Trustee created hereby (other than the obligation of the Trustee to make certain payments to Certificateholders after the final Distribution Date and the obligation of the Servicer to send certain notices as hereinafter
set forth and the obligation of the Servicer to indemnify the Trustee in accordance with Section 6.06) shall terminate upon notice to the Trustee upon the earliest of (i) the Distribution Date on which the Certificate Principal Balances of
the Regular Certificates have been reduced to zero, (ii) the final payment or other liquidation of the last Mortgage Loan in the Trust, (iii) the optional purchase by the Servicer of the Mortgage Loans as described below and (iv) the
Distribution Date in January 2036. Notwithstanding the foregoing, in no event shall the trust created hereby continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late ambassador
of the United States to the Court of St. James, living on the date hereof. 
  
 The Servicer may, at its option, terminate this Agreement on any date on which the aggregate of the Principal Balances of the Mortgage Loans on such date is equal to or less than 10% of the Maximum Collateral Amount,
by purchasing, on the next succeeding Distribution Date, all of the outstanding Mortgage Loans and REO Properties at a price equal to the greater of the Principal Balance of the Mortgage Loans and REO Properties or the market value of the Mortgage
Loans and REO Properties, in each case plus accrued and unpaid interest thereon at the weighted average of the Mortgage Rates through the end of the Due Period preceding the final Distribution Date plus unreimbursed Servicing Advances, Advances, any
unpaid Servicing Fees allocable to such Mortgage Loans and REO Properties, any accrued and unpaid Available Funds Cap Shortfall Amount and Available Funds Cap Carryforward Amount (without duplication of amounts already paid) and any unpaid amount
due the Trustee, the Swap 
  

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 Counterparties, the Cap Counterparties and the Custodian under this Agreement; provided, however, that in
no event shall such price be less than the amount necessary to pay the sum of (i) 100% of the aggregate Certificate Principal Balance of each Class of Certificates, (ii) accrued and unpaid interest thereon at the related Pass-Through Rate
through the date on which the trust is terminated, (iii) any unpaid Administrative Fees and (iv) any unpaid amount due to the Swap Counterparties or the Cap Counterparties (the “Termination Price”); provided, however, that
such option may only be exercised if the Termination Price is sufficient to pay all interest accrued on, as well as amounts necessary to retire the principal balance of, each class of net interest margin notes issued pursuant to the Indenture at the
time the option is exercised. 
  
 In connection with any such
purchase pursuant to the preceding paragraph, the Servicer shall deposit in the Distribution Account all amounts then on deposit in the Collection Account, which deposit shall be deemed to have occurred immediately preceding such purchase.

  
 Any such purchase shall be accomplished by deposit into the
Distribution Account on the Distribution Date of the Termination Price. 
  
 (b) In the event that the Certificate Principal Balances of all of the Class A and Mezzanine have not been reduced to zero by the Distribution Date in January 2036, the Trustee, shall (i) sign a plan of complete liquidation of
each REMIC created hereunder meeting the requirements of a “Qualified Liquidation” under Section 860F of the Code and any regulations thereunder, (ii) sell all of the assets of the Trust Fund for cash in a commercially reasonable
manner to maximize the value thereof, pursuant to the terms of the plan of complete liquidation, (iii) distribute the proceeds of the sale to the Certificateholders in accordance with Section 4.01 hereof, and (iv) terminate the Trust.
By their acceptance of Certificates, the Holders thereof hereby agree to appoint the Trustee as their attorney in fact to: (i) adopt such a plan of complete liquidation (and the Certificateholders hereby appoint the Trustee as their attorney in
fact to sign such a plan) as appropriate and (ii) to take such other action in connection therewith as may be reasonably required to carry out such plan of complete liquidation in accordance with the terms thereof. 
  
 (c) Notice of any termination, specifying the Distribution Date (which shall
be a date that would otherwise be a Distribution Date) upon which the Certificateholders may surrender their Certificates to the Trustee for payment of the final distribution and cancellation, shall be given promptly by the Trustee upon the Trustee
receiving notice of such date from the Servicer, by letter to the Certificateholders mailed not earlier than the 15th day and not later than the 25th day of the month next preceding the month of such final distribution specifying (1) the
Distribution Date upon which final distribution of the Certificates will be made upon presentation and surrender of such Certificates at the office or agency of the Trustee therein designated, (2) the amount of any such final distribution and
(3) that the Record Date otherwise applicable to such Distribution Date is not applicable, distributions being made only upon presentation and surrender of the Certificates at the office or agency of the Trustee therein specified. 

 
 (d) Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to the Holders of the Certificates on the Distribution Date for such final distribution, in proportion to the Percentage Interests of their respective Class and to the extent 
  

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 that funds are available for such purpose, an amount equal to the amount required to be distributed to such Holders in
accordance with the provisions of Section 4.01 for such Distribution Date. 
  
 (e) In the event that all Certificateholders shall not surrender their Certificates for final payment and cancellation on or before such final Distribution Date, the Trustee shall promptly following such date cause
all funds in the Distribution Account not distributed in final distribution to Certificateholders to be withdrawn therefrom and credited to the remaining Certificateholders by depositing such funds in a separate Servicing Account for the benefit of
such Certificateholders, and the Servicer (if the Servicer has exercised its right to purchase the Mortgage Loans) or the Trustee (in any other case) shall give a second written notice to the remaining Certificateholders, to surrender their
Certificates for cancellation and receive the final distribution with respect thereto. If within nine months after the second notice all the Certificates shall not have been surrendered for cancellation, the Residual Certificateholder shall be
entitled to all unclaimed funds and other assets which remain subject hereto, and the Trustee upon transfer of such funds shall be discharged of any responsibility for such funds, and the Certificateholders shall look to the Residual
Certificateholder for payment. 
  
 Section 11.02
Additional Termination Requirements. 
  
 (a) In the
event that the Servicer exercises its purchase option as provided in Section 11.01 or the Trustee terminates the Trust, each REMIC shall be terminated in accordance with the following additional requirements, unless the Trustee shall have been
furnished with an Opinion of Counsel to the effect that the failure of the Trust to comply with the requirements of this Section will not (i) result in the imposition of taxes on “prohibited transactions” of the Trust as defined in
Section 860F of the Code or (ii) cause any REMIC constituting part of the Trust Fund to fail to qualify as a REMIC at any time that any Certificates are outstanding: 
  
 (i) Within 90 days prior to the final Distribution Date, the Servicer shall adopt and the Trustee shall sign
a plan of complete liquidation of each REMIC created hereunder meeting the requirements of a “Qualified Liquidation” under Section 860F of the Code and any regulations thereunder; and 
  
 (ii) At or after the time of adoption of such a plan of
complete liquidation and at or prior to the final Distribution Date, the Trustee shall sell all of the assets of the Trust Fund to the Servicer for cash pursuant to the terms of the plan of complete liquidation. 
  
 (b) By their acceptance of Certificates, the Holders thereof hereby agree to
appoint the Trustee as their attorney in fact to: (i) adopt such a plan of complete liquidation (and the Certificateholders hereby appoint the Trustee as their attorney in fact to sign such plan) as appropriate and (ii) to take such other
action in connection therewith as may be reasonably required to carry out such plan of complete liquidation all in accordance with the terms hereof. 
  

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 ARTICLE XII 
  
 MISCELLANEOUS PROVISIONS 
  
 Section 12.01 Amendment. 
  
 This Agreement may be amended from time to time by the parties hereto, and without the consent of the Certificateholders, the Swap Counterparties or the
Cap Counterparties (i) to cure any ambiguity, (ii) to correct or supplement any provisions herein which may be defective or inconsistent with any other provisions herein or (iii) to make any other provisions with respect to matters or
questions arising under this Agreement which shall not be inconsistent with the provisions of this Agreement; provided, however, that any such action listed in clause (i) through (iii) above shall be deemed not to adversely affect
in any respect the interests of (A) any Certificateholder, if evidenced by (i) written notice to the Company, the Servicer and the Trustee from the Rating Agencies that such action will not result in the reduction or withdrawal of the
rating of any outstanding Class of Certificates with respect to which it is a Rating Agency or (ii) an Opinion of Counsel delivered to the Servicer, the Company and the Trustee and (B) any Swap Counterparty or Cap Counterparty, if
evidenced by an Opinion of Counsel from outside counsel delivered to the Servicer, the Company, the Trustee, each Swap Counterparty and each Cap Counterparty with a copy to the Rating Agencies stating that such actions will have no material adverse
effect on the Swap Counterparty or Cap Counterparties. This Agreement may be amended by the parties hereto without the consent of the Swap Counterparties after the Class I Termination Date and without the consent of the Cap Counterparties after the
Distribution Date in August 2008. 
  
 In addition, this Agreement
may be amended from time to time by the parties hereto with the consent of the Majority Certificateholders for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of modifying
in any manner the rights of the Holders of Certificates; provided, however, that no such amendment or waiver shall (w) reduce in any manner the amount of, or delay the timing of, payments on the Certificates or distributions which are required
to be made on any Certificate without the consent of the Holder of such Certificate, (x) adversely affect in any material respect the interests of the Holders of any Class of Certificates in a manner other than as described in clause
(w) above, without the consent of the Holders of Certificates of such Class evidencing at least a 66% Percentage Interest in such Class, (y) reduce the percentage of Voting Rights required by clause (x) above without the consent of
the Holders of all Certificates of such Class then outstanding or (z) have a material adverse effect on the interests of the Swap Counterparties or Cap Counterparties without such Swap Counterparties’ or Cap Counterparties’ consent.
Upon approval of an amendment, a copy of such amendment shall be sent to the Rating Agencies. 
  
 Notwithstanding any provision of this Agreement to the contrary, the Trustee shall not consent to any amendment to this Agreement unless it shall have first received an Opinion of Counsel, delivered by (and at the
expense of) the Person seeking such Amendment, to the effect that such amendment will not result in the imposition of a tax on any REMIC created hereunder constituting part of the Trust Fund pursuant to the REMIC Provisions or cause any REMIC
created hereunder constituting part of the Trust to fail to qualify as a REMIC at any time that any Certificates are outstanding and that the amendment is being made in accordance 
  

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 with the terms hereof. Additionally, prior to entering into any amendment, the Trustee shall be entitled to receive from
the party requesting such amendment an opinion of counsel stating that such amendment is authorized any permitted pursuant to the terms of this Agreement. 
  
 Promptly after the execution of any such amendment the Trustee shall furnish, at the expense of the Person that requested the amendment if such Person is
Seller or the Servicer (but in no event at the expense of the Trustee), otherwise at the expense of the Trust, a copy of such amendment and the Opinion of Counsel referred to in the immediately preceding paragraph to the Servicer and each Rating
Agency. 
  
 It shall not be necessary for the consent of
Certificateholders under this Section 12.01 to approve the particular form of any proposed amendment; instead it shall be sufficient if such consent shall approve the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be subject to such reasonable regulations as the Trustee may prescribe. 
  
 The Trustee shall not be obligated to enter into any amendment pursuant to this Section 12.01 that affects its rights, duties and immunities under
this Agreement or otherwise. 
  
 Section 12.02
Recordation of Agreement; Counterparts. 
  
 To the
extent permitted by applicable law, this Agreement is subject to recordation in all appropriate public offices for real property records in all the counties or other comparable jurisdictions in which any or all of the properties subject to the
Mortgages are situated, and in any other appropriate public recording office or elsewhere, such recordation to be effected by the Servicer at the expense of the Trust, but only upon direction of Certificateholders accompanied by an Opinion of
Counsel to the effect that such recordation materially and beneficially affects the interests of the Certificateholders. 
  
 For the purpose of facilitating the recordation of this Agreement as herein provided and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be an original, and such counterparts shall together constitute but one and the same instrument. 
  
 Section 12.03 Limitation on Rights of Certificateholders. 
  
 The death or incapacity of any Certificateholder shall not (i) operate
to terminate this Agreement or the Trust, (ii) entitle such Certificateholder’s legal representatives or heirs to claim an accounting or to take any action or proceeding in any court for a partition or winding up of the Trust, or
(iii) otherwise affect the rights, obligations and liabilities of the parties hereto or any of them. 
  
 Except as expressly provided for herein, no Certificateholder shall have any right to vote or in any manner otherwise control the operation and management
of the Trust, or the obligations of the parties hereto, nor shall anything herein set forth or contained in the terms of the Certificates be construed so as to constitute the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third person by reason of any action taken by the parties to this Agreement pursuant to any provision hereof. 
  

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 No Certificateholder shall have any right by virtue of any provision of this Agreement to institute any
suit, action or proceeding in equity or at law upon or under or with respect to this Agreement, unless such Holder previously shall have given to the Trustee a written notice of default and of the continuance thereof, as hereinbefore provided, and
unless also the Holders of Certificates entitled to at least 25% of the Voting Rights shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby, and the Trustee for 15 days after its receipt of such notice, request and offer of indemnity, shall have neglected or
refused to institute any such action, suit or proceeding. It is understood and intended, and expressly covenanted by each Certificateholder with every other Certificateholder and the Trustee, that no one or more Holders of Certificates shall have
any right in any manner whatever by virtue of any provision of this Agreement to affect, disturb or prejudice the rights of the Holders of any other of such Certificates, or to obtain or seek to obtain priority over or preference to any other such
Holder, which priority or preference is not otherwise provided for herein, or to enforce any right under this Agreement, except in the manner herein provided and for the equal, ratable and common benefit of all Certificateholders. For the protection
and enforcement of the provisions of this Section 12.03 each and every Certificateholder and the Trustee shall be entitled to such relief as can be given either at law or in equity. 
  
 Section 12.04 Governing Law; Jurisdiction. 
  
 This Agreement shall be construed in accordance with the laws of the State of New York, and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such laws. With respect to any claim arising out of this Agreement, each party irrevocably submits to the exclusive jurisdiction of the courts of the State of New York and the
United States District Court located in the Borough of Manhattan in The City of New York, and each party irrevocably waives any objection which it may have at any time to the laying of venue of any suit, action or proceeding arising out of or
relating hereto brought in any such courts, irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in any inconvenient forum and further irrevocably waives the right to object, with respect
to such claim, suit, action or proceeding brought in any such court, that such court does not have jurisdiction over such party, provided that service of process has been made by any lawful means. 
  

 81 

 Section 12.05 Notices. 
  
 All demands, notices and communications hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by certified mail, return receipt requested, or sent by reputable overnight courier service to: 
  

	 	(a)	in the case of the Company: 

  
 NovaStar Mortgage Funding Corporation 
 8140 Ward Parkway 
 Suite 300 
 Kansas City, Missouri 64114 
 Attention: Matt Kaltenrieder 
  

	 	(b)	in the case of the Servicer or the Seller: 

  
 NovaStar Mortgage, Inc. 
 8140 Ward Parkway 
 Suite 300 
 Kansas City, Missouri 64114 
 Attention: Matt Kaltenrieder 
  

	 	(c)	in the case of Rating Agencies: 

  
 Moody’s Investors Service Inc. 
 99 Church Street 
 New York, New York 10007 
 Attention: Shelly Garg 
  
 Standard & Poor’s 
 26 Broadway 
 New York, New York 10004-1064 
 Attention: Scott Mason 
  
 Fitch Ratings 
 One State Street Plaza, 30th Floor 
 New York, New York 10004 
 Attention: Michele Patterson 
 Tel: (212) 908-0779 
  

	 	(d)	in the case of the Custodian: 

  
 Wachovia Bank, National Association 
 4527 Metropolitan Court 
 Suite C 
 Frederick, MD 21704 
 Attn: Edwin Aquino 
 Tel: (301) 874-4531 
 Fax: (301) 874-6055 
 Attention: Structured Finance Trust Services 
 (NovaStar Mortgage Funding Trust, Series
2005-3) 
  

 82 

	 	(e)	in the case of the Trustee: 

  
 JPMorgan Chase Bank, National Association 
 4 New York Plaza, 6th Floor 
 New York, NY 10004-2477 
 Attention: Institutional Trust Services/ Global Debt 
 (NovaStar Mortgage Funding Trust, Series 2005-3) 
  

	 	(f)	in the case of the Co-Trustee: 

  
 J.P. Morgan Trust Company, National Association 
 ITS - Global Debt 
 560 Mission Street, 13th Floor 
 San Francisco, CA 94105 
 Attn: James Myers, V.P. (NovaStar Mortgage Funding Trust, Series 2005-3) 
  

	 	(g)	in the case of The Royal Bank of Scotland plc, as Swap Counterparty and as Cap Counterparty: 

  
 c/o RBS Financial Markets 
 Level 7, 135 Bishopsgate 
 London, EC2M 3UR 
 Attention:     Financial Markets Legal

 Telephone:   44 207 085 5000 
 Facsimile:      44 207 085 8411 
  
 With a copy to: 
  
 600 Steamboat Road 
 Greenwich, CT 06830 
 Attention:     Legal Department – Derivatives Documentation

 Telephone:   203 618-2531/32 
 Facsimile:      203 618-2533/34 
  

	 	(h)	in the case of Wachovia Bank, N.A., as Swap Counterparty and as Cap Counterparty: 

  
 Wachovia Bank, N.A. 
 201 South College Street, 6th Floor 
 Charlotte, NC 28288-0601 
 Attention: Collateral Management Group 
 Tel: (704) 715-7663 
 Fax: (704) 383-3394 
  

 83 

	 	(i)	in the case of Deutsche Bank AG, as Swap Counterparty and as Cap Counterparty: 

  

Deutsche Bank AG 
 Taunusanlage 12 
 60262 Frankfurt 
 GERMANY 
 Attention: Legal Department 
 Telex No: 411836 or 416731 or 41233 
 Answerback: DBF-D 
  
 or, as to each party, at such other address as shall be designated by such party in a written notice to each other party. Any notice required or permitted to be mailed to
a Certificateholder shall be given by first class mail, postage prepaid, at the address of such Certificateholder as shown in the Certificate Register. Any notice so mailed within the time prescribed in this Agreement shall be conclusively presumed
to have been duly given, whether or not the Certificateholder receives such notice. Any notice or other document required to be delivered or mailed by the Trustee to any Rating Agency shall be given on a reasonable efforts basis and only as a matter
of courtesy and accommodation and the Trustee shall have no liability for failure to deliver such notice or document to any Rating Agency. 
  
 Section 12.06 Severability of Provisions. 
  
 If any one or more of the covenants, agreements, provisions or terms of this Agreement shall for any reason whatsoever be held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement
or of the Certificates or the rights of the Holders thereof. 
  
 Section 12.07 Article and Section References. 
  
 All article and section references used in this Agreement, unless otherwise provided, are to articles and sections in this Agreement. 
  
 Section 12.08 Further Assurances. 
  
 Notwithstanding any other provision of this Agreement, the Trustee shall not have any obligation to consent to any amendment
or modification of this Agreement unless they have been provided reasonable security or indemnity against their out-of-pocket expenses (including reasonable attorneys’ fees) to be incurred in connection therewith. 
  
 Section 12.09 Benefits of Agreement. 
  
 Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Certificateholders, the Swap Counterparties, the Cap Counterparties and the parties hereto and their successors hereunder, any benefit or any legal or equitable right, remedy or claim under this Agreement.

  

 84 

 Section 12.10 Acts of Certificateholders. 
  
 (a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by the Certificateholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Certificateholders in person or by agent duly
appointed in writing, and such action shall become effective when such instrument or instruments are delivered to the Trustee, the Seller and the Servicer. Such instrument or instruments (and the action embodied therein and evidenced thereby) are
herein sometimes referred to as the “act” of the Certificateholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee and the Trust, if made in the manner provided in this Section 12.10. 
  
 (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by
the certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Whenever such execution is by a
signer acting in a capacity other than his or her individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. 
  
 (c) Any request, demand, authorization, direction, notice, consent, waiver or other action by any Certificateholder shall bind every future Holder of such
Certificate and the Holder of every Certificate issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, in respect of anything done, omitted or suffered to be done by the Trustee or the Trust in reliance thereon,
whether or not notation of such action is made upon such Certificate. 
  
 Section 12.11 Confidentiality. 
  
 The Trustee hereby agrees to hold and treat all Confidential Information (as defined below) provided to it in connection with the offering of the Certificates in confidence and in accordance with this Section 12.11, and will implement
and maintain safeguards in accordance with the “Interagency Guidelines Establishing Standards for Safeguarding Customer Information” as required by Appendix B to 12 CFR, Chapter I, Part 30, to further assure the confidentiality of such
Confidential Information. Such Confidential Information will not, without the prior written consent of the Servicer, be disclosed or used by the Trustee or by its subsidiaries or, affiliates, or its or their directors, officers, employees, agents or
controlling persons or agents or advisors (collectively, the “Information Recipients”) other than for the purposes of (i) structuring the securitization transaction and the facilitating the issuance of the Certificates, or
(ii) in connection with the performance of its required due diligence on the Mortgage Loans. Disclosure that is not in violation of the Right to Financial Privacy Act of 1978, as amended, the Gramm-Leach-Bliley Act of 1999, as amended, (the
“G-L-B Act”) or other applicable law by the Trustee of any Confidential Information at the request of its outside auditors or governmental regulatory authorities in connection with an examination of the Trustee by any such authority
or for the purposes specified in above shall not constitute a breach of its obligations under this Section 12.11, and shall not require the prior consent of the Servicer. 
  

 85 

 As used herein, “Confidential Information” means non-public personal information (as defined in
the G-L-B Act and its enabling regulations issued by the Federal Trade Commission) regarding obligors on the Mortgage Loans that is identified as such by the Servicer. Confidential Information shall not include information which (i) is or
becomes generally available to the public other than as a result of disclosure by the Trustee or any of its Information Recipients; (ii) was available to the Trustee on a non-confidential basis from a person or entity other than the Servicer;
(iii) is requested to be disclosed by a governmental authority or related governmental, administrative, or regulatory or self-regulatory agencies having or claiming authority to regulate or oversee any aspect of the Trustee’s business or
that of its affiliates or is otherwise required by law or by legal or regulatory process to be disclosed; (iv) becomes available to the Trustee on a non-confidential basis from a person or entity other than the Servicer who, to the best
knowledge of the Trustee, is not otherwise bound by a confidentiality agreement with the Servicer, and is not otherwise prohibited from transmitting the information to the Trustee; (v) the Servicer provides written permission to the Trustee to
release, (vi) is independently developed by employees of the Trustee who did not have access to any or all of the otherwise Confidential Information or (vii) is disclosed to the Trustee’s auditors or counsel or is required to be
disclosed to its lenders or rating agencies, to the extent required for the purpose of consummating the services it is to provide as set forth herein. 
  

 86 

 IN WITNESS WHEREOF, the Company, the Servicer, the Seller, Custodian and the Trustee have caused their
names to be signed hereto by their respective officers thereunto duly authorized, all as of the day and year first above written. 
  

			
	NOVASTAR MORTGAGE FUNDING CORPORATION,
	 as Company

		
	 By:
	 	  

	 Name:
	 	 Matt Kaltenrieder

	 Title:
	 	 Vice President

	
	 NOVASTAR MORTGAGE, INC.,
 as Servicer and as
Seller

		
	 By:
	 	  

	 Name:
	 	 Matt Kaltenrieder

	 Title:
	 	 Vice President

	
	 WACHOVIA BANK, NATIONAL ASSOCIATION,
 as
Custodian

		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 
	
	 JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
 as Trustee

		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 

  
 [Pooling and
Servicing Agreement Signature Page] 
  

 87 

			
	 J.P. MORGAN TRUST COMPANY, NATIONAL
 ASSOCIATION,
 as Co-Trustee

		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 

  
 [Pooling and
Servicing Agreement Signature Page] 
  

 88 

					
	 STATE OF MISSOURI
	  	)	  	 
	 	  	)	  	ss.:
	 COUNTY OF JACKSON
	  	)	  	 

  
 On the
                 day of September, 2005 before me, a notary public in and for said State, personally appeared Matt Kaltenrieder known to me (or proved to me on
the basis of satisfactory evidence) to be a Vice President of NovaStar Mortgage Funding Corporation, a Delaware corporation that executed the within instrument, and also known to me (or proved to me on the basis of satisfactory evidence) to be the
person who executed it on behalf of said corporation, and acknowledged to me that such corporation executed the within instrument. 
  
 IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written. 
  

			
	 	 	  

	 Seal
	 	Notary Public

  

 89 

					
	 STATE OF MISSOURI
	  	)	  	 
	 	  	)	  	ss.:
	 COUNTY OF JACKSON
	  	)	  	 

  
 On the
                 day of September, 2005 before me, a notary public in and for said State, personally appeared Matt Kaltenrieder known to me (or proved to me on
the basis of satisfactory evidence) to be a Vice President of NovaStar Mortgage, Inc., a Virginia corporation that executed the within instrument, and also known to me (or proved to me on the basis of satisfactory evidence) to be the person who
executed it on behalf of said corporation, and acknowledged to me that such corporation executed the within instrument. 
  
 IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written. 
  

			
	 	  	  

	 Seal
	  	Notary Public

  

 90 

					
	STATE OF MARYLAND      	 	)	 	 
	 	 	)	 	ss.:
	COUNTY OF FREDERICK    	 	)	 	 

  
 On the
     day of September, 2005 before me, a notary public in and for said State, personally appeared
                     known to me (or proved to me on the basis of satisfactory evidence) to be a
                                        
     of Wachovia Bank, National Association, a national banking association that executed the within instrument, and also known to me (or proved to me on the basis of satisfactory evidence) to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation executed the within instrument. 
  
 IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written. 
  

			
	 	 	  

	Seal	 	Notary Public

  

 91 

					
	STATE OF NEW YORK      	 	)	 	 
	 	 	)	 	ss.:
	COUNTY OF NEW YORK      	 	)	 	 

  
 On the
     day of September, 2005 before me, a notary public in and for said State, personally appeared
                    , known to me (or proved to me on the basis of satisfactory evidence) to be
                                        
of JPMorgan Chase Bank, National Association that executed the within instrument, and also known to me (or proved to me on the basis of satisfactory evidence) to be the person who executed it on behalf of said association, and acknowledged to me
that such corporation executed the within instrument. 
  
 IN
WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written. 
  

			
	 	 	  

	Seal	 	Notary Public

  

 92 

 APPENDIX A 
  
 DEFINITIONS 
  
 “1933 Act”: The Securities Act of 1933, as amended. 
  
 “Account”: The Collection Account, the Pre-Funding Account, the Supplemental Interest Account, and the
Distribution Account. 
  
 “Accrual Period”: With
respect to each Distribution Date, the period commencing on the preceding Distribution Date (or in the case of the first Accrual Period, commencing on the Closing Date) and ending on the day preceding the applicable Distribution Date, or with
respect to the Swap Amount due in September 2005, the period commencing on September 22, 2005 and ending on September 25, 2005. 
  
 “Addition Notice”: With respect to the transfer of Subsequent Mortgage Loans to the Trust Fund pursuant to Section 2.08, a notice of
the Company’s designation of the Subsequent Mortgage Loans to be sold to the Trust Fund and the aggregate principal balance of such Subsequent Mortgage Loans as of the Subsequent Cut-off Date. The Addition Notice shall be given not later than
four Business Days prior to the related Subsequent Transfer Date and shall be substantially in the form attached hereto as Exhibit C. 
  
 “Adjustable Rate Mortgage Loan”: A Mortgage Loan which provides at any period during the life of such loan for the adjustment of the
Mortgage Rate payable in respect thereto. The Adjustable Rate Mortgage Loans are identified as such on the Mortgage Loan Schedule. 
  
 “Adjustment Date”: With respect to each Adjustable Rate Mortgage Loan, each adjustment date, on which the Mortgage Rate of such Mortgage
Loan changes pursuant to the related Mortgage Note. 
  
 “Administrative Fee”: With respect to each Distribution Date, the sum of the MI Premium, the Servicing Fee, the Custodian Fee and the Trustee Fee with respect to such Distribution Date. 
  
 “Administrative Fee Rate”: As to each Distribution Date, the
sum of (i) the Trustee Fee Rate, (ii) the Servicing Fee Rate, (iii) the Custodian Fee Rate and (iv) the total MI Premiums due during the related Due Period, expressed as an annual percentage rate of the Pool Balance as of the
beginning of that Due Period. 
  
 “Advance”: As
to any Mortgage Loan, any advance made by the Servicer in respect of any Distribution Date pursuant to Section 3.24. 
  
 “Adverse REMIC Event”: As defined in Section 10.01(f) hereof. 
  
 “Affiliate”: With respect to any Person, any other Person controlling, controlled by or under common
control with such Person. For purposes of this definition, “control” means the power to direct the management and policies of a Person, directly or indirectly, whether through ownership of voting securities, by contract or otherwise and
“controlling” and “controlled” shall have meanings correlative to the foregoing. 

 “Agreement”: This Pooling and Servicing Agreement and all amendments hereof and
supplements hereto. 
  
 “Allocated Realized Loss
Amount”: With respect to any Distribution Date and any Class of Mezzanine Certificates or the Overcollateralization Amount, the Realized Losses allocated to such Class of Certificates (or, with respect to the Overcollateralization Amount,
the Realized Loss allocated to the Overcollateralization Amount) on such Distribution Date. 
  
 “Applicable Regulations”: As to any Mortgage Loan, all federal and state laws, statutes, rules and regulations applicable thereto. 
  
 “Appraised Value”: The appraised value of a Mortgaged Property based upon the appraisal made at the time of
the origination of the related Mortgage Loan. With respect to a Mortgage Loan the proceeds of which were used to refinance an existing Mortgage Loan, the appraised value of the Mortgaged Property based upon the appraisal with the lowest appraised
value (as reviewed and approved by the Seller) obtained within 12 months of the time of refinancing. 
  
 “Assignment of Mortgage”: An assignment of Mortgage, notice of transfer or equivalent instrument, in recordable form, which is sufficient
under the laws of the jurisdiction wherein the related Mortgaged Property is located to reflect of record the sale of the Mortgage, which assignment, notice of transfer or equivalent instrument may be in the form of one or more blanket assignments
covering Mortgages secured by Mortgaged Properties located in the same county, if permitted by law. 
  
 “Assumed Final Maturity Date”: As to each Class of Certificates, the Distribution Date in January 2036. 
  
 “Available Funds”: As to each Distribution Date, an amount
equal to the amount on deposit in the Distribution Account, representing the sum of (i) the aggregate amount of scheduled payments on the related Mortgage Loans due on the related Due Date and received on or prior to the related Determination
Date, (ii) miscellaneous fees and collections, including prepayment penalties with respect to the Mortgage Loans (but excluding late fees), (iii) any unscheduled payments and receipts, including Mortgagor prepayments on the related
Mortgage Loans, received during the related Prepayment Period and proceeds of repurchases, and adjustments in the case of substitutions and terminations, Net Liquidation Proceeds and Insurance Proceeds, and proceeds from Subsequent Recoveries to pay
certain Certificates amounts in respect of Realized Losses allocated to such Certificates, (iv) all Advances made and Compensating Interest paid for such Distribution Date in respect of the related Mortgage Loans, (v) on the Distribution
Date following the termination of the Pre-Funding Period, the remaining amount of the Original Pre-Funded Amount on deposit in the Pre-Funding Account at such time and (vi) on the Distribution Date following the termination pursuant to
Section 11.01 herein, the Termination Price. 
  

 Appendix A-2 

 “Available Funds Cap”: With respect to each Distribution Date and (a) the Group I
Certificates, the Group I Available Funds Cap, (b) the Group II Certificates, the Group II Available Funds Cap and (c) the Class M Certificates, the Subordinate Available Funds Cap, each for such Distribution Date. If the aggregate
Principal Balance of any Group of Mortgage Loans has been reduced to zero on a prior Distribution Date, the Available Funds Cap for the related Classes of Class A Certificates will be equal to the Available Funds Cap of the Group of Mortgage
Loans with an aggregate Principal Balance greater than zero. 
  
 “Available Funds Cap Carryforward Amount”: With respect to any Class of Class A Certificates and Mezzanine Certificates and any Distribution Date, the sum of (i) the positive excess, if any, of (x) the
aggregate cumulative amount of Available Funds Cap Shortfall Amounts for such Class on all prior Distribution Dates over (y) the aggregate cumulative amount of Supplemental Interest Payments actually paid to the Holders of that Class on all
prior Distribution Dates pursuant to those clauses of Section 4.04(c), which relate to payments to that Class, plus (ii) interest on the amount described in clause (i) at a rate equal to the related Formula Rate for such Class and
Distribution Date. 
  
 “Available Funds Cap Shortfall
Amount”: With respect to any Distribution Date and Class of Class A Certificates and Mezzanine Certificates the excess, if any, of (1) the interest due on such Class calculated using the Formula Rate applicable to such Class over
(2) the interest due on such Class, calculated using the Pass-Through Rate applicable to such Class. 
  
 “Balloon Mortgage Loan”: A Mortgage Loan that provides for the payment of the unamortized principal balance of such Mortgage Loan in a
single payment at the maturity of such Mortgage Loan that is substantially greater than the preceding monthly payment. 
  
 “Balloon Payment”: A payment of the unamortized principal balance of a Mortgage Loan in a single payment at the maturity of such Mortgage
Loan that is substantially greater than the preceding Monthly Payment. 
  
 “Bankruptcy Code”: The Bankruptcy Reform Act of 1978 (Title 11 of the United States Code), as amended. 
  
 “Base Prospectus”: The base Prospectus, dated December 27, 2004 with respect to the Offered Certificates. 
  
 “Basic Documents”: This Agreement, the Purchase Agreement,
each Subsequent Transfer Instrument, the REMIC Interests Sale Agreement, the Underwriting Agreement, MI Policy, the Swap Agreements, the Cap Agreements, the Novation Agreements and the other documents and Certificates delivered in connection with
any of the above. 
  
 “Book-Entry Certificates”:
Any of the Certificates that shall be registered in the name of the Depository or its nominee, the ownership of which is reflected on the books of the Depository or on the books of a Person maintaining an account with the Depository (directly, as a
Depository Participant, or indirectly, as an indirect participant in accordance with the rules of the Depository and as described in Section 5.02 hereof). On the Closing Date, the Class A Certificates and the Class M-1, Class M-2, Class
M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9 and Class M-10 Certificates shall be Book-Entry Certificates. 
  

 Appendix A-3 

 “Business Day”: Any day other than (i) a Saturday or a Sunday or (ii) a day on
which banking institutions in the City of New York, the State of Missouri or in the city in which the corporate trust office of the Trustee or Custodian are located, are required or authorized by law to be closed. 
  
 “Cap Adjustment Amount” shall mean, the sum of the
notional balance of all cap contracts previously assigned to the REMIC that have matured prior to such Distribution Date. 
  
 “Cap Agreement”: Any of the eighteen interest rate Cap Agreements between the Supplemental Interest Trust and a Cap Counterparty which
are deemed to be assets of the Supplemental Interest Trust and not an asset of any one of the REMICs created hereunder. 
  
 “Cap Amount”: The Cap Amount is subject to the verification and confirmation of the Cap Counterparties who are calculation agents for the
Cap Agreements. Cap Amount shall mean, on each Distribution Date on or prior to the Class I Termination Date, the product of (i) the related fixed rate of interest, (ii) 30 divided by 360 and (iii) the related effective notional
amount, which after the occurrence of a Notional Amount Test Event, shall be calculated pursuant to Section 4.03. 
  
 “Cap Contract Rights and Obligations”: The rights of the Class A Certificates and Mezzanine Certificates to receive interest
payments in excess of payments at the REMIC Pass-Through Rate on the Master REMIC Regular Interest corresponding to such Class of Certificates as set forth in Exhibit K and the obligations of the Class A Certificates and Mezzanine Certificates
to make certain payments to the Class C Holder to the extent that the amounts allocated at the REMIC Pass-Through Rate on the Master REMIC Regular Interest corresponding to such Class of Certificates exceed the amount of interest distributed on such
Certificates. 
  
 “Cap Counterparty”: The Royal
Bank of Scotland plc, Wachovia Bank, N.A., or Deutsche Bank AG, as applicable. 
  
 “Cash Liquidation”: As to any defaulted Mortgage Loan other than a Mortgage Loan as to which an REO Acquisition occurred, a determination by the Servicer that it has received all Liquidation Proceeds
and other payments or cash recoveries which the Servicer reasonably and in good faith expects to be finally recoverable with respect to such Mortgage Loan. 
  
 “Certificate”: Any Regular Certificate, Class M-11 DSI Certificate, Class M-12 DSI Certificate or Class R Certificate. 
  
 “Certificateholder” or “Holder”: The Person
in whose name a Certificate is registered in the Certificate Register, except that a Disqualified Organization or non-U.S. Person shall not be a Holder of a Residual Certificate for any purpose hereof. 
  

 Appendix A-4 

 “Certificate Margin”: With respect to each Class and each Distribution Date prior to the
Rate Step-Up Date: 
  

				
	 Class

	  	Rate

	 
	 A-1A
	  	0.2600	%
	 A-2A
	  	0.1300	%
	 A-2B
	  	0.1900	%
	 A-2C
	  	0.2800	%
	 A-2D
	  	0.3700	%
	 M-1
	  	0.4500	%
	 M-2
	  	0.4700	%
	 M-3
	  	0.4900	%
	 M-4
	  	0.5900	%
	 M-5
	  	0.6400	%
	 M-6
	  	0.6800	%
	 M-7
	  	1.1200	%
	 M-8
	  	1.2500	%
	 M-9
	  	1.7300	%
	 M-10
	  	2.7500	%
	 M-11
	  	2.7500	%
	 M-12
	  	2.7500	%

  
 With respect to each
Class and each Distribution Date on and after the Rate Step-Up Date: 
  

				
	 Class

	  	Rate

	 
	 A-1A
	  	0.5200	%
	 A-2A
	  	0.2600	%
	 A-2B
	  	0.3800	%
	 A-2C
	  	0.5600	%
	 A-2D
	  	0.7400	%
	 M-1
	  	0.6750	%
	 M-2
	  	0.7050	%
	 M-3
	  	0.7350	%
	 M-4
	  	0.8850	%
	 M-5
	  	0.9600	%
	 M-6
	  	1.0200	%
	 M-7
	  	1.6800	%
	 M-8
	  	1.8750	%
	 M-9
	  	2.5950	%
	 M-10
	  	4.1250	%
	 M-11
	  	4.1250	%
	 M-12
	  	4.1250	%

  

 Appendix A-5 

 “Certificate Owner”: With respect to each Book-Entry Certificate, any beneficial owner
thereof. 
  
 “Certificate Principal Balance”:
With respect to any Class of Regular Certificates (other than the Class C Certificates and the Class I Certificates) immediately prior to any Distribution Date, an amount equal to the Initial Certificate Principal Balance thereof reduced by the sum
of all amounts actually distributed in respect of principal of such Class and, in the case of a Mezzanine Certificate, Allocated Realized Loss Amounts applied with respect to that Class on all prior Distribution Dates. The Class C Certificates,
Class M-11 DSI Certificate, Class M-12 DSI Certificate and the Class I Certificates will not have a Certificate Principal Balance. 
  
 “Certificate Register”: The register maintained by the Certificate Registrar in which the Certificate Registrar shall provide for the
registration of Certificates and of transfers and exchanges of Certificates. 
  
 “Certificate Registrar”: Initially, the Trustee, in its capacity as Certificate Registrar, or any successor to the Trustee in such capacity. 
  
 “Class”: Collectively, Certificates which have the same
priority of payment and bear the same Class designation and the form of which is identical except for variation in the Percentage Interest evidenced thereby. 
  
 “Class A Certificate”: Any Group I Certificate or Group II Certificate. 
  
 “Class A Principal Distribution Amount”: For any Distribution Date, the sum of the Group I Certificate
Principal Distribution Amount and the Group II Certificate Principal Distribution Amount for such Distribution Date. 
  
 “Class A-1A Certificate”: Any one of the Class A-1A Certificates executed, authenticated and delivered pursuant to
Section 5.01, substantially in the form annexed hereto as Exhibit A-1, representing the right to distributions as set forth herein and therein and evidencing a regular interest in the Master REMIC. 
  
 “Class A-2A Certificate”: Any one of the Class A-2A
Certificates executed, authenticated and delivered pursuant to Section 5.01, substantially in the form annexed hereto as Exhibit A-2, representing the right to distributions as set forth herein and therein and evidencing a regular interest in
the Master REMIC. 
  

 Appendix A-6 

 “Class A-2B Certificate”: Any one of the Class A-2B Certificates executed,
authenticated and delivered pursuant to Section 5.01, substantially in the form annexed hereto as Exhibit A-3, representing the right to distributions as set forth herein and therein and evidencing a regular interest in the Master REMIC.

  
 “Class A-2C Certificate”: Any one of the
Class A-2C Certificates executed, authenticated and delivered pursuant to Section 5.01, substantially in the form annexed hereto as Exhibit A-4, representing the right to distributions as set forth herein and therein and evidencing a
regular interest in the Master REMIC. 
  
 “Class A-2D
Certificate”: Any one of the Class A-2D Certificates executed, authenticated and delivered pursuant to Section 5.01, substantially in the form annexed hereto as Exhibit A-5, representing the right to distributions as set forth
herein and therein and evidencing a regular interest in the Master REMIC. 
  
 “Class C Certificate”: Any one of the Class C Certificates executed, authenticated and delivered pursuant to Section 5.01, substantially in the form annexed hereto as Exhibit A-21,
representing the right to distributions as set forth herein and therein and evidencing one or more regular interests in the Master REMIC. 
  
 “Class I Certificate”: Any Class I-1 Certificate, Class I-2 Certificate or Class I-3 Certificate. 
  
 “Class I-1 Certificate”: Any one of the Class I-1
Certificates executed, authenticated and delivered pursuant to Section 5.01, substantially in the form annexed hereto as Exhibit A-18, representing the right to distributions as set forth herein and therein and evidencing a regular interest in
the Master REMIC. 
  
 “Class I-2 Certificate”:
Any one of the Class I-2 Certificates executed, authenticated and delivered pursuant to Section 5.01, substantially in the form annexed hereto as Exhibit A-19, representing the right to distributions as set forth herein and therein and
evidencing a regular interest in the Master REMIC. 
  
 “Class I-3 Certificate”: Any one of the Class I-3 Certificates executed, authenticated and delivered pursuant to Section 5.01, substantially in the form annexed hereto as Exhibit A-20, representing the right to
distributions as set forth herein and therein and evidencing a regular interest in the Master REMIC. 
  
 “Class I Monthly Interest Distributable Amount”: For any Distribution Date, shall mean the sum of (i) the Group I Class I Monthly
Interest Distributable Amount and (ii) the Group II Class I Monthly Interest Distributable Amount, each for such Distribution Date. 
  
 “Class IV-Accrual Interest”: Either the Class IV-Accrual1 or Class IV-Accrual2 Interest as applicable. 
  
 “Class I Termination Date”: The Distribution Date occurring
in August 2009. 
  

 Appendix A-7 

 “Class M Certificate”: Any Class M-1 Certificate, Class M-2 Certificate, Class M-3
Certificate, Class M-4 Certificate, Class M-5 Certificate, Class M-6 Certificate, Class M-7 Certificate, Class M-8 Certificate, Class M-9 Certificate, Class M-10 Certificate, Class M-11 Certificate or Class M-12 Certificate. 
  
 “Class M-1 Certificate”: Any one of the Class M-1
Certificates executed, authenticated and delivered pursuant to Section 5.01, substantially in the form annexed hereto as Exhibit A-6, representing the right to distributions as set forth herein and therein and evidencing a regular interest in
the Master REMIC. 
  
 “Class M-1 Principal Distribution
Amount”: For any Distribution Date, an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date) and (ii) the Certificate Principal Balance of the Class M-1 Certificates immediately prior to such Distribution Date over (y) the lesser of (A) the product of (i) 74.00%
and (ii) the aggregate principal balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment Period) and (B) the aggregate principal balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) minus $12,500,000. 
  
 “Class M-2 Certificate”: Any one of the Class M-2 Certificates executed, authenticated and delivered
pursuant to Section 5.01, substantially in the form annexed hereto as Exhibit A-7, representing the right to distributions as set forth herein and therein and evidencing a regular interest in the Master REMIC. 
  
 “Class M-2 Principal Distribution Amount”: For any
Distribution Date, an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A Certificates (after taking into account the payment of the Class A Principal Distribution Amount on
such Distribution Date), (ii) the Certificate Principal Balance of the Class M-1 Certificates (after taking into account the payment of the Class M-1 Principal Distribution Amount on such Distribution Date) and (iii) the Certificate
Principal Balance of the Class M-2 Certificates immediately prior to such Distribution Date over (y) the lesser of (A) the product of (i) 78.80% and (ii) the aggregate principal balance of the Mortgage Loans as of the last day of
the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and
(B) the aggregate principal balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment Period) minus $12,500,000. 
  
 “Class M-3 Certificate”: Any one of the Class M-3 Certificates executed, authenticated and delivered pursuant to Section 5.01,
substantially in the form annexed hereto as Exhibit A-8, representing the right to distributions as set forth herein and therein and evidencing a regular interest in the Master REMIC. 
  

 Appendix A-8 

 “Class M-3 Principal Distribution Amount”: For any Distribution Date, an amount equal to
the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A Certificates (after taking into account the payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Certificate Principal Balance of the Class M-1 Certificates (after taking into account the payment of the Class M-1 Principal Distribution Amount on such Distribution Date), (iii) the Certificate Principal Balance of the Class M-2
Certificates (after taking into account the payment of the Class M-2 Principal Distribution Amount on such Distribution Date) and (iv) the Certificate Principal Balance of the Class M-3 Certificates immediately prior to such Distribution Date
over (y) the lesser of (A) the product of (i) 82.60% and (ii) the aggregate principal balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during
the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (B) the aggregate principal balance of the Mortgage Loans as of the last day of the related
Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) minus $12,500,000.

  
 “Class M-4 Certificate”: Any one of the Class
M-4 Certificates executed, authenticated and delivered pursuant to Section 5.01, substantially in the form annexed hereto as Exhibit A-9, representing the right to distributions as set forth herein and therein and evidencing a regular interest
in the Master REMIC. 
  
 “Class M-4 Principal Distribution
Amount”: For any Distribution Date, an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date), (ii) the Certificate Principal Balance of the Class M-1 Certificates (after taking into account the payment of the Class M-1 Principal Distribution Amount on such Distribution Date),
(iii) the Certificate Principal Balance of the Class M-2 Certificates (after taking into account the payment of the Class M-2 Principal Distribution Amount on such Distribution Date), (iv) the Certificate Principal Balance of the Class M-3
Certificates (after taking into account the payment of the Class M-3 Principal Distribution Amount on such Distribution Date), and (v) the Certificate Principal Balance of the Class M-4 Certificates immediately prior to such Distribution Date
over (y) the lesser of (A) the product of (i) 85.00% and (ii) the aggregate principal balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during
the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (B) the aggregate principal balance of the Mortgage Loans as of the last day of the related
Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) minus $12,500,000.

  
 “Class M-5 Certificate”: Any one of the Class
M-5 Certificates executed, authenticated and delivered pursuant to Section 5.01, substantially in the form annexed hereto as Exhibit A-10, representing the right to distributions as set forth herein and therein and evidencing a regular interest
in the Master REMIC. 
  

 Appendix A-9 

 “Class M-5 Principal Distribution Amount”: For any Distribution Date, an amount equal to
the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A Certificates (after taking into account the payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Certificate Principal Balance of the Class M-1 Certificates (after taking into account the payment of the Class M-1 Principal Distribution Amount on such Distribution Date) (iii) the Certificate Principal Balance of the Class M-2
Certificates (after taking into account the payment of the Class M-2 Principal Distribution Amount on such date), (iv) the Certificate Principal Balance of the Class M-3 Certificates (after taking into account the payment of the Class M-3
Principal Distribution Amount on such Distribution Date), (v) the Certificate Principal Balance of the Class M-4 Certificates (after taking into account the payment of the Class M-4 Principal Distribution Amount on such Distribution Date) and
(vi) the Certificate Principal Balance of the Class M-5 Certificates immediately prior to such Distribution Date over (y) the lesser of (A) the product of (i) 87.40% and (ii) the aggregate principal balance of the Mortgage
Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related
Prepayment Period) and (B) the aggregate principal balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or
advanced, and unscheduled collections of principal received during the related Prepayment Period) minus $12,500,000. 
  
 “Class M-6 Certificate”: Any one of the Class M-6 Certificates executed, authenticated and delivered pursuant to Section 5.01,
substantially in the form annexed hereto as Exhibit A-11, representing the right to distributions as set forth herein and therein and evidencing a regular interest in the Master REMIC. 
  
 “Class M-6 Principal Distribution Amount”: For any Distribution Date, an amount equal to the excess of
(x) the sum of (i) the aggregate Certificate Principal Balance of the Class A Certificates (after taking into account the payment of the Class A Principal Distribution Amount on such Distribution Date), (ii) the Certificate
Principal Balance of the Class M-1 Certificates (after taking into account the payment of the Class M-1 Principal Distribution Amount on such Distribution Date), (iii) the Certificate Principal Balance of the Class M-2 Certificates (after
taking into account the payment of the Class M-2 Principal Distribution Amount on such Distribution Date), (iv) the Certificate Principal Balance of the Class M-3 Certificates (after taking into account the payment of the Class M-3 Principal
Distribution Amount on such Distribution Date), (v) the Certificate Principal Balance of the Class M-4 Certificates (after taking into account the payment of the Class M-4 Principal Distribution Amount on such Distribution Date), (vi) the
Certificate Principal Balance of the Class M-5 Certificates (after taking into account the payment of the Class M-5 Principal Distribution Amount on such Distribution Date) and (vii) the Certificate Principal Balance of the Class M-6
Certificates immediately prior to such Distribution Date over (y) the lesser of (A) the product of (i) 88.90% and (ii) the aggregate principal balance of the Mortgage Loans as of the last day of the related Due Period (after
giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (B) the aggregate principal
balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) minus $12,500,000. 
  

 Appendix A-10 

 “Class M-7 Certificate”: Any one of the Class M-7 Certificates executed, authenticated
and delivered pursuant to Section 5.01, substantially in the form annexed hereto as Exhibit A-12, representing the right to distributions as set forth herein and therein and evidencing a regular interest in the Master REMIC. 
  
 “Class M-7 Principal Distribution Amount”: For any
Distribution Date, is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A Certificates (after taking into account the payment of the Class A Principal Distribution Amount
on such Distribution Date), (ii) the Certificate Principal Balance of the Class M-1 Certificates (after taking into account the payment of the Class M-1 Principal Distribution Amount on such Distribution Date), (iii) the Certificate
Principal Balance of the Class M-2 Certificates (after taking into account the payment of the Class M-2 Principal Distribution Amount on such Distribution Date), (iv) the Certificate Principal Balance of the Class M-3 Certificates (after taking
into account the payment of the Class M-3 Principal Distribution Amount on such Distribution Date), (v) the Certificate Principal Balance of the Class M-4 Certificates (after taking into account the payment of the Class M-4 Principal
Distribution Amount on such Distribution Date), (vi) the Certificate Principal Balance of the Class M-5 Certificates (after taking into account the payment of the Class M-5 Principal Distribution Amount on such Distribution Date),
(vii) the Certificate Principal Balance of the Class M-6 Certificates (after taking into account the payment of the Class M-6 Principal Distribution Amount on such Distribution Date), and (viii) the Certificate Principal Balance of the
Class M-7 Certificates immediately prior to that Distribution Date over (y) the lesser of (A) the product of (i) 90.40% and (ii) the aggregate principal balance of the Mortgage Loans as of the last day of the related Due Period
(after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (B) the aggregate
principal balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) minus $12,500,000. 
  
 “Class M-8 Certificate”: Any one of the Class M-8 Certificates executed, authenticated and delivered pursuant to Section 5.01, substantially in the form annexed hereto as Exhibit A-13,
representing the right to distributions as set forth herein and therein and evidencing a regular interest in the Master REMIC. 
  
 “Class M-8 Principal Distribution Amount”: For any Distribution Date, is an amount equal to the excess of (x) the sum of
(i) the aggregate Certificate Principal Balance of the Class A Certificates (after taking into account the payment of the Class A Principal Distribution Amount on such Distribution Date), (ii) the Certificate Principal Balance of
the Class M-1 Certificates (after taking into account the payment of the Class M-1 Principal Distribution Amount on such Distribution Date), (iii) the Certificate Principal Balance of the Class M-2 Certificates (after taking into account the
payment of the Class M-2 Principal Distribution Amount on such Distribution Date), (iv) the Certificate Principal Balance of the Class M-3 
  

 Appendix A-11 

 Certificates (after taking into account the payment of the Class M-3 Principal Distribution Amount on such Distribution
Date), (v) the Certificate Principal Balance of the Class M-4 Certificates (after taking into account the payment of the Class M-4 Principal Distribution Amount on such Distribution Date), (vi) the Certificate Principal Balance of the
Class M-5 Certificates (after taking into account the payment of the Class M-5 Principal Distribution Amount on such Distribution Date), (vii) the Certificate Principal Balance of the Class M-6 Certificates (after taking into account the
payment of the Class M-6 Principal Distribution Amount on such Distribution Date), (viii) the Certificate Principal Balance of the Class M-7 Certificates, (after taking into account the payment of the Class M-7 Principal Distribution Amount on
such Distribution Date) and (ix) the Certificate Principal Balance of the Class M-8 Certificates immediately prior to such Distribution Date over (y) the lesser of (A) the product of (i) 91.90% and (ii) the aggregate
principal balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of
principal received during the related Prepayment Period) and (B) the aggregate principal balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related
Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) minus $12,500,000. 
  
 “Class M-9 Certificate”: Any one of the Class M-9 Certificates executed, authenticated and delivered pursuant to Section 5.01,
substantially in the form annexed hereto as Exhibit A-14, representing the right to distributions as set forth herein and therein and evidencing a regular interest in the Master REMIC. 
  
 “Class M-9 Principal Distribution Amount”: For any Distribution Date, is an amount equal to the excess of
(x) the sum of (i) the aggregate Certificate Principal Balance of the Class A Certificates (after taking into account the payment of the Class A Principal Distribution Amount on such Distribution Date), (ii) the Certificate
Principal Balance of the Class M-1 Certificates (after taking into account the payment of the Class M-1 Principal Distribution Amount on such Distribution Date), (iii) the Certificate Principal Balance of the Class M-2 Certificates (after
taking into account the payment of the Class M-2 Principal Distribution Amount on such Distribution Date), (iv) the Certificate Principal Balance of the Class M-3 Certificates (after taking into account the payment of the Class M-3 Principal
Distribution Amount on such Distribution Date), (v) the Certificate Principal Balance of the Class M-4 Certificates (after taking into account the payment of the Class M-4 Principal Distribution Amount on such Distribution Date), (vi) the
Certificate Principal Balance of the Class M-5 Certificates (after taking into account the payment of the Class M-5 Principal Distribution Amount on such Distribution Date), (vii) the Certificate Principal Balance of the Class M-6 Certificates
(after taking into account the payment of the Class M-6 Principal Distribution Amount on such Distribution Date), (viii) the Certificate Principal Balance of the Class M-7 Certificates (after taking into account the payment of the Class M-7
Principal Distribution Amount on such Distribution Date), (ix) the Certificate Principal Balance of the Class M-8 Certificates (after taking into account the payment of the Class M-8 Principal Distribution Amount on such Distribution Date) and
(x) the Certificate Principal Balance of the Class M-9 Certificates immediately prior to such Distribution Date over (y) the lesser of (A) the product of (i) 93.30% and (ii) the aggregate principal balance of the Mortgage
Loans as of the last day of 
  

 Appendix A-12 

 the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the
extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (B) the aggregate principal balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect
to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) minus $12,500,000. 
  
 “Class M-10 Certificate”: Any one of the Class M-10
Certificates executed, authenticated and delivered pursuant to Section 5.01, substantially in the form annexed hereto as Exhibit A-15, representing the right to distributions as set forth herein and therein and evidencing a regular interest in
the Master REMIC. 
  
 “Class M-10 Principal Distribution
Amount”: For any Distribution Date, is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A Certificates (after taking into account the payment of the Class A
Principal Distribution Amount on such Distribution Date), (ii) the Certificate Principal Balance of the Class M-1 Certificates (after taking into account the payment of the Class M-1 Principal Distribution Amount on such Distribution Date),
(iii) the Certificate Principal Balance of the Class M-2 Certificates (after taking into account the payment of the Class M-2 Principal Distribution Amount on such Distribution Date), (iv) the Certificate Principal Balance of the Class M-3
Certificates (after taking into account the payment of the Class M-3 Principal Distribution Amount on such Distribution Date), (v) the Certificate Principal Balance of the Class M-4 Certificates (after taking into account the payment of the
Class M-4 Principal Distribution Amount on such Distribution Date), (vi) the Certificate Principal Balance of the Class M-5 Certificates (after taking into account the payment of the Class M-5 Principal Distribution Amount on such Distribution
Date), (vii) the Certificate Principal Balance of the Class M-6 Certificates (after taking into account the payment of the Class M-6 Principal Distribution Amount on such Distribution Date), (viii) the Certificate Principal Balance of the
Class M-7 Certificates (after taking into account the payment of the Class M-7 Principal Distribution Amount on such Distribution Date), (ix) the Certificate Principal Balance of the Class M-8 Certificates (after taking into account the payment
of the Class M-8 Principal Distribution Amount on such Distribution Date), (x) the Certificate Principal Balance of the Class M-9 Certificates (after taking into account the payment of the Class M-9 Principal Distribution Amount on such
Distribution Date) and (xi) the Certificate Principal Balance of the Class M-10 Certificates immediately prior to such Distribution Date over (y) the lesser of (A) the product of (i) 94.60% and (ii) the aggregate principal
balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal
received during the related Prepayment Period) and (B) the aggregate principal balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period,
to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) minus $12,500,000. 
  
 “Class M-11 Certificate”: Any one of the Class M-11 Certificates executed, authenticated and delivered pursuant to Section 5.01,
substantially in the form annexed hereto as Exhibit A-16, representing the right to distributions as set forth herein and therein and evidencing a regular interest in the Master REMIC. 
  

 Appendix A-13 

 “Class M-11 DSI Certificates”: Any one of the Class M-11 DSI Certificates executed,
authenticated and delivered pursuant to Section 5.01, substantially in the form annexed hereto as Exhibit A-23, which are notional amount certificates based on the Certificate Principal Balance of the Class M-11 Certificates and which represent
the right to receive certain distributions from the Supplemental Interest Trust. 
  
 “Class M-11 Principal Distribution Amount”: For any Distribution Date, is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A
Certificates (after taking into account the payment of the Class A Principal Distribution Amount on such Distribution Date), (ii) the Certificate Principal Balance of the Class M-1 Certificates (after taking into account the payment of the
Class M-1 Principal Distribution Amount on such Distribution Date), (iii) the Certificate Principal Balance of the Class M-2 Certificates (after taking into account the payment of the Class M-2 Principal Distribution Amount on such Distribution
Date), (iv) the Certificate Principal Balance of the Class M-3 Certificates (after taking into account the payment of the Class M-3 Principal Distribution Amount on such Distribution Date), (v) the Certificate Principal Balance of the
Class M-4 Certificates (after taking into account the payment of the Class M-4 Principal Distribution Amount on such Distribution Date), (vi) the Certificate Principal Balance of the Class M-5 Certificates (after taking into account the payment
of the Class M-5 Principal Distribution Amount on such Distribution Date), (vii) the Certificate Principal Balance of the Class M-6 Certificates (after taking into account the payment of the Class M-6 Principal Distribution Amount on such
Distribution Date), (viii) the Certificate Principal Balance of the Class M-7 Certificates (after taking into account the payment of the Class M-7 Principal Distribution Amount on such Distribution Date), (ix) the Certificate Principal
Balance of the Class M-8 Certificates (after taking into account the payment of the Class M-8 Principal Distribution Amount on such Distribution Date), (x) the Certificate Principal Balance of the Class M-9 Certificates (after taking into
account the payment of the Class M-9 Principal Distribution Amount on such Distribution Date, (xi) the Certificate Principal Balance of the Class M-10 Certificates (after taking into account the payment of the Class M-10 Principal Distribution
Amount on such Distribution Date and (xii) the Certificate Principal Balance of the Class M-11 Certificates immediately prior to such Distribution Date over (y) the lesser of (A) the product of (i) 96.60% and (ii) the
aggregate principal balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections
of principal received during the related Prepayment Period) and (B) the aggregate principal balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the
related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) minus $12,500,000. 
  
 “Class M-12 Certificate”: Any one of the Class M-12 Certificates executed, authenticated and delivered
pursuant to Section 5.01, substantially in the form annexed hereto as Exhibit A-17, representing the right to distributions as set forth herein and therein and evidencing a regular interest in the Master REMIC. 
  

 Appendix A-14 

 “Class M-12 DSI Certificates”: Any one of the Class M-12 DSI Certificates executed,
authenticated and delivered pursuant to Section 5.01, substantially in the form annexed hereto as Exhibit A-24, which are notional amount certificates based on the Certificate Principal Balance of the Class M-12 Certificates and which represent
the right to receive certain distributions from the Supplemental Interest Trust. 
  
 “Class M-12 Principal Distribution Amount”: For any Distribution Date, is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A
Certificates (after taking into account the payment of the Class A Principal Distribution Amount on such Distribution Date), (ii) the Certificate Principal Balance of the Class M-1 Certificates (after taking into account the payment of the
Class M-1 Principal Distribution Amount on such Distribution Date), (iii) the Certificate Principal Balance of the Class M-2 Certificates (after taking into account the payment of the Class M-2 Principal Distribution Amount on such Distribution
Date), (iv) the Certificate Principal Balance of the Class M-3 Certificates (after taking into account the payment of the Class M-3 Principal Distribution Amount on such Distribution Date), (v) the Certificate Principal Balance of the
Class M-4 Certificates (after taking into account the payment of the Class M-4 Principal Distribution Amount on such Distribution Date), (vi) the Certificate Principal Balance of the Class M-5 Certificates (after taking into account the payment
of the Class M-5 Principal Distribution Amount on such Distribution Date), (vii) the Certificate Principal Balance of the Class M-6 Certificates (after taking into account the payment of the Class M-6 Principal Distribution Amount on such
Distribution Date), (viii) the Certificate Principal Balance of the Class M-7 Certificates (after taking into account the payment of the Class M-7 Principal Distribution Amount on such Distribution Date), (ix) the Certificate Principal
Balance of the Class M-8 Certificates (after taking into account the payment of the Class M-8 Principal Distribution Amount on such Distribution Date), (x) the Certificate Principal Balance of the Class M-9 Certificates (after taking into
account the payment of the Class M-9 Principal Distribution Amount on such Distribution Date, (xi) the Certificate Principal Balance of the Class M-10 Certificates (after taking into account the payment of the Class M-10 Principal Distribution
Amount on such Distribution Date, (xii) the Certificate Principal Balance of the Class M-11 Certificates immediately prior to such Distribution Date and (xiii) the Certificate Principal Balance of the Class M-12 Certificates immediately
prior to such Distribution Date over (y) the lesser of (A) the product of (i) 99.00% and (ii) the aggregate principal balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled
payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (B) the aggregate principal balance of the Mortgage Loans
as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related
Prepayment Period) minus $12,500,000. 
  
 “Class R
Certificate”: Any one of the Class R Certificates executed, authenticated and delivered pursuant to Section 5.01, substantially in the form annexed hereto as Exhibit A-22, representing the right to distributions as set forth herein,
and evidencing the R-I Interest, the R-II Interest, the R-III Interest, the R-IV Interest and the R-V Interest, each the sole “residual interest” in REMIC I, REMIC II, REMIC III, REMIC IV and the Master REMIC,
respectively. 
  

 Appendix A-15 

 “Close of Business”: As used herein, with respect to any Business Day, 5:00 p.m. (New
York time). 
  
 “Closing Date”:
September 22, 2005. 
  
 “Code”: The Internal
Revenue Code of 1986 as it may be amended from time to time. 
  
 “Collection Account”: The account or accounts created and maintained by the Servicer pursuant to Section 3.06(d) hereof, which must be an Eligible Account. 
  
 “Commission”: The Securities and Exchange Commission. 
  
 “Company”: NovaStar Mortgage Funding Corporation, a Delaware
corporation, and its successors and assigns. 
  
 “Compensating Interest”: With respect to any Determination Date, an amount equal to the lesser of (i) the aggregate amount of Prepayment Interest Shortfalls for the related Prepayment Period and (ii) the Servicing
Fee for the related Distribution Date. 
  
 “Corporate
Trust Office”: With respect to the Trustee, the Paying Agent and the Certificate Registrar, the principal corporate trust office at which at any particular time its corporation trust business shall be administered, which office at the date
of execution of this Agreement is located at (i) solely for purposes of the transfer, exchange or surrender of Certificates, 2001 Bryan Street, 10th Floor, Dallas, Texas 75201, Attention: Worldwide Securities Services/Global Debt - NovaStar
Mortgage Funding Trust, Series 2005-3 and (ii) for all other purposes, 4 New York Plaza, 6th Floor, New York, New York 10004-2477, Attention: Worldwide Securities Services/Global Debt - NovaStar Mortgage Funding Trust, Series 2005-3 and with
respect to the co-trustee appointed pursuant to Section 8.10, the principal corporate trust office at which at any particular time its corporation trust business shall be administered, which office at the date of execution of this Agreement is
located at ITS - Global Debt, 560 Mission Street, 13th Floor, San Francisco, California 94105, Attention: James Myers, V.P. (NovaStar Mortgage Funding Trust, Series 2005-3). 
  
 “Corresponding Class of Master REMIC Certificates”: As defined in Exhibit K hereof. 
  
 “Corresponding Distribution Date”: As set forth in the
Swap/Cap Interest Rate Schedule. 
  
 “Corresponding
Interest Rate”: As set forth in the Swap/Cap Interest Rate Schedule. 
  
 “Corresponding Maturity Date”: As set forth in the Swap/Cap Maturity Date Schedule. 
  
 “Corresponding REMIC II Regular Interest”: As defined in Exhibit K hereof. 
  
 “Credit Enhancement Percentage”: For any Distribution Date, is equal to (i) the sum of the aggregate
Certificate Principal Balances of the Mezzanine Certificates and the Overcollateralization Amount, divided by (ii) the Pool Balance, in each case calculated prior to taking into account the distribution of the Principal Distribution Amount to
the Holders of the Certificates then entitled to distributions of principal on such Distribution Date and prior to taking into account distributions of principal on the Mortgage Loans on such Distribution Date. 
  

 Appendix A-16 

 “Crossover Date”: The earlier to occur of (i) the Distribution Date on which the
aggregate Certificate Principal Balance of the Class A Certificates is reduced to zero; and (ii) the later to occur of (x) the Distribution Date occurring in October 2008 and (y) the first Distribution Date on which the Credit
Enhancement Percentage (calculated for this purpose only after taking into account distributions of principal on the Mortgage Loans but prior to the principal distributions to the certificates) is greater than or equal to 31.60%. 
  
 “Cumulative Adjustment Amount” shall mean, the sum of
the related Pre-Funding Cumulative Adjustment Amount and the Cap Adjustment Amount. 
  
 “Cumulative Loss Percentage”: As to any Distribution Date, the percentage equivalent of the fraction obtained by dividing (i) the aggregate amount of Realized Losses on the Mortgage Loans (after
giving effect to coverage provided by any MI Policy) from the Cut-off Date through such Distribution Date by (ii) the sum of the aggregate Principal Balance of the Initial Mortgage Loans as of the Cut-off Date plus the Original Pre-Funded
Amount. 
  
 “Current Interest”: For any
Distribution Date and each Class of Class A Certificates and Mezzanine Certificates the amount of interest accrued during the related Accrual Period at the related Pass-Through Rate on the Certificate Principal Balance of such Class immediately
prior to such Distribution Date, in each case, reduced by any Net Prepayment Interest Shortfalls and any Relief Act Shortfalls allocated to that Class (allocated to each Certificate based on its respective entitlements to interest irrespective of
any Net Prepayment Interest Shortfalls or Relief Act Shortfalls for that Distribution Date). 
  
 “Custodian”: Wachovia Bank, National Association, a national banking association, and any successor thereto. 
  
 “Custodian Fee”: With respect to each Distribution Date, the product of (i) $0.20 and (ii) the number of Mortgage Loans.

  
 “Custodian Fee Rate”: The percentage
equivalent expressed as a fraction, the numerator of which is (i) the product of (a) the Custodian Fee and (b) 12 and the denominator of which is (ii) the aggregate principal balance of the Mortgage Loans as of the beginning of
the Due Period. 
  
 “Cut-off Date”: With respect
to each Initial Mortgage Loan the later of (i) September 1, 2005 and (ii) the date of origination of such Initial Mortgage Loan. With respect to each Subsequent Mortgage Loan, the later of (i) the first day of the month in which
such Subsequent Mortgage Loan is acquired by the Trust and (ii) the date of origination of such Subsequent Mortgage Loan. 
  
 “Cut-off Date Aggregate Principal Balance”: With respect to the Mortgage Pool, the aggregate of the Cut-off Date Principal Balances of
the Initial Mortgage Loans of $1,989,468,408.55 consisting of $1,153,601,722.44 related to Group I and $835,866,686.11 related to Group II. 
  

 Appendix A-17 

 “Cut-off Date Principal Balance”: With respect to any Mortgage Loan, the unpaid
principal balance thereof as of the applicable Cut-off Date or Subsequent Cut-off Date, as the case may be (or as of the applicable date of substitution with respect to an Eligible Substitute Mortgage Loan). 
  
 “Debt Service Reduction”: With respect to any Mortgage Loan,
a reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of competent jurisdiction in a proceeding under the Bankruptcy Code, except such a reduction resulting from a Deficient Valuation. 
  
 “Deferred Interest”: With respect to any REO Property, the
current portion of interest not currently paid by the Mortgagor that is added to the principal balance of such REO Property. 
  
 “Deficient Valuation”: With respect to any Mortgage Loan, a valuation of the related Mortgaged Property by a court of competent
jurisdiction in an amount less than the then outstanding principal balance of the Mortgage Loan, which valuation results from a proceeding initiated under the Bankruptcy Code. 
  
 “Definitive Certificates”: The Class C, Class I and Class R Certificates, and such other Classes of
Certificates as become Definitive Certificates pursuant to Section 5.02(c) hereof. 
  
 “Deleted Mortgage Loan”: A Mortgage Loan replaced or to be replaced by one or more Eligible Substitute Mortgage Loans. 
  
 “30-Day Delinquency Percentage”: As of the last day of any Due Period, the percentage equivalent of a
fraction, (i) the numerator of which equals the aggregate Principal Balance of the Mortgage Loans that are 30 or more days contractually delinquent, in foreclosure or converted to REO Properties, and (ii) the denominator of which is the
Pool Balance as of the last day of such Due Period. 
  
 “60-Day Delinquency Percentage”: As of the last day of any Due Period, the percentage equivalent of a fraction, (i) the numerator of which equals the aggregate Principal Balance of the Mortgage Loans that are 60 or
more days contractually delinquent, in foreclosure or converted to REO Properties, and (ii) the denominator of which is the Pool Balance as of the last day of such Due Period. 
  
 “90-Day Delinquency Percentage”: As of the last day of any Due Period, the percentage equivalent of a
fraction, (i) the numerator of which equals the aggregate Principal Balance of the Mortgage Loans that are 90 or more days contractually delinquent, in foreclosure or converted to REO Properties and (ii) the denominator of which is the
Pool Balance as of the last day of such Due Period. 
  
 “Delinquent”: Any Mortgage Loan, the Monthly Payment due on a Due Date which is not made by the Close of Business on the next scheduled Due Date for such Mortgage Loan. 
  
 “Depository”: The initial Depository shall be The Depository
Trust Company, whose nominee is Cede & Co., or any other organization registered as a “clearing agency” pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. The Depository shall initially 
  

 Appendix A-18 

 be the registered Holder of the Book-Entry Certificates. The Depository shall at all times be a “clearing
corporation” as defined in Section 8-102(a)(5) of the Uniform Commercial Code of the State of New York. 
  
 “Depository Participant”: A broker, dealer, bank or other financial institution or other person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited with the Depository. 
  
 “Derivative Supplemental Interest Payment”: With respect to each Distribution Date, and the Class M-11 and the Class M-12 Certificates, the dollar amount of the excess of (i) the Supplemental
Interest Payment for the Class M-11 or Class M-12 Certificates, as appropriate, over (ii) the Non-Derivative Supplemental Interest Payment for the Class M-11 or Class M-12 Certificates, as appropriate. 
  
 “Determination Date”: With respect to any Distribution Date,
the 15th day of the calendar month in which such Distribution Date occurs or, if such 15th day is not a Business Day, the Business Day immediately preceding such 15th day. 
  
 “Determination Date Report”: The meaning specified in Section 3.23 hereof. 
  
 “Disqualified Organization”: “Disqualified
Organization” shall have the meaning set forth from time to time in the definition thereof at Section 860E(e)(5) of the Code and applicable to the Trust. 
  
 “Distribution Account”: The trust account or accounts created and maintained by the Trustee pursuant to
Section 4.02 hereof, which must be an Eligible Account. 
  
 “Distribution Date”: The 25th day of any calendar month, or if such 25th day is not a Business Day, the Business Day immediately following such 25th day, commencing in October 2005. 
  
 “Due Date”: The first day of the month of the related
Distribution Date. 
  
 “Due Period”: With respect
to any Mortgage Loan and Due Date, the period commencing on the second day of the month preceding the month of such Distribution Date and ending on the related Due Date. 
  
 “Eligible Account”: An account that is either: (A) a segregated account or accounts maintained with an
institution whose deposits are insured by the FDIC, the unsecured and uncollateralized long-term debt obligations of which institution shall be rated “AA” or higher by Standard & Poor’s, “Aa2” or higher by
Moody’s and “AA”/”F-1+” or higher by Fitch and in the highest short-term rating category by each of the Rating Agencies, and which is (i) a federal savings and loan association duly organized, validly existing and in
good standing under the federal banking laws, (ii) an institution duly organized, validly existing and in good standing under the applicable banking laws of any state, (iii) a national banking association duly organized, validly existing
and in good standing under the federal banking laws, or (iv) a principal subsidiary of a bank holding company or (B) a segregated trust account or accounts maintained with the trust department of a federal or state chartered depository
institution acceptable to each Rating Agency, having capital and surplus of not less than $100,000,000, acting in its fiduciary capacity. 
  

 Appendix A-19 

 “Eligible Investments”: One or more of the following: 
  
 (i) direct obligations of, and obligations fully guaranteed by, the United
States of America, any of the Federal Home Mortgage Corporation, the Federal National Mortgage Association, the Federal Home Loan Banks or any agency or instrumentality of the United States of America the obligations of which are backed by the full
faith and credit of the United States of America; 
  
 (ii)
(A) demand and time deposits in, Certificates of deposit of, banker’s acceptances issued by or federal funds sold by any depository institution or trust company (including the Trustee or its agents acting in their respective commercial
capacities) incorporated under the laws of the United States of America or any State thereof and subject to supervision and examination by federal and/or state authorities, so long as at the time of such investment or contractual commitment
providing for such investment, such depository institution or trust company has a short-term unsecured debt rating in the highest available rating category of each of the Rating Agencies and provided that each such investment has an original
maturity of no more than 365 days, and (B) any other demand or time deposit or deposit which is fully insured by the Federal Deposit Insurance Corporation; 
  

(iii) repurchase obligations with a term not to exceed 30 days with respect to any security described in clause (i) above and entered into with a
depository institution or trust company (acting as a principal) rated “A-1+” or higher by S&P, “A2” or higher by Moody’s and “F-1+” or higher by Fitch; provided, however, that collateral transferred pursuant to
such repurchase obligation must (A) be valued daily at current market price plus accrued interest, (B) pursuant to such valuation, equal, at all times, 105% of the cash transferred in exchange for such collateral and (C) be delivered
in such a manner as to accomplish perfection of a security interest in the collateral by possession of certificated securities; 
  
 (iv) securities bearing interest or sold at a discount issued by any corporation incorporated under the laws of the United States of America or any State
thereof which has a long-term unsecured debt rating in the highest available rating category of each of the Rating Agencies at the time of such investment; 
  
 (v) commercial paper having an original maturity of less than 365 days and issued by an institution having a short-term unsecured debt rating in the
highest available rating category of each of the Rating Agencies at the time of such investment; 
  
 (vi) a guaranteed investment contract approved by each of the Rating Agencies and issued by an insurance company or other corporation having a long-term
unsecured debt rating in the highest available rating category of each of the Rating Agencies at the time of such investment; and 
  
 (vii) money market funds having ratings in the highest available long-term rating category of each of the Rating Agencies at the time of such investment;
any such money market funds which provide for demand withdrawals being conclusively deemed to satisfy any maturity requirement for Eligible Investments set forth in the Agreement, 
  

 Appendix A-20 

 provided, however, that each such instrument shall be acquired in an arm’s-length
transaction and no such instrument shall be an Eligible Investment if it represents, either (1) the right to receive only interest payments with respect to the underlying debt instrument or (2) the right to receive both principal and
interest payments derived from obligations underlying such instrument and the principal and interest payments with respect to such instrument provide a yield to maturity greater than 120% of the yield to maturity at par of such underlying
obligations; provided, further, however, that each such instrument acquired shall not be acquired at a price in excess of par. The Trustee may purchase from or sell to itself or an affiliate, as principal or agent, the Eligible Investments listed
above. 
  
 “Eligible Substitute Mortgage Loan”: A
Mortgage Loan substituted by the Seller for a Deleted Mortgage Loan which must, on the date of such substitution, as confirmed in an Officers’ Certificate delivered to the Trustee, (i) have an outstanding principal balance, after deduction
of the principal portion of the monthly payment due in the month of substitution (or in the case of a substitution of more than one Mortgage Loan for a Deleted Mortgage Loan, an aggregate outstanding principal balance, after such deduction), not in
excess of the outstanding principal balance of the Deleted Mortgage Loan (the amount of any shortfall to be deposited by the Seller in the Collection Account in the month of substitution); (ii) comply in all material respects with each
representation and warranty set forth in clauses, (ii) through (xcix) of Section 3.01(b) of the Purchase Agreement other than clauses (iii), (v)-(xiv), (xlii), (lv), (lvi)-(lviii), (lxxii), (lxxxix) and (xc); (iii) have a
Mortgage Rate and, with respect to an Adjustable Rate Mortgage Loan, a Gross Margin no lower than and not more than 1% per annum higher than the Mortgage Rate and Gross Margin, respectively, of the Deleted Mortgage Loan as of the date of
substitution; (iv) have a Loan-to-Value Ratio, at the time of substitution no higher than that of the Deleted Mortgage Loan at the time of substitution; (v) have a remaining term to stated maturity not greater than (and not more than one
year less than) that of the Deleted Mortgage Loan; (vi) not be 30 days or more delinquent; (vii) not be a negative amortization loan; (viii) have a lien priority equal to or superior to the lien priority of the Deleted Mortgage Loan;
and (ix) be a Qualified Replacement Mortgage. 
  
 “ERISA”: The Employee Retirement Income Security Act of 1974, as amended. 
  
 “Excess Cashflow”: For any Distribution Date, the excess of (a) the Interest Remittance Amount over (b) the sum of (w) the
Monthly Interest Distributable Amounts for the Class A Certificates and the Mezzanine Certificates, (x) the Class I Monthly Interest Distributable Amount and (y) the Administrative Fees, each for such Distribution Date. 
  
 “Extra Principal Distribution Amount”: For any Distribution
Date, is the lesser of (x) the Excess Cashflow for such Distribution Date and (y) the Overcollateralization Deficiency Amount for such Distribution Date. 
  
 “Expense Adjusted Mortgage Rate”: With respect to any Mortgage Loan, as of any date of determination, a per
annum rate of interest equal to the then applicable Mortgage Rate for such Mortgage Loan minus the Administrative Fee Rate. 
  

 Appendix A-21 

 “Failed Reassignment Termination Payment”: A termination payment with respect to the
affected portion of the notional balance of a Swap Agreement or Cap Agreement due under such Swap Agreement or Cap Agreement as a result of a failed reassignment of such affected portion of the notional balance thereof pursuant to
Section 4.03(f). 
  
 “Failed Reassignment Termination
Payment Due Date”: As defined in Section 4.04(g) herein. 
  
 “Fannie Mae”: Federal National Mortgage Association or any successor thereto. 
  
 “FDIC”: Federal Deposit Insurance Corporation or any successor thereto. 
  
 “Fitch”: Fitch Ratings, or its successors in interest. 
  
 “Fixed Rate Mortgage Loan”: A first-lien or second-lien
Mortgage Loan which provides for a fixed Mortgage Rate payable with respect thereto. The Fixed Rate Mortgage Loans are identified as such on the Mortgage Loan Schedule. 
  
 “Foreclosure Profit”: With respect to a Liquidated Mortgage Loan, the amount, if any, by which (i) the
aggregate of its Net Liquidation Proceeds exceeds (ii) the related Principal Balance (plus accrued and unpaid interest thereon at the applicable Mortgage Rate from the date interest was last paid through the date of receipt of the final
Liquidation Proceeds) of such Liquidated Mortgage Loan immediately prior to the final recovery of its Liquidation Proceeds. 
  
 “Formula Rate”: For any Distribution Date and the Class A Certificates and the Mezzanine Certificates the lesser of (i) LIBOR
plus the related Certificate Margin and (ii) 11% (13% with respect to the Group I Certificates). 
  
 “Freddie Mac”: The Federal Home Loan Mortgage Corporation, or any successor thereto. 
  
 “Gross Margin”: With respect to each Adjustable Rate
Mortgage Loan, the fixed percentage set forth in the related Mortgage Note that is added to the Index on each Adjustment Date in accordance with the terms of the related Mortgage Note used to determine the Mortgage Rate for such Mortgage Loan.

  
 “Group”: Any of the Group I Mortgage Loans
and the Group II Mortgage Loans. 
  
 “Group I Allocation
Percentage”: For any Distribution Date is the percentage equivalent of a fraction, the numerator of which is (i) the Group I Principal Remittance Amount for such Distribution Date and the denominator of which is (ii) the Principal
Remittance Amount for such Distribution Date. 
  
 “Group I
Available Funds Cap”: For each Distribution Date, the percentage equivalent of a fraction equal to (a) an amount equal to (i) the aggregate Interest Remittance Formula Amount for the Group I Mortgage Loans, less (ii) the
Administrative Fees allocable to the Group I Mortgage Loans, and less (iii) the Group I Class I Monthly Interest Distributable Amount, divided by (b) the product of (i) the actual number of days in the related Accrual Period divided
by 360 and (ii) the aggregate principal balance of the Group I Mortgage Loans plus any related amounts on deposit in the Pre-Funding Account. 
  

 Appendix A-22 

 “Group I Certificate”: Any Class A-1A Certificate. 
  
 “Group I Certificate Principal Distribution Amount”: For any
Distribution Date, an amount equal to the excess of (x) the Certificate Principal Balance of the Class A-1A Certificates immediately prior to that Distribution Date over (y) the lesser of (A) the product of (i) 68.40% and
(ii) the aggregate Principal Balance of the Group I Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and
unscheduled collections of principal received during the related Prepayment Period) and (B) the aggregate Principal Balance of the Group I Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of
principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) minus $7,103,711. 
  
 “Group I Class I Monthly Interest Distributable Amount”: For any Distribution Date, shall mean the sum of
(i) the Group I Class I-1 Monthly Interest Distributable Amount, (ii) the Group I Class I-2 Monthly Interest Distributable Amount, each for such Distribution Date and (iii) the Group I Class I-3 Monthly Interest Distributable Amount,
each for such Distribution Date. 
  
 “Group I Class I
Monthly Interest Formula Amounts” shall mean, on each Distribution Date up to and including the Distribution Date in August 2009, the following: 
  
 (I) the product of (x) the excess, if any, of 3.8700% (on a 30/360 basis) over LIBOR (on an actual/360 basis) and (y) the lesser of (a) the
excess of (i) the aggregate unpaid Principal Balance of the Group I Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $555,000,000 less the related Cumulative Adjustment
Amount multiplied by (Y) the Group I Class I Percentage for such Distribution Date and (b) $80,000,000 multiplied by the Group I Class I Percentage for such Distribution Date; and 
  
 (II) the product of (x) the excess, if any, of 3.7700% (on a 30/360
basis) over LIBOR (on an actual/360 basis) and (y) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group I Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution
Date, over (ii)(X) $475,000,000 less the related Cumulative Adjustment Amount multiplied by (Y) the Group I Class I Percentage for such Distribution Date and (b) $80,000,000 multiplied by the Group I Class I Percentage for such
Distribution Date; and 
  
 (III) the product of (x) the
excess, if any, of 4.0180% (on a 30/360 basis) over LIBOR (on an actual/360 basis) and (y) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group I Mortgage Loans plus any related amount in the
Pre-Funding Account, for such Distribution Date, over (ii) (X) $395,000,000 less the related Cumulative Adjustment Amount multiplied by (Y) the Group I Class I Percentage for such Distribution Date and (b) $80,000,000 multiplied
by the Group I Class I Percentage for such Distribution Date; and 
  

 Appendix A-23 

 (IV) the product of (x) the excess, if any, of 4.1100% (on a 30/360 basis) over LIBOR (on an
actual/360 basis) and (y) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group I Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over
(ii) (X) $345,000,000 less the related Cumulative Adjustment Amount multiplied by (Y) the Group I Class I Percentage for such Distribution Date and (b) $50,000,000 multiplied by the Group I Class I Percentage for such
Distribution Date; and 
  
 (V) the product of (x) the excess,
if any, of 4.1525% (on a 30/360 basis) over LIBOR (on an actual/360 basis) and (y) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group I Mortgage Loans plus any related amount in the Pre-Funding
Account, for such Distribution Date, over (ii) (X) $265,000,000 less the related Cumulative Adjustment Amount multiplied by (Y) the Group I Class I Percentage for such Distribution Date and (b) $80,000,000 multiplied by the Group
I Class I Percentage for such Distribution Date; and 
  
 (VI) the
product of (x) the excess, if any, of 4.4675% (on a 30/360 basis) over LIBOR (on an actual/360 basis) and (y) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group I Mortgage Loans plus any
related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $185,000,000 less the related Cumulative Adjustment Amount multiplied by (Y) the Group I Class I Percentage for such Distribution Date and
(b) the product of (A) $80,000,000 less the related Pre-Funding Swap/Cap Adjustment Amount multiplied by (B) the Group I Class I Percentage for such Distribution Date; and 
  
 (VII) the product of (x) the excess, if any, of 4.0480% (on a 30/360 basis) over LIBOR (on an actual/360 basis) and
(y) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group I Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $165,000,000 less the
related Cumulative Adjustment Amount multiplied by (Y) the Group I Class I Percentage for such Distribution Date and (b) $20,000,000 multiplied by the Group I Class I Percentage for such Distribution Date; and 
  
 (VIII) the product of (x) the excess, if any, of 3.8650% (on a 30/360
basis) over LIBOR (on an actual/360 basis) and (y) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group I Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution
Date, over (ii) (X) $145,000,000 less the related Cumulative Adjustment Amount multiplied by (Y) the Group I Class I Percentage for such Distribution Date and (b) $20,000,000 multiplied by the Group I Class I Percentage for such
Distribution Date; and 
  
 (IX) the product of (x) the
excess, if any, of 4.0840% (on a 30/360 basis) over LIBOR (on an actual/360 basis) and (y) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group I Mortgage Loans plus any related amount in the
Pre-Funding Account, for such Distribution Date, over (ii) (X) $125,000,000 less the related Cumulative Adjustment Amount multiplied by (Y) the Group I Class I Percentage for such Distribution Date and (b) $20,000,000 multiplied
by the Group I Class I Percentage for such Distribution Date; and 
  
 (X) the product of (x) the excess, if any, of 4.4050% (on a 30/360 basis) over LIBOR (on an actual/360 basis) and (y) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group I Mortgage
Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $90,000,000 less the related Cumulative Adjustment 
  

 Appendix A-24 

 Amount multiplied by (Y) the Group I Class I Percentage for such Distribution Date and (b) the product of
(A) $35,000,000 less the related Pre-Funding Swap/Cap Adjustment Amount multiplied by (B) the Group I Class I Percentage for such Distribution Date; and 
  
 (XI) the product of (x) 0.3650% (on a 30/360 basis) (y) 10 and (z) the lesser of (a) the excess of
(i) the aggregate unpaid Principal Balance of the Group I Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $82,000,000 less the related Pre-Funding Cumulative Adjustment
Amount multiplied by (Y) the Group I Class I Percentage for such Distribution Date and (b) $8,000,000 multiplied by the Group I Class I Percentage for such Distribution Date; and 
  
 (XII) the product of (x) 0.3670% (on a 30/360 basis) (y) 10 and
(z) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group I Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $74,000,000 less the
related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the Group I Class I Percentage for such Distribution Date and (b) $8,000,000 multiplied by the Group I Class I Percentage for such Distribution Date; and 
  
 (XIII) the product of (x) 0.3280% (on a 30/360 basis) (y) 10 and
(z) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group I Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $66,000,000 less the
related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the Group I Class I Percentage for such Distribution Date and (b) $8,000,000 multiplied by the Group I Class I Percentage for such Distribution Date; and 
  
 (XIV) the product of (x) 0.3220% (on a 30/360 basis) (y) 10 and
(z) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group I Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $58,000,000 less the
related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the Group I Class I Percentage for such Distribution Date and (b) $8,000,000 multiplied by the Group I Class I Percentage for such Distribution Date; and 
  
 (XV) the product of (x) 0.2950% (on a 30/360 basis) (y) 10 and
(z) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group I Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $50,000,000 less the
related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the Group I Class I Percentage for such Distribution Date and (b) $8,000,000 multiplied by the Group I Class I Percentage for such Distribution Date; and 
  
 (XVI) the product of (x) 0.2870% (on a 30/360 basis) (y) 10 and
(z) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group I Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $42,000,000 less the
related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the Group I Class I Percentage for such Distribution Date and (b) $8,000,000 multiplied by the Group I Class I Percentage for such Distribution Date; and 
  

 Appendix A-25 

 (XVII) the product of (x) 0.2880% (on a 30/360 basis) (y) 10 and (z) the lesser of
(a) the excess of (i) the aggregate unpaid Principal Balance of the Group I Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $34,000,000 less the related Pre-Funding
Cumulative Adjustment Amount multiplied by (Y) the Group I Class I Percentage for such Distribution Date and (b) $8,000,000 multiplied by the Group I Class I Percentage for such Distribution Date; and 
  
 (XVIII) the product of (x) 0.28125% (on a 30/360 basis) (y) 10 and
(z) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group I Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $26,000,000 less the
related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the Group I Class I Percentage for such Distribution Date and (b) the product of (A) $8,000,000 less the related Pre-Funding Swap/Cap Adjustment Amount multiplied by
(B) the Group I Class I Percentage for such Distribution Date; and 
  
 (XIX) the product of (x) 0.2740% (on a 30/360 basis) (y) 10 and (z) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group I Mortgage Loans plus any related amount in the Pre-Funding
Account, for such Distribution Date, over (ii) (X) $18,000,000 less the related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the Group I Class I Percentage for such Distribution Date and (b) the product of
(A) $8,000,000 less the related Pre-Funding Swap/Cap Adjustment Amount multiplied by (B) the Group I Class I Percentage for such Distribution Date; and 
  
 (XX) the product of (x) 0.4600% (on a 30/360 basis) (y) 10 and (z) the lesser of (a) the excess of
(i) the aggregate unpaid Principal Balance of the Group I Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $16,000,000 less the related Pre-Funding Cumulative Adjustment
Amount multiplied by (Y) the Group I Class I Percentage for such Distribution Date and (b) $2,000,000 multiplied by the Group I Class I Percentage for such Distribution Date; and 
  
 (XXI) the product of (x) 0.4520% (on a 30/360 basis) (y) 10 and
(z) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group I Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $14,000,000 less the
related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the Group I Class I Percentage for such Distribution Date and (b) $2,000,000 multiplied by the Group I Class I Percentage for such Distribution Date; and 
  
 (XXII) the product of (x) 0.4225% (on a 30/360 basis) (y) 10 and
(z) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group I Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $12,000,000 less the
related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the Group I Class I Percentage for such Distribution Date and (b) $2,000,000 multiplied by the Group I Class I Percentage for such Distribution Date; and 
  
 (XXIII) the product of (x) 0.4290% (on a 30/360 basis) (y) 10 and
(z) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group I Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $10,000,000

  

 Appendix A-26 

 less the related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the Group I Class I Percentage for such
Distribution Date and (b) $2,000,000 multiplied by the Group I Class I Percentage for such Distribution Date; and 
  
 (XXIV) the product of (x) 0.3800% (on a 30/360 basis) (y) 10 and (z) the lesser of (a) the excess of (i) the aggregate unpaid
Principal Balance of the Group I Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $8,000,000 less the related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the
Group I Class I Percentage for such Distribution Date and (b) $2,000,000 multiplied by the Group I Class I Percentage for such Distribution Date; and 
  
 (XXV) the product of (x) 0.3980% (on a 30/360 basis) (y) 10 and (z) the lesser of (a) the excess of (i) the aggregate unpaid
Principal Balance of the Group I Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $6,000,000 less the related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the
Group I Class I Percentage for such Distribution Date and (b) $2,000,000 multiplied by the Group I Class I Percentage for such Distribution Date; and 
  
 (XXVI) the product of (x) 0.4010% (on a 30/360 basis) (y) 10 and (z) the lesser of (a) the excess of (i) the aggregate unpaid
Principal Balance of the Group I Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $4,000,000 less the related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the
Group I Class I Percentage for such Distribution Date and (b) $2,000,000 multiplied by the Group I Class I Percentage for such Distribution Date; and 
  
 (XXVII) the product of (x) 0.3725% (on a 30/360 basis) (y) 10 and (z) the lesser of (a) the excess of (i) the aggregate unpaid
Principal Balance of the Group I Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $2,000,000 less the related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the
Group I Class I Percentage for such Distribution Date and (b) the product of (A) $2,000,000 less the related Pre-Funding Swap/Cap Adjustment Amount multiplied by (B) the Group I Class I Percentage for such Distribution Date; and

  
 (XXVIII) the product of (x) 0.3600% (on a 30/360 basis)
(y) 10 and (z) the lesser of (a) the aggregate unpaid Principal Balance of the Group I Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date and (b) the product of (A) $2,000,000 less
the related Pre-Funding Swap/Cap Adjustment Amount multiplied by (B) the Group I Class I Percentage for such Distribution Date. 
  
 “Group I Class I-1 Monthly Interest Distributable Amount” shall mean, commencing on the first Distribution Date through and including the
Distribution Date in March 2007, an amount equal to the sum of the amounts described in clauses (I) through (VI) and clauses (XI) through (XIX) of the definition of Group I Class I Monthly Interest Formula Amounts. 
  
 For the Distribution Date in April 2007, an amount equal to the sum of the
amounts described in clauses (I) through (VI) and clauses (XII) through (XIX) of the definition of Group I Class I Monthly Interest Formula Amounts. 
  

 Appendix A-27 

 For the Distribution Date in May 2007, an amount equal to the sum of the amounts described in clauses
(II) through (VI) and clauses (XIII) through (XIX) of the definition of Group I Class I Monthly Interest Formula Amounts. 
  
 For the Distribution Date in June 2007, an amount equal to the sum of the amounts described in clauses (II) through (VI) and clauses (XV) through (XIX) of
the definition of Group I Class I Monthly Interest Formula Amounts. 
  
 For the Distribution Date in July 2007, an amount equal to the sum of the amounts described in clauses (III) through (VI) and clauses (XVII) through (XIX) of the definition of Group I Class I Monthly Interest Formula Amounts. 
  
 For the Distribution Date in August 2007, an amount equal to the sum of the
amounts described in clause (VI) and clauses (XVIII) through (XIX) of the definition of Group I Class I Monthly Interest Formula Amounts. 
  
 For the Distribution Date in September 2007 and each Distribution Date thereafter, the Group I Class I-1 Monthly Interest Distributable Amount shall be
zero. 
  
 “Group I Class I-2 Monthly Interest
Distributable Amount” shall mean, commencing on the first Distribution Date through and including the Distribution Date in March 2008, an amount equal to the sum of the amounts described in clauses (VII) through (IX) and clauses (XX)
through (XVIII) of the definition of Group I Class I Monthly Interest Formula Amounts. 
  
 For the Distribution Date in April 2008, an amount equal to the sum of the amounts described in clauses (VII) through (IX) and clauses (XXI) through (XVIII) of the definition of Group I Class I Monthly Interest
Formula Amounts. 
  
 For the Distribution Date in May 2008, an
amount equal to the sum of the amounts described in clauses (VIII) through (IX) and clauses (XXII) through (XVIII) of the definition of Group I Class I Monthly Interest Formula Amounts. 
  
 For the Distribution Date in June 2008, an amount equal to the sum of the amounts described in clauses (VIII) through (IX)
and clauses (XXIV) through (XVIII) of the definition of Group I Class I Monthly Interest Formula Amounts. 
  
 For the Distribution Date in July 2008, an amount equal to the sum of the amounts described in clause (IX) and clauses (XXVI) through (XVIII) of the
definition of Group I Class I Monthly Interest Formula Amounts. 
  
 For the Distribution Date in August 2008, an amount equal to the sum of the amounts described in clauses (XXVII) through (XVIII) of the definition of Group I Class I Monthly Interest Formula Amounts. 
  
 For the Distribution Date in September 2008 and each Distribution Date
thereafter, the Group I Class I-2 Monthly Interest Distributable Amount shall be zero. 
  

 Appendix A-28 

 “Group I Class I-3 Monthly Interest Distributable Amount” shall mean, commencing on the
first Distribution Date through and including the Distribution Date in August 2009, an amount equal to the sum of the amount described in clause (X) of the definition of Group I Class I Monthly Interest Formula Amounts. 
  
 “Group I Class I Percentage”: 
  

				
	 Distribution Date

	  	Percentage

	 
	 October 2005
	  	56.829690257	%
	 November 2005
	  	56.827526730	%
	 December 2005
	  	56.824560505	%
	 January 2006
	  	56.821223045	%
	 February 2006
	  	56.817940392	%
	 March 2006
	  	56.814684012	%
	 April 2006
	  	56.811454488	%
	 May 2006
	  	56.808069005	%
	 June 2006
	  	56.804439458	%
	 July 2006
	  	56.800665451	%
	 August 2006
	  	56.795850005	%
	 September 2006
	  	56.789525722	%
	 October 2006
	  	56.783342156	%
	 November 2006
	  	56.777096153	%
	 December 2006
	  	56.770814361	%
	 January 2007
	  	56.764496578	%
	 February 2007
	  	56.758142606	%
	 March 2007
	  	56.751752238	%
	 April 2007
	  	56.745325275	%
	 May 2007
	  	56.738861508	%
	 June 2007
	  	56.732416299	%
	 July 2007
	  	56.732225466	%
	 August 2007
	  	56.703950281	%
	 September 2007
	  	56.678514012	%
	 October 2007
	  	56.652597412	%
	 November 2007
	  	56.625970107	%
	 December 2007
	  	56.598935676	%
	 January 2008
	  	56.566249762	%
	 February 2008
	  	56.558309385	%
	 March 2008
	  	56.547782034	%
	 April 2008
	  	56.538790274	%
	 May 2008
	  	56.529736302	%
	 June 2008
	  	56.520620478	%
	 July 2008
	  	56.511442983	%
	 August 2008
	  	56.502203734	%
	 September 2008
	  	56.492900064	%
	 October 2008
	  	56.483592377	%
	 November 2008
	  	56.474226041	%
	 December 2008
	  	56.464824612	%
	 January 2009
	  	56.455360971	%
	 February 2009
	  	56.445835060	%
	 March 2009
	  	56.436246333	%
	 April 2009
	  	56.426595235	%
	 May 2009
	  	56.416881723	%
	 June 2009
	  	56.407105456	%
	 July 2009
	  	56.397266701	%
	 August 2009
	  	56.387365435	%

  

 Appendix A-29 

 “Group I Cross Collateralization Amount”: For any Distribution Date, the portion of the
Group I Interest Remittance Amount remaining after payment of the Monthly Interest Distributable Amount on the Group I Certificates, the Group I Class I Monthly Interest Distributable Amount and the related proportional amount of the Administrative
Fees. 
  
 “Group I Interest Remittance Amount”:
For any Distribution Date, the portion of the Interest Remittance Amount that was collected or advanced on the Group I Mortgage Loans. 
  
 “Group I Mortgage Loans”: The Mortgage Loans allocated to Group I which primarily support the Group I Certificates. 
  
 “Group I Pool Balance”: The Pool Balance relating to the
Group I Mortgage Loans. 
  
 “Group I Principal
Distribution Amount”: With respect to any Distribution Date is the sum of (i) the Group I Principal Remittance Amount for such Distribution Date and (ii) the Extra Principal Distribution Amount for such Distribution Date
multiplied by the Group I Allocation Percentage. 
  
 “Group I Principal Remittance Amount”: For any Distribution Date, the portion of the Principal Remittance Amount that was collected or advanced on the Group I Mortgage Loans plus, following the Pre-Funding Period, any
remaining Pre-Funded Amounts related to the Group I Mortgage Loans. 
  
 “Group I REMIC Available Funds Cap”: The weighted average of the pass-through rates on the Class IV-J1 and Class IV-S1 Interests. 
  
 “Group I REMIC III Net WAC”: The weighted average of the pass-through rates on the Class II-A1 through
Class II-A18, Class II-B1 through Class II-B19, Class II-C1 through Class II-C19, Class II-D1 through Class II-D20, Class II-E1 through Class II-E20, Class II-F1 through Class II-F21, Class II-G1 through Class II-G21, Class II-H1 through Class
II-H21, Class II-K1 through Class II-K22, Class II-L1 through Class II-L22, Class II-M1 through Class II-M22, Class II-O1 through Class II-O22, Class II-Q1 through Class II-Q23, Class II-S1 through Class II-S23, Class II-T1 through Class II-T23,
Class II-U1 through Class II-U30, Class II-V1 through Class II-V31, Class II-W1 through Class II-W31, Class II-Y1 through Class II-Y32, Class II-Z1 through Class II-Z32, Class II-a1 through Class II-a33, Class II-b1 through Class II-b33, Class

  

 Appendix A-30 

 II-c1 through Class II-c33, Class II-d1 through Class II-d34, Class II-e1 through Class II-e34, Class II-f1 through Class
II-f35, Class II-g1 through Class II-g35, Class II-h1 through Class II-h47 and Class II-J1 Interests. 
  
 “Group I Schedule”: As set forth in Appendix B. 
  

“Group I Subordinated Amount”: For any Distribution Date, the excess, if any, of the Group I Pool Balance plus any related Pre-Funded
Amount over the aggregate Certificate Principal Balance of the Group I Certificates, for such Distribution Date. 
  
 “Group II Allocation Percentage”: For any Distribution Date is the percentage equivalent of a fraction, the numerator of which is
(i) the Group II Principal Remittance Amount for such Distribution Date and the denominator of which is (ii) the Principal Remittance Amount for such Distribution Date. 
  
 “Group II Available Funds Cap”: For each Distribution Date, the percentage equivalent of a fraction equal
to (a) an amount equal to (i) the aggregate Interest Remittance Formula Amount for the Group II Mortgage Loans, less (ii) the Administrative Fees allocable to the Group II Mortgage Loans, and less (iii) the Group II Class I
Monthly Interest Distributable Amount, divided by (b) the product of (i) the actual number of days in the related Accrual Period divided by 360 and (ii) the aggregate principal balance of the Group II Mortgage Loans plus any related
amounts on deposit in the Pre-Funding Account. 
  
 “Group
II Certificate”: Any of the Class A-2A Certificates, Class A-2B Certificates, Class A-2C Certificates or Class A-2D Certificates. 
  

“Group II Certificate Principal Distribution Amount”: For any Distribution Date, an amount equal to the excess of (x) the
aggregate Certificate Principal Balance of the Group II Certificates immediately prior to that Distribution Date over (y) the lesser of (A) the product of (i) 68.40% and (ii) the aggregate Principal Balance of the Group II
Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the
related Prepayment Period) and (B) the aggregate Principal Balance of the Group II Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the
extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) minus $5,396,289. 
  
 “Group II Class I Monthly Interest Distributable Amount”: For any Distribution Date, shall mean the sum of (i) the Group II Class
I-1 Monthly Interest Distributable Amount, (ii) the Group II Class I-2 Monthly Interest Distributable Amount, each for such Distribution Date and (iii) the Group II Class I-3 Monthly Interest Distributable Amount, each for such
Distribution Date. 
  
  

 Appendix A-31 

 “Group II Class I Monthly Interest Formula Amounts” shall mean, on each Distribution
Date up to and including the Distribution Date in August 2009, the following: 
  
 (I) the product of (x) the excess, if any, of 3.8700% (on a 30/360 basis) over LIBOR (on an actual/360 basis) and (y) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of
the Group II Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $555,000,000 less the related Cumulative Adjustment Amount multiplied by (Y) the Group II Class I Percentage for
such Distribution Date and (b) $80,000,000 multiplied by the Group II Class I Percentage for such Distribution Date; and 
  
 (II) the product of (x) the excess, if any, of 3.7700% (on a 30/360 basis) over LIBOR (on an actual/360 basis) and (y) the lesser of
(a) the excess of (i) the aggregate unpaid Principal Balance of the Group II Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii)(X) $475,000,000 less the related Cumulative Adjustment
Amount multiplied by (Y) the Group II Class I Percentage for such Distribution Date and (b) $80,000,000 multiplied by the Group II Class I Percentage for such Distribution Date; and 
  
 (III) the product of (x) the excess, if any, of 4.0180% (on a 30/360
basis) over LIBOR (on an actual/360 basis) and (y) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group II Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution
Date, over (ii) (X) $395,000,000 less the related Cumulative Adjustment Amount multiplied by (Y) the Group II Class I Percentage for such Distribution Date and (b) $80,000,000 multiplied by the Group II Class I Percentage for
such Distribution Date; and 
  
 (IV) the product of (x) the
excess, if any, of 4.1100% (on a 30/360 basis) over LIBOR (on an actual/360 basis) and (y) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group II Mortgage Loans plus any related amount in the
Pre-Funding Account, for such Distribution Date, over (ii) (X) $345,000,000 less the related Cumulative Adjustment Amount multiplied by (Y) the Group II Class I Percentage for such Distribution Date and (b) $50,000,000 multiplied
by the Group II Class I Percentage for such Distribution Date; and 
  
 (V) the product of (x) the excess, if any, of 4.1525% (on a 30/360 basis) over LIBOR (on an actual/360 basis) and (y) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group II Mortgage
Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $265,000,000 less the related Cumulative Adjustment Amount multiplied by (Y) the Group II Class I Percentage for such Distribution
Date and (b) $80,000,000 multiplied by the Group II Class I Percentage for such Distribution Date; and 
  
 (VI) the product of (x) the excess, if any, of 4.4675% (on a 30/360 basis) over LIBOR (on an actual/360 basis) and (y) the lesser of
(a) the excess of (i) the aggregate unpaid Principal Balance of the Group II Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $185,000,000 less the related Cumulative
Adjustment Amount multiplied by (Y) the Group II Class I Percentage for such Distribution Date and (b) the product of (A) $80,000,000 less the related Pre-Funding Swap/Cap Adjustment Amount multiplied by (B) the Group II Class I
Percentage for such Distribution Date; and 
  
 (VII) the product
of (x) the excess, if any, of 4.0480% (on a 30/360 basis) over LIBOR (on an actual/360 basis) and (y) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group II Mortgage Loans plus any related
amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $165,000,000 less the related Cumulative Adjustment Amount multiplied by (Y) the Group II Class I Percentage for such Distribution Date and
(b) $20,000,000 multiplied by the Group II Class I Percentage for such Distribution Date; and 
  

 Appendix A-32 

 (VIII) the product of (x) the excess, if any, of 3.8650% (on a 30/360 basis) over LIBOR (on an
actual/360 basis) and (y) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group II Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over
(ii) (X) $145,000,000 less the related Cumulative Adjustment Amount multiplied by (Y) the Group II Class I Percentage for such Distribution Date and (b) $20,000,000 multiplied by the Group II Class I Percentage for such
Distribution Date; and 
  
 (IX) the product of (x) the
excess, if any, of 4.0840% (on a 30/360 basis) over LIBOR (on an actual/360 basis) and (y) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group II Mortgage Loans plus any related amount in the
Pre-Funding Account, for such Distribution Date, over (ii) (X) $125,000,000 less the related Cumulative Adjustment Amount multiplied by (Y) the Group II Class I Percentage for such Distribution Date and (b) $20,000,000 multiplied
by the Group II Class I Percentage for such Distribution Date; and 
  
 (X) the product of (x) the excess, if any, of 4.4050% (on a 30/360 basis) over LIBOR (on an actual/360 basis) and (y) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group II Mortgage
Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $90,000,000 less the related Cumulative Adjustment Amount multiplied by (Y) the Group II Class I Percentage for such Distribution Date
and (b) the product of (A) $35,000,000 less the related Pre-Funding Swap/Cap Adjustment Amount multiplied by (B) the Group II Class I Percentage for such Distribution Date; and 
  
 (XI) the product of (x) 0.3650% (on a 30/360 basis) (y) 10 and
(z) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group II Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $82,000,000 less the
related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the Group II Class I Percentage for such Distribution Date and (b) $8,000,000 multiplied by the Group II Class I Percentage for such Distribution Date; and 
  
 (XII) the product of (x) 0.3670% (on a 30/360 basis) (y) 10 and
(z) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group II Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $74,000,000 less the
related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the Group II Class I Percentage for such Distribution Date and (b) $8,000,000 multiplied by the Group II Class I Percentage for such Distribution Date; and 
  
 (XIII) the product of (x) 0.3280% (on a 30/360 basis) (y) 10 and
(z) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group II Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $66,000,000 less the
related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the Group II Class I Percentage for such Distribution Date and (b) $8,000,000 multiplied by the Group II Class I Percentage for such Distribution Date; and 
  

 Appendix A-33 

 (XIV) the product of (x) 0.3220% (on a 30/360 basis) (y) 10 and (z) the lesser of
(a) the excess of (i) the aggregate unpaid Principal Balance of the Group II Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $58,000,000 less the related Pre-Funding
Cumulative Adjustment Amount multiplied by (Y) the Group II Class I Percentage for such Distribution Date and (b) $8,000,000 multiplied by the Group II Class I Percentage for such Distribution Date; and 
  
 (XV) the product of (x) 0.2950% (on a 30/360 basis) (y) 10 and
(z) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group II Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $50,000,000 less the
related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the Group II Class I Percentage for such Distribution Date and (b) $8,000,000 multiplied by the Group II Class I Percentage for such Distribution Date; and 
  
 (XVI) the product of (x) 0.2870% (on a 30/360 basis) (y) 10 and
(z) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group II Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $42,000,000 less the
related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the Group II Class I Percentage for such Distribution Date and (b) $8,000,000 multiplied by the Group II Class I Percentage for such Distribution Date; and 
  
 (XVII) the product of (x) 0.2880% (on a 30/360 basis) (y) 10 and
(z) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group II Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $34,000,000 less the
related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the Group II Class I Percentage for such Distribution Date and (b) $8,000,000 multiplied by the Group II Class I Percentage for such Distribution Date; and 
  
 (XVIII) the product of (x) 0.28125% (on a 30/360 basis) (y) 10 and
(z) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group II Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $26,000,000 less the
related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the Group II Class I Percentage for such Distribution Date and (b) the product of (A) $8,000,000 less the related Pre-Funding Swap/Cap Adjustment Amount multiplied by
(B) the Group II Class I Percentage for such Distribution Date; and 
  
 (XIX) the product of (x) 0.2740% (on a 30/360 basis) (y) 10 and (z) the lesser of (a) the excess of (i) the aggregate unpaid Principal Balance of the Group II Mortgage Loans plus any related
amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $18,000,000 less the related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the Group II Class I Percentage for such Distribution Date and
(b) the product of (A) $8,000,000 less the related Pre-Funding Swap/Cap Adjustment Amount multiplied by (B) the Group II Class I Percentage for such Distribution Date; and 
  
 (XX) the product of (x) 0.4600% (on a 30/360 basis) (y) 10 and (z) the lesser of (a) the excess of
(i) the aggregate unpaid Principal Balance of the Group II Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $16,000,000 
  

 Appendix A-34 

 less the related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the Group II Class I Percentage for such
Distribution Date and (b) $2,000,000 multiplied by the Group II Class I Percentage for such Distribution Date; and 
  
 (XXI) the product of (x) 0.4520% (on a 30/360 basis) (y) 10 and (z) the lesser of (a) the excess of (i) the aggregate unpaid
Principal Balance of the Group II Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $14,000,000 less the related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the
Group II Class I Percentage for such Distribution Date and (b) $2,000,000 multiplied by the Group II Class I Percentage for such Distribution Date; and 
  
 (XXII) the product of (x) 0.4225% (on a 30/360 basis) (y) 10 and (z) the lesser of (a) the excess of (i) the aggregate unpaid
Principal Balance of the Group II Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $12,000,000 less the related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the
Group II Class I Percentage for such Distribution Date and (b) $2,000,000 multiplied by the Group II Class I Percentage for such Distribution Date; and 
  
 (XXIII) the product of (x) 0.4290% (on a 30/360 basis) (y) 10 and (z) the lesser of (a) the excess of (i) the aggregate unpaid
Principal Balance of the Group II Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $10,000,000 less the related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the
Group II Class I Percentage for such Distribution Date and (b) $2,000,000 multiplied by the Group II Class I Percentage for such Distribution Date; and 
  
 (XXIV) the product of (x) 0.3800% (on a 30/360 basis) (y) 10 and (z) the lesser of (a) the excess of (i) the aggregate unpaid
Principal Balance of the Group II Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $8,000,000 less the related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the
Group II Class I Percentage for such Distribution Date and (b) $2,000,000 multiplied by the Group II Class I Percentage for such Distribution Date; and 
  
 (XXV) the product of (x) 0.3980% (on a 30/360 basis) (y) 10 and (z) the lesser of (a) the excess of (i) the aggregate unpaid
Principal Balance of the Group II Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $6,000,000 less the related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the
Group II Class I Percentage for such Distribution Date and (b) $2,000,000 multiplied by the Group II Class I Percentage for such Distribution Date; and 
  
 (XXVI) the product of (x) 0.4010% (on a 30/360 basis) (y) 10 and (z) the lesser of (a) the excess of (i) the aggregate unpaid
Principal Balance of the Group II Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $4,000,000 less the related Pre-Funding Cumulative Adjustment Amount multiplied by (Y) the
Group II Class I Percentage for such Distribution Date and (b) $2,000,000 multiplied by the Group II Class I Percentage for such Distribution Date; and 
  

 Appendix A-35 

 (XXVII) the product of (x) 0.3725% (on a 30/360 basis) (y) 10 and (z) the lesser of
(a) the excess of (i) the aggregate unpaid Principal Balance of the Group II Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date, over (ii) (X) $2,000,000 less the related Pre-Funding
Cumulative Adjustment Amount multiplied by (Y) the Group II Class I Percentage for such Distribution Date and (b) the product of (A) $2,000,000 less the related Pre-Funding Swap/Cap Adjustment Amount multiplied by (B) the Group
II Class I Percentage for such Distribution Date; and 
  
 (XXVIII)
the product of (x) 0.3600% (on a 30/360 basis) (y) 10 and (z) the lesser of (a) the aggregate unpaid Principal Balance of the Group II Mortgage Loans plus any related amount in the Pre-Funding Account, for such Distribution Date
and (b) the product of (A) $2,000,000 less the related Pre-Funding Swap/Cap Adjustment Amount multiplied by (B) the Group II Class I Percentage for such Distribution Date. 
  
 “Group II Class I-1 Monthly Interest Distributable Amount” shall mean, commencing on the first Distribution
Date through and including the Distribution Date in March 2007, an amount equal to the sum of the amounts described in clauses (I) through (VI) and clauses (XI) through (XIX) of the definition of Group II Class I Monthly Interest Formula
Amounts. 
  
 For the Distribution Date in April 2007, an amount
equal to the sum of the amounts described in clauses (I) through (VI) and clauses (XII) through (XIX) of the definition of Group II Class I Monthly Interest Formula Amounts. 
  
 For the Distribution Date in May 2007, an amount equal to the sum of the amounts described in clauses (II) through (VI) and
clauses (XIII) through (XIX) of the definition of Group II Class I Monthly Interest Formula Amounts. 
  
 For the Distribution Date in June 2007, an amount equal to the sum of the amounts described in clauses (II) through (VI) and clauses (XV) through (XIX) of
the definition of Group II Class I Monthly Interest Formula Amounts. 
  
 For the Distribution Date in July 2007, an amount equal to the sum of the amounts described in clauses (III) through (VI) and clauses (XVII) through (XIX) of the definition of Group II Class I Monthly Interest Formula Amounts. 

 
 For the Distribution Date in August 2007, an amount equal to the sum of
the amounts described in clause (VI) and clauses (XVIII) through (XIX) of the definition of Group II Class I Monthly Interest Formula Amounts. 
  
 For the Distribution Date in September 2007 and each Distribution Date thereafter, the Group II Class I-1 Monthly Interest Distributable Amount shall be
zero. 
  
 “Group II Class I-2 Monthly Interest
Distributable Amount” shall mean, commencing on the first Distribution Date through and including the Distribution Date in March 2008, an amount equal to the sum of the amounts described in clauses (VII) through (IX) and clauses (XX)
through (XVIII) of the definition of Group II Class I Monthly Interest Formula Amounts. 
  

 Appendix A-36 

 For the Distribution Date in April 2008, an amount equal to the sum of the amounts described in clauses
(VII) through (IX) and clauses (XXI) through (XVIII) of the definition of Group II Class I Monthly Interest Formula Amounts. 
  
 For the Distribution Date in May 2008, an amount equal to the sum of the amounts described in clauses (VIII) through (IX) and clauses (XXII) through
(XVIII) of the definition of Group II Class I Monthly Interest Formula Amounts. 
  
 For the Distribution Date in June 2008, an amount equal to the sum of the amounts described in clauses (VIII) through (IX) and clauses (XXIV) through (XVIII) of the definition of Group II Class I Monthly Interest
Formula Amounts. 
  
 For the Distribution Date in July 2008, an
amount equal to the sum of the amounts described in clause (IX) and clauses (XXVI) through (XVIII) of the definition of Group II Class I Monthly Interest Formula Amounts. 
  
 For the Distribution Date in August 2008, an amount equal to the sum of the amounts described in clauses (XXVII) through
(XVIII) of the definition of Group II Class I Monthly Interest Formula Amounts. 
  
 For the Distribution Date in September 2008 and each Distribution Date thereafter, the Group II Class I-2 Monthly Interest Distributable Amount shall be zero. 
  
 “Group II Class I-3 Monthly Interest Distributable Amount”
shall mean, commencing on the first Distribution Date through and including the Distribution Date in August 2009, an amount equal to the sum of the amount described in clause (X) of the definition of Group II Class I Monthly Interest Formula
Amounts. 
  

 Appendix A-37 

 “Group II Class I Percentage”: 
  

				
	 Distribution Date

	  	Percentage

	 
	 October 2005
	  	43.170309743	%
	 November 2005
	  	43.172473270	%
	 December 2005
	  	43.175439495	%
	 January 2006
	  	43.178776956	%
	 February 2006
	  	43.182059608	%
	 March 2006
	  	43.185315988	%
	 April 2006
	  	43.188545513	%
	 May 2006
	  	43.191930995	%
	 June 2006
	  	43.195560542	%
	 July 2006
	  	43.199334549	%
	 August 2006
	  	43.204149995	%
	 September 2006
	  	43.210474279	%
	 October 2006
	  	43.216657844	%
	 November 2006
	  	43.222903847	%
	 December 2006
	  	43.229185639	%
	 January 2007
	  	43.235503421	%
	 February 2007
	  	43.241857394	%
	 March 2007
	  	43.248247762	%
	 April 2007
	  	43.254674726	%
	 May 2007
	  	43.261138492	%
	 June 2007
	  	43.267583701	%
	 July 2007
	  	43.267774534	%
	 August 2007
	  	43.296049719	%
	 September 2007
	  	43.321485987	%
	 October 2007
	  	43.347402588	%
	 November 2007
	  	43.374029894	%
	 December 2007
	  	43.401064324	%
	 January 2008
	  	43.433750238	%
	 February 2008
	  	43.441690616	%
	 March 2008
	  	43.452217966	%
	 April 2008
	  	43.461209726	%
	 May 2008
	  	43.470263698	%
	 June 2008
	  	43.479379522	%
	 July 2008
	  	43.488557017	%
	 August 2008
	  	43.497796264	%
	 September 2008
	  	43.507099935	%
	 October 2008
	  	43.516407624	%
	 November 2008
	  	43.525773957	%
	 December 2008
	  	43.535175388	%
	 January 2009
	  	43.544639029	%
	 February 2009
	  	43.554164938	%
	 March 2009
	  	43.563753667	%
	 April 2009
	  	43.573404765	%
	 May 2009
	  	43.583118277	%
	 June 2009
	  	43.592894546	%
	 July 2009
	  	43.602733299	%
	 August 2009
	  	43.612634566	%

  
 “Group II
Cross Collateralization Amount”: For any Distribution Date, the portion of the Group II Interest Remittance Amount remaining after payment of the Monthly Interest Distributable Amounts on the Group II Certificates, the Group II Class I
Monthly Distributable Amount and the related proportional amount of the Administrative Fees. 
  
 “Group II Interest Remittance Amount”: For any Distribution Date, the portion of the Interest Remittance Amount that was collected or advanced on the Group II Mortgage Loans. 
  
 “Group II Mortgage Loans:” The Mortgage Loans allocated to
Group II which primarily support the Group II Certificates. 
  
 “Group II Principal Distribution Amount”: With respect to any Distribution Date is the sum of (i) the Group II Principal Remittance Amount for such Distribution Date and (ii) the Extra Principal Distribution
Amount for such Distribution Date multiplied by the Group II Allocation Percentage. 
  

 Appendix A-38 

 “Group II Principal Remittance Amount”: For any Distribution Date, the portion of the
Principal Remittance Amount that was collected or advanced on the Group II Mortgage Loans plus, following the Pre-Funding Period, any remaining Pre-Funded Amounts related to the Group II Mortgage Loans. 
  
 Group II REMIC III Net WAC”: The weighted average of the
pass-through rates on the Class II-AA1 through Class II-AA18, Class II-BB1 through Class II-BB19, Class II-CC1 through Class II-CC19, Class II-DD1 through Class II-DD20, Class II-EE1 through Class II-EE20, Class II-FF1 through Class II-FF21, Class
II-GG1 through Class II-GG21, Class II-HH1 through Class II-HH21, Class II-KK1 through Class II-KK22, Class II-LL1 through Class II-LL22, Class II-MM1 through Class II-MM22, Class II-OO1 through Class II-OO22, Class II-QQ1 through Class II-QQ23,
Class II-SS1 through Class II-SS23, Class II-TT1 through Class II-TT23, Class II-UU1 through Class II-UU30, Class II-VV1 through Class II-VV31, Class II-WW1 through Class II-WW31, Class II-YY1 through Class II-YY32, Class II-ZZ1 through Class
II-ZZ32, Class II-aa1 through Class II-aa33, Class II-bb1 through Class II-bb33, Class II-cc1 through Class II-cc33, Class II-dd1 through Class II-dd34, Class II-ee1 through Class II-ee34, Class II-ff1 through Class II-ff35, Class II-gg1 through
Class II-gg35, Class II-hh1 through Class II-hh47 and Class II-J2 Interests. 
  
 “Group II REMIC Available Funds Cap”: The weighted average of the pass-through rates on the Class IV-J2 and Class IV-S2 Interests. 
  
 “Group II Schedule”: As set forth in Appendix B. 
  
 “Group II Subordinated Amount”: For any Distribution Date,
the excess, if any, of the Group II Pool Balance plus any related Pre-Funded Amount over the aggregate Certificate Principal Balance of the Group II Certificates, for such Distribution Date. 
  
 “Hedge Termination Payment”: The termination payment
pursuant to a Swap Agreement or Cap Agreement, which would be payable out of the Supplemental Interest Trust (x) if the Supplemental Interest Trust fails to pay the related Swap Amount or Cap Amount on a prior Distribution Date or (y) if
such amount is a Failed Reassignment Termination Payment and the conditions set forth in Section 4.04(g) are satisfied. 
  
 “Indenture”: An indenture relating to the issuance of net interest margin notes secured by the Class C Certificates. 
  
 “Independent”: When used with respect to any specified
Person, any such Person who (a) is in fact independent of the Company, the Servicer and their respective Affiliates, (b) does not have any direct financial interest in or any material indirect financial interest in the Company or the
Servicer or any Affiliate thereof, and (c) is not connected with the Company or the Servicer or any Affiliate thereof as an officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar functions; provided,
however, that a Person shall not fail to be Independent of the Company or the Servicer or any Affiliate thereof merely because such Person is the beneficial owner of 1% or less of any Class of securities issued by the Company or the Servicer or any
Affiliate thereof, as the case may be. 
  

 Appendix A-39 

 “Index”: With respect to each Adjustable Rate Mortgage Loan and with respect to each
related Adjustment Date, the index as specified in the related Mortgage Note. 
  
 “Initial Certificate Principal Balance”: With respect to any Regular Certificate (other than a Class C Certificate or Class I Certificate), the amount designated “Initial Certificate Principal
Balance” on the face thereof. 
  
 “Initial Mortgage
Loan”: The Mortgage Loans which are described (with complete statistical information included) in the Prospectus Supplement and which are included in the Trust Fund on the Closing Date. 
  
 “Initial Swap Amount”: Shall mean a payment in the amount of
$34,136.39. 
  
 “Insurance Proceeds”: Proceeds
paid by any insurer pursuant to any insurance policy covering a Mortgage Loan which are required to be remitted to the Servicer, including MI Insurance Proceeds in the case of Mortgage Loans covered under a MI Policy, or amounts required to be paid
by the Servicer hereunder, net of any component thereof (i) covering any expenses incurred by or on behalf of the Servicer in connection with obtaining such proceeds, (ii) that is applied to the restoration or repair of the related
Mortgaged Property or (iii) released to the Mortgagor in accordance with the Servicer’s normal servicing procedures. 
  
 “Interest Determination Date”: With respect to each Accrual Period, the second LIBOR Business Day preceding the commencement of such
Accrual Period. 
  
 “Interest Remittance Amount”:
With respect to any Distribution Date, that portion of the Available Funds for such Distribution Date allocable to interest (excluding Prepayment Charges). 
  
 “Interest Remittance Formula Amount”: As of any Distribution Date and any Group is an amount equal to (1) the product of
(x) 1/12 of the Weighted Average Mortgage Rate of the related Group as of the beginning of the prior Due Period and (y) the Pool Balance related to that Group as of the beginning of the prior Due Period minus (2) the aggregate amount
of Relief Act Shortfalls and Net Prepayment Interest Shortfalls for such Group for the prior period. 
  
 “Lender Letter”: The lender letter #LL03-00 dated April 11, 2000 for Fannie Mae Sellers. 
  
 “LIBOR”: All references to LIBOR herein are references to
LIBOR. With respect to any Accrual Period, the rate determined by the Trustee on the related Interest Determination Date on the basis of the offered rates of the Reference Banks for one-month United States dollar deposits, as such rates appear on
the Telerate Page 3750, as of 11:00 a.m. (London time) on such Interest Determination Date. If such rate does not appear on Telerate Page 3750, the rate for that day will be determined on the basis of the rates at which deposits in United States
dollars are offered by the Reference Banks at approximately 11:00 a.m., London time, on that day to prime banks in the London interbank market for a period equal to the relevant Accrual Period 
  

 Appendix A-40 

 (commencing on the first day of such Accrual Period). The Trustee will request the principal London office of each of the
Reference Banks to provide a quotation of its rate. If at least two such quotations are provided, the rate for that day will be the arithmetic mean of the quotations. If fewer than two quotations are provided as requested, the rate for that day will
be the arithmetic mean of the rates quoted by major banks in New York City, selected by the Trustee, at approximately 11:00 a.m., New York City time, on that day for loans in United States dollars to leading European banks for a period equal to the
relevant Accrual Period (commencing on the first day of such Accrual Period). 
  
 The establishment of LIBOR on each Interest Determination Date by the Trustee and the Trustee’s calculation of the rate of interest applicable to the Certificates for the related Accrual Period shall (in the
absence of manifest error) be final and binding. 
  
 “LIBOR Business Day”: Any day other than (i) a Saturday or a Sunday or (ii) a day on which banking institutions in the State of New York or in the city of London, England are required or authorized by law to be
closed. 
  
 “Lifetime Rate Cap”: With respect to
each Adjustable Rate Mortgage Loan with respect to which the related Mortgage Note provides for a lifetime rate cap, the maximum Mortgage Rate permitted over the life of such Mortgage Loan under the terms of such Mortgage Note, as set forth on the
Mortgage Loan Schedule. 
  
 “Liquidated Mortgage
Loan”: With respect to any Distribution Date, any Mortgage Loan in respect of which the Servicer has determined, in accordance with the servicing procedures specified in Article III hereof, as of the end of the related Prepayment Period
that substantially all Liquidation Proceeds which it reasonably expects to recover with respect to the disposition of the related Mortgaged Property or REO Property have been recovered. 
  
 “Liquidation Expenses”: Out-of-pocket expenses (exclusive of overhead) which are incurred by or on behalf
of the Servicer in connection with the liquidation of any Mortgage Loan and not recovered under any insurance policy, such expenses, including, without limitation, legal fees and expenses, any unreimbursed amount expended respecting the related
Mortgage Loan and any related and unreimbursed expenditures for real estate property taxes or for property restoration, preservation or insurance against casualty loss or damage. 
  
 “Liquidation Proceeds”: Proceeds (including Insurance Proceeds) received in connection with the liquidation
of any Mortgage Loan or related REO Property. 
  
 “Loan-to-Value Ratio”: With respect to any Mortgage Loan, as of any date of determination, a fraction expressed as a percentage, the numerator of which is the then current principal amount of the Mortgage Loan, and the
denominator of which is the lesser of the purchase price or the Appraised Value of the related Mortgaged Property. 
  
 “Loan Year”: With respect to any Mortgage Loan, the one year period commencing on the day succeeding the origination of such Mortgage
Loan and ending on the anniversary date of such Mortgage Loan, and each annual period thereafter. 
  

 Appendix A-41 

 “Majority Certificateholders”: The Holders of Certificates evidencing at least 51% of
the Voting Rights. 
  
 “Master REMIC”: The REMIC
established pursuant to Exhibit K hereof. The assets of the Master REMIC shall be the REMIC IV Regular Interests. 
  
 “Master REMIC Regular Interests”: As defined in Exhibit K hereof. 
  
 “Maximum Collateral Amount”: The sum of the Principal Balance as of the Cut-off Date of the Initial
Mortgage Loans and the Original Pre-Funded Amount. 
  
 “Maximum Mortgage Rate”: With respect to each Adjustable Rate Mortgage Loan, the percentage set forth in the related Mortgage Note as the maximum Mortgage Rate thereunder. 
  
 “MERS”: Mortgage Electronic Registration Systems, Inc., a
corporation organized and existing under the laws of the State of Delaware, or any successor thereto. 
  
 “MERS System”: The system of recording transfers of Mortgages electronically maintained by MERS. 
  
 “Mezzanine Certificate”: Any Class M-1 Certificate, Class
M-2 Certificate, Class M-3 Certificate, Class M-4 Certificate, Class M-5 Certificate, Class M-6 Certificate, Class M-7 Certificate, Class M-8 Certificate, Class M-9 Certificate, Class M-10 Certificate, Class M-11 Certificate or Class M-12
Certificate. 
  
 “MI Insurance Agreement”: A
private mortgage insurance agreement issued by the MI Insurer pursuant to which MI Policies are issued on individual Mortgage Loans. 
  
 “MI Insurance Proceeds”: Proceeds paid by the MI Insurer pursuant to an MI Policy. 
  
 “MI Insurer”: Each of (i) PMI Mortgage Insurance Co.,
an Arizona mortgage insurance company, and (ii) Mortgage Guaranty Insurance Corporation, a Wisconsin private mortgage insurance company and their successors and assigns. 
  
 “MI Insurer Insolvency Event”: (A) The determination by the applicable regulatory or supervisory
agency having jurisdiction over the MI Insurer that such MI Insurer is insolvent or unable to pay its obligations as they mature, (B) following the failure of the MI Insurer to pay under the related MI Policy, the determination by the Servicer
that such MI Insurer is insolvent or unable to pay its obligations as they become due, (C) the long-term rating on the claims paying ability of the MI Insurer shall be lowered by Moody’s below A-2, if such MI Insurer is then rated by
Moody’s, or shall be lowered by S&P below AA, if such MI Insurer is then rated by S&P. 
  
 “MI Policy”: A private mortgage insurance policy underwritten by the MI Insurer with respect to an individual Mortgage Loan, issued
pursuant to the MI Insurance Agreement. 
  

 Appendix A-42 

 “MI Premium”: The primary mortgage insurance premium for each MI Policy, payable
annually to an MI Insurer, as specified in the MI Insurance Agreement, and with respect to each monthly premium payment, 1/12 of the annual premium. 
  
 “MIN”: The Mortgage Identification Number for Mortgage Loans registered with MERS on the MERS System. 
  
 “Minimum Mortgage Rate”: With respect to each Adjustable
Rate Mortgage Loan, the percentage set forth in the related Mortgage Note as the minimum Mortgage Rate thereunder. 
  
 “MOM Loan”: With respect to any Mortgage Loan, MERS acting as the mortgagee of such Mortgage Loan, solely as nominee for the originator
of such Mortgage Loan and its successors and assigns, at the origination thereof. 
  
 “Monthly Interest Distributable Amount”: For any Distribution Date and any Class of Class A Certificates and Mezzanine Certificates, the sum of (1) the Unpaid Interest Shortfall Amount for
that Class and Distribution Date and (2) the Current Interest for that Class and Distribution Date. In the event of a shortfall in the full amount necessary to pay both the Unpaid Interest Shortfall Amount and the Current Interest for a Class,
the money will first be applied to the Unpaid Interest Shortfall Amount and then to the Current Interest. 
  
 “Monthly Payment”: With respect to any Mortgage Loan (including any REO Property) and any Due Date, the payment of principal and interest
due thereon in accordance with the amortization schedule at the time applicable thereto (after adjustment, if any, for partial Principal Prepayments and for Deficient Valuations occurring prior to such Due Date but before any adjustment to such
amortization schedule by reason of any bankruptcy, other than a Deficient Valuation, or similar proceeding or any moratorium or similar waiver or grace period). 
  

“Moody’s”: Moody’s Investors Service, Inc. or its successor in interest. 
  
 “Mortgage”: The mortgage, deed of trust or other instrument
creating a first lien on an estate or fee simple interest in real property securing a Mortgage Note. 
  
 “Mortgage File”: The mortgage documents listed in Section 2.01 pertaining to a particular Mortgage Loan and any additional documents
required to be added to the Mortgage File pursuant to this Agreement. 
  
 “Mortgage Loan Schedule”: With respect to any date, the schedule of Mortgage Loans subject to this Agreement on such date. The schedule of Initial Mortgage Loans as of the Cut-off Date is the schedule set forth in Exhibit B
hereto and the schedule or schedules of Subsequent Mortgage Loans, if any, as of the Subsequent Cut-off Date, which schedules set forth as to each Mortgage Loan: 
  
 (i) the loan number and name of the Mortgagor; 
  
 (ii) the street address, city, state and zip code of the Mortgaged Property; 
  
 (iii) the Mortgage Rate at origination; 
  

 Appendix A-43 

 (iv) with respect to an Adjustable Rate Mortgage Loan, the Maximum Rate and the Minimum Rate; 

 
 (v) the maturity date; 
  
 (vi) the original Principal Balance; 
  
 (vii) the first due date; 
  
 (viii) the type of Mortgaged Property; 
  
 (ix) the Monthly Payment in effect as of the Cut-off Date (with respect to an
Initial Mortgage Loan) or Subsequent Cut-off Date (with respect to a Subsequent Mortgage Loan); 
  
 (x) the Principal Balance as of the Cut-off Date (with respect to an Initial Mortgage Loan) or Subsequent Cut-off Date (with respect to a Subsequent
Mortgage Loan); 
  
 (xi) with respect to an Adjustable Rate
Mortgage Loan, the Index, the Gross Margin; the Lifetime Rate Cap and the Periodic Rate Cap; 
  
 (xii) with respect to an Adjustable Rate Mortgage Loan, the first Adjustment Date and next Adjustment Date, if any; 
  
 (xiii) with respect to an Adjustable Rate Mortgage Loan, the Adjustment Date frequency and Distribution Date frequency; 
  
 (xiv) the occupancy status; 
  
 (xv) the purpose of the Mortgage Loan; 
  
 (xvi) the Appraised Value of the Mortgaged Property; 
  
 (xvii) the original term to maturity; 
  
 (xviii) the paid-through date of the Mortgage Loan; 
  
 (xix) the Loan-to-Value Ratio; 
  
 (xx) whether the Mortgage Loan is an Adjustable Rate Mortgage Loan or a Fixed
Rate Mortgage Loan; 
  
 (xxi) whether or not the Mortgage Loan was
underwritten pursuant to a limited documentation program; 
  
 (xxii) whether the Mortgage Loan is covered by an MI Policy; 
  
 (xxiii) if the Mortgage Loan is registered with MERS on the MERS System, the MIN; and 
  

 Appendix A-44 

 (xxiv) whether the Mortgage Loan is in Group I or Group II. 
  
 The Mortgage Loan Schedule shall set forth the total of the amounts described
under (x) above for all of the Mortgage Loans. 
  
 “Mortgage Loans”: At any time, collectively, all Mortgage Loans that have been transferred and conveyed to the Trust, in each case together with the Related Documents, and that remain subject to the terms of the Agreement.
As applicable, a “Mortgage Loan” shall be deemed to refer to the related REO Property and both Initial Mortgage Loans and Subsequent Mortgage Loans. 
  

“Mortgage Note”: The original executed note or other evidence of indebtedness evidencing the indebtedness of a Mortgagor under a
Mortgage Loan. 
  
 “Mortgage Rate”: With respect
to any Mortgage Loan, the annual rate at which interest accrues on such Mortgage Loan. 
  
 “Mortgage Pool”: The pool of Mortgage Loans, identified on Exhibit B from time to time, and any REO Properties acquired in respect thereof and as supplemented by any Subsequent Mortgage Loans
identified on each schedule of Subsequent Mortgage Loans attached to a Subsequent Transfer Instrument. 
  
 “Mortgaged Property”: The underlying property, including real property and improvements thereon, securing a Mortgage Loan. 
  
 “Mortgagor”: The obligor on a Mortgage Note. 
  
 “Net Liquidation Proceeds”: With respect to any Liquidated
Mortgage Loan, Liquidation Proceeds net of Liquidation Expenses. 
  
 “Net Mortgage Rate”: With respect to any Mortgage Loan and any day, the related Mortgage Rate less the Administrative Fee Rate. 
  
 “Net Prepayment Interest Shortfall”: On any Distribution Date, the excess, if any of (i) any Prepayment Interest Shortfall and
(ii) any payments of Compensating Interest made by the Servicer. 
  
 “Net WAC”: With respect to any Distribution Date, the weighted average of the Net Mortgage Rates on the Mortgage Loans (weighted by the Principal Balances of the Mortgage Loans). 
  
 “NCFC”: NovaStar Certificates Financing Corporation, a
Delaware corporation, and its successors and assigns. 
  
 “NFI”: NovaStar Financial, Inc., a Maryland corporation, and its successors and assigns. 
  
 “NIM Note”: Any of the notes (i) issued pursuant to a structured net interest margin transaction sponsored by NovaStar Financial,
Inc. or its Affiliates and (ii) evidencing debt of the 
  

 Appendix A-45 

 trust formed pursuant to such transaction. For the avoidance of doubt, any subordinate equity interests (or subordinate
certificates issued evidencing an equity interest) in such trust shall not be considered NIM Notes. 
  
 “Non-Derivative Supplemental Interest Payment”: With respect to each Distribution Date, and the Class M-11 and the Class M-12
Certificates, the dollar amount of Supplemental Interest Payment which would be distributed to each such Class on such Distribution Date pursuant to Section 4.04(c)(ii) hereof if the amount received by the Supplemental Interest Trust from each
Swap Counterparty and each Cap Counterparty on such Distribution Date was zero. 
  
 “Non-REMIC Accounts”: The Pre-Funding Account and the Supplemental Interest Account held by the Supplemental Interest Trust. 
  
 “Nonrecoverable Advance”: With respect to any Mortgage Loan: 
  
 (x) any Advance (i) which was previously made or is proposed to be made
by the Servicer; and (ii) which, in the good faith judgment of the Servicer, will not or, in the case of a proposed Advance, would not, be ultimately recoverable by the Servicer from Liquidation Proceeds, Repurchase Price or future payments on
such Mortgage Loan; and 
  
 (y) the amount, if any, by which an MI
Claim Payment Advance made or to be made by the Servicer exceeds, or would exceed, the amount actually received, or expected to be received as MI Insurance Proceeds from the related MI Insurer on account of the related claim; provided,
however that if an MI Insurer Insolvency Event occurs after the MI Claim Payment Advance has been made by the Servicer and before the full amount thereof has been reimbursed to the Servicer from the related MI Insurance Proceeds, then any
remaining, unreimbursed amount shall be considered a Nonrecoverable Advance as of the date of the MI Insurer Insolvency Event. 
  
 “Notional Amount Test Event”: Occurs when the Trustee determines, pursuant to Section 4.03(f), that the related scheduled notional
amount that would be used to calculate the Group I Class I Monthly Interest Distributable Amount or Group II Class I Monthly Interest Distributable Amount exceeds the portion of the aggregate Certificate Principal Balance of the Class A
Certificates and Mezzanine Certificates (excluding any such Class A Certificates and Mezzanine Certificates owned by NCFC or an affiliate) on such Distribution Date related to such Group or Groups. 
  
 “Novation Agreements”: The Novation Agreement, dated as of
September 22, 2005, among NovaStar Mortgage, Inc., the Supplemental Interest Trust and Wachovia Bank, N.A., the Novation Agreement, dated as of September 22, 2005 among The Royal Bank of Scotland plc, the Supplemental Interest Trust and
NovaStar Financial, Inc. and the Novation Agreement, dated as of September 22, 2005 among Deutsche Bank AG, the Supplemental Interest Trust and NovaStar Financial, Inc. 
  
 “Offered Certificates”: Collectively, the Class A Certificates and the Class M-1 Certificates, Class
M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates, Class M-6 Certificates, Class M-7 Certificates, Class M-8 Certificates, Class M-9 Certificates and Class M-10 Certificates. 
  

 Appendix A-46 

 “Officers’ Certificate”: A Certificate signed by the Chairman of the Board, the
Vice Chairman of the Board, the President or any vice president (however denominated), and by the Treasurer, the Secretary, or any assistant treasurer or assistant secretary of the applicable Person. 
  
 “Opinion of Counsel”: A written opinion of counsel, who may,
without limitation, be a salaried counsel for the Company or the Servicer, acceptable to the Trustee, except that any opinion of counsel relating to (a) the qualification of any REMIC as a REMIC or (b) compliance with the REMIC Provisions
which must be an opinion of Independent counsel. 
  
 “Optional Termination Date”: The first Distribution Date on which the Servicer may opt to terminate the Trust Fund pursuant to Section 11.01. 
  
 “Original Pre-Funded Amount”: The amount deposited by the Company in the Pre-Funding Account on the Closing
Date, which amount is $510,531,591.45, $267,140,533.99 related to the Group I Mortgage Loans and $243,391,057.46 related to the Group II Mortgage Loans). 
  
 “Original Value”: Except in the case of a refinanced Mortgage Loan, the lesser of the Appraised Value or sales price of the Mortgaged
Property at the time a Mortgage Loan is closed, and for a refinanced Mortgage Loan, the Original Value is the value of such property set forth in an appraisal acceptable to the Servicer. 
  
 “Ownership Interest”: As to any Certificate, any ownership or security interest in such Certificate,
including any interest in such Certificate as the Holder thereof and any other interest therein, whether direct or indirect, legal or beneficial, as owner or as pledgee. 
  
 “Overcollateralization Amount”: For any Distribution Date, is equal to (a) the sum of (i) the
Pool Balance, after giving effect to distributions of principal on the Mortgage Loans, and (ii) any outstanding Pre-Funded Amount, minus (b) the aggregate Certificate Principal Balance of the Class A Certificates and Mezzanine
Certificates, after giving effect to principal distributions to be made on the Class A Certificates and Mezzanine Certificates on such Distribution Date. 
  

“Overcollateralization Deficiency Amount”: With respect to any Distribution Date equals the amount, if any, by which the Required
Overcollateralization Amount exceeds the Overcollateralization Amount on such Distribution Date (after giving effect to distributions in respect of the Group I Principal Remittance Amount and the Group II Principal Remittance Amount on such
Distribution Date). 
  
 “Pass-Through Rate”: For
any Distribution Date and any of the Class A Certificates and Class M Certificates, the lesser of (1) the Formula Rate for such Class for such Distribution Date and (2) the related Available Funds Cap for such Distribution Date.

  
 “Paying Agent”: Any paying agent appointed
pursuant to Section 5.05. 
  
 “Percentage
Interest”: With respect to any Class A Certificate or Class M Certificate, a fraction, expressed as a percentage, the numerator of which is the Initial Certificate Principal Balance represented by such Certificate and the denominator
of which is the Initial Certificate Principal Balance of the related Class. With respect to a Class I Certificate, Class C Certificate, 
  

 Appendix A-47 

 Class M-11 DSI Certificate, Class M-12 DSI Certificate or Residual Certificate, the portion of the Class evidenced
thereby, expressed as a percentage, as stated on the face of such Certificate; provided, however, that the sum of all such percentages for each such Class totals 100%. 
  
 “Periodic Rate Cap”: With respect to each Adjustable Rate Mortgage Loan and any Adjustment Date therefor,
the fixed percentage set forth in the related Mortgage Note, which is the maximum amount by which the Mortgage Rate for such Mortgage Loan may increase or decrease (without regard to the Maximum Mortgage Rate or the Minimum Mortgage Rate) on such
Adjustment Date from the Mortgage Rate in effect immediately prior to such Adjustment Date. 
  
 “Permitted Transferee”: Any transferee of a Residual Certificate other than a Disqualified Organization or a non-U.S. Person. 
  
 “Person”: Any individual, corporation, limited liability company, partnership, joint venture, association,
joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. 
  
 “Plan”: Either (i) an employee benefit plan (as defined in section 3(3) of ERISA) that is subject to the provisions of Title I of
ERISA or (ii) a plan (as defined in section 4975(e)(1) of the Code) that is subject to Section 4975 of the Code. 
  
 “Plan Assets”: As defined in Section 5.02(d) hereof. 
  
 “Pool Balance”: As of any date of determination, the aggregate Principal Balance of the related Mortgage
Loans as of such date. 
  
 “Pre-Funded Amount”:
With respect to any date of determination, the amount on deposit in the Pre-Funding Account. 
  
 “Pre-Funding Account”: The account established and maintained pursuant to Section 4.05, as defined herein, and which must be an Eligible Account. 
  
 “Pre-Funding Cumulative Adjustment Amount”: For each clause
of the definition of Group I Class I Monthly Interest Formula Amounts or Group II Class I Monthly Interest Formula Amounts, as applicable, the sum of all Pre-Funding Swap/Cap Adjustment Amounts applied for all other clauses with clause numbers
greater than such clause number. 
  
 “Pre-Funding
Period”: The period beginning on the Closing Date and ending on the earlier to occur of (a) the date upon which (a) the date on which the amount on deposit in the Pre-Funding Account is less than $10,000 and
(b) December 16, 2005. 
  
 “Pre-Funding Swap/Cap
Adjustment Amount”: For the Distribution Dates commencing in October 2005 through and including the Distribution Date in August 2009, an amount determined using the following rule: For every $1 in the Pre-Funding Account as of the last day
of the Pre-Funding Period (if the Pre-Funding Period has not ended, then the related Pre-Funding Swap/Cap Adjustment Amount shall be equal to zero), the related Pre-Funding Swap/Cap Adjustment Amount will increase by $.061700393 ($.61700393 with
respect to clauses X and 
  

 Appendix A-48 

 VI) in the following order of priority with respect to certain clauses in the definition of Group I Class I Monthly
Interest Formula Amounts or Group II Class I Monthly Interest Formula Amounts, as applicable: clause X, VI, XXVIII, XIX, XXVII and XVIII until such related Pre-Funding Swap/Cap Adjustment Amount equals the numerical value set forth in sub-clause
(b) of such clause at which point any remaining amounts will be allocated as Pre-Funding Swap/Cap Adjustment Amounts to the subsequent clause in the order of priority. For all other Distribution Dates, the related Pre-Funding Swap/Cap
Adjustment Amount shall be equal to zero. 
  
 “Prepayment
Assumption”: As defined in the Prospectus Supplement. 
  
 “Prepayment Charge”: With respect to any Mortgage Loan, the charges or premiums, if any, due in connection with a full or partial Principal Prepayment of such Mortgage Loan in accordance with the terms thereof. 

 
 “Prepayment Interest Shortfall”: As to any Distribution
Date and any Mortgage Loan (other than a Mortgage Loan relating to an REO Property) that was the subject of (a) a Principal Prepayment in full during the related Prepayment Period, but in the prior calendar month an amount equal to the excess
of interest accrued during the prior calendar month at the Mortgage Rate (net of the Servicing Fee) on the Principal Balance of such Mortgage Loan over the amount of interest (adjusted to the Mortgage Rate (net of the Servicing Fee)) paid by the
Mortgagor for such Prepayment Period to the date of such Principal Prepayment in full or (b) a partial Principal Prepayment during the prior calendar month, an amount equal to interest accrued during the related prior calendar month at the
Mortgage Rate (net of the Servicing Fee) on the amount of such partial Principal Prepayment. 
  
 “Prepayment Period”: For any Distribution Date, the period commencing on the day after the Determination Date in the month preceding the month in which such Distribution Date falls (or, in the case of
the first Distribution Date, from the Cut-off Date) and ending on the Determination Date of the calendar month in which such Distribution Date falls. 
  
 “Principal Balance”: With respect to any Mortgage Loan or related REO Property, at any given time, (i) the Principal Balance of the
Mortgage Loan as of the Cut-off Date or Subsequent Cut-off Date, as applicable, minus (ii) the sum of (a) the principal portion of the Monthly Payments due with respect to such Mortgage Loan or REO Property during each Due Period ending
prior to the most recent Distribution Date which were received or with respect to which an Advance was made, and (b) all Principal Prepayments with respect to such Mortgage Loan or REO Property, and all Insurance Proceeds, Liquidation Proceeds
and REO Proceeds, to the extent applied by the Servicer as recoveries of principal in accordance with Section 3.13 hereof with respect to such Mortgage Loan or REO Property, and (c) the principal portion of any Realized Loss with respect
thereto for any previous Distribution Date. 
  
 “Principal
Prepayment”: Any payment of principal made by the Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due Date and which is not accompanied by an amount of interest representing the full amount of scheduled interest
due on any Due Date in any month or months subsequent to the month of prepayment. 
  

 Appendix A-49 

 “Principal Remittance Amount”: With respect to any Distribution Date, the sum of
(i) each scheduled payment of principal collected or advanced on the Mortgage Loans by the Servicer that were due during the related Due Period, (ii) the principal portion of all partial and full Principal Prepayments of the Mortgage Loans
applied by the Servicer during the related Prepayment Period, (iii) the principal portion of all related Net Liquidation Proceeds and Insurance Proceeds received during such Prepayment Period, (iv) that portion of the Repurchase Price,
representing principal of any repurchased Mortgage Loan, deposited to the Collection Account during such Prepayment Period, (v) the principal portion of any related Substitution Adjustment Amounts deposited in the Collection Account during such
Prepayment Period, (vi) in the case of the Distribution Date immediately following the end of the Pre-Funding Period, any remaining amounts of the Original Pre-Funded Amount on deposit in the Pre-Funding Account, (vii) on the Distribution
Date on which the Trust Fund is to be terminated pursuant to Section 11.01, that portion of the Termination Price, in respect of principal and (viii) Subsequent Recoveries to pay certain Certificates amounts in respect of Realized Losses
allocated to such Certificates. 
  
 “Prospectus”:
The Prospectus Supplement together with the Base Prospectus attached thereto with respect to the Offered Certificates. 
  
 “Prospectus Supplement”: That certain Prospectus Supplement dated September 19, 2005 relating to the public offering of the Offered
Certificates. 
  
 “Purchase Agreement”: The
agreement, dated as of September 1, 2005, between the Seller, the Company, the Trustee and the Custodian, regarding the transfer of the Mortgage Loans by the Seller to or at the direction of the Company. 
  
 “Qualified Liquidation”: The meaning set forth from time to
time in the definition thereof at Section 860F(a)(4) of the Code and applicable to the Trust. 
  
 “Qualified Mortgage”: The meaning set forth from time to time in the definition thereof at Section 860G(a)(3) of the Code and
applicable to the Trust. 
  
 “Qualified Replacement
Mortgage”: A Mortgage Loan substituted for another pursuant to Section 3.01 of the Purchase Agreement and that satisfies all of the criteria set forth from time to time in the definition thereof at Section 860G(a)(4) of the Code
and applicable to the Trust, all as evidenced by an Officers’ Certificate of the Seller delivered to the Trustee prior to any such substitution. 
  
 “Qualified Underwriting”: Any public offering or private placement of securities with respect to which an entity that has received from
the U.S. Department of Labor an individual prohibited transaction exemption described in PTE 2000-58, 65 Fed. Reg. 67,765 (Nov. 13, 2000), is (i) the sole underwriter, (ii) the manager or co-manager of the underwriting syndicate or
(iii) a selling or placement agent. 
  
 “Rate Step-up
Date”: The first Distribution Date to occur after the Optional Termination Date has occurred. 
  

 Appendix A-50 

 “Rating Agency”: Any nationally recognized statistical rating organization, or its
successor, that rated the Class A Certificates and Mezzanine Certificates at the request of the Company at the time of the initial issuance of the Class A Certificates and Mezzanine Certificates. Initially such rating agencies shall
consist of Moody’s, Standard & Poor’s and Fitch. If such organization or a successor is no longer in existence, “Rating Agency” shall be such nationally recognized statistical rating organization, or other comparable
Person, designated by the Company, notice of which designation shall be given to the Trustee. References herein to the highest short-term unsecured rating category of a Rating Agency shall mean “A-1” or better in the case of
Standard & Poor’s, “P-1” or better in the case of Moody’s, “F-1+” or better in the case of Fitch and in the case of any other Rating Agency shall mean such equivalent rating. References herein to the highest
long-term rating category of a Rating Agency shall mean “AAA” in the case of Standard & Poor’s, “Aaa” in the case of Moody’s and “AAA” in the case of Fitch, and in the case of any other Rating Agency,
such equivalent rating. 
  
 “Realized Loss”: With
respect to each Mortgage Loan (or REO Property) as to which a Cash Liquidation or REO Disposition has occurred, an amount (not less than zero) equal to (i) the Principal Balance of the Mortgage Loan (or REO Property) as of the date of Cash
Liquidation or REO Disposition, plus (ii) interest (and REO Imputed Interest, if any) at the Net Mortgage Rate from the Due Date as to which interest was last paid or advanced to Certificateholders up to the last day of the month in which the
Cash Liquidation (or REO Disposition) occurred on the Principal Balance of such Mortgage Loan (or REO Property) outstanding during each Due Period that such interest was not paid or advanced, minus (iii) Net Liquidation Proceeds (after giving
effect to coverage provided by any MI policy), if any, received with respect to such Cash Liquidation (or REO Disposition), minus the portion thereof reimbursable to the Servicer or any Subservicer with respect to related Advances or expenses as to
which the Servicer or Subservicer is entitled to reimbursement thereunder but which have not been previously reimbursed. With respect to each Mortgage Loan which has become the subject of a Deficient Valuation, the difference between the Principal
Balance of the Mortgage Loan outstanding immediately prior to such Deficient Valuation and the Principal Balance of the Mortgage Loan as reduced by the Deficient Valuation. With respect to each Mortgage Loan which has become the object of a Debt
Service Reduction, the amount of such Debt Service Reduction. 
  
 “Record Date”: For as long as there are no definitive notes, with respect to each Distribution Date, the Close of Business on the Business Day immediately preceding the related Distribution Date. If definitive notes have
been issued, the Record Date is the last business day of the month prior to the related Distribution Date. 
  
 “Reference Banks”: Deutsche Bank, Barclays Bank PLC, The Bank of Tokyo-Mitsubishi, LTD. and National Westminster Bank PLC and their
successors in interest; provided that if any of the foregoing banks are not suitable to serve as a Reference Bank, then any leading banks selected by the Trustee which are engaged in transactions in Eurodollar deposits in the international
Eurocurrency market (i) with an established place of business in London, (ii) not controlling, under the control of or under common control with the Seller or any Affiliate thereof, (iii) whose quotations appear on the Reuters Screen
LIBOR Page on the relevant Interest Determination Date and (iv) which have been designated as such by the Trustee. 
  

 Appendix A-51 

 “Regular Certificate”: Any of the Class A Certificates, Mezzanine Certificates,
Class I Certificates or Class C Certificates. 
  
 “Related
Documents”: With respect to each Mortgage Loan, the documents specified in Section 2.01 hereof and any documents required to be added to such documents pursuant to this Agreement, the Purchase Agreement or any Subsequent Transfer
Instrument. 
  
 “Relief Act”: The Servicemembers
Civil Relief Act, as amended. 
  
 “Relief Act
Shortfall”: As to any Distribution Date and any Mortgage Loan (other than a Mortgage Loan relating to an REO Property), any shortfalls relating to the Relief Act or similar legislation or regulations. 
  
 “REMIC”: A “real estate mortgage investment
conduit” within the meaning of Section 860D of the Code. 
  
 “REMIC Group I Swap/Cap Termination Amount”: An amount equal to the product of (i) the amount of the Original Pre-Funded Amount relating to Group I not used to purchase Subsequent Mortgage Loans during the Pre-Funding
Period, (ii) 0.61700393 and (iii) (A) if the Pre-Funding Period ends on or prior to the Distribution Date in October 2005, .56829690257; (B) if the Pre-Funding Period ends after the Distribution Date in October 2005 and on or
prior to the Distribution Date in November 2005, .56827526730; and (C) if the Pre-Funding Period ends after the Distribution Date in November 2005 and on or prior to the Distribution Date in December 2005, .56824560505. 
  
 “REMIC Group I Swap/Cap Adjustment Amount”: An amount equal
to the product of (i) the amount of the Original Pre-Funded Amount relating to Group II not used to purchase Subsequent Mortgage Loans during the Pre-Funding Period, (ii) 0.61700393 and (iii) (A) if the Pre-Funding Period ends on
or prior to the Distribution Date in October 2005, .56829690257; (B) if the Pre-Funding Period ends after the Distribution Date in October 2005 and on or prior to the Distribution Date in November 2005, .56827526730; and (C) if the
Pre-Funding Period ends after the Distribution Date in November 2005 and on or prior to the Distribution Date in December 2005, .56824560505. 
  
 “REMIC Group II Swap/Cap Termination Amount”: An amount equal to the product of (i) the amount of the Original Pre-Funded Amount
relating to Group II not used to purchase Subsequent Mortgage Loans during the Pre-Funding Period, (ii) 0.61700393 and (iii) .43612634566. 
  
 “REMIC Group II Swap/Cap Adjustment Amount”: An amount equal to the product of (i) the amount of the Original Pre-Funded Amount
relating to Group II not used to purchase Subsequent Mortgage Loans during the Pre-Funding Period, (ii) 0.61700393 and (iii) .43612634566. 
  
 “REMIC Interests Sale Agreement”: The REMIC Interests Sale Agreement, dated as September 1, 2005, between the Company and NCFC.

  
 “REMIC Pass-Through Rate”: As defined in
Exhibit K hereof. 
  

 Appendix A-52 

 “REMIC I Pass-Through Rate”: As to each of the respective REMIC I Regular
Interests, the applicable “REMIC I Pass-Through Rate” set forth in Exhibit K hereof. 
  
 “REMIC II Pass-Through Rate”: As to each of the respective REMIC II Regular Interests, the applicable “REMIC II
Pass-Through Rate” set forth in Exhibit K hereof. 
  
 “REMIC III Pass-Through Rate”: As to each of the respective REMIC III Regular Interests, the applicable “REMIC III Pass-Through Rate” set forth in Exhibit K hereof. 
  
 “REMIC IV Pass-Through Rate”: As to each of the
respective REMIC IV Regular Interests, the applicable “REMIC IV Pass-Through Rate set forth in Exhibit K hereof. 
  
 “REMIC Provisions”: Provisions of the federal income tax law relating to real estate mortgage investment conduits which appear at
Section 860A through 860G of Subchapter M of Chapter 1 of the Code, and related provisions, and regulations and rulings promulgated thereunder, as the foregoing may be in effect from time to time. 
  
 “REMIC Regular Interests”: The REMIC I Regular Interests,
the REMIC II Regular Interests, the REMIC III Regular Interests, the REMIC IV Regular Interests and the Master REMIC Regular Interests. 
  
 “REMIC I Regular Interests”: As defined in Exhibit K hereof. 
  
 “REMIC II Regular Interests”: As defined in Exhibit K hereof. 
  
 “REMIC III Regular Interests”: As defined in Exhibit K
hereof. 
  
 “REMIC IV Regular Interests”: As
defined in Exhibit K hereof. 
  
 “REO
Acquisition”: The acquisition by the Servicer on behalf of the Trustee for the benefit of the Certificateholders of any REO Property pursuant to Section 3.13 hereof. 
  
 “REO Disposition”: As to any REO Property, a determination by the Servicer that it has received
substantially all Insurance Proceeds, Liquidation Proceeds, REO Proceeds and other payments and recoveries (including proceeds of a final sale) which the Servicer expects to be finally recoverable from the sale or other disposition of the REO
Property. 
  
 “REO Imputed Interest”: As to any
REO Property, for any period, an amount equivalent to interest (at the Net Mortgage Rate that would have been applicable to the related Mortgage Loan had it been outstanding net, with respect to a negative amortization loan, of amounts that would
have been Deferred Interest, if any) on the unpaid Principal Balance of the Mortgage Loan as of the date of acquisition thereof for such period as such balance is reduced pursuant to Section 3.13 hereof by any income from the REO Property
treated as a recovery of principal and with respect to a negative amortization loan, as such balance is increased by the addition of Deferred Interest. 
  
 “REO Proceeds”: Proceeds, net of expenses, received in respect of any REO Property (including, without limitation, proceeds from the
rental of the related Mortgaged Property), which proceeds are required to be deposited into the Collection Account within two days of receipt by the Servicer. 
  

 Appendix A-53 

 “REO Property”: A Mortgaged Property that is acquired by the Trust by foreclosure or by
deed in lieu of foreclosure. 
  
 “Repurchase
Event”: With respect to any Mortgage Loan, either (i) a discovery that, as of the Closing Date the related Mortgage was not a valid lien on the related Mortgaged Property subject only to (A) the lien of real property taxes and
assessments not yet due and payable, (B) covenants, conditions, and restrictions, rights of way, easements and other matters of public record as of the date of recording of such Mortgage and such other permissible title exceptions as are
permitted and (C) other matters to which like properties are commonly subject which do not materially adversely affect the value, use, enjoyment or marketability of the related Mortgaged Property or (ii) with respect to any Mortgage Loan
as to which the Seller delivers an affidavit certifying that the original Mortgage Note has been lost or destroyed, a subsequent default on such Mortgage Loan if the enforcement thereof or of the related Mortgage is materially and adversely affected
by the absence of such original Mortgage Note. 
  
 “Repurchase Price”: With respect to any Mortgage Loan (i) required to be repurchased on any date by the Seller pursuant to the Purchase Agreement or (ii) permitted to be purchased by the Servicer pursuant to
Article III hereof, an amount equal to the sum, without duplication, of (i) 100% of the Principal Balance thereof (without reduction for any amounts charged off) and (ii) unpaid accrued interest at the Mortgage Rate on the outstanding
principal balance thereof from the Due Date to which interest was last paid by the Mortgagor (or with respect to which an Advance was last made by the Servicer) to the first day of the month following the month of purchase plus (iii) the amount
of any unreimbursed Servicing Advances or unreimbursed Advances made with respect to such Mortgage Loan plus (iv) any other amounts owed to the Servicer or the Subservicer pursuant to Section 3.07 hereof and not included in clause
(iii) of this definition plus (v) any costs and damages incurred by the Trust Fund in connection with any violation by any Mortgage Loan of any predatory or abusive lending law or breach of representations and warranties regarding
licensing or any predatory or abusive lending law. 
  
 “Request for Release”: A request for release in substantially the form of Exhibit E hereto. 
  
 “Required Overcollateralization Amount”: For any Distribution Date is equal to 0.50% of the sum of (x) the Pool Balance of the
Initial Mortgage Loans as of the Cut-Off Date and (y) the Original Pre-Funded Amount. 
  
 “Residual Certificate”: The Class R Certificates representing beneficial ownership of the Class R-I, Class R-II, Class R-III, Class R-IV and Class R-V Interests. 

 
 “Residual Interest”: The sole Class of “residual
interests” in a REMIC within the meaning of Section 860G(a)(2) of the Code. 
  
 “Responsible Officer”: With respect to the Trustee, any officer working in the Corporate Trust Office with direct responsibility for the administration of this Agreement and also, with respect to a
particular matter, any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject. 
  

 Appendix A-54 

 “Retained Certificates”: The Class I Certificates, the Class R Certificates and the
Class C Certificates. 
  
 “Rolling 60-Day Delinquency
Percentage”: For any Distribution Date, the average of the 60-Day Delinquency Percentages for the Mortgage Loans as of the last day of each of the three (or 1 and 2 in the case of the first two Distribution Dates, as applicable) most
recently ended Due Periods. 
  
 “Rolling 90-Day
Delinquency Percentage”: For any Distribution Date, the average of the 90-Day Delinquency Percentages for the Mortgage Loans as of the last day of each of the three (or 1 and 2 in the case of the first two Distribution Dates, as applicable)
most recently ended Due Periods. 
  
 “Scheduled Principal
Payment”: Any scheduled payment of principal made on a scheduled Due Date. 
  
 “Seller”: NovaStar Mortgage, Inc., a Virginia corporation, and its successors and assigns. 
  
 “Servicer”: NovaStar Mortgage, Inc., a Virginia corporation, and its successors and assigns. 
  
 “Servicer Remittance Date”: The third Business Day prior to
each Distribution Date. 
  
 “Servicing Account”:
The separate trust account created and maintained by the Servicer or each Subservicer with respect to the Mortgage Loans or REO Property, which shall be an Eligible Account, for collection of taxes, assessments, insurance premiums and comparable
items as described in Section 3.08 hereof. 
  
 “Servicing Advances”: All customary, reasonable and necessary “out of pocket” costs and expenses incurred in connection with a default, delinquency or other unanticipated event in the performance by the Servicer
of its servicing obligations, including, without duplication, but not limited to, the cost of (i) the preservation, restoration and protection of a Mortgaged Property, (ii) any enforcement or judicial proceedings, including foreclosures,
(iii) the management and liquidation of any REO Property, (iv) compliance with the obligations under Section 3.13 hereof, and (v) expenses incurred in connection with any Mortgage Loan being registered on the MERS System.

  
 “Servicing Default”: The meaning assigned in
Section 7.01 hereof. 
  
 “Servicing Fee”:
With respect to the Mortgage Loans and any Distribution Date, the product of (i) the Servicing Fee Rate divided by 12 and (ii) the Pool Balance as of the first day of the related Due Period. 
  
 “Servicing Fee Rate”: With respect to any Mortgage Loan,
0.50% per annum. 
  

 Appendix A-55 

 “Servicing Officer”: Any officer of the Servicer involved in, or responsible for, the
administration and servicing of the Mortgage Loans whose name and specimen signature appear on a list of servicing officers furnished to the Trustee by the Servicer or a Subservicer, as such list may be amended from time to time. 
  
 “Servicing Transfer Costs”: Reasonable and necessary costs
and expenses incurred, by or on behalf of the Trustee or successor Servicer in connection with the transfer of servicing in the event of termination of the Servicer as servicer hereunder and the resulting transfer to the successor Servicer.

  
 “Standard & Poor’s” or
“S&P”: Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., or its successor in interest. 
  
 “Startup Day”: As defined in Section 10.01(a) hereof. 
  
 “Subordinate Available Funds Cap”: For each Distribution Date, a rate equal to the weighted average of
(1) the Group I Available Funds Cap and (2) the Group II Available Funds Cap, weighted on the basis of the related Subordinated Amount, all for such Distribution Date. 
  
 “Subordinate REMIC Available Funds Cap”: The weighted average of the pass-through rates on the Class IV-S1
and Class IV-S2 Interests. 
  
 “Subordinated
Amount”: For each Distribution Date, either (i) the Group I Subordinated Amount or (ii) the Group II Subordinated Amount. 
  
 “Subordinated Amount Ratio”: The ratio of the Group I Subordinated Amount to the Group II Subordinated Amount. 
  
 “Subsequent Cut-off Date”: With respect to those Subsequent
Mortgage Loans which are sold to the Trust pursuant to a Subsequent Transfer Instrument, the later of (i) the first day of the month in which such Subsequent Mortgage Loan was acquired by the Trust and (ii) the date of origination of such
Subsequent Mortgage Loan. 
  
 “Subsequent Mortgage
Loan”: A Mortgage Loan sold by the Company to the Trust Fund pursuant to Section 2.08, such Mortgage Loan being identified on the Mortgage Loan Schedule attached to a Subsequent Transfer Instrument. 
  
 “Subsequent Recovery”: With respect to any Mortgage Loan
that had previously been the subject of a realized loss, any principal amount subsequently received in connection with such Mortgage Loan. 
  
 “Subsequent Transfer Date”: With respect to each Subsequent Transfer Instrument, the date on which the related Subsequent Mortgage Loans
are sold to the Trust Fund. 
  
 “Subsequent Transfer
Instrument”: Each Subsequent Transfer Instrument, dated as of a Subsequent Transfer Date, executed by the Trustee and the Company substantially in the form attached hereto as Exhibit D, by which Subsequent Mortgage Loans are transferred to
the Trust Fund. 
  

 Appendix A-56 

 “Subservicer”: Any Person with which the Servicer has entered into a Subservicing
Agreement and which meets the qualifications of a Subservicer pursuant to Section 3.02 hereof. 
  
 “Subservicing Account”: An account established by a Subservicer which meets the requirements set forth in Section 3.06(e) and is
otherwise acceptable to the Servicer. 
  
 “Subservicing
Agreement”: The written contract between the Servicer and a Subservicer relating to servicing and administration of certain Mortgage Loans as provided in Section 3.02 hereof. 
  
 “Subservicing Fee”: With respect to each Mortgage Loan and
any Distribution Date, the portion of the Servicing Fee paid to a Subservicer. 
  
 “Substitution Adjustment Amount”: As defined in Section 2.03 hereof. 
  
 “Supplemental Interest Account”: An account established by the Trustee pursuant to Section 4.04 and is otherwise acceptable to the
Servicer. 
  
 “Supplemental Interest Amount Due”:
With respect to any of the Class A Certificates and Mezzanine Certificates and any Distribution Date, the sum of (x) the Available Funds Cap Shortfall Amount for such Group or Class of Certificates and such Distribution Date and
(y) the Available Funds Cap Carryforward Amount for such Group or Class and Distribution Date. 
  
 “Supplemental Interest Payment”: With respect to any Distribution Date: 
  
 (i) for the Class A-1A Certificates, the lesser of (x) the Supplemental Interest Amount Due for the
Class A-1A Certificates and (y) the amounts on deposit and available for distribution to the Class A-1A Certificates from the Supplemental Interest Trust on that Distribution Date; 
  
 (ii) for the Class A-2A Certificates, the lesser of (x) the
Supplemental Interest Amount Due for the Class A-2A Certificates and (y) the amounts on deposit and available for distribution to the Class A-2A Certificates from the Supplemental Interest Trust on that Distribution Date; 

 
 (iii) for the Class A-2B Certificates, the lesser of (x) the
Supplemental Interest Amount Due for the Class A-2B Certificates and (y) the amounts on deposit and available for distribution to the Class A-2B Certificates from the Supplemental Interest Trust on that Distribution Date; 

 
 (iv) for the Class A-2C Certificates, the lesser of (x) the
Supplemental Interest Amount Due for the Class A-2C Certificates and (y) the amounts on deposit and available for distribution to the Class A-2C Certificates from the Supplemental Interest Trust on that Distribution Date; 

 
 (v) for the Class A-2D Certificates, the lesser of (x) the
Supplemental Interest Amount Due for the Class A-2D Certificates and (y) the amounts on deposit and available for distribution to the Class A-2D Certificates from the Supplemental Interest Trust on that Distribution Date; 

 

 Appendix A-57 

 (vi) for the Class M-1 Certificates, the lesser of (x) the Supplemental Interest Amount Due for the
Class M-1 Certificates and (y) the amounts on deposit and available for distribution to the Class M-1 Certificates from the Supplemental Interest Trust on that Distribution Date; 
  
 (vii) for the Class M-2 Certificates, the lesser of (x) the Supplemental Interest Amount Due for the Class M-2
Certificates and (y) the amounts on deposit and available for distribution to the Class M-2 Certificates from the Supplemental Interest Trust on that Distribution Date; 
  
 (viii) for the Class M-3 Certificates, the lesser of (x) the Supplemental Interest Amount Due for the Class M-3
Certificates and (y) the amounts on deposit and available for distribution to the Class M-3 Certificates from the Supplemental Interest Trust on that Distribution Date; 
  
 (ix) for the Class M-4 Certificates, the lesser of (x) the Supplemental Interest Amount Due for the Class M-4
Certificates and (y) the amounts on deposit and available for distribution to the Class M-4 Certificates from the Supplemental Interest Trust on that Distribution Date; 
  
 (x) for the Class M-5 Certificates, the lesser of (x) the Supplemental Interest Amount Due for the Class M-5
Certificates and (y) the amounts on deposit and available for distribution to the Class M-5 Certificates from the Supplemental Interest Trust on that Distribution Date; 
  
 (xi) for the Class M-6 Certificates, the lesser of (x) the Supplemental Interest Amount Due for the Class M-6
Certificates and (y) the amounts on deposit and available for distribution to the Class M-6 Certificates from the Supplemental Interest Trust on that Distribution Date; 
  
 (xii) for the Class M-7 Certificates, the lesser of (x) the Supplemental Interest Amount Due for the Class M-7
Certificates and (y) the amounts on deposit and available for distribution to the Class M-7 Certificates from the Supplemental Interest Trust on that Distribution Date; 
  
 (xiii) for the Class M-8 Certificates, the lesser of (x) the Supplemental Interest Amount Due for the Class M-8
Certificates and (y) the amounts on deposit and available for distribution to the Class M-8 Certificates from the Supplemental Interest Trust on that Distribution Date; 
  
 (xiv) for the Class M-9 Certificates, the lesser of (x) the Supplemental Interest Amount Due for the Class M-9
Certificates and (y) the amounts on deposit and available for distribution to the Class M-9 Certificates from the Supplemental Interest Trust on that Distribution Date; and 
  
 (xv) for the Class M-10 Certificates, the lesser of (x) the Supplemental Interest Amount Due for the Class M-10
Certificates and (y) the amounts on deposit and available for distribution to the Class M-10 Certificates from the Supplemental Interest Trust on that Distribution Date. 
  
 (xvi) For the Class M-11 Certificates, the lesser of (x) the Supplemental Interest Amount Due for the Class M-11
Certificates and (y) the amounts on deposit and available for distribution to the Class M-11 Certificates from the Supplemental Interest Trust on that Distribution Date. 
  

 Appendix A-58 

 (xvii) For the Class M-12 Certificates, the lesser of (x) the Supplemental Interest Amount Due for
the Class M-12 Certificates and (y) the amounts on deposit and available for distribution to the Class M-12 Certificates from the Supplemental Interest Trust on that Distribution Date. 
  
 “Supplemental Interest Trust”: The supplemental interest
trust established and maintained pursuant to Section 4.04 and designated as such. 
  
 “Swap Agreement”: Any of the ten interest rate Swap Agreements between the Supplemental Interest Trust and a Swap Counterparty which are deemed to be assets of the Supplemental Interest Trust and not
an asset of any one of the REMICs created hereunder. 
  
 “Swap Amount”: The calculation of the Swap Amount is subject to the verification and confirmation of the Swap Counterparties who are calculation agents for the Swap Agreements. Swap Amount shall mean, on each Distribution
Date on or prior to the Class I Termination Date, the excess of (x) the product of (i) the related fixed rate of interest, (ii) 30 divided by 360 and (iii) the related notional amount over (y) the product of (i) LIBOR,
(ii) the actual number of days elapsed in the related Accrual Period divided by 360 and (iii) the related notional amount, (so long as such calculation results in a positive number) which after the occurrence of a Notional Amount Test
Event, shall be calculated pursuant to Section 4.03(f). 
  
 “Swap Counterparty”: The Royal Bank of Scotland plc, Wachovia Bank, N.A., or Deutsche Bank AG, as applicable. 
  
 “Swap/Cap Interest Rate Schedule”: As set forth in Appendix B. 
  
 “Swap/Cap Maturity Date Schedule”: As set forth in Appendix B. 
  
 “Tax Matters Person”: The tax matters person appointed
pursuant to Section 10.01(e) hereof. 
  
 “Tax
Returns”: The federal income tax return on Internal Revenue Service Form 1066, U.S. Real Estate Mortgage Investment Conduit (REMIC) Income Tax Return, including Schedule Q thereto, Quarterly Notice to Residual Interest Holders of REMIC
Taxable Income or Net Loss Allocation, or any successor forms, to be filed by the Trustee, on behalf of each REMIC, together with any and all other information reports, forms or returns that may be required to be furnished to the Certificateholders
or filed with the Internal Revenue Service or any other governmental taxing authority under any applicable provisions of federal, state or local tax laws. 
  
 “Telerate Page 3750”: The display page currently so designated on the Moneyline Telerate Service (or such other page as may replace that
page on that service for the purpose of displaying comparable rates or prices). 
  

 Appendix A-59 

 “Termination Payment Due Date”: As defined in Section 4.04(g) of the Pooling and
Servicing Agreement. 
  
 “Termination Price”: As
defined in Section 11.01(a) of the Pooling and Servicing Agreement. 
  
 “Treasury Regulations”: Regulations, including proposed or temporary Regulations, promulgated under the Code. References herein to specific provisions of proposed or temporary regulations shall
include analogous provisions of final Treasury Regulations or other successor Treasury Regulations. 
  
 “Trigger Event”: A Trigger Event is in effect with respect to any Distribution Date, on or after the Crossover Date, if either
(i) the Rolling 60-Day Delinquency Percentage (calculated on a contractual basis) exceeds 53.80% of the current Credit Enhancement Percentage, or (ii) the Cumulative Loss Percentage for such Distribution Date is greater than the applicable
percentage set forth below with respect to such Distribution Date: 
  

				
	 Distribution Date Occurring In:    

	  	Percentage

	 
	 October 2008
	  	1.75	%
	 November 2008
	  	1.79	%
	 December 2008
	  	1.83	%
	 January 2009
	  	1.88	%
	 February 2009
	  	1.92	%
	 March 2009
	  	1.96	%
	 April 2009
	  	2.00	%
	 May 2009
	  	2.04	%
	 June 2009
	  	2.08	%
	 July 2009
	  	2.13	%
	 August 2009
	  	2.17	%
	 September 2009
	  	2.21	%
	 October 2009
	  	2.25	%
	 November 2009
	  	2.29	%
	 December 2009
	  	2.33	%
	 January 2010
	  	2.38	%
	 February 2010
	  	2.42	%
	 March 2010
	  	2.46	%
	 April 2010
	  	2.50	%
	 May 2010
	  	2.54	%
	 June 2010
	  	2.58	%
	 July 2010
	  	2.63	%
	 August 2010
	  	2.67	%
	 September 2010
	  	2.71	%
	 October 2010
	  	2.75	%
	 November 2010
	  	2.77	%
	 December 2010
	  	2.79	%
	 January 2011
	  	2.81	%
	 February 2011
	  	2.83	%
	 March 2011
	  	2.85	%
	 April 2011
	  	2.88	%
	 May 2011
	  	2.90	%
	 June 2011
	  	2.92	%
	 July 2011
	  	2.94	%
	 August 2011
	  	2.96	%
	 September 2011
	  	2.98	%
	 October 2011 and thereafter
	  	3.00	%

  

 Appendix A-60 

 “Trust”: NovaStar Mortgage Funding Trust 2005-3, the trust created hereunder.

  
 “Trust Fund”: All of the assets of the Trust,
which is the trust created hereunder consisting of the REMIC I, REMIC II, REMIC III, REMIC IV, the Master REMIC, the Pre-Funding Account and the Supplemental Interest Trust. 
  
 “Trustee”: JPMorgan Chase Bank, National Association, a
national banking association organized under the laws of the United States, and its successors and assigns or any successor trustee appointed pursuant to the terms of the Agreement. 
  
 “Trustee Fee”: With respect to each Distribution Date, the product of (i) the Trustee Fee Rate divided
by 12 and (ii) the sum of the Principal Balance of the Mortgage Loans and the Pre-Funded Amount as of the first day of the related Due Period. 
  
 “Trustee Fee Rate”: 0.0035% per annum. 
  
 “Underwriters”: Greenwich Capital Markets, Inc., Wachovia Capital Markets, LLC, Deutsche Bank Securities Inc., Morgan Stanley &
Co. Incorporated, and their successors and assigns. 
  
 “Underwriting Agreement”: The Underwriting Agreement dated September 19, 2005 among the Underwriters, the Company and the Seller with respect to the offer and sale of the Offered Certificates, as the same may be
amended from time to time. 
  
 “Underwriting
Guidelines”: The underwriting guidelines set forth in the Prospectus Supplement under the heading “Description of the Mortgage Pool—Underwriting Standards for Mortgage Loans”. 
  
 “United States Person” or “U.S. Person”: A
citizen or resident of the United States, a corporation, partnership or other entity treated as a corporation or partnership for federal income tax purposes (other than a partnership that is not treated as a U.S. Person pursuant to any applicable
Treasury regulations) created or organized in, or under the laws of, the United States, any state thereof or the District of Columbia, or an estate the income of which from sources without the United States is includible in gross income for United
States federal income tax purposes regardless of its connection with the conduct of a trade or business within the United States, or a trust if a court within the United States is able to exercise primary supervision over the administration of the
trust and one or more United States persons have authority to control all substantial decisions of the trust. 
  

 Appendix A-61 

 “Unpaid Interest Shortfall Amount”: With respect to each Class of Class A
Certificates and Mezzanine Certificates and (i) the first Distribution Date, zero, and (ii) any Distribution Date after the first Distribution Date, the sum of (a) the Unpaid Interest Shortfall Amount for that Class as of the prior
Distribution Date, (b) the excess of the amount of the Current Interest due with respect to that Class on the prior Distribution Date over the amount actually distributed to the Holders of that Class on account of the Current Interest on the
prior Distribution Date and (c) interest on the sum of (a) and (b) to the extent permitted by law, at the Pass-Through Rate for such Class for the related Accrual Period. 
  
 “Voting Rights”: The portion of the voting rights of all of the Certificates which is allocated to any
Certificate. At all times the Class A Certificates and the Mezzanine Certificates shall have 97% of the Voting Rights (allocated among the Holders of the Class A Certificates and the Mezzanine Certificates in proportion to the then
outstanding Certificate Principal Balances of their respective Certificates), the Class C Certificates shall have 1% of the Voting Rights, the Class I Certificates shall have 1% of the Voting Rights and the Class R Certificates shall have 1% of the
Voting Rights. The Voting Rights allocated to any Class of Certificates (other than the Class C Certificates, Class I Certificates and the Class R Certificates) shall be allocated among all Holders of each such Class in proportion to the outstanding
Certificate Principal Balance of such Certificates and the Voting Rights allocated to the Class C Certificates, Class I Certificates and the Class R Certificates shall be allocated among all Holders of each such Class in proportion to such
Holders’ respective Percentage Interest; provided, however that when none of the Regular Certificates are outstanding, 100% of the Voting Rights shall be allocated among Holders of the Class R Certificates in accordance with such Holders’
respective Percentage Interests in the Certificates of such Class. The Class M-11 DSI and Class M-12 DSI Certificates do not have Voting Rights. 
  
 “Weighted Average Mortgage Rate”: With respect to any Distribution Date, the weighted average of the Mortgage Rates of the Mortgage Loans
(weighted by the Principal Balances of the Mortgage Loans). 
  

 Appendix A-62 

 APPENDIX B 
  

Group I Schedule 
  

					
	 Corresponding
        Number        

	  	 Group I %    

	  	 
	 1
	  	0.002163527	  	 
	 2
	  	0.002966224	  	 
	 3
	  	0.003337461	  	 
	 4
	  	0.003282652	  	 
	 5
	  	0.003256380	  	 
	 6
	  	0.003229525	  	 
	 7
	  	0.003385482	  	 
	 8
	  	0.003629548	  	 
	 9
	  	0.003774007	  	 
	 10
	  	0.004815446	  	 
	 11
	  	0.006324283	  	 
	 12
	  	0.006183565	  	 
	 13
	  	0.006246003	  	 
	 14
	  	0.006281793	  	 
	 15
	  	0.006317783	  	 
	 16
	  	0.006353973	  	 
	 17
	  	0.006390368	  	 
	 18
	  	 0.006426963
 (except 56.751752238 for the A Interests)
	  	 
	 19
	  	 0.006463767
 (except 56.745325275 for the B and C Interests)
	  	 
	 20
	  	 0.006445209
 (except 56.738861508 for the D and E Interests)
	  	 
	 21
	  	 0.000190833
 (except 56.732416299 for the F, G and H Interests)
	  	 
	 22
	  	 0.028275185
 (except 56.732225466 for the K, L, M and O Interests)
	  	 
	 23
	  	 0.025436269
 (except 56.703950281 for the Q, S and T Interests)
	  	 
	 24
	  	0.025916601	  	 
	 25
	  	0.026627305	  	 
	 26
	  	0.027034430	  	 
	 27
	  	0.032685914	  	 
	 28
	  	0.007940377	  	 
	 29
	  	0.010527351	  	 
	 30
	  	 0.008991759
 (except 56.547782034 for the U Interests)
	  	 
	 31
	  	 0.009053972
 (except 56.538790274 for the V and W Interests)
	  	 

					
	 32
	  	 0.009115824
 (except 56.529736302 for the Y and Z Interests)
	  	 
	 33
	  	 0.009177494
 (except 56.520620478 for the a, b and c Interests)
	  	 
	 34
	  	 0.009239249
 (except 56.511442983 for the d and e Interests)
	  	 
	 35
	  	 0.009303670
 (except 56.502203734 for the f and g Interests)
	  	 
	 36
	  	0.009307687	  	 
	 37
	  	0.009366336	  	 
	 38
	  	0.009401429	  	 
	 39
	  	0.009463641	  	 
	 40
	  	0.009525911	  	 
	 41
	  	0.009588728	  	 
	 42
	  	0.009651098	  	 
	 43
	  	0.009713512	  	 
	 44
	  	0.009776267	  	 
	 45
	  	0.009838755	  	 
	 46
	  	0.009901265	  	 
	 47
	  	56.387365435	  	 

  

 Appendix B-2 

 Group II Schedule 
  

					
	 Corresponding
        Number        

	 	 	  	 Group II %    

	 1
	 	 	  	43.170309743
	 2
	 	 	  	0.002163527
	 3
	 	 	  	0.002966224
	 4
	 	 	  	0.003337461
	 5
	 	 	  	0.003282652
	 6
	 	 	  	0.003256380
	 7
	 	 	  	0.003229525
	 8
	 	 	  	0.003385482
	 9
	 	 	  	0.003629548
	 10
	 	 	  	0.003774007
	 11
	 	 	  	0.004815446
	 12
	 	 	  	0.006324284
	 13
	 	 	  	0.006183565
	 14
	 	 	  	0.006246003
	 15
	 	 	  	0.006281793
	 16
	 	 	  	0.006317782
	 17
	 	 	  	0.006353973
	 18
	 	 	  	0.006390367
	 19
	 	 	  	0.006426964
	 20
	 	 	  	0.006463766
	 21
	 	 	  	0.006445209
	 22
	 	 	  	0.000190833
	 23
	 	 	  	0.028275185
	 24
	 	 	  	0.025436269
	 25
	 	 	  	0.025916601
	 26
	 	 	  	0.026627306
	 27
	 	 	  	0.027034429
	 28
	 	 	  	0.032685914
	 29
	 	 	  	0.007940378
	 30
	 	 	  	0.010527350
	 31
	 	 	  	0.008991759
	 32
	 	 	  	0.009053972
	 33
	 	 	  	0.009115824
	 34
	 	 	  	0.009177494
	 35
	 	 	  	0.009239248
	 36
	 	 	  	0.009303670
	 37
	 	 	  	0.009307689
	 38
	 	 	  	0.009366333
	 39
	 	 	  	0.009401431
	 40
	 	 	  	0.009463641
	 41
	 	 	  	0.009525909
	 42
	 	 	  	0.009588729
	 43
	 	 	  	0.009651098
	 44
	 	 	  	0.009713512
	 45
	 	 	  	0.009776269
	 46
	 	 	  	0.009838753
	 47
	 	 	  	0.009901267

  

 Appendix B-3 

 Swap/Cap Interest Rate Schedule 
  

									
	 Corresponding
     Distribution
     Date                    

	  	 Corresponding REMIC III Regular Interest

	  	 Corresponding Interest
 Rate
 0.3650%

	  	 Corresponding
 Interest Rate
 3.8700%

	  	 Corresponding
 Interest Rate
 0.3670%

	  	 Corresponding
 Interest Rate
 0.3280%

	 October 2005
	  	 All A1 and AA1 Interests
	  	 All B1 and BB1 Interests
	  	 All C1 and CC1 Interests
	  	 All D1 and DD1 Interests

					
	 November 2005
	  	 All A2 and AA2 Interests
	  	 All B2 and BB2 Interests
	  	 All C2 and CC2 Interests
	  	 All D2 and DD2 Interests

					
	 December 2005
	  	 All A3 and AA3 Interests
	  	 All B3 and BB3 Interests
	  	 All C3 and CC3 Interests
	  	 All D3 and DD3 Interests

					
	 January 2006
	  	 All A4 and AA4 Interests
	  	 All B4 and BB4 Interests
	  	 All C4 and CC4 Interests
	  	 All D4 and DD4 Interests

					
	 February 2006
	  	 All A5 and AA5 Interests
	  	 All B5 and BB5 Interests
	  	 All C5 and CC5 Interests
	  	 All D5 and DD5 Interests

					
	 March 2006
	  	 All A6 and AA6 Interests
	  	 All B6 and BB6 Interests
	  	 All C6 and CC6 Interests
	  	 All D6 and DD6 Interests

					
	 April 2006
	  	 All A7 and AA7 Interests
	  	 All B7 and BB7 Interests
	  	 All C7 and CC7 Interests
	  	 All D7 and DD7 Interests

					
	 May 2006
	  	 All A8 and AA8 Interests
	  	 All B8 and BB8 Interests
	  	 All C8 and CC8 Interests
	  	 All D8 and DD8 Interests

					
	 June 2006
	  	 All A9 and AA9 Interests
	  	 All B9 and BB9 Interests
	  	 All C9 and CC9 Interests
	  	 All D9 and DD9 Interests

					
	 July 2006
	  	 All A10 and AA10 Interests
	  	 All B10 and BB10 Interests
	  	 All C10 and CC10 Interests
	  	 All D10 and DD10 Interests

					
	 August 2006
	  	 All A11 and AA11 Interests
	  	 All B11 and BB11 Interests
	  	 All C11 and CC11 Interests
	  	 All D11 and DD11 Interests

					
	 September 2006
	  	 All A12 and AA12 Interests
	  	 All B12 and BB12 Interests
	  	 All C12 and CC12 Interests
	  	 All D12 and DD12 Interests

					
	 October 2006
	  	 All A13 and AA13 Interests
	  	 All B13 and BB13 Interests
	  	 All C13 and CC13 Interests
	  	 All D13 and DD13 Interests

					
	 November 2006
	  	 All A14 and AA14 Interests
	  	 All B14 and BB14 Interests
	  	 All C14 and CC14 Interests
	  	 All D14 and DD14 Interests

					
	 December 2006
	  	 All A15 and AA15 Interests
	  	 All B15 and BB15 Interests
	  	 All C15 and CC15 Interests
	  	 All D15 and DD15 Interests

					
	 January 2007
	  	 All A16 and AA16 Interests
	  	 All B16 and BB16 Interests
	  	 All C16 and CC16 Interests
	  	 All D16 and DD16 Interests

					
	 February 2007
	  	 All A17 and AA17 Interests
	  	 All B17 and BB17 Interests
	  	 All C17 and CC17 Interests
	  	 All D17 and DD17 Interests

					
	 March 2007
	  	 All A18 and AA18 Interests
	  	 All B18 and BB18 Interests
	  	 All C18 and CC18 Interests
	  	 All D18 and DD18 Interests

					
	 April 2007
	  	 	  	 All B19 and BB19 Interests
	  	 All C19 and CC19 Interests
	  	 All D19 and DD19 Interests

					
	 May 2007
	  	 	  	 	  	 	  	 All D20 and DD20 Interests

  

 Appendix B-4 

 Swap/Cap Interest Rate Schedule - Continued 
  

									
	 Corresponding
     Distribution
     Date                    

	  	 Corresponding REMIC III Regular Interest

	  	 Corresponding Interest
 Rate
 0.3220%

	  	 Corresponding
 Interest Rate
 3.7700%

	  	 Corresponding
 Interest Rate
 0.2950%

	  	 Corresponding
 Interest Rate
 0.2870%

	 October 2005
	  	 All E1 and EE1 Interests
	  	 All F1 and FF1 Interests
	  	 All G1 and GG1 Interests
	  	 All H1 and HH1 Interests

					
	 November 2005
	  	 All E2 and EE2 Interests
	  	 All F2 and FF2 Interests
	  	 All G2 and GG2 Interests
	  	 All H2 and HH2 Interests

					
	 December 2005
	  	 All E3 and EE3 Interests
	  	 All F3 and FF3 Interests
	  	 All G3 and GG3 Interests
	  	 All H3 and HH3 Interests

					
	 January 2006
	  	 All E4 and EE4 Interests
	  	 All F4 and FF4 Interests
	  	 All G4 and GG4 Interests
	  	 All H4 and HH4 Interests

					
	 February 2006
	  	 All E5 and EE5 Interests
	  	 All F5 and FF5 Interests
	  	 All G5 and GG5 Interests
	  	 All H5 and HH5 Interests

					
	 March 2006
	  	 All E6 and EE6 Interests
	  	 All F6 and FF6 Interests
	  	 All G6 and GG6 Interests
	  	 All H6 and HH6 Interests

					
	 April 2006
	  	 All E7 and EE7 Interests
	  	 All F7 and FF7 Interests
	  	 All G7 and GG7 Interests
	  	 All H7 and HH7 Interests

					
	 May 2006
	  	 All E8 and EE8 Interests
	  	 All F8 and FF8 Interests
	  	 All G8 and GG8 Interests
	  	 All H8 and HH8 Interests

					
	 June 2006
	  	 All E9 and EE9 Interests
	  	 All F9 and FF9 Interests
	  	 All G9 and GG9 Interests
	  	 All H9 and HH9 Interests

					
	 July 2006
	  	 All E10 and EE10 Interests
	  	 All F10 and FF10 Interests
	  	 All G10 and GG10 Interests
	  	 All H10 and HH10 Interests

					
	 August 2006
	  	 All E11 and EE11 Interests
	  	 All F11 and FF11 Interests
	  	 All G11 and GG11 Interests
	  	 All H11 and HH11 Interests

					
	 September 2006
	  	 All E12 and EE12 Interests
	  	 All F12 and FF12 Interests
	  	 All G12 and GG12 Interests
	  	 All H12 and HH12 Interests

					
	 October 2006
	  	 All E13 and EE13 Interests
	  	 All F13 and FF13 Interests
	  	 All G13 and GG13 Interests
	  	 All H13 and HH13 Interests

					
	 November 2006
	  	 All E14 and EE14 Interests
	  	 All F14 and FF14 Interests
	  	 All G14 and GG14 Interests
	  	 All H14 and HH14 Interests

					
	 December 2006
	  	 All E15 and EE15 Interests
	  	 All F15 and FF15 Interests
	  	 All G15 and GG15 Interests
	  	 All H15 and HH15 Interests

					
	 January 2007
	  	 All E16 and EE16 Interests
	  	 All F16 and FF16 Interests
	  	 All G16 and GG16 Interests
	  	 All H16 and HH16 Interests

					
	 February 2007
	  	 All E17 and EE17 Interests
	  	 All F17 and FF17 Interests
	  	 All G17 and GG17 Interests
	  	 All H17 and HH17 Interests

					
	 March 2007
	  	 All E18 and EE18 Interests
	  	 All F18 and FF18 Interests
	  	 All G18 and GG18 Interests
	  	 All H18 and HH18 Interests

					
	 April 2007
	  	 All E19 and EE19 Interests
	  	 All F19 and FF19 Interests
	  	 All G19 and GG19 Interests
	  	 All H19 and HH19 Interests

					
	 May 2007
	  	 All E20 and EE20 Interests
	  	 All F20 and FF20 Interests
	  	 All G20 and GG20 Interests
	  	 All H20 and HH20 Interests

					
	 June 2007
	  	 	  	 All F21 and FF21 Interests
	  	 All G21 and GG21 Interests
	  	 All H21 and HH21 Interests

  

 Appendix B-5 

 Swap/Cap Interest Rate Schedule - Continued 
  

									
	 Corresponding
     Distribution
     Date                    

	  	 Corresponding REMIC III Regular Interest

	  	 Corresponding
 Interest Rate
 4.0180%

	  	 Corresponding
 Interest Rate
 4.1100%

	  	 Corresponding
 Interest Rate
 0.2880%

	  	 Corresponding
 Interest Rate
 4.1525%

	 October 2005
	  	 All K1 and KK1 Interests
	  	 All L1 and LL1 Interests
	  	 All M1 and MM1 Interests
	  	 All O1 and OO1 Interests

					
	 November 2005
	  	 All K2 and KK2 Interests
	  	 All L2 and LL2 Interests
	  	 All M2 and MM2 Interests
	  	 All O2 and OO2 Interests

					
	 December 2005
	  	 All K3 and KK3 Interests
	  	 All L3 and LL3 Interests
	  	 All M3 and MM3 Interests
	  	 All O3 and OO3 Interests

					
	 January 2006
	  	 All K4 and KK4 Interests
	  	 All L4 and LL4 Interests
	  	 All M4 and MM4 Interests
	  	 All O4 and OO4 Interests

					
	 February 2006
	  	 All K5 and KK5 Interests
	  	 All L5 and LL5 Interests
	  	 All M5 and MM5 Interests
	  	 All O5 and OO5 Interests

					
	 March 2006
	  	 All K6 and KK6 Interests
	  	 All L6 and LL6 Interests
	  	 All M6 and MM6 Interests
	  	 All O6 and OO6 Interests

					
	 April 2006
	  	 All K7 and KK7 Interests
	  	 All L7 and LL7 Interests
	  	 All M7 and MM7 Interests
	  	 All O7 and OO7 Interests

					
	 May 2006
	  	 All K8 and KK8 Interests
	  	 All L8 and LL8 Interests
	  	 All M8 and MM8 Interests
	  	 All O8 and OO8 Interests

					
	 June 2006
	  	 All K9 and KK9 Interests
	  	 All L9 and LL9 Interests
	  	 All M9 and MM9 Interests
	  	 All O9 and OO9 Interests

					
	 July 2006
	  	 All K10 and KK10 Interests
	  	 All L10 and LL10 Interests
	  	 All M10 and MM10 Interests
	  	 All O10 and OO10 Interests

					
	 August 2006
	  	 All K11 and KK11 Interests
	  	 All L11 and LL11 Interests
	  	 All M11 and MM11 Interests
	  	 All O11 and OO11 Interests

					
	 September 2006
	  	 All K12 and KK12 Interests
	  	 All L12 and LL12 Interests
	  	 All M12 and MM12 Interests
	  	 All O12 and OO12 Interests

					
	 October 2006
	  	 All K13 and KK13 Interests
	  	 All L13 and LL13 Interests
	  	 All M13 and MM13 Interests
	  	 All O13 and OO13 Interests

					
	 November 2006
	  	 All K14 and KK14 Interests
	  	 All L14 and LL14 Interests
	  	 All M14 and MM14 Interests
	  	 All O14 and OO14 Interests

					
	 December 2006
	  	 All K15 and KK15 Interests
	  	 All L15 and LL15 Interests
	  	 All M15 and MM15 Interests
	  	 All O15 and OO15 Interests

					
	 January 2007
	  	 All K16 and KK16 Interests
	  	 All L16 and LL16 Interests
	  	 All M16 and MM16 Interests
	  	 All O16 and OO16 Interests

					
	 February 2007
	  	 All K17 and KK17 Interests
	  	 All L17 and LL17 Interests
	  	 All M17 and MM17 Interests
	  	 All O17 and OO17 Interests

					
	 March 2007
	  	 All K18 and KK18 Interests
	  	 All L18 and LL18 Interests
	  	 All M18 and MM18 Interests
	  	 All O18 and OO18 Interests

					
	 April 2007
	  	 All K19 and KK19 Interests
	  	 All L19 and LL19 Interests
	  	 All M19 and MM19 Interests
	  	 All O19 and OO19 Interests

					
	 May 2007
	  	 All K20 and KK20 Interests
	  	 All L20 and LL20 Interests
	  	 All M20 and MM20 Interests
	  	 All O20 and OO20 Interests

					
	 June 2007
	  	 All K21 and KK21 Interests
	  	 All L21 and LL21 Interests
	  	 All M21 and MM21 Interests
	  	 All O21 and OO21 Interests

					
	 July 2007
	  	 All K22 and KK22 Interests
	  	 All L22 and LL22 Interests
	  	 All M22 and MM22 Interests
	  	 All O22 and OO22 Interests

  

 Appendix B-6 

 Swap/Cap Interest Rate Schedule - Continued 
  

							
	 Corresponding
     Distribution
     Date                    

	  	 Corresponding REMIC III Regular Interest

	  	 Corresponding Interest
 Rate
 0.28125%

	  	 Corresponding
 Interest Rate
 4.4675%

	  	 Corresponding
 Interest Rate
 0.2740%

	 October 2005
	  	 All Q1 and QQ1 Interests
	  	 All S1 and SS1 Interests
	  	 All T1 and TT1 Interests

				
	 November 2005
	  	 All Q2 and QQ2 Interests
	  	 All S2 and SS2 Interests
	  	 All T2 and TT2 Interests

				
	 December 2005
	  	 All Q3 and QQ3 Interests
	  	 All S3 and SS3 Interests
	  	 All T3 and TT3 Interests

				
	 January 2006
	  	 All Q4 and QQ4 Interests
	  	 All S4 and SS4 Interests
	  	 All T4 and TT4 Interests

				
	 February 2006
	  	 All Q5 and QQ5 Interests
	  	 All S5 and SS5 Interests
	  	 All T5 and TT5 Interests

				
	 March 2006
	  	 All Q6 and QQ6 Interests
	  	 All S6 and SS6 Interests
	  	 All T6 and TT6 Interests

				
	 April 2006
	  	 All Q7 and QQ7 Interests
	  	 All S7 and SS7 Interests
	  	 All T7 and TT7 Interests

				
	 May 2006
	  	 All Q8 and QQ8 Interests
	  	 All S8 and SS8 Interests
	  	 All T8 and TT8 Interests

				
	 June 2006
	  	 All Q9 and QQ9 Interests
	  	 All S9 and SS9 Interests
	  	 All T9 and TT9 Interests

				
	 July 2006
	  	 All Q10 and QQ10 Interests
	  	 All S10 and SS10 Interests
	  	 All T10 and TT10 Interests

				
	 August 2006
	  	 All Q11 and QQ11 Interests
	  	 All S11 and SS11 Interests
	  	 All T11 and TT11 Interests

				
	 September 2006
	  	 All Q12 and QQ12 Interests
	  	 All S12 and SS12 Interests
	  	 All T12 and TT12 Interests

				
	 October 2006
	  	 All Q13 and QQ13 Interests
	  	 All S13 and SS13 Interests
	  	 All T13 and TT13 Interests

				
	 November 2006
	  	 All Q14 and QQ14 Interests
	  	 All S14 and SS14 Interests
	  	 All T14 and TT14 Interests

				
	 December 2006
	  	 All Q15 and QQ15 Interests
	  	 All S15 and SS15 Interests
	  	 All T15 and TT15 Interests

				
	 January 2007
	  	 All Q16 and QQ16 Interests
	  	 All S16 and SS16 Interests
	  	 All T16 and TT16 Interests

				
	 February 2007
	  	 All Q17 and QQ17 Interests
	  	 All S17 and SS17 Interests
	  	 All T17 and TT17 Interests

				
	 March 2007
	  	 All Q18 and QQ18 Interests
	  	 All S18 and SS18 Interests
	  	 All T18 and TT18 Interests

				
	 April 2007
	  	 All Q19 and QQ19 Interests
	  	 All S19 and SS19 Interests
	  	 All T19 and TT19 Interests

				
	 May 2007
	  	 All Q20 and QQ20 Interests
	  	 All S20 and SS20 Interests
	  	 All T20 and TT20 Interests

				
	 June 2007
	  	 All Q21 and QQ21 Interests
	  	 All S21 and SS21 Interests
	  	 All T21 and TT21 Interests

				
	 July 2007
	  	 All Q22 and QQ22 Interests
	  	 All S22 and SS22 Interests
	  	 All T22 and TT22 Interests

				
	 August 2007
	  	 All Q23 and QQ23 Interests
	  	 All S23 and SS23 Interests
	  	 All T23 and TT23 Interests

  

 Appendix B-7 

 Swap/Cap Interest Rate Schedule – Continued 
  

							
	 Corresponding
     Distribution
     Date                    

	  	 Corresponding REMIC III Regular Interest

	  	 Corresponding
 Interest Rate
 0.4600%

	  	 Corresponding
 Interest Rate
 4.0480%

	  	 Corresponding
 Interest Rate
 0.4520%

	 October 2005
	  	 All U1 and UU1 Interests
	  	 All V1 and VV1 Interests
	  	 All W1 and WW1 Interests

				
	 November 2005
	  	 All U2 and UU2 Interests
	  	 All V2 and VV2 Interests
	  	 All W2 and WW2 Interests

				
	 December 2005
	  	 All U3 and UU3 Interests
	  	 All V3 and VV3 Interests
	  	 All W3 and WW3 Interests

				
	 January 2006
	  	 All U4 and UU4 Interests
	  	 All V4 and VV4 Interests
	  	 All W4 and WW4 Interests

				
	 February 2006
	  	 All U5 and UU5 Interests
	  	 All V5 and VV5 Interests
	  	 All W5 and WW5 Interests

				
	 March 2006
	  	 All U6 and UU6 Interests
	  	 All V6 and VV6 Interests
	  	 All W6 and WW6 Interests

				
	 April 2006
	  	 All U7 and UU7 Interests
	  	 All V7 and VV7 Interests
	  	 All W7 and WW7 Interests

				
	 May 2006
	  	 All U8 and UU8 Interests
	  	 All V8 and VV8 Interests
	  	 All W8 and WW8 Interests

				
	 June 2006
	  	 All U9 and UU9 Interests
	  	 All V9 and VV9 Interests
	  	 All W9 and WW9 Interests

				
	 July 2006
	  	 All U10 and UU10 Interests
	  	 All V10 and VV10 Interests
	  	 All W10 and WW10 Interests

				
	 August 2006
	  	 All U11 and UU11 Interests
	  	 All V11 and VV11 Interests
	  	 All W11 and WW11 Interests

				
	 September 2006
	  	 All U12 and UU12 Interests
	  	 All V12 and VV12 Interests
	  	 All W12 and WW12 Interests

				
	 October 2006
	  	 All U13 and UU13 Interests
	  	 All V13 and VV13 Interests
	  	 All W13 and WW13 Interests

				
	 November 2006
	  	 All U14 and UU14 Interests
	  	 All V14 and VV14 Interests
	  	 All W14 and WW14 Interests

				
	 December 2006
	  	 All U15 and UU15 Interests
	  	 All V15 and VV15 Interests
	  	 All W15 and WW15 Interests

				
	 January 2007
	  	 All U16 and UU16 Interests
	  	 All V16 and VV16 Interests
	  	 All W16 and WW16 Interests

				
	 February 2007
	  	 All U17 and UU17 Interests
	  	 All V17 and VV17 Interests
	  	 All W17 and WW17 Interests

				
	 March 2007
	  	 All U18 and UU18 Interests
	  	 All V18 and VV18 Interests
	  	 All W18 and WW18 Interests

				
	 April 2007
	  	 All U19 and UU19 Interests
	  	 All V19 and VV19 Interests
	  	 All W19 and WW19 Interests

				
	 May 2007
	  	 All U20 and UU20 Interests
	  	 All V20 and VV20 Interests
	  	 All W20 and WW20 Interests

				
	 June 2007
	  	 All U21 and UU21 Interests
	  	 All V21 and VV21 Interests
	  	 All W21 and WW21 Interests

				
	 July 2007
	  	 All U22 and UU22 Interests
	  	 All V22 and VV22 Interests
	  	 All W22 and WW22 Interests

				
	 August 2007
	  	 All U23 and UU23 Interests
	  	 All V23 and VV23 Interests
	  	 All W23 and WW23 Interests

				
	 September 2007
	  	 All U24 and UU24 Interests
	  	 All V24 and VV24 Interests
	  	 All W24 and WW24 Interests

				
	 October 2007
	  	 All U25 and UU25 Interests
	  	 All V25 and VV25 Interests
	  	 All W25 and WW25 Interests

				
	 November 2007
	  	 All U26 and UU26 Interests
	  	 All V26 and VV26 Interests
	  	 All W26 and WW26 Interests

				
	 December 2007
	  	 All U27 and UU27 Interests
	  	 All V27 and VV27 Interests
	  	 All W27 and WW27 Interests

				
	 January 2008
	  	 All U28 and UU28 Interests
	  	 All V28 and VV28 Interests
	  	 All W28 and WW28 Interests

				
	 February 2008
	  	 All U29 and UU29 Interests
	  	 All V29 and VV29 Interests
	  	 All W29 and WW29 Interests

				
	 March 2008
	  	 All U30 and UU30 Interests
	  	 All V30 and VV30 Interests
	  	 All W30 and WW30 Interests

				
	 April 2008
	  	 	  	 All V31 and VV31 Interests
	  	 All W31 and WW31 Interests

  

 Appendix B-8 

 Swap/Cap Interest Rate Schedule - Continued 
  

							
	 Corresponding
     Distribution
     Date                    

	  	 Corresponding REMIC III Regular Interest

	  	 Corresponding
 Interest Rate
 0.4225%

	  	 Corresponding
 Interest Rate
 0.4290%

	  	 Corresponding
 Interest Rate
 3.8650%

	 October 2005
	  	 All Y1 and YY1 Interests
	  	 All Z1 and ZZ1 Interests
	  	 All a1 and aa1 Interests

				
	 November 2005
	  	 All Y2 and YY2 Interests
	  	 All Z2 and ZZ2 Interests
	  	 All a2 and aa2 Interests

				
	 December 2005
	  	 All Y3 and YY3 Interests
	  	 All Z3 and ZZ3 Interests
	  	 All a3 and aa3 Interests

				
	 January 2006
	  	 All Y4 and YY4 Interests
	  	 All Z4 and ZZ4 Interests
	  	 All a4 and aa4 Interests

				
	 February 2006
	  	 All Y5 and YY5 Interests
	  	 All Z5 and ZZ5 Interests
	  	 All a5 and aa5 Interests

				
	 March 2006
	  	 All Y6 and YY6 Interests
	  	 All Z6 and ZZ6 Interests
	  	 All a6 and aa6 Interests

				
	 April 2006
	  	 All Y7 and YY7 Interests
	  	 All Z7 and ZZ7 Interests
	  	 All a7 and aa7 Interests

				
	 May 2006
	  	 All Y8 and YY8 Interests
	  	 All Z8 and ZZ8 Interests
	  	 All a8 and aa8 Interests

				
	 June 2006
	  	 All Y9 and YY9 Interests
	  	 All Z9 and ZZ9 Interests
	  	 All a9 and aa9 Interests

				
	 July 2006
	  	 All Y10 and YY10 Interests
	  	 All Z10 and ZZ10 Interests
	  	 All a10 and aa10 Interests

				
	 August 2006
	  	 All Y11 and YY11 Interests
	  	 All Z11 and ZZ11 Interests
	  	 All a11 and aa11 Interests

				
	 September 2006
	  	 All Y12 and YY12 Interests
	  	 All Z12 and ZZ12 Interests
	  	 All a12 and aa12 Interests

				
	 October 2006
	  	 All Y13 and YY13 Interests
	  	 All Z13 and ZZ13 Interests
	  	 All a13 and aa13 Interests

				
	 November 2006
	  	 All Y14 and YY14 Interests
	  	 All Z14 and ZZ14 Interests
	  	 All a14 and aa14 Interests

				
	 December 2006
	  	 All Y15 and YY15 Interests
	  	 All Z15 and ZZ15 Interests
	  	 All a15 and aa15 Interests

				
	 January 2007
	  	 All Y16 and YY16 Interests
	  	 All Z16 and ZZ16 Interests
	  	 All a16 and aa16 Interests

				
	 February 2007
	  	 All Y17 and YY17 Interests
	  	 All Z17 and ZZ17 Interests
	  	 All a17 and aa17 Interests

				
	 March 2007
	  	 All Y18 and YY18 Interests
	  	 All Z18 and ZZ18 Interests
	  	 All a18 and aa18 Interests

				
	 April 2007
	  	 All Y19 and YY19 Interests
	  	 All Z19 and ZZ19 Interests
	  	 All a19 and aa19 Interests

				
	 May 2007
	  	 All Y20 and YY20 Interests
	  	 All Z20 and ZZ20 Interests
	  	 All a20 and aa20 Interests

				
	 June 2007
	  	 All Y21 and YY21 Interests
	  	 All Z21 and ZZ21 Interests
	  	 All a21 and aa21 Interests

				
	 July 2007
	  	 All Y22 and YY22 Interests
	  	 All Z22 and ZZ22 Interests
	  	 All a22 and aa22 Interests

				
	 August 2007
	  	 All Y23 and YY23 Interests
	  	 All Z23 and ZZ23 Interests
	  	 All a23 and aa23 Interests

				
	 September 2007
	  	 All Y24 and YY24 Interests
	  	 All Z24 and ZZ24 Interests
	  	 All a24 and aa24 Interests

				
	 October 2007
	  	 All Y25 and YY25 Interests
	  	 All Z25 and ZZ25 Interests
	  	 All a25 and aa25 Interests

				
	 November 2007
	  	 All Y26 and YY26 Interests
	  	 All Z26 and ZZ26 Interests
	  	 All a26 and aa26 Interests

				
	 December 2007
	  	 All Y27 and YY27 Interests
	  	 All Z27 and ZZ27 Interests
	  	 All a27 and aa27 Interests

				
	 January 2008
	  	 All Y28 and YY28 Interests
	  	 All Z28 and ZZ28 Interests
	  	 All a28 and aa28 Interests

				
	 February 2008
	  	 All Y29 and YY29 Interests
	  	 All Z29 and ZZ29 Interests
	  	 All a29 and aa29 Interests

				
	 March 2008
	  	 All Y30 and YY30 Interests
	  	 All Z30 and ZZ30 Interests
	  	 All a30 and aa30 Interests

				
	 April 2008
	  	 All Y31 and YY31 Interests
	  	 All Z31 and ZZ31 Interests
	  	 All a31 and aa31 Interests

				
	 May 2008
	  	 All Y32 and YY32 Interests
	  	 All Z32 and ZZ32 Interests
	  	 All a32 and aa32 Interests

				
	 June 2008
	  	 	  	 	  	 All a33 and aa33 Interests

  

 Appendix B-9 

 Swap/Cap Interest Rate Schedule - Continued 
  

							
	 Corresponding
     Distribution
    Date                    

	  	 Corresponding REMIC III Regular Interest

	  	 Corresponding
 Interest Rate
 0.3800%

	  	 Corresponding
 Interest Rate
 0.3980%

	  	 Corresponding
 Interest Rate
 0.4010%

	 October 2005
	  	 All b1 and bb1 Interests
	  	 All c1 and cc1 Interests
	  	 All d1 and dd1 Interests

				
	 November 2005
	  	 All b2 and bb2 Interests
	  	 All c2 and cc2 Interests
	  	 All d2 and dd2 Interests

				
	 December 2005
	  	 All b3 and bb3 Interests
	  	 All c3 and cc3 Interests
	  	 All d3 and dd3 Interests

				
	 January 2006
	  	 All b4 and bb4 Interests
	  	 All c4 and cc4 Interests
	  	 All d4 and dd4 Interests

				
	 February 2006
	  	 All b5 and bb5 Interests
	  	 All c5 and cc5 Interests
	  	 All d5 and dd5 Interests

				
	 March 2006
	  	 All b6 and bb6 Interests
	  	 All c6 and cc6 Interests
	  	 All d6 and dd6 Interests

				
	 April 2006
	  	 All b7 and bb7 Interests
	  	 All c7 and cc7 Interests
	  	 All d7 and dd7 Interests

				
	 May 2006
	  	 All b8 and bb8 Interests
	  	 All c8 and cc8 Interests
	  	 All d8 and dd8 Interests

				
	 June 2006
	  	 All b9 and bb9 Interests
	  	 All c9 and cc9 Interests
	  	 All d9 and dd9 Interests

				
	 July 2006
	  	 All b10 and bb10 Interests
	  	 All c10 and cc10 Interests
	  	 All d10 and dd10 Interests

				
	 August 2006
	  	 All b11 and bb11 Interests
	  	 All c11 and cc11 Interests
	  	 All d11 and dd11 Interests

				
	 September 2006
	  	 All b12 and bb12 Interests
	  	 All c12 and cc12 Interests
	  	 All d12 and dd12 Interests

				
	 October 2006
	  	 All b13 and bb13 Interests
	  	 All c13 and cc13 Interests
	  	 All d13 and dd13 Interests

				
	 November 2006
	  	 All b14 and bb14 Interests
	  	 All c14 and cc14 Interests
	  	 All d14 and dd14 Interests

				
	 December 2006
	  	 All b15 and bb15 Interests
	  	 All c15 and cc15 Interests
	  	 All d15 and dd15 Interests

				
	 January 2007
	  	 All b16 and bb16 Interests
	  	 All c16 and cc16 Interests
	  	 All d16 and dd16 Interests

				
	 February 2007
	  	 All b17 and bb17 Interests
	  	 All c17 and cc17 Interests
	  	 All d17 and dd17 Interests

				
	 March 2007
	  	 All b18 and bb18 Interests
	  	 All c18 and cc18 Interests
	  	 All d18 and dd18 Interests

				
	 April 2007
	  	 All b19 and bb19 Interests
	  	 All c19 and cc19 Interests
	  	 All d19 and dd19 Interests

				
	 May 2007
	  	 All b20 and bb20 Interests
	  	 All c20 and cc20 Interests
	  	 All d20 and dd20 Interests

				
	 June 2007
	  	 All b21 and bb21 Interests
	  	 All c21 and cc21 Interests
	  	 All d21 and dd21 Interests

				
	 July 2007
	  	 All b22 and bb22 Interests
	  	 All c22 and cc22 Interests
	  	 All d22 and dd22 Interests

				
	 August 2007
	  	 All b23 and bb23 Interests
	  	 All c23 and cc23 Interests
	  	 All d23 and dd23 Interests

				
	 September 2007
	  	 All b24 and bb24 Interests
	  	 All c24 and cc24 Interests
	  	 All d24 and dd24 Interests

				
	 October 2007
	  	 All b25 and bb25 Interests
	  	 All c25 and cc25 Interests
	  	 All d25 and dd25 Interests

				
	 November 2007
	  	 All b26 and bb26 Interests
	  	 All c26 and cc26 Interests
	  	 All d26 and dd26 Interests

				
	 December 2007
	  	 All b27 and bb27 Interests
	  	 All c27 and cc27 Interests
	  	 All d27 and dd27 Interests

				
	 January 2008
	  	 All b28 and bb28 Interests
	  	 All c28 and cc28 Interests
	  	 All d28 and dd28 Interests

				
	 February 2008
	  	 All b29 and bb29 Interests
	  	 All c29 and cc29 Interests
	  	 All d29 and dd29 Interests

				
	 March 2008
	  	 All b30 and bb30 Interests
	  	 All c30 and cc30 Interests
	  	 All d30 and dd30 Interests

				
	 April 2008
	  	 All b31 and bb31 Interests
	  	 All c31 and cc31 Interests
	  	 All d31 and dd31 Interests

				
	 May 2008
	  	 All b32 and bb32 Interests
	  	 All c32 and cc32 Interests
	  	 All d32 and dd32 Interests

				
	 June 2008
	  	 All b33 and bb33 Interests
	  	 All c33 and cc33 Interests
	  	 All d33 and dd33 Interests

				
	 July 2008
	  	 	  	 	  	 All d34 and dd34 Interests

  

 Appendix B-10 

 Swap/Cap Interest Rate Schedule - Continued 
  

							
	 Corresponding
     Distribution
     Date                    

	  	 Corresponding REMIC III Regular Interest

	  	 Corresponding
 Interest Rate
 4.0840%

	  	 Corresponding
 Interest Rate
 0.3725%

	  	 Corresponding
 Interest Rate
 0.3600%

	 October 2005
	  	 All e1 and ee1 Interests
	  	 All f1 and ff1 Interests
	  	 All g1 and gg1 Interests

				
	 November 2005
	  	 All e2 and ee2 Interests
	  	 All f2 and ff2 Interests
	  	 All g2 and gg2 Interests

				
	 December 2005
	  	 All e3 and ee3 Interests
	  	 All f3 and ff3 Interests
	  	 All g3 and gg3 Interests

				
	 January 2006
	  	 All e4 and ee4 Interests
	  	 All f4 and ff4 Interests
	  	 All g4 and gg4 Interests

				
	 February 2006
	  	 All e5 and ee5 Interests
	  	 All f5 and ff5 Interests
	  	 All g5 and gg5 Interests

				
	 March 2006
	  	 All e6 and ee6 Interests
	  	 All f6 and ff6 Interests
	  	 All g6 and gg6 Interests

				
	 April 2006
	  	 All e7 and ee7 Interests
	  	 All f7 and ff7 Interests
	  	 All g7 and gg7 Interests

				
	 May 2006
	  	 All e8 and ee8 Interests
	  	 All f8 and ff8 Interests
	  	 All g8 and gg8 Interests

				
	 June 2006
	  	 All e9 and ee9 Interests
	  	 All f9 and ff9 Interests
	  	 All g9 and gg9 Interests

				
	 July 2006
	  	 All e10 and ee10 Interests
	  	 All f10 and ff10 Interests
	  	 All g10 and gg10 Interests

				
	 August 2006
	  	 All e11 and ee11 Interests
	  	 All f11 and ff11 Interests
	  	 All g11 and gg11 Interests

				
	 September 2006
	  	 All e12 and ee12 Interests
	  	 All f12 and ff12 Interests
	  	 All g12 and gg12 Interests

				
	 October 2006
	  	 All e13 and ee13 Interests
	  	 All f13 and ff13 Interests
	  	 All g13 and gg13 Interests

				
	 November 2006
	  	 All e14 and ee14 Interests
	  	 All f14 and ff14 Interests
	  	 All g14 and gg14 Interests

				
	 December 2006
	  	 All e15 and ee15 Interests
	  	 All f15 and ff15 Interests
	  	 All g15 and gg15 Interests

				
	 January 2007
	  	 All e16 and ee16 Interests
	  	 All f16 and ff16 Interests
	  	 All g16 and gg16 Interests

				
	 February 2007
	  	 All e17 and ee17 Interests
	  	 All f17 and ff17 Interests
	  	 All g17 and gg17 Interests

				
	 March 2007
	  	 All e18 and ee18 Interests
	  	 All f18 and ff18 Interests
	  	 All g18 and gg18 Interests

				
	 April 2007
	  	 All e19 and ee19 Interests
	  	 All f19 and ff19 Interests
	  	 All g19 and gg19 Interests

				
	 May 2007
	  	 All e20 and ee20 Interests
	  	 All f20 and ff20 Interests
	  	 All g20 and gg20 Interests

				
	 June 2007
	  	 All e21 and ee21 Interests
	  	 All f21 and ff21 Interests
	  	 All g21 and gg21 Interests

				
	 July 2007
	  	 All e22 and ee22 Interests
	  	 All f22 and ff22 Interests
	  	 All g22 and gg22 Interests

				
	 August 2007
	  	 All e23 and ee23 Interests
	  	 All f23 and ff23 Interests
	  	 All g23 and gg23 Interests

				
	 September 2007
	  	 All e24 and ee24 Interests
	  	 All f24 and ff24 Interests
	  	 All g24 and gg24 Interests

				
	 October 2007
	  	 All e25 and ee25 Interests
	  	 All f25 and ff25 Interests
	  	 All g25 and gg25 Interests

				
	 November 2007
	  	 All e26 and ee26 Interests
	  	 All f26 and ff26 Interests
	  	 All g26 and gg26 Interests

				
	 December 2007
	  	 All e27 and ee27 Interests
	  	 All f27 and ff27 Interests
	  	 All g27 and gg27 Interests

				
	 January 2008
	  	 All e28 and ee28 Interests
	  	 All f28 and ff28 Interests
	  	 All g28 and gg28 Interests

				
	 February 2008
	  	 All e29 and ee29 Interests
	  	 All f29 and ff29 Interests
	  	 All g29 and gg29 Interests

				
	 March 2008
	  	 All e30 and ee30 Interests
	  	 All f30 and ff30 Interests
	  	 All g30 and gg30 Interests

				
	 April 2008
	  	 All e31 and ee31 Interests
	  	 All f31 and ff31 Interests
	  	 All g31 and gg31 Interests

				
	 May 2008
	  	 All e32 and ee32 Interests
	  	 All f32 and ff32 Interests
	  	 All g32 and gg32 Interests

				
	 June 2008
	  	 All e33 and ee33 Interests
	  	 All f33 and ff33 Interests
	  	 All g33 and gg33 Interests

				
	 July 2008
	  	 All e34 and ee34 Interests
	  	 All f34 and ff34 Interests
	  	 All g34 and gg34 Interests

				
	 August 2008
	  	 	  	 All f35 and ff35 Interests
	  	 All g35 and gg35 Interests

  

 Appendix B-11 

 Swap/Cap Interest Rate Schedule - Continued 
  

			
	 Corresponding
     Distribution
     Date                    

	  	 Corresponding REMIC III Regular Interest

	  	 Corresponding
 Interest Rate
                                       
  4.4050%                                     
   

	 October 2005
	  	 All h1 and hh1 Interests

		
	 November 2005
	  	 All h2 and hh2 Interests

		
	 December 2005
	  	 All h3 and hh3 Interests

		
	 January 2006
	  	 All h4 and hh4 Interests

		
	 February 2006
	  	 All h5 and hh5 Interests

		
	 March 2006
	  	 All h6 and hh6 Interests

		
	 April 2006
	  	 All h7 and hh7 Interests

		
	 May 2006
	  	 All h8 and hh8 Interests

		
	 June 2006
	  	 All h9 and hh9 Interests

		
	 July 2006
	  	 All h10 and hh10 Interests

		
	 August 2006
	  	 All h11 and hh11 Interests

		
	 September 2006
	  	 All h12 and hh12 Interests

		
	 October 2006
	  	 All h13 and hh13 Interests

		
	 November 2006
	  	 All h14 and hh14 Interests

		
	 December 2006
	  	 All h15 and hh15 Interests

		
	 January 2007
	  	 All h16 and hh16 Interests

		
	 February 2007
	  	 All h17 and hh17 Interests

		
	 March 2007
	  	 All h18 and hh18 Interests

		
	 April 2007
	  	 All h19 and hh19 Interests

		
	 May 2007
	  	 All h20 and hh20 Interests

		
	 June 2007
	  	 All h21 and hh21 Interests

		
	 July 2007
	  	 All h22 and hh22 Interests

		
	 August 2007
	  	 All h23 and hh23 Interests

		
	 September 2007
	  	 All h24 and hh24 Interests

		
	 October 2007
	  	 All h25 and hh25 Interests

		
	 November 2007
	  	 All h26 and hh26 Interests

		
	 December 2007
	  	 All h27 and hh27 Interests

		
	 January 2008
	  	 All h28 and hh28 Interests

		
	 February 2008
	  	 All h29 and hh29 Interests

		
	 March 2008
	  	 All h30 and hh30 Interests

		
	 April 2008
	  	 All h31 and hh31 Interests

		
	 May 2008
	  	 All h32 and hh32 Interests

		
	 June 2008
	  	 All h33 and hh33 Interests

		
	 July 2008
	  	 All h34 and hh34 Interests

		
	 August 2008
	  	 All h35 and hh35 Interests

		
	 September 2008
	  	 All h36 and hh36 Interests

		
	 October 2008
	  	 All h37 and hh37 Interests

		
	 November 2008
	  	 All h38 and hh38 Interests

		
	 December 2008
	  	 All h39 and hh39 Interests

		
	 January 2009
	  	 All h40 and hh40 Interests

		
	 February 2009
	  	 All h41 and hh41 Interests

		
	 March 2009
	  	 All h42 and hh42 Interests

		
	 April 2009
	  	 All h43 and hh43 Interests

		
	 May 2009
	  	 All h44 and hh44 Interests

		
	 June 2009
	  	 All h45 and hh45 Interests

		
	 July 2009
	  	 All h46 and hh46 Interests

		
	 August 2009
	  	 All h47 and hh47 Interests

  

 Appendix B-12 

 Swap/Cap Maturity Date Schedule 
  

			
	 Corresponding REMIC III
 Regular Interest

	 	 Corresponding
 Maturity Date

	 All AA Interests
	 	 March 2007

		
	 All BB Interests
	 	 April 2007

		
	 All CC Interests
	 	 April 2007

		
	 All DD Interests
	 	 May 2007

		
	 All EE Interests
	 	 May 2007

		
	 All FF Interests
	 	 June 2007

		
	 All GG Interests
	 	 June 2007

		
	 All HH Interests
	 	 June 2007

		
	 All KK Interests
	 	 July 2007

		
	 All LL Interests
	 	 July 2007

		
	 All MM Interests
	 	 July 2007

		
	 All OO Interests
	 	 July 2007

		
	 All QQ Interests
	 	 August 2007

		
	 All SS Interests
	 	 August 2007

		
	 All TT Interests
	 	 August 2007

		
	 All UU Interests
	 	 March 2008

		
	 All VV Interests
	 	 April 2008

		
	 All WW Interests
	 	 April 2008

		
	 All YY Interests
	 	 May 2008

		
	 All ZZ Interests
	 	 May 2008

		
	 All aa Interests
	 	 June 2008

		
	 All bb Interests
	 	 June 2008

		
	 All cc Interests
	 	 June 2008

		
	 All dd Interests
	 	 July 2008

		
	 All ee Interests
	 	 July 2008

		
	 All ff Interests
	 	 August 2008

		
	 All gg Interests
	 	 August 2008

		
	 All hh Interests
	 	 August 2009

  

 Appendix B-13 

 Exhibit A-1 
  
 Form of Class A-1A Certificate 
  
 NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2005-3 
 HOME EQUITY LOAN ASSET-BACKED CERTIFICATE 
 CLASS A-1A CERTIFICATE 
  
 Comprised of a Certificate Representing 
 Certain Interests Relating to a Pool of 
 Mortgage Loans 
 The Mortgage Loans are Serviced by 
  
 NOVASTAR MORTGAGE, INC., as Servicer 
  
 Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the
Trust or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof,
Cede & Co., has an interest herein. 
  
 (This certificate
does not represent an interest in, or an obligation of, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Financial, Inc., NovaStar Capital, Inc. or any of their
subsidiaries and affiliates. This certificate is comprised of a Certificate representing a fractional ownership interest in distributions in certain Accounts created pursuant to the Pooling and Servicing Agreement and certain other rights relating
thereto and is payable only from amounts received by the Trustee relating to the Mortgage Loans and other assets held in the Trust Fund.) 
  

					
	No.: A-1A	  	Date: September 22, 2005	  	CUSIP: 66987X GS 8
			
	 Original Principal Balance:
 $1,196,265,000
	  	 Registered Owner:
 CEDE & CO.
	  	 Final Scheduled Distribution
 Date: January 25,
2036

			
	Percentage Interest: 100%	  	 Pass-Through Rate:
 LIBOR + 0.2600%
	  	 

  
 The registered owner
named above is the registered owner of a fractional interest in (i) each Group I Mortgage Loan identified on the Mortgage Loan Schedule attached as Exhibit B to that certain Pooling and Servicing Agreement dated as of September 1,
2005 (the “Pooling and Servicing Agreement”) by and among NovaStar Mortgage Funding Corporation, as the company (the “Company”), JPMorgan Chase Bank, National Association, as trustee (the “Trustee”), J.P. Morgan Trust
Company, National Association, as co-trustee (the “Co-Trustee”), Wachovia Bank, National Association, as the custodian (the “Custodian”), and NovaStar Mortgage, Inc. as servicer (the “Servicer”) and as seller (the
“Seller”), including the related Cut- 

 off Date Principal Balance, all interest accruing thereon on and after the Cut-off Date and all collections in respect of
interest and principal due after the Cut-off Date; (ii) property which secured each such Mortgage Loan and which has been acquired by foreclosure or deed in lieu of foreclosure; (iii) the Company’s interest in any insurance policies
in respect of such Mortgage Loans; (iv) all proceeds of any of the foregoing; (v) the rights of the Company under the Purchase Agreement and (vi) all other assets included or to be included in the Trust Fund. Such assignment includes
all interest and principal due to the Company or the Servicer after the Cut-off Date with respect to the Mortgage Loans. 
  
 The Original Principal Amount set forth above is equal to the product of (i) the Percentage Interest represented by this Certificate and
(ii) the aggregate Original Principal Amount of the Class A-1A Certificates on September 22, 2005 which aggregate amount was $1,196,265,000. The owner hereof is entitled to principal payments on each Distribution Date, which will
fully amortize such Original Principal Amount over the period from the date of initial delivery hereof to the final Distribution Date of the Class A-1A Certificates. Therefore, the actual outstanding principal amount of this Certificate, on any
date subsequent to October 25, 2005 (the first Distribution Date) will be less than the Original Principal Amount set forth above. 
  
 In order to receive the final distribution hereon, the owner hereof is required to present this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution due on this Certificate, this Certificate shall be deemed cancelled for all purposes under the Pooling and Servicing Agreement. 
  
 SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN A CLASS OF “REGULAR INTERESTS” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT” (“REMIC”) AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE “CODE”), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS (SECTIONS 860A THROUGH 860G) OF THE CODE. 
  
 THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS REPRESENTED
HEREBY (OTHER THAN AS REQUIRED FOR FEDERAL INCOME TAX PURPOSES). 
  
 NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY. 
  
 This Certificate is one of a Class of duly-authorized Certificates designated
as NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3, Class A-1A Certificates (the “Class A-1A Certificates”) and issued under and subject to the terms, provisions and conditions of the Pooling and Servicing
Agreement, to which the owner of this Certificate, by virtue of acceptance hereof assents, and is bound. Also issued under the Pooling and Servicing Agreement are the Class A-2A Certificates, Class A-2B Certificates, Class A-2C
Certificates, Class A-2D Certificates, Class M-1 Certificates, Class M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates, Class M-6 Certificates, Class M-7 Certificates, 
  

 A-1-2 

 Class M-8 Certificates, Class M-9 Certificates, Class M-10 Certificates, Class M-11 Certificates, Class M-12
Certificates, Class M-11 DSI Certificates, Class M-12 DSI Certificates, Class I-1 Certificates, Class I-2 Certificates, Class I-3 Certificates, Class C Certificates, and Class R Certificates, and all such Certificates are collectively referred to as
the “Certificates”. Terms capitalized herein and not otherwise defined herein shall have the respective meanings set forth in the Pooling and Servicing Agreement. 
  
 On the 25th day of each month, or, if such day is not a Business Day, then the next succeeding Business Day (each such day
being a “Distribution Date”) commencing October 25, 2005, the owners of the Class A-1A Certificates as of the close of business on the business day immediately preceding such Distribution Date (the “Record Date”) will
be entitled to the distribution described in Article IV of the Pooling and Servicing Agreement, relating to such Distribution Date. Distributions will be made in immediately available funds to such owners, by wire transfer or by check mailed to the
address of the person entitled thereto as it appears on the Certificate Register. 
  
 Each owner of record of a Class A-1A Certificate will be entitled to receive such owner’s Percentage Interest in the amounts distributed on such Distribution Date to the owners of the Class A-1A
Certificates. The Percentage Interest of each Class A-1A Certificate as of any date of determination will be equal to the percentage obtained by dividing the Original Principal Amount set forth on such Class A-1A Certificate by
$1,196,265,000. 
  
 The Trustee is required to duly and punctually
pay distributions with respect to this Certificate in accordance with the terms hereof and the Pooling and Servicing Agreement. Amounts properly withheld under the Code or applicable to any owner shall be considered as having been paid by the
Trustee to such owner for all purposes of the Pooling and Servicing Agreement. 
  
 The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the Servicer to enter into Sub-Servicing Agreements with certain
institutions eligible for appointment as Sub-Servicers for the servicing and administration of certain Mortgage Loans. No appointment of any Sub-Servicer shall release the Servicer from any of its obligations under the Pooling and Servicing
Agreement. 
  
 This Certificate does not represent a deposit or
other obligation of, or an interest in, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Capital, Inc., NovaStar Financial Inc., or any of their subsidiaries and
affiliates and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the Government National Mortgage Association, or any other governmental agency. This Certificate is limited in right of payment to certain collections and
recoveries relating to the Mortgage Loans and amounts on deposit in the Accounts (except as otherwise provided in the Pooling and Servicing Agreement) all as more specifically set forth hereinabove and in the Pooling and Servicing Agreement.

  
 No owner shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement for the appointment of a receiver or trustee, or for any other remedy under the Pooling and Servicing Agreement except in compliance with the terms thereof. 
  

 A-1-3 

 Notwithstanding any other provisions in the Pooling and Servicing Agreement, the owner of any Certificate
shall have the right which is absolute and unconditional to receive distributions to the extent provided in the Pooling and Servicing Agreement with respect to such Certificate or to institute suit for the enforcement of any such distribution, and
such right shall not be impaired without the consent of such owner. 
  
 The Pooling and Servicing Agreement will terminate upon notice to the Trustee upon the earliest of (i) the Distribution Date on which the Certificate Principal Balances of the Regular Certificates have been reduced to zero,
(ii) the final payment or other liquidation of the last Mortgage Loan in the Trust, (iii) the optional purchase by the Servicer of the Mortgage Loans as described below, (iv) the Distribution Date in January 2036 and (v) at any
time when a Qualified Liquidation of the Master REMIC and REMIC I, REMIC II, REMIC III and REMIC IV is effected pursuant to the Pooling and Servicing Agreement. In addition, under certain circumstances relating to the qualification of either the
Master REMIC or any of REMIC I, REMIC II, REMIC III or REMIC IV as a REMIC under the Code, the Mortgage Loans may be sold, thereby affecting the early retirement of the Certificates. Notwithstanding the foregoing, in no event shall the Trust hereby
continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James, living on the date of the Pooling and Servicing Agreement.

  
 The Servicer may, at its option, terminate the Pooling and
Servicing Agreement on any date on which the aggregate of the Principal Balances of the Mortgage Loans on such date is equal to or less than 10% of the Maximum Collateral Amount, by purchasing, on the next succeeding Distribution Date, all of the
outstanding Mortgage Loans and REO Properties at a price equal to the greater of the Principal Balance of the Mortgage Loans and REO Properties or the market value of the Mortgage Loans and REO Properties, in each case plus accrued and unpaid
interest thereon at the weighted average of the Mortgage Rates through the end of the Due Period preceding the final Distribution Date plus unreimbursed Servicing Advances, Advances, any unpaid Servicing Fees allocable to such Mortgage Loans and REO
Properties and any accrued and unpaid Available Funds Cap Shortfall Amount and Available Funds Cap Carryforward Amount and any unpaid amount due the Trustee, the Swap Counterparties, the Cap Counterparties and the Custodian under the Pooling and
Servicing Agreement. 
  
 The Trustee shall give written notice of
termination of the Pooling and Servicing Agreement to each owner in the manner set forth therein. 
  
 As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the office designated as the location of the Certificate Register, and thereupon one or more new certificates of like
class, tenor and Percentage Interest will be issued to the designated transferee or transferees. 
  
 The Trustee is required to furnish certain information on each Distribution Date to the owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement. 
  

 A-1-4 

 The Class A-1A Certificates are issuable only as registered Certificates in denominations of $25,000
Original Principal Amount and integral multiples of $1,000. As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth, Class A-1A Certificates are exchangeable for new Class A-1A Certificates
of authorized denominations evidencing the same aggregate principal amount. 
  
 The Trustee and any agent thereof may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the Trustee or any such agent shall be affected by notice to the
contrary. 
  

 A-1-5 

 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed on behalf of the Trust.

  

			
	 JPMORGAN CHASE BANK,
     NATIONAL ASSOCIATION, not in its individual
     capacity, but solely in its capacity as
Trustee

		
	By:	 	  

	Name:	 	 
	Title:	 	 

  

			
	Trustee Authentication
	
	 JPMORGAN CHASE BANK,
     NATIONAL ASSOCIATION, not in its individual
     capacity, but solely in its capacity as
Trustee

		
	By:	 	  

	Name:	 	 
	Title:	 	 

  

 A-1-6 

 Exhibit A-2 
  
 Form of Class A-2A Certificate 
  
 NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2005-3 
 HOME EQUITY LOAN ASSET-BACKED CERTIFICATE 
 CLASS A-2A CERTIFICATE 
  
 Comprised of a Certificate Representing 
 Certain Interests Relating to a Pool of 
 Mortgage Loans The Mortgage Loans are Serviced by 
  
 NOVASTAR MORTGAGE, INC., as Servicer 
  
 Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation (“DTC”), to the Trust or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. 
  
 (This certificate does not represent an interest in, or an obligation of, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar
Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Financial, Inc., NovaStar Capital, Inc. or any of their subsidiaries and affiliates. This certificate is comprised of a Certificate representing a fractional ownership interest in
distributions in certain Accounts created pursuant to the Pooling and Servicing Agreement and certain other rights relating thereto and is payable only from amounts received by the Trustee relating to the Mortgage Loans and other assets held in the
Trust Fund.) 
  

					
	No.: A-2A	  	Date: September 22, 2005	  	CUSIP: 66987X GT 6
			
	 Original Principal Balance:
 $367,000,000
	  	 Registered Owner:
 CEDE & CO.
	  	 Final Scheduled Distribution
 Date: January 25,
2036

			
	Percentage Interest: 100%	  	 Pass-Through Rate:
 LIBOR + 0.1300%
	  	 

  
 The registered owner
named above is the registered owner of a fractional interest in (i) each Group II Mortgage Loan identified on the Mortgage Loan Schedule attached as Exhibit B to that certain Pooling and Servicing Agreement dated as of September 1, 2005
(the “Pooling and Servicing Agreement”) by and among NovaStar Mortgage Funding Corporation, as the company (the “Company”), JPMorgan Chase Bank, National Association, as trustee (the “Trustee”), J.P. Morgan Trust
Company, National Association, as co-trustee (the “Co-Trustee”), Wachovia Bank, National Association, as the custodian (the “Custodian”), and NovaStar Mortgage, Inc. as servicer (the “Servicer”) and as seller (the
“Seller”), including the related Cut-off Date Principal Balance, all interest accruing thereon on and after the Cut-off Date and all 

 collections in respect of interest and principal due after the Cut-off Date; (ii) property which secured each such
Mortgage Loan and which has been acquired by foreclosure or deed in lieu of foreclosure; (iii) the Company’s interest in any insurance policies in respect of such Mortgage Loans; (iv) all proceeds of any of the foregoing; (v) the
rights of the Company under the Purchase Agreement and (vi) all other assets included or to be included in the Trust Fund. Such assignment includes all interest and principal due to the Company or the Servicer after the Cut-off Date with
respect to the Mortgage Loans. 
  
 The Original Principal Amount
set forth above is equal to the product of (i) the Percentage Interest represented by this Certificate and (ii) the aggregate Original Principal Amount of the Class A-2A Certificates on September 22, 2005 which aggregate amount
was $367,000,000. The owner hereof is entitled to principal payments on each Distribution Date, which will fully amortize such Original Principal Amount over the period from the date of initial delivery hereof to the final Distribution Date of the
Class A-2A Certificates. Therefore, the actual outstanding principal amount of this Certificate, on any date subsequent to October 25, 2005 (the first Distribution Date) will be less than the Original Principal Amount set forth above.

  
 In order to receive the final distribution hereon, the owner
hereof is required to present this Certificate to the Trustee. The Pooling and Servicing Agreement provides that, in any event, upon the making of the final distribution due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement. 
  
 SOLELY FOR
FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN INTEREST IN A CLASS OF “REGULAR INTERESTS” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT” (“REMIC”) AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G
AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS (SECTIONS 860A THROUGH 860G) OF THE CODE. 
  
 THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO
DEBT OF ANY PERSON IS REPRESENTED HEREBY (OTHER THAN AS REQUIRED FOR FEDERAL INCOME TAX PURPOSES). 
  
 NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY. 
  
 This Certificate
is one of a Class of duly-authorized Certificates designated as NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3, Class A-2A Certificates (the “Class A-2A Certificates”) and issued under and subject to the terms,
provisions and conditions of the Pooling and Servicing Agreement, to which the owner of this Certificate, by virtue of acceptance hereof assents, and is bound. Also issued under the Pooling and Servicing Agreement are the Class A-1A
Certificates, Class A-2B Certificates, Class A-2C Certificates, Class A-2D Certificates, Class M-1 Certificates, Class M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates, Class M-6 Certificates,
Class M-7 Certificates, Class M-8 Certificates, Class M-9 Certificates, Class M-10 Certificates, Class M-11 Certificates, 
  

 A-2-2 

 Class M-12 Certificates, Class M-11 DSI Certificates, Class M-12 DSI Certificates, Class I-1 Certificates, Class I-2
Certificates, Class I-3 Certificates, Class C Certificates, and Class R Certificates, and all such Certificates are collectively referred to as the “Certificates”. Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement. 
  
 On the 25th day of each month, or, if such day is not a Business Day, then the next succeeding Business Day (each such day being a “Distribution Date”) commencing October 25, 2005, the owners of the Class A-2A
Certificates as of the close of business on the business day immediately preceding such Distribution Date (the “Record Date”) will be entitled to the distribution described in Article IV of the Pooling and Servicing Agreement, relating to
such Distribution Date. Distributions will be made in immediately available funds to such owners, by wire transfer or by check mailed to the address of the person entitled thereto as it appears on the Certificate Register. 
  
 Each owner of record of a Class A-2A Certificate will be entitled to
receive such owner’s Percentage Interest in the amounts distributed on such Distribution Date to the owners of the Class A-2A Certificates. The Percentage Interest of each Class A-2A Certificate as of any date of determination will be
equal to the percentage obtained by dividing the Original Principal Amount set forth on such Class A-2A Certificate by $367,000,000. 
  
 The Trustee is required to duly and punctually pay distributions with respect to this Certificate in accordance with the terms hereof and the Pooling and
Servicing Agreement. Amounts properly withheld under the Code or applicable to any owner shall be considered as having been paid by the Trustee to such owner for all purposes of the Pooling and Servicing Agreement. 
  
 The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling
and Servicing Agreement. The Pooling and Servicing Agreement permits the Servicer to enter into Sub-Servicing Agreements with certain institutions eligible for appointment as Sub-Servicers for the servicing and administration of certain Mortgage
Loans. No appointment of any Sub-Servicer shall release the Servicer from any of its obligations under the Pooling and Servicing Agreement. 
  
 This Certificate does not represent a deposit or other obligation of, or an interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Capital, Inc., NovaStar Financial Inc., or any of their subsidiaries and affiliates and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the
Government National Mortgage Association, or any other governmental agency. This Certificate is limited in right of payment to certain collections and recoveries relating to the Mortgage Loans and amounts on deposit in the Accounts (except as
otherwise provided in the Pooling and Servicing Agreement) all as more specifically set forth hereinabove and in the Pooling and Servicing Agreement. 
  
 No owner shall have any right to institute any proceeding, judicial or otherwise, with respect to the Pooling and Servicing Agreement for the appointment
of a receiver or trustee, or for any other remedy under the Pooling and Servicing Agreement except in compliance with the terms thereof. 
  

 A-2-3 

 Notwithstanding any other provisions in the Pooling and Servicing Agreement, the owner of any Certificate
shall have the right which is absolute and unconditional to receive distributions to the extent provided in the Pooling and Servicing Agreement with respect to such Certificate or to institute suit for the enforcement of any such distribution, and
such right shall not be impaired without the consent of such owner. 
  
 The Pooling and Servicing Agreement will terminate upon notice to the Trustee upon the earliest of (i) the Distribution Date on which the Certificate Principal Balances of the Regular Certificates have been reduced to zero,
(ii) the final payment or other liquidation of the last Mortgage Loan in the Trust, (iii) the optional purchase by the Servicer of the Mortgage Loans as described below, (iv) the Distribution Date in January 2036 and (v) at any
time when a Qualified Liquidation of the Master REMIC and REMIC I, REMIC II, REMIC III and REMIC IV is effected pursuant to the Pooling and Servicing Agreement. In addition, under certain circumstances relating to the qualification of either the
Master REMIC or any of REMIC I, REMIC II, REMIC III or REMIC IV as a REMIC under the Code, the Mortgage Loans may be sold, thereby affecting the early retirement of the Certificates. Notwithstanding the foregoing, in no event shall the Trust hereby
continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James, living on the date of the Pooling and Servicing Agreement.

  
 The Servicer may, at its option, terminate the Pooling and
Servicing Agreement on any date on which the aggregate of the Principal Balances of the Mortgage Loans on such date is equal to or less than 10% of the Maximum Collateral Amount, by purchasing, on the next succeeding Distribution Date, all of the
outstanding Mortgage Loans and REO Properties at a price equal to the greater of the Principal Balance of the Mortgage Loans and REO Properties or the market value of the Mortgage Loans and REO Properties, in each case plus accrued and unpaid
interest thereon at the weighted average of the Mortgage Rates through the end of the Due Period preceding the final Distribution Date plus unreimbursed Servicing Advances, Advances, any unpaid Servicing Fees allocable to such Mortgage Loans and REO
Properties and any accrued and unpaid Available Funds Cap Shortfall Amount and Available Funds Cap Carryforward Amount and any unpaid amount due the Trustee, the Swap Counterparties, the Cap Counterparties and the Custodian under the Pooling and
Servicing Agreement. 
  
 The Trustee shall give written notice of
termination of the Pooling and Servicing Agreement to each owner in the manner set forth therein. 
  
 As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the office designated as the location of the Certificate Register, and thereupon one or more new certificates of like
class, tenor and Percentage Interest will be issued to the designated transferee or transferees. 
  
 The Trustee is required to furnish certain information on each Distribution Date to the owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement. 
  
 The Class A-2A Certificates are
issuable only as registered Certificates in denominations of $25,000 Original Principal Amount and integral multiples of $1,000. As 
  

 A-2-4 

 provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth, Class A-2A
Certificates are exchangeable for new Class A-2A Certificates of authorized denominations evidencing the same aggregate principal amount. 
  
 The Trustee and any agent thereof may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the
Trustee or any such agent shall be affected by notice to the contrary. 
  

 A-2-5 

 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed on behalf of the Trust.

  

			
	 JPMORGAN CHASE BANK,
     NATIONAL ASSOCIATION, not in its individual
     capacity, but solely in its capacity as
Trustee

		
	By:	 	  

	Name:	 	 
	Title:	 	 

  

			
	Trustee Authentication
	
	 JPMORGAN CHASE BANK,
     NATIONAL ASSOCIATION, not in its individual
     capacity, but solely in its capacity as
Trustee

		
	By:	 	  

	Name:	 	 
	Title:	 	 

  

 A-2-6 

 Exhibit A-3 
  
 Form of Class A-2B Certificate 
  
 NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2005-3 
 HOME EQUITY LOAN ASSET-BACKED CERTIFICATE 
 CLASS A-2B CERTIFICATE 
  
 Comprised of a Certificate Representing 
 Certain Interests Relating to a Pool of 
 Mortgage Loans The Mortgage Loans are Serviced by 
  
 NOVASTAR MORTGAGE, INC., as Servicer 
  
 Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation (“DTC”), to the Trust or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. 
  
 (This certificate does not represent an interest in, or an obligation of, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar
Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Financial, Inc., NovaStar Capital, Inc. or any of their subsidiaries and affiliates. This certificate is comprised of a Certificate representing a fractional ownership interest in
distributions in certain Accounts created pursuant to the Pooling and Servicing Agreement and certain other rights relating thereto and is payable only from amounts received by the Trustee relating to the Mortgage Loans and other assets held in the
Trust Fund.) 
  

					
	No.: A-2B	  	Date: September 22, 2005	  	CUSIP: 66987X GU 3
			
	 Original Principal Balance:
 $236,000,000
	  	 Registered Owner:
 CEDE & CO.
	  	 Final Scheduled Distribution
 Date: January 25,
2036

			
	Percentage Interest: 100%	  	 Pass-Through Rate:
 LIBOR + 0.1900%
	  	 

  
 The registered owner
named above is the registered owner of a fractional interest in (i) each Group II Mortgage Loan identified on the Mortgage Loan Schedule attached as Exhibit B to that certain Pooling and Servicing Agreement dated as of September 1, 2005
(the “Pooling and Servicing Agreement”) by and among NovaStar Mortgage Funding Corporation, as the company (the “Company”), JPMorgan Chase Bank, National Association, as trustee (the “Trustee”), J.P. Morgan Trust
Company, National Association, as co-trustee (the “Co-Trustee”), Wachovia Bank, National Association, as the custodian (the “Custodian”), and NovaStar Mortgage, Inc. as servicer (the “Servicer”) and as seller (the
“Seller”), including the related Cut-off Date Principal Balance, all interest accruing thereon on and after the Cut-off Date and all 

 collections in respect of interest and principal due after the Cut-off Date; (ii) property which secured each such
Mortgage Loan and which has been acquired by foreclosure or deed in lieu of foreclosure; (iii) the Company’s interest in any insurance policies in respect of such Mortgage Loans; (iv) all proceeds of any of the foregoing; (v) the
rights of the Company under the Purchase Agreement and (vi) all other assets included or to be included in the Trust Fund. Such assignment includes all interest and principal due to the Company or the Servicer after the Cut-off Date with
respect to the Mortgage Loans. 
  
 The Original Principal Amount
set forth above is equal to the product of (i) the Percentage Interest represented by this Certificate and (ii) the aggregate Original Principal Amount of the Class A-2B Certificates on September 22, 2005 which aggregate amount
was $236,000,000. The owner hereof is entitled to principal payments on each Distribution Date, which will fully amortize such Original Principal Amount over the period from the date of initial delivery hereof to the final Distribution Date of the
Class A-2B Certificates. Therefore, the actual outstanding principal amount of this Certificate, on any date subsequent to October 25, 2005 (the first Distribution Date) will be less than the Original Principal Amount set forth above.

  
 In order to receive the final distribution hereon, the owner
hereof is required to present this Certificate to the Trustee. The Pooling and Servicing Agreement provides that, in any event, upon the making of the final distribution due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement. 
  
 SOLELY FOR
FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN INTEREST IN A CLASS OF “REGULAR INTERESTS” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT” (“REMIC”) AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G
AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS (SECTIONS 860A THROUGH 860G) OF THE CODE. 
  
 THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO
DEBT OF ANY PERSON IS REPRESENTED HEREBY (OTHER THAN AS REQUIRED FOR FEDERAL INCOME TAX PURPOSES). 
  
 NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY. 
  
 This Certificate
is one of a Class of duly-authorized Certificates designated as NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3, Class A-2B Certificates (the “Class A-2B Certificates”) and issued under and subject to the terms,
provisions and conditions of the Pooling and Servicing Agreement, to which the owner of this Certificate, by virtue of acceptance hereof assents, and is bound. Also issued under the Pooling and Servicing Agreement are the Class A-1A
Certificates, Class A-2A Certificates, Class A-2C Certificates, Class A-2D Certificates, Class M-1 Certificates, Class M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates, Class M-6 Certificates,
Class M-7 Certificates, Class M-8 Certificates, Class M-9 Certificates, Class M-10 Certificates, Class M-11 Certificates, 
  

 A-3-2 

 Class M-12 Certificates, Class M-11 DSI Certificates, Class M-12 DSI Certificates, Class I-1 Certificates, Class I-2
Certificates, Class I-3 Certificates, Certificates, Class C Certificates, and Class R Certificates, and all such Certificates are collectively referred to as the “Certificates”. Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing Agreement. 
  
 On the 25th day of each month, or, if such day is not a Business Day, then the next succeeding Business Day (each such day being a “Distribution Date”) commencing October 25, 2005, the owners of the
Class A-2B Certificates as of the close of business on the business day immediately preceding such Distribution Date (the “Record Date”) will be entitled to the distribution described in Article IV of the Pooling and Servicing
Agreement, relating to such Distribution Date. Distributions will be made in immediately available funds to such owners, by wire transfer or by check mailed to the address of the person entitled thereto as it appears on the Certificate Register.

  
 Each owner of record of a Class A-2B Certificate will be
entitled to receive such owner’s Percentage Interest in the amounts distributed on such Distribution Date to the owners of the Class A-2B Certificates. The Percentage Interest of each Class A-2B Certificate as of any date of
determination will be equal to the percentage obtained by dividing the Original Principal Amount set forth on such Class A-2B Certificate by $236,000,000. 
  

The Trustee is required to duly and punctually pay distributions with respect to this Certificate in accordance with the terms hereof and the Pooling
and Servicing Agreement. Amounts properly withheld under the Code or applicable to any owner shall be considered as having been paid by the Trustee to such owner for all purposes of the Pooling and Servicing Agreement. 
  
 The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling
and Servicing Agreement. The Pooling and Servicing Agreement permits the Servicer to enter into Sub-Servicing Agreements with certain institutions eligible for appointment as Sub-Servicers for the servicing and administration of certain Mortgage
Loans. No appointment of any Sub-Servicer shall release the Servicer from any of its obligations under the Pooling and Servicing Agreement. 
  
 This Certificate does not represent a deposit or other obligation of, or an interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Capital, Inc., NovaStar Financial Inc., or any of their subsidiaries and affiliates and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the
Government National Mortgage Association, or any other governmental agency. This Certificate is limited in right of payment to certain collections and recoveries relating to the Mortgage Loans and amounts on deposit in the Accounts (except as
otherwise provided in the Pooling and Servicing Agreement) all as more specifically set forth hereinabove and in the Pooling and Servicing Agreement. 
  
 No owner shall have any right to institute any proceeding, judicial or otherwise, with respect to the Pooling and Servicing Agreement for the appointment
of a receiver or trustee, or for any other remedy under the Pooling and Servicing Agreement except in compliance with the terms thereof. 
  

 A-3-3 

 Notwithstanding any other provisions in the Pooling and Servicing Agreement, the owner of any Certificate
shall have the right which is absolute and unconditional to receive distributions to the extent provided in the Pooling and Servicing Agreement with respect to such Certificate or to institute suit for the enforcement of any such distribution, and
such right shall not be impaired without the consent of such owner. 
  
 The Pooling and Servicing Agreement will terminate upon notice to the Trustee upon the earliest of (i) the Distribution Date on which the Certificate Principal Balances of the Regular Certificates have been reduced to zero,
(ii) the final payment or other liquidation of the last Mortgage Loan in the Trust, (iii) the optional purchase by the Servicer of the Mortgage Loans as described below, (iv) the Distribution Date in January 2036 and (v) at any
time when a Qualified Liquidation of the Master REMIC and REMIC I, REMIC II, REMIC III and REMIC IV is effected pursuant to the Pooling and Servicing Agreement. In addition, under certain circumstances relating to the qualification of either the
Master REMIC or any of REMIC I, REMIC II, REMIC III or REMIC IV as a REMIC under the Code, the Mortgage Loans may be sold, thereby affecting the early retirement of the Certificates. Notwithstanding the foregoing, in no event shall the Trust hereby
continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James, living on the date of the Pooling and Servicing Agreement.

  
 The Servicer may, at its option, terminate the Pooling and
Servicing Agreement on any date on which the aggregate of the Principal Balances of the Mortgage Loans on such date is equal to or less than 10% of the Maximum Collateral Amount, by purchasing, on the next succeeding Distribution Date, all of the
outstanding Mortgage Loans and REO Properties at a price equal to the greater of the Principal Balance of the Mortgage Loans and REO Properties or the market value of the Mortgage Loans and REO Properties, in each case plus accrued and unpaid
interest thereon at the weighted average of the Mortgage Rates through the end of the Due Period preceding the final Distribution Date plus unreimbursed Servicing Advances, Advances, any unpaid Servicing Fees allocable to such Mortgage Loans and REO
Properties and any accrued and unpaid Available Funds Cap Shortfall Amount and Available Funds Cap Carryforward Amount and any unpaid amount due the Trustee, the Swap Counterparties, the Cap Counterparties and the Custodian under the Pooling and
Servicing Agreement. 
  
 The Trustee shall give written notice of
termination of the Pooling and Servicing Agreement to each owner in the manner set forth therein. 
  
 As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the office designated as the location of the Certificate Register, and thereupon one or more new certificates of like
class, tenor and Percentage Interest will be issued to the designated transferee or transferees. 
  
 The Trustee is required to furnish certain information on each Distribution Date to the owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement. 
  
 The Class A-2B Certificates are
issuable only as registered Certificates in denominations of $25,000 Original Principal Amount and integral multiples of $1,000. As 
  

 A-3-4 

 provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth, Class A-2B
Certificates are exchangeable for new Class A-2B Certificates of authorized denominations evidencing the same aggregate principal amount. 
  
 The Trustee and any agent thereof may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the
Trustee or any such agent shall be affected by notice to the contrary. 
  

 A-3-5 

 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed on behalf of the Trust.

  

			
	 JPMORGAN CHASE BANK,
     NATIONAL ASSOCIATION, not in its individual
     capacity, but solely in its capacity as
Trustee

		
	By:	 	  

	Name:	 	 
	Title:	 	 

  

			
	Trustee Authentication
	
	 JPMORGAN CHASE BANK,
     NATIONAL ASSOCIATION, not in its individual
     capacity, but solely in its capacity as
Trustee

		
	By:	 	  

	Name:	 	 
	Title:	 	 

  

 A-3-6 

 Exhibit A-4 
  
 Form of Class A-2C Certificate 
  
 NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2005-3 
 HOME EQUITY LOAN ASSET-BACKED CERTIFICATE 
 CLASS A-2C CERTIFICATE 
  
 Comprised of a Certificate Representing 
 Certain Interests Relating to a Pool of 
 Mortgage Loans The Mortgage Loans are Serviced by 
  
 NOVASTAR MORTGAGE, INC., as Servicer 
  
 Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation (“DTC”), to the Trust or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. 
  
 (This certificate does not represent an interest in, or an obligation of, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar
Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Financial, Inc., NovaStar Capital, Inc. or any of their subsidiaries and affiliates. This certificate is comprised of a Certificate representing a fractional ownership interest in
distributions in certain Accounts created pursuant to the Pooling and Servicing Agreement and certain other rights relating thereto and is payable only from amounts received by the Trustee relating to the Mortgage Loans and other assets held in the
Trust Fund.) 
  

					
	No.: A-2C	  	Date: September 22, 2005	  	CUSIP: 66987X GV 1
			
	 Original Principal Balance:
 $227,550,000
	  	 Registered Owner:
 CEDE & CO.
	  	 Final Scheduled Distribution
 Date: January 25,
2036

			
	Percentage Interest: 100%	  	 Pass-Through Rate:
 LIBOR + 0.2800%
	  	 

  
 The registered owner
named above is the registered owner of a fractional interest in (i) each Group II Mortgage Loan identified on the Mortgage Loan Schedule attached as Exhibit B to that certain Pooling and Servicing Agreement dated as of September 1, 2005
(the “Pooling and Servicing Agreement”) by and among NovaStar Mortgage Funding Corporation, as the company (the “Company”), JPMorgan Chase Bank, National Association, as trustee (the “Trustee”), J.P. Morgan Trust
Company, National Association, as co-trustee (the “Co-Trustee”), Wachovia Bank, National Association, as the custodian (the “Custodian”), and NovaStar Mortgage, Inc. as servicer (the “Servicer”) and as seller (the
“Seller”), including the related Cut-off Date Principal Balance, all interest accruing thereon on and after the Cut-off Date and all 

 collections in respect of interest and principal due after the Cut-off Date; (ii) property which secured each such
Mortgage Loan and which has been acquired by foreclosure or deed in lieu of foreclosure; (iii) the Company’s interest in any insurance policies in respect of such Mortgage Loans; (iv) all proceeds of any of the foregoing; (v) the
rights of the Company under the Purchase Agreement and (vi) all other assets included or to be included in the Trust Fund. Such assignment includes all interest and principal due to the Company or the Servicer after the Cut-off Date with
respect to the Mortgage Loans. 
  
 The Original Principal Amount
set forth above is equal to the product of (i) the Percentage Interest represented by this Certificate and (ii) the aggregate Original Principal Amount of the Class A-2C Certificates on September 22, 2005 which aggregate amount
was $227,550,000. The owner hereof is entitled to principal payments on each Distribution Date, which will fully amortize such Original Principal Amount over the period from the date of initial delivery hereof to the final Distribution Date of the
Class A-2C Certificates. Therefore, the actual outstanding principal amount of this Certificate, on any date subsequent to October 25, 2005 (the first Distribution Date) will be less than the Original Principal Amount set forth above.

  
 In order to receive the final distribution hereon, the owner
hereof is required to present this Certificate to the Trustee. The Pooling and Servicing Agreement provides that, in any event, upon the making of the final distribution due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement. 
  
 SOLELY FOR
FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN INTEREST IN A CLASS OF “REGULAR INTERESTS” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT” (“REMIC”) AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G
AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS (SECTIONS 860A THROUGH 860G) OF THE CODE. 
  
 THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO
DEBT OF ANY PERSON IS REPRESENTED HEREBY (OTHER THAN AS REQUIRED FOR FEDERAL INCOME TAX PURPOSES). 
  
 NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY. 
  
 This Certificate
is one of a Class of duly-authorized Certificates designated as NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3, Class A-2C Certificates (the “Class A-2C Certificates”) and issued under and subject to the terms,
provisions and conditions of the Pooling and Servicing Agreement, to which the owner of this Certificate, by virtue of acceptance hereof assents, and is bound. Also issued under the Pooling and Servicing Agreement are the Class A-1A
Certificates, Class A-2A Certificates, Class A-2B Certificates, Class A-2D Certificates, Class M-1 Certificates, Class M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates, Class M-6 Certificates,
Class M-7 Certificates, Class M-8 Certificates, Class M-9 Certificates, Class M-10 Certificates, Class M-11 Certificates, 
  

 A-4-2 

 Class M-12 Certificates, Class M-11 DSI Certificates, Class M-12 DSI Certificates, Class I-1 Certificates, Class I-2
Certificates, Class I-3 Certificates, Certificates, Class C Certificates, and Class R Certificates, and all such Certificates are collectively referred to as the “Certificates”. Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing Agreement. 
  
 On the 25th day of each month, or, if such day is not a Business Day, then the next succeeding Business Day (each such day being a “Distribution Date”) commencing October 25, 2005, the owners of the
Class A-2C Certificates as of the close of business on the business day immediately preceding such Distribution Date (the “Record Date”) will be entitled to the distribution described in Article IV of the Pooling and Servicing
Agreement, relating to such Distribution Date. Distributions will be made in immediately available funds to such owners, by wire transfer or by check mailed to the address of the person entitled thereto as it appears on the Certificate Register.

  
 Each owner of record of a Class A-2C Certificate will be
entitled to receive such owner’s Percentage Interest in the amounts distributed on such Distribution Date to the owners of the Class A-2C Certificates. The Percentage Interest of each Class A-2C Certificate as of any date of
determination will be equal to the percentage obtained by dividing the Original Principal Amount set forth on such Class A-2C Certificate by $227,550,000. 
  

The Trustee is required to duly and punctually pay distributions with respect to this Certificate in accordance with the terms hereof and the Pooling
and Servicing Agreement. Amounts properly withheld under the Code or applicable to any owner shall be considered as having been paid by the Trustee to such owner for all purposes of the Pooling and Servicing Agreement. 
  
 The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling
and Servicing Agreement. The Pooling and Servicing Agreement permits the Servicer to enter into Sub-Servicing Agreements with certain institutions eligible for appointment as Sub-Servicers for the servicing and administration of certain Mortgage
Loans. No appointment of any Sub-Servicer shall release the Servicer from any of its obligations under the Pooling and Servicing Agreement. 
  
 This Certificate does not represent a deposit or other obligation of, or an interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Capital, Inc., NovaStar Financial Inc., or any of their subsidiaries and affiliates and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the
Government National Mortgage Association, or any other governmental agency. This Certificate is limited in right of payment to certain collections and recoveries relating to the Mortgage Loans and amounts on deposit in the Accounts (except as
otherwise provided in the Pooling and Servicing Agreement) all as more specifically set forth hereinabove and in the Pooling and Servicing Agreement. 
  
 No owner shall have any right to institute any proceeding, judicial or otherwise, with respect to the Pooling and Servicing Agreement for the appointment
of a receiver or trustee, or for any other remedy under the Pooling and Servicing Agreement except in compliance with the terms thereof. 
  

 A-4-3 

 Notwithstanding any other provisions in the Pooling and Servicing Agreement, the owner of any Certificate
shall have the right which is absolute and unconditional to receive distributions to the extent provided in the Pooling and Servicing Agreement with respect to such Certificate or to institute suit for the enforcement of any such distribution, and
such right shall not be impaired without the consent of such owner. 
  
 The Pooling and Servicing Agreement will terminate upon notice to the Trustee upon the earliest of (i) the Distribution Date on which the Certificate Principal Balances of the Regular Certificates have been reduced to zero,
(ii) the final payment or other liquidation of the last Mortgage Loan in the Trust, (iii) the optional purchase by the Servicer of the Mortgage Loans as described below, (iv) the Distribution Date in January 2036 and (v) at any
time when a Qualified Liquidation of the Master REMIC and REMIC I, REMIC II, REMIC III and REMIC IV is effected pursuant to the Pooling and Servicing Agreement. In addition, under certain circumstances relating to the qualification of either the
Master REMIC or any of REMIC I, REMIC II, REMIC III or REMIC IV as a REMIC under the Code, the Mortgage Loans may be sold, thereby affecting the early retirement of the Certificates. Notwithstanding the foregoing, in no event shall the Trust hereby
continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James, living on the date of the Pooling and Servicing Agreement.

  
 The Servicer may, at its option, terminate the Pooling and
Servicing Agreement on any date on which the aggregate of the Principal Balances of the Mortgage Loans on such date is equal to or less than 10% of the Maximum Collateral Amount, by purchasing, on the next succeeding Distribution Date, all of the
outstanding Mortgage Loans and REO Properties at a price equal to the greater of the Principal Balance of the Mortgage Loans and REO Properties or the market value of the Mortgage Loans and REO Properties, in each case plus accrued and unpaid
interest thereon at the weighted average of the Mortgage Rates through the end of the Due Period preceding the final Distribution Date plus unreimbursed Servicing Advances, Advances, any unpaid Servicing Fees allocable to such Mortgage Loans and REO
Properties and any accrued and unpaid Available Funds Cap Shortfall Amount and Available Funds Cap Carryforward Amount and any unpaid amount due the Trustee, the Swap Counterparties, the Cap Counterparties and the Custodian under the Pooling and
Servicing Agreement. 
  
 The Trustee shall give written notice of
termination of the Pooling and Servicing Agreement to each owner in the manner set forth therein. 
  
 As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the office designated as the location of the Certificate Register, and thereupon one or more new certificates of like
class, tenor and Percentage Interest will be issued to the designated transferee or transferees. 
  
 The Trustee is required to furnish certain information on each Distribution Date to the owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement. 
  
 The Class A-2C Certificates are
issuable only as registered Certificates in denominations of $25,000 Original Principal Amount and integral multiples of $1,000. As 
  

 A-4-4 

 provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth, Class A-2C
Certificates are exchangeable for new Class A-2C Certificates of authorized denominations evidencing the same aggregate principal amount. 
  
 The Trustee and any agent thereof may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the
Trustee or any such agent shall be affected by notice to the contrary. 
  

 A-4-5 

 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed on behalf of the Trust.

  

			
	 JPMORGAN CHASE BANK,
     NATIONAL ASSOCIATION, not in its individual
     capacity, but solely in its capacity as
Trustee

		
	By:	 	  

	Name:	 	 
	Title:	 	 

  

			
	Trustee Authentication
	
	 JPMORGAN CHASE BANK,
     NATIONAL ASSOCIATION, not in its individual
     capacity, but solely in its capacity as
Trustee

		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 

  

 A-4-6 

 Exhibit A-5 
  
 Form of Class A-2D Certificate 
  
 NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2005-3 
 HOME EQUITY LOAN ASSET-BACKED CERTIFICATE 
 CLASS A-2D CERTIFICATE 
  
 Comprised of a Certificate Representing 
 Certain Interests Relating to a Pool of 
 Mortgage Loans The Mortgage Loans are Serviced by 
  
 NOVASTAR MORTGAGE, INC., as Servicer 
  
 Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation (“DTC”), to the Trust or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. 
  
 (This certificate does not represent an interest in, or an obligation of, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar
Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Financial, Inc., NovaStar Capital, Inc. or any of their subsidiaries and affiliates. This certificate is comprised of a Certificate representing a fractional ownership interest in
distributions in certain Accounts created pursuant to the Pooling and Servicing Agreement and certain other rights relating thereto and is payable only from amounts received by the Trustee relating to the Mortgage Loans and other assets held in the
Trust Fund.) 
  

					
	No.: A-2D	 	Date: September 22, 2005	 	CUSIP: 66987X GW 9
			
	Original Principal Balance: $78,185,000	 	Registered Owner: CEDE & CO.	 	Final Scheduled Distribution Date: January 25, 2036
			
	Percentage Interest: 100%	 	 Pass-Through Rate:
 LIBOR + 0.3700%
	 	 

  
 The registered owner
named above is the registered owner of a fractional interest in (i) each Group II Mortgage Loan identified on the Mortgage Loan Schedule attached as Exhibit B to that certain Pooling and Servicing Agreement dated as of September 1, 2005
(the “Pooling and Servicing Agreement”) by and among NovaStar Mortgage Funding Corporation, as the company (the “Company”), JPMorgan Chase Bank, National Association, as trustee (the “Trustee”), J.P. Morgan Trust
Company, National Association, as co-trustee (the “Co-Trustee”), Wachovia Bank, National Association, as the custodian (the “Custodian”), and NovaStar Mortgage, Inc. as servicer (the “Servicer”) and as seller (the
“Seller”), including the related Cut-off Date Principal Balance, all interest accruing thereon on and after the Cut-off Date and all 

 collections in respect of interest and principal due after the Cut-off Date; (ii) property which secured each such
Mortgage Loan and which has been acquired by foreclosure or deed in lieu of foreclosure; (iii) the Company’s interest in any insurance policies in respect of such Mortgage Loans; (iv) all proceeds of any of the foregoing; (v) the
rights of the Company under the Purchase Agreement and (vi) all other assets included or to be included in the Trust Fund. Such assignment includes all interest and principal due to the Company or the Servicer after the Cut-off Date with
respect to the Mortgage Loans. 
  
 The Original Principal Amount
set forth above is equal to the product of (i) the Percentage Interest represented by this Certificate and (ii) the aggregate Original Principal Amount of the Class A-2D Certificates on September 22, 2005 which aggregate amount
was $78,185,000. The owner hereof is entitled to principal payments on each Distribution Date, which will fully amortize such Original Principal Amount over the period from the date of initial delivery hereof to the final Distribution Date of the
Class A-2D Certificates. Therefore, the actual outstanding principal amount of this Certificate, on any date subsequent to October 25, 2005 (the first Distribution Date) will be less than the Original Principal Amount set forth above.

  
 In order to receive the final distribution hereon, the owner
hereof is required to present this Certificate to the Trustee. The Pooling and Servicing Agreement provides that, in any event, upon the making of the final distribution due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement. 
  
 SOLELY FOR
FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN INTEREST IN A CLASS OF “REGULAR INTERESTS” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT” (“REMIC”) AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G
AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS (SECTIONS 860A THROUGH 860G) OF THE CODE. 
  
 THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO
DEBT OF ANY PERSON IS REPRESENTED HEREBY (OTHER THAN AS REQUIRED FOR FEDERAL INCOME TAX PURPOSES). 
  
 NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY. 
  
 This Certificate
is one of a Class of duly-authorized Certificates designated as NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3, Class A-2D Certificates (the “Class A-2D Certificates”) and issued under and subject to the terms,
provisions and conditions of the Pooling and Servicing Agreement, to which the owner of this Certificate, by virtue of acceptance hereof assents, and is bound. Also issued under the Pooling and Servicing Agreement are the Class A-1A
Certificates, Class A-2A Certificates, Class A-2B Certificates, Class A-2C Certificates, Class M-1 Certificates, Class M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates, Class M-6 Certificates,
Class M-7 Certificates, Class M-8 Certificates, Class M-9 Certificates, Class M-10 Certificates, Class M-11 Certificates, 
  

 A-5-2 

 Class M-12 Certificates, Class M-11 DSI Certificates, Class M-12 DSI Certificates, Class I-1 Certificates, Class I-2
Certificates, Class I-3 Certificates, Certificates, Class C Certificates, and Class R Certificates, and all such Certificates are collectively referred to as the “Certificates”. Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing Agreement. 
  
 On the 25th day of each month, or, if such day is not a Business Day, then the next succeeding Business Day (each such day being a “Distribution Date”) commencing October 25, 2005, the owners of the
Class A-2D Certificates as of the close of business on the business day immediately preceding such Distribution Date (the “Record Date”) will be entitled to the distribution described in Article IV of the Pooling and Servicing
Agreement, relating to such Distribution Date. Distributions will be made in immediately available funds to such owners, by wire transfer or by check mailed to the address of the person entitled thereto as it appears on the Certificate Register.

  
 Each owner of record of a Class A-2D Certificate will be
entitled to receive such owner’s Percentage Interest in the amounts distributed on such Distribution Date to the owners of the Class A-2D Certificates. The Percentage Interest of each Class A-2D Certificate as of any date of
determination will be equal to the percentage obtained by dividing the Original Principal Amount set forth on such Class A-2D Certificate by $78,185,000. 
  

The Trustee is required to duly and punctually pay distributions with respect to this Certificate in accordance with the terms hereof and the Pooling
and Servicing Agreement. Amounts properly withheld under the Code or applicable to any owner shall be considered as having been paid by the Trustee to such owner for all purposes of the Pooling and Servicing Agreement. 
  
 The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling
and Servicing Agreement. The Pooling and Servicing Agreement permits the Servicer to enter into Sub-Servicing Agreements with certain institutions eligible for appointment as Sub-Servicers for the servicing and administration of certain Mortgage
Loans. No appointment of any Sub-Servicer shall release the Servicer from any of its obligations under the Pooling and Servicing Agreement. 
  
 This Certificate does not represent a deposit or other obligation of, or an interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Capital, Inc., NovaStar Financial Inc., or any of their subsidiaries and affiliates and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the
Government National Mortgage Association, or any other governmental agency. This Certificate is limited in right of payment to certain collections and recoveries relating to the Mortgage Loans and amounts on deposit in the Accounts (except as
otherwise provided in the Pooling and Servicing Agreement) all as more specifically set forth hereinabove and in the Pooling and Servicing Agreement. 
  
 No owner shall have any right to institute any proceeding, judicial or otherwise, with respect to the Pooling and Servicing Agreement for the appointment
of a receiver or trustee, or for any other remedy under the Pooling and Servicing Agreement except in compliance with the terms thereof. 
  

 A-5-3 

 Notwithstanding any other provisions in the Pooling and Servicing Agreement, the owner of any Certificate
shall have the right which is absolute and unconditional to receive distributions to the extent provided in the Pooling and Servicing Agreement with respect to such Certificate or to institute suit for the enforcement of any such distribution, and
such right shall not be impaired without the consent of such owner. 
  
 The Pooling and Servicing Agreement will terminate upon notice to the Trustee upon the earliest of (i) the Distribution Date on which the Certificate Principal Balances of the Regular Certificates have been reduced to zero,
(ii) the final payment or other liquidation of the last Mortgage Loan in the Trust, (iii) the optional purchase by the Servicer of the Mortgage Loans as described below, (iv) the Distribution Date in January 2036 and (v) at any
time when a Qualified Liquidation of the Master REMIC and REMIC I, REMIC II, REMIC III and REMIC IV is effected pursuant to the Pooling and Servicing Agreement. In addition, under certain circumstances relating to the qualification of either the
Master REMIC or any of REMIC I, REMIC II, REMIC III or REMIC IV as a REMIC under the Code, the Mortgage Loans may be sold, thereby affecting the early retirement of the Certificates. Notwithstanding the foregoing, in no event shall the Trust hereby
continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James, living on the date of the Pooling and Servicing Agreement.

  
 The Servicer may, at its option, terminate the Pooling and
Servicing Agreement on any date on which the aggregate of the Principal Balances of the Mortgage Loans on such date is equal to or less than 10% of the Maximum Collateral Amount, by purchasing, on the next succeeding Distribution Date, all of the
outstanding Mortgage Loans and REO Properties at a price equal to the greater of the Principal Balance of the Mortgage Loans and REO Properties or the market value of the Mortgage Loans and REO Properties, in each case plus accrued and unpaid
interest thereon at the weighted average of the Mortgage Rates through the end of the Due Period preceding the final Distribution Date plus unreimbursed Servicing Advances, Advances, any unpaid Servicing Fees allocable to such Mortgage Loans and REO
Properties and any accrued and unpaid Available Funds Cap Shortfall Amount and Available Funds Cap Carryforward Amount and any unpaid amount due the Trustee, the Swap Counterparties, the Cap Counterparties and the Custodian under the Pooling and
Servicing Agreement. 
  
 The Trustee shall give written notice of
termination of the Pooling and Servicing Agreement to each owner in the manner set forth therein. 
  
 As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the office designated as the location of the Certificate Register, and thereupon one or more new certificates of like
class, tenor and Percentage Interest will be issued to the designated transferee or transferees. 
  
 The Trustee is required to furnish certain information on each Distribution Date to the owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement. 
  
 The Class A-2D Certificates are
issuable only as registered Certificates in denominations of $25,000 Original Principal Amount and integral multiples of $1,000. As 
  

 A-5-4 

 provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth, Class A-2D
Certificates are exchangeable for new Class A-2D Certificates of authorized denominations evidencing the same aggregate principal amount. 
  
 The Trustee and any agent thereof may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the
Trustee or any such agent shall be affected by notice to the contrary. 
  

 A-5-5 

 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed on behalf of the Trust.

  

							
	 	 	 	 	 JPMORGAN CHASE BANK,
     NATIONAL ASSOCIATION, not in its
     individual capacity, but solely in its
     capacity as Trustee

				
	 	 	 	 	By:	 	  

	 	 	 	 	Name:	 	 
	 	 	 	 	Title:	 	 
			
	 Trustee Authentication
	 	 	 	 
			
	 JPMORGAN CHASE BANK,
     NATIONAL ASSOCIATION, not in its
     individual capacity, but solely in its
     capacity as Trustee
	 	 	 	 
				
	 By:
	 	  

	 	 	 	 
	 Name:
	 	 	 	 	 	 
	 Title:
	 	 	 	 	 	 

  

 A-5-6 

 Exhibit A-6 
  
 Form of Class M-1 Certificate 
  
 NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2005-3 
 HOME EQUITY LOAN ASSET-BACKED CERTIFICATE 
 CLASS M-1 CERTIFICATE 
  
 Comprised of a Certificate Representing 
 Certain Interests Relating to a Pool of 
 Mortgage Loans 
 The Mortgage Loans are Serviced by 
  
 NOVASTAR MORTGAGE, INC., as Servicer 
  
 Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the
Trust or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof,
Cede & Co., has an interest herein. 
  
 (This certificate
does not represent an interest in, or an obligation of, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Financial, Inc., NovaStar Capital, Inc. or any of their
subsidiaries and affiliates. This certificate is comprised of a Certificate representing a fractional ownership interest in distributions in certain Accounts created pursuant to the Pooling and Servicing Agreement and certain other rights relating
thereto and is payable only from amounts received by the Trustee relating to the Mortgage Loans and other assets held in the Trust Fund.) 
  

					
	No.: M-1	 	Date: September 22, 2005	 	CUSIP: 66987X GX 7
			
	Original Principal Balance: $70,000,000	 	Registered Owner: CEDE & CO.	 	Final Scheduled Distribution Date: January 25, 2036
			
	Percentage Interest: 100%	 	 Pass-Through Rate:
 LIBOR + 0.4500%
	 	 

  
 The registered owner
named above is the registered owner of a fractional interest in (i) each Mortgage Loan identified on the Mortgage Loan Schedule attached as Exhibit B to that certain Pooling and Servicing Agreement dated as of September 1, 2005 (the
“Pooling and Servicing Agreement”) by and among NovaStar Mortgage Funding Corporation as the company, (the “Company”), JPMorgan Chase Bank, National Association, as trustee (the “Trustee”), J.P. Morgan Trust Company,
National Association, as co-trustee (the “Co-Trustee”), Wachovia Bank, National Association, as the custodian (the “Custodian”), and NovaStar Mortgage, Inc. as servicer (the “Servicer”) and as seller (the
“Seller”), including the related Cut-off Date Principal 

 Balance, all interest accruing thereon on and after the Cut-off Date and all collections in respect of interest and
principal due after the Cut-off Date; (ii) property which secured each such Mortgage Loan and which has been acquired by foreclosure or deed in lieu of foreclosure; (iii) the Company’s interest in any insurance policies in respect of
the Mortgage Loans; (iv) all proceeds of any of the foregoing; (v) the rights of the Company under the Purchase Agreement and (vi) all other assets included or to be included in the Trust fund. Such assignment includes all interest
and principal due to the Company or the Servicer after the Cut-off Date with respect to the Mortgage Loans. 
  
 The Original Principal Amount set forth above is equal to the product of (i) the Percentage Interest represented by this Certificate and
(ii) the aggregate Original Principal Amount of the Class M-1 Certificates on September 22, 2005 which aggregate amount was $70,000,000. The owner hereof is entitled to principal payments on each Distribution Date, as hereinafter
described, which will fully amortize such Original Principal Amount over the period from the date of initial delivery hereof to the final Distribution Date of the Class M-1 Certificates. Therefore, the actual outstanding principal amount of this
Certificate, on any date subsequent to October 25, 2005 (the first Distribution Date) will be less than the Original Principal Amount set forth above. 
  
 In order to receive the final distribution hereon, the owner hereof is required to present this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution due on this Certificate, this Certificate shall be deemed cancelled for all purposes under the Pooling and Servicing Agreement. 
  
 SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN A CLASS OF “REGULAR INTERESTS” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT” (“REMIC”) AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE “CODE”), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS (SECTIONS 860A THROUGH 860G) OF THE CODE. 
  
 THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS REPRESENTED
HEREBY (OTHER THAN AS REQUIRED FOR FEDERAL INCOME TAX PURPOSES). 
  
 NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY. 
  
 This Certificate is one of a Class of duly-authorized Certificates designated
as NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3, Class M-1 Certificates (the “Class M-1 Certificates”) and issued under and subject to the terms, provisions and conditions of the Pooling and Servicing Agreement, to
which the owner of this Certificate, by virtue of acceptance hereof assents, and is bound. Also issued under the Pooling and Servicing Agreement are the Class A-1A Certificates, Class A-2A Certificates, Class A-2B Certificates,
Class A-2C Certificates, Class A-2D Certificates, Class M-2 Certificates, Class M-3 Certificates, 
  

 A-6-2 

 Class M-4 Certificates, Class M-5 Certificates, Class M-6 Certificates, Class M-7 Certificates, Class M-8 Certificates,
Class M-9 Certificates, Class M-10 Certificates, Class M-11 Certificates, Class M-12 Certificates, Class M-11 DSI Certificates, Class M-12 DSI Certificates, Class I-1 Certificates, Class I-2 Certificates, Class I-3 Certificates, Certificates, Class
C Certificates, and Class R Certificates, and all such Certificates are collectively referred to as the “Certificates”. Terms capitalized herein and not otherwise defined herein shall have the respective meanings set forth in the Pooling
and Servicing Agreement. 
  
 On the 25th day of each month, or, if
such day is not a Business Day, then the next succeeding Business Day (each such day being a “Distribution Date”) commencing October 25, 2005, the owners of the Class M-1 Certificates as of the close of business on the business day
immediately preceding such Distribution Date (the “Record Date”) will be entitled to receive the distribution described in Article IV of the Pooling and Servicing Agreement relating to such Distribution Date. Distributions will be made in
immediately available funds to such owners, by wire transfer or by check mailed to the address of the person entitled thereto as it appears on the Certificate Register. 
  
 Each owner of record of a Class M-1 Certificate will be entitled to receive such owner’s Percentage Interest in the
amounts distributed on such Distribution Date to the owners of the Class M-1 Certificates. The Percentage Interest of each Class M-1 Certificate as of any date of determination will be equal to the percentage obtained by dividing the Original
Principal Amount set forth on such Class M-1 Certificate by $70,000,000. 
  
 The Trustee is required to duly and punctually pay distributions with respect to this Certificate in accordance with the terms hereof and the Pooling and Servicing Agreement. Amounts properly withheld under the Code
or applicable to any owner shall be considered as having been paid by the Trustee to such owner for all purposes of the Pooling and Servicing Agreement. 
  
 The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions eligible for appointment as Sub-Servicers for the servicing and administration of certain Mortgage Loans. No appointment of any Sub-Servicer shall release the Servicer from
any of its obligations under the Pooling and Servicing Agreement. 
  
 This Certificate does not represent a deposit or other obligation of, or an interest in, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Capital, Inc.,
NovaStar Financial Inc., or any of their subsidiaries and affiliates and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the Government National Mortgage Association, or any other governmental agency. This Certificate is
limited in right of payment to certain collections and recoveries relating to the Mortgage Loans and amounts on deposit in the Accounts (except as otherwise provided in the Pooling and Servicing Agreement) all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement. 
  
 No
owner shall have any right to institute any proceeding, judicial or otherwise, with respect to the Pooling and Servicing Agreement for the appointment of a receiver or trustee, or for any other remedy under the Pooling and Servicing Agreement except
in compliance with the terms thereof. 
  

 A-6-3 

 Notwithstanding any other provisions in the Pooling and Servicing Agreement, the owner of any Certificate
shall have the right which is absolute and unconditional to receive distributions to the extent provided in the Pooling and Servicing Agreement with respect to such Certificate or to institute suit for the enforcement of any such distribution, and
such right shall not be impaired without the consent of such owner. 
  
 The Pooling and Servicing Agreement will terminate upon notice to the Trustee upon the earliest of (i) the Distribution Date on which the Certificate Principal Balances of the Regular Certificates have been reduced to zero,
(ii) the final payment or other liquidation of the last Mortgage Loan in the Trust, (iii) the optional purchase by the Servicer of the Mortgage Loans as described below, (iv) the Distribution Date in January 2036 and (v) at any
time when a Qualified Liquidation of the Master REMIC and REMIC I, REMIC II, REMIC III and REMIC IV is effected pursuant to the Pooling and Servicing Agreement. In addition, under certain circumstances relating to the qualification of either the
Master REMIC or any of REMIC I, REMIC II, REMIC III or REMIC IV as a REMIC under the Code, the Mortgage Loans may be sold, thereby affecting the early retirement of the Certificates. Notwithstanding the foregoing, in no event shall the Trust hereby
continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James, living on the date of the Pooling and Servicing Agreement.

  
 The Servicer may, at its option, terminate the Pooling and
Servicing Agreement on any date on which the aggregate of the Principal Balances of the Mortgage Loans on such date is equal to or less than 10% of the Maximum Collateral Amount, by purchasing, on the next succeeding Distribution Date, all of the
outstanding Mortgage Loans and REO Properties at a price equal to the greater of the Principal Balance of the Mortgage Loans and REO Properties or the market value of the Mortgage Loans and REO Properties, in each case plus accrued and unpaid
interest thereon at the weighted average of the Mortgage Rates through the end of the Due Period preceding the final Distribution Date plus unreimbursed Servicing Advances, Advances, any unpaid Servicing Fees allocable to such Mortgage Loans and REO
Properties and any accrued and unpaid Available Funds Cap Shortfall Amount and Available Funds Cap Carryforward Amount and any unpaid amount due the Trustee, the Swap Counterparties, the Cap Counterparties and the Custodian under the Pooling and
Servicing Agreement. 
  
 The Trustee shall give written notice of
termination of the Pooling and Servicing Agreement to each owner in the manner set forth therein. 
  
 As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the office designated as the location of the Certificate Register, and thereupon one or more new certificates of like
class, tenor and Percentage Interest will be issued to the designated transferee or transferees. 
  
 The Trustee is required to furnish certain information on each Distribution Date to the owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement. 
  

 A-6-4 

 The Class M-1 Certificates are issuable only as registered Certificates in denominations of $25,000
Original Principal Amount and integral multiples of $1,000. As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth, Class M-1 Certificates are exchangeable for new Class M-1 Certificates of authorized
denominations evidencing the same aggregate principal amount. 
  
 The Trustee and any agent thereof may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the Trustee or any such agent shall be affected by notice to the contrary. 
  

 A-6-5 

 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed on behalf of the Trust.

  

							
	 	 	 	 	 JPMORGAN CHASE BANK,
     NATIONAL ASSOCIATION, not in its
     individual capacity, but solely in its
     capacity as Trustee

				
	 	 	 	 	By:	 	  

	 	 	 	 	Name:	 	 
	 	 	 	 	Title:	 	 
			
	Trustee Authentication	 	 	 	 
			
	 JPMORGAN CHASE BANK,
     NATIONAL ASSOCIATION, not in its
     individual capacity, but solely in its
     capacity as Trustee
	 	 	 	 
				
	 By:
	 	  

	 	 	 	 
	 Name:
	 	 	 	 	 	 
	 Title:
	 	 	 	 	 	 

  

 A-6-6 

 Exhibit A-7 
 Form of Class M-2 Certificate 
  
 NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2005-3 
 HOME EQUITY LOAN ASSET-BACKED CERTIFICATE 
 CLASS M-2 CERTIFICATE 
  
 Comprised of a Certificate Representing 
 Certain Interests Relating to a Pool of

 Mortgage Loans 
 The Mortgage
Loans are Serviced by 
  
 NOVASTAR MORTGAGE, INC., as Servicer

  
 Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation (“DTC”), to the Trust or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in
such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. 
  
 (This certificate does not represent an interest in, or an obligation of, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar
Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Financial, Inc., NovaStar Capital, Inc. or any of their subsidiaries and affiliates. This certificate is comprised of a Certificate representing a fractional ownership interest in
distributions in certain Accounts created pursuant to the Pooling and Servicing Agreement and certain other rights relating thereto and is payable only from amounts received by the Trustee relating to the Mortgage Loans and other assets held in the
Trust Fund.) 
  

					
	No.: M-2	 	Date: September 22, 2005	 	CUSIP: 66987X GY 5
			
	Original Principal Balance: $60,000,000	 	Registered Owner: CEDE & CO.	 	Final Scheduled Distribution Date: January 25, 2036
			
	Percentage Interest: 100%	 	 Pass-Through Rate:
 LIBOR + 0.4700%
	 	 

  
 The registered owner
named above is the registered owner of a fractional interest in (I) each Mortgage Loan identified on the Mortgage Loan Schedule attached as Exhibit B to that certain Pooling and Servicing Agreement dated as of September 1, 2005 (the
“Pooling and Servicing Agreement”) by and among NovaStar Mortgage Funding Corporation as the company (the “Company”), JPMorgan Chase Bank, National Association, as trustee (the “Trustee”), J.P. Morgan Trust Company,
National Association, as co-trustee (the “Co-Trustee”), Wachovia Bank, National Association, as the custodian (the “Custodian”), and NovaStar Mortgage, Inc. as servicer (the “Servicer”) and as seller (the
“Seller”), including the related Cut-off Date Principal 

 Balance, all interest accruing thereon on and after the Cut-off Date and all collections in respect of interest and
principal due after the Cut-off Date; (ii) property which secured each such Mortgage Loan and which has been acquired by foreclosure or deed in lieu of foreclosure; (iii) the Company’s interest in any insurance policies in respect of
the Mortgage Loans; (iv) all proceeds of any of the foregoing; (v) the rights of the Company under the Purchase Agreement and (vi) all other assets included or to be included in the Trust fund. Such assignment includes all interest
and principal due to the Company or the Servicer after the Cut-off Date with respect to the Mortgage Loans. 
  
 The Original Principal Amount set forth above is equal to the product of (i) the Percentage Interest represented by this Certificate and
(ii) the aggregate Original Principal Amount of the Class M-2 Certificates on September 22, 2005 which aggregate amount was $60,000,000. The owner hereof is entitled to principal payments on each Distribution Date, as hereinafter
described, which will fully amortize such Original Principal Amount over the period from the date of initial delivery hereof to the final Distribution Date of the Class M-2 Certificates. Therefore, the actual outstanding principal amount of this
Certificate, on any date subsequent to October 25, 2005 (the first Distribution Date) will be less than the Original Principal Amount set forth above. 
  
 In order to receive the final distribution hereon, the owner hereof is required to present this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution due on this Certificate, this Certificate shall be deemed cancelled for all purposes under the Pooling and Servicing Agreement. 
  
 SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN A CLASS OF “REGULAR INTERESTS” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT” (“REMIC”) AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE “CODE”), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS (SECTIONS 860A THROUGH 860G) OF THE CODE. 
  
 THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS REPRESENTED
HEREBY (OTHER THAN AS REQUIRED FOR FEDERAL INCOME TAX PURPOSES). 
  
 NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY. 
  
 This Certificate is one of a Class of duly-authorized Certificates designated
as NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3, Class M-2 Certificates (the “Class M-2 Certificates”) and issued under and subject to the terms, provisions and conditions of the Pooling and Servicing Agreement, to
which the owner of this Certificate, by virtue of acceptance hereof assents, and is bound. Also issued under the Pooling and Servicing Agreement are the Class A-1A Certificates, Class A-2A Certificates, Class A-2B Certificates,
Class A-2C Certificates, Class A-2D Certificates, Class M-1 Certificates, Class M-3 Certificates, 
  

 A-7-2 

 Class M-4 Certificates, Class M-5 Certificates, Class M-6 Certificates, Class M-7 Certificates, Class M-8 Certificates,
Class M-9 Certificates, Class M-10 Certificates, Class M-11 Certificates, Class M-12 Certificates, Class M-11 DSI Certificates, Class M-12 DSI Certificates, Class I-1 Certificates, Class I-2 Certificates, Class I-3 Certificates, Certificates, Class
C Certificates, and Class R Certificates, and all such Certificates are collectively referred to as the “Certificates”. Terms capitalized herein and not otherwise defined herein shall have the respective meanings set forth in the Pooling
and Servicing Agreement. 
  
 On the 25th day of each month, or, if
such day is not a Business Day, then the next succeeding Business Day (each such day being a “Distribution Date”) commencing October 25, 2005, the owners of the Class M-2 Certificates as of the close of business on the business day
immediately preceding such Distribution Date (the “Record Date”) will be entitled to receive the distribution described in Article IV of the Pooling and Servicing Agreement relating to such Distribution Date. Distributions will be made in
immediately available funds to such owners, by wire transfer or by check mailed to the address of the person entitled thereto as it appears on the Certificate Register. 
  
 Each owner of record of a Class M-2 Certificate will be entitled to receive such owner’s Percentage Interest in the
amounts distributed on such Distribution Date to the owners of the Class M-2 Certificates. The Percentage Interest of each Class M-2 Certificate as of any date of determination will be equal to the percentage obtained by dividing the Original
Principal Amount set forth on such Class M-2 Certificate by $60,000,000. 
  
 The Trustee is required to duly and punctually pay distributions with respect to this Certificate in accordance with the terms hereof and the Pooling and Servicing Agreement. Amounts properly withheld under the Code
or applicable to any owner shall be considered as having been paid by the Trustee to such owner for all purposes of the Pooling and Servicing Agreement. 
  
 The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions eligible for appointment as Sub-Servicers for the servicing and administration of certain Mortgage Loans. No appointment of any Sub-Servicer shall release the Servicer from
any of its obligations under the Pooling and Servicing Agreement. 
  
 This Certificate does not represent a deposit or other obligation of, or an interest in, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Capital, Inc.,
NovaStar Financial Inc., or any of their subsidiaries and affiliates and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the Government National Mortgage Association, or any other governmental agency. This Certificate is
limited in right of payment to certain collections and recoveries relating to the Mortgage Loans and amounts on deposit in the Accounts (except as otherwise provided in the Pooling and Servicing Agreement) all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement. 
  
 No
owner shall have any right to institute any proceeding, judicial or otherwise, with respect to the Pooling and Servicing Agreement for the appointment of a receiver or trustee, or for any other remedy under the Pooling and Servicing Agreement except
in compliance with the terms thereof. 
  

 A-7-3 

 Notwithstanding any other provisions in the Pooling and Servicing Agreement, the owner of any Certificate
shall have the right which is absolute and unconditional to receive distributions to the extent provided in the Pooling and Servicing Agreement with respect to such Certificate or to institute suit for the enforcement of any such distribution, and
such right shall not be impaired without the consent of such owner. 
  
 The Pooling and Servicing Agreement will terminate upon notice to the Trustee upon the earliest of (i) the Distribution Date on which the Certificate Principal Balances of the Regular Certificates have been reduced to zero,
(ii) the final payment or other liquidation of the last Mortgage Loan in the Trust, (iii) the optional purchase by the Servicer of the Mortgage Loans as described below, (iv) the Distribution Date in January 2036 and (v) at any
time when a Qualified Liquidation of the Master REMIC and REMIC I, REMIC II, REMIC III and REMIC IV is effected pursuant to the Pooling and Servicing Agreement. In addition, under certain circumstances relating to the qualification of either the
Master REMIC or any of REMIC I, REMIC II, REMIC III or REMIC IV as a REMIC under the Code, the Mortgage Loans may be sold, thereby affecting the early retirement of the Certificates. Notwithstanding the foregoing, in no event shall the Trust hereby
continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James, living on the date of the Pooling and Servicing Agreement.

  
 The Servicer may, at its option, terminate the Pooling and
Servicing Agreement on any date on which the aggregate of the Principal Balances of the Mortgage Loans on such date is equal to or less than 10% of the Maximum Collateral Amount, by purchasing, on the next succeeding Distribution Date, all of the
outstanding Mortgage Loans and REO Properties at a price equal to the greater of the Principal Balance of the Mortgage Loans and REO Properties or the market value of the Mortgage Loans and REO Properties, in each case plus accrued and unpaid
interest thereon at the weighted average of the Mortgage Rates through the end of the Due Period preceding the final Distribution Date plus unreimbursed Servicing Advances, Advances, any unpaid Servicing Fees allocable to such Mortgage Loans and REO
Properties and any accrued and unpaid Available Funds Cap Shortfall Amount and Available Funds Cap Carryforward Amount and any unpaid amount due the Trustee, the Swap Counterparties, the Cap Counterparties and the Custodian under the Pooling and
Servicing Agreement. 
  
 The Trustee shall give written notice of
termination of the Pooling and Servicing Agreement to each owner in the manner set forth therein. 
  
 As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the office designated as the location of the Certificate Register, and thereupon one or more new certificates of like
class, tenor and Percentage Interest will be issued to the designated transferee or transferees. 
  
 The Trustee is required to furnish certain information on each Distribution Date to the owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement. 
  

 A-7-4 

 The Class M-2 Certificates are issuable only as registered Certificates in denominations of $25,000
Original Principal Amount and integral multiples of $1,000. As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth, Class M-2 Certificates are exchangeable for new Class M-2 Certificates of authorized
denominations evidencing the same aggregate principal amount. 
  
 The Trustee and any agent thereof may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the Trustee or any such agent shall be affected by notice to the contrary. 
  

 A-7-5 

 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed on behalf of the Trust.

  

							
	 	 	 	 	 JPMORGAN CHASE BANK,
     NATIONAL ASSOCIATION, not in its
     individual capacity, but solely in its
     capacity as Trustee

				
	 	 	 	 	By:	 	  

	 	 	 	 	Name:	 	 
	 	 	 	 	Title:	 	 
			
	Trustee Authentication	 	 	 	 
			
	 JPMORGAN CHASE BANK,
     NATIONAL ASSOCIATION, not in its
     individual capacity, but solely in its
     capacity as Trustee
	 	 	 	 
				
	By:	 	  

	 	 	 	 
	Name:	 	 	 	 	 	 
	Title:	 	 	 	 	 	 

  

 A-7-6 

 Exhibit A-8 
  
 Form of Class M-3 Certificate 
  
 NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2005-3 
 HOME EQUITY LOAN ASSET-BACKED CERTIFICATE 
 CLASS M-3 CERTIFICATE 
  
 Comprised of a Certificate Representing 
 Certain Interests Relating to a Pool of 
 Mortgage Loans 
 The Mortgage Loans are Serviced by 
  
 NOVASTAR MORTGAGE, INC., as Servicer 
  
 Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the
Trust or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof,
Cede & Co., has an interest herein. 
  
 (This certificate
does not represent an interest in, or an obligation of, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Financial, Inc., NovaStar Capital, Inc. or any of their
subsidiaries and affiliates. This certificate is comprised of a Certificate representing a fractional ownership interest in distributions in certain Accounts created pursuant to the Pooling and Servicing Agreement and certain other rights relating
thereto and is payable only from amounts received by the Trustee relating to the Mortgage Loans and other assets held in the Trust Fund.) 
  

					
	No.: M-3	 	Date: September 22, 2005	 	CUSIP: 66987X GZ 2
			
	 Original Principal Balance:
 $47,500,000
	 	 Registered Owner:
 CEDE & CO.
	 	 Final Scheduled Distribution
 Date: January 25,
2036

			
	Percentage Interest: 100%	 	 Pass-Through Rate:
 LIBOR + 0.4900%
	 	 

  
 The registered owner
named above is the registered owner of a fractional interest in (i) each Mortgage Loan identified on the Mortgage Loan Schedule attached as Exhibit B to that certain Pooling and Servicing Agreement dated as of September 1, 2005 (the
“Pooling and Servicing Agreement”) by and among NovaStar Mortgage Funding Corporation as the company (the “Company”), JPMorgan Chase Bank, National Association, as trustee (the “Trustee”), J.P. Morgan Trust Company,
National Association, as co-trustee (the “Co-Trustee”), Wachovia Bank, National Association, as the custodian (the “Custodian”), and NovaStar Mortgage, Inc. as servicer (the “Servicer”) and as seller (the
“Seller”), including the related Cut-off Date Principal 

 Balance, all interest accruing thereon on and after the Cut-off Date and all collections in respect of interest and
principal due after the Cut-off Date; (ii) property which secured each such Mortgage Loan and which has been acquired by foreclosure or deed in lieu of foreclosure; (iii) the Company’s interest in any insurance policies in respect of
the Mortgage Loans; (iv) all proceeds of any of the foregoing; (v) the rights of the Company under the Purchase Agreement and (vi) all other assets included or to be included in the Trust fund. Such assignment includes all interest
and principal due to the Company or the Servicer after the Cut-off Date with respect to the Mortgage Loans. 
  
 The Original Principal Amount set forth above is equal to the product of (i) the Percentage Interest represented by this Certificate and
(ii) the aggregate Original Principal Amount of the Class M-3 Certificates on September 22, 2005 which aggregate amount was $47,500,000. The owner hereof is entitled to principal payments on each Distribution Date, as hereinafter
described, which will fully amortize such Original Principal Amount over the period from the date of initial delivery hereof to the final Distribution Date of the Class M-3 Certificates. Therefore, the actual outstanding principal amount of this
Certificate, on any date subsequent to October 25, 2005 (the first Distribution Date) will be less than the Original Principal Amount set forth above. 
  
 In order to receive the final distribution hereon, the owner hereof is required to present this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution due on this Certificate, this Certificate shall be deemed cancelled for all purposes under the Pooling and Servicing Agreement. 
  
 SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN A CLASS OF “REGULAR INTERESTS” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT” (“REMIC”) AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE “CODE”), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS (SECTIONS 860A THROUGH 860G) OF THE CODE. 
  
 THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS REPRESENTED
HEREBY (OTHER THAN AS REQUIRED FOR FEDERAL INCOME TAX PURPOSES). 
  
 NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY. 
  
 This Certificate is one of a Class of duly-authorized Certificates designated
as NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3, Class M-3 Certificates (the “Class M-3 Certificates”) and issued under and subject to the terms, provisions and conditions of the Pooling and Servicing Agreement, to
which the owner of this Certificate, by virtue of acceptance hereof assents, and is bound. Also issued under the Pooling and Servicing Agreement are the Class A-1A Certificates, Class A-2A Certificates, Class A-2B Certificates,
Class A-2C Certificates, Class A-2D Certificates, Class M-1 Certificates, Class M-2 Certificates, 
  

 A-8-2 

 Class M-4 Certificates, Class M-5 Certificates, Class M-6 Certificates, Class M-7 Certificates, Class M-8 Certificates,
Class M-9 Certificates, Class M-10 Certificates, Class M-11 Certificates, Class M-12 Certificates, Class M-11 DSI Certificates, Class M-12 DSI Certificates, Class I-1 Certificates, Class I-2 Certificates, Class I-3 Certificates, Certificates, Class
C Certificates, and Class R Certificates, and all such Certificates are collectively referred to as the “Certificates”. Terms capitalized herein and not otherwise defined herein shall have the respective meanings set forth in the Pooling
and Servicing Agreement. 
  
 On the 25th day of each month, or, if
such day is not a Business Day, then the next succeeding Business Day (each such day being a “Distribution Date”) commencing October 25, 2005, the owners of the Class M-3 Certificates as of the close of business on the business day
immediately preceding such Distribution Date (the “Record Date”) will be entitled to receive the distribution described in Article IV of the Pooling and Servicing Agreement relating to such Distribution Date. Distributions will be made in
immediately available funds to such owners, by wire transfer or by check mailed to the address of the person entitled thereto as it appears on the Certificate Register. 
  
 Each owner of record of a Class M-3 Certificate will be entitled to receive such owner’s Percentage Interest in the
amounts distributed on such Distribution Date to the owners of the Class M-3 Certificates. The Percentage Interest of each Class M-3 Certificate as of any date of determination will be equal to the percentage obtained by dividing the Original
Principal Amount set forth on such Class M-3 Certificate by $47,500,000. 
  
 The Trustee is required to duly and punctually pay distributions with respect to this Certificate in accordance with the terms hereof and the Pooling and Servicing Agreement. Amounts properly withheld under the Code
or applicable to any owner shall be considered as having been paid by the Trustee to such owner for all purposes of the Pooling and Servicing Agreement. 
  
 The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions eligible for appointment as Sub-Servicers for the servicing and administration of certain Mortgage Loans. No appointment of any Sub-Servicer shall release the Servicer from
any of its obligations under the Pooling and Servicing Agreement. 
  
 This Certificate does not represent a deposit or other obligation of, or an interest in, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Capital, Inc.,
NovaStar Financial Inc., or any of their subsidiaries and affiliates and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the Government National Mortgage Association, or any other governmental agency. This Certificate is
limited in right of payment to certain collections and recoveries relating to the Mortgage Loans and amounts on deposit in the Accounts (except as otherwise provided in the Pooling and Servicing Agreement) all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement. 
  
 No
owner shall have any right to institute any proceeding, judicial or otherwise, with respect to the Pooling and Servicing Agreement for the appointment of a receiver or trustee, or for any other remedy under the Pooling and Servicing Agreement except
in compliance with the terms thereof. 
  

 A-8-3 

 Notwithstanding any other provisions in the Pooling and Servicing Agreement, the owner of any Certificate
shall have the right which is absolute and unconditional to receive distributions to the extent provided in the Pooling and Servicing Agreement with respect to such Certificate or to institute suit for the enforcement of any such distribution, and
such right shall not be impaired without the consent of such owner. 
  
 The Pooling and Servicing Agreement will terminate upon notice to the Trustee upon the earliest of (i) the Distribution Date on which the Certificate Principal Balances of the Regular Certificates have been reduced to zero,
(ii) the final payment or other liquidation of the last Mortgage Loan in the Trust, (iii) the optional purchase by the Servicer of the Mortgage Loans as described below, (iv) the Distribution Date in January 2036 and (v) at any
time when a Qualified Liquidation of the Master REMIC and REMIC I, REMIC II, REMIC III and REMIC IV is effected pursuant to the Pooling and Servicing Agreement. In addition, under certain circumstances relating to the qualification of either the
Master REMIC or any of REMIC I, REMIC II, REMIC III or REMIC IV as a REMIC under the Code, the Mortgage Loans may be sold, thereby affecting the early retirement of the Certificates. Notwithstanding the foregoing, in no event shall the Trust hereby
continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James, living on the date of the Pooling and Servicing Agreement.

  
 The Servicer may, at its option, terminate the Pooling and
Servicing Agreement on any date on which the aggregate of the Principal Balances of the Mortgage Loans on such date is equal to or less than 10% of the Maximum Collateral Amount, by purchasing, on the next succeeding Distribution Date, all of the
outstanding Mortgage Loans and REO Properties at a price equal to the greater of the Principal Balance of the Mortgage Loans and REO Properties or the market value of the Mortgage Loans and REO Properties, in each case plus accrued and unpaid
interest thereon at the weighted average of the Mortgage Rates through the end of the Due Period preceding the final Distribution Date plus unreimbursed Servicing Advances, Advances, any unpaid Servicing Fees allocable to such Mortgage Loans and REO
Properties and any accrued and unpaid Available Funds Cap Shortfall Amount and Available Funds Cap Carryforward Amount and any unpaid amount due the Trustee, the Swap Counterparties, the Cap Counterparties and the Custodian under the Pooling and
Servicing Agreement. 
  
 The Trustee shall give written notice of
termination of the Pooling and Servicing Agreement to each owner in the manner set forth therein. 
  
 As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the office designated as the location of the Certificate Register, and thereupon one or more new certificates of like
class, tenor and Percentage Interest will be issued to the designated transferee or transferees. 
  
 The Trustee is required to furnish certain information on each Distribution Date to the owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement. 
  

 A-8-4 

 The Class M-3 Certificates are issuable only as registered Certificates in denominations of $25,000
Original Principal Amount and integral multiples of $1,000. As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth, Class M-3 Certificates are exchangeable for new Class M-3 Certificates of authorized
denominations evidencing the same aggregate principal amount. 
  
 The Trustee and any agent thereof may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the Trustee or any such agent shall be affected by notice to the contrary. 
  

 A-8-5 

 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed on behalf of the Trust.

  

							
	 	 	 	 	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as
Trustee

				
	 	 	 	 	By:	 	  

	 	 	 	 	Name:	 	 
	 	 	 	 	Title:	 	 
	Trustee Authentication	 	 	 	 
			
	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as
Trustee
	 	 	 	 
				
	By:	 	  

	 	 	 	 
	Name:	 	 	 	 	 	 
	Title:	 	 	 	 	 	 

  

 A-8-6 

 Exhibit A-9 
  
 Form of Class M-4 Certificate 
  
 NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2005-3 
 HOME EQUITY LOAN ASSET-BACKED CERTIFICATE 
 CLASS M-4 CERTIFICATE 
  
 Comprised of a Certificate Representing 
 Certain Interests Relating to a Pool of 
 Mortgage Loans 
 The Mortgage Loans are Serviced by 
  
 NOVASTAR MORTGAGE, INC., as Servicer 
  
 Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the
Trust or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof,
Cede & Co., has an interest herein. 
  
 (This certificate
does not represent an interest in, or an obligation of, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Financial, Inc., NovaStar Capital, Inc. or any of their
subsidiaries and affiliates. This certificate is comprised of a Certificate representing a fractional ownership interest in distributions in certain Accounts created pursuant to the Pooling and Servicing Agreement and certain other rights relating
thereto and is payable only from amounts received by the Trustee relating to the Mortgage Loans and other assets held in the Trust Fund.) 
  

					
	No.: M-4	 	Date: September 22, 2005	 	CUSIP: 66987X HA 6
			
	 Original Principal Balance:
 $30,000,000
	 	 Registered Owner:
 CEDE & CO.
	 	 Final Scheduled Distribution
 Date: January 25,
2036

			
	Percentage Interest: 100%	 	 Pass-Through Rate:
 LIBOR + 0.5900%
	 	 

  
 The registered owner
named above is the registered owner of a fractional interest in (i) each Mortgage Loan identified on the Mortgage Loan Schedule attached as Exhibit B to that certain Pooling and Servicing Agreement dated as of September 1, 2005 (the
“Pooling and Servicing Agreement”) by and among NovaStar Mortgage Funding Corporation as the company (the “Company”), JPMorgan Chase Bank, National Association, as trustee (the “Trustee”), J.P. Morgan Trust Company,
National Association, as co-trustee (the “Co-Trustee”), Wachovia Bank, National Association, as the custodian (the “Custodian”), and NovaStar Mortgage, Inc. as servicer (the “Servicer”) and as seller (the
“Seller”), including the related Cut-off Date Principal 

 Balance, all interest accruing thereon on and after the Cut-off Date and all collections in respect of interest and
principal due after the Cut-off Date; (ii) property which secured each such Mortgage Loan and which has been acquired by foreclosure or deed in lieu of foreclosure; (iii) the Company’s interest in any insurance policies in respect of
the Mortgage Loans; (iv) all proceeds of any of the foregoing; (v) the rights of the Company under the Purchase Agreement and (vi) all other assets included or to be included in the Trust fund. Such assignment includes all interest
and principal due to the Company or the Servicer after the Cut-off Date with respect to the Mortgage Loans. 
  
 The Original Principal Amount set forth above is equal to the product of (i) the Percentage Interest represented by this Certificate and
(ii) the aggregate Original Principal Amount of the Class M-4 Certificates on September 22, 2005 which aggregate amount was $30,000,000. The owner hereof is entitled to principal payments on each Distribution Date, as hereinafter
described, which will fully amortize such Original Principal Amount over the period from the date of initial delivery hereof to the final Distribution Date of the Class M-4 Certificates. Therefore, the actual outstanding principal amount of this
Certificate, on any date subsequent to October 25, 2005 (the first Distribution Date) will be less than the Original Principal Amount set forth above. 
  
 In order to receive the final distribution hereon, the owner hereof is required to present this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution due on this Certificate, this Certificate shall be deemed cancelled for all purposes under the Pooling and Servicing Agreement. 
  
 SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN A CLASS OF “REGULAR INTERESTS” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT” (“REMIC”) AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE “CODE”), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS (SECTIONS 860A THROUGH 860G) OF THE CODE. 
  
 THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS REPRESENTED
HEREBY (OTHER THAN AS REQUIRED FOR FEDERAL INCOME TAX PURPOSES). 
  
 NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY. 
  
 This Certificate is one of a Class of duly-authorized Certificates designated
as NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3, Class M-4 Certificates (the “Class M-4 Certificates”) and issued under and subject to the terms, provisions and conditions of the Pooling and Servicing Agreement, to
which the owner of this Certificate, by virtue of acceptance hereof assents, and is bound. Also issued under the Pooling and Servicing Agreement are the Class A-1A Certificates, Class A-2A Certificates, Class A-2B Certificates,
Class A-2C Certificates, Class A-2D Certificates, Class M-1 Certificates, Class M-2 Certificates, 
  

 A-9-2 

 Class M-3 Certificates, Class M-5 Certificates, Class M-6 Certificates, Class M-7 Certificates, Class M-8 Certificates,
Class M-9 Certificates, Class M-10 Certificates, Class M-11 Certificates, Class M-12 Certificates, Class M-11 DSI Certificates, Class M-12 DSI Certificates, Class I-1 Certificates, Class I-2 Certificates, Class I-3 Certificates, Certificates, Class
C Certificates, and Class R Certificates, and all such Certificates are collectively referred to as the “Certificates”. 
  
 Terms capitalized herein and not otherwise defined herein shall have the respective meanings set forth in the Pooling and Servicing Agreement. 

 
 On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a “Distribution Date”) commencing October 25, 2005, the owners of the Class M-4 Certificates as of the close of business on the business day immediately preceding such Distribution
Date (the “Record Date”) will be entitled to receive the distribution described in Article IV of the Pooling and Servicing Agreement relating to such Distribution Date. Distributions will be made in immediately available funds to such
owners, by wire transfer or by check mailed to the address of the person entitled thereto as it appears on the Certificate Register. 
  
 Each owner of record of a Class M-4 Certificate will be entitled to receive such owner’s Percentage Interest in the amounts distributed on such
Distribution Date to the owners of the Class M-4 Certificates. The Percentage Interest of each Class M-4 Certificate as of any date of determination will be equal to the percentage obtained by dividing the Original Principal Amount set forth on such
Class M-4 Certificate by $30,000,000. 
  
 The Trustee is required
to duly and punctually pay distributions with respect to this Certificate in accordance with the terms hereof and the Pooling and Servicing Agreement. Amounts properly withheld under the Code or applicable to any owner shall be considered as having
been paid by the Trustee to such owner for all purposes of the Pooling and Servicing Agreement. 
  
 The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions eligible for appointment as Sub-Servicers for the servicing and administration of certain Mortgage Loans. No appointment of any Sub-Servicer shall release the Servicer from
any of its obligations under the Pooling and Servicing Agreement. 
  
 This Certificate does not represent a deposit or other obligation of, or an interest in, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Capital, Inc.,
NovaStar Financial Inc., or any of their subsidiaries and affiliates and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the Government National Mortgage Association, or any other governmental agency. This Certificate is
limited in right of payment to certain collections and recoveries relating to the Mortgage Loans and amounts on deposit in the Accounts (except as otherwise provided in the Pooling and Servicing Agreement) all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement. 
  

 A-9-3 

 No owner shall have any right to institute any proceeding, judicial or otherwise, with respect to the
Pooling and Servicing Agreement for the appointment of a receiver or trustee, or for any other remedy under the Pooling and Servicing Agreement except in compliance with the terms thereof. 
  
 Notwithstanding any other provisions in the Pooling and Servicing Agreement,
the owner of any Certificate shall have the right which is absolute and unconditional to receive distributions to the extent provided in the Pooling and Servicing Agreement with respect to such Certificate or to institute suit for the enforcement of
any such distribution, and such right shall not be impaired without the consent of such owner. 
  
 The Pooling and Servicing Agreement will terminate upon notice to the Trustee upon the earliest of (i) the Distribution Date on which the Certificate Principal Balances of the Regular Certificates have been
reduced to zero, (ii) the final payment or other liquidation of the last Mortgage Loan in the Trust, (iii) the optional purchase by the Servicer of the Mortgage Loans as described below, (iv) the Distribution Date in January 2036 and
(v) at any time when a Qualified Liquidation of the Master REMIC and REMIC I, REMIC II, REMIC III and REMIC IV is effected pursuant to the Pooling and Servicing Agreement. In addition, under certain circumstances relating to the qualification
of either the Master REMIC or any of REMIC I, REMIC II, REMIC III or REMIC IV as a REMIC under the Code, the Mortgage Loans may be sold, thereby affecting the early retirement of the Certificates. Notwithstanding the foregoing, in no event shall the
Trust hereby continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James, living on the date of the Pooling and Servicing
Agreement. 
  
 The Servicer may, at its option, terminate the
Pooling and Servicing Agreement on any date on which the aggregate of the Principal Balances of the Mortgage Loans on such date is equal to or less than 10% of the Maximum Collateral Amount, by purchasing, on the next succeeding Distribution Date,
all of the outstanding Mortgage Loans and REO Properties at a price equal to the greater of the Principal Balance of the Mortgage Loans and REO Properties or the market value of the Mortgage Loans and REO Properties, in each case plus accrued and
unpaid interest thereon at the weighted average of the Mortgage Rates through the end of the Due Period preceding the final Distribution Date plus unreimbursed Servicing Advances, Advances, any unpaid Servicing Fees allocable to such Mortgage Loans
and REO Properties and any accrued and unpaid Available Funds Cap Shortfall Amount and Available Funds Cap Carryforward Amount and any unpaid amount due the Trustee, the Swap Counterparties, the Cap Counterparties and the Custodian under the Pooling
and Servicing Agreement. 
  
 The Trustee shall give written notice
of termination of the Pooling and Servicing Agreement to each owner in the manner set forth therein. 
  
 As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the office designated as the location of the Certificate Register, and thereupon one or more new certificates of like
class, tenor and Percentage Interest will be issued to the designated transferee or transferees. 
  

 A-9-4 

 The Trustee is required to furnish certain information on each Distribution Date to the owner of this
Certificate, as more fully described in the Pooling and Servicing Agreement. 
  
 The Class M-4 Certificates are issuable only as registered Certificates in denominations of $25,000 Original Principal Amount and integral multiples of $1,000. As provided in the Pooling and Servicing Agreement and
subject to certain limitations therein set forth, Class M-4 Certificates are exchangeable for new Class M-4 Certificates of authorized denominations evidencing the same aggregate principal amount. 
  
 The Trustee and any agent thereof may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the Trustee or any such agent shall be affected by notice to the contrary. 
  

 A-9-5 

 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed on behalf of the Trust.

  

							
	 	 	 	 	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as
Trustee

				
	 	 	 	 	By:	 	  

	 	 	 	 	Name:	 	 
	 	 	 	 	Title:	 	 
	Trustee Authentication	 	 	 	 
			
	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as
Trustee
	 	 	 	 
				
	By:	 	  

	 	 	 	 
	Name:	 	 	 	 	 	 
	Title:	 	 	 	 	 	 

  

 A-9-6 

 Exhibit A-10 
  
 Form of Class M-5 Certificate 
  
 NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2005-3 
 HOME EQUITY LOAN ASSET-BACKED CERTIFICATE 
 CLASS M-5 CERTIFICATE 
  
 Comprised of a Certificate Representing 
 Certain Interests Relating to a Pool of 
 Mortgage Loans 
 The Mortgage Loans are Serviced by 
  
 NOVASTAR MORTGAGE, INC., as Servicer 
  
 Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the
Trust or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof,
Cede & Co., has an interest herein. 
  
 (This certificate
does not represent an interest in, or an obligation of, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Financial, Inc., NovaStar Capital, Inc. or any of their
subsidiaries and affiliates. This certificate is comprised of a Certificate representing a fractional ownership interest in distributions in certain Accounts created pursuant to the Pooling and Servicing Agreement and certain other rights relating
thereto and is payable only from amounts received by the Trustee relating to the Mortgage Loans and other assets held in the Trust Fund.) 
  

					
	No.: M-5	 	Date: September 22, 2005	 	CUSIP: 66987X HB 4
			
	 Original Principal Balance:
 $30,000,000
	 	 Registered Owner:
 CEDE & CO.
	 	 Final Scheduled Distribution
 Date: January 25,
2036

			
	Percentage Interest: 100%	 	 Pass-Through Rate:
 LIBOR + 0.6400%
	 	 

  
 The registered owner
named above is the registered owner of a fractional interest in (i) each Mortgage Loan identified on the Mortgage Loan Schedule attached as Exhibit B to that certain Pooling and Servicing Agreement dated as of September 1, 2005 (the
“Pooling and Servicing Agreement”) by and among NovaStar Mortgage Funding Corporation as the company (the “Company”), JPMorgan Chase Bank, National Association, as trustee (the “Trustee”), J.P. Morgan Trust Company,
National Association, as co-trustee (the “Co-Trustee”), Wachovia Bank, National Association, as the custodian (the “Custodian”), and NovaStar Mortgage, Inc. as servicer (the “Servicer”) and as seller (the
“Seller”), including the related Cut-off Date Principal 

 Balance, all interest accruing thereon on and after the Cut-off Date and all collections in respect of interest and
principal due after the Cut-off Date; (ii) property which secured each such Mortgage Loan and which has been acquired by foreclosure or deed in lieu of foreclosure; (iii) the Company’s interest in any insurance policies in respect of
the Mortgage Loans; (iv) all proceeds of any of the foregoing; (v) the rights of the Company under the Purchase Agreement and (vi) all other assets included or to be included in the Trust fund. Such assignment includes all interest
and principal due to the Company or the Servicer after the Cut-off Date with respect to the Mortgage Loans. 
  
 The Original Principal Amount set forth above is equal to the product of (i) the Percentage Interest represented by this Certificate and
(ii) the aggregate Original Principal Amount of the Class M-5 Certificates on September 22, 2005 which aggregate amount was $30,000,000. The owner hereof is entitled to principal payments on each Distribution Date, as hereinafter
described, which will fully amortize such Original Principal Amount over the period from the date of initial delivery hereof to the final Distribution Date of the Class M-5 Certificates. Therefore, the actual outstanding principal amount of this
Certificate, on any date subsequent to October 25, 2005 (the first Distribution Date) will be less than the Original Principal Amount set forth above. 
  
 In order to receive the final distribution hereon, the owner hereof is required to present this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution due on this Certificate, this Certificate shall be deemed cancelled for all purposes under the Pooling and Servicing Agreement. 
  
 SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN A CLASS OF “REGULAR INTERESTS” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT” (“REMIC”) AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE “CODE”), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS (SECTIONS 860A THROUGH 860G) OF THE CODE. 
  
 THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS REPRESENTED
HEREBY (OTHER THAN AS REQUIRED FOR FEDERAL INCOME TAX PURPOSES). 
  
 NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY. 
  
 This Certificate is one of a Class of duly-authorized Certificates designated
as NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3, Class M-5 Certificates (the “Class M-5 Certificates”) and issued under and subject to the terms, provisions and conditions of the Pooling and Servicing Agreement, to
which the owner of this Certificate, by virtue of acceptance hereof assents, and is bound. Also issued under the Pooling and Servicing Agreement are the Class A-1A Certificates, Class A-2A Certificates, Class A-2B Certificates,
Class A-2C Certificates, Class A-2D Certificates, Class M-1 Certificates, Class M-2 Certificates, 
  

 A-10-2 

 Class M-3 Certificates, Class M-4 Certificates, Class M-6 Certificates, Class M-7 Certificates, Class M-8 Certificates,
Class M-9 Certificates, Class M-10 Certificates, Class M-11 Certificates, Class M-12 Certificates, Class M-11 DSI Certificates, Class M-12 DSI Certificates, Class I-1 Certificates, Class I-2 Certificates, Class I-3 Certificates, Certificates, Class
C Certificates, and Class R Certificates, and all such Certificates are collectively referred to as the “Certificates”. 
  
 Terms capitalized herein and not otherwise defined herein shall have the respective meanings set forth in the Pooling and Servicing Agreement. 

 
 On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a “Distribution Date”) commencing October 25, 2005, the owners of the Class M-5 Certificates as of the close of business on the business day immediately preceding such Distribution
Date (the “Record Date”) will be entitled to receive the distribution described in Article IV of the Pooling and Servicing Agreement relating to such Distribution Date. Distributions will be made in immediately available funds to such
owners, by wire transfer or by check mailed to the address of the person entitled thereto as it appears on the Certificate Register. 
  
 Each owner of record of a Class M-5 Certificate will be entitled to receive such owner’s Percentage Interest in the amounts distributed on such
Distribution Date to the owners of the Class M-5 Certificates. The Percentage Interest of each Class M-3 Certificate as of any date of determination will be equal to the percentage obtained by dividing the Original Principal Amount set forth on such
Class M-5 Certificate by $30,000,000. 
  
 The Trustee is required
to duly and punctually pay distributions with respect to this Certificate in accordance with the terms hereof and the Pooling and Servicing Agreement. Amounts properly withheld under the Code or applicable to any owner shall be considered as having
been paid by the Trustee to such owner for all purposes of the Pooling and Servicing Agreement. 
  
 The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions eligible for appointment as Sub-Servicers for the servicing and administration of certain Mortgage Loans. No appointment of any Sub-Servicer shall release the Servicer from
any of its obligations under the Pooling and Servicing Agreement. 
  
 This Certificate does not represent a deposit or other obligation of, or an interest in, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Capital, Inc.,
NovaStar Financial Inc., or any of their subsidiaries and affiliates and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the Government National Mortgage Association, or any other governmental agency. This Certificate is
limited in right of payment to certain collections and recoveries relating to the Mortgage Loans and amounts on deposit in the Accounts (except as otherwise provided in the Pooling and Servicing Agreement) all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement. 
  

 A-10-3 

 No owner shall have any right to institute any proceeding, judicial or otherwise, with respect to the
Pooling and Servicing Agreement for the appointment of a receiver or trustee, or for any other remedy under the Pooling and Servicing Agreement except in compliance with the terms thereof. 
  
 Notwithstanding any other provisions in the Pooling and Servicing Agreement,
the owner of any Certificate shall have the right which is absolute and unconditional to receive distributions to the extent provided in the Pooling and Servicing Agreement with respect to such Certificate or to institute suit for the enforcement of
any such distribution, and such right shall not be impaired without the consent of such owner. 
  
 The Pooling and Servicing Agreement will terminate upon notice to the Trustee upon the earliest of (i) the Distribution Date on which the Certificate Principal Balances of the Regular Certificates have been
reduced to zero, (ii) the final payment or other liquidation of the last Mortgage Loan in the Trust, (iii) the optional purchase by the Servicer of the Mortgage Loans as described below, (iv) the Distribution Date in January 2036 and
(v) at any time when a Qualified Liquidation of the Master REMIC and REMIC I, REMIC II, REMIC III and REMIC IV is effected pursuant to the Pooling and Servicing Agreement. In addition, under certain circumstances relating to the qualification
of either the Master REMIC or any of REMIC I, REMIC II, REMIC III or REMIC IV as a REMIC under the Code, the Mortgage Loans may be sold, thereby affecting the early retirement of the Certificates. Notwithstanding the foregoing, in no event shall the
Trust hereby continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James, living on the date of the Pooling and Servicing
Agreement. 
  
 The Servicer may, at its option, terminate the
Pooling and Servicing Agreement on any date on which the aggregate of the Principal Balances of the Mortgage Loans on such date is equal to or less than 10% of the Maximum Collateral Amount, by purchasing, on the next succeeding Distribution Date,
all of the outstanding Mortgage Loans and REO Properties at a price equal to the greater of the Principal Balance of the Mortgage Loans and REO Properties or the market value of the Mortgage Loans and REO Properties, in each case plus accrued and
unpaid interest thereon at the weighted average of the Mortgage Rates through the end of the Due Period preceding the final Distribution Date plus unreimbursed Servicing Advances, Advances, any unpaid Servicing Fees allocable to such Mortgage Loans
and REO Properties and any accrued and unpaid Available Funds Cap Shortfall Amount and Available Funds Cap Carryforward Amount and any unpaid amount due the Trustee, the Swap Counterparties, the Cap Counterparties and the Custodian under the Pooling
and Servicing Agreement. 
  
 The Trustee shall give written notice
of termination of the Pooling and Servicing Agreement to each owner in the manner set forth therein. 
  
 As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the office designated as the location of the Certificate Register, and thereupon one or more new certificates of like
class, tenor and Percentage Interest will be issued to the designated transferee or transferees. 
  

 A-10-4 

 The Trustee is required to furnish certain information on each Distribution Date to the owner of this
Certificate, as more fully described in the Pooling and Servicing Agreement. 
  
 The Class M-5 Certificates are issuable only as registered Certificates in denominations of $25,000 Original Principal Amount and integral multiples of $1,000. As provided in the Pooling and Servicing Agreement and
subject to certain limitations therein set forth, Class M-5 Certificates are exchangeable for new Class M-5 Certificates of authorized denominations evidencing the same aggregate principal amount. 
  
 The Trustee and any agent thereof may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the Trustee or any such agent shall be affected by notice to the contrary. 
  

 A-10-5 

 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed on behalf of the Trust.

  

							
	 	 	 	 	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as
Trustee

				
	 	 	 	 	By:	 	  

	 	 	 	 	Name:	 	 
	 	 	 	 	Title:	 	 
			
	Trustee Authentication	 	 	 	 
			
	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as
Trustee
	 	 	 	 
				
	By:	 	  

	 	 	 	 
	Name:	 	 	 	 	 	 
	Title:	 	 	 	 	 	 

  

 A-10-6 

 Exhibit A-11 
  
 Form of Class M-6 Certificate 
  
 NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2005-3 
 HOME EQUITY LOAN ASSET-BACKED CERTIFICATE 
 CLASS M-6 CERTIFICATE 
  
 Comprised of a Certificate Representing 
 Certain Interests Relating to a Pool of 
 Mortgage Loans The Mortgage Loans are Serviced by 
  
 NOVASTAR MORTGAGE, INC., as Servicer 
  
 Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation (“DTC”), to the Trust or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. 
  
 (This certificate does not represent an interest in, or an obligation of, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar
Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Financial, Inc., NovaStar Capital, Inc. or any of their subsidiaries and affiliates. This certificate is comprised of a Certificate representing a fractional ownership interest in
distributions in certain Accounts created pursuant to the Pooling and Servicing Agreement and certain other rights relating thereto and is payable only from amounts received by the Trustee relating to the Mortgage Loans and other assets held in the
Trust Fund.) 
  

					
	No.: M-6	 	Date: September 22, 2005	 	CUSIP: 66987X HC 2
			
	 Original Principal Balance:
 $18,750,000
	 	 Registered Owner:
 CEDE & CO.
	 	 Final Scheduled Distribution
 Date: January 25,
2036

			
	Percentage Interest: 100%	 	 Pass-Through Rate:
 LIBOR + 0.6800%
	 	 

  
 The registered owner
named above is the registered owner of a fractional interest in (i) each Mortgage Loan identified on the Mortgage Loan Schedule attached as Exhibit B to that certain Pooling and Servicing Agreement dated as of September 1, 2005 (the
“Pooling and Servicing Agreement”) by and among NovaStar Mortgage Funding Corporation, as the company (the “Company”), JPMorgan Chase Bank, National Association, as trustee (the “Trustee”), J.P. Morgan Trust Company,
National Association, as co-trustee (the “Co-Trustee”), Wachovia Bank, National Association, as the custodian (the “Custodian”), and NovaStar Mortgage, Inc. as servicer (the “Servicer”) and as seller (the
“Seller”), including the related Cut-off Date Principal Balance, all interest accruing thereon on and after the Cut-off Date and all collections in respect 

 
of interest and principal due after the Cut-off Date; (ii) property which secured each such Mortgage Loan and which has been acquired by foreclosure or
deed in lieu of foreclosure; (iii) the Company’s interest in any insurance policies in respect of such Mortgage Loans; (iv) all proceeds of any of the foregoing; (v) the rights of the Company under the Purchase Agreement and
(vi) all other assets included or to be included in the Trust Fund. Such assignment includes all interest and principal due to the Company or the Servicer after the Cut-off Date with respect to the Mortgage Loans. 
  
 The Original Principal Amount set forth above is equal to the product of
(i) the Percentage Interest represented by this Certificate and (ii) the aggregate Original Principal Amount of the Class M-6 Certificates on September 22, 2005 which aggregate amount was $18,750,000. The owner hereof is entitled to
principal payments on each Distribution Date, which will fully amortize such Original Principal Amount over the period from the date of initial delivery hereof to the final Distribution Date of the Class M-6 Certificates. Therefore, the actual
outstanding principal amount of this Certificate, on any date subsequent to October 25, 2005 (the first Distribution Date) will be less than the Original Principal Amount set forth above. 
  
 In order to receive the final distribution hereon, the owner hereof is
required to present this Certificate to the Trustee. The Pooling and Servicing Agreement provides that, in any event, upon the making of the final distribution due on this Certificate, this Certificate shall be deemed cancelled for all purposes
under the Pooling and Servicing Agreement. 
  
 SOLELY FOR FEDERAL
INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN INTEREST IN A CLASS OF “REGULAR INTERESTS” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT” (“REMIC”) AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS (SECTIONS 860A THROUGH 860G) OF THE CODE. 
  

THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY (OTHER THAN AS REQUIRED FOR FEDERAL INCOME TAX PURPOSES). 
  
 NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY. 
  
 This Certificate is one of a Class of duly-authorized Certificates designated
as NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3, Class M-6 Certificates (the “Class M-6 Certificates”) and issued under and subject to the terms, provisions and conditions of the Pooling and Servicing Agreement, to
which the owner of this Certificate, by virtue of acceptance hereof assents, and is bound. Also issued under the Pooling and Servicing Agreement are the Class A-1A Certificates, Class A-2A Certificates, Class A-2B Certificates,
Class A-2C Certificates, Class A-2D Certificates, Class M-1 Certificates, Class M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates, Class M-7 Certificates, Class M-8 Certificates, Class M-9
Certificates, Class M-10 Certificates, Class M-11 Certificates, 
  

 A-11-2 

 Class M-12 Certificates, Class M-11 DSI Certificates, Class M-12 DSI Certificates, Class I-1 Certificates, Class I-2
Certificates, Class I-3 Certificates, Certificates, Class C Certificates, and Class R Certificates, and all such Certificates are collectively referred to as the “Certificates”. Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing Agreement. 
  
 On the 25th day of each month, or, if such day is not a Business Day, then the next succeeding Business Day (each such day being a “Distribution Date”) commencing October 25, 2005, the owners of the
Class M-6 Certificates as of the close of business on the business day immediately preceding such Distribution Date (the “Record Date”) will be entitled to the distribution described in Article IV of the Pooling and Servicing Agreement,
relating to such Distribution Date. Distributions will be made in immediately available funds to such owners, by wire transfer or by check mailed to the address of the person entitled thereto as it appears on the Certificate Register. 
  
 Each owner of record of a Class M-6 Certificate will be entitled to receive
such owner’s Percentage Interest in the amounts distributed on such Distribution Date to the owners of the Class M-6 Certificates. The Percentage Interest of each Class M-6 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the Original Principal Amount set forth on such Class M-6 Certificate by $18,750,000. 
  
 The Trustee is required to duly and punctually pay distributions with respect to this Certificate in accordance with the terms hereof and the Pooling and
Servicing Agreement. Amounts properly withheld under the Code or applicable to any owner shall be considered as having been paid by the Trustee to such owner for all purposes of the Pooling and Servicing Agreement. 
  
 The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling
and Servicing Agreement. The Pooling and Servicing Agreement permits the Servicer to enter into Sub-Servicing Agreements with certain institutions eligible for appointment as Sub-Servicers for the servicing and administration of certain Mortgage
Loans. No appointment of any Sub-Servicer shall release the Servicer from any of its obligations under the Pooling and Servicing Agreement. 
  
 This Certificate does not represent a deposit or other obligation of, or an interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Capital, Inc., NovaStar Financial Inc., or any of their subsidiaries and affiliates and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the
Government National Mortgage Association, or any other governmental agency. This Certificate is limited in right of payment to certain collections and recoveries relating to the Mortgage Loans and amounts on deposit in the Accounts (except as
otherwise provided in the Pooling and Servicing Agreement) all as more specifically set forth hereinabove and in the Pooling and Servicing Agreement. 
  
 No owner shall have any right to institute any proceeding, judicial or otherwise, with respect to the Pooling and Servicing Agreement for the appointment
of a receiver or trustee, or for any other remedy under the Pooling and Servicing Agreement except in compliance with the terms thereof. 
  

 A-11-3 

 Notwithstanding any other provisions in the Pooling and Servicing Agreement, the owner of any Certificate
shall have the right which is absolute and unconditional to receive distributions to the extent provided in the Pooling and Servicing Agreement with respect to such Certificate or to institute suit for the enforcement of any such distribution, and
such right shall not be impaired without the consent of such owner. 
  
 The Pooling and Servicing Agreement will terminate upon notice to the Trustee upon the earliest of (i) the Distribution Date on which the Certificate Principal Balances of the Regular Certificates have been reduced to zero,
(ii) the final payment or other liquidation of the last Mortgage Loan in the Trust, (iii) the optional purchase by the Servicer of the Mortgage Loans as described below, (iv) the Distribution Date in January 2036 and (v) at any
time when a Qualified Liquidation of the Master REMIC and REMIC I, REMIC II, REMIC III and REMIC IV is effected pursuant to the Pooling and Servicing Agreement. In addition, under certain circumstances relating to the qualification of either the
Master REMIC or any of REMIC I, REMIC II, REMIC III or REMIC IV as a REMIC under the Code, the Mortgage Loans may be sold, thereby affecting the early retirement of the Certificates. Notwithstanding the foregoing, in no event shall the Trust hereby
continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James, living on the date of the Pooling and Servicing Agreement.

  
 The Servicer may, at its option, terminate the Pooling and
Servicing Agreement on any date on which the aggregate of the Principal Balances of the Mortgage Loans on such date is equal to or less than 10% of the Maximum Collateral Amount, by purchasing, on the next succeeding Distribution Date, all of the
outstanding Mortgage Loans and REO Properties at a price equal to the greater of the Principal Balance of the Mortgage Loans and REO Properties or the market value of the Mortgage Loans and REO Properties, in each case plus accrued and unpaid
interest thereon at the weighted average of the Mortgage Rates through the end of the Due Period preceding the final Distribution Date plus unreimbursed Servicing Advances, Advances, any unpaid Servicing Fees allocable to such Mortgage Loans and REO
Properties and any accrued and unpaid Available Funds Cap Shortfall Amount and Available Funds Cap Carryforward Amount and any unpaid amount due the Trustee, the Swap Counterparties, the Cap Counterparties and the Custodian under the Pooling and
Servicing Agreement. 
  
 The Trustee shall give written notice of
termination of the Pooling and Servicing Agreement to each owner in the manner set forth therein. 
  
 As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the office designated as the location of the Certificate Register, and thereupon one or more new certificates of like
class, tenor and Percentage Interest will be issued to the designated transferee or transferees. 
  
 The Trustee is required to furnish certain information on each Distribution Date to the owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement. 
  
 The Class M-6 Certificates are
issuable only as registered Certificates in denominations of $25,000 Original Principal Amount and integral multiples of $1,000. As 
  

 A-11-4 

 provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth, Class M-6
Certificates are exchangeable for new Class M-6 Certificates of authorized denominations evidencing the same aggregate principal amount. 
  
 The Trustee and any agent thereof may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the
Trustee or any such agent shall be affected by notice to the contrary. 
  

 A-11-5 

 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed on behalf of the Trust.

  

							
	 	 	 	 	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as
Trustee

				
	 	 	 	 	By:	 	  

	 	 	 	 	Name:	 	 
	 	 	 	 	Title:	 	 
			
	Trustee Authentication	 	 	 	 
			
	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as
Trustee
	 	 	 	 
				
	By:	 	  

	 	 	 	 
	Name:	 	 	 	 	 	 
	Title:	 	 	 	 	 	 

  

 A-11-6 

 Exhibit A-12 
  
 Form of Class M-7 Certificate 
  
 NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2005-3 
 HOME EQUITY LOAN ASSET-BACKED CERTIFICATE 
 CLASS M-7 CERTIFICATE 
  
 Comprised of a Certificate Representing 
 Certain Interests Relating to a Pool of 
 Mortgage Loans 
 The Mortgage Loans are Serviced by 
  
 NOVASTAR MORTGAGE, INC., as Servicer 
  
 Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the
Trust or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof,
Cede & Co., has an interest herein. 
  
 (This certificate
does not represent an interest in, or an obligation of, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Financial, Inc., NovaStar Capital, Inc. or any of their
subsidiaries and affiliates. This certificate is comprised of a Certificate representing a fractional ownership interest in distributions in certain Accounts created pursuant to the Pooling and Servicing Agreement and certain other rights relating
thereto and is payable only from amounts received by the Trustee relating to the Mortgage Loans and other assets held in the Trust Fund.) 
  

					
	No.: M-7	 	Date: September 22, 2005	 	CUSIP: 66987X HD 0
			
	 Original Principal Balance:
 $18,750,000
	 	 Registered Owner:
 CEDE & CO.
	 	 Final Scheduled Distribution
 Date: January 25,
2036

			
	Percentage Interest: 100%	 	 Pass-Through Rate:
 LIBOR + 1.1200%
	 	 

  
 The registered owner
named above is the registered owner of a fractional interest in (i) each Mortgage Loan identified on the Mortgage Loan Schedule attached as Exhibit B to that certain Pooling and Servicing Agreement dated as of September 1, 2005 (the
“Pooling and Servicing Agreement”) by and among NovaStar Mortgage Funding Corporation as the company (the “Company”), JPMorgan Chase Bank, National Association, as trustee (the “Trustee”), J.P. Morgan Trust Company,
National Association, as co-trustee (the “Co-Trustee”), Wachovia Bank, National Association, as the custodian (the “Custodian”), and NovaStar Mortgage, Inc. as 

 servicer (the “Servicer”) and as seller (the “Seller”), including the related Cut-off Date Principal
Balance, all interest accruing thereon on and after the Cut-off Date and all collections in respect of interest and principal due after the Cut-off Date; (ii) property which secured each such Mortgage Loan and which has been acquired by
foreclosure or deed in lieu of foreclosure; (iii) the Company’s interest in any insurance policies in respect of the Mortgage Loans; (iv) all proceeds of any of the foregoing; (v) the rights of the Company under the Purchase
Agreement and (vi) all other assets included or to be included in the Trust fund. Such assignment includes all interest and principal due to the Company or the Servicer after the Cut-off Date with respect to the Mortgage Loans. 
  
 The Original Principal Amount set forth above is equal to the product of
(i) the Percentage Interest represented by this Certificate and (ii) the aggregate Original Principal Amount of the Class M-7 Certificates on September 22, 2005 which aggregate amount was $18,750,000. The owner hereof is entitled to
principal payments on each Distribution Date, as hereinafter described, which will fully amortize such Original Principal Amount over the period from the date of initial delivery hereof to the final Distribution Date of the Class M-7 Certificates.
Therefore, the actual outstanding principal amount of this Certificate, on any date subsequent to October 25, 2005 (the first Distribution Date) will be less than the Original Principal Amount set forth above. 
  
 In order to receive the final distribution hereon, the owner hereof is
required to present this Certificate to the Trustee. The Pooling and Servicing Agreement provides that, in any event, upon the making of the final distribution due on this Certificate, this Certificate shall be deemed cancelled for all purposes
under the Pooling and Servicing Agreement. 
  
 SOLELY FOR FEDERAL
INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN INTEREST IN A CLASS OF “REGULAR INTERESTS” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT” (“REMIC”) AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS (SECTIONS 860A THROUGH 860G) OF THE CODE. 
  

THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY (OTHER THAN AS REQUIRED FOR FEDERAL INCOME TAX PURPOSES). 
  
 NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY. 
  
 This Certificate is one of a Class of duly-authorized Certificates designated
as NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3, Class M-7 Certificates (the “Class M-7 Certificates”) and issued under and subject to the terms, provisions and conditions of the Pooling and Servicing Agreement, to
which the owner of this Certificate, by virtue of acceptance hereof assents, and is bound. Also issued under the Pooling and Servicing Agreement are the Class A-1A Certificates, Class A-2A Certificates, Class A-2B Certificates,

  

 A-12-2 

 Class A-2C Certificates, Class A-2D Certificates, Class M-1 Certificates, Class M-2 Certificates, Class M-3
Certificates, Class M-4 Certificates, Class M-5 Certificates, Class M-6 Certificates, Class M-8 Certificates, Class M-9 Certificates, Class M-10 Certificates, Class M-11 Certificates, Class M-12 Certificates, Class M-11 DSI Certificates, Class M-12
DSI Certificates, Class I-1 Certificates, Class I-2 Certificates, Class I-3 Certificates, Certificates, Class C Certificates, and Class R Certificates, and all such Certificates are collectively referred to as the “Certificates”. Terms
capitalized herein and not otherwise defined herein shall have the respective meanings set forth in the Pooling and Servicing Agreement. 
  
 On the 25th day of each month, or, if such day is not a Business Day, then the next succeeding Business Day (each such day being a “Distribution
Date”) commencing October 25, 2005, the owners of the Class M-7 Certificates as of the close of business on the business day immediately preceding such Distribution Date (the “Record Date”) will be entitled to receive the
distribution described in Article IV of the Pooling and Servicing Agreement relating to such Distribution Date. Distributions will be made in immediately available funds to such owners, by wire transfer or by check mailed to the address of the
person entitled thereto as it appears on the Certificate Register. 
  
 Each owner of record of a Class M-7 Certificate will be entitled to receive such owner’s Percentage Interest in the amounts distributed on such Distribution Date to the owners of the Class M-7 Certificates. The Percentage Interest of
each Class M-7 Certificate as of any date of determination will be equal to the percentage obtained by dividing the Original Principal Amount set forth on such Class M-7 Certificate by $18,750,000. 
  
 The Trustee is required to duly and punctually pay distributions with respect
to this Certificate in accordance with the terms hereof and the Pooling and Servicing Agreement. Amounts properly withheld under the Code or applicable to any owner shall be considered as having been paid by the Trustee to such owner for all
purposes of the Pooling and Servicing Agreement. 
  
 The Mortgage
Loans will be serviced by the Servicer pursuant to the Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the Servicer to enter into Sub-Servicing Agreements with certain institutions eligible for appointment as
Sub-Servicers for the servicing and administration of certain Mortgage Loans. No appointment of any Sub-Servicer shall release the Servicer from any of its obligations under the Pooling and Servicing Agreement. 
  
 This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Capital, Inc., NovaStar Financial Inc., or any of their subsidiaries and affiliates and are not
insured or guaranteed by the Federal Deposit Insurance Corporation, the Government National Mortgage Association, or any other governmental agency. This Certificate is limited in right of payment to certain collections and recoveries relating to the
Mortgage Loans and amounts on deposit in the Accounts (except as otherwise provided in the Pooling and Servicing Agreement) all as more specifically set forth hereinabove and in the Pooling and Servicing Agreement. 
  

 A-12-3 

 No owner shall have any right to institute any proceeding, judicial or otherwise, with respect to the
Pooling and Servicing Agreement for the appointment of a receiver or trustee, or for any other remedy under the Pooling and Servicing Agreement except in compliance with the terms thereof. 
  
 Notwithstanding any other provisions in the Pooling and Servicing Agreement,
the owner of any Certificate shall have the right which is absolute and unconditional to receive distributions to the extent provided in the Pooling and Servicing Agreement with respect to such Certificate or to institute suit for the enforcement of
any such distribution, and such right shall not be impaired without the consent of such owner. 
  
 The Pooling and Servicing Agreement will terminate upon notice to the Trustee upon the earliest of (i) the Distribution Date on which the Certificate Principal Balances of the Regular Certificates have been
reduced to zero, (ii) the final payment or other liquidation of the last Mortgage Loan in the Trust, (iii) the optional purchase by the Servicer of the Mortgage Loans as described below, (iv) the Distribution Date in January 2036 and
(v) at any time when a Qualified Liquidation of the Master REMIC and REMIC I, REMIC II, REMIC III and REMIC IV is effected pursuant to the Pooling and Servicing Agreement. In addition, under certain circumstances relating to the qualification
of either the Master REMIC or any of REMIC I, REMIC II, REMIC III or REMIC IV as a REMIC under the Code, the Mortgage Loans may be sold, thereby affecting the early retirement of the Certificates. Notwithstanding the foregoing, in no event shall the
Trust hereby continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James, living on the date of the Pooling and Servicing
Agreement. 
  
 The Servicer may, at its option, terminate the
Pooling and Servicing Agreement on any date on which the aggregate of the Principal Balances of the Mortgage Loans on such date is equal to or less than 10% of the Maximum Collateral Amount, by purchasing, on the next succeeding Distribution Date,
all of the outstanding Mortgage Loans and REO Properties at a price equal to the greater of the Principal Balance of the Mortgage Loans and REO Properties or the market value of the Mortgage Loans and REO Properties, in each case plus accrued and
unpaid interest thereon at the weighted average of the Mortgage Rates through the end of the Due Period preceding the final Distribution Date plus unreimbursed Servicing Advances, Advances, any unpaid Servicing Fees allocable to such Mortgage Loans
and REO Properties and any accrued and unpaid Available Funds Cap Shortfall Amount and Available Funds Cap Carryforward Amount and any unpaid amount due the Trustee, the Swap Counterparties, the Cap Counterparties and the Custodian under the Pooling
and Servicing Agreement. 
  
 The Trustee shall give written notice
of termination of the Pooling and Servicing Agreement to each owner in the manner set forth therein. 
  
 As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the office designated as the location of the Certificate Register, and thereupon one or more new certificates of like
class, tenor and Percentage Interest will be issued to the designated transferee or transferees. 
  

 A-12-4 

 The Trustee is required to furnish certain information on each Distribution Date to the owner of this
Certificate, as more fully described in the Pooling and Servicing Agreement. 
  
 The Class M-7 Certificates are issuable only as registered Certificates in denominations of $25,000 Original Principal Amount and integral multiples of $1,000. As provided in the Pooling and Servicing Agreement and
subject to certain limitations therein set forth, Class M-7 Certificates are exchangeable for new Class M-7 Certificates of authorized denominations evidencing the same aggregate principal amount. 
  
 The Trustee and any agent thereof may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the Trustee or any such agent shall be affected by notice to the contrary. 
  

 A-12-5 

 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed on behalf of the Trust.

  

							
	 	 	 	 	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as
Trustee

				
	 	 	 	 	By:	 	  

	 	 	 	 	Name:	 	 
	 	 	 	 	Title:	 	 
			
	Trustee Authentication	 	 	 	 
			
	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as
Trustee
	 	 	 	 
	By:	 	  

	 	 	 	 
	Name:	 	 	 	 	 	 
	Title:	 	 	 	 	 	 

  

 A-12-6 

 Exhibit A-13 
  
 Form of Class M-8 Certificate 
  
 NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2005-3 
 HOME EQUITY LOAN ASSET-BACKED CERTIFICATE 
 CLASS M-8 CERTIFICATE 
  
 Comprised of a Certificate Representing 
 Certain Interests Relating to a Pool of 
 Mortgage Loans 
 The Mortgage Loans are Serviced by 
  
 NOVASTAR MORTGAGE, INC., as Servicer 
  
 Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the
Trust or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof,
Cede & Co., has an interest herein. 
  
 (This certificate
does not represent an interest in, or an obligation of, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Financial, Inc., NovaStar Capital, Inc. or any of their
subsidiaries and affiliates. This certificate is comprised of a Certificate representing a fractional ownership interest in distributions in certain Accounts created pursuant to the Pooling and Servicing Agreement and certain other rights relating
thereto and is payable only from amounts received by the Trustee relating to the Mortgage Loans and other assets held in the Trust Fund.) 
  

					
	No.: M-8	 	Date: September 22, 2005	 	CUSIP: 66987X HE 8
			
	 Original Principal Balance:
 $18,750,000
	 	 Registered Owner:
 CEDE & CO.
	 	 Final Scheduled Distribution
 Date: January 25,
2036

			
	Percentage Interest: 100%	 	 Pass-Through Rate:
 LIBOR + 1.2500%
	 	 

  
 The registered owner
named above is the registered owner of a fractional interest in (i) each Mortgage Loan identified on the Mortgage Loan Schedule attached as Exhibit B to that certain Pooling and Servicing Agreement dated as of September 1, 2005 (the
“Pooling and Servicing Agreement”) by and among NovaStar Mortgage Funding Corporation as the company (the “Company”), JPMorgan Chase Bank, National Association, as trustee (the “Trustee”), J.P. Morgan Trust Company,
National Association, as co-trustee (the “Co-Trustee”), Wachovia Bank, National Association, as the custodian (the “Custodian”), and NovaStar Mortgage, Inc. as servicer (the “Servicer”) and as seller (the
“Seller”), including the related Cut-off Date Principal 

 Balance, all interest accruing thereon on and after the Cut-off Date and all collections in respect of interest and
principal due after the Cut-off Date; (ii) property which secured each such Mortgage Loan and which has been acquired by foreclosure or deed in lieu of foreclosure; (iii) the Company’s interest in any insurance policies in respect of
the Mortgage Loans; (iv) all proceeds of any of the foregoing; (v) the rights of the Company under the Purchase Agreement and (vi) all other assets included or to be included in the Trust fund. Such assignment includes all interest
and principal due to the Company or the Servicer after the Cut-off Date with respect to the Mortgage Loans. 
  
 The Original Principal Amount set forth above is equal to the product of (i) the Percentage Interest represented by this Certificate and
(ii) the aggregate Original Principal Amount of the Class M-8 Certificates on September 22, 2005 which aggregate amount was $18,750,000. The owner hereof is entitled to principal payments on each Distribution Date, as hereinafter
described, which will fully amortize such Original Principal Amount over the period from the date of initial delivery hereof to the final Distribution Date of the Class M-8 Certificates. Therefore, the actual outstanding principal amount of this
Certificate, on any date subsequent to October 25, 2005 (the first Distribution Date) will be less than the Original Principal Amount set forth above. 
  
 In order to receive the final distribution hereon, the owner hereof is required to present this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution due on this Certificate, this Certificate shall be deemed cancelled for all purposes under the Pooling and Servicing Agreement. 
  
 SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN A CLASS OF “REGULAR INTERESTS” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT” (“REMIC”) AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE “CODE”), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS (SECTIONS 860A THROUGH 860G) OF THE CODE. 
  
 THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS REPRESENTED
HEREBY (OTHER THAN AS REQUIRED FOR FEDERAL INCOME TAX PURPOSES). 
  
 NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY. 
  
 This Certificate is one of a Class of duly-authorized Certificates designated
as NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3, Class M-8 Certificates (the “Class M-8 Certificates”) and issued under and subject to the terms, provisions and conditions of the Pooling and Servicing Agreement, to
which the owner of this Certificate, by virtue of acceptance hereof assents, and is bound. Also issued under the Pooling and Servicing Agreement are the Class A-1A Certificates, Class A-2A Certificates, Class A-2B Certificates,
Class A-2C Certificates, Class A-2D Certificates, Class M-1 Certificates, Class M-2 Certificates, 
  

 A-13-2 

 Class M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates, Class M-6 Certificates, Class M-7 Certificates,
Class M-9 Certificates, Class M-10 Certificates, Class M-11 Certificates, Class M-12 Certificates, Class M-11 DSI Certificates, Class M-12 DSI Certificates, Class I-1 Certificates, Class I-2 Certificates, Class I-3 Certificates, Certificates, Class
C Certificates, and Class R Certificates, and all such Certificates are collectively referred to as the “Certificates”. 
  
 Terms capitalized herein and not otherwise defined herein shall have the respective meanings set forth in the Pooling and Servicing Agreement. 

 
 On the 25th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a “Distribution Date”) commencing October 25, 2005, the owners of the Class M-8 Certificates as of the close of business on the business day immediately preceding such Distribution
Date (the “Record Date”) will be entitled to receive the distribution described in Article IV of the Pooling and Servicing Agreement relating to such Distribution Date. Distributions will be made in immediately available funds to such
owners, by wire transfer or by check mailed to the address of the person entitled thereto as it appears on the Certificate Register. 
  
 Each owner of record of a Class M-8 Certificate will be entitled to receive such owner’s Percentage Interest in the amounts distributed on such
Distribution Date to the owners of the Class M-8 Certificates. The Percentage Interest of each Class M-8 Certificate as of any date of determination will be equal to the percentage obtained by dividing the Original Principal Amount set forth on such
Class M-8 Certificate by $18,750,000. 
  
 The Trustee is required
to duly and punctually pay distributions with respect to this Certificate in accordance with the terms hereof and the Pooling and Servicing Agreement. Amounts properly withheld under the Code or applicable to any owner shall be considered as having
been paid by the Trustee to such owner for all purposes of the Pooling and Servicing Agreement. 
  
 The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions eligible for appointment as Sub-Servicers for the servicing and administration of certain Mortgage Loans. No appointment of any Sub-Servicer shall release the Servicer from
any of its obligations under the Pooling and Servicing Agreement. 
  
 This Certificate does not represent a deposit or other obligation of, or an interest in, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Capital, Inc.,
NovaStar Financial Inc., or any of their subsidiaries and affiliates and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the Government National Mortgage Association, or any other governmental agency. This Certificate is
limited in right of payment to certain collections and recoveries relating to the Mortgage Loans and amounts on deposit in the Accounts (except as otherwise provided in the Pooling and Servicing Agreement) all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement. 
  

 A-13-3 

 No owner shall have any right to institute any proceeding, judicial or otherwise, with respect to the
Pooling and Servicing Agreement for the appointment of a receiver or trustee, or for any other remedy under the Pooling and Servicing Agreement except in compliance with the terms thereof. 
  
 Notwithstanding any other provisions in the Pooling and Servicing Agreement,
the owner of any Certificate shall have the right which is absolute and unconditional to receive distributions to the extent provided in the Pooling and Servicing Agreement with respect to such Certificate or to institute suit for the enforcement of
any such distribution, and such right shall not be impaired without the consent of such owner. 
  
 The Pooling and Servicing Agreement will terminate upon notice to the Trustee upon the earliest of (i) the Distribution Date on which the Certificate Principal Balances of the Regular Certificates have been
reduced to zero, (ii) the final payment or other liquidation of the last Mortgage Loan in the Trust, (iii) the optional purchase by the Servicer of the Mortgage Loans as described below, (iv) the Distribution Date in January 2036 and
(v) at any time when a Qualified Liquidation of the Master REMIC and REMIC I, REMIC II, REMIC III and REMIC IV is effected pursuant to the Pooling and Servicing Agreement. In addition, under certain circumstances relating to the qualification
of either the Master REMIC or any of REMIC I, REMIC II, REMIC III or REMIC IV as a REMIC under the Code, the Mortgage Loans may be sold, thereby affecting the early retirement of the Certificates. Notwithstanding the foregoing, in no event shall the
Trust hereby continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James, living on the date of the Pooling and Servicing
Agreement. 
  
 The Servicer may, at its option, terminate the
Pooling and Servicing Agreement on any date on which the aggregate of the Principal Balances of the Mortgage Loans on such date is equal to or less than 10% of the Maximum Collateral Amount, by purchasing, on the next succeeding Distribution Date,
all of the outstanding Mortgage Loans and REO Properties at a price equal to the greater of the Principal Balance of the Mortgage Loans and REO Properties or the market value of the Mortgage Loans and REO Properties, in each case plus accrued and
unpaid interest thereon at the weighted average of the Mortgage Rates through the end of the Due Period preceding the final Distribution Date plus unreimbursed Servicing Advances, Advances, any unpaid Servicing Fees allocable to such Mortgage Loans
and REO Properties and any accrued and unpaid Available Funds Cap Shortfall Amount and Available Funds Cap Carryforward Amount and any unpaid amount due the Trustee, the Swap Counterparties, the Cap Counterparties and the Custodian under the Pooling
and Servicing Agreement. 
  
 The Trustee shall give written notice
of termination of the Pooling and Servicing Agreement to each owner in the manner set forth therein. 
  
 As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the office designated as the location of the Certificate Register, and thereupon one or more new certificates of like
class, tenor and Percentage Interest will be issued to the designated transferee or transferees. 
  

 A-13-4 

 The Trustee is required to furnish certain information on each Distribution Date to the owner of this
Certificate, as more fully described in the Pooling and Servicing Agreement. 
  
 The Class M-8 Certificates are issuable only as registered Certificates in denominations of $25,000 Original Principal Amount and integral multiples of $1,000. As provided in the Pooling and Servicing Agreement and
subject to certain limitations therein set forth, Class M-8 Certificates are exchangeable for new Class M-8 Certificates of authorized denominations evidencing the same aggregate principal amount. 
  
 The Trustee and any agent thereof may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the Trustee or any such agent shall be affected by notice to the contrary. 
  

 A-13-5 

 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed on behalf of the Trust.

  

	
	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as
Trustee

  

			
	By:	 	  

	 	 	Name:
	 	 	Title:

  

	
	 Trustee Authentication

	
	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as Trustee

  

			
	 By:
	 	  

	 	 	 Name:

	 	 	 Title:

  

 A-13-6 

 Exhibit A-14 
  
 Form of Class M-9 Certificate 
  
 NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2005-3 
 HOME EQUITY LOAN ASSET-BACKED CERTIFICATE 
 CLASS M-9 CERTIFICATE 
  
 Comprised of a Certificate Representing 
 Certain Interests Relating to a Pool of 
 Mortgage Loans 
 The Mortgage Loans are Serviced by 
  
 NOVASTAR MORTGAGE, INC., as Servicer 
  
 Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the
Trust or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof,
Cede & Co., has an interest herein. 
  
 (This certificate
does not represent an interest in, or an obligation of, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Financial, Inc., NovaStar Capital, Inc. or any of their
subsidiaries and affiliates. This certificate is comprised of a Certificate representing a fractional ownership interest in distributions in certain Accounts created pursuant to the Pooling and Servicing Agreement and certain other rights relating
thereto and is payable only from amounts received by the Trustee relating to the Mortgage Loans and other assets held in the Trust Fund.) 
  

					
	No.: M-9	 	Date: September 22, 2005	 	CUSIP: 66987X HF 5
			
	 Original Principal Balance:
 $17,500,000
	 	 Registered Owner:
 CEDE & CO.
	 	 Final Scheduled Distribution
 Date: January 25,
2036

			
	Percentage Interest: 100%	 	 Pass-Through Rate:
 LIBOR + 1.7300%
	 	 

  
 The registered owner
named above is the registered owner of a fractional interest in (i) each Mortgage Loan identified on the Mortgage Loan Schedule attached as Exhibit B to that certain Pooling and Servicing Agreement dated as of September 1, 2005 (the
“Pooling and Servicing Agreement”) by and among NovaStar Mortgage Funding Corporation as the company (the “Company”), JPMorgan Chase Bank, National Association, as trustee (the “Trustee”), J.P. Morgan Trust Company,
National Association, as co-trustee (the “Co-Trustee”), Wachovia Bank, National Association, as the custodian (the “Custodian”), and NovaStar Mortgage, Inc. as servicer (the “Servicer”) and as seller (the
“Seller”), including the related Cut-off Date Principal 

 Balance, all interest accruing thereon on and after the Cut-off Date and all collections in respect of interest and
principal due after the Cut-off Date; (ii) property which secured each such Mortgage Loan and which has been acquired by foreclosure or deed in lieu of foreclosure; (iii) the Company’s interest in any insurance policies in respect of
the Mortgage Loans; (iv) all proceeds of any of the foregoing; (v) the rights of the Company under the Purchase Agreement and (vi) all other assets included or to be included in the Trust fund. Such assignment includes all interest
and principal due to the Company or the Servicer after the Cut-off Date with respect to the Mortgage Loans. 
  
 The Original Principal Amount set forth above is equal to the product of (i) the Percentage Interest represented by this Certificate and
(ii) the aggregate Original Principal Amount of the Class M-9 Certificates on September 22, 2005 which aggregate amount was $17,500,000. The owner hereof is entitled to principal payments on each Distribution Date, as hereinafter
described, which will fully amortize such Original Principal Amount over the period from the date of initial delivery hereof to the final Distribution Date of the Class M-9 Certificates. Therefore, the actual outstanding principal amount of this
Certificate, on any date subsequent to October 25, 2005 (the first Distribution Date) will be less than the Original Principal Amount set forth above. 
  
 In order to receive the final distribution hereon, the owner hereof is required to present this Certificate to the Trustee. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution due on this Certificate, this Certificate shall be deemed cancelled for all purposes under the Pooling and Servicing Agreement. 
  
 SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN A CLASS OF “REGULAR INTERESTS” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT” (“REMIC”) AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE “CODE”), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS (SECTIONS 860A THROUGH 860G) OF THE CODE. 
  
 THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS REPRESENTED
HEREBY (OTHER THAN AS REQUIRED FOR FEDERAL INCOME TAX PURPOSES). 
  
 NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY. 
  
 This Certificate is one of a Class of duly-authorized Certificates designated
as NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3, Class M-9 Certificates (the “Class M-9 Certificates”) and issued under and subject to the terms, provisions and conditions of the Pooling and Servicing Agreement, to
which the owner of this Certificate, by virtue of acceptance hereof assents, and is bound. Also issued under the Pooling and Servicing Agreement are the Class A-1A Certificates, Class A-2A Certificates, Class A-2B Certificates,
Class A-2C Certificates, Class A-2D Certificates, Class M-1 Certificates, Class M-2 Certificates, 
  

 A-14-2 

 Class M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates, Class M-6 Certificates, Class M-7 Certificates,
Class M-8 Certificates, Class M-10 Certificates, Class M-11 Certificates, Class M-12 Certificates, Class M-11 DSI Certificates, Class M-12 DSI Certificates, Class I-1 Certificates, Class I-2 Certificates, Class I-3 Certificates, Certificates, Class
C Certificates, and Class R Certificates, and all such Certificates are collectively referred to as the “Certificates”. Terms capitalized herein and not otherwise defined herein shall have the respective meanings set forth in the Pooling
and Servicing Agreement. 
  
 On the 25th day of each month, or, if
such day is not a Business Day, then the next succeeding Business Day (each such day being a “Distribution Date”) commencing October 25, 2005, the owners of the Class M-9 Certificates as of the close of business on the business day
immediately preceding such Distribution Date (the “Record Date”) will be entitled to receive the distribution described in Article IV of the Pooling and Servicing Agreement relating to such Distribution Date. Distributions will be made in
immediately available funds to such owners, by wire transfer or by check mailed to the address of the person entitled thereto as it appears on the Certificate Register. 
  
 Each owner of record of a Class M-9 Certificate will be entitled to receive such owner’s Percentage Interest in the
amounts distributed on such Distribution Date to the owners of the Class M-9 Certificates. The Percentage Interest of each Class M-9 Certificate as of any date of determination will be equal to the percentage obtained by dividing the Original
Principal Amount set forth on such Class M-9 Certificate by $17,500,000. 
  
 The Trustee is required to duly and punctually pay distributions with respect to this Certificate in accordance with the terms hereof and the Pooling and Servicing Agreement. Amounts properly withheld under the Code
or applicable to any owner shall be considered as having been paid by the Trustee to such owner for all purposes of the Pooling and Servicing Agreement. 
  
 The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions eligible for appointment as Sub-Servicers for the servicing and administration of certain Mortgage Loans. No appointment of any Sub-Servicer shall release the Servicer from
any of its obligations under the Pooling and Servicing Agreement. 
  
 This Certificate does not represent a deposit or other obligation of, or an interest in, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Capital, Inc.,
NovaStar Financial Inc., or any of their subsidiaries and affiliates and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the Government National Mortgage Association, or any other governmental agency. This Certificate is
limited in right of payment to certain collections and recoveries relating to the Mortgage Loans and amounts on deposit in the Accounts (except as otherwise provided in the Pooling and Servicing Agreement) all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement. 
  
 No
owner shall have any right to institute any proceeding, judicial or otherwise, with respect to the Pooling and Servicing Agreement for the appointment of a receiver or trustee, or for any other remedy under the Pooling and Servicing Agreement except
in compliance with the terms thereof. 
  

 A-14-3 

 Notwithstanding any other provisions in the Pooling and Servicing Agreement, the owner of any Certificate
shall have the right which is absolute and unconditional to receive distributions to the extent provided in the Pooling and Servicing Agreement with respect to such Certificate or to institute suit for the enforcement of any such distribution, and
such right shall not be impaired without the consent of such owner. 
  
 The Pooling and Servicing Agreement will terminate upon notice to the Trustee upon the earliest of (i) the Distribution Date on which the Certificate Principal Balances of the Regular Certificates have been reduced to zero,
(ii) the final payment or other liquidation of the last Mortgage Loan in the Trust, (iii) the optional purchase by the Servicer of the Mortgage Loans as described below, (iv) the Distribution Date in January 2036 and (v) at any
time when a Qualified Liquidation of the Master REMIC and REMIC I, REMIC II, REMIC III and REMIC IV is effected pursuant to the Pooling and Servicing Agreement. In addition, under certain circumstances relating to the qualification of either the
Master REMIC or any of REMIC I, REMIC II, REMIC III or REMIC IV as a REMIC under the Code, the Mortgage Loans may be sold, thereby affecting the early retirement of the Certificates. Notwithstanding the foregoing, in no event shall the Trust hereby
continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James, living on the date of the Pooling and Servicing Agreement.

  
 The Servicer may, at its option, terminate the Pooling and
Servicing Agreement on any date on which the aggregate of the Principal Balances of the Mortgage Loans on such date is equal to or less than 10% of the Maximum Collateral Amount, by purchasing, on the next succeeding Distribution Date, all of the
outstanding Mortgage Loans and REO Properties at a price equal to the greater of the Principal Balance of the Mortgage Loans and REO Properties or the market value of the Mortgage Loans and REO Properties, in each case plus accrued and unpaid
interest thereon at the weighted average of the Mortgage Rates through the end of the Due Period preceding the final Distribution Date plus unreimbursed Servicing Advances, Advances, any unpaid Servicing Fees allocable to such Mortgage Loans and REO
Properties and any accrued and unpaid Available Funds Cap Shortfall Amount and Available Funds Cap Carryforward Amount and any unpaid amount due the Trustee, the Swap Counterparties, the Cap Counterparties and the Custodian under the Pooling and
Servicing Agreement. 
  
 The Trustee shall give written notice of
termination of the Pooling and Servicing Agreement to each owner in the manner set forth therein. 
  
 As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the office designated as the location of the Certificate Register, and thereupon one or more new certificates of like
class, tenor and Percentage Interest will be issued to the designated transferee or transferees. 
  
 The Trustee is required to furnish certain information on each Distribution Date to the owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement. 
  

 A-14-4 

 The Class M-9 Certificates are issuable only as registered Certificates in denominations of $25,000
Original Principal Amount and integral multiples of $1,000. As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth, Class M-9 Certificates are exchangeable for new Class M-9 Certificates of authorized
denominations evidencing the same aggregate principal amount. 
  
 The Trustee and any agent thereof may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the Trustee or any such agent shall be affected by notice to the contrary. 
  

 A-14-5 

 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed on behalf of the Trust.

  

	
	 JPMORGAN CHASE BANK,
      NATIONAL ASSOCIATION, not in its
     individual capacity, but solely in its
      capacity as Trustee

  

			
	By:	 	  

	Name:
	Title:

  

	
	 Trustee Authentication

	
	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as Trustee

  

			
	 By:
	 	  

	 Name:

	 Title:

  

 A-14-6 

 Exhibit A-15 
  
 Form of Class M-10 Certificate 
  
 NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2005-3 
 HOME EQUITY LOAN ASSET-BACKED CERTIFICATE 
 CLASS M-10 CERTIFICATE 
  
 Comprised of a Certificate Representing 
 Certain Interests Relating to a Pool of 
 Mortgage Loans The Mortgage Loans are Serviced by 
  
 NOVASTAR MORTGAGE, INC., as Servicer 
  
 Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation (“DTC”), to the Trust or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. 
  
 (This certificate does not represent an interest in, or an obligation of, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar
Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Financial, Inc., NovaStar Capital, Inc. or any of their subsidiaries and affiliates. This certificate is comprised of a Certificate representing a fractional ownership interest in
distributions in certain Accounts created pursuant to the Pooling and Servicing Agreement and certain other rights relating thereto and is payable only from amounts received by the Trustee relating to the Mortgage Loans and other assets held in the
Trust Fund.) 
  

					
	No.: M-10	 	Date: September 22, 2005	 	CUSIP: 66987X HG 3
			
	 Original Principal Balance:
 $16,250,000
	 	 Registered Owner:
 CEDE & CO.
	 	 Final Scheduled Distribution
 Date: January 25,
2036

			
	Percentage Interest: 100%	 	 Pass-Through Rate:
 LIBOR + 2.7500%
	 	 

  
 The registered owner
named above is the registered owner of a fractional interest in (i) each Mortgage Loan identified on the Mortgage Loan Schedule attached as Exhibit B to that certain Pooling and Servicing Agreement dated as of September 1, 2005 (the
“Pooling and Servicing Agreement”) by and among NovaStar Mortgage Funding Corporation, as the company (the “Company”), JPMorgan Chase Bank, National Association, as trustee (the “Trustee”), J.P. Morgan Trust Company,
National Association, as co-trustee (the “Co-Trustee”), Wachovia Bank, National Association, as the custodian (the “Custodian”), and NovaStar Mortgage, Inc. as servicer (the “Servicer”) and as seller (the
“Seller”), including the related Cut-off Date Principal Balance, all interest accruing thereon on and after the Cut-off Date and all collections in respect 

 of interest and principal due after the Cut-off Date; (ii) property which secured each such Mortgage Loan and which
has been acquired by foreclosure or deed in lieu of foreclosure; (iii) the Company’s interest in any insurance policies in respect of such Mortgage Loans; (iv) all proceeds of any of the foregoing; (v) the rights of the Company
under the Purchase Agreement and (vi) all other assets included or to be included in the Trust Fund. Such assignment includes all interest and principal due to the Company or the Servicer after the Cut-off Date with respect to the Mortgage
Loans. 
  
 The Original Principal Amount set forth above is equal
to the product of (i) the Percentage Interest represented by this Certificate and (ii) the aggregate Original Principal Amount of the Class M-10 Certificates on September 22, 2005 which aggregate amount was $16,250,000. The owner
hereof is entitled to principal payments on each Distribution Date, which will fully amortize such Original Principal Amount over the period from the date of initial delivery hereof to the final Distribution Date of the Class M-10 Certificates.
Therefore, the actual outstanding principal amount of this Certificate, on any date subsequent to October 25, 2005 (the first Distribution Date) will be less than the Original Principal Amount set forth above. 
  
 In order to receive the final distribution hereon, the owner hereof is
required to present this Certificate to the Trustee. The Pooling and Servicing Agreement provides that, in any event, upon the making of the final distribution due on this Certificate, this Certificate shall be deemed cancelled for all purposes
under the Pooling and Servicing Agreement. 
  
 SOLELY FOR FEDERAL
INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN INTEREST IN A CLASS OF “REGULAR INTERESTS” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT” (“REMIC”) AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS (SECTIONS 860A THROUGH 860G) OF THE CODE. 
  

THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY (OTHER THAN AS REQUIRED FOR FEDERAL INCOME TAX PURPOSES). 
  
 NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY. 
  
 This Certificate is one of a Class of duly-authorized Certificates designated
as NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3, Class M-10 Certificates (the “Class M-10 Certificates”) and issued under and subject to the terms, provisions and conditions of the Pooling and Servicing Agreement, to
which the owner of this Certificate, by virtue of acceptance hereof assents, and is bound. Also issued under the Pooling and Servicing Agreement are the Class A-1A Certificates, Class A-2A Certificates, Class A-2B Certificates,
Class A-2C Certificates, Class A-2D Certificates, Class M-1 Certificates, Class M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates, Class M-6 Certificates, Class M-7 Certificates, Class M-8
Certificates, Class M-9 Certificates, Class M-11 Certificates, 
  

 A-15-2 

 Class M-12 Certificates, Class M-11 DSI Certificates, Class M-12 DSI Certificates, Class I-1 Certificates, Class I-2
Certificates, Class I-3 Certificates, Certificates, Class C Certificates, and Class R Certificates, and all such Certificates are collectively referred to as the “Certificates”. Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing Agreement. 
  
 On the 25th day of each month, or, if such day is not a Business Day, then the next succeeding Business Day (each such day being a “Distribution Date”) commencing October 25, 2005, the owners of the
Class M-10 Certificates as of the close of business on the business day immediately preceding such Distribution Date (the “Record Date”) will be entitled to the distribution described in Article IV of the Pooling and Servicing Agreement,
relating to such Distribution Date. Distributions will be made in immediately available funds to such owners, by wire transfer or by check mailed to the address of the person entitled thereto as it appears on the Certificate Register. 
  
 Each owner of record of a Class M-10 Certificate will be entitled to receive
such owner’s Percentage Interest in the amounts distributed on such Distribution Date to the owners of the Class M-10 Certificates. The Percentage Interest of each Class M-10 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the Original Principal Amount set forth on such Class M-10 Certificate by $16,250,000. 
  
 The Trustee is required to duly and punctually pay distributions with respect to this Certificate in accordance with the terms hereof and the Pooling and
Servicing Agreement. Amounts properly withheld under the Code or applicable to any owner shall be considered as having been paid by the Trustee to such owner for all purposes of the Pooling and Servicing Agreement. 
  
 The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling
and Servicing Agreement. The Pooling and Servicing Agreement permits the Servicer to enter into Sub-Servicing Agreements with certain institutions eligible for appointment as Sub-Servicers for the servicing and administration of certain Mortgage
Loans. No appointment of any Sub-Servicer shall release the Servicer from any of its obligations under the Pooling and Servicing Agreement. 
  
 This Certificate does not represent a deposit or other obligation of, or an interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Capital, Inc., NovaStar Financial Inc., or any of their subsidiaries and affiliates and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the
Government National Mortgage Association, or any other governmental agency. This Certificate is limited in right of payment to certain collections and recoveries relating to the Mortgage Loans and amounts on deposit in the Accounts (except as
otherwise provided in the Pooling and Servicing Agreement) all as more specifically set forth hereinabove and in the Pooling and Servicing Agreement. 
  
 No owner shall have any right to institute any proceeding, judicial or otherwise, with respect to the Pooling and Servicing Agreement for the appointment
of a receiver or trustee, or for any other remedy under the Pooling and Servicing Agreement except in compliance with the terms thereof. 
  

 A-15-3 

 Notwithstanding any other provisions in the Pooling and Servicing Agreement, the owner of any Certificate
shall have the right which is absolute and unconditional to receive distributions to the extent provided in the Pooling and Servicing Agreement with respect to such Certificate or to institute suit for the enforcement of any such distribution, and
such right shall not be impaired without the consent of such owner. 
  
 The Pooling and Servicing Agreement will terminate upon notice to the Trustee upon the earliest of (i) the Distribution Date on which the Certificate Principal Balances of the Regular Certificates have been reduced to zero,
(ii) the final payment or other liquidation of the last Mortgage Loan in the Trust, (iii) the optional purchase by the Servicer of the Mortgage Loans as described below, (iv) the Distribution Date in January 2036 and (v) at any
time when a Qualified Liquidation of the Master REMIC and REMIC I, REMIC II, REMIC III and REMIC IV is effected pursuant to the Pooling and Servicing Agreement. In addition, under certain circumstances relating to the qualification of either the
Master REMIC or any of REMIC I, REMIC II, REMIC III or REMIC IV as a REMIC under the Code, the Mortgage Loans may be sold, thereby affecting the early retirement of the Certificates. Notwithstanding the foregoing, in no event shall the Trust hereby
continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James, living on the date of the Pooling and Servicing Agreement.

  
 The Servicer may, at its option, terminate the Pooling and
Servicing Agreement on any date on which the aggregate of the Principal Balances of the Mortgage Loans on such date is equal to or less than 10% of the Maximum Collateral Amount, by purchasing, on the next succeeding Distribution Date, all of the
outstanding Mortgage Loans and REO Properties at a price equal to the greater of the Principal Balance of the Mortgage Loans and REO Properties or the market value of the Mortgage Loans and REO Properties, in each case plus accrued and unpaid
interest thereon at the weighted average of the Mortgage Rates through the end of the Due Period preceding the final Distribution Date plus unreimbursed Servicing Advances, Advances, any unpaid Servicing Fees allocable to such Mortgage Loans and REO
Properties and any accrued and unpaid Available Funds Cap Shortfall Amount and Available Funds Cap Carryforward Amount and any unpaid amount due the Trustee, the Swap Counterparties, the Cap Counterparties and the Custodian under the Pooling and
Servicing Agreement. 
  
 The Trustee shall give written notice of
termination of the Pooling and Servicing Agreement to each owner in the manner set forth therein. 
  
 As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the office designated as the location of the Certificate Register, and thereupon one or more new certificates of like
class, tenor and Percentage Interest will be issued to the designated transferee or transferees. 
  
 The Trustee is required to furnish certain information on each Distribution Date to the owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement. 
  
 The Class M-10 Certificates are
issuable only as registered Certificates in denominations of $25,000 Original Principal Amount and integral multiples of $1,000. As 
  

 A-15-4 

 provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth, Class M-10
Certificates are exchangeable for new Class M-10 Certificates of authorized denominations evidencing the same aggregate principal amount. 
  
 The Trustee and any agent thereof may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the
Trustee or any such agent shall be affected by notice to the contrary. 
  

 A-15-5 

 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed on behalf of the Trust.

  

	
	 JPMORGAN CHASE BANK,
      NATIONAL ASSOCIATION, not in its
      individual capacity, but solely in its
      capacity as Trustee

  

			
	By:	 	  

	Name:
	Title:

  

	
	 Trustee Authentication

	
	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as Trustee

  

			
	 By:
	 	  

	 Name:

	 Title:

  

 A-15-6 

 Exhibit A-16 
  
 Form of Class M-11 Certificate 
  
 NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2005-3 
 HOME EQUITY LOAN ASSET-BACKED CERTIFICATE 
 CLASS M-11 CERTIFICATE 
  
 Comprised of a Certificate Representing 
 Certain Interests Relating to a Pool of 
 Mortgage Loans The Mortgage Loans are Serviced by 
  
 NOVASTAR MORTGAGE, INC., as Servicer 
  
 (This certificate does not represent an interest in, or an obligation of, nor
are the underlying Mortgage Loans insured or guaranteed by, NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Financial, Inc., NovaStar Capital, Inc. or any of their subsidiaries and affiliates. This certificate is comprised
of a Certificate representing a fractional ownership interest in distributions in certain Accounts created pursuant to the Pooling and Servicing Agreement and certain other rights relating thereto and is payable only from amounts received by the
Trustee relating to the Mortgage Loans and other assets held in the Trust Fund.) 
  
 THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE
MADE ONLY IN A TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS OF THE POOLING AND SERVICING AGREEMENT. 
  
 NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN MAY BE MADE TO (I) AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN
SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”)) THAT IS SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN (AS DEFINED IN SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE “CODE”)) THAT IS SUBJECT TO SECTION 4975 OF THE CODE OR (III) ANY PERSON ACTING, DIRECTLY OR INDIRECTLY, ON BEHALF OF ANY PLAN DESCRIBED IN (I) OR (II) OR ACQUIRING THIS CERTIFICATE OR ANY INTEREST HEREIN
WITH THE ASSETS OF ANY SUCH PLAN. 
  

					
	No.: [M-11-1/M-11-2/M-11-3]	 	Date: September 22, 2005	 	CUSIP: 66987X HH 1
			
	 Original Principal Balance:
 $25,000,000
	 	 Registered Owner:
 [Greenwich Capital Financial Products,
Inc./Wachovia Investment Holdings,
 LLC/Newport Funding Corp.]
	 	Final Scheduled Distribution Date: January 25, 2036
			
	 Percentage Interest:
 1/3 of 100%
	 	 Pass-Through Rate:
 LIBOR + 2.7500%
	 	 

 The registered owner named above is the registered owner of a fractional interest in (i) each
Mortgage Loan identified on the Mortgage Loan Schedule attached as Exhibit B to that certain Pooling and Servicing Agreement dated as of September 1, 2005 (the “Pooling and Servicing Agreement”) by and among NovaStar Mortgage Funding
Corporation, as the company (the “Company”), JPMorgan Chase Bank, National Association, as trustee (the “Trustee”), J.P. Morgan Trust Company, National Association, as co-trustee (the “Co-Trustee”), Wachovia Bank,
National Association, as the custodian (the “Custodian”), and NovaStar Mortgage, Inc. as servicer (the “Servicer”) and as seller (the “Seller”), including the related Cut-off Date Principal Balance, all interest
accruing thereon on and after the Cut-off Date and all collections in respect of interest and principal due after the Cut-off Date; (ii) property which secured each such Mortgage Loan and which has been acquired by foreclosure or deed in lieu
of foreclosure; (iii) the Company’s interest in any insurance policies in respect of such Mortgage Loans; (iv) all proceeds of any of the foregoing; (v) the rights of the Company under the Purchase Agreement and (vi) all
other assets included or to be included in the Trust Fund. Such assignment includes all interest and principal due to the Company or the Servicer after the Cut-off Date with respect to the Mortgage Loans. 
  
 The Original Principal Amount set forth above is equal to the product of
(i) the Percentage Interest represented by this Certificate and (ii) the aggregate Original Principal Amount of the Class M-11 Certificates on September 22, 2005 which aggregate amount was $25,000,000. The owner hereof is entitled to
principal payments on each Distribution Date, which will fully amortize such Original Principal Amount over the period from the date of initial delivery hereof to the final Distribution Date of the Class M-11 Certificates. Therefore, the actual
outstanding principal amount of this Certificate, on any date subsequent to October 25, 2005 (the first Distribution Date) will be less than the Original Principal Amount set forth above. 
  
 In order to receive the final distribution hereon, the owner hereof is
required to present this Certificate to the Trustee. The Pooling and Servicing Agreement provides that, in any event, upon the making of the final distribution due on this Certificate, this Certificate shall be deemed cancelled for all purposes
under the Pooling and Servicing Agreement. 
  
 SOLELY FOR FEDERAL
INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN INTEREST IN A CLASS OF “REGULAR INTERESTS” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT” (“REMIC”) AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS (SECTIONS 860A THROUGH 860G) OF THE CODE. 
  

THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY (OTHER THAN AS REQUIRED FOR FEDERAL INCOME TAX PURPOSES). 
  

 A-16-2 

 NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY. 
  
 This Certificate is one of a Class of duly-authorized Certificates designated as NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3, Class
M-11 Certificates (the “Class M-11 Certificates”) and issued under and subject to the terms, provisions and conditions of the Pooling and Servicing Agreement, to which the owner of this Certificate, by virtue of acceptance hereof assents,
and is bound. Also issued under the Pooling and Servicing Agreement are the Class A-1A Certificates, Class A-2A Certificates, Class A-2B Certificates, Class A-2C Certificates, Class A-2D Certificates, Class M-1 Certificates,
Class M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates, Class M-6 Certificates, Class M-7 Certificates, Class M-8 Certificates, Class M-9 Certificates, Class M-10 Certificates, Class M-12 Certificates, Class
M-11 DSI Certificates, Class M-12 DSI Certificates, Class I-1 Certificates, Class I-2 Certificates, Class I-3 Certificates, Certificates, Class C Certificates, and Class R Certificates, and all such Certificates are collectively referred to as the
“Certificates”. Terms capitalized herein and not otherwise defined herein shall have the respective meanings set forth in the Pooling and Servicing Agreement. 
  
 On the 25th day of each month, or, if such day is not a Business Day, then the next succeeding Business Day (each such day
being a “Distribution Date”) commencing October 25, 2005, the owners of the Class M-11 Certificates as of the close of business on the business day immediately preceding such Distribution Date (the “Record Date”) will be
entitled to the distribution described in Article IV of the Pooling and Servicing Agreement, relating to such Distribution Date. Distributions will be made in immediately available funds to such owners, by wire transfer or by check mailed to the
address of the person entitled thereto as it appears on the Certificate Register. 
  
 Each owner of record of a Class M-11 Certificate will be entitled to receive such owner’s Percentage Interest in the amounts distributed on such Distribution Date to the owners of the Class M-11 Certificates. The
Percentage Interest of each Class M-11 Certificate as of any date of determination will be equal to the percentage obtained by dividing the Original Principal Amount set forth on such Class M-11 Certificate by $25,000,000. 
  
 The Trustee is required to duly and punctually pay distributions with respect
to this Certificate in accordance with the terms hereof and the Pooling and Servicing Agreement. Amounts properly withheld under the Code or applicable to any owner shall be considered as having been paid by the Trustee to such owner for all
purposes of the Pooling and Servicing Agreement. 
  
 The Mortgage
Loans will be serviced by the Servicer pursuant to the Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the Servicer to enter into Sub-Servicing Agreements with certain institutions eligible for appointment as
Sub-Servicers for the servicing and administration of certain Mortgage Loans. No appointment of any Sub-Servicer shall release the Servicer from any of its obligations under the Pooling and Servicing Agreement. 
  

 A-16-3 

 This Certificate does not represent a deposit or other obligation of, or an interest in, nor are the
underlying Mortgage Loans insured or guaranteed by, NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Capital, Inc., NovaStar Financial Inc., or any of their subsidiaries and affiliates and are not insured or guaranteed by the
Federal Deposit Insurance Corporation, the Government National Mortgage Association, or any other governmental agency. This Certificate is limited in right of payment to certain collections and recoveries relating to the Mortgage Loans and amounts
on deposit in the Accounts (except as otherwise provided in the Pooling and Servicing Agreement) all as more specifically set forth hereinabove and in the Pooling and Servicing Agreement. 
  
 No owner shall have any right to institute any proceeding, judicial or otherwise, with respect to the Pooling and Servicing
Agreement for the appointment of a receiver or trustee, or for any other remedy under the Pooling and Servicing Agreement except in compliance with the terms thereof. 
  
 Notwithstanding any other provisions in the Pooling and Servicing Agreement, the owner of any Certificate shall have the
right which is absolute and unconditional to receive distributions to the extent provided in the Pooling and Servicing Agreement with respect to such Certificate or to institute suit for the enforcement of any such distribution, and such right shall
not be impaired without the consent of such owner. 
  
 The Pooling
and Servicing Agreement will terminate upon notice to the Trustee upon the earliest of (i) the Distribution Date on which the Certificate Principal Balances of the Regular Certificates have been reduced to zero, (ii) the final payment or
other liquidation of the last Mortgage Loan in the Trust, (iii) the optional purchase by the Servicer of the Mortgage Loans as described below, (iv) the Distribution Date in January 2036 and (v) at any time when a Qualified
Liquidation of the Master REMIC and REMIC I, REMIC II, REMIC III and REMIC IV is effected pursuant to the Pooling and Servicing Agreement. In addition, under certain circumstances relating to the qualification of either the Master REMIC or any of
REMIC I, REMIC II, REMIC III or REMIC IV as a REMIC under the Code, the Mortgage Loans may be sold, thereby affecting the early retirement of the Certificates. Notwithstanding the foregoing, in no event shall the Trust hereby continue beyond the
expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James, living on the date of the Pooling and Servicing Agreement. 
  
 The Servicer may, at its option, terminate the Pooling and Servicing
Agreement on any date on which the aggregate of the Principal Balances of the Mortgage Loans on such date is equal to or less than 10% of the Maximum Collateral Amount, by purchasing, on the next succeeding Distribution Date, all of the outstanding
Mortgage Loans and REO Properties at a price equal to the greater of the Principal Balance of the Mortgage Loans and REO Properties or the market value of the Mortgage Loans and REO Properties, in each case plus accrued and unpaid interest thereon
at the weighted average of the Mortgage Rates through the end of the Due Period preceding the final Distribution Date plus unreimbursed Servicing Advances, Advances, any unpaid Servicing Fees allocable to such Mortgage Loans and REO Properties and
any accrued and unpaid Available Funds Cap Shortfall Amount and Available Funds Cap Carryforward Amount and any unpaid amount due the Trustee, the Swap Counterparties, the Cap Counterparties and the Custodian under the Pooling and Servicing
Agreement. 
  

 A-16-4 

 The Trustee shall give written notice of termination of the Pooling and Servicing Agreement to each owner
in the manner set forth therein. 
  
 As provided in the Pooling
and Servicing Agreement and subject to certain limitations therein set forth and referred to on the face hereof, the transfer of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of
transfer at the office designated as the location of the Certificate Register, and thereupon one or more new certificates of like class, tenor and Percentage Interest will be issued to the designated transferee or transferees. 
  
 The Trustee is required to furnish certain information on each Distribution
Date to the owner of this Certificate, as more fully described in the Pooling and Servicing Agreement. 
  
 The Class M-11 Certificates are issuable only as registered Certificates in denominations of $25,000 Original Principal Amount and integral multiples of
$1,000. As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth, Class M-11 Certificates are exchangeable for new Class M-11 Certificates of authorized denominations evidencing the same aggregate
principal amount. 
  
 The Trustee and any agent thereof may treat
the person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the Trustee or any such agent shall be affected by notice to the contrary. 
  

 A-16-5 

 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed on behalf of the Trust.

  

			
	 JPMORGAN CHASE BANK,
      NATIONAL ASSOCIATION, not in its
      individual capacity, but solely in its
      capacity as Trustee

		
	By:	 	  

	Name:
	Title:

  

	
	 Trustee Authentication

	
	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as Trustee

  

			
	By:	 	  

	Name:
	Title:

  

 A-16-6 

 Exhibit A-17 
  
 Form of Class M-12 Certificate 
  
 NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2005-3 
 HOME EQUITY LOAN ASSET-BACKED CERTIFICATE 
 CLASS M-12 CERTIFICATE 
  
 Comprised of a Certificate Representing 
 Certain Interests Relating to a Pool of 
 Mortgage Loans The Mortgage Loans are Serviced by 
  
 NOVASTAR MORTGAGE, INC., as Servicer 
  
 (This certificate does not represent an interest in, or an obligation of, nor
are the underlying Mortgage Loans insured or guaranteed by, NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Financial, Inc., NovaStar Capital, Inc. or any of their subsidiaries and affiliates. This certificate is comprised
of a Certificate representing a fractional ownership interest in distributions in certain Accounts created pursuant to the Pooling and Servicing Agreement and certain other rights relating thereto and is payable only from amounts received by the
Trustee relating to the Mortgage Loans and other assets held in the Trust Fund.) 
  
 THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE
MADE ONLY IN A TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS OF THE POOLING AND SERVICING AGREEMENT. 
  
 NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN MAY BE MADE TO (I) AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN
SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”)) THAT IS SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN (AS DEFINED IN SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE “CODE”)) THAT IS SUBJECT TO SECTION 4975 OF THE CODE OR (III) ANY PERSON ACTING, DIRECTLY OR INDIRECTLY, ON BEHALF OF ANY PLAN DESCRIBED IN (I) OR (II) OR ACQUIRING THIS CERTIFICATE OR ANY INTEREST HEREIN
WITH THE ASSETS OF ANY SUCH PLAN. 
  

					
	No.: [M-12-1/M-12-2/M-12-3]	 	Date: September 22, 2005	 	CUSIP: 66987X HJ 7
			
	 Original Principal Balance:
 $30,000,000
	 	Registered Owner: [Greenwich Capital Financial Products, Inc./Wachovia Investment Holdings, LLC/Newport Funding Corp.]	 	 Final Scheduled Distribution
 Date: January 25,
2036

			
	 Percentage Interest: 1/3 of
 100%
	 	 Pass-Through Rate:
 LIBOR + 2.7500%
	 	 

 The registered owner named above is the registered owner of a fractional interest in (i) each
Mortgage Loan identified on the Mortgage Loan Schedule attached as Exhibit B to that certain Pooling and Servicing Agreement dated as of September 1, 2005 (the “Pooling and Servicing Agreement”) by and among NovaStar Mortgage Funding
Corporation, as the company (the “Company”), JPMorgan Chase Bank, National Association, as trustee (the “Trustee”), J.P. Morgan Trust Company, National Association, as co-trustee (the “Co-Trustee”), Wachovia Bank,
National Association, as the custodian (the “Custodian”), and NovaStar Mortgage, Inc. as servicer (the “Servicer”) and as seller (the “Seller”), including the related Cut-off Date Principal Balance, all interest
accruing thereon on and after the Cut-off Date and all collections in respect of interest and principal due after the Cut-off Date; (ii) property which secured each such Mortgage Loan and which has been acquired by foreclosure or deed in lieu
of foreclosure; (iii) the Company’s interest in any insurance policies in respect of such Mortgage Loans; (iv) all proceeds of any of the foregoing; (v) the rights of the Company under the Purchase Agreement and (vi) all
other assets included or to be included in the Trust Fund. Such assignment includes all interest and principal due to the Company or the Servicer after the Cut-off Date with respect to the Mortgage Loans. 
  
 The Original Principal Amount set forth above is equal to the product of
(i) the Percentage Interest represented by this Certificate and (ii) the aggregate Original Principal Amount of the Class M-12 Certificates on September 22, 2005 which aggregate amount was $30,000,000. The owner hereof is entitled to
principal payments on each Distribution Date, which will fully amortize such Original Principal Amount over the period from the date of initial delivery hereof to the final Distribution Date of the Class M-12 Certificates. Therefore, the actual
outstanding principal amount of this Certificate, on any date subsequent to October 25, 2005 (the first Distribution Date) will be less than the Original Principal Amount set forth above. 
  
 In order to receive the final distribution hereon, the owner hereof is
required to present this Certificate to the Trustee. The Pooling and Servicing Agreement provides that, in any event, upon the making of the final distribution due on this Certificate, this Certificate shall be deemed cancelled for all purposes
under the Pooling and Servicing Agreement. 
  
 SOLELY FOR FEDERAL
INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN INTEREST IN A CLASS OF “REGULAR INTERESTS” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT” (“REMIC”) AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS (SECTIONS 860A THROUGH 860G) OF THE CODE. 
  

THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY (OTHER THAN AS REQUIRED FOR FEDERAL INCOME TAX PURPOSES). 
  

 A-17-2 

 NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY. 
  
 This Certificate is one of a Class of duly-authorized Certificates designated as NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3, Class
M-12 Certificates (the “Class M-12 Certificates”) and issued under and subject to the terms, provisions and conditions of the Pooling and Servicing Agreement, to which the owner of this Certificate, by virtue of acceptance hereof assents,
and is bound. Also issued under the Pooling and Servicing Agreement are the Class A-1A Certificates, Class A-2A Certificates, Class A-2B Certificates, Class A-2C Certificates, Class A-2D Certificates, Class M-1 Certificates,
Class M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates, Class M-6 Certificates, Class M-7 Certificates, Class M-8 Certificates, Class M-9 Certificates, Class M-10 Certificates, Class M-11 Certificates, Class
M-11 DSI Certificates, Class M-12 DSI Certificates, Class I-1 Certificates, Class I-2 Certificates, Class I-3 Certificates, Certificates, Class C Certificates, and Class R Certificates, and all such Certificates are collectively referred to as the
“Certificates”. Terms capitalized herein and not otherwise defined herein shall have the respective meanings set forth in the Pooling and Servicing Agreement. 
  
 On the 25th day of each month, or, if such day is not a Business Day, then the next succeeding Business Day (each such day
being a “Distribution Date”) commencing October 25, 2005, the owners of the Class M-12 Certificates as of the close of business on the business day immediately preceding such Distribution Date (the “Record Date”) will be
entitled to the distribution described in Article IV of the Pooling and Servicing Agreement, relating to such Distribution Date. Distributions will be made in immediately available funds to such owners, by wire transfer or by check mailed to the
address of the person entitled thereto as it appears on the Certificate Register. 
  
 Each owner of record of a Class M-12 Certificate will be entitled to receive such owner’s Percentage Interest in the amounts distributed on such Distribution Date to the owners of the Class M-12 Certificates. The
Percentage Interest of each Class M-12 Certificate as of any date of determination will be equal to the percentage obtained by dividing the Original Principal Amount set forth on such Class M-12 Certificate by $30,000,000. 
  
 The Trustee is required to duly and punctually pay distributions with respect
to this Certificate in accordance with the terms hereof and the Pooling and Servicing Agreement. Amounts properly withheld under the Code or applicable to any owner shall be considered as having been paid by the Trustee to such owner for all
purposes of the Pooling and Servicing Agreement. 
  
 The Mortgage
Loans will be serviced by the Servicer pursuant to the Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the Servicer to enter into Sub-Servicing Agreements with certain institutions eligible for appointment as
Sub-Servicers for the servicing and administration of certain Mortgage Loans. No appointment of any Sub-Servicer shall release the Servicer from any of its obligations under the Pooling and Servicing Agreement. 
  

 A-17-3 

 This Certificate does not represent a deposit or other obligation of, or an interest in, nor are the
underlying Mortgage Loans insured or guaranteed by, NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Capital, Inc., NovaStar Financial Inc., or any of their subsidiaries and affiliates and are not insured or guaranteed by the
Federal Deposit Insurance Corporation, the Government National Mortgage Association, or any other governmental agency. This Certificate is limited in right of payment to certain collections and recoveries relating to the Mortgage Loans and amounts
on deposit in the Accounts (except as otherwise provided in the Pooling and Servicing Agreement) all as more specifically set forth hereinabove and in the Pooling and Servicing Agreement. 
  
 No owner shall have any right to institute any proceeding, judicial or otherwise, with respect to the Pooling and Servicing
Agreement for the appointment of a receiver or trustee, or for any other remedy under the Pooling and Servicing Agreement except in compliance with the terms thereof. 
  
 Notwithstanding any other provisions in the Pooling and Servicing Agreement, the owner of any Certificate shall have the
right which is absolute and unconditional to receive distributions to the extent provided in the Pooling and Servicing Agreement with respect to such Certificate or to institute suit for the enforcement of any such distribution, and such right shall
not be impaired without the consent of such owner. 
  
 The Pooling
and Servicing Agreement will terminate upon notice to the Trustee upon the earliest of (i) the Distribution Date on which the Certificate Principal Balances of the Regular Certificates have been reduced to zero, (ii) the final payment or
other liquidation of the last Mortgage Loan in the Trust, (iii) the optional purchase by the Servicer of the Mortgage Loans as described below, (iv) the Distribution Date in January 2036 and (v) at any time when a Qualified
Liquidation of the Master REMIC and REMIC I, REMIC II, REMIC III and REMIC IV is effected pursuant to the Pooling and Servicing Agreement. In addition, under certain circumstances relating to the qualification of either the Master REMIC or any of
REMIC I, REMIC II, REMIC III or REMIC IV as a REMIC under the Code, the Mortgage Loans may be sold, thereby affecting the early retirement of the Certificates. Notwithstanding the foregoing, in no event shall the Trust hereby continue beyond the
expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James, living on the date of the Pooling and Servicing Agreement. 
  
 The Servicer may, at its option, terminate the Pooling and Servicing
Agreement on any date on which the aggregate of the Principal Balances of the Mortgage Loans on such date is equal to or less than 10% of the Maximum Collateral Amount, by purchasing, on the next succeeding Distribution Date, all of the outstanding
Mortgage Loans and REO Properties at a price equal to the greater of the Principal Balance of the Mortgage Loans and REO Properties or the market value of the Mortgage Loans and REO Properties, in each case plus accrued and unpaid interest thereon
at the weighted average of the Mortgage Rates through the end of the Due Period preceding the final Distribution Date plus unreimbursed Servicing Advances, Advances, any unpaid Servicing Fees allocable to such Mortgage Loans and REO Properties and
any accrued and unpaid Available Funds Cap Shortfall Amount and Available Funds Cap Carryforward Amount and any unpaid amount due the Trustee, the Swap Counterparties, the Cap Counterparties and the Custodian under the Pooling and Servicing
Agreement. 
  

 A-17-4 

 The Trustee shall give written notice of termination of the Pooling and Servicing Agreement to each owner
in the manner set forth therein. 
  
 As provided in the Pooling
and Servicing Agreement and subject to certain limitations therein set forth and referred to on the face hereof, the transfer of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of
transfer at the office designated as the location of the Certificate Register, and thereupon one or more new certificates of like class, tenor and Percentage Interest will be issued to the designated transferee or transferees. 
  
 The Trustee is required to furnish certain information on each Distribution
Date to the owner of this Certificate, as more fully described in the Pooling and Servicing Agreement. 
  
 The Class M-12 Certificates are issuable only as registered Certificates in denominations of $25,000 Original Principal Amount and integral multiples of
$1,000. As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth, Class M-12 Certificates are exchangeable for new Class M-12 Certificates of authorized denominations evidencing the same aggregate
principal amount. 
  
 The Trustee and any agent thereof may treat
the person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the Trustee or any such agent shall be affected by notice to the contrary. 
  

 A-17-5 

 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed on behalf of the Trust.

  

			
	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as
Trustee

		
	By:	 	  

	Name:	 	 
	Title:	 	 

  

			
	Trustee Authentication
	
	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as
Trustee

		
	By:	 	  

	Name:	 	 
	Title:	 	 

  

 A-17-6 

 Exhibit A-18 
  
 Form of Class I-1 Certificate 
  
 NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2005-3 
 HOME EQUITY LOAN ASSET-BACKED CERTIFICATE 
 CLASS I-1 CERTIFICATE 
  
 Comprised of a Certificate Representing 
 Certain Interests Relating to a Pool of 
 Mortgage Loans 
 The Mortgage Loans are Serviced by 
  
 NOVASTAR MORTGAGE, INC., as Servicer 
  
 (This certificate does not represent an interest in, or an obligation of, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar
Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Financial, Inc., NovaStar Capital, Inc. or any of their subsidiaries and affiliates. This certificate is comprised of a Certificate representing a fractional ownership interest in
distributions in certain Accounts created pursuant to the Pooling and Servicing Agreement and certain other rights relating thereto and is payable only from amounts received by the Trustee relating to the Mortgage Loans and other assets held in the
Trust Fund.) 
  
 THIS CERTIFICATE HAS NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE SECURITIES LAW OF ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A
TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS OF THE POOLING AND SERVICING AGREEMENT. 
  
 NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN MAY BE MADE TO (I) AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”)) THAT IS SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN (AS DEFINED IN SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
“CODE”)) THAT IS SUBJECT TO SECTION 4975 OF THE CODE OR (III) ANY PERSON ACTING, DIRECTLY OR INDIRECTLY, ON BEHALF OF ANY PLAN DESCRIBED IN (I) OR (II) OR ACQUIRING THIS CERTIFICATE OR ANY INTEREST HEREIN WITH THE
ASSETS OF ANY SUCH PLAN. 
  

					
	No.: I-1	 	Date: September 22, 2005	 	CUSIP: 66987X HK 4
			
	Percentage Interest: 100%	 	 Registered Owner:
 NovaStar Mortgage
 Supplement Trust, Series 2005-3
	 	 Final Scheduled Distribution
 Date: January 25,
2036

  
 The registered owner
named above is the registered owner of a fractional interest in (i) each Mortgage Loan identified on the Mortgage Loan Schedule attached as Exhibit B to that certain Pooling and Servicing Agreement dated as of September 1, 2005 (the
“Pooling and 

 Servicing Agreement”) by and among NovaStar Mortgage Funding Corporation as the company (the “Company”),
the Trustee, J.P. Morgan Trust Company, National Association, as co-trustee (the “Co-Trustee”), Wachovia Bank, National Association, as the custodian (the “Custodian”), and NovaStar Mortgage, Inc. as servicer (the
“Servicer”) and as seller (the “Seller”), including the related Cut-off Date Principal Balance, all interest accruing thereon on and after the Cut-off Date and all collections in respect of interest and principal due after the
Cut-off Date; (ii) property which secured each such Mortgage Loan and which has been acquired by foreclosure or deed in lieu of foreclosure; (iii) the Company’s interest in any insurance policies in respect of the Mortgage Loans;
(iv) all proceeds of any of the foregoing; (v) the rights of the Company under the Purchase Agreement and (vi) all other assets included or to be included in the Trust fund. Such assignment includes all interest and principal due to
the Company or the Servicer after the Cut-off Date with respect to the Mortgage Loans. 
  
 In order to receive the final distribution hereon, the owner hereof is required to present this Certificate to the Trustee. The Pooling and Servicing Agreement provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed cancelled for all purposes under the Pooling and Servicing Agreement. 
  
 SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN INTEREST IN A CLASS OF “REGULAR INTERESTS” IN A “REAL ESTATE
MORTGAGE INVESTMENT CONDUIT” (“REMIC”) AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS
(SECTIONS 860A THROUGH 860G) OF THE CODE. 
  
 THIS CERTIFICATE IS
A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS REPRESENTED HEREBY (OTHER THAN AS REQUIRED FOR FEDERAL INCOME TAX PURPOSES). 
  
 NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY. 
  
 THIS CERTIFICATE IS AN INTEREST ONLY CERTIFICATE. THE HOLDER OF THIS CERTIFICATE SHALL NOT BE ENTITLED TO ANY DISTRIBUTIONS OF PRINCIPAL WITH RESPECT
TO THE MORTGAGE LOANS. 
  
 This Certificate is one of a Class
of duly-authorized Certificates designated as NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3, Class I-1 Certificates (the “Class I-1 Certificates”) and issued under and subject to the terms, provisions and conditions of
the Pooling and Servicing Agreement, to which the owner of this Certificate, by virtue of acceptance hereof assents, and is bound. Also issued under the Pooling and Servicing Agreement are the Class A-1A Certificates, Class A-2A
Certificates, Class A-2B Certificates, Class A-2C Certificates, Class A-2D Certificates, Class M-1 Certificates, Class M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates, Class M-6 Certificates,
Class M-7 Certificates, Class M-8 Certificates, Class M-9 Certificates, Class M-10 Certificates, 
  

 A-18-2 

 Class M-11 Certificates, Class M-12 Certificates, Class M-11 DSI Certificates, Class M-12 DSI Certificates, Class I-2
Certificates, Class I-3 Certificates, Certificates, Class C Certificates, and Class R Certificates, and all such Certificates are collectively referred to as the “Certificates”. 
  
 Terms capitalized herein and not otherwise defined herein shall have the respective meanings set forth in the Pooling and
Servicing Agreement. 
  
 On the 25th day of each month, or, if
such day is not a Business Day, then the next succeeding Business Day (each such day being a “Distribution Date”) commencing October 25, 2005, the owners of the Class I-1 Certificates as of the close of business on the business day
immediately preceding such Distribution Date (the “Record Date”) will be entitled to receive the distribution described in Article IV of the Pooling and Servicing Agreement relating to such Distribution Date. Distributions will be made in
immediately available funds to such owners, by wire transfer or by check mailed to the address of the person entitled thereto as it appears on the Certificate Register. 
  
 Each owner of record of a Class I-1 Certificate will be entitled to receive such owner’s Percentage Interest in the
amounts distributed on such Distribution Date to the owners of the Class I-1 Certificates. 
  
 The Trustee is required to duly and punctually pay distributions with respect to this Certificate in accordance with the terms hereof and the Pooling and Servicing Agreement. Amounts properly withheld under the Code
or applicable to any owner shall be considered as having been paid by the Trustee to such owner for all purposes of the Pooling and Servicing Agreement. 
  
 The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions eligible for appointment as Sub-Servicers for the servicing and administration of certain Mortgage Loans. No appointment of any Sub-Servicer shall release the Servicer from
any of its obligations under the Pooling and Servicing Agreement. 
  
 This Certificate does not represent a deposit or other obligation of, or an interest in, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Capital, Inc.,
NovaStar Financial Inc., or any of their subsidiaries and affiliates and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the Government National Mortgage Association, or any other governmental agency. This Certificate is
limited in right of payment to certain collections and recoveries relating to the Mortgage Loans and amounts on deposit in the Accounts (except as otherwise provided in the Pooling and Servicing Agreement) all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement. 
  
 No
owner shall have any right to institute any proceeding, judicial or otherwise, with respect to the Pooling and Servicing Agreement for the appointment of a receiver or trustee, or for any other remedy under the Pooling and Servicing Agreement except
in compliance with the terms thereof. 
  

 A-18-3 

 Notwithstanding any other provisions in the Pooling and Servicing Agreement, the owner of any Certificate
shall have the right which is absolute and unconditional to receive distributions to the extent provided in the Pooling and Servicing Agreement with respect to such Certificate or to institute suit for the enforcement of any such distribution, and
such right shall not be impaired without the consent of such owner. 
  
 The Pooling and Servicing Agreement will terminate upon notice to the Trustee upon the earliest of (i) the Distribution Date on which the Certificate Principal Balances of the Regular Certificates have been reduced to zero,
(ii) the final payment or other liquidation of the last Mortgage Loan in the Trust, (iii) the optional purchase by the Servicer of the Mortgage Loans as described below, (iv) the Distribution Date in January 2036 and (v) at any
time when a Qualified Liquidation of the Master REMIC and REMIC I, REMIC II, REMIC III and REMIC IV is effected pursuant to the Pooling and Servicing Agreement. In addition, under certain circumstances relating to the qualification of either the
Master REMIC or any of REMIC I, REMIC II, REMIC III or REMIC IV as a REMIC under the Code, the Mortgage Loans may be sold, thereby affecting the early retirement of the Certificates. Notwithstanding the foregoing, in no event shall the Trust hereby
continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James, living on the date of the Pooling and Servicing Agreement.

  
 The Servicer may, at its option, terminate the Pooling and
Servicing Agreement on any date on which the aggregate of the Principal Balances of the Mortgage Loans on such date is equal to or less than 10% of the Maximum Collateral Amount, by purchasing, on the next succeeding Distribution Date, all of the
outstanding Mortgage Loans and REO Properties at a price equal to the greater of the Principal Balance of the Mortgage Loans and REO Properties or the market value of the Mortgage Loans and REO Properties, in each case plus accrued and unpaid
interest thereon at the weighted average of the Mortgage Rates through the end of the Due Period preceding the final Distribution Date plus unreimbursed Servicing Advances, Advances, any unpaid Servicing Fees allocable to such Mortgage Loans and REO
Properties and any accrued and unpaid Available Funds Cap Shortfall Amount and Available Funds Cap Carryforward Amount and any unpaid amount due the Trustee, the Swap Counterparties, the Cap Counterparties and the Custodian under the Pooling and
Servicing Agreement. 
  
 The Trustee shall give written notice of
termination of the Pooling and Servicing Agreement to each owner in the manner set forth therein. 
  
 As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the office designated as the location of the Certificate Register, and thereupon one or more new certificates of like
class, tenor and Percentage Interest will be issued to the designated transferee or transferees. 
  
 The Trustee is required to furnish certain information on each Distribution Date to the owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement. 
  

 A-18-4 

 As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth,
Class I-1 Certificates are exchangeable for new Class I-1 Certificates of authorized denominations evidencing the same aggregate principal amount. 
  
 The Trustee and any agent thereof may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the
Trustee or any such agent shall be affected by notice to the contrary. 
  

 A-18-5 

 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed on behalf of the Trust.

  

			
	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as
Trustee

		
	By:	 	  

	Name:	 	 
	Title:	 	 

  

			
	Trustee Authentication
	
	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as
Trustee

		
	By:	 	  

	Name:	 	 
	Title:	 	 

  

 A-18-6 

 Exhibit A-19 
  
 Form of Class I-2 Certificate 
  
 NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2005-3 
 HOME EQUITY LOAN ASSET-BACKED CERTIFICATE 
 CLASS I-2 CERTIFICATE 
  
 Comprised of a Certificate Representing 
 Certain Interests Relating to a Pool of 
 Mortgage Loans 
 The Mortgage Loans are Serviced by 
  
 NOVASTAR MORTGAGE, INC., as Servicer 
  
 (This certificate does not represent an interest in, or an obligation of, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar
Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Financial, Inc., NovaStar Capital, Inc. or any of their subsidiaries and affiliates. This certificate is comprised of a Certificate representing a fractional ownership interest in
distributions in certain Accounts created pursuant to the Pooling and Servicing Agreement and certain other rights relating thereto and is payable only from amounts received by the Trustee relating to the Mortgage Loans and other assets held in the
Trust Fund.) 
  
 THIS CERTIFICATE HAS NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE SECURITIES LAW OF ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A
TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS OF THE POOLING AND SERVICING AGREEMENT. 
  
 NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN MAY BE MADE TO (I) AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”)) THAT IS SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN (AS DEFINED IN SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
“CODE”)) THAT IS SUBJECT TO SECTION 4975 OF THE CODE OR (III) ANY PERSON ACTING, DIRECTLY OR INDIRECTLY, ON BEHALF OF ANY PLAN DESCRIBED IN (I) OR (II) OR ACQUIRING THIS CERTIFICATE OR ANY INTEREST HEREIN WITH THE
ASSETS OF ANY SUCH PLAN. 
  

					
	No.: I-2	 	Date: September 22, 2005	 	CUSIP: 66987X HK 4
			
	Percentage Interest: 100%	 	 Registered Owner:
 NovaStar Mortgage
 Supplemental Interest Trust,
 Series 2005-3
	 	 Final Scheduled Distribution
 Date: January 25,
2036

  
 The registered owner
named above is the registered owner of a fractional interest in (i) each Mortgage Loan identified on the Mortgage Loan Schedule attached as Exhibit B to 

 that certain Pooling and Servicing Agreement dated as of September 1, 2005 (the “Pooling and Servicing
Agreement”) by and among NovaStar Mortgage Funding Corporation as the company (the “Company”), the Trustee, J.P. Morgan Trust Company, National Association, as co-trustee (the “Co-Trustee”), Wachovia Bank, National
Association, as the custodian (the “Custodian”), and NovaStar Mortgage, Inc. as servicer (the “Servicer”) and as seller (the “Seller”), including the related Cut-off Date Principal Balance, all interest accruing thereon
on and after the Cut-off Date and all collections in respect of interest and principal due after the Cut-off Date; (ii) property which secured each such Mortgage Loan and which has been acquired by foreclosure or deed in lieu of foreclosure;
(iii) the Company’s interest in any insurance policies in respect of the Mortgage Loans; (iv) all proceeds of any of the foregoing; (v) the rights of the Company under the Purchase Agreement and (vi) all other assets
included or to be included in the Trust fund. Such assignment includes all interest and principal due to the Company or the Servicer after the Cut-off Date with respect to the Mortgage Loans. 
  
 In order to receive the final distribution hereon, the owner hereof is
required to present this Certificate to the Trustee. The Pooling and Servicing Agreement provides that, in any event, upon the making of the final distribution due on this Certificate, this Certificate shall be deemed cancelled for all purposes
under the Pooling and Servicing Agreement. 
  
 SOLELY FOR FEDERAL
INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN INTEREST IN A CLASS OF “REGULAR INTERESTS” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT” (“REMIC”) AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS (SECTIONS 860A THROUGH 860G) OF THE CODE. 
  

THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY (OTHER THAN AS REQUIRED FOR FEDERAL INCOME TAX PURPOSES). 
  
 NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY. 
  
 THIS CERTIFICATE IS AN INTEREST ONLY CERTIFICATE. THE HOLDER OF THIS
CERTIFICATE SHALL NOT BE ENTITLED TO ANY DISTRIBUTIONS OF PRINCIPAL WITH RESPECT TO THE MORTGAGE LOANS. 
  
 This Certificate is one of a Class of duly-authorized Certificates designated as NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3, Class
I-2 Certificates (the “Class I-2 Certificates”) and issued under and subject to the terms, provisions and conditions of the Pooling and Servicing Agreement, to which the owner of this Certificate, by virtue of acceptance hereof assents,
and is bound. Also issued under the Pooling and Servicing Agreement are the Class A-1A Certificates, Class A-2A Certificates, Class A-2B Certificates, Class A-2C Certificates, Class A-2D Certificates, Class M-1 Certificates,
Class M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates, Class M-6 Certificates, 
  

 A-19-2 

 Class M-7 Certificates, Class M-8 Certificates, Class M-9 Certificates, Class M-10 Certificates, Class M-11 Certificates,
Class M-12 Certificates, Class M-11 DSI Certificates, Class M-12 DSI Certificates, Class I-1 Certificates, Class C Certificates, and Class R Certificates, and all such Certificates are collectively referred to as the “Certificates”.

  
 Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing Agreement. 
  
 On the 25th day of each month, or, if such day is not a Business Day, then the next succeeding Business Day (each such day being a “Distribution Date”) commencing October 25, 2005, the owners of the
Class I-2 Certificates as of the close of business on the business day immediately preceding such Distribution Date (the “Record Date”) will be entitled to receive the distribution described in Article IV of the Pooling and Servicing
Agreement relating to such Distribution Date. Distributions will be made in immediately available funds to such owners, by wire transfer or by check mailed to the address of the person entitled thereto as it appears on the Certificate Register.

  
 Each owner of record of a Class I-2 Certificate will be
entitled to receive such owner’s Percentage Interest in the amounts distributed on such Distribution Date to the owners of the Class I-2 Certificates. 
  
 The Trustee is required to duly and punctually pay distributions with respect to this Certificate in accordance with the terms hereof and the Pooling and
Servicing Agreement. Amounts properly withheld under the Code or applicable to any owner shall be considered as having been paid by the Trustee to such owner for all purposes of the Pooling and Servicing Agreement. 
  
 The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling
and Servicing Agreement. The Pooling and Servicing Agreement permits the Servicer to enter into Sub-Servicing Agreements with certain institutions eligible for appointment as Sub-Servicers for the servicing and administration of certain Mortgage
Loans. No appointment of any Sub-Servicer shall release the Servicer from any of its obligations under the Pooling and Servicing Agreement. 
  
 This Certificate does not represent a deposit or other obligation of, or an interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Capital, Inc., NovaStar Financial Inc., or any of their subsidiaries and affiliates and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the
Government National Mortgage Association, or any other governmental agency. This Certificate is limited in right of payment to certain collections and recoveries relating to the Mortgage Loans and amounts on deposit in the Accounts (except as
otherwise provided in the Pooling and Servicing Agreement) all as more specifically set forth hereinabove and in the Pooling and Servicing Agreement. 
  
 No owner shall have any right to institute any proceeding, judicial or otherwise, with respect to the Pooling and Servicing Agreement for the appointment
of a receiver or trustee, or for any other remedy under the Pooling and Servicing Agreement except in compliance with the terms thereof. 
  

 A-19-3 

 Notwithstanding any other provisions in the Pooling and Servicing Agreement, the owner of any Certificate
shall have the right which is absolute and unconditional to receive distributions to the extent provided in the Pooling and Servicing Agreement with respect to such Certificate or to institute suit for the enforcement of any such distribution, and
such right shall not be impaired without the consent of such owner. 
  
 The Pooling and Servicing Agreement will terminate upon notice to the Trustee upon the earliest of (i) the Distribution Date on which the Certificate Principal Balances of the Regular Certificates have been reduced to zero,
(ii) the final payment or other liquidation of the last Mortgage Loan in the Trust, (iii) the optional purchase by the Servicer of the Mortgage Loans as described below, (iv) the Distribution Date in January 2036 and (v) at any
time when a Qualified Liquidation of the Master REMIC and REMIC I, REMIC II, REMIC III and REMIC IV is effected pursuant to the Pooling and Servicing Agreement. In addition, under certain circumstances relating to the qualification of either the
Master REMIC or any of REMIC I, REMIC II, REMIC III or REMIC IV as a REMIC under the Code, the Mortgage Loans may be sold, thereby affecting the early retirement of the Certificates. Notwithstanding the foregoing, in no event shall the Trust hereby
continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James, living on the date of the Pooling and Servicing Agreement.

  
 The Servicer may, at its option, terminate the Pooling and
Servicing Agreement on any date on which the aggregate of the Principal Balances of the Mortgage Loans on such date is equal to or less than 10% of the Maximum Collateral Amount, by purchasing, on the next succeeding Distribution Date, all of the
outstanding Mortgage Loans and REO Properties at a price equal to the greater of the Principal Balance of the Mortgage Loans and REO Properties or the market value of the Mortgage Loans and REO Properties, in each case plus accrued and unpaid
interest thereon at the weighted average of the Mortgage Rates through the end of the Due Period preceding the final Distribution Date plus unreimbursed Servicing Advances, Advances, any unpaid Servicing Fees allocable to such Mortgage Loans and REO
Properties and any accrued and unpaid Available Funds Cap Shortfall Amount and Available Funds Cap Carryforward Amount and any unpaid amount due the Trustee, the Swap Counterparties, the Cap Counterparties and the Custodian under the Pooling and
Servicing Agreement. 
  
 The Trustee shall give written notice of
termination of the Pooling and Servicing Agreement to each owner in the manner set forth therein. 
  
 As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the office designated as the location of the Certificate Register, and thereupon one or more new certificates of like
class, tenor and Percentage Interest will be issued to the designated transferee or transferees. 
  
 The Trustee is required to furnish certain information on each Distribution Date to the owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement. 
  

 A-19-4 

 As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth,
Class I-2 Certificates are exchangeable for new Class I-2 Certificates of authorized denominations evidencing the same aggregate principal amount. 
  
 The Trustee and any agent thereof may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the
Trustee or any such agent shall be affected by notice to the contrary. 
  

 A-19-5 

 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed on behalf of the Trust.

  

			
	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as
Trustee

		
	By:	 	  

	Name:	 	 
	Title:	 	 

  

			
	Trustee Authentication
	
	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as
Trustee

		
	By:	 	  

	Name:	 	 
	Title:	 	 

  

 A-19-6 

 Exhibit A-20 
  
 Form of Class I-3 Certificate 
  
 NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2005-3 
 HOME EQUITY LOAN ASSET-BACKED CERTIFICATE 
 CLASS I-3 CERTIFICATE 
  
 Comprised of a Certificate Representing 
 Certain Interests Relating to a Pool of 
 Mortgage Loans 
 The Mortgage Loans are Serviced by 
  
 NOVASTAR MORTGAGE, INC., as Servicer 
  
 (This certificate does not represent an interest in, or an obligation of, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar
Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Financial, Inc., NovaStar Capital, Inc. or any of their subsidiaries and affiliates. This certificate is comprised of a Certificate representing a fractional ownership interest in
distributions in certain Accounts created pursuant to the Pooling and Servicing Agreement and certain other rights relating thereto and is payable only from amounts received by the Trustee relating to the Mortgage Loans and other assets held in the
Trust Fund.) 
  
 THIS CERTIFICATE HAS NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE SECURITIES LAW OF ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A
TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS OF THE POOLING AND SERVICING AGREEMENT. 
  
 NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN MAY BE MADE TO (I) AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”)) THAT IS SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN (AS DEFINED IN SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
“CODE”)) THAT IS SUBJECT TO SECTION 4975 OF THE CODE OR (III) ANY PERSON ACTING, DIRECTLY OR INDIRECTLY, ON BEHALF OF ANY PLAN DESCRIBED IN (I) OR (II) OR ACQUIRING THIS CERTIFICATE OR ANY INTEREST HEREIN WITH THE
ASSETS OF ANY SUCH PLAN. 
  

					
	No.: I-3	 	Date: September 22, 2005	 	CUSIP: 66987X HK 4
			
	Percentage Interest: 100%	 	 Registered Owner:
 NovaStar Mortgage
 Supplemental Interest Trust,
 Series 2005-3
	 	 Final Scheduled Distribution
 Date: January 25,
2036

  
 The registered owner
named above is the registered owner of a fractional interest in (i) each Mortgage Loan identified on the Mortgage Loan Schedule attached as Exhibit B to 

 that certain Pooling and Servicing Agreement dated as of September 1, 2005 (the “Pooling and Servicing
Agreement”) by and among NovaStar Mortgage Funding Corporation as the company (the “Company”), the Trustee, J.P. Morgan Trust Company, National Association, as co-trustee (the “Co-Trustee”), Wachovia Bank, National
Association, as the custodian (the “Custodian”), and NovaStar Mortgage, Inc. as servicer (the “Servicer”) and as seller (the “Seller”), including the related Cut-off Date Principal Balance, all interest accruing thereon
on and after the Cut-off Date and all collections in respect of interest and principal due after the Cut-off Date; (ii) property which secured each such Mortgage Loan and which has been acquired by foreclosure or deed in lieu of foreclosure;
(iii) the Company’s interest in any insurance policies in respect of the Mortgage Loans; (iv) all proceeds of any of the foregoing; (v) the rights of the Company under the Purchase Agreement and (vi) all other assets
included or to be included in the Trust fund. Such assignment includes all interest and principal due to the Company or the Servicer after the Cut-off Date with respect to the Mortgage Loans. 
  
 In order to receive the final distribution hereon, the owner hereof is
required to present this Certificate to the Trustee. The Pooling and Servicing Agreement provides that, in any event, upon the making of the final distribution due on this Certificate, this Certificate shall be deemed cancelled for all purposes
under the Pooling and Servicing Agreement. 
  
 SOLELY FOR FEDERAL
INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN INTEREST IN A CLASS OF “REGULAR INTERESTS” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT” (“REMIC”) AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS (SECTIONS 860A THROUGH 860G) OF THE CODE. 
  

THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY (OTHER THAN AS REQUIRED FOR FEDERAL INCOME TAX PURPOSES). 
  
 NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY. 
  
 THIS CERTIFICATE IS AN INTEREST ONLY CERTIFICATE. THE HOLDER OF THIS
CERTIFICATE SHALL NOT BE ENTITLED TO ANY DISTRIBUTIONS OF PRINCIPAL WITH RESPECT TO THE MORTGAGE LOANS. 
  
 This Certificate is one of a Class of duly-authorized Certificates designated as NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3, Class
I-3 Certificates (the “Class I-3 Certificates”) and issued under and subject to the terms, provisions and conditions of the Pooling and Servicing Agreement, to which the owner of this Certificate, by virtue of acceptance hereof assents,
and is bound. Also issued under the Pooling and Servicing Agreement are the Class A-1A Certificates, Class A-2A Certificates, Class A-2B Certificates, Class A-2C Certificates, Class A-2D Certificates, Class M-1 Certificates,
Class M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates, Class M-6 Certificates, 
  

 A-20-2 

 Class M-7 Certificates, Class M-8 Certificates, Class M-9 Certificates, Class M-10 Certificates, Class M-11 Certificates,
Class M-12 Certificates, Class M-11 DSI Certificates, Class M-12 DSI Certificates, Class I-1 Certificates, Class C Certificates, and Class R Certificates, and all such Certificates are collectively referred to as the “Certificates”.

  
 Terms capitalized herein and not otherwise defined herein
shall have the respective meanings set forth in the Pooling and Servicing Agreement. 
  
 On the 25th day of each month, or, if such day is not a Business Day, then the next succeeding Business Day (each such day being a “Distribution Date”) commencing October 25, 2005, the owners of the
Class I-3 Certificates as of the close of business on the business day immediately preceding such Distribution Date (the “Record Date”) will be entitled to receive the distribution described in Article IV of the Pooling and Servicing
Agreement relating to such Distribution Date. Distributions will be made in immediately available funds to such owners, by wire transfer or by check mailed to the address of the person entitled thereto as it appears on the Certificate Register.

  
 Each owner of record of a Class I-3 Certificate will be
entitled to receive such owner’s Percentage Interest in the amounts distributed on such Distribution Date to the owners of the Class I-3 Certificates. 
  
 The Trustee is required to duly and punctually pay distributions with respect to this Certificate in accordance with the terms hereof and the Pooling and
Servicing Agreement. Amounts properly withheld under the Code or applicable to any owner shall be considered as having been paid by the Trustee to such owner for all purposes of the Pooling and Servicing Agreement. 
  
 The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling
and Servicing Agreement. The Pooling and Servicing Agreement permits the Servicer to enter into Sub-Servicing Agreements with certain institutions eligible for appointment as Sub-Servicers for the servicing and administration of certain Mortgage
Loans. No appointment of any Sub-Servicer shall release the Servicer from any of its obligations under the Pooling and Servicing Agreement. 
  
 This Certificate does not represent a deposit or other obligation of, or an interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Capital, Inc., NovaStar Financial Inc., or any of their subsidiaries and affiliates and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the
Government National Mortgage Association, or any other governmental agency. This Certificate is limited in right of payment to certain collections and recoveries relating to the Mortgage Loans and amounts on deposit in the Accounts (except as
otherwise provided in the Pooling and Servicing Agreement) all as more specifically set forth hereinabove and in the Pooling and Servicing Agreement. 
  
 No owner shall have any right to institute any proceeding, judicial or otherwise, with respect to the Pooling and Servicing Agreement for the appointment
of a receiver or trustee, or for any other remedy under the Pooling and Servicing Agreement except in compliance with the terms thereof. 
  

 A-20-3 

 Notwithstanding any other provisions in the Pooling and Servicing Agreement, the owner of any Certificate
shall have the right which is absolute and unconditional to receive distributions to the extent provided in the Pooling and Servicing Agreement with respect to such Certificate or to institute suit for the enforcement of any such distribution, and
such right shall not be impaired without the consent of such owner. 
  
 The Pooling and Servicing Agreement will terminate upon notice to the Trustee upon the earliest of (i) the Distribution Date on which the Certificate Principal Balances of the Regular Certificates have been reduced to zero,
(ii) the final payment or other liquidation of the last Mortgage Loan in the Trust, (iii) the optional purchase by the Servicer of the Mortgage Loans as described below, (iv) the Distribution Date in January 2036 and (v) at any
time when a Qualified Liquidation of the Master REMIC and REMIC I, REMIC II, REMIC III and REMIC IV is effected pursuant to the Pooling and Servicing Agreement. In addition, under certain circumstances relating to the qualification of either the
Master REMIC or any of REMIC I, REMIC II, REMIC III or REMIC IV as a REMIC under the Code, the Mortgage Loans may be sold, thereby affecting the early retirement of the Certificates. Notwithstanding the foregoing, in no event shall the Trust hereby
continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James, living on the date of the Pooling and Servicing Agreement.

  
 The Servicer may, at its option, terminate the Pooling and
Servicing Agreement on any date on which the aggregate of the Principal Balances of the Mortgage Loans on such date is equal to or less than 10% of the Maximum Collateral Amount, by purchasing, on the next succeeding Distribution Date, all of the
outstanding Mortgage Loans and REO Properties at a price equal to the greater of the Principal Balance of the Mortgage Loans and REO Properties or the market value of the Mortgage Loans and REO Properties, in each case plus accrued and unpaid
interest thereon at the weighted average of the Mortgage Rates through the end of the Due Period preceding the final Distribution Date plus unreimbursed Servicing Advances, Advances, any unpaid Servicing Fees allocable to such Mortgage Loans and REO
Properties and any accrued and unpaid Available Funds Cap Shortfall Amount and Available Funds Cap Carryforward Amount and any unpaid amount due the Trustee, the Swap Counterparties, the Cap Counterparties and the Custodian under the Pooling and
Servicing Agreement. 
  
 The Trustee shall give written notice of
termination of the Pooling and Servicing Agreement to each owner in the manner set forth therein. 
  
 As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the office designated as the location of the Certificate Register, and thereupon one or more new certificates of like
class, tenor and Percentage Interest will be issued to the designated transferee or transferees. 
  
 The Trustee is required to furnish certain information on each Distribution Date to the owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement. 
  

 A-20-4 

 As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth,
Class I-3 Certificates are exchangeable for new Class I-3 Certificates of authorized denominations evidencing the same aggregate principal amount. 
  
 The Trustee and any agent thereof may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the
Trustee or any such agent shall be affected by notice to the contrary. 
  

 A-20-5 

 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed on behalf of the Trust.

  

			
	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as
Trustee

		
	By:	 	  

	Name:	 	 
	Title:	 	 

  

			
	Trustee Authentication
	
	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as
Trustee

		
	By:	 	  

	Name:	 	 
	Title:	 	 

  

 A-20-6 

 Exhibit A-21 
  
 Form of Class C Certificate 
  
 NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2005-3 
 HOME EQUITY LOAN ASSET-BACKED CERTIFICATE 
 CLASS C CERTIFICATES 
  
 Comprised of a Certificate Representing 
 Certain Interests Relating to a Pool of 
 Mortgage Loans 
 The Mortgage Loans are Serviced by 
  
 NOVASTAR MORTGAGE, INC., as Servicer 
  
 (This certificate does not represent an interest in, or an obligation of, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar
Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Financial, Inc., NovaStar Capital, Inc. or any of their subsidiaries and affiliates. This certificate is comprised of a Certificate representing a fractional ownership interest in
distributions in certain Accounts created pursuant to the Pooling and Servicing Agreement and certain other rights relating thereto and is payable only from amounts received by the Trustee relating to the Mortgage Loans and other assets held in the
Trust Fund.) 
  
 THIS CERTIFICATE HAS NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR
QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS OF THE POOLING AND SERVICING AGREEMENT. 
  
 NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN MAY BE MADE TO (I) AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
(“ERISA”)) THAT IS SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN (AS DEFINED IN SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”)) THAT IS SUBJECT TO SECTION 4975 OF THE CODE
OR (III) ANY PERSON ACTING, DIRECTLY OR INDIRECTLY, ON BEHALF OF ANY PLAN DESCRIBED IN (I) OR (II) OR ACQUIRING THIS CERTIFICATE OR ANY INTEREST HEREIN WITH THE ASSETS OF ANY SUCH PLAN. 
  

					
	No.: C	 	Date: September 22, 2005	 	CUSIP: 66987X HL 2
			
	 Notional Amount:
  
 $2,500,000,000
	 	 Registered Owner:
  
 [Greenwich Capital Financial
 Products, Inc./Wachovia
 Investment Holdings,
 LLC/Newport Funding Corp.]
	 	 Final Scheduled Distribution
 Date: January 25,
2036

			
	 Percentage Interest:
  
 [1/3 of 100%]
	 	 	 	 

 The registered owner named above is the registered owner of a fractional interest in (i) each
Mortgage Loan identified on the Mortgage Loan Schedule attached as Exhibit B to that certain Pooling and Servicing Agreement dated as of September 1, 2005 (the “Pooling and Servicing Agreement”) by and among NovaStar Mortgage Funding
Corporation as the company (the “Company”), the Trustee, J.P. Morgan Trust Company, National Association, as co-trustee (the “Co-Trustee”), Wachovia Bank, National Association, as the custodian (the “Custodian”), and
NovaStar Mortgage, Inc. as servicer (the “Servicer”) and as seller (the “Seller”), including the related Cut-off Date Principal Balance, all interest accruing thereon on and after the Cut-off Date and all collections in respect
of interest and principal due after the Cut-off Date; (ii) property which secured each such Mortgage Loan and which has been acquired by foreclosure or deed in lieu of foreclosure; (iii) the Company’s interest in any insurance
policies in respect of the Mortgage Loans; (iv) all proceeds of any of the foregoing; (v) the rights of the Company under the Purchase Agreement and (vi) all other assets included or to be included in the Trust Fund. Such assignment
includes all interest and principal due to the Company or the Servicer after the Cut-off Date with respect to the Mortgage Loans. 
  
 Each owner of record of a Class C Certificate will be entitled to certain distributions, as described under Article IV of the Pooling and Servicing
Agreement. 
  
 In order to receive the final distribution hereon,
the owner hereof is required to present this Certificate to the Trustee. The Pooling and Servicing Agreement provides that, in any event, upon the making of the final distribution due on this Certificate, this Certificate shall be deemed cancelled
for all purposes under the Pooling and Servicing Agreement. 
  
 SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN INTEREST IN ONE OR MORE CLASSES OF “REGULAR INTERESTS” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT” (“REMIC”) AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS (SECTIONS 860A THROUGH 860G) OF THE CODE. 
  
 DISTRIBUTIONS ON THIS CERTIFICATE WILL BE MADE TO THE OWNER HEREOF FOLLOWING
THE PRIOR FUNDING OF AMOUNTS OWED TO CERTAIN SWAP COUNTERPARTIES, AND FOLLOWING THE FUNDING OF SUPPLEMENTAL INTEREST PAYMENTS TO CERTAIN OTHER CLASSES OF CERTIFICATES. 
  
 THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO
DEBT OF ANY PERSON IS REPRESENTED HEREBY (OTHER THAN AS REQUIRED FOR FEDERAL INCOME TAX PURPOSES). 
  

 A-21-2 

 NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY. 
  
 This Certificate is one of a Class of duly-authorized Certificates designated as NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3, Class
C Certificates (the “Class C Certificates”) and issued under and subject to the terms, provisions and conditions of the Pooling and Servicing Agreement, to which the owner of this Certificate, by virtue of acceptance hereof assents, and is
bound. Also issued under the Pooling and Servicing Agreement are the Class A-1A Certificates, Class A-2A Certificates, Class A-2B Certificates, Class A-2C Certificates, Class A-2D Certificates, Class M-1 Certificates, Class
M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates, Class M-6 Certificates, Class M-7 Certificates, Class M-8 Certificates, Class M-9 Certificates, Class M-10 Certificates, Class M-11 Certificates, Class M-12
Certificates, Class M-11 DSI Certificates, Class M-12 DSI Certificates, Class I-1 Certificates, Class I-2 Certificates, Class I-3 Certificates, Certificates and Class R Certificates, and all such Certificates are collectively referred to as the
“Certificates”. 
  
 Terms capitalized herein and not
otherwise defined herein shall have the respective meanings set forth in the Pooling and Servicing Agreement. 
  
 On the 25th day of each month, or, if such day is not a Business Day, then the next succeeding Business Day (each such day being a “Distribution
Date”) commencing October 25, 2005, the owners of the Class C Certificates as of the close of business on the business day immediately preceding such Distribution Date (the “Record Date”) will be entitled to receive payments in
respect of interest, principal, if any, and the Prepayment Charges relating to such Distribution Date, all as described in Article IV of the Pooling and Servicing Agreement. Distributions will be made in immediately available funds to such owners,
by wire transfer or by check mailed to the address of the person entitled thereto as it appears on the Certificate Register. 
  
 The Trustee is required to duly and punctually pay distributions with respect to this Certificate in accordance with the terms hereof and the Pooling and
Servicing Agreement. Amounts properly withheld under the Code or applicable to any owner shall be considered as having been paid by the Trustee to such owner for all purposes of the Pooling and Servicing Agreement. 
  
 The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling
and Servicing Agreement. The Pooling and Servicing Agreement permits the Servicer to enter into Sub-Servicing Agreements with certain institutions eligible for appointment as Sub-Servicers for the servicing and administration of certain Mortgage
Loans. No appointment of any Sub-Servicer shall release the Servicer from any of its obligations under the Pooling and Servicing Agreement. 
  
 This Certificate does not represent a deposit or other obligation of, or an interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Capital, Inc., NovaStar Financial Inc., or any of their subsidiaries and affiliates and are not insured or guaranteed by the Federal Deposit 
  

 A-21-3 

 Insurance Corporation, the Government National Mortgage Association, or any other governmental agency. This Certificate
is limited in right of payment to certain collections and recoveries relating to the Mortgage Loans and amounts on deposit in the Accounts (except as otherwise provided in the Pooling and Servicing Agreement) all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement. 
  
 No
owner shall have any right to institute any proceeding, judicial or otherwise, with respect to the Pooling and Servicing Agreement for the appointment of a receiver or trustee, or for any other remedy under the Pooling and Servicing Agreement except
in compliance with the terms thereof. 
  
 Notwithstanding any
other provisions in the Pooling and Servicing Agreement, the owner of any Certificate shall have the right which is absolute and unconditional to receive distributions to the extent provided in the Pooling and Servicing Agreement with respect to
such Certificate or to institute suit for the enforcement of any such distribution, and such right shall not be impaired without the consent of such owner. 
  
 The Pooling and Servicing Agreement will terminate upon notice to the Trustee upon the earliest of (i) the Distribution Date on which the Certificate
Principal Balances of the Regular Certificates have been reduced to zero, (ii) the final payment or other liquidation of the last Mortgage Loan in the Trust, (iii) the optional purchase by the Servicer of the Mortgage Loans as described
below, (iv) the Distribution Date in January 2036 and (v) at any time when a Qualified Liquidation of the Master REMIC and REMIC I, REMIC II, REMIC III and REMIC IV is effected pursuant to the Pooling and Servicing Agreement. In addition,
under certain circumstances relating to the qualification of either the Master REMIC or any of REMIC I, REMIC II, REMIC III or REMIC IV as a REMIC under the Code, the Mortgage Loans may be sold, thereby affecting the early retirement of the
Certificates. Notwithstanding the foregoing, in no event shall the Trust hereby continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States to the
Court of St. James, living on the date of the Pooling and Servicing Agreement. 
  
 The Servicer may, at its option, terminate the Pooling and Servicing Agreement on any date on which the aggregate of the Principal Balances of the Mortgage Loans on such date is equal to or less than 10% of the
Maximum Collateral Amount, by purchasing, on the next succeeding Distribution Date, all of the outstanding Mortgage Loans and REO Properties at a price equal to the greater of the Principal Balance of the Mortgage Loans and REO Properties or the
market value of the Mortgage Loans and REO Properties, in each case plus accrued and unpaid interest thereon at the weighted average of the Mortgage Rates through the end of the Due Period preceding the final Distribution Date plus unreimbursed
Servicing Advances, Advances, any unpaid Servicing Fees allocable to such Mortgage Loans and REO Properties and any accrued and unpaid Available Funds Cap Shortfall Amount and Available Funds Cap Carryforward Amount and any unpaid amount due the
Trustee, the Swap Counterparties, the Cap Counterparties and the Custodian under the Pooling and Servicing Agreement. 
  
 The Trustee shall give written notice of termination of the Pooling and Servicing Agreement to each owner in the manner set forth therein. 
  

 A-21-4 

 As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth
and referred to on the face hereof, the transfer of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the office designated as the location of the Certificate Register,
and thereupon one or more new certificates of like class, tenor and Percentage Interest will be issued to the designated transferee or transferees. 
  
 The Trustee is required to furnish certain information on each Distribution Date to the owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement. 
  
 As provided in the Pooling and
Servicing Agreement and subject to certain limitations therein set forth, Class C Certificates are exchangeable for new Class C Certificates of authorized denominations evidencing the same aggregate principal amount. 
  
 The Trustee and any agent thereof may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the Trustee or any such agent shall be affected by notice to the contrary. 
  

 A-21-5 

 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed on behalf of the Trust.

  

			
	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION,
not in its individual capacity, but solely
in its capacity as
Trustee

		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 

  

			
	 Trustee Authentication

	
	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION,
not in its individual capacity, but solely
in its capacity as
Trustee

		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 

  

 A-21-6 

 Exhibit A-22 
  
 Form of Class R Certificate 
  
 NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2005-3 
 HOME EQUITY LOAN ASSET-BACKED CERTIFICATE 
 CLASS R CERTIFICATES 
  
 Comprised of a Certificate Representing 
 Certain Interests Relating to a Pool of 
 Mortgage Loans 
 The Mortgage Loans are Serviced by 
  
 NOVASTAR MORTGAGE, INC., as Servicer 
  
 (This certificate does not represent an interest in, or an obligation of, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar
Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Financial, Inc., NovaStar Capital, Inc. or any of their subsidiaries and affiliates. This certificate is comprised of a Certificate representing a fractional ownership interest in
distributions in certain Accounts created pursuant to the Pooling and Servicing Agreement and certain other rights relating thereto and is payable only from amounts received by the Trustee relating to the Mortgage Loans held in the Trust Fund.)

  
 THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE SECURITIES LAW OF ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH
DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS OF THE POOLING AND SERVICING AGREEMENT. 
  
 NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN MAY BE MADE TO (I) AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”)) THAT IS SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN (AS DEFINED IN SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
“CODE”)) THAT IS SUBJECT TO SECTION 4975 OF THE CODE OR (III) ANY PERSON ACTING, DIRECTLY OR INDIRECTLY, ON BEHALF OF ANY PLAN DESCRIBED IN (I) OR (II) OR ACQUIRING THIS CERTIFICATE OR ANY INTEREST HEREIN WITH THE
ASSETS OF ANY SUCH PLAN. 
  

					
	No.: R	 	Date: September 22, 2005	 	 Final Scheduled Distribution
 Date: January 25,
2036

			
	Percentage Interest: 100%	 	 Registered Owner:
 NovaStar REMIC Financing

Corporation
	 	 

 The registered owner named above is the registered owner of a fractional interest in (i) each
Mortgage Loan identified on the Mortgage Loan Schedule attached as Exhibit B to that certain Pooling and Servicing Agreement dated as of September 1, 2005 (the “Pooling and Servicing Agreement”) by and among NovaStar Mortgage Funding
Corporation as the company (the “Company”), JPMorgan Chase Bank, National Association, as trustee (the “Trustee”), J.P. Morgan Trust Company, National Association, as co-trustee (the “Co-Trustee”), Wachovia Bank,
National Association, as the custodian (the “Custodian”), and NovaStar Mortgage, Inc. as servicer (the “Servicer”) and as seller (the “Seller”), including the related Cut-off Date Principal Balance, all interest
accruing thereon on and after the Cut-off Date and all collections in respect of interest and principal due after the Cut-off Date; (ii) property which secured each such Mortgage Loan and which has been acquired by foreclosure or deed in lieu
of foreclosure; (iii) the Company’s interest in any insurance policies in respect of the Mortgage Loans; (iv) all proceeds of any of the foregoing; (v) the rights of the Company under the Purchase Agreement and (vi) all
other assets included or to be included in the Trust Fund. Such assignment includes all interest and principal due to the Company or the Servicer after the Cut-off Date with respect to the Mortgage Loans. 
  
 Each owner of record of a Class R Certificate will be entitled to certain
distributions as described in Exhibit K of the Pooling and Servicing Agreement. 
  
 In order to receive the final distribution hereon, the owner hereof is required to present this Certificate to the Trustee. The Pooling and Servicing Agreement provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed cancelled for all purposes under the Pooling and Servicing Agreement. 
  
 SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS “RESIDUAL INTERESTS” IN FIVE “REAL ESTATE MORTGAGE INVESTMENT
CONDUITS” (“REMICs”) AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), ASSUMING COMPLIANCE WITH THE REMIC PROVISIONS (SECTIONS 860A THROUGH
860G) OF THE CODE. 
  
 THIS CERTIFICATE IS A PASS-THROUGH
CERTIFICATE ONLY AND, NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS REPRESENTED HEREBY (OTHER THAN AS REQUIRED FOR FEDERAL INCOME TAX PURPOSES). 
  
 TRANSFER OF THIS CLASS R CERTIFICATE IS RESTRICTED AS SET FORTH IN THE POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS
CLASS R CERTIFICATE MAY BE MADE TO A “DISQUALIFIED ORGANIZATION” AS DEFINED IN SECTION 860E(5) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”). SUCH TERM INCLUDES THE UNITED STATES, ANY STATE OR POLITICAL
SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING (OTHER THAN CERTAIN TAXABLE INSTRUMENTALITIES), ANY COOPERATIVE ORGANIZATION FURNISHING ELECTRIC ENERGY OR PROVIDING
THEREOF SERVICE TO PERSONS IN RURAL AREAS, OR ANY ORGANIZATION (OTHER THAN A FARMERS’ COOPERATIVE) THAT IS EXEMPT 
  

 A-22-2 

 FROM FEDERAL INCOME TAX UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX ON UNRELATED BUSINESS INCOME. NO TRANSFER OF THIS
CLASS R CERTIFICATE WILL BE REGISTERED BY THE TRUSTEE UNLESS THE PROPOSED TRANSFEREE HAS DELIVERED AN AFFIDAVIT AFFIRMING, AMONG OTHER THINGS, THAT THE PROPOSED TRANSFEREE IS NOT A DISQUALIFIED ORGANIZATION AND IS NOT ACQUIRING THE CLASS R
CERTIFICATE FOR THE ACCOUNT OF A DISQUALIFIED ORGANIZATION. A COPY OF THE FORM OF AFFIDAVIT REQUIRED OF EACH PROPOSED TRANSFEREE IS ON FILE AND AVAILABLE FROM THE TRUSTEE. 
  
 A TRANSFER IN VIOLATION OF THE APPLICABLE RESTRICTIONS MAY GIVE RISE TO A SUBSTANTIAL TAX UPON THE TRANSFEROR OR, IN CERTAIN
CASES, UPON AN AGENT ACTING FOR THE TRANSFEREE. A PASS-THRU ENTITY THAT HOLDS THIS CLASS R CERTIFICATE AND THAT HAS A DISQUALIFIED ORGANIZATION AS A RECORD OWNER IN ANY TAXABLE YEAR GENERALLY WILL BE SUBJECT TO A TAX FOR EACH SUCH YEAR EQUAL TO THE
PRODUCT OF (A) THE AMOUNT OF EXCESS INCLUSIONS WITH RESPECT TO THE PORTION OF THIS CERTIFICATE OWNED THROUGH SUCH PASS-THRU ENTITY BY SUCH DISQUALIFIED ORGANIZATION AND (B) THE HIGHEST MARGINAL FEDERAL TAX RATE ON CORPORATIONS. FOR
PURPOSES OF THE PRECEDING SENTENCE, THE TERM “PASS-THRU” ENTITY INCLUDES REGULATED INVESTMENT COMPANIES, REAL ESTATE INVESTMENT TRUSTS, COMMON TRUST FUNDS, PARTNERSHIPS, TRUSTS, ESTATES, COOPERATIVES TO WHICH PART I OF SUBCHAPTER T,
CHAPTER 1 OF THE CODE APPLIES AND, EXCEPT AS PROVIDED IN REGULATIONS, NOMINEES. 
  
 NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY. 
  
 This Certificate is one of a Class of duly-authorized Certificates designated
as NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3 Class R Certificates (the “Class R Certificates”) and issued under and subject to the terms, provisions and conditions of the Pooling and Servicing Agreement, to which
the owner of this Certificate, by virtue of acceptance hereof assents, and is bound. Also issued under the Pooling and Servicing Agreement are the Class A-1A Certificates, Class A-2A Certificates, Class A-2B Certificates,
Class A-2C Certificates, Class A-2D Certificates, Class M-1 Certificates, Class M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates, Class M-6 Certificates, Class M-7 Certificates, Class M-8
Certificates, Class M-9 Certificates, Class M-10 Certificates, Class M-11 Certificates, Class M-12 Certificates, Class M-11 DSI Certificates, Class M-12 DSI Certificates, Class I-1 Certificates, Class I-2 Certificates, Class I-3 Certificates,
Certificates and Class C Certificates, and all such Certificates are collectively referred to as the “Certificates”. 
  
 Terms capitalized herein and not otherwise defined herein shall have the respective meanings set forth in the Pooling and Servicing Agreement. 

 

 A-22-3 

 On the 25th day of each month, or, if such day is not a Business Day, then the next succeeding Business
Day (each such day being a “Distribution Date”) commencing October 25, 2005, the owners of the Class R Certificates as of the close of business on the business day immediately preceding such Distribution Date (the “Record
Date”) will be entitled to receive the distribution described in Article IV of the Pooling and Servicing Agreement relating to such Distribution Date. Distributions will be made in immediately available funds to such owners, by wire transfer or
by check mailed to the address of the person entitled thereto as it appears on the Certificate Register. 
  
 The Trustee is required to duly and punctually pay distributions with respect to this Certificate in accordance with the terms hereof and the Pooling and
Servicing Agreement. Amounts properly withheld under the Code or applicable to any owner shall be considered as having been paid by the Trustee to such owner for all purposes of the Pooling and Servicing Agreement. 
  
 The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling
and Servicing Agreement. The Pooling and Servicing Agreement permits the Servicer to enter into Sub-Servicing Agreements with certain institutions eligible for appointment as Sub-Servicers for the servicing and administration of certain Mortgage
Loans. No appointment of any Sub-Servicer shall release the Servicer from any of its obligations under the Pooling and Servicing Agreement. 
  
 This Certificate does not represent a deposit or other obligation of, or an interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Capital, Inc., NovaStar Financial Inc., or any of their subsidiaries and affiliates and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the
Government National Mortgage Association, or any other governmental agency. This Certificate is limited in right of payment to certain collections and recoveries relating to the Mortgage Loans and amounts on deposit in the Accounts (except as
otherwise provided in the Pooling and Servicing Agreement) all as more specifically set forth hereinabove and in the Pooling and Servicing Agreement. 
  
 No owner shall have any right to institute any proceeding, judicial or otherwise, with respect to the Pooling and Servicing Agreement for the appointment
of a receiver or trustee, or for any other remedy under the Pooling and Servicing Agreement except in compliance with the terms thereof. 
  
 Notwithstanding any other provisions in the Pooling and Servicing Agreement, the owner of any Certificate shall have the right which is absolute and
unconditional to receive distributions to the extent provided in the Pooling and Servicing Agreement with respect to such Certificate or to institute suit for the enforcement of any such distribution, and such right shall not be impaired without the
consent of such owner. 
  
 The Pooling and Servicing Agreement
will terminate upon notice to the Trustee upon the earliest of (i) the Distribution Date on which the Certificate Principal Balances of the Regular Certificates have been reduced to zero, (ii) the final payment or other liquidation of the
last Mortgage Loan in the Trust, (iii) the optional purchase by the Servicer of the Mortgage Loans as described below, (iv) the Distribution Date in January 2036 and (v) at any time when a 
  

 A-22-4 

 Qualified Liquidation of the Master REMIC and REMIC I, REMIC II, REMIC III and REMIC IV is effected pursuant to the
Pooling and Servicing Agreement. In addition, under certain circumstances relating to the qualification of either the Master REMIC or any of REMIC I, REMIC II, REMIC III or REMIC IV as a REMIC under the Code, the Mortgage Loans may be sold, thereby
affecting the early retirement of the Certificates. Notwithstanding the foregoing, in no event shall the Trust hereby continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late
ambassador of the United States to the Court of St. James, living on the date of the Pooling and Servicing Agreement. 
  
 The Servicer may, at its option, terminate the Pooling and Servicing Agreement on any date on which the aggregate of the Principal Balances of the
Mortgage Loans on such date is equal to or less than 10% of the Maximum Collateral Amount, by purchasing, on the next succeeding Distribution Date, all of the outstanding Mortgage Loans and REO Properties at a price equal to the greater of the
Principal Balance of the Mortgage Loans and REO Properties or the market value of the Mortgage Loans and REO Properties, in each case plus accrued and unpaid interest thereon at the weighted average of the Mortgage Rates through the end of the Due
Period preceding the final Distribution Date plus unreimbursed Servicing Advances, Advances, any unpaid Servicing Fees allocable to such Mortgage Loans and REO Properties and any accrued and unpaid Available Funds Cap Shortfall Amount and Available
Funds Cap Carryforward Amount and any unpaid amount due the Trustee, the Swap Counterparties, the Cap Counterparties and the Custodian under the Pooling and Servicing Agreement. 
  
 The Trustee shall give written notice of termination of the Pooling and Servicing Agreement to each owner in the manner set
forth therein. 
  
 As provided in the Pooling and Servicing
Agreement and subject to certain limitations therein set forth and referred to on the face hereof, the transfer of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the
office designated as the location of the Certificate Register, and thereupon one or more new certificates of like class, tenor and Percentage Interest will be issued to the designated transferee or transferees. 
  
 The Trustee is required to furnish certain information on each Distribution
Date to the owner of this Certificate, as more fully described in the Pooling and Servicing Agreement. 
  
 As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth, Class R Certificates are exchangeable for new
Class R Certificates of authorized denominations evidencing the same aggregate principal amount. 
  
 The Trustee and any agent thereof may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the
Trustee or any such agent shall be affected by notice to the contrary. 
  

 A-22-5 

 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed on behalf of the Trust.

  

			
	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as
Trustee

		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 

  

			
	 Trustee Authentication

	
	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as
Trustee

		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 

  

 A-22-6 

 Exhibit A-23 
  
 Form of Class M-11 DSI Certificate 
  
 NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2005-3 
 HOME EQUITY LOAN ASSET-BACKED CERTIFICATE 
 CLASS M-11 DSI CERTIFICATE 
  
 Comprised of a Certificate Representing 
 Certain Interests Relating to a Pool of 
 Mortgage Loans The Mortgage Loans are Serviced by 
  
 NOVASTAR MORTGAGE, INC., as Servicer 
  
 (This certificate does not represent an interest in, or an obligation of, nor
are the underlying Mortgage Loans insured or guaranteed by, NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Financial, Inc., NovaStar Capital, Inc. or any of their subsidiaries and affiliates. This certificate is comprised
of a Certificate representing a fractional ownership interest in distributions in certain Accounts created pursuant to the Pooling and Servicing Agreement and certain other rights relating thereto and is payable only from amounts received by the
Trustee relating to the Mortgage Loans and other assets held in the Trust Fund.) 
  
 THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE
MADE ONLY IN A TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS OF THE POOLING AND SERVICING AGREEMENT. 
  
 NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN MAY BE MADE TO (I) AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN
SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”)) THAT IS SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN (AS DEFINED IN SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE “CODE”)) THAT IS SUBJECT TO SECTION 4975 OF THE CODE OR (III) ANY PERSON ACTING, DIRECTLY OR INDIRECTLY, ON BEHALF OF ANY PLAN DESCRIBED IN (I) OR (II) OR ACQUIRING THIS CERTIFICATE OR ANY INTEREST HEREIN
WITH THE ASSETS OF ANY SUCH PLAN. 
  

					
	No.: M-11 DSI	 	Date: September 22, 2005	 	CUSIP: 66987X HM 0
			
	 Notional Amount:
 $25,000,000
	 	 Registered Owner: NovaStar
 Certificates
Financing
 Corporation
	 	 Final Scheduled Distribution
 Date: January 25,
2036

			
	Percentage Interest: 100%	 	 	 	 

 The registered owner named above is the registered owner of a fractional interest in (i) each
Mortgage Loan identified on the Mortgage Loan Schedule attached as Exhibit B to that certain Pooling and Servicing Agreement dated as of September 1, 2005 (the “Pooling and Servicing Agreement”) by and among NovaStar Mortgage Funding
Corporation, as the company (the “Company”), JPMorgan Chase Bank, National Association, as trustee (the “Trustee”), J.P. Morgan Trust Company, National Association, as co-trustee (the “Co-Trustee”), Wachovia Bank,
National Association, as the custodian (the “Custodian”), and NovaStar Mortgage, Inc. as servicer (the “Servicer”) and as seller (the “Seller”), including the related Cut-off Date Principal Balance, all interest
accruing thereon on and after the Cut-off Date and all collections in respect of interest and principal due after the Cut-off Date; (ii) property which secured each such Mortgage Loan and which has been acquired by foreclosure or deed in lieu
of foreclosure; (iii) the Company’s interest in any insurance policies in respect of such Mortgage Loans; (iv) all proceeds of any of the foregoing; (v) the rights of the Company under the Purchase Agreement and (vi) all
other assets included or to be included in the Trust Fund. Such assignment includes all interest and principal due to the Company or the Servicer after the Cut-off Date with respect to the Mortgage Loans. 
  
 Each owner of record of a Class M-11 DSI Certificate will be entitled to
certain distributions, as described under Article IV of the Pooling and Servicing Agreement. 
  
 In order to receive the final distribution hereon, the owner hereof is required to present this Certificate to the Trustee. The Pooling and Servicing Agreement provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed cancelled for all purposes under the Pooling and Servicing Agreement. 
  
 THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS REPRESENTED
HEREBY (OTHER THAN AS REQUIRED FOR FEDERAL INCOME TAX PURPOSES). 
  
 NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY. 
  
 This Certificate is one of a Class of duly-authorized Certificates designated
as NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3, Class M-11 DSI Certificates (the “Class M-11 DSI Certificates”) and issued under and subject to the terms, provisions and conditions of the Pooling and Servicing
Agreement, to which the owner of this Certificate, by virtue of acceptance hereof assents, and is bound. Also issued under the Pooling and Servicing Agreement are the Class A-1A Certificates, Class A-2A Certificates, Class A-2B
Certificates, Class A-2C Certificates, Class A-2D Certificates, Class M-1 Certificates, Class M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates, Class M-6 Certificates, Class M-7 Certificates, Class
M-8 Certificates, Class M-9 Certificates, Class M-10 Certificates, Class M-11 Certificates, Class M-12 Certificates, Class M-12 DSI Certificates, Class I-1 Certificates, Class I-2 Certificates, Class I-3 Certificates, Class C Certificates, and Class
R Certificates, and all such Certificates are collectively referred to as the “Certificates”. Terms capitalized herein and not otherwise defined herein shall have the respective meanings set forth in the Pooling and Servicing Agreement.

  

 A-23-2 

 On the 25th day of each month, or, if such day is not a Business Day, then the next succeeding Business
Day (each such day being a “Distribution Date”) commencing October 25, 2005, the owners of the Class M-11 DSI Certificates as of the close of business on the business day immediately preceding such Distribution Date (the “Record
Date”) will be entitled to the distribution described in Article IV of the Pooling and Servicing Agreement, relating to such Distribution Date. Distributions will be made in immediately available funds to such owners, by wire transfer or by
check mailed to the address of the person entitled thereto as it appears on the Certificate Register. 
  
 The Trustee is required to duly and punctually pay distributions with respect to this Certificate in accordance with the terms hereof and the Pooling and
Servicing Agreement. Amounts properly withheld under the Code or applicable to any owner shall be considered as having been paid by the Trustee to such owner for all purposes of the Pooling and Servicing Agreement. 
  
 The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling
and Servicing Agreement. The Pooling and Servicing Agreement permits the Servicer to enter into Sub-Servicing Agreements with certain institutions eligible for appointment as Sub-Servicers for the servicing and administration of certain Mortgage
Loans. No appointment of any Sub-Servicer shall release the Servicer from any of its obligations under the Pooling and Servicing Agreement. 
  
 This Certificate does not represent a deposit or other obligation of, or an interest in, nor are the underlying Mortgage Loans insured or guaranteed by,
NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Capital, Inc., NovaStar Financial Inc., or any of their subsidiaries and affiliates and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the
Government National Mortgage Association, or any other governmental agency. This Certificate is limited in right of payment to certain collections and recoveries relating to the Mortgage Loans and amounts on deposit in the Accounts (except as
otherwise provided in the Pooling and Servicing Agreement) all as more specifically set forth hereinabove and in the Pooling and Servicing Agreement. 
  
 No owner shall have any right to institute any proceeding, judicial or otherwise, with respect to the Pooling and Servicing Agreement for the appointment
of a receiver or trustee, or for any other remedy under the Pooling and Servicing Agreement except in compliance with the terms thereof. 
  
 Notwithstanding any other provisions in the Pooling and Servicing Agreement, the owner of any Certificate shall have the right which is absolute and
unconditional to receive distributions to the extent provided in the Pooling and Servicing Agreement with respect to such Certificate or to institute suit for the enforcement of any such distribution, and such right shall not be impaired without the
consent of such owner. 
  
 The Pooling and Servicing Agreement
will terminate upon notice to the Trustee upon the earliest of (i) the Distribution Date on which the Certificate Principal Balances of the 
  

 A-23-3 

 Regular Certificates have been reduced to zero, (ii) the final payment or other liquidation of the last Mortgage
Loan in the Trust, (iii) the optional purchase by the Servicer of the Mortgage Loans as described below, (iv) the Distribution Date in January 2036 and (v) at any time when a Qualified Liquidation of the Master REMIC and REMIC I,
REMIC II, REMIC III and REMIC IV is effected pursuant to the Pooling and Servicing Agreement. In addition, under certain circumstances relating to the qualification of either the Master REMIC or any of REMIC I, REMIC II, REMIC III or REMIC IV as a
REMIC under the Code, the Mortgage Loans may be sold, thereby affecting the early retirement of the Certificates. Notwithstanding the foregoing, in no event shall the Trust hereby continue beyond the expiration of 21 years from the death of the last
survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James, living on the date of the Pooling and Servicing Agreement. 
  
 The Servicer may, at its option, terminate the Pooling and Servicing Agreement on any date on which the aggregate of the
Principal Balances of the Mortgage Loans on such date is equal to or less than 10% of the Maximum Collateral Amount, by purchasing, on the next succeeding Distribution Date, all of the outstanding Mortgage Loans and REO Properties at a price equal
to the greater of the Principal Balance of the Mortgage Loans and REO Properties or the market value of the Mortgage Loans and REO Properties, in each case plus accrued and unpaid interest thereon at the weighted average of the Mortgage Rates
through the end of the Due Period preceding the final Distribution Date plus unreimbursed Servicing Advances, Advances, any unpaid Servicing Fees allocable to such Mortgage Loans and REO Properties and any accrued and unpaid Available Funds Cap
Shortfall Amount and Available Funds Cap Carryforward Amount and any unpaid amount due the Trustee, the Swap Counterparties, the Cap Counterparties and the Custodian under the Pooling and Servicing Agreement. 
  
 The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each owner in the manner set forth therein. 
  
 As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth and referred to on the face hereof, the transfer of this Certificate is registerable in the Certificate Register upon surrender of this
Certificate for registration of transfer at the office designated as the location of the Certificate Register, and thereupon one or more new certificates of like class, tenor and Percentage Interest will be issued to the designated transferee or
transferees. 
  
 The Trustee is required to furnish certain
information on each Distribution Date to the owner of this Certificate, as more fully described in the Pooling and Servicing Agreement. 
  
 As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth, Class M-11 DSI Certificates are exchangeable for
new Class M-11 DSI Certificates of authorized denominations evidencing the same aggregate principal amount. 
  
 The Trustee and any agent thereof may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the
Trustee or any such agent shall be affected by notice to the contrary. 
  

 A-23-4 

 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed on behalf of the Trust.

  

			
	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as
Trustee

		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 

  

			
	 Trustee Authentication

	
	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as
Trustee

		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 

  

 A-23-5 

 Exhibit A-24 
  
 Form of Class M-12 DSI Certificate 
  
 NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2005-3 
 HOME EQUITY LOAN ASSET-BACKED CERTIFICATE 
 CLASS M-12 DSI CERTIFICATE 
  
 Comprised of a Certificate Representing 
 Certain Interests Relating to a Pool of 
 Mortgage Loans The Mortgage Loans are Serviced by 
  
 NOVASTAR MORTGAGE, INC., as Servicer 
  
 (This certificate does not represent an interest in, or an obligation of, nor
are the underlying Mortgage Loans insured or guaranteed by, NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Financial, Inc., NovaStar Capital, Inc. or any of their subsidiaries and affiliates. This certificate is comprised
of a Certificate representing a fractional ownership interest in distributions in certain Accounts created pursuant to the Pooling and Servicing Agreement and certain other rights relating thereto and is payable only from amounts received by the
Trustee relating to the Mortgage Loans and other assets held in the Trust Fund.) 
  
 THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE
MADE ONLY IN A TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS OF THE POOLING AND SERVICING AGREEMENT. 
  
 NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN MAY BE MADE TO (I) AN EMPLOYEE BENEFIT PLAN (AS DEFINED IN
SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”)) THAT IS SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN (AS DEFINED IN SECTION 4975(E)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE “CODE”)) THAT IS SUBJECT TO SECTION 4975 OF THE CODE OR (III) ANY PERSON ACTING, DIRECTLY OR INDIRECTLY, ON BEHALF OF ANY PLAN DESCRIBED IN (I) OR (II) OR ACQUIRING THIS CERTIFICATE OR ANY INTEREST HEREIN
WITH THE ASSETS OF ANY SUCH PLAN. 
  

					
	No.: M-12 DSI	 	Date: September 22, 2005	 	CUSIP: 66987X HN 8
			
	 Notional Balance:
 $30,000,000
	 	 Registered Owner: NovaStar
 Certificates
Financing
 Corporation
	 	 Final Scheduled Distribution
 Date: January 25,
2036

			
	Percentage Interest: 100%	 	 	 	 

 The registered owner named above is the registered owner of a fractional interest in (i) each
Mortgage Loan identified on the Mortgage Loan Schedule attached as Exhibit B to that certain Pooling and Servicing Agreement dated as of September 1, 2005 (the “Pooling and Servicing Agreement”) by and among NovaStar Mortgage Funding
Corporation, as the company (the “Company”), JPMorgan Chase Bank, National Association, as trustee (the “Trustee”), J.P. Morgan Trust Company, National Association, as co-trustee (the “Co-Trustee”), Wachovia Bank,
National Association, as the custodian (the “Custodian”), and NovaStar Mortgage, Inc. as servicer (the “Servicer”) and as seller (the “Seller”), including the related Cut-off Date Principal Balance, all interest
accruing thereon on and after the Cut-off Date and all collections in respect of interest and principal due after the Cut-off Date; (ii) property which secured each such Mortgage Loan and which has been acquired by foreclosure or deed in lieu
of foreclosure; (iii) the Company’s interest in any insurance policies in respect of such Mortgage Loans; (iv) all proceeds of any of the foregoing; (v) the rights of the Company under the Purchase Agreement and (vi) all
other assets included or to be included in the Trust Fund. Such assignment includes all interest and principal due to the Company or the Servicer after the Cut-off Date with respect to the Mortgage Loans. 
  
 Each owner of record of a Class M-12 DSI Certificate will be entitled to
certain distributions, as described under Article IV of the Pooling and Servicing Agreement. 
  
 In order to receive the final distribution hereon, the owner hereof is required to present this Certificate to the Trustee. The Pooling and Servicing Agreement provides that, in any event, upon the making of the final
distribution due on this Certificate, this Certificate shall be deemed cancelled for all purposes under the Pooling and Servicing Agreement. 
  
 THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS REPRESENTED
HEREBY (OTHER THAN AS REQUIRED FOR FEDERAL INCOME TAX PURPOSES). 
  
 NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY. 
  
 This Certificate is one of a Class of duly-authorized Certificates designated
as NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3, Class M-12 DSI Certificates (the “Class M-12 DSI Certificates”) and issued under and subject to the terms, provisions and conditions of the Pooling and Servicing
Agreement, to which the owner of this Certificate, by virtue of acceptance hereof assents, and is bound. Also issued under the Pooling and Servicing Agreement are the Class A-1A Certificates, Class A-2A Certificates, Class A-2B
Certificates, Class A-2C Certificates, Class A-2D Certificates, Class M-1 Certificates, Class M-2 Certificates, Class M-3 Certificates, Class M-4 Certificates, Class M-5 Certificates, Class M-6 Certificates, Class M-7 Certificates, Class
M-8 Certificates, Class M-9 Certificates, Class M-10 Certificates, Class M-11 Certificates, Class M-12 Certificates, Class M-11 DSI Certificates, Class I-1 Certificates, Class I-2 Certificates, Class I-3 Certificates, Class C Certificates, and

  

 A-24-2 

 Class R Certificates, and all such Certificates are collectively referred to as the “Certificates”. Terms
capitalized herein and not otherwise defined herein shall have the respective meanings set forth in the Pooling and Servicing Agreement. 
  
 On the 25th day of each month, or, if such day is not a Business Day, then the next succeeding Business Day (each such day being a “Distribution
Date”) commencing October 25, 2005, the owners of the Class M-12 DSI Certificates as of the close of business on the business day immediately preceding such Distribution Date (the “Record Date”) will be entitled to the
distribution described in Article IV of the Pooling and Servicing Agreement, relating to such Distribution Date. Distributions will be made in immediately available funds to such owners, by wire transfer or by check mailed to the address of the
person entitled thereto as it appears on the Certificate Register. 
  
 The Trustee is required to duly and punctually pay distributions with respect to this Certificate in accordance with the terms hereof and the Pooling and Servicing Agreement. Amounts properly withheld under the Code or applicable to any
owner shall be considered as having been paid by the Trustee to such owner for all purposes of the Pooling and Servicing Agreement. 
  
 The Mortgage Loans will be serviced by the Servicer pursuant to the Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions eligible for appointment as Sub-Servicers for the servicing and administration of certain Mortgage Loans. No appointment of any Sub-Servicer shall release the Servicer from
any of its obligations under the Pooling and Servicing Agreement. 
  
 This Certificate does not represent a deposit or other obligation of, or an interest in, nor are the underlying Mortgage Loans insured or guaranteed by, NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, NovaStar Capital, Inc.,
NovaStar Financial Inc., or any of their subsidiaries and affiliates and are not insured or guaranteed by the Federal Deposit Insurance Corporation, the Government National Mortgage Association, or any other governmental agency. This Certificate is
limited in right of payment to certain collections and recoveries relating to the Mortgage Loans and amounts on deposit in the Accounts (except as otherwise provided in the Pooling and Servicing Agreement) all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement. 
  
 No
owner shall have any right to institute any proceeding, judicial or otherwise, with respect to the Pooling and Servicing Agreement for the appointment of a receiver or trustee, or for any other remedy under the Pooling and Servicing Agreement except
in compliance with the terms thereof. 
  
 Notwithstanding any
other provisions in the Pooling and Servicing Agreement, the owner of any Certificate shall have the right which is absolute and unconditional to receive distributions to the extent provided in the Pooling and Servicing Agreement with respect to
such Certificate or to institute suit for the enforcement of any such distribution, and such right shall not be impaired without the consent of such owner. 
  

 A-24-3 

 The Pooling and Servicing Agreement will terminate upon notice to the Trustee upon the earliest of
(i) the Distribution Date on which the Certificate Principal Balances of the Regular Certificates have been reduced to zero, (ii) the final payment or other liquidation of the last Mortgage Loan in the Trust, (iii) the optional
purchase by the Servicer of the Mortgage Loans as described below, (iv) the Distribution Date in January 2036 and (v) at any time when a Qualified Liquidation of the Master REMIC and REMIC I, REMIC II, REMIC III and REMIC IV is effected
pursuant to the Pooling and Servicing Agreement. In addition, under certain circumstances relating to the qualification of either the Master REMIC or any of REMIC I, REMIC II, REMIC III or REMIC IV as a REMIC under the Code, the Mortgage Loans may
be sold, thereby affecting the early retirement of the Certificates. Notwithstanding the foregoing, in no event shall the Trust hereby continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late ambassador of the United States to the Court of St. James, living on the date of the Pooling and Servicing Agreement. 
  
 The Servicer may, at its option, terminate the Pooling and Servicing Agreement on any date on which the aggregate of the Principal Balances of the
Mortgage Loans on such date is equal to or less than 10% of the Maximum Collateral Amount, by purchasing, on the next succeeding Distribution Date, all of the outstanding Mortgage Loans and REO Properties at a price equal to the greater of the
Principal Balance of the Mortgage Loans and REO Properties or the market value of the Mortgage Loans and REO Properties, in each case plus accrued and unpaid interest thereon at the weighted average of the Mortgage Rates through the end of the Due
Period preceding the final Distribution Date plus unreimbursed Servicing Advances, Advances, any unpaid Servicing Fees allocable to such Mortgage Loans and REO Properties and any accrued and unpaid Available Funds Cap Shortfall Amount and Available
Funds Cap Carryforward Amount and any unpaid amount due the Trustee, the Swap Counterparties, the Cap Counterparties and the Custodian under the Pooling and Servicing Agreement. 
  
 The Trustee shall give written notice of termination of the Pooling and Servicing Agreement to each owner in the manner set
forth therein. 
  
 As provided in the Pooling and Servicing
Agreement and subject to certain limitations therein set forth and referred to on the face hereof, the transfer of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the
office designated as the location of the Certificate Register, and thereupon one or more new certificates of like class, tenor and Percentage Interest will be issued to the designated transferee or transferees. 
  
 The Trustee is required to furnish certain information on each Distribution
Date to the owner of this Certificate, as more fully described in the Pooling and Servicing Agreement. 
  
 As provided in the Pooling and Servicing Agreement and subject to certain limitations therein set forth, Class M-12 DSI Certificates are exchangeable for
new Class M-12 DSI Certificates of authorized denominations evidencing the same aggregate principal amount. 
  
 The Trustee and any agent thereof may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the
Trustee or any such agent shall be affected by notice to the contrary. 
  

 A-24-4 

 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed on behalf of the Trust.

  

			
	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as
Trustee

		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 

  

			
	Trustee Authentication
	
	 JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely in its
capacity as
Trustee

		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 

  

 A-24-5 

 Exhibit B 
  
 Mortgage Loan Schedule 
  
 [See Exhibit 1 to the 
  
 Mortgage Loan Purchase Agreement] 

 Exhibit C 
  
 Form of Addition Notice 
  
                     , 2005 
  
 VIA FEDERAL EXPRESS 
  
 JPMorgan Chase Bank, National Association 
 4 New York Plaza, 6th Floor

 New York, New York 10004 
 Attn: Worldwide Securities Services/Global Debt - NovaStar Series 2005-3 
  

			
	Re:	 	Mortgage Loan Purchase Agreement, dated as of September 1, 2005 (the “Purchase Agreement”), among NovaStar Mortgage, Inc. (the “Seller”), NovaStar Mortgage Funding
Corporation (the “Company”), Wachovia Bank, National Association, as Custodian (the “Custodian”), JPMorgan Chase Bank, National Association, as trustee (the “Trustee”) and J.P. Morgan Trust Company, National
Association, relating to NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3

  
 Ladies and Gentlemen: 
  
 Pursuant to
Section 2.02(b)(i) of the above-captioned Purchase Agreement, the Seller has designated the Subsequent Mortgage Loans (see subsequent mortgage loan schedule attached hereto) to be sold to the Company, and then sold by the Company to the Trust,
on                     , with an aggregate principal balance of
$            . Capitalized terms not otherwise defined herein have the meaning set forth in the Purchase Agreement. 
  
 Please acknowledge your receipt of this notice by countersigning the enclosed copy in the space indicated below and
returning it to the attention of the undersigned. 
  

			
	Very truly yours,
	
	NOVASTAR MORTGAGE, INC.
		
	By:	 	  

	 	 	Matt Kaltenrieder
	 	 	Vice President

  
 Acknowledged and agreed: 
  

			
	 JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, not in its
 individual capacity, but solely in its capacity as Trustee

		
	 By:
	 	  

 Exhibit D 
  
 Form of Subsequent Transfer Instrument 
  
 [See Exhibits 2(A) and 2(B) to the Mortgage Loan Purchase Agreement] 

 Exhibit E 
  
 Request for Release 
  
 [date] 
  

	To:	Wachovia Bank, National Association, as Custodian and JPMorgan Chase Bank, National Association, as Trustee 

  

			
	Re:	 	 Pooling and Servicing Agreement, dated as of September 1, 2005
 NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3

  
 In connection with the
administration of the pool of Mortgage Loans held by you as Custodian, we request the release, and acknowledge receipt, of the (Mortgage File/[specify document]) for the Mortgage Loan described below, for the reason indicated. 
  
 Mortgagor’s Name, Address & Zip Code:

  
 Mortgage Loan Number: 
  
 Reason for Requesting Documents (check one) 
  

			
	         1.	 	 Mortgage Loan Paid in Full
 (Servicer hereby certifies
that all amounts received in connection therewith have been credited to the Collection Account and remitted to the Trustee for deposit into the Distribution Account pursuant to the Pooling and Servicing Agreement.)

		
	         2.	 	 Mortgage Loan Liquidated
 (Servicer hereby certifies that
all proceeds of foreclosure, insurance or other liquidation have been finally received and credited to the Collection Account and remitted to the Trustee for deposit into the Distribution Account pursuant to the Pooling and Servicing
Agreement.)

		
	         3.	 	Mortgage Loan in Foreclosure
		
	         4.	 	Mortgage Loan Purchased Pursuant to Section 11.01 of the Pooling and Servicing Agreement.
		
	         5.	 	Mortgage Loan Repurchased or Substituted pursuant to Article II or III of the Pooling and Servicing Agreement (Seller hereby certifies that the repurchase price or Substitution Adjustment has
been credited to the Collection Account and that the substituted mortgage loan is a Qualified Substitute Mortgage Loan.)
		
	         6.	 	 Other
 (explain)
                                        
                                        
                                        
                

 If box 1 or 2 above is checked, and if all or part of the Mortgage File was previously released to us,
please release to us our previous receipt on file with you, as well as any additional documents in your possession relating to the above specified Mortgage Loan. 
  
 If box 3, 4, 5 or 6 above is checked, upon our return of all of the above documents to you as Custodian, please acknowledge
your receipt by signing in the space indicated below, and returning this form. 
  

			
	NovaStar Mortgage, Inc.,
	as [Servicer][Seller]
		
	By:	 	  

	Name:	 	 
	Title:	 	 

  
 Documents returned to Custodian: 
  

			
	Wachovia Bank, National Association,
	as Custodian
		
	By:	 	  

	Name:	 	 
	Title:	 	 

  
 Date:
                     
  
 Remittance returned to Trustee: 
  

			
	JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, not in its
	individual capacity, but solely in its capacity as Trustee
		
	By:	 	  

	Name:	 	 
	Title:	 	 

  
 Date:
                     
  

 E-2 

 Exhibit F-1 
  
 Form of Initial Certification 
  
 [Date] 
  
 NovaStar Mortgage, Inc. 
 8140 Ward Parkway, Suite 300 
 Kansas City, Missouri 64114 
 Attention: Chris Miller, Senior Vice President

  
 NovaStar Mortgage Funding Corporation 
 8140 Ward Parkway, Suite 300 
 Kansas City, Missouri 64114 
 Attention: Chris Miller, Senior Vice President 
  
 Wachovia Bank, National Association 
 401 South Tryon Street, 12th Floor

 Charlotte, North Carolina 28202 
 Attn: NovaStar Mortgage
Funding Trust, 
           Series 2005-3 
  
 JPMorgan Chase Bank, National Association 
 4 New York Plaza, 6th Floor 
 New York, New York 10004 
 Attn: Worldwide Securities Services/Global Debt -
NovaStar Series 2005-3 
  
 J.P. Morgan Trust Company, National Association

 ITS- Global Debt 
 560 Mission Street, 13th Floor 

San Francisco, CA 94105 
 Attn: James Myers, V.P. - NovaStar Series 2005-3

  

					
	 	 	Re:  	 	Pooling and Servicing Agreement, dated as of September 1, 2005 (the “Agreement”), among NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, Wachovia Bank, National
Association (the “Custodian”), JPMorgan Chase Bank, National Association (the “Trustee”) and J.P. Morgan Trust Company, National Association (the “Co-Trustee”), relating to the NovaStar Mortgage Funding Trust, Series
2005-3 Home Equity Loan Asset-Backed Certificates

  
 Gentlemen: 
  
 In accordance with Section 2.03 of
the above-captioned Agreement, and Section 2.01(c) of the Mortgage Loan Purchase Agreement, dated as of September 1, 2005 (the “Purchase Agreement” and, together with the Agreement, the “Agreements”), among NovaStar
Mortgage, Inc., NovaStar Mortgage Funding Corporation, the Custodian, the Trustee and Wachovia Bank, National Association, the undersigned, as Custodian, on behalf of the Trustee, 

 hereby certifies that as to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or listed on the attachment hereto) it has reviewed the Mortgage File and the Mortgage Loan Schedule and has determined that: (i) all documents required to be included in the Mortgage File are in its possession; (ii) such documents
have been reviewed by it and appear regular on their face and relate to such Mortgage Loan; and (iii) based on examination by it, and only as to such documents, the information set forth in items (i) - (vii) and (xiv) of the definition or
description of “Mortgage Loan Schedule” is correct. 
  
 The Custodian, on behalf of the Trustee, has made no independent examination of any documents contained in each Mortgage File beyond the review specifically required in the above-referenced Agreements. The Custodian, on behalf of the
Trustee, makes no representation that any documents specified in clause (vi) of Section 2.01(c) of the Purchase Agreement should be included in any Mortgage File. The Custodian, on behalf of the Trustee, makes no representations as to and
shall not be responsible to verify: (i) the validity, legality, sufficiency, enforceability, due authorization, recordability or genuineness of any of the documents contained in each Mortgage File of any of the Mortgage Loans identified on the
Mortgage Loan Schedule, (ii) the collectability, insurability, effectiveness or suitability of any such Mortgage Loan, or (iii) the existence of any assumption, modification, written assurance or substitution agreement with respect to any
Mortgage File if no such documents appear in the Mortgage File delivered to the Custodian, on behalf of the Trustee. 
  
 Capitalized words and phrases used herein shall have the respective meanings assigned to them in the above-captioned Agreement. 
  

			
	 WACHOVIA BANK, NATIONAL
 ASSOCIATION, not in
its

	individual capacity but solely as Custodian
		
	By:	 	  

	Name:	 	 
	Title:	 	 

  

 F-2 

 Exhibit F-2 
  
 Form of Final Certification  
  
 [Date] 
  
 NovaStar Mortgage, Inc. 
 8140 Ward Parkway, Suite 300 
 Kansas City, Missouri 64114 
 Attention: Chris Miller, Senior Vice President

  
 NovaStar Mortgage Funding Corporation 
 8140 Ward Parkway, Suite 300 
 Kansas City, Missouri 64114 
 Attention: Chris Miller, Senior Vice President 
  
 Wachovia Bank, National Association 
 401 South Tryon Street, 12th Floor

 Charlotte, North Carolina 28202 
 Attn: NovaStar Mortgage
Funding Trust, 
           Series 2005-3 
  
 JPMorgan Chase Bank, National Association 
 4
New York Plaza, 6th Floor 
 New York, New York 10004 
 Attn: Worldwide Securities Services/Global Debt - NovaStar Series 2005-3 
  
 J.P. Morgan Trust Company, National Association 
 ITS- Global Debt 
 560 Mission Street, 13th Floor 
 San Francisco, CA 94105 
 Attn: James Myers, V.P. - NovaStar Series 2005-3

  

					
	 	 	Re:  	 	Pooling and Servicing Agreement, dated as of September 1, 2005 (the “Agreement”), among NovaStar Mortgage, Inc., NovaStar Mortgage Funding Corporation, Wachovia Bank, National
Association (the “Custodian”), JPMorgan Chase Bank, National Association (the “Trustee”) and J.P. Morgan Trust Company, National Association (the “Co-Trustee”) relating to the NovaStar Mortgage Funding Trust, Series
2005-3 Home Equity Loan Asset-Backed Certificates

  
 Gentlemen: 
  
 In accordance with Section 2.03 of
the above-captioned Agreement, and Section 2.01(c) of the Mortgage Loan Purchase Agreement, dated as of September 1, 2005 (the “Purchase Agreement” and, together with the Agreement, the “Agreements”), among NovaStar
Mortgage, Inc., NovaStar Mortgage Funding Corporation, the Custodian and the Trustee, the undersigned, as Custodian, on behalf of the Trustee, hereby certifies that as to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or listed on the attachment hereto) it has received the documents set forth in Section 2.01(c) of the Mortgage Loan Purchase Agreement. 

 The Custodian, on behalf of the Trustee, has made no independent examination of any documents contained
in each Mortgage File beyond the review specifically required in the Agreements. The Custodian, on behalf of the Trustee, makes no representation that any documents specified in clause (vi) of Section 2.01(c) should be included in any
Mortgage File. The Custodian, on behalf of the Trustee, makes no representations as to and shall not be responsible to verify: (i) the validity, legality, sufficiency, enforceability, due authorization, recordability or genuineness of any of
the documents contained in each Mortgage File of any of the Mortgage Loans identified on the Mortgage Loan Schedule, (ii) the collectability, insurability, effectiveness or suitability of any such Mortgage Loan or (iii) the existence of
any assumption, modification, written assurance or substitution agreement with respect to any Mortgage File if no such documents appear in the Mortgage File delivered to the Custodian, on behalf of the Trustee. 
  
 Capitalized words and phrases used herein shall have the respective meanings
assigned to them in the above-captioned Agreement. 
  

			
	 WACHOVIA BANK, NATIONAL
 ASSOCIATION, not in
its

	individual capacity but solely as Custodian
		
	By:	 	  

	Name:	 	 
	Title:	 	 

  

 F-2-2 

 Exhibit G 
  
 Form of Investment Letter 
  
 NovaStar Mortgage, Inc. 
 8140 Ward Parkway, Suite 300 
 Kansas City, Missouri 64114 
 Attention: Chris Miller, Senior Vice President

  
 JPMorgan Chase Bank, National Association 
 4 New York Plaza, 6th Floor

 New York, New York 10004 
 Attn: Worldwide Securities
Services/Global Debt - NovaStar Series 2005-3 
  
 Ladies and Gentlemen: 
  
 The undersigned (the
“Transferee”) has agreed to purchase from                      (the “Transferor”) the following certificates: 

 

					
	 Class

	  	 	  	 Number

	 ___
	  	 	  	 
	 ___
	  	 	  	 
	 ___
	  	 	  	 
	 ___
	  	 	  	 
	 ___
	  	 	  	 

  
 I. The Transferee is
(check one): 
  

			
	___	  	(i) An insurance company, as defined in Section 2(13) of the Securities Act of 1933, as amended (the “Securities Act”), (ii) an investment company registered under the Investment
Company Act of 1940, as amended (the “Investment Company Act”), (iii) a business development company as defined in Section 2(a)(48) of the Securities Act, (iv) a Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958, as amended, (v) a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, (vi) a business development company as defined in Section 202(a)(22) of the Investment Advisors Act of 1940, as amended, (vii) an organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation (other than a bank as defined in Section 3(a)(2) of the Securities Act or a savings and loan association or other institution referenced in Section 3(a)(2) of the Securities Act or a foreign bank or savings and loan
association or equivalent institution), partnership, or Massachusetts or similar business trust; or

			
	 	  	(viii) an investment advisor registered under the Investment Advisors Act of 1940, as amended, which, for each of (i) through (viii), owns and invests on a discretionary basis at least $100
million in securities other than securities of issuers affiliated with the Transferee, securities issued or guaranteed by the United States or a person controlled or supervised by and acting as an instrumentality of the government of the United
States pursuant to authority granted by the Congress of the United States, bank deposit notes and certificates of deposit, loan participations, repurchase agreements, securities owned but subject to a repurchase agreement, and currency, interest
rate and commodity swaps (collectively, “Excluded Securities”);
		
	___	  	a dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that in the aggregate owns and invests on a discretionary basis at
least $10 million of securities other than Excluded Securities and securities constituting the whole or part of an unsold allotment to, or subscription by, Transferee as a participant in a public offering;
		
	___	  	an investment company registered under the Investment Company Act that is part of a family of investment companies (as defined in Rule 144A of the Securities and Exchange Commission) which own
in the aggregate at least $100 million in securities other than Excluded Securities and securities of issuers that are part of such family of investment companies;
		
	___	  	an entity, all of the equity owners of which are entities described in this Paragraph A(I);
		
	___	  	a bank as defined in Section 3(a)(2) of the Securities Act, any savings and loan association or other institution as referenced in Section 3(a)(5)(A) of the Securities Act, or any foreign bank
or savings and loan association or equivalent institution that in the aggregate owns and invests on a discretionary basis at least $100 million in securities other than Excluded Securities and has an audited net worth of at least $25 million as
demonstrated in its latest annual financial statements, as of a date not more than 16 months preceding the date of transfer of the Certificates to the Transferee in the case of a U.S. Bank or savings and loan association, and not more than 18 months
preceding such date in the case of a foreign bank or savings association or equivalent institution.

  
 II. The Transferee is
acquiring such Certificates solely for its own account, for the account of one or more others, all of which are “Qualified Institutional Buyers” within the meaning of Rule 144A, or in its capacity as a dealer registered pursuant to
Section 15 of the Exchange Act acting in a riskless principal transaction on behalf of a “Qualified Institutional 
  

 G-2 

 Buyer”. The Transferee is not acquiring such Certificates with a view to or for the resale, distribution,
subdivision or fractionalization thereof which would require registration of the Certificates under the Securities Act. 
  
 III. The Transferee represents that it is not (i) an employee benefit plan (as defined in section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended (“ERISA”)) that is subject to the provisions of Title I of ERISA, or (ii) a plan (as defined in section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (the “Code”)) that is subject to
Section 4975 of the Code, and is not acting, directly or indirectly, on behalf of a plan described in (i) or (ii) or acquiring the Certificates with assets of any such plan. 
  

					
	 	 	Very truly yours,
			
	 	 	By:	 	  

	 	 	Title:	 	  

			
	Dated:                     	 	 	 	 

  

 G-3 

 Exhibit H 
  
 Form of Residual Certificate Transfer Affidavit 
  
 AFFIDAVIT PURSUANT TO SECTION 860E OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED 
  
 [NAME OF OFFICER], being first duly sworn, deposes and says: 
  
 1. That he is [Title of Officer] of [Name of Investor] (the “Investor”), a [savings institution] [corporation]
duly organized and existing under the laws of [the State of             ] [the United States], on behalf of which he makes this affidavit and agreement. 
  
 2. That the Investor (i) is not and will not be a “disqualified
organization” as of [date of transfer] within the meaning of Section 860E(e)(5) of the Internal Revenue Code of 1986 (the “Code”), (ii) will endeavor to remain other than a disqualified organization for so long as it retains
its ownership interest in the Class R Certificates, and (iii) is acquiring the Class R Certificates for its own account or for the account of another investor from which it has received an affidavit and agreement in substantially the same form
as this affidavit and agreement. For this purpose, a “disqualified organization” means the United States, any state or political subdivision thereof, any agency or instrumentality of any of the foregoing (other than an instrumentality all
of the activities of which are subject to tax and, except for the Federal Home Loan Mortgage Corporation, a majority of whose board of directors is not selected by any such governmental entity) or any foreign government, international organization
or any agency or instrumentality of such foreign government or organization, any rural electric or telephone cooperative, or any organization (other than certain farmers’ cooperatives) that generally is exempt from federal income tax unless
such organization is subject to the tax on unrelated business taxable income. 
  
 3. That the Investor has historically paid its debts as they came due and will continue to pay its debts as they come due in the future. 
  
 4. That the Investor has no present knowledge or expectation that it will be unable to pay any United States taxes owed by
it or that it will become insolvent or subject to a bankruptcy proceeding for so long as any of the Class R Certificates remain outstanding. 
  
 5. That the Investor has been advised of, and understands that as the holder of a noneconomic residual interest it may incur tax liabilities in excess of
any cash flows generated by the interest. That the Investor intends to pay such taxes associated with holding the Class R Certificates as they become due. 

 6. That the Investor will not cause income from the Class R Certificates to be attributable to a foreign
permanent establishment or fixed base (within the meaning of an applicable income tax treaty) of the Investor or another U.S. taxpayer. 
  
 7. 1[A. Formula Test]
That the Investor agrees that the present value of the anticipated tax liabilities associated with holding the Class R Certificates does not exceed the sum of the present value of any consideration given to the Investor to acquire the Class R
Certificates, the present value of the expected future distributions on the Class R Certificates, and the present value of the anticipated tax savings associated with holding the interest as the REMIC generates losses. That the Investor agrees that
it complied with U.S. Treasury Regulations Section 1.860E-1(c)(8) in making such representation. 
  
 That the Investor agrees that it is not a foreign permanent establishment or fixed base (within the meaning of an applicable income tax treaty) of the
Transferor or another U.S. taxpayer. 
  
 [B. Asset Test] That the
Investor, at the time of the transfer, and at the close of the Investor’s two fiscal years preceding the year of the transfer, had gross assets for financial reporting purposes in excess of $100 million and net assets in excess of $10 million
(excluding any obligation of a person related to the Investor within the meaning of U.S. Treasury Regulations Section 1.860E-1(c)(6)(ii) or any other asset if a principle purpose for holding or acquiring the other asset was to permit the
Investor to satisfy the above stated minimum asset requirements). 
  
 That the Investor is an “eligible corporation,” as defined in U.S. Treasury Regulations Section 1.860E-1(c)(6)(i). That the Investor agrees, in connection with any subsequent transfer of its ownership interest in the Class R
Certificates, to transfer its ownership interest only to another “eligible corporation,” as defined in U.S. Treasury Regulations Section 1.860E-1(c)(6)(i), and to honor the restrictions on subsequent transfers of the Class R
Certificates by transferring its ownership interest only in a transaction that satisfies the requirements of U.S. Treasury Regulations Section 1.860E-1(c)(4)(i), (ii) (iii) and U.S. Treasury Regulations Section 1.860E-1(c)(5).

  
 That the Investor determined the consideration paid to it to
acquire the Class R Certificates in good faith and based on reasonable market assumptions (including, but not limited to, borrowing and investment rates, prepayment and loss assumptions, expense and reinvestment assumptions, tax rates and other
factors specific to the Investor). 
  
 8. That the Investor is a
citizen or resident of the United States, a corporation, partnership or other entity created or organized in, or under the laws of, the United States or any political subdivision thereof, or an estate or trust whose income from sources without the
United States is includable in gross income for United States federal income tax purposes regardless of its connection with the conduct of a trade or business within the United States. 

	1	Insert either section 7A or 7B. 

  

 H-2 

 9. That the Investor’s Taxpayer Identification Number is
                    . 
  
 10. That the Investor has reviewed the restrictions set forth on the face of the Class R Certificates and the provisions of Section 5.02(d) of the
Pooling and Servicing Agreement under which the Class R Certificates were issued, which authorize the Trustee to deliver payments to a person other than the Investor and negotiate a mandatory sale by the Trustee in the event that the Investor holds
such Certificates in violation of Section 5.02(d). That the Investor expressly agrees to be bound by and to comply with all the provisions of Section 5.02(d) of the Pooling and Servicing Agreement and the restrictions on the face of the
Class R Certificates. 
  
 11. That the Investor will, in
connection with any transfer that it makes of the Class R Certificates, deliver to the Trustee a certificate, in form and substance satisfactory to the Trustee, that is in substantially the same form as Exhibit I attached to the Pooling and
Servicing Agreement and that contains the same representations set forth therein. 
  
 12. That the Investor will not transfer any of its interest in the Class R Certificates unless (i) it has received from any subsequent transferee an affidavit in substantially the same form as this affidavit
containing the same representations set forth herein, and (ii) as of the time of the transfer, it does not have actual knowledge that such affidavit is false. That the Investor will cause such affidavit to be delivered to the Trustee upon
receipt. That the Investor is aware that the Trustee will not register the transfer of any Class R Certificates unless and until such affidavit is received. 
  
 13. That the Investor consents to any additional restrictions or arrangements that shall be deemed necessary upon advice of counsel to constitute a
reasonable arrangement to ensure that the Class R Certificates will only be owned, directly or indirectly, by an investor that is not a disqualified organization. 
  
 14. That the Investor understands and agrees that any breach of any of the representations included herein shall render the
transfer to the Investor contemplated hereby null and void. 
  

 H-3 

 IN WITNESS WHEREOF, the Investor has caused this instrument to be executed on its behalf, pursuant to the
authority of its Board of Directors, by its [Title of Officer] and its corporate seal to be hereunto attached, attested by its [Assistant] Secretary, this      day of. 
  

							
	 	 	 	 	[NAME OF INVESTOR]
				
	 	 	 	 	By:	 	  

	 	 	 	 	[Name of Officer]
	 	 	 	 	[Title of Officer]
	 	 	[Corporate Seal]	 	 	 	 
				
	 	 	ATTEST:	 	 	 	 
				
	 	 	  

	 	 	 	 
	 	 	[Assistant] Secretary	 	 	 	 

  
 Personally appeared
before me the above named [Name of Officer], known or proved to me to be the same person who executed the foregoing instrument and to be the [Title of Officer] of the Investor, and acknowledged to me that he executed the same as his free act and
deed and the free act and deed of the Investor. 
  

 H-4 

 Exhibit I 
  
 Transferor’s Certificate 
  
  

					
	To:	  	 JPMorgan Chase Bank, National Association
 2001 Bryan Street, 10th Floor
 Dallas, Texas 75201
 Attention: Worldwide Securities Services/Global Debt - NovaStar Series 2005-3

			
	 	  	Re:	  	The Pooling and Servicing Agreement, dated as of September 1, 2005, among NovaStar Mortgage Funding Corporation, as Company, NovaStar Mortgage, Inc., as Servicer and as Seller, Wachovia
Bank, National Association, as Custodian, JPMorgan Chase Bank, National Association, as trustee and J.P. Morgan Trust Company, National Association, as co-trustee

  
 Ladies and Gentlemen:

  
 This letter is delivered to you in connection with the
transfer by NovaStar Mortgage, Inc. (the “Seller”) to
                                        
(the “Purchaser”) of a     % Percentage Interest of NovaStar Mortgage Funding Trust, Series 2005-3, NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3, Class R (the “Certificates”),
pursuant to Section 5.02(d) of the Pooling and Servicing Agreement (the “Pooling and Servicing Agreement”), dated as of September 1, 2005 among NovaStar Mortgage Funding Corporation, as Company (the “Company”), NovaStar
Mortgage, Inc., as Servicer and Seller (the “Servicer and Seller”), Wachovia Bank, National Association, as Custodian (the “Custodian”), JPMorgan Chase Bank, National Association, as trustee (the “Trustee”) and J.P.
Morgan Trust Company, National Association, as co-trustee (the “Co-Trustee”). All terms used herein and not otherwise defined shall have the meanings set forth in the Pooling and Servicing Agreement. The Seller hereby certifies, represents
and warrants to, and covenants with, the Company and the Trustee that: 
  
 1. No purpose of the Seller relating to the transfer of the Certificates by the Seller to the Purchaser is or will be to impede the assessment or collection of any tax. 
  
 2. The Seller has conducted a reasonable investigation of the financial condition of the Purchaser and, as a result of such
investigation, has concluded that the Purchaser has historically paid its debts as they came due and will continue to pay its debts as they come due in the future. 
  
 3. The Seller has received, and understands that the Purchaser has delivered to the Trustee and the Company, a Residual
Certificate Transfer Affidavit in the form attached to the Pooling and Servicing Agreement as Exhibit H. The Seller does not know or believe that any representation contained therein is false. 
  
 4. The Seller does not know or have reason to know that the Purchaser
(i) will be unwilling or unable to pay taxes due on its share of the Certificates or (ii) will not honor the restrictions on subsequent transfers of the Certificates set forth in section 5.02(d) of the Pooling and Servicing Agreement and
in the Residual Certificate Transfer Affidavit. 

 5. The Seller has no actual knowledge that the proposed Transferee is not both a United States Person and
a Permitted Transferee. 
  

			
	Very truly yours,
	
	  

	(Seller)	 	 
		
	By:	 	  

	Name:	 	 
	Title:	 	 

  

 I-2 

 Exhibit J 
  
 Form of Notional Amount Test Event Notice 
  
 [Please see attached] 

 Exhibit K 
  
 Designation Under REMIC Provisions 
  
 [Please See Attached] 

 Exhibit L 
  
 Form of Advance Facility Notice 
  
 [date] 
  
 JPMorgan Chase Bank, National Association 
 4 New York Plaza, 6th Floor 
 New York, NY 10004-2477 
 Attention: Worldwide Securities Services/ Global
Debt - NovaStar Series 2005-3 
  

			
	Re:	  	Pooling and Servicing Agreement, dated as of September 1, 2005, by and among NovaStar Mortgage Funding Corporation (the “Company”), NovaStar Mortgage, Inc., as seller and servicer
(the “Seller” or “Servicer”), Wachovia Bank, National Association, as custodian (the “Custodian”) and JPMorgan Chase Bank, National Association (formerly known as JPMorgan Chase Bank), as trustee (the
“Trustee”) and J.P. Morgan Trust Company, National Association, as co-trustee (the “Co-Trustee”) (the “Agreement”)

  
 In accordance with
Section 3.26(a) of the above-captioned Agreement, the undersigned hereby notifies the Trustee of the following information: 
  

	 	•	 	The Servicer has entered into an Advance Facility. 

  

	 	•	 	The Advancing Person is [                    ]. 

 

	 	•	 	[                    ], as the Servicer’s Assignee, has the right to
make withdrawals from the Collection Account subject to Section 3.26(b) of the Agreement to reimburse previously unreimbursed Advances and/or Servicing Advances pursuant to Section 3.07 of the Agreement. 

  
 [Remainder of Page Intentionally Left Blank] 

 Capitalized words and phrases used herein shall have the respective meanings assigned to them in the
above-captioned Agreement. 
  

			
	NOVASTAR MORTGAGE INC.
	as Servicer
		
	By:	 	  

	Name:	 	 
	Title:	 	 
	
	[                                      
  ]
	as Advancing Person
		
	By:	 	  

	Name:	 	 
	Title:	 	 

  
 The undersigned hereby
acknowledges receipt of this notice pursuant to Section 3.26(a) of the Agreement. 
  
 ACKNOWLEDGED AND AGREED: 
  
 JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
not in its individual capacity but solely as Trustee 
  

			
	By:	 	  

	Name:	 	 
	Title:	 	 

 Exhibit K 
  
 Designation Under REMIC Provisions 
  
 (a) The Trustee shall elect that each of REMIC I, REMIC II, REMIC III, REMIC IV and the Master REMIC be treated as a REMIC under Section 860D of the
Code. Any inconsistencies or ambiguities in this Agreement or in the administration of this Agreement shall be resolved in a manner that preserves the validity of such REMIC elections. 
  
 (b) The designation of REMIC interests shall be as follows: 
  
 (i) REMIC I will consist of all of the assets of the Trust (other than the Pre-Funding Account, the
Supplemental Interest Account, the Swap Agreements, the Cap Agreements, the Initial Swap Amount, the Novation Agreements and the Supplemental Interest Trust), including the Mortgage Loans, the Accounts, any REO Property and any proceeds of the
foregoing. REMIC I will be evidenced by the “REMIC I Regular Interests” as set forth in (c) below, which will be uncertificated and will represent the “regular interests” in REMIC I. The Class R-I Interest will represent the
sole class of residual interest in REMIC I; 
  
 (ii) REMIC II will consist of the REMIC I Regular Interests and will be evidenced by the “REMIC II Regular Interests” as set forth in (d) below, which will be uncertificated and will represent the “regular
interests” in REMIC II. The Class R-II Interest will represent the sole class of residual interest in REMIC II; 
  
 (iii) REMIC III will consist of the REMIC II Regular Interests and will be evidenced by the “REMIC III Regular Interests” as set
forth in (e) below, which will be uncertificated and will represent the “regular interests” in REMIC III. The Class R-III Interest will represent the sole class of residual interest in REMIC III; 
  
 (iv) REMIC IV will consist of the REMIC III Regular
Interests and will be evidenced by the “REMIC IV Regular Interests” as set forth in (f) below, which will be uncertificated and will represent the “regular interests” in REMIC IV. The Class R-IV Interest will represent the
sole class of residual interest in REMIC IV; and 
  
 (v) The Master REMIC will consist of the REMIC IV Regular Interests and will be evidenced, as set forth in (g) below, by (i) the following Certificates, in each case, other than its respective Cap Contract Rights: the
Class A-1A, the Class A-2A, the Class A-2B, the Class A-2C, the Class A-2D, the Class M-1, the Class M-2, the Class M-3, the Class M-4, the Class M-5, the Class M-6, the Class M-7, the Class M-8, the Class M-9, the Class
M-10, the Class M-11 and the Class M-12 Certificates and (ii) the following Certificates: the Class I-1, the Class I-2, the Class I-3 and the Class C Certificates which, in the case of each Class referenced in (i) and (ii), will represent
one or more “regular interests” in the Master REMIC. The Class R-V Interest will represent the sole class of residual interest in the Master REMIC. 

 (vi) The Class R Certificates will represent the beneficial ownership of the Class R-I,
Class R-II, Class R-III, Class R-IV and Class R-V Interests. The Class R Certificates will not have a principal balance and will not bear interest. 
  
 (vii) The Trustee will hold the REMIC I Regular Interests, REMIC II Regular Interests, REMIC III Regular Interests and REMIC IV Regular
Interests. 
  
 (c) The REMIC I Regular Interests shall have the
following principal balances and REMIC I Pass-Through Rates as set forth in the table below: 
  

								
	 REMIC I Interest

	  	Initial Principal Balance

	 	 	REMIC I Pass-Through Rate

	 
	 I-J1
	  	$	1,153,601,722.44	 	 	 	(1)
	 I-J2
	  	$	835.866.586.11	 	 	 	(2)
	 I-N
	  	 	 	(3)	 	 	(4)
	 I-PO1
	  	$	267,140,533.99	 	 	 	(5)
	 I-PO2
	  	$	243,391,057.46	 	 	 	(6)
	 I-P
	  	$	100	 	 	 	(7)

	(1)	The pass-through rate for the Class I-J1 Interest will be as follows: (i) commencing on the first Distribution Date through and including the Distribution Date in January 2006,
Net WAC, computed solely with respect to the Initial Mortgage Loans relating to Group I and (ii) for all Distribution Dates thereafter, Net WAC of the Group I Mortgage Loans. 

	(2)	The pass-through rate for the Class I-J2 Interest will be as follows: (i) commencing on the first Distribution Date through and including the Distribution Date in January 2006,
Net WAC, computed solely with respect to the Initial Mortgage Loans relating to Group II and (ii) for all Distribution Dates thereafter, Net WAC of the Group II Mortgage Loans. 

	(3)	The Class I-N Interest will have a notional principal balance equal to $510,531,591.45. 

	(4)	The pass-through rate for the Class I-N Interest for each Distribution Date will be as follows: (i) commencing on the first Distribution Date through and including the
Distribution Date in January 2006, all interest on the Subsequent Mortgage Loans for such Distribution Date divided by $510,531,591.45 and (ii) for all Distribution Dates thereafter, 0.00%. 

	(5)	The pass-through rate for the Class I-PO1 Interest will be as follows: (i) commencing on the first Distribution Date through and including the Distribution Date in January
2006, 0.00% and (ii) for all Distribution Dates thereafter, Net WAC of the Group I Mortgage Loans. 

  

 2 

	(6)	The pass-through rate for the Class I-PO2 Interest will be as follows: (i) commencing on the first Distribution Date through and including the Distribution Date in January
2006, 0.00% and (ii) for all Distribution Dates thereafter, Net WAC of the Group II Mortgage Loans. 

	(7)	The Class I-P Interest shall bear interest at the same rate as the Class I-J2 Interest. In addition, the Class I-P Interest is entitled to distributions of all Prepayment Charges.

  
 Commencing on the first Distribution Date
through and including the Distribution Date in January 2006, all Realized Losses, prepayments and payments of scheduled principal generated with respect to the Initial Mortgage Loans relating to Group I shall be allocated to the Class I-J1 Interest.
All Realized Losses, prepayments and payments of scheduled principal generated with respect to the Initial Mortgage Loans relating to Group II shall be allocated pro rata to the Class I-J2 and Class I-P Interests. All Realized Losses, prepayments
and payments of scheduled principal generated with respect to the Subsequent Mortgage Loans relating to Group I and any related amounts transferred from the Pre-Funding Account to REMIC I shall be allocated to the Class I-PO1 Interest. All Realized
Losses, prepayments and payments of scheduled principal generated with respect to the Subsequent Mortgage Loans relating to Group II and any related amounts transferred from the Pre-Funding Account to REMIC I shall be allocated to the Class I-PO2
Interest. 
  
 On each Distribution Date occurring after the
Distribution Date in January 2006, all Realized Losses, prepayments and payments of scheduled principal generated with respect to the Group I Mortgage Loans shall be allocated pro rata, to the Class I-J1 and I-PO1 Interests, until such classes are
paid in full or eliminated by such losses. All Realized Losses, prepayments and payments of scheduled principal generated with respect to the Group II Mortgage Loans shall be allocated pro rata, to the Class I-J2, I-PO2 and I-P Interests, until such
classes are paid in full or eliminated by such losses. 
  
 (d) The
REMIC II Regular Interests shall have the following principal balances and REMIC II Pass-Through Rates set forth in the table below: 
  

									
	 REMIC II Interests (1)

	 	 	  	 Initial
 Principal Balances

	 	 	 REMIC II
 Pass-Through Rates

	 
	 II-A1 through II-A18
	 	 	  	 	(2)	 	 	(3)
	 II-B1 through II-B19
	 	 	  	 	(2)	 	 	(3)
	 II-C1 through II-C19
	 	 	  	 	(2)	 	 	(3)
	 II-D1 through II-D20
	 	 	  	 	(2)	 	 	(3)
	 II-E1 through II-E20
	 	 	  	 	(2)	 	 	(3)
	 II-F1 through II-F21
	 	 	  	 	(2)	 	 	(3)
	 II-G1 through II-G21
	 	 	  	 	(2)	 	 	(3)
	 II-H1 through II-H21
	 	 	  	 	(2)	 	 	(3)
	 II-K1 through II-K22
	 	 	  	 	(2)	 	 	(3)
	 II-L1 through II-L22
	 	 	  	 	(4)	 	 	(3)
	 II-M1 through II-M22
	 	 	  	 	(2)	 	 	(3)

  

 3 

									
	 REMIC II Interests (1)

	 	 	  	 Initial
 Principal Balances

	 	 	 REMIC II
 Pass-Through Rates

	 
	 II-O1 through II-O22
	 	 	  	 	(2)	 	 	(3)
	 II-Q1 through II-Q23
	 	 	  	 	(2)	 	 	(3)
	 II-S1 through II-S23
	 	 	  	 	(2)	 	 	(3)
	 II-T1 through II-T23
	 	 	  	 	(2)	 	 	(3)
	 II-U1 through II-U30
	 	 	  	 	(5)	 	 	(3)
	 II-V1 through II-V31
	 	 	  	 	(5)	 	 	(3)
	 II-W1 through II-W31
	 	 	  	 	(5)	 	 	(3)
	 II-Y1 through II-Y32
	 	 	  	 	(5)	 	 	(3)
	 II-Z1 through II-Z32
	 	 	  	 	(5)	 	 	(3)
	 II-a1 through II-a33
	 	 	  	 	(5)	 	 	(3)
	 II-b1 through II-b33
	 	 	  	 	(5)	 	 	(3)
	 II-c1 through II-c33
	 	 	  	 	(5)	 	 	(3)
	 II-d1 through II-d34
	 	 	  	 	(5)	 	 	(3)
	 II-e1 through II-e34
	 	 	  	 	(5)	 	 	(3)
	 II-f1 through II-f35
	 	 	  	 	(5)	 	 	(3)
	 II-g1 through II-g35
	 	 	  	 	(5)	 	 	(3)
	 II-h1 through II-h47
	 	 	  	 	(6)	 	 	(3)
	 II-AA1 through II-AA18
	 	 	  	 	(7)	 	 	(8)
	 II-BB1 through II-BB19
	 	 	  	 	(7)	 	 	(8)
	 II-CC1 through II-CC19
	 	 	  	 	(7)	 	 	(8)
	 II-DD1 through II-DD20
	 	 	  	 	(7)	 	 	(8)
	 II-EE1 through II-EE20
	 	 	  	 	(7)	 	 	(8)
	 II-FF1 through II-FF21
	 	 	  	 	(7)	 	 	(8)
	 II-GG1 through II-GG21
	 	 	  	 	(7)	 	 	(8)
	 II-HH1 through II-HH21
	 	 	  	 	(7)	 	 	(8)
	 II-KK1 through II-KK22
	 	 	  	 	(7)	 	 	(8)
	 II-LL1 through II-LL22
	 	 	  	 	(9)	 	 	(8)
	 II-MM1 through II-MM22
	 	 	  	 	(7)	 	 	(8)
	 II-OO1 through II-OO22
	 	 	  	 	(7)	 	 	(8)
	 II-QQ1 through II-QQ23
	 	 	  	 	(7)	 	 	(8)
	 II-SS1 through II-SS23
	 	 	  	 	(7)	 	 	(8)
	 II-TT1 through II-TT23
	 	 	  	 	(7)	 	 	(8)
	 II-UU1 through II-UU30
	 	 	  	 	(10)	 	 	(8)
	 II-VV1 through II-VV31
	 	 	  	 	(10)	 	 	(8)
	 II-WW1 through II-WW31
	 	 	  	 	(10)	 	 	(8)
	 II-YY1 through II-YY32
	 	 	  	 	(10)	 	 	(8)
	 II-ZZ1 through II-ZZ32
	 	 	  	 	(10)	 	 	(8)
	 II-aa1 through II-aa33
	 	 	  	 	(10)	 	 	(8)
	 II-bb1 through II-bb33
	 	 	  	 	(10)	 	 	(8)
	 II-cc1 through II-cc33
	 	 	  	 	(10)	 	 	(8)
	 II-dd1 through II-dd34
	 	 	  	 	(10)	 	 	(8)
	 II-ee1 through II-ee34
	 	 	  	 	(10)	 	 	(8)
	 II-ff1 through II-ff35
	 	 	  	 	(10)	 	 	(8)

  

 4 

										
	 REMIC II Interests (1)

	 	 	  	 Initial
 Principal Balances

	 	 	 REMIC II
 Pass-Through Rates

	 
	 II-gg1 through II-gg35
	 	 	  	 	 	(10)	 	 	(8)
	 II-hh1 through II-hh47
	 	 	  	 	 	(12)	 	 	(8)
	 II-J1
	 	 	  	$	599,553,232.22	 	 	 	(3)
	 II-J2
	 	 	  	$	453,394,853.77	 	 	 	(8)
	 II-N
	 	 	  	 	 	(12)	 	 	(13)
	 II-P
	 	 	  	$	100	 	 	 	(14)

	(1)	The first 56 rows each encompass anywhere from 18 through 47 regular interests in REMIC II. 

	(2)	The Class II-A1 through Class II-A18 Interests, the Class II-B1 through Class II-B19 Interests, the Class II-C1 through Class II-C19 Interests, the Class II-D1 through Class II-D20
Interests, the Class II-E1 through Class II-E20 Interests, the Class II-F1 through Class II-F21 Interests, the Class II-G1 through Class II-G21 Interests, the Class II-H1 through Class II-H21 Interests, the Class II-K1 through Class II-K22
Interests, the Class II-M1 through Class II-M22 Interests, the Class II-O1 through Class II-O22 Interests, the Class II-Q1 through Class II-Q23 Interests, the Class II-S1 through Class II-S23 Interests and the Class II-T1 through Class II-T23
Interests will have an initial principal balance equal to the product of (i) $80,000,000 and (ii) the applicable percentage shown on the Group I Schedule corresponding to the number following the letter A, B, C, D, E, F, G, H, K, M, O, Q,
S or T as applicable. 

	(3)	The pass-through rate for these REMIC II Regular Interests will be the weighted average of the pass-through rates on the Class I-J1 and Class I-PO1 Interests.

	(4)	The Class II-L1 through Class II-L22 Interests will have an initial principal balance equal to the product of (i) $50,000,000 and (ii) the applicable percentage shown on
the Group I Schedule corresponding to the number following the letter L. 

	(5)	The Class II-U1 through Class II-U30 Interests, the Class II-V1 through Class II-V31 Interests, the Class II-W1 through Class II-W31 Interests, the Class II-Y1 through Class II-Y32
Interests, the Class II-Z1 through Class II-Z32 Interests, the Class II-a1 through Class II-a33 Interests, the Class II-b1 through Class II-b33 Interests, the Class II-c1 through Class II-c33 Interests, the Class II-d1 through Class II-d34
Interests, the Class II-e1 through Class II-e34 Interests, the Class II-f1 through Class II-f35 Interests and the Class II-g1 through Class II-g35 Interests will have an initial principal balance equal to the product of (i) $20,000,000 and
(ii) the applicable percentage shown on the Group I Schedule corresponding to the number following the letter U, V, W, Y, Z, a, b, c, d, e, f or g as applicable. 

	(6)	The Class II-h1 through Class II-h47 Interests will have an initial principal balance equal to the product of (i) $35,000,000 and (ii) the applicable percentage shown on
the Group I Schedule corresponding to the number following the letter h. 

  

 5 

	(7)	The Class II-AA1 through Class II-AA18 Interests, the Class II-BB1 through Class II-BB19 Interests, the Class II-CC1 through Class II-CC19 Interests, the Class II-DD1 through Class
II-DD20 Interests, the Class II-EE1 through Class II-EE20 Interests, the Class II-FF1 through Class II-FF21 Interests, the Class II-GG1 through Class II-GG21 Interests, the Class II-HH1 through Class II-HH21 Interests, the Class II-KK1 through Class
II-KK22 Interests, the Class II-MM1 through Class II-MM22 Interests, the Class II-OO1 through Class II-OO22 Interests, the Class II-QQ1 through Class II-QQ23 Interests, the Class II-SS1 through Class II-SS23 Interests and the Class II-TT1 through
Class II-TT23 Interests will have an initial principal balance equal to the product of (i) $80,000,000 and (ii) the applicable percentage shown on the Group II Schedule corresponding to the number following the letter AA, BB, CC, DD, EE,
FF, GG, HH, KK, MM, OO, QQ, SS or TT as applicable. 

	(8)	The pass-through rate for these REMIC II Regular Interests will be the weighted average of the pass-through rates on the Class I-J2 and Class I-PO2 Interests.

	(9)	The Class II-LL1 through Class II-LL22 Interests will have an initial principal balance equal to the product of (i) $50,000,000 and (ii) the applicable percentage shown on
the Group II Schedule corresponding to the number following the letter LL. 

	(10)	The Class II-UU1 through Class II-UU30 Interests, the Class II-VV1 through Class II-VV31 Interests, the Class II-WW1 through Class II-WW31 Interests, the Class II-YY1 through Class
II-YY32 Interests, the Class II-ZZ1 through Class II-ZZ32 Interests, the Class II-aa1 through Class II-aa33 Interests, the Class II-bb1 through Class II-bb33 Interests, the Class II-cc1 through Class II-cc33 Interests, the Class II-dd1 through Class
II-dd34 Interests, the Class II-ee1 through Class II-ee34 Interests, the Class II-ff1 through Class II-ff35 Interests and the Class II-gg1 through Class II-gg35 Interests will have an initial principal balance equal to the product of
(i) $20,000,000 and (ii) the applicable percentage shown on the Group II Schedule corresponding to the number following the letter UU, VV, WW, YY, ZZ, aa, bb, cc, dd, ee, ff or gg as applicable. 

	(11)	The Class II-hh1 through Class II-hh47 Interests will have an initial principal balance equal to the product of (i) $35,000,000 and (ii) the applicable percentage shown on
the Group II Schedule corresponding to the number following the letter hh. 

	(12)	The Class II-N Interest will have a notional principal balance equal to the notional principal balance of the Class I-N Interest. 

	(13)	The Class II-N Interest is entitled to all distributions on the Class I-N Interest. 

	(14)	The Class II-P Interest is entitled to all distributions on the Class I-P Interest. 

  

 6 

 Any amounts relating to Group I transferred from the Pre-Funding Account to REMIC I shall be allocated in
the following manner: The sum of the REMIC Group I Swap/Cap Termination Amount and the REMIC Group I Swap/Cap Adjustment Amount will be allocated in the following order: (i) first, pro rata to the Class II-h1 through Class II-h47 Interests
until such classes are paid in full; (ii) second, pro rata to the Class II-S1 through Class II-S23 Interests until such classes are paid in full; (iii) third, pro rata to the Class II-g1 through Class II-g35 Interests until such classes
are paid in full; (iv) fourth, pro rata to the Class II-T1 through Class II-T23 Interests until such classes are paid in full; (v) fifth, pro rata to the Class II-f1 through Class II-f35 Interests until such classes are paid in full; and
(vi) sixth, pro rata to the Class II-Q1 through Class II-Q23 Interests until such classes are paid in full. The remaining amounts relating to Group I transferred from the Pre-Funding Account to REMIC I shall be allocated to the Class II-J1
Interest until such class is paid in full. 
  
 On each
Distribution Date, all Realized Losses, prepayments and payments of scheduled principal generated with respect to the Group I Mortgage Loans shall be allocated in the following order: (i) first, in the order as described in clauses
(i) through (vi) of the previous paragraph, to the classes set forth in clauses (i) through (vi) in the previous paragraph, an amount equal to the REMIC Group I Swap/Cap Adjustment Amount but only to the extent that any portion
of such amount has not been previously paid pursuant to this clause (i) or pursuant to the previous paragraph; (ii) second, pro rata, to the Class II-J1 Interest and all Class II-A, Class II-B, Class II-C, Class II-D, Class II-E, Class
II-F, Class II-G, Class II-H, Class II-K, Class II-L, Class II-M, Class II-O, Class II-Q, Class II-S, Class II-T, Class II-U, Class II-V, Class II-W Class II-Y, Class II-Z, Class II-a, Class II-b, Class II-c, Class II-d, Class II-e, Class II-f,
Class II-g and Class II-h Interests whose Corresponding REMIC III Regular Interests have a Corresponding Distribution Date from the Swap/Cap Interest Rate Schedule on or prior to such current Distribution Date until such classes are paid in full or
eliminated by such losses; (iii) third, to the Class II-B1 through Class II-B19 Interests, sequentially, until such classes are paid in full or eliminated by such losses; (iv) fourth, to the Class II-F1 through Class II-F21 Interests,
sequentially, until such classes are paid in full or eliminated by such losses; (v) fifth, to the Class II-K1 through Class II-K22 Interests, sequentially, until such classes are paid in full or eliminated by such losses; (vi) sixth, to
the Class II-L1 through Class II-L22 Interests, sequentially, until such classes are paid in full or eliminated by such losses: (vii) seventh, to the Class II-O1 through Class II-O22 Interests, sequentially, until such classes are paid in full
or eliminated by such losses; (viii) eighth, to the Class II-S1 through Class II-S23 Interests, sequentially, until such classes are paid in full or eliminated by such losses; (ix) ninth, to the Class II-V1 through Class II-V31 Interests,
sequentially, until such classes are paid in full or eliminated by such losses; (x) tenth, to the Class II-a1 through Class II-a33 Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xi) eleventh, to
the Class II-e1 through Class II-e34 Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xii) twelfth, to the Class II-h1 through Class II-h47 Interests, sequentially, until such classes are paid in full
or eliminated by such losses; (xiii) thirteenth, to the Class II-A1 through Class II-A18 Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xiv) fourteenth, to the Class II-C1 through Class II-C19
Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xv)
  

 7 

 fifteenth, to the Class II-D1 through Class II-D20 Interests, sequentially, until such classes are paid in full or
eliminated by such losses; (xvi) sixteenth, to the Class II-E1 through Class II-E20 Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xvii) seventeenth, to the Class II-G1 through Class II-G21
Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xviii) eighteenth, to the Class II-H1 through Class II-H21 Interests, sequentially, until such classes are paid in full or eliminated by such losses;
(xix) nineteenth, to the Class II-M1 through Class II-M22 Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xx) twentieth, to the Class II-Q1 through Class II-Q23 Interests, sequentially, until
such classes are paid in full or eliminated by such losses; (xxi) twenty-first, to the Class II-T1 through Class II-T23 Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xxii) twenty-second, to the
Class II-U1 through Class II-U30 Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xxiii) twenty-third, to the Class II-W1 through Class II-W31 Interests, sequentially, until such classes are paid in
full or eliminated by such losses; (xxiv) twenty-fourth, to the Class II-Y1 through Class II-Y32 Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xxv) twenty-fifth, to the Class II-Z1 through
Class II-Z32 Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xxvi) twenty-sixth, to the Class II-b1 through Class II-b33 Interests, sequentially, until such classes are paid in full or eliminated by
such losses; (xxvii) twenty-seventh, to the Class II-c1 through Class II-c33 Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xxviii) twenty-eighth, to the Class II-d1 through Class II-d34
Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xxix) twenty-ninth, to the Class II-f1 through Class II-f35 Interests, sequentially, until such classes are paid in full or eliminated by such losses;
and (xxx) thirtieth, to the Class II-g1 through Class II-g35 Interests, sequentially, until such classes are paid in full or eliminated by such losses. 
  
 Any amounts relating to Group II transferred from the Pre-Funding Account to REMIC I shall be allocated in the following manner: The sum of the REMIC
Group II Swap/Cap Termination Amount and the REMIC Group II Swap/Cap Adjustment Amount will be allocated in the following order: (i) first, pro rata to the Class II-hh1 through Class II-hh47 Interests until such classes are paid in full;
(ii) second, pro rata to the Class II-SS1 through Class II-SS23 Interests until such classes are paid in full; (iii) third, pro rata to the Class II-gg1 through Class II-gg35 Interests until such classes are paid in full; (iv) fourth,
pro rata to the Class II-TT1 through Class II-TT23 Interests until such classes are paid in full; (v) fifth, pro rata to the Class II-ff1 through Class II-ff35 Interests until such classes are paid in full; and (vi) sixth, pro rata to the
Class II-QQ1 through Class II-QQ23 Interests until such classes are paid in full. The remaining amounts relating to Group II transferred from the Pre-Funding Account to REMIC I shall be allocated to the Class II-J2 Interest until such class is paid
in full. 
  
 On each Distribution Date, all Realized Losses,
prepayments and payments of scheduled principal generated with respect to the Group II Mortgage Loans shall be allocated in the following order: (i) first, in the order as described in clauses (i) through (vi) of the previous
paragraph, to the classes set forth in clauses (i) through (vi) in the previous paragraph, an amount equal to the REMIC Group II Swap Adjustment 
  

 8 

 Amount but only to the extent that any portion of such amount has not been previously paid pursuant to this clause
(i) or pursuant to the previous paragraph; (ii) second, pro rata to the Class II-J2 Interest and all Class II-AA, Class II-BB, Class II-CC, Class II-DD, Class II-EE, Class II-FF, Class II-GG, Class II-HH, Class II-KK, Class II-LL, Class
II-MM, Class II-OO, Class II-QQ, Class II-SS, Class II-TT, Class II-UU, Class II-VV, Class II-WW Class II-YY, Class II-ZZ, Class II-aa, Class II-bb, Class II-cc, Class II-dd, Class II-ee, Class II-ff, Class II-gg and Class II-hh Interests whose
Corresponding REMIC III Regular Interests have a Corresponding Maturity Date from the Swap/Cap Maturity Date Schedule on or prior to such current Distribution Date, until such classes are paid in full or eliminated by such losses; (iii) third,
to the Class II-BB1 through Class II-BB19 Interests, in reverse numerical order, until such classes are paid in full or eliminated by such losses; (iv) fourth, to the Class II-FF1 through Class II-FF21 Interests, in reverse numerical order,
until such classes are paid in full or eliminated by such losses; (v) fifth, to the Class II-KK1 through Class II-KK22 Interests, in reverse numerical order, until such classes are paid in full or eliminated by such losses; (vi) sixth, to
the Class II-LL1 through Class II-LL22 Interests, in reverse numerical order, until such classes are paid in full or eliminated by such losses: (vii) seventh, to the Class II-OO1 through Class II-OO22 Interests, in reverse numerical order,
until such classes are paid in full or eliminated by such losses; (viii) eighth, to the Class II-SS1 through Class II-SS23 Interests, in reverse numerical order, until such classes are paid in full or eliminated by such losses; (ix) ninth,
to the Class II-VV1 through Class II-VV31 Interests, in reverse numerical order, until such classes are paid in full or eliminated by such losses; (x) tenth, to the Class II-aa1 through Class II-aa33 Interests, in reverse numerical order, until
such classes are paid in full or eliminated by such losses; (xi) eleventh, to the Class II-ee1 through Class II-ee34 Interests, in reverse numerical order, until such classes are paid in full or eliminated by such losses; (xii) twelfth, to
the Class II-hh1 through Class II-hh47 Interests, in reverse numerical order, until such classes are paid in full or eliminated by such losses; (xiii) thirteenth, to the Class II-AA1 through Class II-AA18 Interests, in reverse numerical order,
until such classes are paid in full or eliminated by such losses; (xiv) fourteenth, to the Class II-CC1 through Class II-CC19 Interests, in reverse numerical order, until such classes are paid in full or eliminated by such losses;
(xv) fifteenth, to the Class II-DD1 through Class II-DD20 Interests, in reverse numerical order, until such classes are paid in full or eliminated by such losses; (xvi) sixteenth, to the Class II-EE1 through Class II-EE20 Interests, in
reverse numerical order, until such classes are paid in full or eliminated by such losses; (xvii) seventeenth, to the Class II-GG1 through Class II-GG21 Interests, in reverse numerical order, until such classes are paid in full or eliminated by
such losses; (xviii) eighteenth, to the Class II-HH1 through Class II-HH21 Interests, in reverse numerical order, until such classes are paid in full or eliminated by such losses; (xix) nineteenth, to the Class II-MM1 through Class II-MM22
Interests, in reverse numerical order, until such classes are paid in full or eliminated by such losses; (xx) twentieth, to the Class II-QQ1 through Class II-QQ23 Interests, in reverse numerical order, until such classes are paid in full or
eliminated by such losses; (xxi) twenty-first, to the Class II-TT1 through Class II-TT23 Interests, in reverse numerical order, until such classes are paid in full or eliminated by such losses; (xxii) twenty-second, to the Class II-UU1
through Class II-UU30 Interests, in reverse numerical order, until such classes are paid in full or eliminated by such losses; (xxiii) twenty-third, 
  

 9 

 to the Class II-WW1 through Class II-WW31 Interests, in reverse numerical order, until such classes are paid in full or
eliminated by such losses; (xxiv) twenty-fourth, to the Class II-YY1 through Class II-YY32 Interests, in reverse numerical order, until such classes are paid in full or eliminated by such losses; (xxv) twenty-fifth, to the Class II-ZZ1
through Class II-ZZ32 Interests, in reverse numerical order, until such classes are paid in full or eliminated by such losses; (xxvi) twenty-sixth, to the Class II-bb1 through Class II-bb33 Interests, in reverse numerical order, until such
classes are paid in full or eliminated by such losses; (xxvii) twenty-seventh, to the Class II-cc1 through Class II-cc33 Interests, in reverse numerical order, until such classes are paid in full or eliminated by such losses;
(xxviii) twenty-eighth, to the Class II-dd1 through Class II-dd34 Interests, in reverse numerical order, until such classes are paid in full or eliminated by such losses; (xxix) twenty-ninth, to the Class II-ff1 through Class II-ff35
Interests, in reverse numerical order, until such classes are paid in full or eliminated by such losses; and (xxx) thirtieth, to the Class II-gg1 through Class II-gg35 Interests, in reverse numerical order, until such classes are paid in full
or eliminated by such losses; and (xxxi) thirty-first, to the Class II-P Interest until such class is paid in full or eliminated by such losses. 
  
 (e) The REMIC III Regular Interests shall have the following principal balances and REMIC III Pass-Through Rates set forth in the table below: 

 

									
	 REMIC III Interests(1)

	  	 Corresponding REMIC II
 Regular Interest (respectively)

	  	Initial
Principal Balances

	 	 	 REMIC III
 Pass-Through Rates

	 
	 III-A1a through III-A18a
	  	II-A1 through II-A18	  	 	(2)	 	 	(3)
	 III-A1c through III-A18c
	  	II-A1 through II-A18	  	 	(4)	 	 	(5)
	 III-B1a through III-B19a
	  	II-B1 through II-B19	  	 	(6)	 	 	(7)
	 III-B1b through III-B19b
	  	II-B1 through II-B19	  	 	(8)	 	 	(9)
	 III-B1c through III-B19c
	  	II-B1 through II-B19	  	 	(4)	 	 	(10)
	 III-C1a through III-C19a
	  	II-C1 through II-C19	  	 	(2)	 	 	(3)
	 III-C1c through III-C19c
	  	II-C1 through II-C19	  	 	(4)	 	 	(5)
	 III-D1a through III-D20a
	  	II-D1 through II-D20	  	 	(2)	 	 	(3)
	 III-D1c through III-D20c
	  	II-D1 through II-D20	  	 	(4)	 	 	(5)
	 III-E1a through III-E20a
	  	II-E1 through II-E20	  	 	(2)	 	 	(3)
	 III-E1c through III-E20c
	  	II-E1 through II-E20	  	 	(4)	 	 	(5)
	 III-F1a through III-F21a
	  	II-F1 through II-F21	  	 	(6)	 	 	(7)
	 III-F1b through III-F21b
	  	II-F1 through II-F21	  	 	(8)	 	 	(9)
	 III-F1c through III-F21c
	  	II-F1 through II-F21	  	 	(4)	 	 	(10)
	 III-G1a through III-G21a
	  	II-G1 through II-G21	  	 	(2)	 	 	(3)
	 III-G1c through III-G21c
	  	II-G1 through II-G21	  	 	(4)	 	 	(5)
	 III-H1a through III-H21a
	  	II-H1 through II-H21	  	 	(2)	 	 	(3)
	 III-H1c through III-H21c
	  	II-H1 through II-H21	  	 	(4)	 	 	(5)
	 III-K1a through III-K22a
	  	II-K1 through II-K22	  	 	(6)	 	 	(7)
	 III-K1b through III-K22b
	  	II-K1 through II-K22	  	 	(8)	 	 	(9)
	 III-K1c through III-K22c
	  	II-K1 through II-K22	  	 	(4)	 	 	(10)
	 III-L1a through III-L22a
	  	II-L1 through II-L22	  	 	(6)	 	 	(7)

  

 10 

									
	 REMIC III Interests(1)

	  	 Corresponding REMIC II
 Regular Interest (respectively)

	  	Initial
Principal Balances

	 	 	 REMIC III
 Pass-Through Rates

	 
	 III-L1b through III-L22b
	  	II-L1 through II-L22	  	 	(8)	 	 	(9)
	 III-L1c through III-L22c
	  	II-L1 through II-L22	  	 	(4)	 	 	(10)
	 III-M1a through III-M22a
	  	II-M1 through II-M22	  	 	(2)	 	 	(3)
	 III-M1c through III-M22c
	  	II-M1 through II-M22	  	 	(4)	 	 	(5)
	 III-O1a through III-O22a
	  	II-O1 through II-O22	  	 	(6)	 	 	(7)
	 III-O1b through III-O22b
	  	II-O1 through II-O22	  	 	(8)	 	 	(9)
	 III-O1c through III-O22c
	  	II-O1 through II-O22	  	 	(4)	 	 	(10)
	 III-Q1a through III-Q23a
	  	II-Q1 through II-Q23	  	 	(8)	 	 	(9)
	 III-Q1c through III-Q23c
	  	II-Q1 through II-Q23	  	 	(6)	 	 	(10)
	 III-S1a through III-S23a
	  	II-S1 through II-S23	  	 	(6)	 	 	(7)
	 III-S1b through III-S23b
	  	II-S1 through II-S23	  	 	(8)	 	 	(9)
	 III-S1c through III-S23c
	  	II-S1 through II-S23	  	 	(4)	 	 	(10)
	 III-T1a through III-T23a
	  	II-T1 through II-T23	  	 	(2)	 	 	(3)
	 III-T1c through III-T23c
	  	II-T1 through II-T23	  	 	(4)	 	 	(5)
	 III-U1a through III-U30a
	  	II-U1 through II-U30	  	 	(2)	 	 	(3)
	 III-U1c through III-U30c
	  	II-U1 through II-U30	  	 	(4)	 	 	(5)
	 III-V1a through III-V31a
	  	II-V1 through II-V31	  	 	(6)	 	 	(7)
	 III-V1b through III-V31b
	  	II-V1 through II-V31	  	 	(8)	 	 	(9)
	 III-V1c through III-V31c
	  	II-V1 through II-V31	  	 	(4)	 	 	(10)
	 III-W1a through III-W31a
	  	II-W1 through II-W31	  	 	(2)	 	 	(3)
	 III-W1c through III-W31c
	  	II-W1 through II-W31	  	 	(4)	 	 	(5)
	 III-Y1a through III-Y32a
	  	II-Y1 through II-Y32	  	 	(2)	 	 	(3)
	 III-Y1c through III-Y32c
	  	II-Y1 through II-Y32	  	 	(4)	 	 	(5)
	 III-Z1a through III-Z32a
	  	II-Z1 through II-Z32	  	 	(2)	 	 	(3)
	 III-Z1c through III-Z32c
	  	II-Z1 through II-Z32	  	 	(4)	 	 	(5)
	 III-a1a through III-a33a
	  	II-a1 through II-a33	  	 	(6)	 	 	(7)
	 III-a1b through III-a33b
	  	II-a1 through II-a33	  	 	(8)	 	 	(9)
	 III-a1c through III-a33c
	  	II-a1 through II-a33	  	 	(4)	 	 	(10)
	 III-b1a through III-b33a
	  	II-b1 through II-b33	  	 	(2)	 	 	(3)
	 III-b1c through III-b33c
	  	II-b1 through II-b33	  	 	(4)	 	 	(5)
	 III-c1a through III-c33a
	  	II-c1 through II-c33	  	 	(2)	 	 	(3)
	 III-c1c through III-c33c
	  	II-c1 through II-c33	  	 	(4)	 	 	(5)
	 III-d1a through III-d34a
	  	II-d1 through II-d34	  	 	(2)	 	 	(3)
	 III-d1c through III-d34c
	  	II-d1 through II-d34	  	 	(4)	 	 	(5)
	 III-e1a through III-e34a
	  	II-e1 through II-e34	  	 	(6)	 	 	(7)
	 III-e1b through III-e34b
	  	II-e1 through II-e34	  	 	(8)	 	 	(9)
	 III-e1c through III-e34c
	  	II-e1 through II-e34	  	 	(4)	 	 	(10)
	 III-f1a through III-f35a
	  	II-f1 through II-f35	  	 	(2)	 	 	(3)
	 III-f1c through III-f35c
	  	II-f1 through II-f35	  	 	(4)	 	 	(5)
	 III-g1a through III-g35a
	  	II-g1 through II-g35	  	 	(2)	 	 	(3)
	 III-g1c through III-g35c
	  	II-g1 through II-g35	  	 	(4)	 	 	(5)

  

 11 

									
	 REMIC III Interests(1)

	  	 Corresponding REMIC II
 Regular Interest (respectively)

	  	Initial
Principal Balances

	 	 	 REMIC III
 Pass-Through Rates

	 
	 III-h1a through III-h47a
	  	II-h1 through II-h47	  	 	(6)	 	 	(7)
	 III-h1b through III-h47b
	  	II-h1 through II-h47	  	 	(8)	 	 	(9)
	 III-h1c through III-h47c
	  	II-h1 through II-h47	  	 	(4)	 	 	(10)
	 III-AA1a through III-AA18a
	  	II-AA1 through II-AA18	  	 	(2)	 	 	(11)
	 III-AA1c through III-AA18c
	  	II-AA1 through II-AA18	  	 	(4)	 	 	(12)
	 III-BB1a through III-BB19a
	  	II-BB1 through II-BB19	  	 	(6)	 	 	(13)
	 III-BB1b through III-BB19b
	  	II-BB1 through II-BB19	  	 	(8)	 	 	(14)
	 III-BB1c through III-BB19c
	  	II-BB1 through II-BB19	  	 	(4)	 	 	(15)
	 III-CC1a through III-CC19a
	  	II-CC1 through II-CC19	  	 	(2)	 	 	(11)
	 III-CC1c through III-CC19c
	  	II-CC1 through II-CC19	  	 	(4)	 	 	(12)
	 III-DD1a through III-DD20a
	  	II-DD1 through II-DD20	  	 	(2)	 	 	(11)
	 III-DD1c through III-DD20c
	  	II-DD1 through II-DD20	  	 	(4)	 	 	(12)
	 III-EE1a through III-EE20a
	  	II-EE1 through II-EE20	  	 	(2)	 	 	(11)
	 III-EE1c through III-EE20c
	  	II-EE1 through II-EE20	  	 	(4)	 	 	(12)
	 III-FF1a through III-FF21a
	  	II-FF1 through II-FF21	  	 	(6)	 	 	(13)
	 III-FF1b through III-FF21b
	  	II-FF1 through II-FF21	  	 	(8)	 	 	(14)
	 III-FF1c through III-FF21c
	  	II-FF1 through II-FF21	  	 	(4)	 	 	(15)
	 III-GG1a through III-GG21a
	  	II-GG1 through II-GG21	  	 	(2)	 	 	(11)
	 III-GG1c through III-GG21c
	  	II-GG1 through II-GG21	  	 	(4)	 	 	(12)
	 III-HH1a through III-HH21a
	  	II-HH1 through II-HH21	  	 	(2)	 	 	(11)
	 III-HH1c through III-HH21c
	  	II-HH1 through II-HH21	  	 	(4)	 	 	(12)
	 III-KK1a through III-KK22a
	  	II-KK1 through II-KK22	  	 	(6)	 	 	(13)
	 III-KK1b through III-KK22b
	  	II-KK1 through II-KK22	  	 	(8)	 	 	(14)
	 III-KK1c through III-KK22c
	  	II-KK1 through II-KK22	  	 	(4)	 	 	(15)
	 III-LL1a through III-LL22a
	  	II-LL1 through II-LL22	  	 	(6)	 	 	(13)
	 III-LL1b through III-LL22b
	  	II-LL1 through II-LL22	  	 	(8)	 	 	(14)
	 III-LL1c through III-LL22c
	  	II-LL1 through II-LL22	  	 	(4)	 	 	(15)
	 III-MM1a through III-MM22a
	  	II-MM1 through II-MM22	  	 	(2)	 	 	(11)
	 III-MM1c through III-MM22c
	  	II-MM1 through II-MM22	  	 	(4)	 	 	(12)
	 III-OO1a through III-OO22a
	  	II-OO1 through II-OO22	  	 	(6)	 	 	(13)
	 III-OO1b through III-OO22b
	  	II-OO1 through II-OO22	  	 	(8)	 	 	(14)
	 III-OO1c through III-OO22c
	  	II-OO1 through II-OO22	  	 	(4)	 	 	(15)
	 III-QQ1a through III-QQ23a
	  	II-QQ1 through II-QQ23	  	 	(8)	 	 	(11)
	 III-QQ1c through III-QQ23c
	  	II-QQ1 through II-QQ23	  	 	(6)	 	 	(12)
	 III-SS1a through III-SS23a
	  	II-SS1 through II-SS23	  	 	(6)	 	 	(13)
	 III-SS1b through III-SS23b
	  	II-SS1 through II-SS23	  	 	(8)	 	 	(14)
	 III-SS1c through III-SS23c
	  	II-SS1 through II-SS23	  	 	(4)	 	 	(15)
	 III-TT1a through III-TT23a
	  	II-TT1 through II-TT23	  	 	(2)	 	 	(11)
	 III-TT1c through III-TT23c
	  	II-TT1 through II-TT23	  	 	(4)	 	 	(12)
	 III-UU1a through III-UU30a
	  	II-UU1 through II-UU30	  	 	(2)	 	 	(11)
	 III-UU1c through III-UU30c
	  	II-UU1 through II-UU30	  	 	(4)	 	 	(12)

  

 12 

										
	 REMIC III Interests(1)

	  	 Corresponding REMIC II
 Regular Interest (respectively)

	  	Initial
Principal Balances

	 	 	 REMIC III
 Pass-Through Rates

	 
	 III-VV1a through III-VV31a
	  	II-VV1 through II-VV31	  	 	 	(6)	 	 	(13)
	 III-VV1b through III-V3V1b
	  	II-VV1 through II-VV31	  	 	 	(8)	 	 	(14)
	 III-VV1c through III-VV31c
	  	II-VV1 through II-VV31	  	 	 	(4)	 	 	(15)
	 III-WW1a through III-WW31a
	  	II-WW1 through II-WW31	  	 	 	(2)	 	 	(11)
	 III-WW1c through III-WW31c
	  	II-WW1 through II-WW31	  	 	 	(4)	 	 	(12)
	 III-YY1a through III-YY32a
	  	II-YY1 through II-YY32	  	 	 	(2)	 	 	(11)
	 III-YY1c through III-YY32c
	  	II-YY1 through II-YY32	  	 	 	(4)	 	 	(12)
	 III-ZZ1a through III-ZZ32a
	  	II-ZZ1 through II-ZZ32	  	 	 	(2)	 	 	(11)
	 III-ZZ1c through III-ZZ32c
	  	II-ZZ1 through II-ZZ32	  	 	 	(4)	 	 	(12)
	 III-aa1a through III-aa33a
	  	II-aa1 through II-aa33	  	 	 	(6)	 	 	(13)
	 III-aa1b through III-aa33b
	  	II-aa1 through II-aa33	  	 	 	(8)	 	 	(14)
	 III-aa1c through III-aa33c
	  	II-aa1 through II-aa33	  	 	 	(4)	 	 	(15)
	 III-bb1a through III-bb33a
	  	II-bb1 through II-bb33	  	 	 	(2)	 	 	(11)
	 III-bb1c through III-bb33c
	  	II-bb1 through II-bb33	  	 	 	(4)	 	 	(12)
	 III-cc1a through III-cc33a
	  	II-cc1 through II-cc33	  	 	 	(2)	 	 	(11)
	 III-cc1c through III-cc33c
	  	II-cc1 through II-cc33	  	 	 	(4)	 	 	(12)
	 III-dd1a through III-dd34a
	  	II-dd1 through II-dd34	  	 	 	(2)	 	 	(11)
	 III-dd1c through III-dd34c
	  	II-dd1 through II-dd34	  	 	 	(4)	 	 	(12)
	 III-ee1a through III-ee34a
	  	II-ee1 through II-ee34	  	 	 	(6)	 	 	(13)
	 III-ee1b through III-ee34b
	  	II-ee1 through II-ee34	  	 	 	(8)	 	 	(14)
	 III-ee1c through III-ee34c
	  	II-ee1 through II-ee34	  	 	 	(4)	 	 	(15)
	 III-ff1a through III-ff35a
	  	II-ff1 through II-ff35	  	 	 	(2)	 	 	(11)
	 III-ff1c through III-ff35c
	  	II-ff1 through II-ff35	  	 	 	(4)	 	 	(12)
	 III-gg1a through III-gg35a
	  	II-gg1 through II-gg35	  	 	 	(2)	 	 	(11)
	 III-gg1c through III-gg35c
	  	II-gg1 through II-gg35	  	 	 	(4)	 	 	(12)
	 III-hh1a through III-hh47a
	  	II-hh1 through II-hh47	  	 	 	(6)	 	 	(13)
	 III-hh1b through III-hh47b
	  	II-hh1 through II-hh47	  	 	 	(8)	 	 	(14)
	 III-hh1c through III-hh47c
	  	II-h1 through II-h47	  	 	 	(4)	 	 	(15)
	 III-J1
	  	II-J1	  	 	 	(16)	 	 	(17)
	 III-J2
	  	II-J2	  	 	 	(16)	 	 	(18)
	 III-S1
	  	II-J1	  	 	 	(19)	 	 	(17)(21)
	 III-S2
	  	II-J2	  	 	 	(20)	 	 	(18)(21)
	 III-N
	  	II-N	  	 	 	(22)	 	 	(23)
	 III-P
	  	II-P	  	$	100	 	 	 	(24)

	(1)	The first 132 rows each encompass anywhere from 18 to 47 regular interests in REMIC III. 

	(2)	These REMIC III Regular Interests will have a principal balance equal to the principal balance of the Corresponding REMIC II Regular Interest. 

  

 13 

	(3)	The pass-through rate for these REMIC III Regular Interests will be as follows: (i) commencing on the first Distribution Date through and including the Corresponding
Distribution Date from the Swap/Cap Interest Rate Schedule, the Group I REMIC III Net WAC minus the Corresponding Interest Rate from the Swap/Cap Interest Rate Schedule and (ii) for all Distribution Dates thereafter, Group I REMIC III Net WAC.

	(4)	These REMIC III Regular Interests will have a notional principal balance equal to the principal balance of the Corresponding REMIC II Regular Interest. 

	(5)	The pass-through rate for these REMIC III Regular Interests will be as follows: (i) commencing on the first Distribution Date through and including the Corresponding
Distribution Date from the Swap/Cap Interest Rate Schedule, the Corresponding Interest Rate from the Swap/Cap Interest Rate and (ii) for all Distribution Dates thereafter, zero. 

	(6)	These REMIC III Regular Interests will have an initial principal balance equal to the product of (i) the initial principal balance of the Corresponding REMIC II Regular
Interest and (ii) two divided by three. 

	(7)	The pass-through rate for these REMIC III Regular Interests will be as follows: (i) commencing on the first Distribution Date through and including the Corresponding
Distribution Date from the Swap/Cap Interest Rate Schedule, 1.5 multiplied by (Group I REMIC III Net WAC minus the Corresponding Interest Rate from the Swap/Cap Interest Rate Schedule) and (ii) for all Distribution Dates thereafter, Group I
REMIC III Net WAC. 

	(8)	These REMIC III Regular Interests will have an initial principal balance equal to the initial principal balance of the Corresponding REMIC II Regular Interest divided by three.

	(9)	The pass-through rate for these REMIC III Regular Interests will be as follows: (i) commencing on the first Distribution Date through and including the Corresponding
Distribution Date from the Swap/Cap Interest Rate Schedule, 3 multiplied by 1-month LIBOR, subject to a cap of 3 multiplied by the Corresponding Interest Rate from the Swap/Cap Interest Rate Schedule and (ii) for all Distribution Dates
thereafter, Group I REMIC III Net WAC. 

	(10)	The pass-through rate for these REMIC III Regular Interests will be as follows: (i) commencing on the first Distribution Date through and including the Corresponding
Distribution Date from the Swap/Cap Interest Rate Schedule, the Corresponding Interest Rate from the Swap/Cap Interest Rate Schedule minus 1-Month LIBOR, subject to a floor of zero and (ii) for all Distribution Dates thereafter, zero.

	(11)	The pass-through rate for these REMIC III Regular Interests will be as follows: (i) for all Distribution Dates commencing on the Corresponding Distribution Date from the
Swap/Cap Interest Rate Schedule through and including the 

  

 14 

 Corresponding Maturity Date from the Swap/Cap Maturity Date Schedule, Group II REMIC III Net WAC minus
the Corresponding Interest Rate from the Swap/Cap Interest Rate Schedule and (ii) for all other Distribution Dates, Group II REMIC III Net WAC. 

	(12)	The pass-through rate for these REMIC III Regular Interests will be as follows: (i) for all Distribution Dates commencing on the Corresponding Distribution Date from the
Swap/Cap Interest Rate Schedule through and including the Corresponding Maturity Date from the Swap/Cap Maturity Date Schedule, the Corresponding Interest Rate from the Swap/Cap Interest Rate and (ii) for all other Distribution Dates, zero.

	(13)	The pass-through rate for these REMIC III Regular Interests will be as follows: (i) for all Distribution Dates commencing on the Corresponding Distribution Date from the
Swap/Cap Interest Rate Schedule through and including the Corresponding Maturity Date from the Swap/Cap Maturity Date Schedule, 1.5 multiplied by (Group II REMIC III Net WAC minus the Corresponding Interest Rate from the Swap/Cap Interest Rate
Schedule) and (ii) for all other Distribution Dates, Group II REMIC III Net WAC. 

	(14)	The pass-through rate for these REMIC III Regular Interests will be as follows: (i) for all Distribution Dates commencing on the Corresponding Distribution Date from the
Swap/Cap Interest Rate Schedule through and including the Corresponding Maturity Date from the Swap/Cap Maturity Date Schedule, 3 multiplied by 1-month LIBOR, subject to a cap of 3 multiplied by the Corresponding Interest Rate from the Swap/Cap
Interest Rate Schedule and (ii) for all other Distribution Dates, Group II REMIC III Net WAC. 

	(15)	The pass-through rate for these REMIC III Regular Interests will be as follows: (i) for all Distribution Dates commencing on the Corresponding Distribution Date from the
Swap/Cap Interest Rate Schedule through and including the Corresponding Maturity Date from the Swap/Cap Maturity Date Schedule, the Corresponding Interest Rate from the Swap/Cap Interest Rate Schedule minus 1-Month LIBOR, subject to a floor of zero
and (ii) for all other Distribution Dates, zero. 

	(16)	These REMIC III Regular Interests will have an initial principal balance equal to the initial principal balance of the Corresponding REMIC II Regular Interest minus .01% of the
Group I Subordinated Amount, in the case of the Class III-J1 Interest and .01% of the Group II Subordinated Amount, in the case of the Class III-J2 Interest. 

	(17)	The pass-through rate for these REMIC III Regular Interests will be equal to the Group I REMIC III Net WAC. 

	(18)	The pass-through rate for these REMIC III Regular Interests will be equal to the Group II REMIC III Net WAC. 

  

 15 

	(19)	The Class III-S1 Interest will have an initial principal balance equal to .01% of the Group I Subordinated Amount. 

	(20)	The Class III-S2 Interest will have an initial principal balance equal to .01% of the Group II Subordinated Amount. 

	(21)	Interest on these REMIC III Regular Interests will accrue as principal to the extent needed to increase the principal balance for each of these classes to an amount equal to .01% of
the Group I Subordinated Amount or Group II Subordinated Amount as applicable. 

	(22)	The Class III-N Interest will have a notional principal balance equal to the notional principal balance of the Class II-N Interest. 

	(23)	The Class III-N Interest is entitled to all distributions on the Class II-N Interest. 

	(24)	The Class III-P Interest is entitled to all distributions on the Class II-P Interest. 

  
 Any amounts relating to Group I transferred from the Pre-Funding Account to REMIC I shall be allocated in the following
manner: The sum of the REMIC Group I Swap/Cap Termination Amount and the REMIC Group I Swap/Cap Adjustment Amount will be allocated in the following order: (i) first, pro rata to the Class III-h1a through Class III-h47a Interests and Class
III-h1b through Class III-h47b Interests until such classes are paid in full; (ii) second, pro rata to the Class III-S1a through Class III-S23a Interests and Class III-S1b through Class III-S23b Interests until such classes are paid in full;
(iii) third, pro rata to the Class III-g1a through Class III-g35a Interests until such classes are paid in full; (iv) fourth, pro rata to the Class III-T1a through Class III-T23a Interests until such classes are paid in full;
(v) fifth, pro rata to the Class III-f1a through Class III-f35a Interests until such classes are paid in full; and (vi) sixth, pro rata to the Class III-Q1a through Class III-Q23a Interests until such classes are paid in full. The
remaining amounts relating to Group I transferred from the Pre-Funding Account to REMIC I shall be allocated to the Class III-J1 Interest until such class is paid in full. 
  
 On each Distribution Date, all Realized Losses, prepayments and payments of scheduled principal generated with respect to
the Group I Mortgage Loans shall be allocated in the following order: (i) first, (A) to the Class III-S1 Interest until the principal balance of such Class is reduced to .01% of the Group I Subordinated Amount and (B) if necessary, to
the Class III-S1 Interest until the ratio of the principal balance of the Class III-S1 Interest to the principal balance of the Class III-S2 Interest equals the Subordinated Amount Ratio; (ii) second, in the order as described in clauses
(i) through (vi) of the previous paragraph, to the classes set forth in clauses (i) through (vi) in the previous paragraph, an amount equal to the REMIC Group I Swap/Cap Adjustment Amount but only to the extent that any portion
of such amount has not been previously paid pursuant to this clause (ii) or pursuant to the previous paragraph; (iii) third, pro rata, to the Class III-J1 Interest and all Class III-A, Class III-B, Class III-C, Class III-D, Class III-E,
Class III-F, Class III-G, Class III-H, Class III-K, Class III-L, Class III-M, Class III-O, Class III-Q, Class III-S, Class III-T, Class III-U, Class III-V, Class III-W, Class III-Y, 
  

 16 

 Class III-Z, Class III-a, Class III-b, Class III-c, Class III-d, Class III-e, Class III-f, Class III-g and Class III-h
Interests that have a Corresponding Distribution Date from the Swap/Cap Interest Rate Schedule on or prior to such current Distribution Date, until such classes are paid in full or eliminated by such losses; (iv) fourth, to the Class III-B1a
through Class III-B19a Interests and Class III-B1b through Class III-B19b Interests, first, pro rata between the two sets of Interests, and second, sequentially among the subsets of Interests, until such classes are paid in full or
eliminated by such losses; (v) fifth, to the Class III-F1a through Class III-F21a Interests and Class III-F1b through Class III-F21b Interests, first, pro rata between the two sets of Interests, and second, sequentially among the
subsets of Interests, until such classes are paid in full or eliminated by such losses; (vi) sixth, to the Class III-K1a through Class III-K22a Interests and Class III-K1b through Class III-K22b Interests, first, pro rata between the two
sets of Interests, and second, sequentially among the subsets of Interests, until such classes are paid in full or eliminated by such losses; (vii) seventh, to the Class III-L1a through Class III-L22a Interests and Class III-L1b through
Class III-L22b Interests, first, pro rata between the two sets of Interests, and second, sequentially among the subsets of Interests, until such classes are paid in full or eliminated by such losses; (viii) eighth, to the Class
III-O1a through Class III-O22a Interests and Class III-O1b through Class III-O22b Interests, first, pro rata between the two sets of Interests, and second, sequentially among the subsets of Interests, until such classes are paid in
full or eliminated by such losses; (ix) ninth, to the Class III-S1a through Class III-S23a Interests and Class III-S1b through Class III-S23b Interests, first, pro rata between the two sets of Interests, and second, sequentially
among the subsets of Interests, until such classes are paid in full or eliminated by such losses; (x) tenth, to the Class III-V1a through Class III-V31a Interests and Class III-V1b through Class III-V31b Interests, first, pro rata
between the two sets of Interests, and second, sequentially among the subsets of Interests, until such classes are paid in full or eliminated by such losses; (xi) eleventh, to the Class III-a1a through Class III-a33a Interests and Class
III-a1b through Class III-a33b Interests, first, pro rata between the two sets of Interests, and second, sequentially among the subsets of Interests, until such classes are paid in full or eliminated by such losses; (xii) twelfth,
to the Class III-e1a through Class III-e34a Interests and Class III-e1b through Class III-e34b Interests, first, pro rata between the two sets of Interests, and second, sequentially among the subsets of Interests, until such classes
are paid in full or eliminated by such losses; (xiii) thirteenth, to the Class III-h1a through Class III-h47a Interests and Class III-h1b through Class III-h47b Interests, first, pro rata between the two sets of Interests, and
second, sequentially among the subsets of Interests, until such classes are paid in full or eliminated by such losses; (xiv) fourteenth, to the Class III-A1a through Class III-A18a Interests, sequentially, until such classes are paid in
full or eliminated by such losses; (xv) fifteenth, to the Class III-C1a through Class III-C19a Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xvi) sixteenth, to the Class III-D1a through Class
III-D20a Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xvii) seventeenth, to the Class III-E1a through Class III-E20a Interests, sequentially, until such classes are paid in full or eliminated by
such losses; (xviii) eighteenth, to the Class III-G1a through Class III-G21a Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xix) nineteenth, to the Class III-H1a through Class III-H21a
Interests, sequentially, until such classes are paid in full or 
  

 17 

 eliminated by such losses; (xx) twentieth, to the Class III-M1a through Class III-M22a Interests, sequentially,
until such classes are paid in full or eliminated by such losses; (xxi) twenty-first, to the Class III-Q1a through Class III-Q23a Interests, sequentially, until such classes are paid in full or eliminated by such losses;
(xxii) twenty-second, to the Class III-T1a through Class III-T23a Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xxiii) twenty-third, to the Class III-U1a through Class III-U30a Interests,
sequentially, until such classes are paid in full or eliminated by such losses; (xxiv) twenty-fourth, to the Class III-W1a through Class III-W31a Interests, sequentially, until such classes are paid in full or eliminated by such losses;
(xxv) twenty-fifth, to the Class III-Y1a through Class III-Y32a Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xxvi) twenty-sixth, to the Class III-Z1a through Class III-Z32a Interests,
sequentially, until such classes are paid in full or eliminated by such losses; (xxvii) twenty-seventh, to the Class III-b1a through Class III-b33a Interests, sequentially, until such classes are paid in full or eliminated by such losses;
(xxviii) twenty-eighth, to the Class III-c1a through Class III-c33a Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xxix) twenty-ninth, to the Class III-d1a through Class III-d34a Interests,
sequentially, until such classes are paid in full or eliminated by such losses; (xxx) thirtieth, to the Class III-f1a through Class III-f35a Interests, sequentially, until such classes are paid in full or eliminated by such losses; and
(xxxi) thirty-first, to the Class III-g1a through Class III-g35a Interests, sequentially, until such classes are paid in full or eliminated by such losses. 
  

Any amounts relating to Group II transferred from the Pre-Funding Account to REMIC I shall be allocated in the following manner: The sum of the REMIC
Group II Swap/Cap Termination Amount and the REMIC Group II Swap/Cap Adjustment Amount will be allocated in the following order: (i) first, pro rata to the Class III-hh1a through Class III-hh47a Interests and Class III-hh1b through Class
III-hh47b Interests until such classes are paid in full; (ii) second, pro rata to the Class III-SS1a through Class III-SS23a Interests and Class III-SS1b through Class III-SS23b Interests until such classes are paid in full; (iii) third,
pro rata to the Class III-gg1a through Class III-gg35a Interests until such classes are paid in full; (iv) fourth, pro rata to the Class III-TT1a through Class III-TT23a Interests until such classes are paid in full; (v) fifth, pro rata to
the Class III-ff1a through Class III-ff35a Interests until such classes are paid in full; and (vi) sixth, pro rata to the Class III-QQ1a through Class III-QQ23a Interests until such classes are paid in full. The remaining amounts relating to
Group II transferred from the Pre-Funding Account to REMIC I shall be allocated to the Class III-J2 Interest until such class is paid in full. 
  
 On each Distribution Date, all Realized Losses, prepayments and payments of scheduled principal generated with respect to the Group II Mortgage Loans
shall be allocated in the following order: (i) first, (A) to the Class III-S2 Interest until the principal balance of such Class is reduced to .01% of the Group II Subordinated Amount and (B) if necessary, to the Class III-S2 Interest
until the ratio of the principal balance of the Class III-S1 Interest to the principal balance of the Class III-S2 Interest equals the Subordinated Amount Ratio; (ii) second, in the order as described in clauses (i) through (vi) of
the previous paragraph, to the classes set forth in clauses (i) through (vi) in the 
  

 18 

 previous paragraph, an amount equal to the REMIC Group II Swap/Cap Adjustment Amount but only to the extent that any
portion of such amount has not been previously paid pursuant to this clause (ii) or pursuant to the previous paragraph; (iii) third, pro rata to the Class III-J2 Interest and all Class III-AA, Class III-BB, Class III-CC, Class III-DD,
Class III-EE, Class III-FF, Class III-GG, Class III-HH, Class III-KK, Class III-LL, Class III-MM, Class III-OO, Class III-QQ, Class III-SS, Class III-TT, Class III-UU, Class III-VV, Class III-WW Class III-YY, Class III-ZZ, Class III-aa, Class
III-bb, Class III-cc, Class III-dd, Class III-ee, Class III-ff, Class III-gg and Class III-hh Interests that have a Corresponding Maturity Date from the Swap/Cap Maturity Date Schedule on or prior to such current Distribution Date, until such
classes are paid in full or eliminated by such losses; (iv) fourth, to the Class III-BB1a through Class III-BB19a Interests and Class III-BB1b through Class III-BB19b Interests, first, pro rata between the two sets of Interests, and
second, sequentially among the subsets of Interests, until such classes are paid in full or eliminated by such losses; (v) fifth, to the Class III-FF1a through Class III-FF21a Interests and Class III-FF1b through Class III-FF21b
Interests, first, pro rata between the two sets of Interests, and second, sequentially among the subsets of Interests, until such classes are paid in full or eliminated by such losses; (vi) sixth, to the Class III-KK1a through
Class III-KK22a Interests and Class III-KK1b through Class III-KK22b Interests, first, pro rata between the two sets of Interests, and second, sequentially among the subsets of Interests, until such classes are paid in full or
eliminated by such losses; (vii) seventh, to the Class III-LL1a through Class III-LL22a Interests and Class III-LL1b through Class III-LL22b Interests, first, pro rata between the two sets of Interests, and second, sequentially
among the subsets of Interests, until such classes are paid in full or eliminated by such losses; (viii) eighth, to the Class III-OO1a through Class III-OO22a Interests and Class III-OO1b through Class III-OO22b Interests, first, pro
rata between the two sets of Interests, and second, sequentially among the subsets of Interests, until such classes are paid in full or eliminated by such losses; (ix) ninth, to the Class III-SS1a through Class III-SS23a Interests and
Class III-SS1b through Class III-SS23b Interests, first, pro rata between the two sets of Interests, and second, sequentially among the subsets of Interests, until such classes are paid in full or eliminated by such losses;
(x) tenth, to the Class III-VV1a through Class III-VV31a Interests and Class III-VV1b through Class III-VV31b Interests, first, pro rata between the two sets of Interests, and second, sequentially among the subsets of Interests,
until such classes are paid in full or eliminated by such losses; (xi) eleventh, to the Class III-aa1a through Class III-aa33a Interests and Class III-aa1b through Class III-aa33b Interests, first, pro rata between the two sets of
Interests, and second, sequentially among the subsets of Interests, until such classes are paid in full or eliminated by such losses; (xii) twelfth, to the Class III-ee1a through Class III-ee34a Interests and Class III-ee1b through Class
III-ee34b Interests, first, pro rata between the two sets of Interests, and second, sequentially among the subsets of Interests, until such classes are paid in full or eliminated by such losses; (xiii) thirteenth, to the Class
III-hh1a through Class III-hh47a Interests and Class III-hh1b through Class III-hh47b Interests, first, pro rata between the two sets of Interests, and second, sequentially among the subsets of Interests, until such classes are paid in
full or eliminated by such losses; (xiv) fourteenth, to the Class III-AA1a through Class III-AA18a Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xv) fifteenth, to the Class III-CC1a through
Class III-CC19a Interests, 
  

 19 

 sequentially, until such classes are paid in full or eliminated by such losses; (xvi) sixteenth, to the Class
III-DD1a through Class III-DD20a Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xvii) seventeenth, to the Class III-EE1a through Class III-EE20a Interests, sequentially, until such classes are paid
in full or eliminated by such losses; (xviii) eighteenth, to the Class III-GG1a through Class III-GG21a Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xix) nineteenth, to the Class III-HH1a
through Class III-HH21a Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xx) twentieth, to the Class III-MM1a through Class III-MM22a Interests, sequentially, until such classes are paid in full or
eliminated by such losses; (xxi) twenty-first, to the Class III-QQ1a through Class III-QQ23a Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xxii) twenty-second, to the Class III-TT1a through
Class III-TT23a Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xxiii) twenty-third, to the Class III-UU1a through Class III-UU30a Interests, sequentially, until such classes are paid in full or
eliminated by such losses; (xxiv) twenty-fourth, to the Class III-WW1a through Class III-WW31a Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xxv) twenty-fifth, to the Class III-YY1a through
Class III-YY32a Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xxvi) twenty-sixth, to the Class III-ZZ1a through Class III-ZZ32a Interests, sequentially, until such classes are paid in full or
eliminated by such losses; (xxvii) twenty-seventh, to the Class III-bb1a through Class III-bb33a Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xxviii) twenty-eighth, to the Class III-cc1a
through Class III-cc33a Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xxix) twenty-ninth, to the Class III-dd1a through Class III-dd34a Interests, sequentially, until such classes are paid in full
or eliminated by such losses; (xxx) thirtieth, to the Class III-ff1a through Class III-ff35a Interests, sequentially, until such classes are paid in full or eliminated by such losses; (xxxi) thirty-first, to the Class III-gg1a through
Class III-gg35a Interests, sequentially, until such classes are paid in full or eliminated by such losses; and (xxxii) thirty-second, to the Class III-P Interest until such class is paid in full or eliminated by such losses. 
  
 (f) The REMIC IV Regular Interests shall have the following principal
balances, REMIC IV Pass-Through Rates and Corresponding Classes of Master REMIC Certificates, as set forth in the table below: 
  

								
	 REMIC IV Interest

	  	 Initial Principal
 Balance

	  	REMIC IV Pass-
Through Rate

	 	 	 Corresponding Class of
 Master REMIC Certificates

	IV-Accrual	  	 25% of the sum of the
 Pool Balance and the
 Pre-Funded Amount
	  	 	(1)	 	N/A
	IV-A1A	  	 25% of the
 Corresponding Class
 Balance
	  	 	(1)	 	A-1A

  

 20 

								
	 IV-A2A
	  	 25% of the
 Corresponding Class
 Balance
	  	 	(1)	 	A-2A
	 IV-A2B
	  	 25% of the
 Corresponding Class
 Balance
	  	 	(1)	 	A-2B
	 IV-A2C
	  	 25% of the
 Corresponding Class
 Balance
	  	 	(1)	 	A-2C
	 IV-A2D
	  	 25% of the
 Corresponding Class
 Balance
	  	 	(1)	 	A-2D
	 IV-M1
	  	 25% of the
 Corresponding Class
 Balance
	  	 	(1)	 	M-1
	 IV-M2
	  	 25% of the
 Corresponding Class
 Balance
	  	 	(1)	 	M-2
	 IV-M3
	  	 25% of the
 Corresponding Class
 Balance
	  	 	(1)	 	M-3
	 IV-M4
	  	 25% of the
 Corresponding Class
 Balance
	  	 	(1)	 	M-4
	 IV-M5
	  	 25% of the
 Corresponding Class
 Balance
	  	 	(1)	 	M-5
	 IV-M6
	  	 25% of the
 Corresponding Class
 Balance
	  	 	(1)	 	M-6
	 IV-M7
	  	 25% of the
 Corresponding Class
 Balance
	  	 	(1)	 	M-7
	 IV-M8
	  	 25% of the
 Corresponding Class
 Balance
	  	 	(1)	 	M-8
	 IV-M9
	  	 25% of the
 Corresponding Class
 Balance
	  	 	(1)	 	M-9
	 IV-M10
	  	 25% of the
 Corresponding Class
 Balance
	  	 	(1)	 	M-10
	 IV-M11
	  	 25% of the
 Corresponding Class
 Balance
	  	 	(1)	 	M-11

  

 21 

							
	 IV-M12
	  	 25% of the
 Corresponding
 Class Balance
	  	(1)	  	M-12
	 IV-C
	  	 25% of the
 Corresponding Class
 Balance
 (Overcollateralization Amount)
	  	(1)	  	C/Overcollateralization Amount
	 IV-S1
	  	(2)	  	(3)	  	N/A
	 IV-J1
	  	(4)	  	(3)	  	N/A
	 IV-S2
	  	(2)	  	(5)	  	N/A
	 IV-J2
	  	(6)	  	(5)	  	N/A
	 IV-N
	  	(7)	  	(8)	  	N/A
	 IV-P
	  	$100	  	(9)	  	C
	 IV-I1
	  	(10)	  	(10)	  	I-1
	 IV-I2
	  	(11)	  	(11)	  	I-2
	 IV-I3
	  	(12)	  	(12)	  	I-3

	(1)	The pass-through rate for these REMIC IV Regular Interests will be the weighted average of the pass-through rates of the Class III-A1a through Class III-A18a, Class III-B1a through
Class III-B19a, Class III-B1b through Class III-B19b, Class III-C1a through Class III-C19a, Class III-D1a through Class III-D20a, Class III-E1a through Class III-E20a, Class III-F1a through Class III-F21a, Class III-F1b through Class III-F21b, Class
III-G1a through Class III-G21a, Class III-H1a through Class III-H21a, Class Class III-K1a through Class III-K22a, Class III-K1b through Class III-K22b, Class III-L1a through Class III-L22a, Class III-L1b through Class III-L22b, Class III-M1a through
Class III-M22a, Class III-O1a through Class III-O22a, Class III-O1b through Class III-O22b, Class III-Q1a through Class III-Q23a, Class III-S1a through Class III-S23a, Class III-S1b through Class III-S23b, Class III-T1a through Class III-T23a, Class
III-U1a through Class III-U30a, Class III-V1a through Class III-V31a, Class III-V1b through Class III-V31b, Class III-W1a through Class III-W31a, Class III-Y1a through Class III-Y32a, Class III-Z1a through Class III-Z32a, Class III-a1a through Class
III-a33a, Class III-a1b through Class III-a33b, Class III-b1a through Class III-b33a, Class III-c1a through Class III-c33a, Class III-d1a through Class III-d34a, Class III-e1a through Class III-e34a, Class III-e1b through Class III-e34b, Class
III-f1a through Class III-f35a, Class III-g1a through Class III-g35a, Class III-h1a through Class III-h47a, Class III-h47b through Class III-h47b, Class III-J1, Class III-S1, Class III-AA1a through Class III-AA18a, Class III-BB1a through Class
III-BB19a, Class III-BB1b through Class III-BB19b, Class III-CC1a through Class III-CC19a, Class III-DD1a through Class III-DD20a, Class III-EE1a through Class III-EE20a, Class III-FF1a through Class III-FF21a, Class III-FF1b through Class
III-FF21b, Class III-GG1a through Class III-GG21a, Class III-HH1a through Class III-HH21a, Class Class III-KK1a through Class III-KK22a, Class III-KK1b through Class III-KK22b, Class III-LL1a through Class III-LL22a, Class III-LL1b through Class
III-LL22b, Class III-MM1a through 

  

 22 

 Class III-MM22a, Class III-OO1a through Class III-OO22a, Class III-OO1b through Class III-OO22b, Class
III-QQ1a through Class III-QQ23a, Class III-SS1a through Class III-SS23a, Class III-SS1b through Class III-SS23b, Class III-TT1a through Class III-TT23a, Class III-UU1a through Class III-UU30a, Class III-VV1a through Class III-VV31a, Class III-VV1b
through Class III-VV31b, Class III-WW1a through Class III-WW31a, Class III-YY1a through Class III-YY32a, Class III-ZZ1a through Class III-ZZ32a, Class III-aa1a through Class III-aa33a, Class III-aa1b through Class III-aa33b, Class III-bb1a through
Class III-bb33a, Class III-cc1a through Class III-cc33a, Class III-dd1a through Class III-dd34a, Class III-ee1a through Class III-ee34a, Class III-ee1b through Class III-ee34b, Class III-ff1a through Class III-ff35a, Class III-gg1a through Class
III-gg35a, Class III-hh1a through Class III-hh47a, Class III-hh47b through Class III-hh47b, Class III-J2 and Class III-S2 Interests. 

	(2)	The Class IV-S1 and Class IV-S2 Interests will have a principal balance equal to the principal balances of the Class III-S1 and Class III-S2 Interests, respectively.

	(3)	The pass-through rate for these REMIC IV Regular Interests will be the weighted average of the pass-through rates of the Class III-A1a through Class III-A18a, Class III-B1a through
Class III-B19a, Class III-B1b through Class III-B19b, Class III-C1a through Class III-C19a, Class III-D1a through Class III-D20a, Class III-E1a through Class III-E20a, Class III-F1a through Class III-F21a, Class III-F1b through Class III-F21b, Class
III-G1a through Class III-G21a, Class III-H1a through Class III-H21a, Class Class III-K1a through Class III-K22a, Class III-K1b through Class III-K22b, Class III-L1a through Class III-L22a, Class III-L1b through Class III-L22b, Class III-M1a through
Class III-M22a, Class III-O1a through Class III-O22a, Class III-O1b through Class III-O22b, Class III-Q1a through Class III-Q23a, Class III-S1a through Class III-S23a, Class III-S1b through Class III-S23b, Class III-T1a through Class III-T23a, Class
III-U1a through Class III-U30a, Class III-V1a through Class III-V31a, Class III-V1b through Class III-V31b, Class III-W1a through Class III-W31a, Class III-Y1a through Class III-Y32a, Class III-Z1a through Class III-Z32a, Class III-a1a through Class
III-a33a, Class III-a1b through Class III-a33b, Class III-b1a through Class III-b33a, Class III-c1a through Class III-c33a, Class III-d1a through Class III-d34a, Class III-e1a through Class III-e34a, Class III-e1b through Class III-e34b, Class
III-f1a through Class III-f35a, Class III-g1a through Class III-g35a, Class III-h1a through Class III-h47a, Class III-h47b through Class III-h47b, Class III-J1 and Class III-S1 Interests. 

	(4)	The Class IV-J1 Interest will have a principal balance equal to the excess of (i) 50% of the sum of (a) the Group I Pool Balance and (b) the related Pre-Funded Amount
over (ii) the principal balance of the Class IV-S1 Interest. 

	(5)	The pass-through rate for these REMIC IV Regular Interests will be the weighted average of the pass-through rates of the Class III-AA1a through Class III-AA18a, Class III-BB1a
through Class III-BB19a, Class III-BB1b through Class III-BB19b, Class III-CC1a through Class III-CC19a, Class III-DD1a through Class 

  

 23 

 III-DD20a, Class III-EE1a through Class III-EE20a, Class III-FF1a through Class III-FF21a, Class III-FF1b
through Class III-FF21b, Class III-GG1a through Class III-GG21a, Class III-HH1a through Class III-HH21a, Class Class III-KK1a through Class III-KK22a, Class III-KK1b through Class III-KK22b, Class III-LL1a through Class III-LL22a, Class III-LL1b
through Class III-LL22b, Class III-MM1a through Class III-MM22a, Class III-OO1a through Class III-OO22a, Class III-OO1b through Class III-OO22b, Class III-QQ1a through Class III-QQ23a, Class III-SS1a through Class III-SS23a, Class III-SS1b through
Class III-SS23b, Class III-TT1a through Class III-TT23a, Class III-UU1a through Class III-UU30a, Class III-VV1a through Class III-VV31a, Class III-VV1b through Class III-VV31b, Class III-WW1a through Class III-WW31a, Class III-YY1a through Class
III-YY32a, Class III-ZZ1a through Class III-ZZ32a, Class III-aa1a through Class III-aa33a, Class III-aa1b through Class III-aa33b, Class III-bb1a through Class III-bb33a, Class III-cc1a through Class III-cc33a, Class III-dd1a through Class
III-dd34a, Class III-ee1a through Class III-ee34a, Class III-ee1b through Class III-ee34b, Class III-ff1a through Class III-ff35a, Class III-gg1a through Class III-gg35a, Class III-hh1a through Class III-hh47a, Class III-hh47b through Class
III-hh47b, Class III-J2 and Class III-S2 Interests. 

	(6)	The Class IV-J2 Interest will have a principal balance equal to the excess of (i) 50% of the sum of (a) the Group II Pool Balance and (b) the related Pre-Funded
Amount over (ii) the sum of (a) the principal balance of the Class IV-S2 Interest and (b) $100. 

	(7)	The Class IV-N Interest will have a notional principal balance equal to the notional principal balance of the Class III-N Interest. 

	(8)	The Class IV-N Interest is entitled to all distributions on the Class III-N Interest. 

	(9)	The Class IV-P Interest is entitled to all distributions on the Class III-P Interest. 

	(10)	The Class IV-I1 Interest will be an interest only regular interest and will be entitled to receive on each Distribution Date the sum of the amounts distributable on the Class
III-A1c through Class III-A18c, Class III-B1c through Class III-B19c, Class III-C1c through Class III-C19c, Class III-D1c through Class III-D20c, Class III-E1c through Class III-E20c, Class III-F1c through Class III-F21c, Class III-G1c through Class
III-G21c, Class III-H1c through Class III-H21c, Class III-K1c through Class III-K22c, Class III-L1c through Class III-L22c, Class III-M1c through Class III-M22c, Class III-O1c through Class III-O22c, Class III-Q1c through Class III-Q23c, Class
III-S1c through Class III-S23c, Class III-T1c through Class III-T23c, Class III-AA1c through Class III-AA18c, Class III-BB1c through Class III-BB19c, Class III-CC1c through Class III-CC19c, Class III-DD1c through Class III-DD20c, Class III-EE1c
through Class III-EE20c, Class III-FF1c through Class III-FF21c, Class III-GG1c through Class III-GG21c, Class III-HH1c through Class III-HH21c, Class III-KK1c through Class III-KK22c, Class III-LL1c through Class III-LL22c, Class III-MM1c through
Class III-MM22c, Class III-OO1c through Class III-OO22c, Class III-QQ1c through Class III-QQ23c, Class III-SS1c through Class III-SS23c and Class III-TT1c through Class III-TT23c Interests on such Distribution Date. 

  

 24 

	(11)	The Class IV-I2 Interest will be an interest only regular interest and will be entitled to receive on each Distribution Date the sum of the amounts distributable on the Class
III-U1c through Class III-U30c, Class III-V1c through Class III-V31c, Class III-W1c through Class III-W31c, Class III-Y1c through Class III-Y32c, Class III-Z1c through Class III-Z32c, Class III-a1c through Class III-a33c, Class III-b1c through Class
III-b33c, Class III-c1c through Class III-c33c, Class III-d1c through Class III-d34c, Class III-e1c through Class III-e34c, Class III-f1c through Class III-f35c, Class III-g1c through Class III-g35c, Class III-UU1c through Class III-UU30c, Class
III-VV1c through Class III-VV31c, Class III-WW1c through Class III-WW31c, Class III-YY1c through Class III-YY32c, Class III-ZZ1c through Class III-ZZ32c, Class III-aa1c through Class III-aa33c, Class III-bb1c through Class III-bb33c, Class III-cc1c
through Class III-cc33c, Class III-dd1c through Class III-dd34c, Class III-ee1c through Class III-ee34c, Class III-ff1c through Class III-ff35c and Class III-gg1c through Class III-gg35c Interests on such Distribution Date. 

	(12)	The Class IV-I3 will be an interest only regular interest and will be entitled to receive on each Distribution Date the sum of the amounts distributable on the Class III-h1c through
Class III-h47c and Class III-hh1c through Class III-hh47c Interests on such Distribution Date. 

  
 On each Distribution Date, 25% of the increase in the Over-collateralization Amount will be payable as a reduction of the principal balances of the Class
IV-A1A, Class IV-A2A, Class IV -A2B, Class IV-A2C, Class IV-A2D, Class IV-M1, Class IV-M2, Class IV-M3, Class IV-M4, Class IV-M5, Class IV-M6, Class IV-M7, Class IV-M8, Class IV-M9, Class IV-M10, Class IV-M11, Class IV-M12 and Class IV-C Interests
(in the order and relative amount of such reduction to the principal balance of each class’s Corresponding Class of Master REMIC Certificates) and will be accrued and added to the principal balances of the Class IV-Accrual Interest. On each
Distribution Date, the increase in the principal balance of the Class IV-Accrual Interest may not exceed interest accruals for such Distribution Date for the respective Class IV-Accrual Interests. In the event that (i) 25% of the increase in
the related Overcollateralization Amount exceeds (ii) interest accruals on the related Class IV-Accrual Interest for such Distribution Date, the excess for such Distribution Date (accumulated with all such excesses for all prior Distribution
Dates) will be added to any increase in the Overcollateralization Amount for purposes of determining the amount of interest accrual on the related Class IV-Accrual Interest payable as principal on the related Class IV-Accrual Interest on the next
Distribution Date pursuant to the first sentence of this paragraph. 
  
 All payments of scheduled principal and prepayments of principal and any amounts transferred from the Pre-Funding Account to REMIC I shall be allocated as follows: (i) first, 25% to the Class IV-Accrual Interest and (ii) second,
25% to the Class IV-A1A, Class IV-A2A, Class IV-A2B, Class IV-A2C, Class IV-A2D, Class IV-M1, 
  

 25 

 Class IV-M2, Class IV-M3, Class IV-M4, Class IV-M5, Class IV-M6, Class IV-M7, Class IV-M8, Class IV-M9, Class IV-M10,
Class IV-M11, Class IV-M12 and Class IV-C Interests (to each such Class in an amount equal to 1/4 of the principal paid in reduction of the principal balance of the Corresponding Class of Master REMIC Certificates) until paid in full.
Notwithstanding the above, principal payments allocated to the Class C Certificates that result in the reduction of the Overcollateralization Amount shall be allocated 25% to the Class IV-Accrual1 Interest and 25% to the Class IV-C Interest until
such classes are paid in full. Fifty percent of the Realized Losses shall be applied so that after all distributions have been made on each Distribution Date the principal balances of the Class IV-A1A, Class IV-A2A, Class IV-A2B, Class IV-A2C, Class
IV-A2D, Class IV-M1, Class IV-M2, Class IV-M3, Class IV-M4, Class IV-M5, Class IV-M6, Class IV-M7, Class IV-M8, Class IV-M9, Class IV-M10, Class IV-M11 and Class IV-M12 Interests are each equal to 25% of the principal balance of its Corresponding
Class of Master REMIC Certificates and the Class IV-Accrual1 Interest is equal to 25% of the sum of the Pool Balance and the Pre-Funded Amount. 
  
 The remaining 50% of all payments of scheduled principal, prepayments of principal, any amounts transferred from the Pre-Funding Account to REMIC I and
Realized Losses shall be allocated as follows: (i) first, (A) to the Class IV-S1 and Class IV-S2 Interests until the principal balance of each such Class is reduced to .01% of the Group I Subordinated Amount and the Group II Subordinated
Amount, respectively and (B) if necessary, to the Class IV-S1 and Class IV-S2 Interests until the ratio of the principal balance of the Class IV-S1 Interest to the principal balance of the Class IV-S2 Interest equals the Subordinated Amount
Ratio; (ii) to the Class IV-P Interest in an amount equal to the principal paid in reduction of the principal balance of the Class C-3 Master REMIC Regular Interest; (iii) to the Class IV-J1 Interest until the principal balance of such
Class equals the excess of (a) 50% of the sum of (I) the Group I Pool Balance and (II) the related Pre-Funded Amount over (b) the principal balance of the Class IV-S1 Interest and (iv) to the Class IV-J2 Interest until the
principal balance of such Class equals the excess of (a) 50% of the sum of (I) the Group II Pool Balance and (II) the related Pre-Funded Amount over (b) the sum of (I) the principal balance of the Class IV-S2 Interest and (II)
$100. 
  
 (g) The following table sets forth characteristics of
the Certificates, each of which (other than the Class R Certificates and, with respect to the Class A Certificates, Class M Certificates and Class B Certificates, other than its Cap Contract Rights) is hereby designated as a “regular
interest” in the Master REMIC: 
  

						
	 Class of Certificates

	  	 Initial Certificate
Principal
 Balance

	  	 REMIC Pass-Through Rate

	Class A-1A	  	$	1,196,265,000	  	the lesser of (i) 13% and (ii) LIBOR + Certificate Margin (1)
	Class A-2A	  	$	367,000,000	  	the lesser of (i) 11% and (ii)LIBOR + Certificate Margin (2)
	Class A-2B	  	$	236,000,000	  	the lesser of (i) 11% and (ii)LIBOR + Certificate Margin (2)
	Class A-2C	  	$	227,550,000	  	the lesser of (i) 11% and (ii)LIBOR + Certificate Margin (2)
	Class A-2D	  	$	78,185,000	  	the lesser of (i) 11% and (ii)LIBOR + Certificate Margin (2)
	Class M-1	  	$	70,000,000	  	the lesser of (i) 11% and (ii)LIBOR + Certificate Margin (3)

  

 26 

							
	 Class of Certificates

	  	Initial Certificate
Principal Balance

	 	 	 REMIC
 Pass-Through Rate

	Class M-2	  	$	60,000,000	 	 	 the lesser of (i) 11% and (ii)LIBOR + Certificate Margin (3)

	Class M-3	  	$	47,500,000	 	 	 the lesser of (i) 11% and (ii)LIBOR + Certificate Margin (3)

	Class M-4	  	$	30,000,000	 	 	 the lesser of (i) 11% and (ii)LIBOR + Certificate Margin (3)

	Class M-5	  	$	30,000,000	 	 	 the lesser of (i) 11% and (ii)LIBOR + Certificate Margin (3)

	Class M-6	  	$	18,750,000	 	 	 the lesser of (i) 11% and (ii)LIBOR + Certificate Margin (3)

	Class M-7	  	$	18,750,000	 	 	 the lesser of (i) 11% and (ii)LIBOR + Certificate Margin (3)

	Class M-8	  	$	18,750,000	 	 	 the lesser of (i) 11% and (ii)LIBOR + Certificate Margin (3)

	Class M-9	  	$	17,500,000	 	 	the lesser of (i) 11% and (ii)LIBOR + Certificate Margin (3)
	Class M-10	  	$	16,250,000	 	 	the lesser of (i) 11% and (ii)LIBOR + Certificate Margin (3)
	Class M-11(4)	  	$	25,000,000	 	 	the lesser of (i) 11% and (ii)LIBOR + Certificate Margin (3)
	Class M-12(4)	  	$	30,000,000	 	 	the lesser of (i) 11% and (ii)LIBOR + Certificate Margin (3)
	 Class C-1 (5)
	  	 	 	(6)	 	(6)
	 Class C-2 (5)
	  	 	 	(7)	 	(8)
	 Class C-3 (5)
	  	$	100	 	 	(9)
	 Class I-1
	  	 	 	(10)	 	(10)
	 Class I-2
	  	 	 	(11)	 	(11)
	 Class I-3
	  	 	 	(12)	 	(12)
	 Class R
	  	 	 	(13)	 	(13)

	(1)	Subject to the Group I REMIC Available Funds Cap. 

	(2)	Subject to the Group II REMIC Available Funds Cap. 

	(3)	Subject to the Subordinate REMIC Available Funds Cap. 

	(4)	The Class M-11 DSI Certificates and the Class M-12 DSI Certificates do not represent regular interests in the Master REMIC or any other REMIC created under the Pooling and Servicing
Agreement. 

	(5)	The Class C Certificates will represent three regular interests in the Master REMIC, the Class C-1, Class C-2 and Class C-3 Interest. 

	(6)	The Class C-1 Interest will have a principal balance equal to $12,499,900 but will not bear interest on this principal balance. Instead the Class C-1 Interest will bear interest on
its notional principal balance. The Class C-1 Interest will have a notional principal balance equal to the aggregate principal balance of the Mortgage Loans plus any outstanding Pre-Funded Amount. The REMIC Pass-Through Rate for the Class C-1
Interest will be the excess of: (I) the weighted average of the pass-through rates on the REMIC IV Regular Interests (other than the Class IV-S1, Class IV-J1, Class IV-S2, Class IV-J2, Class IV-I1, Class IV-I2, Class IV-I3 and Class IV-N
Interests) over (II) the product of: (A) two and (B) the weighted average pass-through rate of the REMIC IV Regular Interests (other than the Class IV-S1, Class IV-J1, Class IV-S2, Class IV-J2, Class IV-I1, Class IV-I2, Class IV-I3 and
Class IV-N Interests) where the Class IV-Accrual Interests and the Class IV-C Interest are subject to a cap equal to zero, and the remaining classes are subject to a cap equal to the REMIC Pass-Through Rates on their respective Corresponding Classes
of Master REMIC Regular Interests. 

  

 27 

	(7)	The Class C-2 Interest will have a notional principal balance equal to the notional principal balance of the Class IV-N Interest. 

	(8)	The Class C-2 Interest is entitled to all distributions on the Class IV-N Interest. 

	(9)	The Class C-3 Interest are entitled to all distributions on the Class IV-P Interest. 

	(10)	The Class I-1 Certificates will be an interest only regular interest and will be entitled to receive on each Distribution Date all distributions on the Class IV-I1 Interest.

	(11)	The Class I-2 Certificates will be an interest only regular interest and will be entitled to receive on each Distribution Date all distributions on the Class IV-I2 Interest.

	(12)	The Class I-3 Certificates will be an interest only regular interest and will be entitled to receive on each Distribution Date all distributions on the Class IV-I3 Interest.

	(13)	The Class R Certificates will represent the beneficial ownership of the R-I, R-II, R-III, R-IV and R-V Interests. On each Distribution Date, available funds, if any, remaining in
any of the REMICs after payments of interest and principal, as designated above, will be distributed to the Class R Certificate. It is expected that there shall not be any distributions on the Class R Certificate. 

  
 (h) For federal income tax purposes, the “latest possible maturity
date” for each of the REMIC I Regular Interests, REMIC II Regular Interests, REMIC III Regular Interests, REMIC IV Regular Interests (other than the Class IV-I1, Class IV-I2 and Class IV-I3 Interests) and Master REMIC Regular Interests (other
than the Class I1, Class I2 and Class I3 Certificates) is hereby set to be the Distribution Date of January 2036. The “latest possible maturity date” for the Class IV-I1 Interest and the Class I1 Certificates is hereby set to be the
Distribution Date of August 2007. The “latest possible maturity date” for the Class IV-I2 Interest and the Class I2 Certificates is hereby set to be the Distribution Date of August 2008. The “latest possible maturity date” for
the Class IV-I3 Interest and the Class I3 Certificates is hereby set to be the Distribution Date of August 2009. 
  
 (i) NovaStar Financial Inc. (“NFI”) is hereby designated as the “Tax Interests Registrar” for the purposes of maintaining a register
of the tax ownership of all uncertificated Master REMIC Regular Interests. NFI, in such capacity, shall maintain a book-entry register reflecting such tax ownership and shall transfer tax ownership of such uncertificated Master REMIC Regular
Interests at the request of the then-registered owner. The Tax Interests Registrar shall request such documentation in connection with any such transfer as it shall deem appropriate. 
  

 28Mortgage Loan Purchase Agreement

 EXHIBIT 10.1 
  
 EXECUTION COPY 
  
 NOVASTAR MORTGAGE, INC. as Seller, 
  
 NOVASTAR MORTGAGE FUNDING CORPORATION 
 as
Company, 
  
 WACHOVIA BANK, NATIONAL ASSOCIATION 
 as Custodian 
  
 and 
  
 JPMORGAN CHASE BANK, NATIONAL ASSOCIATION 
 as Trustee 
  
 MORTGAGE LOAN PURCHASE AGREEMENT 
  
 Dated as of September 1, 2005 
  
 Fixed and Adjustable Rate Mortgage Loans 
  
 NovaStar Mortgage Funding Trust, Series 2005-3 
 NovaStar Home Equity Loan Asset-Backed Certificate, Series 2005-3 

 TABLE OF CONTENTS 
  

					
	 	 	 	  	Page(s)

	 ARTICLE I DEFINITIONS
	  	1
			
	       Section 1.01
	 	Definitions.	  	1
		
	 ARTICLE II SALE OF MORTGAGE LOANS AND RELATED PROVISIONS
	  	2
			
	       Section 2.01
	 	Sale of Initial Mortgage Loans and MI Policies.	  	2
	       Section 2.02
	 	Conveyance of the Subsequent Mortgage Loans.	  	5
	       Section 2.03
	 	Pre-Funding Account.	  	10
		
	 ARTICLE III REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH
	  	10
			
	       Section 3.01
	 	Seller Representations and Warranties.	  	10
	       Section 3.02
	 	Company Representations and Warranties.	  	28
		
	 ARTICLE IV SELLER’S COVENANTS
	  	29
			
	       Section 4.01
	 	Covenants of the Seller.	  	29
	       Section 4.02
	 	Payment of Expenses.	  	30
		
	 ARTICLE V CONDITIONS TO INITIAL MORTGAGE LOAN PURCHASE
	  	30
			
	       Section 5.01
	 	Conditions of Company’s Obligations.	  	30
		
	 ARTICLE VI INDEMNIFICATION BY THE SELLER WITH RESPECT TO THE MORTGAGE LOANS
	  	31
			
	       Section 6.01
	 	Indemnification With Respect to the Mortgage Loans.	  	31
	       Section 6.02
	 	Limitation on Liability of the Seller.	  	31
		
	 ARTICLE VII TERMINATION
	  	31
			
	       Section 7.01
	 	Termination.	  	31
		
	 ARTICLE VIII MISCELLANEOUS PROVISIONS
	  	33
			
	       Section 8.01
	 	Amendment.	  	33
	       Section 8.02
	 	Governing Law.	  	33
	       Section 8.03
	 	Notices.	  	33
	       Section 8.04
	 	Severability of Provisions.	  	34
	       Section 8.05
	 	Relationship of Parties.	  	35
	       Section 8.06
	 	Counterparts.	  	35
	       Section 8.07
	 	Further Agreements.	  	35
	       Section 8.08
	 	Intention of the Parties.	  	35
	       Section 8.09
	 	Successors and Assigns; Assignment of Purchase Agreement.	  	36
	       Section 8.10
	 	Survival.	  	36
	       Section 8.11
	 	Liability of the Trustee.	  	36
			
	 EXHIBIT 1
	 	Initial Mortgage Loan Schedule	  	 
	 EXHIBIT 2(A)
	 	Seller’s Subsequent Transfer Instrument	  	 
	 EXHIBIT 2(B)
	 	Company’s Subsequent Transfer Instrument	  	 

 THIS MORTGAGE LOAN PURCHASE AGREEMENT (this “Purchase Agreement”), dated as of
September 1, 2005, is made among NovaStar Mortgage, Inc. (the “Seller”), NovaStar Mortgage Funding Corporation (the “Company”), Wachovia Bank, National Association (the “Custodian”) and
JPMorgan Chase Bank, National Association (the “Trustee”). 
  
 W I T N E S S E T H T H A T: 
  

WHEREAS, pursuant to the terms of this Purchase Agreement, the Seller will sell the Initial Mortgage Loans and the related MI Policies to the Company
on the Closing Date; 
  
 WHEREAS, pursuant to the terms of the
Pooling and Servicing Agreement, the Company will transfer the Initial Mortgage Loans and the related MI Policies, and assign all of its rights under the Purchase Agreement, to the Trustee, without recourse, on the Closing Date; 
  
 WHEREAS, pursuant to the terms of the Pooling and Servicing Agreement, the
Trustee will issue the Certificates; 
  
 WHEREAS, pursuant to the
terms of the Pooling and Servicing Agreement, the Trustee will transfer the Certificates to the Company; 
  
 WHEREAS, pursuant to the terms of the Underwriting Agreement, the Company will sell the Offered Certificates to the Underwriters; 
  
 WHEREAS, pursuant to the terms of the REMIC Interests Sale Agreement, the
Company will sell the Class M-11 Certificates, the Class M-12 Certificates and the Class C Certificates (including the net value represented by the Class I Certificates) and the Residual Certificates to NovaStar Certificates Financing Corporation
(“NCFC”); and 
  
 WHEREAS, pursuant to the terms
of the Pooling and Servicing Agreement, the Servicer will service the Mortgage Loans. 
  
 ARTICLE I 
  
 DEFINITIONS

  
 Section 1.01 Definitions. 
  
 For all purposes of this Purchase Agreement, except as otherwise expressly
provided herein or unless the context otherwise requires, capitalized terms not otherwise defined herein shall have the meanings assigned to such terms in the Definitions contained in Appendix A to the Pooling and Servicing Agreement, dated as of
September 1, 2005, among the Custodian, the Trustee, J.P. Morgan Trust Company, National Association, as co-trustee (the “Co-Trustee”), the Company and NovaStar Mortgage, Inc. as seller and servicer (the
“Servicer”) which is incorporated by reference herein. All other capitalized terms used herein shall have the meanings specified herein. 
  

 1 

 ARTICLE II 
  

SALE OF MORTGAGE LOANS AND RELATED PROVISIONS 
  
 Section 2.01 Sale of Initial Mortgage Loans and MI Policies. 
  
 (a) The Seller hereby sells, and the Company hereby purchases on the Closing Date the Initial Mortgage Loans identified (and
the related MI Policies) on the Mortgage Loan Schedule annexed hereto as Exhibit 1, the proceeds thereof and all rights under the Related Documents (including the related Mortgage Files). The Initial Mortgage Loans consist of a group of
conventional, residential first and second lien mortgage loans with fixed and adjustable interest rates (the “Group I Mortgage Loans”) and a group of conventional, residential first and second lien mortgage loans with fixed and adjustable
interest rates (the “Group II Mortgage Loans”). The Initial Mortgage Loans will have a Principal Balance as of the close of business on the Cut-off Date, after giving effect to any payments due on or before such date whether or not
received, of approximately $1,989,468,408.55. The sale of the Initial Mortgage Loans will take place on the Closing Date, subject to and simultaneously with the deposit of the Initial Mortgage Loans and the Original Pre-Funded Amount into the Trust
Fund, the issuance of the Certificates by the Trustee and the sale of the Offered Certificates pursuant to the Underwriting Agreement. The purchase price (the “Purchase Price”) for the Initial Mortgage Loans to be paid by the
Company to the Seller on the Closing Date shall consist of the following: 
  
 (i) a payment in an amount equal to $2,425,862,742 representing the net proceeds of the sale of the Offered Certificates, which payment shall be paid to the Seller by wire transfer in immediately available funds on
the Closing Date by or on behalf of the Company, or as otherwise agreed by the Company; and 
  
 (ii) a payment in an amount equal to $111,000,000 representing the proceeds of the sale of the Class M-11 Certificates, the Class M-12
Certificates and the Class C Certificates (including the net value represented by the Class I Certificates) and the Residual Certificates by the Company to NCFC pursuant to the REMIC Interests Sale Agreement, which payment shall be paid to the
Seller by wire transfer in immediately available funds on the Closing Date by or on behalf of the Company, or as otherwise agreed by the Company. 
  
 (b) [Reserved] 
  
 (c) In connection with such conveyances by the Seller, the Seller shall on behalf of and at the direction of the Company deliver to, and deposit with the
Custodian on behalf of the Trustee, on or before the Closing Date in the case of an Initial Mortgage Loan and two Business Days prior to the related Subsequent Transfer Date in the case of a Subsequent Mortgage Loan, the following documents or
instruments with respect to each Mortgage Loan (the “Mortgage File”): 
  
 (i) the original Mortgage Note endorsed to “JPMorgan Chase Bank, National Association, as Trustee of the NovaStar Mortgage Funding
Trust, Series 2005-3, relating to the NovaStar Home Equity Loan Asset-Backed Certificates, Series 2005-3”; 
  

 2 

 (ii) the original Mortgage with evidence of recording thereon, or, if the original
Mortgage has not yet been returned from the public recording office, a copy of the original Mortgage certified by the Seller or the public recording office in which such original Mortgage has been recorded and if the Mortgage Loan is registered on
the MERS System, such Mortgage shall include thereon a statement that it is a MOM Loan and shall include the MIN for such Mortgage Loan; 
  
 (iii) unless the Mortgage Loan is registered on the MERS System, an original assignment (which may be included in one or more blanket
assignments if permitted by applicable law) of the Mortgage endorsed to “JPMorgan Chase Bank, National Association, as Trustee of the NovaStar Mortgage Funding Trust, Series 2005-3, relating to the NovaStar Home Equity Loan Asset-Backed
Certificates, Series 2005-3,” and otherwise in recordable form; 
  
 (iv) originals of any intervening assignments of the Mortgage showing an unbroken chain of title from the originator thereof to the Person assigning it to the Trustee (or to MERS, if the Mortgage Loan is registered on
the MERS System, and noting the presence of a MIN, if the Mortgage Loan is registered on the MERS System), with evidence of recording thereon, or, if the original of any such intervening assignment has not yet been returned from the public recording
office, a copy of such original intervening assignment certified by the Seller or the public recording office in which such original intervening assignment has been recorded; 
  
 (v) the original policy of title insurance (or a commitment for title insurance, if the policy is being
held by the title insurance company pending recordation of the Mortgage); 
  
 (vi) true and correct copy of each assumption, modification, consolidation or substitution agreement, if any, relating to the Mortgage Loan; and 
  
 (vii) an executed copy of the notice of assignment and acknowledgement of assignment with respect to the
Mortgage Loans covered by the MI Policies. 
  
 If a material
defect in any Mortgage File is discovered which may materially and adversely affect the value of the related Mortgage Loan, or the interests of the Trustee (as pledgee of the Mortgage Loans), or the Certificateholders in such Mortgage Loan,
including if any document required to be delivered to the Custodian has not been delivered (provided that a Mortgage File will not be deemed to contain a defect for an unrecorded assignment under clause (i) above for 180 days following
submission of the assignment if the Seller has submitted such assignment for recording pursuant to the terms of the following paragraph), the Seller shall cure such defect, repurchase the related Mortgage Loan at the Repurchase Price or substitute
an Eligible Substitute Mortgage Loan for the related Mortgage Loan upon the same terms and conditions set forth in Section 3.01 hereof as to the Initial Mortgage Loans and the Subsequent Mortgage Loans and Section 2.02(c) hereof as to the
Subsequent Mortgage Loans for breaches of representations and warranties. 
  

 3 

 Promptly after the Closing Date in the case of an Initial Mortgage Loan or, in the case of a Subsequent
Mortgage Loan, promptly after the Subsequent Transfer Date (or after the date of transfer of any Eligible Substitute Mortgage Loan), the Seller at its own expense shall complete and submit for recording in the appropriate public office for real
property records each of the assignments referred to in clause (iii) above, with such assignment completed in favor of the Trustee, excluding any Mortgage Loan that is registered on the MERS System if MERS is identified on the Mortgage or on a
properly recorded assignment of Mortgage as the mortgagee of record. While such assignment to be recorded is being recorded, the Custodian shall retain a photocopy of such assignment. If any assignment is lost or returned unrecorded to the Custodian
because of any defect therein, the Seller is required to prepare a substitute assignment or cure such defect, as the case may be, and the Seller shall cause such substitute assignment to be recorded in accordance with this paragraph. 
  
 In instances where an original Mortgage or any original intervening
assignment of Mortgage is not, in accordance with clause (ii) or (iv) above, delivered by the Seller to the Custodian, on behalf of the Trustee, prior to or on the Closing Date in the case of an Initial Mortgage Loan or, in the case of a
Subsequent Mortgage Loan, prior to or on the Subsequent Transfer Date, the Seller will deliver or cause to be delivered the originals of such documents to the Custodian, on behalf of the Trustee, promptly upon receipt thereof. 
  
 In connection with the assignment of any Initial Mortgage Loan registered on
the MERS System, promptly after the Closing Date, the Seller further agrees that it will cause, at the Seller’s own expense, the MERS System to indicate that such Initial Mortgage Loan has been assigned by the Seller to the Trustee in
accordance with this Agreement for the benefit of the Certificateholders by including in such computer files (a) the applicable Trustee code in the field “Trustee” which identifies the Trustee and (b) the code “NovaStar
2005-3” (or its equivalent) in the field “Pool” which identifies the series of the Certificates issued in connection with such Mortgage Loans. The Custodian will certify in its final certification that the MERS System shows the
Trustee on behalf of the Certificateholders as the beneficial owner of the Mortgage Loans registered on the MERS System. 
  
 Effective on the Closing Date, the Company hereby acknowledges its acceptance of all right, title and interest to the Initial Mortgage Loans and other
property, existing on the Closing Date and thereafter created and conveyed to it pursuant to this Section 2.01. 
  
 The Trustee, as assignee or transferee of the Company, shall be entitled to all scheduled principal payments due after the Cut-off Date, all other
payments of principal due and collected after the Cut-off Date, and all payments of interest on the Initial Mortgage Loans. No scheduled payments of principal due on or before the Cut-off Date and collected after the Cut-off Date shall belong to the
Company pursuant to the terms of this Purchase Agreement. The Pooling and Servicing Agreement shall provide that any late payment charges collected in connection with a Mortgage Loan shall be paid to the Servicer as provided therein. 
  

 4 

 (d) The parties hereto intend that the transactions set forth herein constitute a sale by the Seller to
the Company on the Closing Date of all the Seller’s right, title and interest in and to the Initial Mortgage Loans and other property as and to the extent described above. In the event the transactions set forth herein shall be deemed not to be
a sale, the Seller hereby grants to the Company as of the Closing Date a security interest in all of the Seller’s right, title and interest in, to and under the Initial Mortgage Loans and such other property, to secure all of the Seller’s
obligations hereunder and this Purchase Agreement shall constitute a security agreement under applicable law and in such event, the parties hereto acknowledge that the Custodian, in addition to holding the Initial Mortgage Loans on behalf of the
Trustee for the benefit of the Certificateholders, holds the Initial Mortgage Loans as designee of the Company. The Seller agrees to take or cause to be taken such actions and to execute such documents, including without limitation the filing of all
necessary UCC-1 financing statements filed in the Commonwealth of Virginia (which shall have been submitted for filing as of the Closing Date and each Subsequent Transfer Date, as applicable), any continuation statements with respect thereto and any
amendments thereto required to reflect a change in the name or corporate structure of the Seller, as are necessary to perfect and protect the interests of the Company and their respective assignees in each Initial Mortgage Loan and the proceeds
thereof and the interests of the Trustee and its assignees in each Subsequent Mortgage Loan and the proceeds thereof. The Company agrees to take or cause to be taken such actions and to execute such documents, including without limitation the filing
of all necessary UCC-1 financing statements, and continuation statements with respect thereto and any amendments thereto as are necessary to perfect and protect the interests of the Trustee and its assignees in each Initial Mortgage Loan.

  
 The parties hereto understand and agree that it is not intended that any
Mortgage Loan be included in the Trust Fund that is a “High-Cost Home Loan” as defined in the New Jersey Home Ownership Act, effective as of November 27, 2003, the Home Loan Protection Act of New Mexico, effective as of
January 1, 2004, the Massachusetts Predatory Home Loan Practices Act, effective as of November 7, 2004, or the Indiana Home Loan Practices Act effective January 1st, 2005. 
  
 Section 2.02 Conveyance of the Subsequent Mortgage Loans. 
  
 (a) Subject to the conditions set forth in paragraph (b) below in
consideration of the Trustee’s delivery on the related Subsequent Transfer Dates of all or a portion of the balance of funds in the Pre-Funding Account, the Seller shall on any Subsequent Transfer Date sell, transfer, assign, set over and
convey, without recourse, to the Company, who shall then sell, transfer, assign, set over and convey, without recourse, to the Trustee, but subject to the other terms and provisions of this Purchase Agreement and the Pooling and Servicing Agreement,
all of the right, title and interest of the Seller in and to (i) the Subsequent Mortgage Loans (and the related MI Policies) identified on the related Mortgage Loan Schedule attached to the related Subsequent Transfer Instrument delivered by
the Seller on such Subsequent Transfer Date, (ii) principal due and interest accruing on the Subsequent Mortgage Loans after the related Subsequent Cut-off Date and (i) with respect to such Subsequent Mortgage Loans all items to be
delivered pursuant to Section 2.01(c) above and the other items in the related Mortgage Files; provided, however, that the Seller reserves and retains all right, title and interest in and to principal received and interest accruing on the
Subsequent Mortgage Loans prior to the related Subsequent Cut-off Date. The transfer by the Seller to the Company, and by the Company to the Trustee, of the Subsequent Mortgage Loans identified on each Mortgage Loan Schedule attached 
  

 5 

 to the related Subsequent Transfer Instrument and the related MI Policies shall be absolute and is intended by the
Trustee, the Company and the Seller to constitute and to be treated as a sale of the Subsequent Mortgage Loans by the Seller to the Company, and a sale of the Subsequent Mortgage Loans by the Company to the Trustee. 
  
 The Subsequent Mortgage Loans presented for purchase will be designated as
either Group I or Group II. Of the Original Pre-Funded Amount of $510,531,591.45, a maximum of $267,140,533.99 will be used to acquire Subsequent Mortgage Loans for inclusion in Group I and a maximum of $243,391,057.46 will be used to acquire
Subsequent Mortgage Loans for inclusion in Group II, subject to the satisfaction of the conditions set forth herein. 
  
 In the event such transactions shall be deemed not to be a sale, the Seller hereby grants to the Company as of each Subsequent Transfer Date a security
interest in all of the Seller’s right, title and interest in, to and under the related Subsequent Mortgage Loans and such other property, to secure all of the Seller’s obligations hereunder, and this Purchase Agreement shall constitute a
security agreement under applicable law, and in such event, the parties hereto acknowledge that the Custodian, in addition to holding the Subsequent Mortgage Loans and the related MI Policies on behalf of the Trustee for the benefit of the
Certificateholders, holds the Subsequent Mortgage Loans and the related MI Policies as designee of the Company. The Seller agrees to take or cause to be taken such actions and to execute such documents, including without limitation the filing of all
necessary UCC-1 financing statements filed in the Commonwealth of Virginia (which shall be submitted for filing as of the related Subsequent Transfer Date), any continuation statements with respect thereto and any amendments thereto required to
reflect a change in the name or corporate structure of the Seller or the filing of any additional UCC-1 financing statements due to a change in the state of incorporation of the Seller as are necessary to perfect and protect the interests of the
Company and its assignees in the Subsequent Mortgage Loans. 
  
 In
the event such transactions shall be deemed not to be a sale, the Company hereby grants to the Trustee as of each Subsequent Transfer Date a security interest in all of the Company’s right, title and interest in, to and under the related
Subsequent Mortgage Loans and such other property, to secure all of the Company’s obligations hereunder, and this Purchase Agreement shall constitute a security agreement under applicable law, and in such event, the parties hereto acknowledge
that the Custodian, in addition to holding the Subsequent Mortgage Loans and the related MI Policies on behalf of the Trustee for the benefit of the Certificateholders, holds the Subsequent Mortgage Loans and the related MI Policies as designee of
the Trustee. The Company agrees to take or cause to be taken such actions and to execute such documents, including without limitation, the filing of all necessary UCC-1 financing statements filed in the State of Delaware (which shall be submitted
for filing as of the related Subsequent Transfer Date), any continuation statements with respect thereto and any amendments thereto required to reflect a change in the name or corporate structure of the Company or the filing of any additional UCC-1
financing statements due to a change in the state of incorporation of the Company as are necessary to perfect and protect the interests of the Trustee and its assignees in Subsequent Mortgage Loans. 
  
 The related Mortgage File for each Subsequent Mortgage Loan shall be
delivered to the Custodian, on behalf of the Trustee, prior to the related Subsequent Transfer Date. 
  

 6 

 The Trustee on each Subsequent Transfer Date shall acknowledge by signing receipt thereof its acceptance
of all right, title and interest to the related Subsequent Mortgage Loans and other property, existing on the Subsequent Transfer Date and thereafter created, conveyed to it pursuant to this Section 2.02. 
  
 The Trustee, as trustee of the Trust Fund, shall be entitled to all scheduled
principal payments due after each Subsequent Cut-off Date, all other payments of principal due and collected after each related Subsequent Cut-off Date, and all payments of interest on the Subsequent Mortgage Loans, minus that portion of any such
payment which is allocable to the period prior to the related Subsequent Cut-off Date. No scheduled payments of principal due on or before the related Subsequent Cut-off Date and collected after the related Subsequent Cut-off Date shall belong to
the Trust Fund pursuant to the terms of this Purchase Agreement. 
  
 The purchase price paid by the Trustee, at the direction of the Servicer and on behalf of the Trustee, from amounts released from the Pre-Funding Account shall be one-hundred percent (100%) of the aggregate Principal Balances of the
Subsequent Mortgage Loans so transferred (as identified on the Mortgage Loan Schedule attached to the related Subsequent Transfer Instrument provided by the Seller). 
  
 (b) The Seller shall transfer to the Company, who shall transfer to the Trustee, the Subsequent Mortgage Loans and the other
property and rights related thereto described in Section 2.02(a) above, and the Trustee shall cause to be released funds from the related Pre-Funding Account, only upon the satisfaction of each of the following conditions on or prior to the
related Subsequent Transfer Date: 
  
 (i) the
Seller shall have provided the Company, and the Company shall have provided the Trustee, with a timely Addition Notice, which notice shall be given no fewer than four Business Days prior to the related Subsequent Transfer Date and shall designate
the Subsequent Mortgage Loans to be sold to the Company and then to the Trustee and the aggregate Principal Balances of such Subsequent Mortgage Loans as of the related Subsequent Cut-off Date and any other information reasonably requested by the
Trustee with respect to the Subsequent Mortgage Loans; 
  
 (ii) the Seller shall have delivered to the Company, who shall have delivered to the Trustee, who shall have delivered to the Custodian, a duly executed Subsequent Transfer Instrument substantially in the form of
Exhibit 2(A) or 2(B), as applicable, (A) confirming the satisfaction of each condition precedent and representations specified in this Section 2.02(b), Section 2.02(c) and in the related Subsequent Transfer Instrument and
(B) including a Mortgage Loan Schedule attached thereto listing the Subsequent Mortgage Loans; 
  
 (iii) as of each Subsequent Transfer Date, as evidenced by delivery of the Seller’s Subsequent Transfer Instrument in the form of
Exhibit 2(A) and the Company’s Subsequent Transfer Instrument is the form of Exhibit 2(B), neither the Seller nor the Company shall be insolvent or have been made insolvent by such transfers, nor shall they be aware of any pending insolvency;

  

 7 

 (iv) such sale and transfer (i) does not cause any REMIC created under the Pooling
and Servicing Agreement to fail to qualify as a REMIC and (ii) is not a prohibited transaction within the meaning of Section 860F(a)(2) of the Code or a contribution resulting in a tax under Section 860G(d) of the Code, both as
evidenced by an Opinion of Counsel provided for the Trustee at the expense of the Seller; 
  
 (v) the Pre-Funding Period shall not have terminated; and 
  
 (vi) the Seller shall have delivered to the Custodian, the Trustee, and the Rating Agencies Opinions of
Counsel addressed to the Rating Agencies, the Trustee and the Custodian with respect to the transfers of the Subsequent Mortgage Loans substantially in the form of the Opinion of Counsel delivered to the Custodian, the Trustee and the Rating
Agencies on the Closing Date (1) regarding certain corporate matters and (2) confirming the existence of a true sale which may be contained in such opinion delivered on the Closing Date. 
  
 The obligation of the Trustee to purchase a Subsequent Mortgage Loan on any
Subsequent Transfer Date is subject to the following conditions: (1) each such Subsequent Mortgage Loan shall satisfy the representations and warranties specified in the related Subsequent Transfer Instrument and this Purchase Agreement;
(2) the Seller shall not select such Subsequent Mortgage Loans in a manner that it reasonably believes is adverse to the interests of the Majority Certificateholders; (3) the Seller shall have delivered certain Opinions of Counsel required
pursuant to Section 2.02(b)(iv) and (vi) hereof; (4) as of the related Subsequent Cut-off Date, the Subsequent Mortgage Loans shall satisfy the following criteria: (i) each Subsequent Mortgage Loan shall not be 60 or more days
contractually delinquent as of the related Subsequent Cut-off Date; (ii) the remaining stated term to maturity of each Subsequent Mortgage Loan shall not exceed 360 months; (iii) no less than approximately 95.00% of the Subsequent Mortgage
Loans are secured by first liens on the related Mortgaged Property; (iv) each Subsequent Mortgage Loan shall have an outstanding Principal Balance of at least $10,000; (v) each Subsequent Mortgage Loan shall be underwritten in accordance
with the Underwriting Guidelines; (vi) each Subsequent Mortgage Loan shall have a Loan-to-Value Ratio or a combined Loan-to-Value Ratio of no more than 100%; (vii) each Subsequent Mortgage Loan shall have a stated maturity of no later than
October 1, 2036; (viii) no Subsequent Mortgage Loan shall permit negative amortization; (ix) each Subsequent Mortgage Loan shall either have a Mortgage Rate of at least 4.00%; (x) a minimum of 75% of the Subsequent Mortgage Loans
(by Subsequent Cut-off Date Principal Balance) shall have an adjustable Mortgage Rate; (xi) the weighted average Loan-to-Value Ratio of the Subsequent Mortgage Loans (by Subsequent Cut-off Date Principal Balance) shall be no more than 83.00%;
(xii) no less than 73.00% of the Subsequent Mortgage Loans shall either (A) have a Loan-to Value Ratio of no more than 60% or (B) have a Loan-to-Value Ratio of greater than 60% and be covered by an MI Policy which will insure losses
to the extent that the uninsured exposure of the related Subsequent Mortgage Loan is reduced to an amount equal to 55% or 51% of the lesser of the appraised value or purchase price, as the case may be, of the related Mortgaged Property, in each
case, at the time of the effective date of the MI Policy; (xiii) the Subsequent Mortgage Loans (by Subsequent Cut-off Date Principal Balance) shall have a weighted average coupon of at least 7.40%; (xiv) pursuant to the Underwriting
Guidelines, no fewer than 50% of the Subsequent Mortgage Loans (by Subsequent Cut-off Date Principal Balance) shall be ALT-A and M1 credit risks, no fewer than 
  

 8 

 10% of the Subsequent Mortgage Loans (by Subsequent Cut-off Date Principal Balance) shall be M2 credit risks, and no more
than 15% of the Subsequent Mortgage Loans (by Subsequent Cut-off Date Principal Balance) shall be M3 and M4 credit risks; (xv) the Subsequent Mortgage Loans (by Subsequent Cut-off Date Principal Balance) shall have a weighted average FICO score
issued by a consumer credit rating agency of at least 625; (xvi) at least 85.00% of such Subsequent Mortgage Loans (by Subsequent Cut-off Date Principal Balance) shall be loans for primary residences; (xvii) no more than 50.00% of the
Subsequent Mortgage Loans (by Subsequent Cut-off Date Principal Balance) shall have stated loan documentation, and no more than 15.00% of the Subsequent Mortgage Loans (by Subsequent Cut-off Date Principal Balance shall have no loan documentation;
(xviii) at least 60.00% of the Subsequent Mortgage Loans (by Subsequent Cut-off Date Principal Balance) shall be loans for single family residences; (xix) no more than 70% of the Subsequent Mortgage Loans (by Subsequent Cut-off Date
Principal Balance) shall be loans that are the subject of cash-out refinances; (xx) the ratings agencies shall have consented either in writing or verbally to the transfer of the Subsequent Mortgage Loans; (xxi) at least 55.00% of the
Subsequent Mortgage Loans shall have prepayment penalties and (xxii) no Subsequent Mortgage Loan originated on or prior to September 1, 2005 shall relate to a Mortgaged Property located in a Designated Area unless such Mortgaged Property
shall have been Confirmed to be in Good Repair prior to Subsequent Mortgage Loan’s acquisition by the Trustee on behalf of the Trust Fund. 
  
 As used herein: 
  
 “Designated Area” means those zip codes listed on the attached Exhibit 3, including those zip codes listed on such
Exhibit as constituting the “Red Zone”. 
  
 “Confirmed to be in Good Repair” means: 
  

	 	(i)	with respect to a Mortgaged Property located in the Red Zone, or, if located in the Designated Area but not in the Red Zone, with respect to which the Servicer is unable after five
attempts to confirm telephonically prior to the Closing Date (or in the case of Subsequent Mortgage Loans, prior to the Subsequent Transfer Date) with the related Mortgagor that the Mortgaged Property has not been damaged materially by the recent
Hurricane Katrina or its after effects (such Mortgage Loan will thereafter be treated as though it were located in the Red Zone), that the Trustee has received a written field report from the Servicer, or from an independent contractor (which, in
either case, need not be a qualified appraiser but who cannot be the related Mortgagor) certifying that, based on a visual exterior inspection conducted by such person, such Mortgaged Property appears not to have been damaged materially by the
recent Hurricane Katrina or its after effects, such report to be received within 120 days of the Closing Date (or in the case of Subsequent Mortgage Loans, within 120 days of the Subsequent Transfer Date); or 

  

	 	(ii)	with respect to a Mortgaged Property located in the Designated Area but not in the Red Zone, that the Servicer has made telephone contact with the related Mortgagor prior to the
Closing Date (or in the case of Subsequent 

  

 9 

 Mortgage Loans, prior to the Subsequent Transfer Date), and such Mortgagor has confirmed that the
Mortgaged Property has not been damaged materially by the recent Hurricane Katrina or its after effects. 
  
 Notwithstanding the foregoing, no Mortgage Loans (or Subsequent Mortgage Loan) originated after September 1, 2005 will be treated as if it were
located in a Designated Area regardless of where the Mortgaged Property is located. 
  
 The acceptance of the Subsequent Mortgage Loans by the Trustee is subject to the Seller receiving a written or verbal consent from each of the Rating Agencies that states that the addition of such Subsequent Mortgage
Loans will not cause the Rating Agencies to downgrade any of their ratings on the Offered Certificates. 
  
 Notwithstanding the foregoing, Subsequent Mortgage Loans with characteristics varying from those set forth above may be purchased by the Trustee and
included in the Trust Fund, if (i) the Trustee is provided with written confirmation that the aggregate credit risk of such Subsequent Mortgage Loans is similar to that of the Initial Mortgage Loans and (ii) the Seller receives and
provides to the Trustee a written consent from each of the Rating Agencies that states that the addition of such Subsequent Mortgage Loans will not cause the Rating Agencies to downgrade any of their ratings of the Offered Certificates. 

 
 (c) Within five Business Days after the end of the Pre-Funding Period, the
Seller shall deliver to the Rating Agencies, the Trustee and the Custodian a copy of the updated Mortgage Loan Schedule including the Subsequent Mortgage Loans in electronic format. 
  
 Section 2.03 Pre-Funding Account. 
  
 (a) No later than the Closing Date, the Trustee will establish and maintain the Pre-Funding Account pursuant to the Pooling
and Servicing Agreement. On the Closing Date, the Seller will deposit in the Pre-Funding Account the Original Pre-Funded Amount from the net proceeds of the sale of the Offered Certificates. 
  
 ARTICLE III 
  
 REPRESENTATIONS AND WARRANTIES; 
 REMEDIES FOR BREACH 
  
 Section 3.01 Seller Representations and Warranties. 
  

The Seller hereby represents and warrants to the Company and the Trustee as of the date hereof, as of the Closing Date (or if otherwise specified
below, as of the date so specified) and as of each Subsequent Transfer Date: 
  
 (a) As to the Seller: 
  
 (i) The Seller (i) is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Virginia and (ii) is qualified and in good standing as a foreign corporation to do business in each

  

 10 

 jurisdiction where such qualification is necessary, except where the failure to so qualify would not have
a material adverse effect on the Seller’s ability to enter into this Purchase Agreement and each Seller’s Subsequent Transfer Instrument and to consummate the transactions contemplated hereby and thereby; 
  
 (ii) The Seller has the power and authority to make,
execute, deliver and perform its obligations under this Purchase Agreement and each Seller’s Subsequent Transfer Instrument and all of the transactions contemplated under this Purchase Agreement and each Seller’s Subsequent Transfer
Instrument, and has taken all necessary corporate action to authorize the execution, delivery and performance of this Purchase Agreement each Seller’s Subsequent Transfer Instrument; 
  
 (iii) The Seller is not required to obtain the consent of
any other Person or any consent, approval or authorization from, or registration or declaration with, any governmental authority, bureau or agency in connection with the execution, delivery, performance, validity or enforceability of this Purchase
Agreement or any Seller’s Subsequent Transfer Instrument, except for such consents, approvals or authorization, or registration or declaration, as shall have been obtained or filed, as the case may be; 
  
 (iv) The execution and delivery of this Purchase Agreement
and each Seller’s Subsequent Transfer Instrument and the performance of the transactions contemplated hereby by the Seller will not violate any provision of any existing law or regulation or any order or decree of any court applicable to the
Seller or any provision of the certificate of incorporation or bylaws of the Seller, or constitute a material breach of any mortgage, indenture, contract or other agreement to which the Seller is a party or by which the Seller may be bound;

  
 (v) No litigation or administrative
proceeding of or before any court, tribunal or governmental body is currently pending, or to the knowledge of the Seller threatened, against the Seller or any of its properties or with respect to this Purchase Agreement or any Seller’s
Subsequent Transfer Instrument, the Certificates which in the opinion of the Seller has a reasonable likelihood of resulting in a material adverse effect on the transactions contemplated by this Purchase Agreement or any Seller’s Subsequent
Transfer Instrument; 
  
 (vi) This Purchase
Agreement and each Seller’s Subsequent Transfer Instrument constitute the legal, valid and binding obligations of the Seller, enforceable against the Seller in accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect affecting the enforcement of creditors’ rights in general and except as such enforceability may be limited by general principles of equity
(whether considered in a proceeding at law or in equity); 
  
 (vii) This Purchase Agreement constitutes a valid transfer and assignment to the Company of all right, title and interest of the Seller in and to the Cut-off Date Principal Balance of the Initial Mortgage Loans, all
monies due or to become 
  

 11 

 due with respect thereto, and all proceeds of such Cut-off Date Principal Balance of the Initial Mortgage
Loans, and this Purchase Agreement and the related Seller’s Subsequent Transfer Instrument constitutes a valid transfer and assignment to the Trustee of all right, title and interest of the Seller in and to the Subsequent Cut-off Date Principal
Balance of the Subsequent Mortgage Loans, all monies due or to become due with respect thereto, and all proceeds of such Subsequent Cut-off Date Principal Balance of the Subsequent Mortgage Loans; 
  
 (viii) The Seller is not in default with respect to any
order or decree of any court or any order or regulation of any federal, state or governmental agency, which default might have consequences that would materially and adversely affect the condition (financial or other) or operations of the Seller or
its properties or might have consequences that would materially adversely affect its performance hereunder; and 
  
 (ix) The Servicer or any Subservicer who will be servicing any Mortgage Loan pursuant to the Pooling and Servicing Agreement or a
Subservicing Agreement is qualified to do business in all jurisdictions in which its activities as Servicer or Subservicer of the Mortgage Loans serviced by it require such qualifications except where failure to be so qualified will not have a
material adverse effect on such servicing activities. 
  
 (b) As
to each Initial Mortgage Loan as of the Closing Date and with respect to each Subsequent Mortgage Loan as of the Subsequent Transfer Date, except as otherwise expressly stated: 
  
 (i) The information set forth on the Mortgage Loan Schedule with respect to each Initial Mortgage Loan is
true and correct in all material respects as of the Closing Date, and with respect to each Subsequent Mortgage Loan is true and correct in all material respects as of the related Subsequent Transfer Date, and the information regarding the Initial
Mortgage Loans and the Subsequent Mortgage Loans on the computer diskette or tape delivered to the Trustee prior to the Closing Date or related Subsequent Transfer Date, as applicable, is true and accurate in all material respects and describes the
same Mortgage Loans as the Mortgage Loans on the Mortgage Loan Schedule; 
  
 (ii) The Mortgage Loans are not being transferred with any intent to hinder, delay or defraud any creditors; 
  
 (iii) No more than 5.84% and 7.15% of the Initial Mortgage Loans in Group I and the Initial Mortgage Loans in Group II, respectively, (by
Cut-off Date Principal Balance) were secured by condominium units; and no more than 15.00% and 20.90% of the Initial Mortgage Loans in Group I and the Initial Mortgage Loans in Group II, respectively, (by Cut-off Date Principal Balance) were secured
by properties in planned unit developments; 
  

 12 

 (iv) As of the Cut-off Date, the remaining term of each Group I Initial Mortgage Loan is
not more than 360 months and not less than 118 months and the remaining term of each Group II Initial Mortgage Loan is not more than 360 months and not less than 118 months; 
  
 (v) No more than 76.12% and 32.37% of the Initial Mortgage Loans in Group I and Initial Mortgage Loans in
Group II, respectively, (by Cut-off Date Principal Balance) have been the subject of cash-out refinances; 
  
 (vi) No more than 4.66% and 1.09% of the Initial Mortgage Loans in Group I and Initial Mortgage Loans in Group II, respectively, (by
Cut-off Date Principal Balance), have been the subject of rate and term (no cash-out) refinances; 
  
 (vii) No fewer than 19.21% and 66.54% of the Initial Mortgage Loans in Group I and Initial Mortgage Loans in Group II, respectively, (by
Cut-off Date Principal Balance) are purchase money loans; 
  
 (viii) No more than 13.17% and 25.42% of the Initial Mortgage Loans in Group I and Initial Mortgage Loans in Group II, respectively, (by Cut-off Date Principal Balance) are secured by Mortgaged Properties located in
the State of California; no more than 20.98% and 23.62% of the Initial Mortgage Loans in Group I and Initial Mortgage Loans in Group II, respectively, (by Cut-off Date Principal Balance) are secured by Mortgaged Properties located in the State of
Florida; no more than 4.45% and 6.39% of the Initial Mortgage Loans in Group I and Initial Mortgage Loans in Group II (by Cut-off Date Principal Balance) are secured by Mortgaged Properties located in the State of Virginia; no more than 5.23% and
2.67% of the Initial Mortgage Loans in Group I and Initial Mortgage Loans in Group II (by Cut-off Date Principal Balance) are secured by Mortgaged Properties located in the State of New Jersey; no more than 6.79% and 4.55% of the Initial Mortgage
Loans in Group I and Initial Mortgage Loans in Group II (by Cut-off Date Principal Balance) are secured by Mortgaged Properties located in the State of Maryland; no more than 3.84% and 4.05% of the Initial Mortgage Loans in Group I and Initial
Mortgage Loans in Group II, respectively, (by Cut-off Date Principal Balance) are located in any other state; 
  
 (ix) The outstanding Principal Balances of the Initial Mortgage Loans in Group I (by Cut-off Date Principal Balance) ranged from $13,500
to $472,000, the average outstanding Principal Balance of the Initial Mortgage Loans in Group I is approximately $160,445.30; the outstanding Principal Balances of the Initial Mortgage Loans in Group II (by Cut-off Date Principal Balance) ranged
from $11,000 to $800,000, the average outstanding Principal Balance of the Initial Mortgage Loans in Group II is approximately $182,703.10; 
  
 (x) Approximately 72.26% and 62.93% of the Initial Mortgage Loans in Group I and Initial Mortgage Loans in Group II, respectively, (by
Cut-off Date Principal Balance) were secured by a first lien on a parcel of real property improved by a detached single family residence; no more than 4.62% and 3.09% of the Initial Mortgage Loans in Group I and Initial Mortgage Loans in Group II,
respectively, (by 
  

 13 

 Cut-off Date Principal Balance) were secured by a first lien on a parcel of real estate improved by a
multi-unit residence; 
  
 (xi) All points and
fees related to each Mortgage Loan were disclosed in writing to the borrower in accordance with applicable state and federal law and the borrower has executed a statement to that effect. No borrower was charged “points and fees” (whether
or not financed) in an amount greater than 5% of the principal amount of any such loan originated by the Seller, such 5% limitation calculated in accordance with the Lender Letter. All fees and charges (including finance charges) and whether or not
financed, assessed, collected or to be collected with the origination and servicing of each Mortgage Loan has been disclosed in writing to the borrower in accordance with applicable state and federal law and regulation; 
  
 (xii) The Mortgage Rates borne by the adjustable rate
Initial Mortgage Loans in Group I as of the Closing Date range from 4.800% per annum to 11.990% per annum, and the weighted average Mortgage Rate (by Cut-off Date Principal Balance) of the adjustable rate Initial Mortgage Loans in Group I
was 7.590% per annum; the Mortgage Rates borne by fixed rate Initial Mortgage Loans in Group I as of the Closing Date range from 5.375% per annum to 13.000% per annum, and the weighted average Mortgage Rate (by Cut-off Date Principal
Balance) of the fixed rate Initial Mortgage Loans in Group I was 7.388% per annum; the Mortgage Rates borne by adjustable rate Initial Mortgage Loans in Group II as of the Closing Date range from 4.950% per annum to 12.100% per annum,
and the weighted average Mortgage Rate (by Cut-off Date Principal Balance) of the adjustable rate Initial Mortgage Loans in Group II was 7.349% per annum; the Mortgage Rates borne by fixed rate Initial Mortgage Loans in Group II as of the
Closing Date range from 5.350% per annum to 13.000% per annum, and the weighted average Mortgage Rate (by Cut-off Date Principal Balance) of the fixed rate Initial Mortgage Loans in Group II was 8.326% per annum; 
  
 (xiii) Approximately 48.09% and 44.92% of the Initial
Mortgage Loans in Group I and the Initial Mortgage Loans in Group II, respectively, (by Cut-off Date Principal Balance) have a Loan-to-Value Ratio in excess of 80%; no Group I Initial Mortgage Loan or Group II Initial Mortgage Loan in the Mortgage
Pool had a Loan-to-Value Ratio or combined Loan-to-Value Ratio at origination in excess of 100%; and the weighted average Loan-to-Value Ratio (by Cut-off Date Principal Balance) of the Initial Mortgage Loans in Group I and the Initial Mortgage Loans
in Group II was equal to or less than 80.41% and 83.34%, respectively (by Cut-off Date Principal Balance); 
  
 (xiv) Approximately 98.78% and 93.21% of the Initial Mortgage Loans in Group I and the Initial Mortgage Loans in Group II, respectively
(by Cut-off Date Principal Balance), are secured by first liens on the related Mortgaged Property; and approximately 1.22% and 6.79% (by Cut-off Date Principal Balance) of the Initial Mortgage Loans in Group I and the Initial Mortgage Loans in Group
II are secured by second liens on the related Mortgaged Property; 
  

 14 

 (xv) As of the Cut-off Date, the weighted average Loan-to-Value Ratio of the Initial
Mortgage Loans secured by first liens in Group I is approximately 80.18%; the weighted average combined Loan-to-Value Ratio of the Initial Mortgage Loans secured by first and second liens in Group I is approximately 80.41%; the weighted average
Loan-to-Value Ratio of the Initial Mortgage Loans secured by first liens in Group II is approximately 82.17%; the weighted average combined Loan-to-Value Ratio of the Initial Mortgage Loans secured by first and second liens in Group II is
approximately 83.34%; the weighted average combined Loan-to-Value Ratio of all of the Initial Mortgage Loans in Group I and Group II is approximately 81.64%; and the gross weighted average coupon of the Initial Mortgage Loans is approximately
7.546%; 
  
 (xvi) There is no valid offset,
right of rescission, defense, claim or counterclaim of any obligor under any Mortgage Note or Mortgage, including the obligation of the Mortgagor to pay the unpaid principal of or interest on such Mortgage Note, and any applicable right of
rescission has expired, nor will the operation of any of the terms of such Mortgage Note or Mortgage, or the exercise of any right thereunder, render either the Mortgage Note or the Mortgage unenforceable, in whole or in part, or subject to any
right of rescission, set-off, recoupment, counterclaim or defense, including, without limitation, the defense of usury, and no such right of rescission, set-off, recoupment, counterclaim or defense has been asserted with respect thereto, and, to the
best of Seller’s knowledge, no Mortgagor of the applicable Mortgage is or since the date of origination has been a debtor in any state or federal bankruptcy or insolvency proceeding and no Mortgaged Property has been subject to any such
proceeding; 
  
 (xvii) There are no
mechanics’ liens or any similar liens or claims for work, labor or material affecting any Mortgaged Property which are or may be a lien prior to, or equal with, the lien of such Mortgage, except those which are insured against by the title
insurance policy referred to in clause (xxii) below; 
  
 (xviii) As of the Closing Date in the case of an Initial Mortgage Loan or as of the related Subsequent Transfer Date in the case of a Subsequent Mortgage Loan, each Mortgaged Property is free of material damage and is
in good repair and there is no proceeding pending or threatened for the total or partial condemnation of any Mortgage Property. With respect to a Mortgage Loan with respect to which the related Mortgaged Property is located in the Designated Area
such Mortgaged Property has been Confirmed to be in Good Repair. 
  
 (xix) Each Mortgage is a valid and enforceable first or second lien on the Mortgaged Property including all improvements on the Mortgaged Property securing the related Mortgage Note and each Mortgaged Property is
owned by the Mortgagor in fee simple (except with respect to common areas in the case of condominiums, PUDs and de minimis PUTDs) subject only to (1) the lien of nondelinquent current real property taxes and assessments,
(2) covenants, conditions and restrictions, rights of way, easements and other matters of public record as of the date of recording of such Mortgage, such exceptions appearing of record being acceptable to mortgage lending institutions
generally or specifically reflected in the appraisal made in connection with the origination of the related Mortgage Loan or 
  

 15 

 referred to in the lender’s title insurance policy delivered to the originator of the related
Mortgage Loan and (3) other matters to which like properties are commonly subject that do not materially interfere with the benefits of the security intended to be provided by such Mortgage. Immediately prior to the sale of such Mortgage Loan
to the Company in the case of an Initial Mortgage Loan and to the Trustee in the case of a Subsequent Mortgage Loan pursuant to this Purchase Agreement, the Seller had full right to sell and assign the same to the Company or the Trustee, as the case
may be. Immediately following the sale of such Mortgage Loan to the Company and the Company’s assignment and sale thereof of such Mortgage Loan to the Trustee in the case of an Initial Mortgage Loan, the Trustee will have good title thereto
subject to no claims or liens, including delinquent tax or assessment liens. Immediately following the sale of such Mortgage Loan to the Company and the Company’s assignment and sale thereof to the Trustee in the case of a Subsequent Mortgage
Loan, the Trustee will have good title thereto subject to no claims or liens; 
  
 (xx) Each Mortgage Loan at origination complied with applicable local, state and federal laws, including, without limitation, usury,
equal credit opportunity, real estate settlement procedures, the Truth In Lending Act of 1968, as amended, all applicable predatory and abusive lending laws and disclosure laws and consummation of the transactions contemplated hereby, including
without limitation, the receipt of interest by the owner of such Mortgage Loan or the Holders of Certificates secured thereby, will not violate any such laws. Any and all statements or acknowledgments required to be made by the Mortgagor relating to
such requirements are and will remain in the Mortgage File. Each Mortgage Loan is being serviced in accordance with applicable state and federal laws, including, without limitation, the Truth In Lending Act of 1968, as amended, and other consumer
protection laws, real estate settlement procedures, usury, equal credit opportunity and disclosure laws and in a prudent and customary manner; 
  
 (xxi) Neither the Seller nor any prior holder of any Mortgage has impaired, waived, altered or modified the Mortgage or Mortgage Notes in
any material respect (except that a Mortgage Loan may have been modified by a written instrument which has been recorded, if necessary to protect the interests of the owner of such Mortgage Loan or the Certificates, and which has been delivered to
the Trustee); satisfied, canceled or subordinated such Mortgage in whole or in part; released the applicable Mortgaged Property in whole or in part from the lien of such Mortgage; or executed any instrument of release, cancellation or satisfaction
with respect thereto; 
  
 (xxii) A lender’s
policy of title insurance (on an ALTA or CLTA form) or binder, or other assurance of title customary in the relevant jurisdiction insuring the first lien priority of the Mortgage Loan in an amount at least equal to the original Principal Balance of
each such Mortgage Loan or a commitment binder or commitment to issue the same was effective on the date of the origination of each Mortgage Loan, each such policy is valid and remains in full force and effect, and each such policy was issued by a
title insurer qualified to do business in the jurisdiction where the Mortgaged Property is located, which policy insures the Seller and successor owners of indebtedness secured by the insured Mortgage as to the first priority lien of 
  

 16 

 the Mortgage as applicable. The Seller is, and such successor owners will be, the sole insured under such
lender’s title insurance policy; no claims have been made under such mortgage title insurance policy; no prior holder of the applicable Mortgage, including the Seller, has done, by act or omission, anything which would impair the coverage of
such mortgage title insurance policy; and each such policy, binder or assurance contains all applicable endorsements; 
  
 (xxiii) All of the improvements which were included for the purpose of determining the Appraised Value of the Mortgaged Property lie
wholly within the boundaries and building restriction lines of such property and no improvements on adjoining properties encroach upon the Mortgaged Property; 
  

(xxiv) No improvement located on or being part of the Mortgaged Property is in violation of any applicable zoning law or regulation,
subdivision law or ordinance, except where the failure to comply would not have a material adverse effect on the market value of the Mortgaged Property. All inspections, licenses and certificates required to be made or issued with respect to all
occupied portions of the Mortgaged Property and, with respect to the use and occupancy and fire underwriting certificates, have been made or obtained from the appropriate authorities and the Mortgaged Property is lawfully occupied under applicable
law except where the failure to comply would not have a material adverse effect on the market value of the Mortgaged Property; 
  
 (xxv) Each Mortgage Note and the applicable Mortgage are genuine, and each is the legal, valid and binding obligation of the maker
thereof, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization, moratorium, receivership and other similar laws relating to creditors’ rights generally or by equitable principles (regardless of
whether such enforcement is considered in a proceeding in equity or at law). All parties to the Mortgage Note and the Mortgage had legal capacity to execute the Mortgage Note and the Mortgage and each Mortgage Note and Mortgage has been duly and
properly executed by such parties; 
  
 (xxvi)
The proceeds of the Mortgage Loans have been fully disbursed, there is no requirement for future advances thereunder and any and all requirements as to completion of any on-site or off-site improvements and as to disbursement of any escrow funds
therefor have been complied with. All costs, fees and expenses incurred in making, closing or recording the Mortgage Loans were paid and the Mortgagor is not entitled to any refund of amounts paid or due under the Mortgage Note; 
  
 (xxvii) Each Mortgage contains customary and enforceable
provisions that render the rights and remedies of the holder thereof adequate for the realization against the Mortgaged Property of the benefits of the security, including (i) in the case of a Mortgage designated as a deed of trust, by
trustee’s sale, and (ii) otherwise by judicial foreclosure or if applicable, non-judicial foreclosure. Upon default by a Mortgagor on a Mortgage Loan and foreclosure on, or trustee’s sale of, the Mortgaged Property pursuant to the
proper procedures, the holder of the Mortgage Loan 
  

 17 

 will be able to deliver good and merchantable title to the property, subject to any applicable rights of
redemption; 
  
 (xxviii) With respect to each
Mortgage constituting a deed of trust, either a trustee, duly qualified under applicable law to serve as such, has been properly designated and currently so serves and is named in such Mortgage or if no duly qualified trustee has been properly
designated and so serves, the Mortgage contains satisfactory provisions for the appointment of such trustee by the holder of the Mortgage at no cost or expense to such holder, and no fees or expenses are or will become payable by the
Certificateholders to the trustee under the deed of trust, except in connection with a trustee’s sale after default by the Mortgagor; 
  
 (xxix) There exist no deficiencies with respect to escrow deposits and payments, if such are required, for which customary arrangements
for repayment thereof cannot be made, and no escrow deficits or payments of other charges or payments due the Seller have been capitalized under the Mortgage or the applicable Mortgage Note; 
  
 (xxx) The Mortgage Note is not and has not been secured by
any collateral, pledged account or other security other than real estate securing the Mortgagor’s obligations and no Mortgage Loan is secured by more than one Mortgaged Property; 
  
 (xxxi) As of the Closing Date in the case of an Initial Mortgage Loan and as of the related Subsequent
Transfer Date in the case of a Subsequent Mortgage Loan, the improvements upon each Mortgaged Property are covered by a valid and existing hazard insurance policy substantially acceptable to FNMA and acceptable to the Seller which policy provides
for fire extended coverage and such other hazards as are customary in the area where the Mortgaged Property is located representing coverage in an amount not less than the lesser of (A) the maximum insurable value of the improvements securing
such Mortgage Loan and (B) the outstanding Principal Balance of the related Mortgage Loan; if the improvement on the Mortgaged Property is a condominium unit, it is included under the coverage afforded by a blanket policy for the condominium
project. All individual insurance policies contain a standard mortgagee clause naming the Seller or the original holder of the Mortgage, and its successors in interest, as mortgagee, and the Seller has received no notice that any premiums due and
payable thereon have not been paid; the Mortgage obligates the Mortgagor thereunder to maintain all such insurance at the Mortgagor’s cost and expense, and upon the Mortgagor’s failure to do so, authorizes the holder of the Mortgage to
obtain and maintain such insurance at the Mortgagor’s cost and expense and to seek reimbursement therefor from the Mortgagor. There has been no act or omission which would impair the coverage of any such policy, the benefits of the endorsement
provided for herein, or the validity and binding effect of either; 
  
 (xxxii) If the Mortgaged Property is in an area identified in the Federal Register by the Federal Emergency Management Agency as having special flood hazards, a flood insurance policy in a form meeting the
requirements of the 
  

 18 

 current guidelines of the Flood Insurance Administration is in effect with respect to such Mortgaged
Property with a generally acceptable carrier in an amount representing coverage not less than the least of (A) the outstanding Principal Balance of the Mortgage Loan, (B) the minimum amount required to compensate for damage or loss on a
replacement cost basis and (C) the maximum amount of flood coverage that is available under federal law; 
  
 (xxxiii) Except for the Mortgage Loans referred to in clause (xlii) as being delinquent, if any, there is no default, breach,
violation or event of acceleration existing under the Mortgage or the applicable Mortgage Note; and no event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a material default, breach,
violation or event of acceleration, and neither the Seller, any of its affiliates nor any servicer or subservicer of any related Mortgage Loan has waived any default, breach, violation or event of acceleration; no foreclosure action is threatened or
has been commenced with respect to the Mortgage Loan; 
  
 (xxxiv) Each Mortgage Loan is being serviced by the Servicer in accordance with the terms of the Mortgage Note; 
  
 (xxxv) There is no obligation on the part of the Seller or any other party to make any payments with respect to the related Mortgage Loan
in addition to the Monthly Payments required to be made by the applicable Mortgagor; 
  
 (xxxvi) Any future advances made prior to the Cut-off Date in the case of an Initial Mortgage Loan and as of the related Subsequent
Transfer Date in the case of a Subsequent Mortgage Loan, with respect to any Mortgage Loan have been consolidated with the outstanding principal amount secured by such Mortgage, and the secured principal amount, as consolidated, bears a single
interest rate and single repayment term reflected on the Mortgage Loan Schedule. The consolidated principal amount does not exceed the original principal amount of the Mortgage Loan. The Mortgage Note with respect to any Mortgage Loan does not
permit or obligate the Servicer to make future advances to the Mortgagor at the option of the Mortgagor; 
  
 (xxxvii) The Seller has caused or will cause to be performed any and all acts required to preserve the rights and remedies of the Company
and the Trustee evidencing an interest in the Mortgage Loans in any insurance policies applicable to the Mortgage Loans including, without limitation, any necessary notifications of insurers, assignments of policies or interests therein, and
establishments of coinsured, joint loss payee and mortgagee rights in favor of Trustee; 
  
 (xxxviii) Except as set forth in clause (xlii), there are no defaults by the Mortgagor in complying with the terms of any Mortgage, and
all taxes, governmental assessments, insurance premiums, water, sewer and municipal charges which previously became due and owing have been paid, or, if required by the terms of the Mortgage Loan, an escrow of funds has been established in an amount
sufficient to pay for every such item which remains unpaid and which has been assessed, but is not yet due and payable. Except for (A) payments in the nature of escrow payments and (B)
  

 19 

 interest accruing from the date of the Mortgage Note or date of disbursement of the Mortgage proceeds to
the day which precedes by one month the Due Date of the first installment of principal and interest, including, without limitation, taxes and insurance payments, neither the Seller nor the Servicer has advanced funds, or induced, solicited or
knowingly received any advance of funds by a party other than the Mortgagor, directly or indirectly, for the payment of any amount required by the Mortgage; 
  
 (xxxix) At the time of origination, each Mortgaged Property was the subject of an appraisal which conforms to the underwriting
requirements of the related originator; and the Mortgage File contains an appraisal of the applicable Mortgaged Property; 
  
 (xl) None of the Mortgage Loans are graduated payment Mortgage Loans or growth equity Mortgage Loans; 
  
 (xli) [Reserved.] 
  
 (xlii) (a) Except with respect to no more than 0.04%
and 0.07% of the Initial Mortgage Loans in Group I and the Initial Mortgage Loans in Group II, respectively, none of the payments of principal of or interest on or in respect of any Initial Mortgage Loans (by Cut-off Date Principal Balance) shall be
30 days or more but less than 60 days past due as of the Cut-off Date; and 0.01% and none of the Initial Mortgage Loans in Group I and the Initial Mortgage Loans in Group II, respectively, was 60 days or more past due as of the Cut-off Date;
(b) except as set forth in clause (a) above, all payments required to be made by the Mortgagor under the terms of the Mortgage Note have been made and credited; and (c) to the Seller’s knowledge, there was no delinquent
recording, tax or assessment lien against the property subject to any Mortgage, except where such lien was being contested in good faith and a stay had been granted against levying on the property; 
  
 (xliii) Upon payment of the Purchase Price for the Mortgage
Loans by the Company or the Trustee, as applicable, pursuant to this Purchase Agreement, the Seller has transferred to the Company in the case of an Initial Mortgage Loan and to the Trustee in the case of a Subsequent Mortgage Loan, good and
marketable title to each Mortgage Note and Mortgage free and clear of any and all liens, claims, encumbrances, participation interests, equities, pledges, charges or security interests of any nature and has or had full right and authority, subject
to no participation of or agreement with any other person, to sell and assign the same, and following the sale of each Mortgage Loan, the Company or the Trustee, as applicable, will own such Mortgage Loan free and clear of any encumbrance, equity
interest, participation interest, lien, pledge, charge, claim or security interest; 
  
 (xliv) The Seller acquired any right, title and interest in and to the Mortgage Loans in good faith and without notice of any adverse
claim; 
  
 (xlv) The Mortgage Note, the
Mortgage, the related Assignment of Mortgage and any other documents required to be delivered by the Seller have been 
  

 20 

 delivered to the Custodian. The Custodian is in possession of a complete, true and accurate Mortgage File
in accordance with Section 2.01 hereof. Substantially all the Mortgage Loans have monthly payments due on the first day of each month and each Mortgage Loan had an original term to maturity of no greater than 30 years; 
  
 (xlvi) Each Mortgage Loan contains a due-on-sale provision,
although each Mortgage Loan may be assumable if permitted by the Servicer under certain circumstances; 
  
 (xlvii) Each of the Mortgage and the Assignment of Mortgage is in recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property is located; 
  
 (xlviii) The Mortgagor has not notified the Seller, and the Seller has no knowledge of any relief requested or allowed to the Mortgagor under the Servicemembers Civil Relief Act other than as disclosed pursuant to the
Prospectus Supplement; 
  
 (xlix) To the best of
the Seller’s knowledge, there exists no violation of any local, state, or federal environmental law, rule or regulation in respect of the Mortgaged Property which violation has or could have a material adverse effect on the market value of such
Mortgaged Property. The Seller has no knowledge of any pending action or proceeding directly involving the related Mortgaged Property in which compliance with any environmental law, rule or regulation is in issue; and, to the best of the
Seller’s knowledge, nothing further remains to be done to satisfy in full all requirements of each such law, rule or regulation constituting a prerequisite to the use and employment of such Mortgaged Property; 
  
 (l) Each Mortgage Loan conforms, and all such Mortgage
Loans in the aggregate conform, to the description thereof set forth in the Prospectus and Prospectus Supplement in all material respects; 
  
 (li) [Reserved] 
  
 (lii) No Group I Mortgage Loan is subject to the requirements of the Home Ownership and Equity Protection Act of 1994
(“HOEPA”); 
  
 (liii) Immediately
prior to the transfer to the Company or the Trustee, as applicable, the Seller had good and marketable title thereto, and the Seller is the sole legal, equitable owner of beneficial title to and holder of the Mortgage Loan. The Seller is conveying
the same to the Company or the Trustee, as applicable, free and clear of any and all liens, claims, encumbrances, participation interests, equities, pledges, charges or security interests of any nature and has full right and authority to sell and
assign the same pursuant to this Purchase Agreement, except for liens which will be released simultaneously with such conveyance; 
  

 21 

 (liv) For each Mortgage Loan, the related Mortgage File contains a true, accurate and
correct copy of each of the documents and instruments required to be included therein; 
  
 (lv) The Servicer meets all applicable requirements under the Pooling and Servicing Agreement, is properly qualified to service each
Mortgage Loan and has been servicing each Mortgage Loan prior to the Cut-off Date or the related Subsequent Cut-off Date, as the case may be; 
  
 (lvi) No instrument of release or waiver has been executed in connection with the Mortgage Loans, and no Mortgagor has been released, in
whole or in part from its obligations in connection with a Mortgage Loan except in connection with an assumption agreement which has been delivered to the Trustee; 
  
 (lvii) On the basis of a representation by the Mortgagor at the time of origination of the Mortgage Loans,
at least 92.40% and 97.58% of the Initial Mortgage Loans in Group I and Initial Mortgage Loans in Group II, respectively, (by Cut-off Date Principal Balance) will be secured by Mortgages on owner-occupied primary residence properties; 
  
 (lviii) Approximately 1.49%, and 7.11% of the Initial
Mortgage Loans in Group I and the Initial Mortgage Loans in Group II, respectively, (by Cut-off Date Principal Balance) provide for a balloon payment and each Mortgage Note with respect to each such Mortgage Loan requires monthly payments of
principal based on either a 40 year or 30 year amortization schedules and have scheduled maturity dates of 30 years or 15 years, respectively, from the due date of the first monthly payment; 
  
 (lix) No Mortgage Loan was originated based on an appraisal
of the related Mortgaged Property made prior to completion of construction of the improvements thereon; 
  
 (lx) None of the Mortgage Loans is a “buy down” mortgage loan; 
  
 (lxi) [Reserved]. 
  

(lxii) No Mortgage Loan is a “High Cost Home Loan” or “Covered Loan,” as applicable, (as such terms are defined in
the then current Standard & Poor’s LEVELS® Glossary which is now Version 5.6(b) Revised, Appendix E) and no Mortgage Loan is a “High Cost Home Loan” as defined in the Georgia Fair Lending Act, as amended (the
“Georgia Act”). No Mortgage Loan that was originated (or modified) on or after October 1, 2002 and before March 7, 2003, is secured by property located in the State of Georgia. There is no Mortgage Loan that was originated on or
after March 7, 2003 which is a “high cost home loan” as defined under the Georgia Fair Lending Act; 
  
 (lxiii) None of the Mortgage Loans are covered by the requirements of the Home Ownership and Equity Protection Act of 1994, as amended,
or any comparable state or local law; none of the Mortgage Loans are “section 32” loans 
  

 22 

 or “high cost” loans as defined by applicable predatory and abusive lending laws; no proceeds
from any Mortgage Loan were used to finance any single premium credit insurance policies; none of the Mortgage Loans (by Cut-off Date Principal Balance) require a mortgagor to pay a Prepayment Charge if the mortgagor prepays a Mortgage Loan more
than five years after the date the Mortgage Loan was originated; 
  
 (lxiv) No Mortgage Loan is a “High-Cost Home Loan” as defined in New York Banking Law 6-1; 
  
 (lxv) No Mortgage Loan is a “High-Cost Home Loan” as defined in the Arkansas Home Loan Protection Act effective July 16,
2003 (Act 1340 of 2003); 
  
 (lxvi) No Mortgage
Loan is a “High-Cost Home Loan” as defined in the Kentucky high-cost home loan statute effective June 24, 2003 (Ky. Rev. Stat. Section 360.100); 
  
 (lxvii) No Mortgage Loan in the trust is a “high-cost home,” “covered” (excluding home
loans defined as “covered home loans” in the New Jersey Home Ownership Security Act of 2002 that were originated between November 26, 2003 and July 7, 2004), “high risk home” or “predatory” loan under any
applicable state, federal or local law (or a similarly classified loan using different terminology under a law imposing heightened regulatory scrutiny or additional legal liability for residential mortgage loans having high interest rates, points
and/or fees); 
  
 (lxviii) No Mortgage Loan is a
“High-Cost Home Loan” as defined in the New Mexico Home Loan Protection Act effective January 1, 2004 (N.M. Stat. Ann. §§ 58-21A-1 et seq.); 
  
 (lxix) No Mortgage Loan is a “High-Risk Home Loan” as defined in the Illinois High-Risk Home Loan
Act effective January 1, 2004 (815 Ill. Comp. Stat. 137/1 et seq.); 
  
 (lxx) No Mortgage Loan is a “High-Cost Home Loan” as defined in the Massachusetts Predatory Home Loan Practices Act effective November 7, 2004 (MA House Bill 4880); 
  
 (lxxi) No Mortgage Loan is a “High-Cost Home
Loan” as defined in the Indiana Home Loan Practices Act effective January 1st, 2005 (Indiana Code Ann. §§ 24-9-1 et seq.); 
  
 (lxxii) Approximately 64.38% of the Initial Mortgage Loans are subject to prepayment penalty charges as of the Cut-off Date; 

 
 (lxxiii) [Reserved.] 
  
 (lxxiv) No borrower was required to purchase any credit
life, disability, accident or health insurance product as a condition of obtaining the extension of credit. No borrower obtained a prepaid single premium credit life, credit disability, 
  

 23 

 credit unemployment or credit property insurance policy in connection with the origination of the
Mortgage Loan; No proceeds from any Mortgage Loan were used to purchase single premium credit insurance policies as part of the origination of, or as a condition to closing, such Mortgage Loan; 
  
 (lxxv) No Group I Mortgage Loan originated on or after
October 1, 2002 will impose a prepayment premium for a term in excess of three years and no Group I Mortgage Loan originated before October 1, 2002 will impose prepayment penalties in excess of five years; 
  
 (lxxvi) [Reserved.] 
  
 (lxxvii) [Reserved.] 
  
 (lxxviii) [Reserved.] 
  
 (lxxix) With respect to Mortgaged Properties located in the
continental United States and Puerto Rico, no Group I Mortgage Loan secured by a single-family residence has a Principal Balance at origination in excess of $359,650; no Group I Mortgage Loan secured by a two-family residence has a Principal Balance
at origination in excess of $460,400; no Group I Mortgage Loan secured by a three-family residence has a Principal Balance at origination in excess of $556,500; and no Group I Mortgage Loan secured by a four-family residence has a Principal Balance
at origination in excess of $691,600; with respect to Mortgaged Properties located in Alaska, Guam, Hawaii and the Virgin Islands, no Group I Mortgage Loan secured by a single-family residence has a Principal Balance at origination in excess of
$539,475; no Group I Mortgage Loan secured by a two-family residence has a Principal Balance at origination in excess of $690,600; no Group I Mortgage Loan secured by a three-family residence has a Principal Balance at origination in excess of
$834,750; and no Group I Mortgage Loan secured by a four-family residence has a Principal Balance at origination in excess of $1,037,550; 
  
 (lxxx) No selection procedure reasonably believed by the Seller to be adverse to the interests of the Certificateholders was utilized in
selecting the Mortgage Loans; 
  
 (lxxxi) The
terms of the Mortgage Note related to each adjustable rate Mortgage Loan provide that, following an initial period of two or three years following the month in which such Mortgage Loan was originated and semiannually or annually thereafter (each
such date, an “Adjustment Date”), the Mortgage Rate on such Mortgage Loan will be adjusted to equal the sum of (a) the related Index and (b) a fixed percentage amount specified in the related Mortgage Note (each, a
“Gross Margin”); provided, however, that the Mortgage Rate generally will not increase or decrease by the related Periodic Rate Cap, and will not increase above a specified maximum Mortgage Rate over the life of the
Adjustable Rate Mortgage Loan (the “Maximum Mortgage Rate”) or decrease below a specified minimum Mortgage 
  

 24 

 Rate over the life of the Adjustable Rate Mortgage Loan (the “Minimum Mortgage Rate”);

  
 (lxxxii) None of the Initial Mortgage Loans
(by Cut-off Date Principal Balance) are negative amortization loans, and none of the Subsequent Mortgage Loans shall be negative amortization loans; 
  
 (lxxxiii) No error, omission, negligence, misrepresentation, fraud or similar occurrence with respect to a Mortgage Loan has taken place
on the part of the Seller, its affiliates or employees or any other person involved in the origination of the Mortgage Loan or in the application for any insurance, including, but not limited to the MI Policy, in relation to such Mortgage Loan;

  
 (lxxxiv) Each Mortgage Loan was originated
by a mortgagee approved by the Secretary of Housing and Urban Development pursuant to Sections 203 and 211 of the Act, a savings and loan association, a savings bank, a commercial bank, credit union, insurance company or similar institution which is
supervised and examined by a federal or state authority; 
  
 (lxxxv) With respect to each Mortgage Loan secured by manufactured housing, such manufactured housing is permanently affixed to a foundation and constitutes real estate under applicable state law; 
  
 (lxxxvi) No Mortgage Loans are date of payment or simple
interest loans; 
  
 (lxxxvii) The sale,
transfer, assignment and conveyance of Mortgage Loans by the Seller pursuant to this Purchase Agreement is not subject to and will not result in any tax, fee or governmental charge payable by the Company, the Custodian or the Trustee to any federal,
state or local government (“Transfer Taxes”) other than Transfer Taxes which have or will be paid by the Seller as due; 
  
 (lxxxviii) Each Mortgage Loan is a “qualified mortgage” within Section 860G(a)(3) of the Code; 
  
 (lxxxix) Approximately 73.97% of the Initial Mortgage Loans
(by Cut-off Date Principal Balance) with a Loan-to-Value Ratio greater than 60% are covered by an MI Policy issued by an MI Insurer; 
  
 (xc) Approximately 69.69% of the Initial Mortgage Loans that are identified on Exhibit 1 hereto are covered by a MI Policy issued by the
MI Insurer; 
  
 (xci) All requirements for the
valid transfer of each MI Policy, including any assignments or notices required in each MI Policy, have been satisfied; 
  
 (xcii) As of the Closing Date with respect to each Initial Mortgage Loan that is subject to a MI Policy and as of each Subsequent
Transfer Date with respect to each Subsequent Mortgage Loan that is subject to a MI Policy, the Seller is unaware of any existing circumstances which would cause the MI Insurer to deny a claim with respect to such Mortgage Loan; 
  

 25 

 (xciii) All appraisals of the Mortgage Loans by the Seller are full URAR/1004
appraisals; 
  
 (xciv) All Prepayment Charges
are enforceable and were originated in compliance with all applicable federal, state, and local laws; 
  
 (xcv) [Reserved.] 
  
 (xcvi) With respect to mortgage loans that are more than 59 days delinquent as of the Cut-off Date, the Seller has made a specific review
of the Servicer’s data and records that reflect mortgagor communications and payment history, and has no actual knowledge of an event, condition or mortgagor communication which would cause the Seller to institute foreclosure proceedings;

  
 (xcvii) The servicer for each Group I
Mortgage Loan has fully furnished (and will fully furnish), in accordance with the Fair Credit Reporting Act and its implementing regulations, accurate and complete information (i.e., favorable and unfavorable) on its borrower credit files to
Equifax, Experian, and Trans Union Credit Information Company (three of the credit repositories), on a monthly basis; 
  
 (xcviii) None of the Group I Mortgage Loans are classified as (a) “high cost” loans under the Home Ownership and Equity
Protection Act of 1994 or (b) “high cost,” “threshold,” “covered”, “predatory” or “abusive” loans under any other applicable state, federal or local law (including without limitation any
regulation or ordinance) (or a similarly classified loan using different terminology under a law imposing heightened regulatory scrutiny or additional legal liability for residential mortgage loans having high interest rates, points and/or fees);
and 
  
 (xcix) With respect to any Group I
Mortgage Loan originated on or after August 1, 2004, neither the related mortgage nor the related mortgage note requires the borrower to submit to arbitration to resolve any dispute arising out of or relating in any way to the mortgage loan
transaction. 
  
 Upon discovery by the Seller or upon notice from
the Company, the Trustee, or the Custodian, as applicable, of a breach of any representation or warranty in subsection (a) of this Section which materially and adversely affects the interests of the Certificateholders the Seller shall, within
45 days of its discovery or its receipt of notice of such breach, either (i) cure such breach in all material respects or (ii) to the extent that such breach is with respect to a Mortgage Loan or a Related Document, either
(A) repurchase such Mortgage Loan from the Trustee at the Repurchase Price, or (B) substitute one or more Eligible Substitute Mortgage Loans for such Mortgage Loan, in each case in the manner and subject to the conditions and limitations
set forth below. 
  
 In the interests of clarity, the Seller
acknowledges that, notwithstanding the 45-day grace period provided for above, the Seller shall take the actions described in the above 
  

 26 

 paragraph with respect to any Mortgage Loan relating to a Mortgaged Property located in (or treated as being located in)
the Red Zone and which Mortgaged Property has not been Confirmed to be in Good Repair by the 120th day after the Trust Fund’s acquisition of such Mortgage Loan, in such a way that any such Mortgage Loan is removed from the Trust Fund by such
120th day; provided, however, that for any other breach of a representation or warranty in subsection (a) of this Section, the obligation to repurchase shall be done in the time period set forth in the above paragraph. 
  
 Upon discovery by the Seller or upon notice from the Company, the Trustee, or
the Custodian, as applicable, of a breach of any representation or warranty in this subsection (b) with respect to any Mortgage Loan or upon the occurrence of a Repurchase Event, which materially and adversely affects the value of the related
Mortgage Loan or the interests of any Certificateholders or of the Company or the Trustee in such Mortgage Loan (notice of which shall be given to the Company and the Trustee by the Seller, if it discovers the same) the Seller shall, within 90 days
after the earlier of its discovery or receipt of notice thereof, either cure such breach or Repurchase Event in all material respects or either (i) repurchase such Mortgage Loan from the Trustee at the Repurchase Price, or (ii) substitute
one or more Eligible Substitute Mortgage Loans for such Mortgage Loan, in each case in the manner and subject to the conditions set forth below; provided, however, that a breach of any of the representations and warranties found in
subsections b(xx), (b)(lii), (b)(lxii), (b)(lxvii), (b)(lxxiv), (b)(lxxv), (b)(lxxix), (b)(xcvii), (b)(xcviii) and (b)(xcix) shall be deemed to materially and adversely affect the interest of the Certificateholders. No Mortgage Loan originated on or
prior to September 1, 2005 and with respect to which the related Mortgaged Property is located in the Designated Area shall be an “Eligible Substitute Mortgage Loan”. The Repurchase Price for any such Mortgage Loan repurchased by the
Seller shall be deposited or caused to be deposited by the Servicer in the Collection Account maintained by it pursuant to Section 3.06 of the Pooling and Servicing Agreement. 
  
 In the event that the Seller elects to substitute an Eligible Substitute Mortgage Loan or Loans for a Deleted Mortgage Loan
pursuant to this Section 3.01, the Seller shall deliver to the Custodian on behalf of the Trustee, with respect to such Eligible Substitute Mortgage Loan or Loans, the original Mortgage Note and all other documents and agreements as are
required by Section 2.01 hereof, with the Mortgage Note endorsed as required by such Section 2.01 hereof. No substitution will be made in any calendar month after the Determination Date for such month. Monthly Payments due with respect to
Eligible Substitute Mortgage Loans in the month of substitution shall not be part of the Trust Fund and will be retained by the Servicer and remitted by the Servicer to the Seller on the next succeeding Payment Date. For the month of substitution,
distributions to the Payment Account pursuant to the Pooling and Servicing Agreement will include the Monthly Payment due on a Deleted Mortgage Loan for such month and thereafter the Seller shall be entitled to retain all amounts received in respect
of such Deleted Mortgage Loan. The Servicer shall amend or cause to be amended the Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage Loan and the substitution of the Eligible Substitute Mortgage Loan or Loans and the Servicer
shall deliver the amended Mortgage Loan Schedule to the Custodian and the Trustee. Upon such substitution, the Eligible Substitute Mortgage Loan or Loans shall be subject to the terms of this Purchase Agreement and the Pooling and Servicing
Agreement in all respects, the Seller shall be deemed to have made the representations and warranties with respect to the Eligible Substitute Mortgage Loan contained 
  

 27 

 herein set forth in this Section 3.01(b), to the extent set forth in the definition of “Eligible Substitute
Mortgage Loan”, as of the date of substitution, and the Seller shall be obligated to repurchase or substitute for any Eligible Substitute Mortgage Loan as to which a Repurchase Event has occurred as provided herein. In connection with the
substitution of one or more Eligible Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Servicer will determine the amount (such amount, a “Substitution Adjustment Amount”), if any, by which (i) the Repurchase Price
that would otherwise apply to such Deleted Mortgage Loan, exceeds (ii) the principal balance of the related Eligible Substitute Mortgage Loan (after application of the principal portion of the Monthly Payments due in the month of substitution
that are to be distributed to the Payment Account in the month of substitution). The Seller shall pay the amount of such shortfall to the Servicer for deposit into the Collection Account on the day of substitution, without any reimbursement
therefor. 
  
 Upon receipt by the Trustee of written notification,
signed by a Servicing Officer, of the deposit of such Repurchase Price or of such substitution of an Eligible Substitute Mortgage Loan and deposit of any applicable Substitution Adjustment Amount as provided above, the Custodian shall, on behalf of
the Trustee, cause to be released to the Seller the related Mortgage File for the Mortgage Loan being repurchased or substituted for and the Trustee shall execute and deliver such instruments of transfer or assignment prepared by the Servicer, in
each case without recourse, as shall be necessary to vest in the Seller or its designee such Mortgage Loan released pursuant hereto and thereafter such Mortgage Loan shall not be an asset of the Trustee. 
  
 It is understood and agreed that the obligation of the Seller to cure any
breach with respect to or to repurchase or substitute for, any Mortgage Loan as to which such a breach has occurred and is continuing shall, except to the extent provided in Section 6.01 of this Purchase Agreement, constitute the sole remedy
respecting such breach available to the Company, the Trustee, the Certificateholders or the Custodian against the Seller. 
  
 It is understood and agreed that the representations and warranties set forth in this Section 3.01 shall survive delivery of the respective Mortgage
Files to the Custodian on behalf of the Trustee. 
  
 Section 3.02
Company Representations and Warranties. 
  
 The Company
hereby represents and warrants to the Seller and the Trustee as of the date hereof and as of the Closing Date that: 
  
 (a) The Company is duly organized and validly existing as a corporation in good standing under the laws of the State of Delaware, with power and authority
to own its properties and to conduct its business as such properties are currently owned and such business is presently conducted. 
  
 (b) The Company is duly qualified to do business as a foreign corporation in good standing and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of its property or the conduct of its business shall require such qualifications and in which the failure to so qualify would have a material adverse effect on the business, properties, assets or
condition (financial or other) of the Company and the ability of the Company to perform under this Purchase Agreement. 
  

 28 

 (c) The Company has the power and authority to execute and deliver this Purchase Agreement and to carry
out its terms; the Company has full power and authority to purchase the property to be purchased from the Seller and the Company has duly authorized such purchase by all necessary corporate action; and the execution, delivery and performance of this
Purchase Agreement have been duly authorized by the Company by all necessary corporate action. 
  
 (d) The consummation of the transactions contemplated by this Purchase Agreement and the fulfillment of the terms hereof do not conflict with, result in any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time) a default under, the articles of incorporation or bylaws of the Company, or any indenture, agreement or other instrument to which the Company is a party or by which it is bound; nor result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement or other instrument (other than pursuant to the Basic Documents); nor violate any law or, to the best of the Company’s knowledge, any
order, rule or regulation applicable to the Company of any court or of any federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Company or its properties. 
  
 (e) The Company (A) is a solvent entity and is paying its debts as they
become due and (B) after giving effect to the transfer of the Mortgage Loans, will be a solvent entity and will have sufficient resources to pay its debts as they become due. 
  
 ARTICLE IV 
  
 SELLER’S COVENANTS 
  
 Section 4.01 Covenants of the Seller. 
  
 The Seller hereby covenants as of the date hereof and as of the Closing Date that, except for the transfer hereunder, on and after the Closing Date, the
Seller will not sell, pledge, assign or transfer to any other Person, or grant, create, incur or assume any Lien on, any Mortgage Loan, whether now existing or hereafter created, or any interest therein; the Seller will notify the Custodian and the
Trustee of the existence of any such Lien on any Mortgage Loan immediately upon discovery thereof; the Seller will defend the right, title and interest of the Trustee, on its own behalf and as assignee of the Company, in, to and under the Mortgage
Loans, whether now existing or hereafter created, against all claims of third parties claiming through or under the Seller; and the Seller will use substantially all of the amounts on deposit in the Pre-Funding Account to purchase Subsequent
Mortgage Loans and sell such Subsequent Mortgage Loans to the Company pursuant to this Purchase Agreement no later than December 16, 2005. 
  
 In the event that the Custodian or the Trustee receives actual notice of any Transfer Taxes arising out of the transfer, assignment and conveyance of the
Mortgage Loans, on written demand by the Custodian, or upon the Seller’s otherwise being given notice thereof by 
  

 29 

 the Custodian, the Seller shall pay any and all such Transfer Taxes (it being understood that the Holders of the
Certificates, the Company, the Custodian and the Trustee shall have no obligation to pay such Transfer Taxes). 
  
 Section 4.02 Payment of Expenses. 
  
 (a) The Seller will pay on the Closing Date all expenses incident to the performance of its obligations under this Purchase Agreement and the Underwriting
Agreement, including (i) the preparation, printing and any filing of the preliminary prospectus, Prospectus Supplement and Prospectus (including any schedules or exhibits and any document incorporated therein by reference) originally filed and
of each amendment or supplement thereto, (ii) the preparation, printing and delivery to the Underwriters of this Purchase Agreement and the Underwriting Agreement, the Pooling and Servicing Agreement and such other documents as may be required
in connection with the offering, purchase, sale and delivery of the Certificates, (iii) the preparation, issuance and delivery of the certificates for the Class A Certificates and Mezzanine Certificates to the Underwriters, including any
charges of DTC, Clearstream Luxembourg and the Euroclear System in connection therewith; (iv) the qualification of the Class A Certificates and Mezzanine Certificates under securities laws in accordance with the provisions of
Section 3(f) of the Underwriting Agreement, including filing fees and the reasonable fees and disbursements of counsel for the Underwriters in connection therewith and in connection with the preparation of the Blue Sky Survey and any supplement
thereto for delivery to potential investors, (v) in addition to the initial printing and filing costs under (i) above, the printing and delivery to the Underwriters of copies of each preliminary prospectus and of the Prospectus and any
amendments or supplements thereto for delivery to potential investors, (vi) the fees and expenses of the Trustee and the Custodian, including the fees and disbursements of counsel for the Trustee and the Custodian in connection with the Pooling
and Servicing Agreement, the Purchase Agreement and the Certificates and (vii) any fees payable in connection with the rating of the Certificates. 
  
 (b) If the Underwriting Agreement is terminated by the Underwriters in accordance with the provisions of Section 5 or Section 9(a)(i) thereof,
the Seller shall reimburse the Underwriters for all of their out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the Underwriters. 
  
 ARTICLE V 
  
 CONDITIONS TO INITIAL MORTGAGE LOAN PURCHASE 
  
 Section 5.01 Conditions of Company’s Obligations. 
  
 The Company’s obligations to purchase the Initial Mortgage Loans which each accepts for purchase hereunder shall be subject to each of the following
conditions: 
  
 (i) the Mortgage File for each
Initial Mortgage Loan shall have been delivered in accordance with this Purchase Agreement; 
  
 (ii) the representations and warranties set forth in Section 3.01(b) hereof with respect to each Initial Mortgage Loan shall be true
as of the Closing Date; 
  

 30 

 (iii) the Underwriters or their affiliates shall have had an opportunity to perform a
due diligence review of each Mortgage Loan; and 
  
 (iv) the Seller shall have provided to the Underwriters or their affiliates such other documents which are then required to have been delivered under this Purchase Agreement or which are reasonably requested by the Underwriters or their
affiliates, which other documents may include UCC financing statements, a favorable opinion or opinions of counsel with respect to matters which are reasonably requested by the Underwriters, and/or an Officers’ Certificate. 
  
 ARTICLE VI 
  
 INDEMNIFICATION BY THE SELLER 
 WITH RESPECT TO THE MORTGAGE LOANS 
  
 Section 6.01 Indemnification With Respect to the Mortgage Loans. 
  
 The Seller shall indemnify and hold harmless the Company, Trustee and the Custodian from and against any loss, liability or
expense arising from the breach by the Seller of its representations and warranties in Section 3.01 of this Purchase Agreement which materially and adversely affects the value of any Mortgage Loan or the Company’s assignees’ interest
in any Mortgage Loan or from the failure by the Seller to perform its obligations under this Purchase Agreement in any material respect. 
  
 Section 6.02 Limitation on Liability of the Seller. 
  

None of the directors, officers, employees or agents of the Seller shall be under any liability to the Company, it being expressly understood that all
such liability is expressly waived and released as a condition of, and as consideration for, the execution of this Purchase Agreement. Except as and to the extent expressly provided in the Basic Documents, the Seller shall not be under any liability
to the Trustee, the Custodian or the Certificateholders. The Seller and any director, officer, employee or agent of the Seller may rely in good faith on any document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. 
  
 ARTICLE VII

  
 TERMINATION 
  
 Section 7.01 Termination. 
  
 (a) Except as provided in Section 7.01(b) hereof, the respective
obligations and responsibilities of the Seller, the Company, the Trustee and the Custodian created hereby shall terminate, except for the Seller’s indemnity obligations as provided herein, upon the termination of the Trust Fund pursuant to the
terms of the Pooling and Servicing Agreement. 
  

 31 

 (b) The Company may terminate this Purchase Agreement, by notice to the Seller, at any time at or prior
to the Closing Date: 
  
 (i) if the Underwriting
Agreement is terminated by the Underwriters pursuant to the terms of the Underwriting Agreement or if there has been, since the time of execution of this Purchase Agreement or since the respective dates as of which information is given in the
Prospectus, any material adverse change in the financial condition, earnings, business affairs or business prospects of the Seller, whether or not arising in the ordinary course of business, or 
  
 (ii) if there has occurred any material adverse change in
the financial markets in the United States, any outbreak of hostilities or escalation thereof or other calamity or crisis or any change or development involving a prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the judgment of the Underwriters, impracticable to market the Offered Certificates or to enforce contracts for the sale of the Offered Certificates, or 
  
 (iii) if trading in any securities of the Seller has been
suspended or limited by the Commission or the New York Stock Exchange, or if trading generally on the American Stock Exchange or the New York Stock Exchange or in the NASDAQ National Market System has been suspended or limited, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices have been required, by any of said exchanges or by such system or by order of the Commission, the National Association of Securities Dealers, Inc. or any other governmental authority,

  
 (iv) if a banking moratorium has been
declared by either federal or New York authorities, 
  
 (v) either (A) a change in control of the Seller shall have occurred other than in connection with and as a result of the issuance and sale by the Seller or registered, publicly offered common stock; or (B) the Underwriters
determine in their sole discretion that any material adverse change has occurred in the management of the Seller, 
  
 (vi) there is (A) a material breach by the Seller of any representation and warranty contained in this Purchase Agreement or the
Underwriting Agreement other than a representation or warranty relating to particular Mortgage Loans, and the Underwriters have reason to believe in good faith either that such breach is not curable within two (2) days or that such breach may
not have been cured in all material respects at the expiration of two (2) days following discovery thereof by the Seller or (B) a failure by the Seller to make any payment payable by it under this Purchase Agreement or (C) any other
failure by the Seller to observe and perform in any material respect its material covenants, agreements and obligations with the Company, including without limitation those contained in this Purchase Agreement, and the Company has reason to believe
in good faith that such failure may not have been cured 
  

 32 

 in all material respects at the expiration of two (2) days following discovery thereof by the
Seller, or 
  
 (vii) the Seller fails to provide
written notification to the Underwriters of any change in its loan origination, acquisition or appraisal guidelines or practices, or the Seller, without the prior consent of the Underwriters (which shall not be unreasonably withheld), amends in any
material respect its loan origination, acquisition or appraisal guidelines or practices. 
  
 If this Purchase Agreement is terminated pursuant to this Section 7.01(b), such termination shall be without liability of any party to any other party except as provided in Section 4.02 hereof. 

 
 ARTICLE VIII 
  
 MISCELLANEOUS PROVISIONS 
  
 Section 8.01 Amendment. 
  
 This Purchase Agreement may be amended from time to time by the Seller, the
Company, the Trustee and the Custodian by written agreement signed by the Seller, the Company, the Trustee and the Custodian. 
  
 Section 8.02 Governing Law. 
  
 This Purchase Agreement shall be governed by and construed in accordance with the laws of the State of New York and the obligations, rights and remedies
of the parties hereunder shall be determined in accordance with such laws. 
  
 Section 8.03 Notices. 
  
 All demands, notices and communications hereunder shall be in writing and shall be deemed to have been duly given if personally delivered at or mailed by registered mail, postage prepaid, addressed as follows: 
  

	 	(i)	if to the Seller: 

  
 NovaStar Mortgage, Inc. 
 8140 Ward Parkway 
 Suite 300 
 Kansas City, Missouri 64114 
 Attention: Scott F. Hartman 
  
 or, such other address as may hereafter be furnished to the Company in writing by the Seller. 
  

	 	(ii)	if to the Company: 

  
 NovaStar Mortgage Funding Corporation 
 8140 Ward Parkway 
 Suite 300 
 Kansas City, Missouri 64114 
 Attention: Matt Kaltenrieder 
  

 33 

 or such other address as may hereafter be furnished to the Seller in writing by the
Company. 
  

	 	(iii)	if to the Custodian: 

  
 Wachovia Bank, National Association 
 4527 Metropolitan Court, Suite C 
 Frederick, Maryland 21704 
 Attention: Edward Aquino 
  
 or such other address as may hereafter be furnished to the Seller in writing by the Custodian. 
  

	 	(iv)	if to the Co-Trustee: 

  
 J.P. Morgan Trust Company, National Association 
 ITS - Global Debt 
 560 Mission Street, 13th Floor 
 San Francisco, CA 94105 
 Attn: James Myers, VP (NovaStar Mortgage Funding Trust, Series 2005-3) 
  
 or such other address as may hereafter be furnished to the Seller in writing by the Co-Trustee. 

 

	 	(v)	if to the Trustee: 

  
 JPMorgan Chase Bank, National Association 
 4 New York Plaza, 6th Floor 
 New York, NY 10004-2477 
 Attention: Institutional Trust Services/Global Debt (NovaStar Mortgage Funding Trust, Series 2005-3) 
  
 or such other address as may hereafter be furnished to the
Seller in writing by the Trustee. 
  
 Section 8.04
Severability of Provisions. 
  
 If any one or more of the
covenants, agreements, provisions or terms of this Purchase Agreement shall be held invalid for any reason whatsoever, then such covenants, agreements, provisions or terns shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Purchase Agreement and shall in no way affect the validity or enforceability of the other provisions of this Purchase Agreement. 
  

 34 

 Section 8.05 Relationship of Parties. 
  
 Nothing herein contained shall be deemed or construed to create a
partnership or joint venture between the parties hereto, and the services of the Seller shall be rendered as an independent contractor and not as agent for the Company. 
  
 Section 8.06 Counterparts. 
  
 This Purchase Agreement may be executed in two or more counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed to be an original and such counterparts together shall constitute one and the same agreement. 
  
 Section 8.07 Further Agreements. 
  
 The Company and the Seller each agree to execute and deliver to the other such additional documents, instruments or agreements as may be necessary or
appropriate to effectuate the purposes of this Purchase Agreement. Each of the Company and the Seller agrees to use its best reasonable efforts to take all actions necessary to be taken by it to cause the Class A-1A Certificates to be rated
“Aaa” by Moody’s, “AAA” by S&P and “AAA” by Fitch, the Class A-2A Certificates to be rated “Aaa” by Moody’s, “AAA” by S&P and “AAA” by Fitch, the Class A-2B
Certificates to be rated “Aaa” by Moody’s, “AAA” by S&P and “AAA” by Fitch, the Class A-2C Certificates to be rated “Aaa” by Moody’s, “AAA” by S&P and “AAA” by Fitch,
the Class A-2D Certificates to be rated “Aaa” by Moody’s, “AAA” by S&P and “AAA” by Fitch, the Class M-1 Certificates to be rated “Aa1” by Moody’s, “AA+” by S&P and
“AA+” by Fitch, the Class M-2 Certificates to be rated “Aa2” by Moody’s, “AA+” by S&P and “AA+” by Fitch, the Class M-3 Certificates to be rated “Aa3” by Moody’s, “AA” by
S&P and “AA” by Fitch, the Class M-4 Certificates to be rated “A1” by Moody’s, “AA” by S&P and “AA” by Fitch, the Class M-5 Certificates to be rated “A2” by Moody’s, “AA”
by S&P and “AA-” by Fitch, the Class M-6 Certificates to be rated “A3” by Moody’s, “AA-” by S&P and”AA-” by Fitch, the Class M-7 Certificates to be rated “Baa1” by Moody’s,
“A+” by S&P and “A+” by Fitch, the Class M-8 Certificates to be rated “Baa2” by Moody’s, “A+” by S&P and “A” by Fitch, the Class M-9 Certificates to be rated “Baa3” by
Moody’s, “A-” by S&P and “A” by Fitch, the Class M-10 Certificates to be rated “BBB+” by S&P and “BBB+” by Fitch, the Class M-11 Certificates to be rated “BBB” by S&P and
“BBB-” by Fitch and the M-12 Certificates to be rated BBB- by S&P, each party will cooperate with the other in connection therewith. 
  
 Section 8.08 Intention of the Parties. 
  
 It is the intention of the parties that (i) the Company is purchasing on the Closing Date, and the Seller is selling on the Closing Date, the Initial
Mortgage Loans, rather than the Company providing to the Seller a loan secured by the Initial Mortgage Loans on the Closing Date, and (ii) the Trustee is purchasing on the Closing Date, and the Company is selling on the Closing Date, the
Initial Mortgage Loans, rather than the Trustee providing to the Company a loan secured by the Initial Mortgage Loans, (iii) the Company will be purchasing on each Subsequent Transfer Date, and the Seller will be selling on each Subsequent
Transfer Date, the 
  

 35 

 related Subsequent Mortgage Loans, rather than the Company providing to the Seller a loan secured by the related
Subsequent Mortgage Loans on each Subsequent Transfer Date, and (iv) the Trustee will be purchasing on each Subsequent Transfer Date, and the Company will be selling on each Subsequent Transfer Date, the related Subsequent Mortgage Loans,
rather than the Trustee providing to the Company a loan secured by the related Subsequent Mortgage Loans on each Subsequent Transfer Date. Accordingly, the parties hereto each intend to treat these transactions as (i) a sale by the Seller, and
a purchase by the Company, of the Initial Mortgage Loans on the Closing Date, and (ii) a sale by the Company, and a purchase by the Trustee, of the Initial Mortgage Loans on the Closing Date, (iii) a sale by the Seller, and a purchase by
the Company, of the related Subsequent Mortgage Loans on each Subsequent Transfer Date, and (iv) a sale by the Company, and a purchase by the Trustee, of the related Subsequent Mortgage Loans on each Subsequent Transfer Date. 
  
 Section 8.09 Successors and Assigns; Assignment of Purchase
Agreement. 
  
 This Purchase Agreement shall bind and inure
to the benefit of and be enforceable by the Seller, the Company, the Trustee, the Custodian, and their respective successors and assigns. The obligations of the Seller under this Purchase Agreement cannot be assigned or delegated to a third party
without the consent of the Company, which consent shall be at the Company’s discretion. The parties hereto acknowledge that (i) the Company is acquiring the Initial Mortgage Loans for the purpose of selling them to the Trustee, who will
hold the Initial Mortgage Loans in trust for the benefit of the Certificateholders and (ii) the Company is acquiring the Subsequent Mortgage Loans for the purpose of selling them to the Trustee, who will hold the Subsequent Mortgage Loans for
the benefit of the Certificateholders. As an inducement to the Company and the Trustee to purchase the Mortgage Loans, the Seller acknowledges and consents to (i) the assignment by the Company to the Trustee of all of the Company’s rights
or remedies against the Seller pursuant to this Purchase Agreement and to (ii) the enforcement or exercise of any rights against the Seller pursuant to this Purchase Agreement by the Company and the Trustee. Such enforcement of a right or
remedy by the Trustee, shall have the same force and effect as if the right or remedy had been enforced or exercised by the Company directly. 
  
 Section 8.10 Survival. 
  
 The representations and warranties made herein by the Seller and the provisions of Article V hereof shall survive the purchase of the Mortgage Loans
hereunder. 
  
 Section 8.11 Liability of the Trustee.

  
 The Trustee is entering into the Basic Documents to which it
is a party solely as Trustee, hereunder and thereunder, and not in its individual capacity, and all persons having any claim against the Trustee by reason of the transactions contemplated by this Agreement or any other Basic Document shall look only
to the Trust Fund for payment or satisfaction thereof. 
  
 [Signature page to follow] 
  

 36 

 IN WITNESS WHEREOF, the Seller, the Company, the Custodian and the Trustee have caused their names to be
signed to this Mortgage Loan Purchase Agreement by their respective officers thereunto duly authorized as of the day and year first above written. 
  

			
	 NOVASTAR MORTGAGE, INC.
 as Seller

		
	 By:
	 	  

	 Name:
	 	Matt Kaltenrieder
	 Title:
	 	Vice President
	
	 NOVASTAR MORTGAGE FUNDING
 CORPORATION
 as Company

		
	 By:
	 	  

	 Name:
	 	Matt Kaltenrieder
	 Title:
	 	Vice President
	
	 WACHOVIA BANK, NATIONAL ASSOCIATION, as Custodian

		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 
	
	 JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
 not in its individual capacity, but solely as Trustee

		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 

  

 37 

			
	 NOVASTAR FINANCIAL, INC., solely with respect to
 Section 3.01(b)

		
	 By:
	 	  

	 Name:
	 	Matt Kaltenrieder
	 Title:
	 	Vice President

  
 [Signature Page
to Mortgage Loan Purchase Agreement (2 of 2)] 
  

 38 

 EXHIBIT 1 
  

INITIAL MORTGAGE LOAN SCHEDULE 
  
 [Provided to Company and to Trustee at the Closing] 

 EXHIBIT 2(A) 
  
 SELLER’S SUBSEQUENT TRANSFER INSTRUMENT 
  
 Pursuant to this Seller’s Subsequent Transfer Instrument (the “Seller’s Instrument”), dated as of
September 1, 2005, between NovaStar Mortgage, Inc. as seller (the “Seller”), and NovaStar Mortgage Funding Corporation, as company (the “Company”), and pursuant to the Mortgage Loan Purchase Agreement, dated as
of September 1, 2005 (the “Purchase Agreement”), among the Seller, the Company, Wachovia Bank, National Association, as Custodian (the “Custodian”) and JPMorgan Chase Bank, National Association, as Trustee (the
“Trustee”), the Seller and the Company agree to the sale by the Seller and the purchase by the Company of the subsequent Mortgage Loans listed on the attached Mortgage Loan Schedule (the “Subsequent Mortgage Loans”)
and the related MI Policies. 
  
 Capitalized terms used and not
defined herein have their respective meanings as set forth in the definitions contained in the Pooling and Servicing Agreement, dated as of September 1, 2005 (the “Pooling and Servicing Agreement”), between the Trustee, the
Custodian, the Company and the Seller/Servicer which definitions are incorporated by reference herein. All other capitalized terms used herein shall have the meanings specified herein. 
  
 Section 1. Conveyance of Subsequent Mortgage Loans. 
  
 (a) The Seller does hereby sell, transfer, assign, set over and convey to
the Company, without recourse, all of its right, title and interest in and to the Subsequent Mortgage Loans and the related MI Policies, all scheduled payments of principal and interest on the Subsequent Mortgage Loans due after the Subsequent
Cut-off Date, and all other payments of principal and interest on the Subsequent Mortgage Loans collected after the Subsequent Cut-off Date (minus that portion of any such payment which is allocable to the period prior to the Subsequent Cut-off
Date); provided, however, that no scheduled payments of principal and interest due on or before the Subsequent Cut-off Date and collected after the Subsequent Cut-off Date shall belong to the Company pursuant to the terms of this Seller’s
Instrument. The Seller, contemporaneously with the delivery of this Seller’s Instrument, has delivered or caused to be delivered to the Custodian, at the direction of the Company, each item set forth in Section 2.02(b) of the Purchase
Agreement with respect to such Subsequent Mortgage Loans and the related MI Policies. The transfer to the Company by the Seller of the Subsequent Mortgage Loans identified on the attached Mortgage Loan Schedule shall be absolute and is intended by
the Seller, the Company, the Custodian, the Trustee and the Certificateholders to constitute and to be treated as a sale by the Seller. 
  
 The parties hereto intend that the transactions set forth herein constitute a sale by the Seller to the Company on the Subsequent Transfer Date of all the
Seller’s right, title and interest in and to the Subsequent Mortgage Loans and the related MI Policies, and other property as and to the extent described above. In the event the transactions set forth herein shall be deemed not to be a sale,
the Seller hereby grants to the Company as of the Subsequent Transfer Date a security interest in all of the Seller’s right, title and interest in, to and under the Subsequent Mortgage Loans, and such other property, to secure all of the
Seller’s obligations hereunder, and this Purchase Agreement shall constitute a security agreement under applicable 
  

 EX 2(A)-1 

 law, and in such event, the parties hereto acknowledge that the Custodian, in addition to holding the Subsequent Mortgage
Loans and the related MI Policies on behalf of the Trustee for the benefit of the Certificateholders, holds the Subsequent Mortgage Loans and the related MI Policies as designee and agent of the Company. The Seller agrees to take or cause to be
taken such actions and to execute such documents, including without limitation the filing of all necessary UCC-1 financing statements filed in the State of Maryland (which shall be submitted for filing as of the Subsequent Transfer Date), any
continuation statements with respect thereto and any amendments thereto required to reflect a change in the name or corporate structure of the Seller or the filing of any additional UCC-1 financing statements due to the change in the state of
incorporation of the Seller as are necessary to perfect and protect the interests of the Company and its assignees in each Subsequent Mortgage Loan, the related MI Policies and the proceeds thereof. 
  
 (b) The expenses and costs relating to the delivery of the Subsequent
Mortgage Loans, this Seller’s Instrument and such other items required under the Mortgage Loan Purchase Agreement shall be borne by the Seller. 
  
 (c) Additional terms of the sale are set forth on Attachment A hereto. 
  
 Section 2. Representations and Warranties; Conditions Precedent. 
  
 (a) The Seller hereby affirms the representations and warranties set forth
in Section 3.01 of the Purchase Agreement that relate to the Seller and the Subsequent Mortgage Loans as of the date hereof. The Seller hereby confirms that each of the conditions set forth in Section 2.02(b) of the Purchase Agreement are
satisfied as of the date hereof and further represents and warrants that each Subsequent Mortgage Loan complies with the requirements of this Seller’s Instrument and Section 2.02(c) of the Purchase Agreement. 
  
 (b) The Seller is solvent, is able to pay its debts as they become due and
has capital sufficient to carry on its business and its obligations hereunder; it will not be rendered insolvent by the execution and delivery of this Seller’s Instrument or by the performance of its obligations hereunder nor is it aware of any
pending insolvency; no petition of bankruptcy (or similar insolvency proceeding) has been filed by or against the Seller prior to the date hereof. 
  
 (c) All terms and conditions of the Purchase Agreement are hereby ratified and confirmed; provided, however, that in the event of any conflict the
provisions of this Seller’s Instrument shall control over the conflicting provisions of the Purchase Agreement. 
  
 Section 3. Recordation of the Seller’s Instrument. 
  
 To the extent permitted by applicable law, this Seller’s Instrument, or a memorandum thereof if permitted under
applicable law, is subject to recordation in all appropriate public offices for real property records in all of the counties or other comparable jurisdictions in which any or all of the properties subject to the Mortgages are situated, and in any
other appropriate public recording office or elsewhere, such recordation to be effected by the Servicer, but only when accompanied by an Opinion of Counsel to the effect that such recordation materially and beneficially affects the interests of the
Certificateholders or is necessary for the administration or servicing of the Mortgage Loans. 
  

 EX 2(A)-2 

 Section 4. Governing Law. 
  
 This Seller’s Instrument shall be construed in accordance with the laws of the State of New York and the obligations,
rights and remedies of the parties hereunder shall be determined in accordance with such laws, without giving effect to principles of conflicts of law. 
  
 Section 5. Counterparts. 
  
 This Seller’s Instrument may be executed in one or more counterparts and by the different parties hereto on separate counterparts, each of which,
when so executed, shall be deemed to be an original; such counterparts, together, shall constitute one and the same instrument. 
  
 Section 6. Successors and Assigns. 
  
 This Seller’s Instrument shall inure to the benefit of and be binding upon the Seller and the Company and their respective successors and assigns.
The Custodian and the Trustee shall be express third party beneficiaries hereto. 
  
 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Seller’s Instrument as of the day and year first written above. 
  

			
	 NOVASTAR MORTGAGE, INC.,
 as Seller

		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 
	
	 NOVASTAR MORTGAGE FUNDING CORPORATION,
 as
Company

		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 

  

 EX 2(A)-3 

 NOVASTAR HOME EQUITY LOAN ASSET-BACKED CERTIFICATES, SERIES 2005-3 
  
 ATTACHMENT A TO SELLER’S SUBSEQUENT TRANSFER INSTRUMENT 
  
                          , 2005 
  
 A. Profile of Subsequent Mortgage Loans: 
  

	 	1.	Subsequent Cut-off Date:                     
    , 2005 

  

	 	2.	Subsequent Transfer Date:                     
    , 2005 

  

	 	3.	Aggregate Principal Balance of the Subsequent Mortgage Loans as of the Subsequent Cut-off Date:
$                     

  

	 	4.	Purchase Price: 100.00% 

  
 B. As to all the Subsequent Mortgage Loans the subject of this Instrument: 
  

					
	 I.
	  	Longest stated term to maturity:	  	360 months
			
	 II.
	  	Minimum Mortgage Rate:	  	            %
			
	 III.
	  	Maximum Mortgage Rate:	  	            %
			
	 IV.
	  	WAC of all Mortgage Loans:	  	            %
			
	 V.
	  	WAM of all Mortgage Loans:	  	            %
			
	 VI.
	  	Largest Principal Balance:	  	$            
			
	 VII.
	  	Non-owner occupied Mortgaged Properties:	  	            %
			
	 VIII.
	  	California zip code concentration:	  	            %
			
	 IX.
	  	Condominiums:	  	            %
			
	 X.
	  	Single-family:	  	            %
			
	 XI.
	  	Weighted average term since origination:	  	         month
			
	 XII.
	  	Mortgage Loans Covered by MI Policies:	  	            %

  

 EX 2(A)-4 

 EXHIBIT 2(B) 
  
 COMPANY’S SUBSEQUENT TRANSFER INSTRUMENT 
  
 Pursuant to this Company’s Subsequent Transfer Instrument (the “Company’s Instrument”), dated as of
                         , 2005, between NovaStar Mortgage Funding Corporation, as company (the
“Company”) and JPMorgan Chase Bank, National Association, as trustee (the “Trustee”), and pursuant to the Mortgage Loan Purchase Agreement, dated as of September 1, 2005 (the “Purchase
Agreement”), among NovaStar Mortgage, Inc., as seller (the “Seller”), the Company, Wachovia Bank, National Association, as Custodian (“Custodian”) and JPMorgan Chase Bank, National Association, as Trustee
(the “Trustee”), the Company and the Trustee agree to the sale by the Company and the purchase by the Trustee of the subsequent Mortgage Loans listed on the attached Mortgage Loan Schedule (the “Subsequent Mortgage
Loans”) and the related MI Policies, and the pledge of the Subsequent Mortgage Loans by the Trustee. 
  
 Capitalized terms used and not defined herein have their respective meanings as set forth in the definitions contained in the Pooling and Servicing
Agreement, dated as of September 1, 2005 (the “Pooling and Servicing Agreement”), between the Custodian, the Trustee, the Company and the Servicer which definitions are incorporated by reference herein. All other capitalized
terms used herein shall have the meanings specified herein. 
  
 Section 1. Conveyance of Subsequent Mortgage Loans. 
  
 (a) The Company does hereby sell, transfer, assign, set over and convey to the Trustee, without recourse, (i) all of its right, title and interest in and to the Subsequent Mortgage Loans and the related MI
Policies, all scheduled payments of principal and interest on the Subsequent Mortgage Loans due after the Subsequent Cut-off Date, and all other payments of principal and interest on the Subsequent Mortgage Loans collected after the Subsequent
Cut-off Date (minus that portion of any such payment which is allocable to the period prior to the Subsequent Cut-off Date); provided, however, that no scheduled payments of principal and interest due on or before the Subsequent Cut-off Date and
collected after the Subsequent Cut-off Date shall belong to the Trustee pursuant to the terms of this Company’s Instrument and (ii) all of its right, title and interest in and to the Seller’s Subsequent Transfer Instrument, dated as
of                          , 2005 (the “Seller’s Instrument”), between the Seller and the Company.
The Company, contemporaneously with the delivery of this Company’s Instrument, has delivered or caused to be delivered to the Custodian each item set forth in Section 2.02(b) of the Purchase Agreement with respect to such Subsequent
Mortgage Loans. The transfer to the Trustee by the Company of the Subsequent Mortgage Loans identified on the attached Mortgage Loan Schedule and the related MI Policies shall be absolute and is intended by the Company, the Trustee, the Custodian
and the Certificateholders to constitute and to be treated as a sale by the Company. 
  
 The parties hereto intend that the transactions set forth herein constitute a sale by the Company to the Trustee on the Subsequent Transfer Date of all the Company’s right, title and interest in and to the
Subsequent Mortgage Loans and the related MI Policies, and other property as and to the extent described above. In the event the transactions set forth herein shall be deemed not to be a sale, the Company hereby grants to the Trustee as of the
Subsequent 
  

 EX 2(B)-1 

 Transfer Date a security interest in all of the Company’s right, title and interest in, to and under the Subsequent
Mortgage Loans, and such other property, to secure all of the Company’s obligations hereunder, and this Company’s Instrument shall constitute a security agreement under applicable law, and in such event, the parties hereto acknowledge that
the Custodian on behalf of the Trustee, in addition to holding the Subsequent Mortgage Loans and the related MI Policies for the benefit of the Certificateholders, holds the Subsequent Mortgage Loans and the related MI Policies as designee and agent
of the Trustee. The Company agrees to take or cause to be taken such actions and to execute such documents, including without limitation the filing of all necessary UCC-1 financing statements filed in the State of Delaware (which shall be submitted
for filing as of the Subsequent Transfer Date), any continuation statements with respect thereto and any amendments thereto required to reflect a change in the name or corporate structure of the Company or the filing of any additional UCC-1
financing statements due to the change in the state of incorporation of the Company as are necessary to perfect and protect the interests of the Trustee and its assignees in each Subsequent Mortgage Loan, the related MI Policies and the proceeds
thereof. 
  
 (b) The expenses and costs relating to the delivery
of the Subsequent Mortgage Loans, this Company’s Instrument and such other items required under the Purchase Agreement shall be borne by the Company. 
  
 Section 2. Representations and Warranties; Conditions Precedent. 
  
 (a) The Company hereby affirms the representations and warranties set forth in Section 3.02 of the Purchase Agreement
that relate to the Company as of the date hereof. 
  
 (b) The
Company is solvent, is able to pay its debts as they become due and has capital sufficient to carry on its business and its obligations hereunder; it will not be rendered insolvent by the execution and delivery of this Company’s Instrument or
by the performance of its obligations hereunder nor is it aware of any pending insolvency; no petition of bankruptcy (or similar insolvency proceeding) has been filed by or against the Company prior to the date hereof. 
  
 (c) All terms and conditions of the Purchase Agreement are hereby ratified
and confirmed; provided, however, that in the event of any conflict the provisions of this Company’s Instrument shall control over the conflicting provisions of the Mortgage Loan Purchase Agreement. 
  
 Section 3. Recordation of Instrument. 
  
 To the extent permitted by applicable law, this Company’s Instrument,
or a memorandum thereof if permitted under applicable law, is subject to recordation in all appropriate public offices for real property records in all of the counties or other comparable jurisdictions in which any or all of the properties subject
to the Mortgages are situated, and in any other appropriate public recording office or elsewhere, such recordation to be effected by the Servicer, but only when accompanied by an Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interests of the Certificateholders or is necessary for the administration or servicing of the Mortgage Loans. 
  

 EX 2(B)-2 

 Section 4. Governing Law. 
  
 This Company’s Instrument shall be construed in accordance with the laws of the State of New York and the obligations,
rights and remedies of the parties hereunder shall be determined in accordance with such laws, without giving effect to principles of conflicts of law. 
  
 Section 5. Counterparts. 
  
 This Company’s Instrument may be executed in one or more counterparts and by the different parties hereto on separate counterparts, each of which,
when so executed, shall be deemed to be an original; such counterparts, together, shall constitute one and the same instrument. 
  
 Section 6. Successors and Assigns. 
  
 This Company’s instrument shall inure to the benefit of and be binding upon the Company, the Custodian and the Trustee and their respective
successors and assigns. 
  

 EX 2(B)-3 

 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Company’s Instrument as of
the day and year first written above. 
  

			
	 NOVASTAR MORTGAGE FUNDING
 CORPORATION,
 as Company

		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 
	
	 JPMORGAN CHASE BANK, NATIONAL
 ASSOCIATION, not in its individual capacity but solely
 as Trustee

		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 
	
	 J.P. MORGAN TRUST COMPANY, NATIONAL
 ASSOCIATION, not in its individual capacity but solely
 as Co-Trustee

		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 
	
	WACHOVIA BANK, NATIONAL ASSOCIATION, as Custodian
		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 

  

 EX 2(B)-4 

 EXHIBIT 3 
  

Zip Codes 
  

									
	39500	 	70032	 	70096	 	70179	 	70465
	39501	 	70033	 	70112	 	70181	 	70466
	39502	 	70036	 	70113	 	70182	 	70467
	39503	 	70037	 	70114	 	70183	 	70469
	39505	 	70038	 	70115	 	70184	 	70470
	39506	 	70039	 	70116	 	70185	 	70471
	39507	 	70040	 	70117	 	70186	 	 
	39520	 	70041	 	70118	 	70187	 	 
	39521	 	70042	 	70119	 	70189	 	 
	39522	 	70043	 	70121	 	70190	 	 
	39525	 	70044	 	70122	 	70195	 	 
	39529	 	70046	 	70123	 	70377	 	 
	39530	 	70047	 	70124	 	70401	 	 
	39531	 	70049	 	70125	 	70402	 	 
	39532	 	70050	 	70126	 	70403	 	 
	39533	 	70051	 	70127	 	70404	 	 
	39534	 	70052	 	70128	 	70420	 	 
	39535	 	70053	 	70129	 	70421	 	 
	39540	 	70054	 	70130	 	70422	 	 
	39552	 	70055	 	70131	 	70426	 	 
	39553	 	70056	 	70139	 	70427	 	 
	39555	 	70057	 	70140	 	70429	 	 
	39556	 	70058	 	70141	 	70431	 	 
	39558	 	70059	 	70142	 	70433	 	 
	39560	 	70060	 	70143	 	70434	 	 
	39561	 	70062	 	70145	 	70435	 	 
	39562	 	70063	 	70146	 	70436	 	 
	39563	 	70064	 	70148	 	70437	 	 
	39564	 	70065	 	70149	 	70438	 	 
	39565	 	70066	 	70150	 	70441	 	 
	39566	 	70067	 	70151	 	70442	 	 
	39567	 	70068	 	70152	 	70443	 	 
	39568	 	70069	 	70153	 	70444	 	 
	39569	 	70070	 	70154	 	70445	 	 
	39571	 	70071	 	70156	 	70446	 	 
	39572	 	70072	 	70157	 	70447	 	 
	39573	 	70073	 	70158	 	70448	 	 
	39574	 	70075	 	70159	 	70449	 	 
	39576	 	70076	 	70160	 	70450	 	 
	39577	 	70078	 	70161	 	70451	 	 
	39581	 	70079	 	70162	 	70452	 	 
	39595	 	70080	 	70163	 	70453	 	 
	70001	 	70081	 	70164	 	70454	 	 
	70002	 	70082	 	70165	 	70455	 	 
	70003	 	70083	 	70166	 	70456	 	 
	70004	 	70084	 	70167	 	70457	 	 
	70005	 	70085	 	70170	 	70458	 	 
	70006	 	70086	 	70172	 	70459	 	 
	70009	 	70087	 	70174	 	70460	 	 
	70010	 	70090	 	70175	 	70461	 	 
	70011	 	70091	 	70176	 	70462	 	 
	70030	 	70092	 	70177	 	70463	 	 
	70031	 	70094	 	70178	 	70464	 	 

  

 EX 3-1

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