Document:

AMENDED AND RESTATED MORTGAGES TRUST DEED       EXHIBIT 4.2.1

                               21 NOVEMBER 2007

                             BANK OF SCOTLAND PLC

                                      and

                       PERMANENT FUNDING (NO. 1) LIMITED

                                      and

                       PERMANENT FUNDING (NO. 2) LIMITED

                                      and

                      PERMANENT MORTGAGES TRUSTEE LIMITED

                                      and

                             SFM OFFSHORE LIMITED

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                                   CONTENTS

CLAUSE                                                                     PAGE

1.       Definitions and Construction.........................................2
2.       Creation of Mortgages Trust..........................................2
3.       Conditions Precedent.................................................3
4.       Acquisition by Funding 1 and/or Funding 2 of an Increased Interest
         in the Trust Property................................................4
5.       Initial Funding 1 Share, Initial Seller Share and Initial Funding
         2 Share..............................................................8
6.       Acquisition by Seller of an Interest Relating to Capitalised
         Interest.............................................................9
7.       Payment by the Seller, Funding 1 and/or Funding 2 to Funding 1 or
         Funding 2 of the Amount Outstanding under an Intercompany Loan or
         the Master Intercompany Loan.........................................9
8.       Adjustment of Funding 1 Share Percentage, Funding 2 Share
         Percentage and Seller Share Percentage on Calculation Dates.........10
9.       Minimum Seller Share................................................14
10.      Allocation and Distribution of Revenue Receipts.....................15
11.      Allocation and Distribution of Principal Receipts...................17
12.      Allocation of Losses................................................20
13.      New Beneficiary of the Mortgages Trust..............................20
14.      Ledgers.............................................................21
15.      Costs and Expenses of the Mortgages Trustee.........................21
16.      Directions from Beneficiaries.......................................21
17.      Transfers...........................................................23
18.      Covenants of the Mortgages Trustee..................................24
19.      Power to Delegate...................................................25
20.      Powers of Investment................................................25
21.      Other Provisions Regarding the Mortgages Trustee....................25
22.      No Retirement of Mortgages Trustee..................................26
23.      Termination.........................................................27
24.      Further Assurances..................................................27
25.      Amendments..........................................................27
26.      Non Petition Covenant...............................................28
27.      No Partnership or Agency............................................28
28.      Calculations........................................................28
29.      No Waiver; Remedies.................................................28
30.      Execution in Counterparts/Severability..............................28
31.      Tax.................................................................28
32.      Confidentiality.....................................................29
33.      Exclusion of Third Party Rights.....................................29
34.      Addresses for Notices...............................................30
35.      Governing Law and Submission to Jurisdiction........................31
36.      Exclusion of Trustee Act 2000.......................................31

Signatories..................................................................32

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THIS AMENDED AND RESTATED MORTGAGES TRUST DEED (this DEED) is made as a deed on
21 November 2007 between:

(1)      BANK OF SCOTLAND PLC (registered number SC327000) (formerly The
         Governor and Company of the Bank of Scotland), a public limited
         company incorporated under the laws of Scotland whose registered
         office is at The Mound, Edinburgh, EH1 1YZ (acting in its capacities
         as the SELLER, a BENEFICIARY and the CASH MANAGER);

(2)      PERMANENT FUNDING (NO. 1) LIMITED (registered number 4267660), a
         private limited company incorporated under the laws of England and
         Wales whose registered office is at 35 Great St. Helen's, London EC3A
         6AP (acting in its capacities as a BENEFICIARY and FUNDING 1);

(3)      PERMANENT FUNDING (NO. 2) LIMITED (registered number 04441772), a
         private limited company incorporated under the laws of England and
         Wales whose registered office is at 35 Great St. Helen's, London EC3A
         6AP (acting in its capacities as a BENEFICIARY and FUNDING 2);

(4)      PERMANENT MORTGAGES TRUSTEE LIMITED (registered number 83116), a
         private limited company incorporated under the laws of Jersey whose
         registered office is at 47 Esplanade, St Helier, Jersey JE1 0BD,
         Channel Islands (acting in its capacity as the MORTGAGES TRUSTEE); and

(5)      SFM OFFSHORE LIMITED (registered number 76015), a private limited
         company incorporated under the laws of Jersey whose registered office
         is at 47 Esplanade, St Helier, Jersey JE1 0BD, Channel Islands (acting
         in its capacity as the SHARE TRUSTEE).

WHEREAS:

(A)      On 13 June 2002 the Share Trustee assigned the Initial Trust Property
         to the Mortgages Trustee and the Mortgages Trustee declared that it
         held and would hold the Trust Property on trust absolutely for the
         benefit of Funding 1 and Halifax (then in its capacity as the Seller)
         on the terms and subject to the conditions set out in the Mortgages
         Trust Deed dated such date.

(B)      Pursuant to the terms of the Seller Mortgages Trust Assignment
         Agreement, Funding 2 acquired a portion of Halifax's beneficial
         interest in the Mortgages Trust on 17 October 2006.

(C)      On the Reorganisation Date, pursuant to the HBOS Group Reorganisation
         Act 2006, The Governor and Company of the Bank of Scotland was
         registered as a public company under the Companies Act 1985 and
         changed its name to Bank of Scotland plc and the business and all
         property and liabilities of Halifax (including its beneficial interest
         in the Mortgages Trust and its rights and obligations under the
         Mortgages Trust Deed) were transferred to Bank of Scotland.

(D)      The Mortgages Trustee holds the Trust Property as bare trustee for the
         Beneficiaries upon, with and subject to the trusts, powers and
         provisions of the Mortgages Trust Deed.

                                       1

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(E)      The Seller carries on the business of, inter alia, originating
         residential first mortgage loans to individual Borrowers in the United
         Kingdom including under the Halifax brand and of managing and
         administering such mortgage loans and residential first mortgage loans
         that were originated by Halifax. Halifax assigned the Initial
         Portfolio to the Mortgages Trustee on 14 June 2002 and (from time to
         time) has sold New Portfolios to the Mortgages Trustee, pursuant to
         the terms of the Mortgage Sale Agreement. Bank of Scotland may sell
         further New Portfolios to the Mortgages Trustee pursuant to the terms
         of the Mortgage Sale Agreement. The Initial Portfolio is, and any New
         Portfolios are and shall be, held by the Mortgages Trustee (in
         relation to Scottish Loans, in its capacity as beneficiary under a
         Scottish Declaration of Trust) on trust for the Beneficiaries upon,
         with and subject to the trusts, powers and provisions of the Mortgages
         Trust Deed.

(F)      The parties to the Mortgages Trust Deed have agreed to further amend
         and restate the terms of the Mortgages Trust Deed on the date hereof
         as set out herein.

NOW THIS DEED WITNESSES:

1.       DEFINITIONS AND CONSTRUCTION

1.1      The amended and restated master definitions and construction schedule
         signed by, amongst others, the parties to this Deed and dated 21
         November 2007 (as the same may be amended, varied or supplemented from
         time to time with the consent of the parties to this Deed) (the MASTER
         DEFINITIONS AND CONSTRUCTION SCHEDULE) is expressly and specifically
         incorporated into this Deed and, accordingly, the expressions defined
         in the Master Definitions and Construction Schedule (as so amended,
         varied or supplemented from time to time) shall, except where the
         context otherwise requires and save where otherwise defined herein,
         have the same meanings in this Deed, including the Recitals hereto and
         this Deed shall be construed in accordance with the interpretation
         provisions set out in CLAUSE 3 of the Master Definitions and
         Construction Schedule.

1.2      This Deed amends and restates the mortgages trust deed made on 13 June
         2002 as amended and restated on 6 March 2003, 25 November 2003, 12
         March 2004, 22 July 2004, 18 November 2004, 23 March 2005, 22 March
         2006 and 17 October 2006 (the PRINCIPAL DEED). As of the date of this
         Deed, any future rights or obligations (excluding such obligations
         accrued to the date of this Deed) of a party under the Principal Deed
         shall be extinguished and shall instead be governed by this Deed,
         provided that the Mortgages Trust shall not be terminated as a result
         thereof but shall continue on the terms of the Principal Deed as
         amended by this Deed.

2.       CREATION OF MORTGAGES TRUST

2.1      INITIAL TRUST PROPERTY

         On 13 June 2002 the Share Trustee assigned the Initial Trust Property
         to the Mortgages Trustee and the Mortgages Trustee declared that it
         held the Initial Trust Property on trust absolutely as to both capital
         and income by the Mortgages Trustee for the benefit, as beneficial
         tenants in common, of Halifax (then in its capacity as the Seller) as
         to the Initial Seller Share Percentage and Funding 1 as to the Initial
         Funding 1 Share Percentage.

2.2      INITIAL CLOSING TRUST PROPERTY

         Pursuant to the provisions of the Mortgage Sale Agreement, Halifax
         (then in its capacity as the Seller) assigned the Initial Closing
         Trust Property to the Mortgages Trustee on the Initial Closing Date.

                                       2

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2.3      FUTURE TRUST PROPERTY

         From time to time and pursuant to the Mortgage Sale Agreement, Halifax
         (then in its capacity as the Seller) has sold and Bank of Scotland (in
         its capacity as the Seller since the Reorganisation Date) intends to
         sell the Future Trust Property to the Mortgages Trustee.

2.4      TRUST PROPERTY

         Subject to CLAUSE 3.4, the Mortgages Trustee shall hold the Trust
         Property as to both capital and income on trust absolutely for Funding
         1 (as to the Funding 1 Share), for Funding 2 (as to the Funding 2
         Share) and for the Seller (as to the Seller Share) as beneficial
         tenants in common upon, with and subject to all the trusts, powers and
         provisions of this Deed.

2.5      OTHER TRUST PROPERTY

         The Trust Property shall also include:

         (a)     any increase in the Outstanding Principal Balance of the Loans
                 in the Portfolio due to capitalisation of interest, expenses
                 or arrears, Borrowers taking Payment Holidays, or Borrowers
                 making any Flexible Loan Drawing, Retention Drawing, drawing
                 under a Delayed Cashback or Home Cash Reserve Drawing;

         (b)     any Revenue Receipts and Principal Receipts on the Loans in
                 the Portfolio;

         (c)     any other amounts received under or in respect of the Loans
                 and their Related Security on or after the relevant Sale Date
                 (excluding Third Party Amounts), including the proceeds of any
                 sale of the Loans and their Related Security and any other
                 proceeds of sale of any other Trust Property;

         (d)     rights under the insurance policies that are assigned to the
                 Mortgages Trustee or which the Mortgages Trustee has the
                 benefit of;

         (e)     amounts on deposit (and interest earned on those amounts) in
                 the Mortgages Trustee GIC Account; and

         (f)     any other property representing Initial Trust Property or (a)
                 to (e) ABOVE from time to time.

3.       CONDITIONS PRECEDENT

3.1      The Initial Trust Property is held by the Mortgages Trustee on the
         Mortgages Trust.

3.2      The Initial Closing Trust Property was held by the Mortgages Trustee
         on the Mortgages Trust upon the satisfaction of the following
         conditions precedent:

         (a)     due execution and delivery of the mortgage sale agreement
                 dated the Initial Closing Date by all parties to it;

         (b)     due execution and delivery of the mortgages trust deed dated
                 13 June 2002 by all parties to it; and

         (c)     in respect of the Funding 1 Share of the Trust Property only,
                 payment of the Purchase Price by Funding 1 to Halifax (then in
                 its capacity as the Seller) on the Initial Closing Date.

                                       3

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3.3      The Initial Closing Trust Property is and any Future Trust Property
         which has or is to be sold shall be held by the Mortgages Trustee on
         the Mortgages Trust subject to satisfaction of the conditions set out
         in CLAUSE 4.1 of the Mortgage Sale Agreement for the sale of New Loans
         and their New Related Security to the Mortgages Trustee.

3.4      The requirement for the Mortgages Trustee to hold the Trust Property
         on trust for Funding 2 was conditional upon the payment of [POUND]100
         by Funding 2 to Halifax (then in its capacity as the Seller) for the
         acquisition by Funding 2, by way of assignment, from Halifax (then in
         its capacity as the Seller) of a portion of its beneficial interest in
         the Mortgages Trust in accordance with the terms of the Seller
         Mortgages Trust Assignment Agreement.

4.       ACQUISITION BY FUNDING 1 AND/OR FUNDING 2 OF AN INCREASED INTEREST IN
         THE TRUST PROPERTY

4.1      OFFER TO PAY

         On not more than 60 days' written notice nor less than 20 days'
         written notice:

         (a)     Funding 1 may offer to make a payment to the Seller or Funding
                 2 (as applicable) so as to increase the Funding 1 Share of the
                 Trust Property and to cause a corresponding decrease in the
                 Seller Share of the Trust Property or the Funding 2 Share of
                 the Trust Property (as the case may be) on the date specified
                 in that notice (and any such adjustments to the relevant
                 Beneficiaries' Shares to be calculated in accordance with
                 CLAUSE 8); and/or

         (b)     Funding 2 may offer to make a payment to the Seller or Funding
                 1 (as applicable) so as to increase the Funding 2 Share of the
                 Trust Property and to cause a corresponding decrease in the
                 Seller Share of the Trust Property or the Funding 1 Share of
                 the Trust Property (as the case may be) on the date specified
                 in that notice (and any such adjustments to the relevant
                 Beneficiaries' Shares to be calculated in accordance with
                 CLAUSE 8).

         Such offer may only be accepted if the following conditions precedent
         are satisfied on such date:

         (i)     in the case of an offer by Funding 1:

                 (A)     no deficiency is recorded on the Principal Deficiency
                         Ledger as at the most recent Funding 1 Interest
                         Payment Date;

                 (B)     no Note Event of Default (in respect of the Notes
                         issued by the Funding 1 Issuers) or Intercompany Loan
                         Event of Default (under an Intercompany Loan
                         Agreement) shall have occurred which is continuing or
                         unwaived as at the relevant date;

                 (C)     the Funding 1 Security Trustee is not aware that the
                         increase in the Funding 1 Share of the Trust Property
                         would adversely affect the then current credit ratings
                         by the Rating Agencies (or any of them) of the Notes
                         issued by the Funding 1 Issuers or the Master Issuer;

                                       4

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                 (D)     the Notes have been issued by the relevant Funding 1
                         Issuer, the subscription proceeds received on behalf
                         of the relevant Funding 1 Issuer and advanced by the
                         relevant Funding 1 Issuer to Funding 1 pursuant to an
                         Intercompany Loan Agreement, the proceeds of which
                         will be applied by Funding 1 and shall be sufficient
                         to make the payment referred to in the notice on the
                         relevant date;

                 (E)     Funding 1 has entered into, if necessary, a New
                         Start-up Loan and a New Funding 1 Swap and adjustments
                         have been made, if required, to the General Reserve
                         Fund;

                 (F)     receipt of a solvency certificate executed by an
                         authorised signatory of the Seller or Funding 2 (as
                         applicable) in form and content acceptable to the
                         Mortgages Trustee, Funding 1 and the Funding 1
                         Security Trustee;

                 (G)     as at the relevant date, the aggregate Outstanding
                         Principal Balance of Loans constituting the Trust
                         Property, in respect of which the aggregate amount in
                         arrears is more than three times the monthly payment
                         then due, is less than 5 per cent. of the aggregate
                         Outstanding Principal Balance of all Loans
                         constituting the Trust Property unless the Rating
                         Agencies have confirmed that the then current ratings
                         of the Notes of the Funding 1 Issuers or of the Master
                         Issuer will not be withdrawn, reduced or qualified;

                 (H)     where Funding 1 makes the offer to the Seller, the
                         Seller has not received written notice that the short
                         term, unsecured, unguaranteed and unsubordinated debt
                         obligations of the Seller are not rated at least P-1
                         by Moody's, A-1 by Standard & Poor's and F1 by Fitch
                         at the time of, and immediately following, the payment
                         made by Funding 1 on the relevant date;

                 (I)     the product of the WAFF and WALS for the Loans
                         constituting the Trust Property calculated on the
                         relevant date in the same way as for the Initial
                         Portfolio (or as agreed by the Servicer and the Rating
                         Agencies from time to time) does not exceed the
                         product of the WAFF and WALS (when tested by Fitch at
                         the "AAA level" as calculated in accordance with
                         Fitch's methodology) for the Loans constituting the
                         Trust Property calculated on the most recent previous
                         Closing Date, plus 0.25 per cent.;

                 (J)     the loan to value ratio of Loans in the Trust
                         Property, after application of the LTV Test on the
                         relevant date, does not exceed the loan to value ratio
                         (based on the LTV Test) of Loans in the Trust Property
                         on the most recent previous Closing Date, plus 0.25
                         per cent.; and

                 (K)     the General Reserve Fund has not been debited on or
                         before the relevant date for the purposes of curing a
                         Principal Deficiency in respect of the Term Advances
                         in circumstances where the General Reserve Fund has
                         not been replenished by a corresponding amount by the
                         relevant date.

                                       5

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                 Funding 1 may not make or offer to make a payment to the
                 Seller or Funding 2 in consideration of an increased share of
                 the Trust Property if, as at the relevant date, the Step-up
                 Date in respect of any Note issued by a Funding 1 Issuer has
                 been reached and the Funding 1 Issuer who issued that Note has
                 not exercised its option to redeem that Note as at the
                 relevant date in accordance with the Terms and Conditions of
                 that Note. For the avoidance of doubt, this prohibition on
                 Funding 1 making a payment to the Seller or Funding 2 in
                 consideration of an increased share of the Trust Property
                 shall remain in effect only so long as any such Note remains
                 outstanding and, upon, its redemption, Funding 1 may again
                 make a payment to the Seller or Funding 2 in consideration of
                 an increased share of the Trust Property; and

         (ii)    in the case of an offer by Funding 2:

                 (A)     no deficiency is recorded on the Funding 2 Principal
                         Deficiency Ledger (other than the Subordinated Loan
                         Principal Deficiency Ledger) as at the most recent
                         Funding 2 Interest Payment Date;

                 (B)     no Note Event of Default (in respect of Notes issued
                         by the Master Issuer) or Master Intercompany Loan
                         Event of Default (under the Master Intercompany Loan
                         Agreement) shall have occurred which is continuing or
                         unwaived as at the relevant date;

                 (C)     the Funding 2 Security Trustee is not aware that the
                         increase in the Funding 2 Share of the Trust Property
                         would adversely affect the then current credit ratings
                         by the Rating Agencies (or any of them) of the Notes
                         issued by the Funding 1 Issuers or by the Master
                         Issuer;

                 (D)     the Notes have been issued by the Master Issuer, the
                         subscription proceeds received on behalf of the Master
                         Issuer and advanced by the Master Issuer to Funding 2
                         pursuant to the Master Intercompany Loan Agreement,
                         the proceeds of which will be applied by Funding 2 and
                         shall be sufficient to make the payment referred to in
                         the notice on the relevant date;

                 (E)     Funding 2 has entered into, if necessary, a New
                         Funding 2 Start-up Loan and a New Funding 2 Swap and
                         adjustments have been made, if required, to the
                         Funding 2 General Reserve Fund;

                 (F)     receipt of a solvency certificate executed by an
                         authorised signatory of the Seller or Funding 1 (as
                         applicable) in form and content acceptable to the
                         Mortgages Trustee, Funding 2 and the Funding 2
                         Security Trustee;

                 (G)     as at the relevant date, the aggregate Outstanding
                         Principal Balance of Loans constituting the Trust
                         Property, in respect of which the aggregate amount in
                         arrears is more than three times the monthly payment
                         then due, is less than 5 per cent. of the aggregate
                         Outstanding Principal Balance of all Loans
                         constituting the Trust Property unless the Rating
                         Agencies have confirmed that the then current ratings
                         of the Notes of the Master Issuer or of the Funding 1
                         Issuers will not be reduced, withdrawn or qualified;

                                       6

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                 (H)     where Funding 2 makes the offer to the Seller, the
                         Seller has not received written notice that the short
                         term, unsecured, unguaranteed and unsubordinated debt
                         obligations of the Seller are not rated at least P-1
                         by Moody's, A-1 by Standard & Poor's and F1 by Fitch
                         at the time of, and immediately following, the payment
                         made by Funding 2 on the relevant date;

                 (I)     the product of the WAFF and WALS for the Loans
                         constituting the Trust Property calculated on the
                         relevant date in the same way as for the Initial
                         Portfolio (or as agreed by the Servicer and the Rating
                         Agencies from time to time) does not exceed the
                         product of the WAFF and WALS (when tested by Fitch at
                         the "AAA level" as calculated in accordance with
                         Fitch's methodology) for the Loans constituting the
                         Trust Property calculated on the most recent previous
                         Closing Date, plus 0.25 per cent.;

                 (J)     the loan-to-value ratio of Loans in the Trust
                         Property, after application of the LTV Test on the
                         relevant date, does not exceed the loan-to-value ratio
                         (based on the LTV Test) of Loans in the Trust Property
                         on the most recent previous Closing Date plus 0.25 per
                         cent.; and

                 (K)     the Funding 2 General Reserve Fund has not been
                         debited on or before the relevant date for the
                         purposes of curing a Principal Deficiency in respect
                         of the Rated Loan Tranches in circumstances where the
                         Funding 2 General Reserve Fund has not been
                         replenished by a corresponding amount by the relevant
                         date.

         Funding 2 may not make or offer to make a payment to the Seller or
         Funding 1 in consideration of an increased share of the Trust Property
         if, as at the relevant date, the Step-Up Date in respect of any Series
         and Class of Notes of the Master Issuer has been reached and the
         Master Issuer has not exercised its option to redeem such Series and
         Class of Notes as at the relevant date in accordance with the Terms
         and Conditions of such Series and Class of Notes. For the avoidance of
         doubt, this prohibition on Funding 2 making a payment to the Seller or
         Funding 1 in consideration of an increased share of the Trust Property
         shall remain in effect only so long as any such Note remains
         outstanding and, upon its redemption, Funding 2 may again make a
         payment to the Seller or Funding 1 in consideration of an increased
         share of the Trust Property.

         The Mortgages Trustee may vary or waive the conditions set out in this
         Clause 4.1 where it has (1) provided notification of such variation or
         waiver to Moody's and (2) received written confirmation from each of
         S&P and Fitch that such variation or waiver will not cause the ratings
         of the Notes of any Funding 1 Issuer or the Master Issuer to be
         reduced, withdrawn or qualified).

4.2      COMPLETION OF ASSIGNMENT

         If an offer is made by Funding 1 or Funding 2 (as applicable) in
         accordance with CLAUSE 4.1 above and that offer is accepted by the
         Seller, Funding 1 or Funding 2 (as applicable), Funding 1 or Funding 2
         (as applicable) shall, subject to satisfaction of the conditions
         precedent set out in Clause 4.1 above, pay to the Seller, Funding 1 or
         Funding 2 (as applicable) an amount equal to the increase in the
         Funding 1 Share of the Trust Property or the Funding 2 Share of the
         Trust Property (as applicable) and:

         (a)     in the case of such payment by Funding 1, the Funding 1 Share
                 of the Trust Property shall increase by a corresponding amount
                 and the Seller Share of the Trust Property

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                 or the Funding 2 Share of the Trust Property (as applicable)
                 shall decrease by the same amount; or

         (b)     in the case of such payment by Funding 2, the Funding 2 Share
                 of the Trust Property shall increase by a corresponding amount
                 and the Seller Share of the Trust Property or the Funding 1
                 Share of the Trust Property (as applicable) shall decrease by
                 the same amount.

4.3      AUDIT OF LOANS CONSTITUTING THE TRUST PROPERTY

         If the short term, unsecured, unguaranteed and unsubordinated debt
         obligations of the Seller fall below A-1 by Standard & Poor's, P-1 by
         Moody's and/or F1 by Fitch, then the Beneficiaries shall appoint a
         firm of independent auditors (approved by the Rating Agencies) to
         determine whether the Loans and their Related Security (or any part of
         them) constituting the Trust Property complied with the
         representations and warranties set out in SCHEDULE 1 of the Mortgage
         Sale Agreement as at the date such Loans were sold to the Mortgages
         Trustee. The costs of such independent auditors shall be borne by the
         Beneficiaries pro rata according to their respective current
         percentage shares in the Trust Property.

5.       INITIAL FUNDING 1 SHARE, INITIAL SELLER SHARE AND INITIAL FUNDING 2
         SHARE

5.1      INITIAL FUNDING 1 SHARE

         The Initial Funding 1 Share of the Trust Property was [POUND]34.38 as
         at 13 June 2002 and [POUND]3,478,376,344.38 as at the Initial Closing
         Date. The Initial Funding 1 Share Percentage was the Initial Funding 1
         Share expressed as a percentage of the Trust Property as at the
         Initial Closing Date, such percentage being 34.38 per cent.

5.2      INITIAL SELLER SHARE

         The Initial Seller Share of the Trust Property was the total amount of
         the Trust Property minus the Initial Funding 1 Share as at 13 June
         2002. As at the Initial Closing Date, the Initial Seller Share was
         [POUND]6,638,679,574.44 and the Initial Seller Share Percentage was
         equal to 100 per cent. minus the Initial Funding 1 Share Percentage,
         such percentage being 65.62 per cent.

5.3      INITIAL FUNDING 2 SHARE

         The Initial Funding 2 Share of the Trust Property was:

         (a)     [POUND]100 following the acquisition by Funding 2, by way of
                 assignment, from Halifax (then in its capacity as the Seller)
                 of a portion of its beneficial interest in the Mortgages Trust
                 on 17 October 2006 in accordance with the Seller Mortgages
                 Trust Assignment Agreement; and

         (b)     as at the Programme Date, [POUND]5,411,550,100 and the Initial
                 Funding 2 Share Percentage expressed as a percentage of the
                 Trust Property was at the Programme Date 11.76 per cent.

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6.       ACQUISITION BY SELLER OF AN INTEREST RELATING TO CAPITALISED INTEREST

6.1      Any increase in the Outstanding Principal Balance of a Loan due to
         Capitalised Interest will be allocated to the Funding 1 Share of the
         Trust Property, the Funding 2 Share of the Trust Property and the
         Seller Share of the Trust Property, based on respectively the Funding
         1 Share Percentage, the Funding 2 Share Percentage and the Seller
         Share Percentage in the Trust Property as calculated on the most
         recent Calculation Date.

6.2      Prior to an Insolvency Event occurring in respect of the Seller, on
         each Distribution Date the Seller shall make a cash payment to Funding
         1 and to Funding 2 in an amount equal to Funding 1's share and Funding
         2's share of the Capitalised Interest in respect of those Loans that
         are subject to Payment Holidays. As a result of making such payment
         the Seller Share of the Trust Property will increase by an amount
         equal to the amount paid to Funding 1 for Funding 1's share of the
         Capitalised Interest and Funding 2 for Funding 2's share of the
         Capitalised Interest and the Funding 1 Share of the Trust Property and
         the Funding 2 Share of the Trust Property (respectively) will decrease
         by a corresponding amount. The cash payment shall be made in
         accordance with CLAUSE 6.4 below.

6.3      If an Insolvency Event occurs in respect of the Seller, then the
         Seller may acquire from Funding 1 and Funding 2 each of their
         respective shares of the Capitalised Interest in the same manner as is
         contemplated in CLAUSE 6.2, but it is not obliged to do so.

6.4      In respect of the cash payment to be made by the Seller pursuant to
         CLAUSE 6.2, the Seller hereby directs the Mortgages Trustee to deduct
         from the Seller's Share of the Mortgages Trust Available Revenue
         Receipts (allocated to the Seller pursuant to CLAUSE 10.2 of this
         Deed) an amount equal to such cash payment and to pay the same to
         Funding 1 and Funding 2 in satisfaction of the Seller's obligations
         under CLAUSE 6.2. To the extent that the Seller's Share of the
         Mortgages Trust Available Revenue Receipts is less than the amount
         required to be paid by it pursuant to CLAUSE 6.2, then the Seller
         shall pay an amount equal to the shortfall directly to Funding 1 and
         Funding 2 from its own resources.

7.       PAYMENT BY THE SELLER, FUNDING 1 AND/OR FUNDING 2 TO FUNDING 1 OR
         FUNDING 2 OF THE AMOUNT OUTSTANDING UNDER AN INTERCOMPANY LOAN OR THE
         MASTER INTERCOMPANY LOAN

7.1      CONDITIONS PRECEDENT TO ACCEPTANCE OF OFFER

(a)      On each occasion that the Seller or Funding 2 (as applicable) offers
         to make a payment to Funding 1 of the amount outstanding under an
         Intercompany Loan (referred to in this CLAUSE 7.1(a) as the RELEVANT
         INTERCOMPANY LOAN), then Funding 1 may accept that offer but only if:

         (i)     the Funding 1 Security Trustee has received written
                 confirmation from each of the Rating Agencies that the then
                 current ratings of the Notes issued by a Funding 1 Issuer
                 would not be withdrawn, qualified or downgraded by Funding 1
                 accepting the offer;

         (ii)    Funding 1 would receive the payment from the Seller or Funding
                 2 (as applicable) on a Funding 1 Interest Payment Date; and

         (iii)   Funding 1 will apply the proceeds of the payment to repay the
                 relevant Intercompany Loan and the relevant Funding 1 Issuer
                 has confirmed to Funding 1 that on that

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                 Funding 1 Interest Payment Date it will use the proceeds of
                 the relevant payment to repay the corresponding classes of
                 Notes.

(b)      On each occasion that the Seller or Funding 1 (as applicable) offers
         to make a payment to Funding 2 of the amount outstanding under a Loan
         Tranche (other than a Start-Up Loan Tranche) (referred to in this
         CLAUSE 7.1(b) as the RELEVANT LOAN TRANCHE), then Funding 2 may accept
         that offer but only if:

         (i)     the Funding 2 Security Trustee has received written
                 confirmation from each of the Rating Agencies that the then
                 current ratings of the Notes issued by the Master Issuer would
                 not be withdrawn, qualified or downgraded by Funding 2
                 accepting the offer;

         (ii)    (except in the case of a Subordinated Loan Tranche) Funding 2
                 would receive the payment from the Seller or Funding 1 (as
                 applicable) on a Funding 2 Interest Payment Date; and

         (iii)   Funding 2 will apply the proceeds of the payment to repay the
                 relevant Loan Tranche and the Master Issuer has confirmed to
                 Funding 2 that on that Funding 2 Interest Payment Date or (in
                 the case of a Subordinated Loan Tranche) such other applicable
                 London Business Day that it will use the proceeds of the
                 relevant payment to repay the corresponding Series and Class
                 of Notes or the relevant Master Issuer Subordinated Loan (as
                 applicable).

7.2      ADJUSTMENT TO SHARES IF OFFER ACCEPTED

(a)      If Funding 1 accepts the offer as described in CLAUSE 7.1(a) above,
         then the Funding 1 Share of the Trust Property shall decrease by an
         amount corresponding to the amount paid by the Seller or Funding 2 (as
         applicable) and the Seller Share of the Trust Property or the Funding
         2 Share of the Trust Property (as applicable) shall increase by the
         same amount.

(b)      If Funding 2 accepts the offer as described in CLAUSE 7.1(a) above,
         then the Funding 2 Share of the Trust Property shall decrease by an
         amount corresponding to the amount paid by the Seller or Funding 1 (as
         applicable) and the Seller Share of the Trust Property or the Funding
         1 Share of the Trust Property (as applicable) shall increase by the
         same amount.

8.       ADJUSTMENT OF FUNDING 1 SHARE PERCENTAGE, FUNDING 2 SHARE PERCENTAGE
         AND SELLER SHARE PERCENTAGE ON CALCULATION DATES

8.1      DISTRIBUTION

         On each Calculation Date and on the date that the Mortgages Trust
         terminates, excluding, for the avoidance of doubt, the Initial Closing
         Date and Programme Date, the Funding 1 Share Percentage, the Funding 2
         Share Percentage and the Seller Share Percentage will be recalculated
         by the Cash Manager (on behalf of the Mortgages Trustee and the
         Beneficiaries) based on the aggregate Outstanding Principal Balance of
         the Loans constituting the Trust Property (as adjusted from time to
         time) as at (i) the immediately preceding calendar month end or (ii)
         the close of business on the London Business Day immediately preceding
         that Calculation Date, whichever occurs later. On each Distribution
         Date, the Mortgages Trustee will distribute Principal Receipts and
         Revenue Receipts in accordance with CLAUSES 10 and 11 hereof.

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8.2      CURRENT FUNDING 1 SHARE PERCENTAGE AND CURRENT FUNDING 2 SHARE
         PERCENTAGE

         On each Calculation Date (the RELEVANT CALCULATION DATE) or on the
         date that the Mortgages Trust terminates, the Current Funding 1 Share
         Percentage and the Current Funding 2 Share Percentage will be
         recalculated and the recalculated amount will take effect from the
         next Distribution Date immediately succeeding the next following
         Calculation Date. The "CURRENT FUNDING 1 SHARE PERCENTAGE" and the
         "CURRENT FUNDING 2 SHARE PERCENTAGE" will in each case (as applicable)
         be an amount, expressed as a percentage (calculated to an accuracy of
         five decimal places (rounded upwards)), equal to:

                               A - B - C + D + E + F
                               --------------------- x 100
                                         G

         where,

         A =     the Current Funding 1 Share or the Current Funding 2 Share (as
                 applicable) as calculated on the immediately preceding
                 Calculation Date (or, in the case of the first Calculation
                 Date, the Initial Funding 1 Share as at the Initial Closing
                 Date and, in the case of the first Calculation Date following
                 the Programme Date, the Initial Funding 2 Share as at the
                 Programme Date) (as applicable);

         B =     the amount of any Principal Receipts to be distributed to
                 Funding 1 or Funding 2 (as applicable), on the Distribution
                 Date immediately following the relevant Calculation Date in
                 accordance with the provisions described in CLAUSE 11 below;

         C =     the amount of any Losses sustained on the Loans in the period
                 from the immediately preceding Calculation Period and the
                 amount of any reductions occurring in respect of the Loans as
                 described in paragraphs (i) of CLAUSE 8.4(a), in each case
                 allocated to Funding 1 or Funding 2 (as applicable) in the
                 immediately preceding Calculation Period;

         D =     an amount equal to any consideration to be paid by Funding 1
                 or Funding 2 (as applicable) to the Seller in relation to any
                 New Loans to be sold to the Mortgages Trustee on the relevant
                 Calculation Date;

         E =     an amount equal to any consideration to be paid by Funding 1
                 or Funding 2, (as applicable) to the Seller, Funding 2 or
                 Funding 1 (as applicable) in relation to any acquisition by
                 Funding 1 or Funding 2 (as applicable) from the Seller,
                 Funding 2 or Funding 1 (as applicable) on such Calculation
                 Date of an interest in the Trust Property;

         F =     an amount equal to any Capitalised Interest accruing on a Loan
                 due to Borrowers taking Payment Holidays and which has been
                 allocated to Funding 1 or Funding 2 (as applicable) since the
                 immediately preceding Calculation Date, less the amount to be
                 paid by the Seller to Funding 1 and Funding 2 on the relevant
                 Distribution Date to acquire an interest in the Trust Property
                 in accordance with CLAUSE 6 above; and

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<PAGE>

         G =     the aggregate Outstanding Principal Balance of all the Loans
                 constituting the Trust Property as at the relevant Calculation
                 Date including after making or provisioning for the
                 distributions, allocations and additions referred to in (B),
                 (C), (D), (E) and (F) above, and after taking account of any
                 distributions of Principal Receipts to Funding 1, Funding 2
                 and the Seller, the amount of any Losses allocated to Funding
                 1, Funding 2 and the Seller, the amount of any increase in the
                 balances of the Loans constituting the Trust Property due to
                 capitalisation of insurance premiums due by Borrowers or
                 Borrowers taking Payment Holidays under Loans, the adjustments
                 referred to in PARAGRAPHS (i) to (iv) (inclusive) of CLAUSE
                 8.4(a) below (or, if the Seller Share is zero, the adjustments
                 referred to in PARAGRAPH (i) only) and the amount of any other
                 additions or subtractions to the Trust Property since the
                 immediately preceding Calculation Date.

8.3      CURRENT FUNDING 1 SHARE AND CURRENT FUNDING 2 SHARE

         The "CURRENT FUNDING 1 SHARE" and the "CURRENT FUNDING 2 SHARE" will
         be an amount equal to:

                               A - B - C + D + E + F

         where "A", "B", "C", "D", "E" and "F" have the meanings specified in
         CLAUSE 8.2 above.

8.4      ADJUSTMENTS TO TRUST PROPERTY

(a)      On each relevant Calculation Date, the aggregate Outstanding Principal
         Balance of the Loans constituting the Trust Property shall be reduced
         or, as the case may be, deemed to be reduced for the purposes of the
         calculation set out in "G" in CLAUSE 8.2 above, if any of the
         following events has occurred during the Calculation Period
         immediately preceding the relevant Calculation Date:

         (i)     any Borrower exercises a right of set-off in relation to Loans
                 constituting part of the Trust Property so that the amount of
                 principal and/or interest owing under a Loan is reduced but no
                 corresponding amount is received by the Mortgages Trustee in
                 which event the total amount of Trust Property shall be
                 reduced by an amount equal to the amount set-off; and/or

         (ii)    a Loan or its Related Security (i) is in breach of the Loan
                 Warranties in the Mortgage Sale Agreement, (ii) is the subject
                 of a Further Advance or (iii) is the subject of a Product
                 Switch in the circumstances set out in CLAUSE 8.4 of the
                 Mortgage Sale Agreement or other obligation of the Seller to
                 repurchase, and if the Seller fails to repurchase the Loan or
                 Loans under the relevant Mortgage Account and their Related
                 Security as required by the terms of the Mortgage Sale
                 Agreement, then the Trust Property shall be deemed to be
                 reduced for the purposes of the calculation of "G" in CLAUSE
                 8.2 above by an amount equal to the Outstanding Principal
                 Balance of the relevant Loan or Loans under the relevant
                 Mortgage Account together with Arrears of Interest and Accrued
                 Interest; and/or

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<PAGE>

         (iii)   the Seller would be required by the Mortgages Trustee to
                 repurchase a Loan and its Related Security in accordance with
                 the terms of the Mortgage Sale Agreement, but such Loan and
                 its Related Security are not capable of repurchase, in which
                 case the Trust Property shall be deemed to be reduced for the
                 purposes of the calculation of "G" in CLAUSE 8.2 above by an
                 amount equal to the Outstanding Principal Balance of the
                 relevant Loan or Loans under the relevant Mortgage Account
                 together with Arrears of Interest and Accrued Interest; and/or

         (iv)    the Seller materially breaches any other material warranty
                 under the Mortgage Sale Agreement and/or (for so long as it is
                 the Servicer) the Servicing Agreement, in which event the
                 aggregate Outstanding Principal Balance of Loans constituting
                 the Trust Property shall be deemed for the purposes of the
                 calculation of "G" in CLAUSE 8.2 above to be reduced by an
                 amount equivalent to all losses, costs, liabilities, claims,
                 expenses and damages incurred by the Beneficiaries as a result
                 of such breach.

(b)      The reductions and deemed reductions set out in PARAGRAPH (i) to (iv)
         (inclusive) of CLAUSE 8.4(a) above shall be made on the relevant
         Calculation Date first to the Seller's Share (including the Minimum
         Seller Share) of the Trust Property only, and thereafter shall be made
         pro rata to the Funding 1 Share and the Funding 2 Share of the Trust
         Property.

(c)      If at any time after the Initial Closing Date the Mortgages Trustee
         holds, or there is held to its order, or it receives, or there is
         received to its order, any property, interest, right or benefit
         relating to any Loan and its Related Security which is or has been
         subject to any reduction or deemed reduction pursuant to PARAGRAPHS
         (i) to (iv) (inclusive) of CLAUSE 8.4(a) above, then such property,
         interest, right or benefit shall constitute a Revenue Receipt under
         the relevant Loan. Such Revenue Receipt shall belong pro rata to
         Funding 1 and Funding 2 (but only if and to the extent that the
         related reductions were applied against the Funding 1 Share and the
         Funding 2 Share of the Trust Property respectively) and thereafter
         shall belong to the Seller.

8.5      CURRENT SELLER SHARE PERCENTAGE

         On each Calculation Date, the CURRENT SELLER SHARE PERCENTAGE will be
         an amount calculated to the accuracy of five decimal places equal to:

         100% - (Current Funding 1 Share Percentage + Current Funding 2 Share
         Percentage (each as calculated on such Calculation Date)).

8.6      CURRENT SELLER SHARE

         The CURRENT SELLER SHARE will be an amount equal to:

         Outstanding Principal Balance of all the Loans in the Trust Property
         on the relevant Calculation Date - (Current Funding 1 Share + Current
         Funding 2 Share (each as calculated on such Calculation Date)).

8.7      FUNDING 1 SHARE/FUNDING 2 SHARE/SELLER SHARE

         None of the Funding 1 Share, the Funding 2 Share or the Seller Share
         may be reduced below zero. At all times the sum of the Funding 1 Share
         Percentage, the Funding 2 Share Percentage and the Seller Share
         Percentage shall be equal to 100 per cent. of the Trust Property (each
         as calculated on the most recent Calculation Date).

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9.       MINIMUM SELLER SHARE

9.1      INITIAL MINIMUM SELLER SHARE

         Subject to the provisions of Clause 12, the Seller Share of the Trust
         Property includes an amount equal to the Minimum Seller Share. Unless
         and until both the Funding 1 Share and the Funding 2 Share of the
         Trust Property are in an amount equal to zero or an Asset Trigger
         Event occurs, the Seller will not be entitled to receive Principal
         Receipts which would reduce the Seller Share of the Trust Property to
         an amount less than the Minimum Seller Share and the Seller consents
         and directs the Mortgages Trustee accordingly.

9.2      FLUCTUATION OF MINIMUM SELLER SHARE ON EACH CALCULATION DATE

         At the Initial Closing Date, the Minimum Seller Share was
         [POUND]505,862,790.74. The amount of the Minimum Seller Share will be
         recalculated on each Calculation Date in accordance with the following
         formula:

                                X + Y + Z

         where:

         X =     7.5% of the aggregate Outstanding Principal Balance of all
                 Loans comprised in the Trust Property;

         Y =     the product of: (p x q) x r where:

                 p =     8%;

                 q =     the sum of (a) the FLEXIBLE DRAW CAPACITY, being an
                         amount equal to the excess of (i) the maximum amount
                         that Borrowers are entitled to draw under Flexible
                         Loans included in the Trust Property (whether or not
                         drawn) over (ii) the aggregate principal balance of
                         Flexible Loans in the Trust Property on the relevant
                         Calculation Date, (b) the RETENTION DRAW CAPACITY,
                         being an amount equal to the excess of (i) the maximum
                         amount that Borrowers are entitled to draw under
                         Retention Loans included in the Trust Property
                         (whether or not drawn) over (ii) the aggregate
                         principal balance of Retention Loans in the Trust
                         Property on the relevant Calculation Date, (c) the
                         HOME CASH RESERVE DRAW CAPACITY, being an amount equal
                         to the excess of (i) the maximum amount that Borrowers
                         may draw under loans with a Home Cash Reserve included
                         in the Trust Property (whether drawn or not drawn)
                         over (ii) the aggregate principal balance of loans
                         with a Home Cash Reserve in the Trust Property on the
                         Relevant Calculation Date, and (d) the DELAYED
                         CASHBACK DRAW CAPACITY, being an amount equal to the
                         excess of (i) the maximum amount that Borrowers may
                         draw under loans with a Delayed Cashback included in
                         the Trust Property (whether drawn or not drawn) over
                         (ii) the aggregate principal balance of loans with a
                         Delayed Cashback in the Trust Property on the Relevant
                         Calculation Date; and

                 r =     3; and

         Z =     the aggregate sum of reductions deemed made (if any) in
                 accordance with PARAGRAPHS (ii), (iii) and (iv) of CLAUSE
                 8.4(a).

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<PAGE>

9.3      RECALCULATION OF MINIMUM SELLER SHARE FOLLOWING OCCURRENCE OF
         EXCEPTIONAL EVENTS

         Prior to the occurrence of a Trigger Event:

         (a)     the calculation of the Minimum Seller Share in accordance with
                 CLAUSE 9.2 above will be recalculated or increased (in
                 consultation with the relevant Rating Agencies) if the Seller
                 merges or otherwise combines its business with another bank or
                 other financial institution so as to increase the risks
                 associated with Borrowers holding deposits in Bank of Scotland
                 accounts and such merger or combination would adversely affect
                 the then current ratings of the Notes of the Funding 1 Issuers
                 and/or the Notes of the Master Issuer and such adverse effect
                 on the then current ratings of the Notes of the Funding 1
                 Issuers and/or the Notes of the Master Issuer would be avoided
                 if the Minimum Seller Share was so recalculated or increased;

         (b)     the calculation of the Minimum Seller Share in accordance with
                 CLAUSE 9.2 above will be recalculated or increased (in
                 consultation with the relevant Rating Agencies) if notice has
                 been received from one or more of the Rating Agencies that the
                 then current ratings of the Notes of the Funding 1 Issuers
                 and/or the Notes of the Master Issuer would be downgraded and
                 that such downgrade would be avoided if the Minimum Seller
                 Share was so recalculated or increased;

         (c)     the amount of the Minimum Seller Share as calculated in
                 accordance with CLAUSE 9.2 above will be decreased (and the
                 calculation thereof amended accordingly) from time to time at
                 the request of any of the Seller, Funding 1 or Funding 2
                 (acting reasonably) provided that the Funding 1 Security
                 Trustee has received written confirmation from each of the
                 Rating Agencies that there would be no adverse effect on the
                 then current ratings of the Notes of the Funding 1 Issuers as
                 a result thereof and the Funding 2 Security Trustee has
                 received written confirmation from each of the Rating Agencies
                 that there would be no adverse effect on the then current
                 ratings of the Notes of the Master Issuer as a result thereof;

         (d)     the amount of "X" in the calculation of the Minimum Seller
                 Share as calculated in accordance with CLAUSE 9.2 will be
                 recalculated to such amount as the Rating Agencies may require
                 in order that there is no adverse effect on the then current
                 ratings of the Notes of the Funding 1 Issuers as a result
                 thereof and the Funding 2 Security Trustee has received
                 written confirmation from each of the Rating Agencies that
                 there would be no adverse effect on the then current ratings
                 of the Notes of the Master Issuer as a result thereof in the
                 event that the Seller ceases to be assigned a long-term
                 unsecured, unsubordinated, unguaranteed debt obligation rating
                 by Moody's of at least Baa3, by S&P's of at least BBB- or by
                 Fitch of at least BBB-.

10.      ALLOCATION AND DISTRIBUTION OF REVENUE RECEIPTS

10.1     ALLOCATION AND DISTRIBUTION OF THIRD PARTY AMOUNTS

         Pursuant to the Cash Management Agreement, the Cash Manager (at the
         direction of the Mortgages Trustee on behalf of the Beneficiaries at
         their direction and with their consent) will deduct, as and when
         identified, Third Party Amounts from the Revenue Receipts standing to
         the credit of the Mortgages Trustee GIC Account, and pay over the same
         to the proper recipients thereof. The Mortgages Trustee and the
         Beneficiaries hereby consent to such deductions.

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<PAGE>

10.2     ALLOCATION AND DISTRIBUTION OF MORTGAGES TRUST AVAILABLE REVENUE
         RECEIPTS

         On each Distribution Date the Cash Manager (at the direction of the
         Mortgages Trustee and on behalf of the Beneficiaries at their
         direction and with their consent) will apply the Mortgages Trust
         Available Revenue Receipts to meet the following expenses and
         payments:

         (a)     first, in or towards satisfaction pari passu and pro rata
                 according to the respective amounts thereof of:

                 (i)     any costs, charges, liabilities and expenses then due
                         or to become due to the Mortgages Trustee under the
                         provisions of this Deed in the immediately succeeding
                         Calculation Period or any terms agreed by the
                         Mortgages Trustee with the Beneficiaries in writing
                         together with VAT thereon as provided herein (if
                         payable); and

                 (ii)    any amounts due and payable by the Mortgages Trustee
                         to third parties in respect of the Mortgages Trust and
                         incurred without breach by the Mortgages Trustee of
                         the documents to which it is a party and for which
                         payment has not been provided for elsewhere,
                         (including amounts due to H.M Revenue and Customs or
                         any other taxation authority which has jurisdiction
                         over the Trust Property or the Mortgages Trustee in
                         respect of any stamp, issue, registration, documentary
                         and other fees, duties and taxes (including interest
                         and penalties) payable by the Mortgages Trustee in
                         connection with (i) the execution and delivery of this
                         Deed; (ii) any action to be taken by or on behalf of
                         the Mortgages Trustee to enforce or to resolve any
                         doubt concerning or, for any other purpose in relation
                         to, the Mortgages Trust Deed; and (iii) any such tax
                         which is primarily due from any or all of the
                         Beneficiaries (and, for the avoidance of doubt, only
                         in such capacities) in circumstances where the
                         Mortgages Trustee has made a payment of such tax (or
                         part thereof) by reason of a failure by the relevant
                         Beneficiary to discharge their primary liability in
                         respect of such tax;

         (b)     second, in or towards satisfaction pari passu and pro rata
                 according to the respective amounts thereof of:

                 (i)     any amounts then due and payable by the Mortgages
                         Trustee to the Servicer and any costs, charges,
                         liabilities and expenses then due or to become due to
                         the Servicer from the Mortgages Trustee in the
                         immediately succeeding Calculation Period under the
                         provisions of the Servicing Agreement, together with
                         VAT thereon as provided therein (if payable);

                 (ii)    any amounts then due and payable by the Mortgages
                         Trustee to the Account Bank and any costs, charges,
                         liabilities and expenses then due or to become due to
                         the Account Bank from the Mortgages Trustee in the
                         immediately succeeding Calculation Period under the
                         provisions of the Bank Account Agreement, together
                         with VAT thereon as provided therein (if payable); and

                 (iii)   any amounts then due and payable by the Mortgages
                         Trustee to the Mortgages Trustee Corporate Services
                         Provider and any costs, charges, liabilities and
                         expenses then due or to become due to the Mortgages
                         Trustee Corporate Services Provider from the Mortgages
                         Trustee in the immediately succeeding Calculation
                         Period under the provisions of the Mortgages Trustee
                         Corporate Services Agreement, together with VAT
                         thereon as provided therein (if payable);

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<PAGE>

         (c)     third, to allocate to the Beneficiaries and pay such amounts
                 pari passu and pro rata according to the respective amounts
                 due:

                 (i)     to Funding 1 an amount equal to the amount determined
                         by multiplying the total amount of the remaining
                         Mortgages Trust Available Revenue Receipts by the
                         Funding 1 Share Percentage of the Trust Property (as
                         determined on the Relevant Share Calculation Date);
                         and

                 (ii)    to Funding 2 an amount equal to the amount determined
                         by multiplying the total amount of the remaining
                         Mortgages Trust Available Revenue Receipts by the
                         Funding 2 Share Percentage of the Trust Property (as
                         determined on the Relevant Share Calculation Date);

         (d)     fourth, to allocate and distribute to the Mortgages Trustee
                 and/or Funding 1 and/or Funding 2 (as applicable), an amount
                 equal to any Loss Amount suffered or incurred by it or them
                 (as applicable); and

         (e)     fifth, to allocate and distribute to the Seller an amount (if
                 positive) which shall equal to the Mortgages Trust Available
                 Revenue Receipts less the amount of such Mortgages Trust
                 Available Revenue Receipts applied and/or allocated under
                 PARAGRAPHS (a) to (d) above.

11.      ALLOCATION AND DISTRIBUTION OF PRINCIPAL RECEIPTS

11.1     ALLOCATION AND DISTRIBUTION OF PRINCIPAL RECEIPTS

(a)      On each Calculation Date (the RELEVANT CALCULATION DATE), prior to
         distributing any Principal Receipts, the Cash Manager shall ascertain:

         (i)     the amount of Mortgages Trust Available Principal Receipts;

         (ii)    whether the Distribution Date immediately succeeding the
                 relevant Calculation Date is within a Cash Accumulation Period
                 relating to a Bullet Term Advance (in the case of Funding 1),
                 a Bullet Loan Tranche (in the case of Funding 2) or a
                 Scheduled Amortisation Instalment (in the case of Funding 1
                 and/or Funding 2) (the Cash Accumulation Period being
                 calculated separately for each Bullet Term Advance, Bullet
                 Loan Tranche and Scheduled Amortisation Instalment); and

         (iii)   the Cash Accumulation Requirement and Repayment Requirement
                 for each of Funding 1 and Funding 2.

(b)      On each Distribution Date, the Cash Manager (at the direction of the
         Mortgages Trustee acting on behalf of the Beneficiaries at their
         direction and with their consent) shall then allocate and distribute
         Principal Receipts as provided in this CLAUSE 11.

11.2     ALLOCATION AND DISTRIBUTION OF PRINCIPAL RECEIPTS PRIOR TO THE
         OCCURRENCE OF A TRIGGER EVENT

         On each Distribution Date where no Trigger Event has occurred on or
         before the immediately preceding Calculation Date, the Cash Manager
         shall allocate the Mortgages Trust Available Principal Receipts to the
         Beneficiaries and distribute such amounts as follows:

         (a)     first, pari passu and pro rata according to the respective
                 amounts due:

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<PAGE>

                 (i)     to Funding 1 an amount equal to the lesser of:

                         (A)     an amount determined by multiplying the total
                                 amount of the Mortgages Trust Available
                                 Principal Receipts by the Funding 1 Share
                                 Percentage of the Trust Property (as
                                 determined on the Relevant Share Calculation
                                 Date); and

                         (B)     an amount up to but not exceeding Funding 1's
                                 Cash Accumulation Requirement on that
                                 Distribution Date;

                 (ii)    to Funding 2 an amount equal to the lesser of:

                         (A)     an amount determined by multiplying the total
                                 amount of the Mortgages Trust Available
                                 Principal Receipts by the Funding 2 Share
                                 Percentage of the Trust Property (as
                                 determined on the Relevant Share Calculation
                                 Date); and

                         (B)     an amount up to but not exceeding Funding 2's
                                 Cash Accumulation Requirement on that
                                 Distribution Date;

         (b)     second, pari passu and pro rata according to the respective
                 amounts due, to Funding 1 and Funding 2, to the extent not
                 already paid pursuant to item (a) above, up to the amounts set
                 forth in items (a)(i)(B) and (a)(ii)(B) above, respectively;

         (c)     third, pari passu and pro rata according to the respective
                 amounts due:

                 (i)     to Funding 1 an amount equal to the lesser of:

                         (A)     an amount determined by multiplying the total
                                 amount of the remaining Mortgages Trust
                                 Available Principal Receipts by the Funding 1
                                 Share Percentage of the Trust Property (as
                                 determined on the Relevant Share Calculation
                                 Date); and

                         (B)     an amount up to but not exceeding Funding 1's
                                 Repayment Requirement on that Distribution
                                 Date;

                 (ii)    to Funding 2 an amount equal to the lesser of:

                         (A)     an amount determined by multiplying the total
                                 amount of the remaining Mortgages Trust
                                 Available Principal Receipts by the Funding 2
                                 Share Percentage of the Trust Property (as
                                 determined on the Relevant Share Calculation
                                 Date); and

                         (B)     an amount up to but not exceeding Funding 2's
                                 Repayment Requirement on that Distribution
                                 Date;

         (d)     fourth, pari passu and pro rata according to the respective
                 amounts due, to Funding 1 and Funding 2, to the extent not
                 already paid pursuant to item (c) above, up to the amounts set
                 forth in items (c)(i)(B) and (c)(ii)(B) above, respectively;

         (e)     fifth, to allocate the remainder of the Mortgages Trust
                 Available Principal Receipts, if any, to the Seller until the
                 Seller Share of the Trust Property (as calculated on the
                 Relevant Share Calculation Date) is equal to the Minimum
                 Seller Share.

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<PAGE>

         PROVIDED THAT, in relation to items (a) through (e) above, the
         following rules will apply:

         (1)     The amount of Mortgages Trust Available Principal Receipts to
                 be allocated and paid to:

                 (i)     Funding 1 on a Distribution Date will be reduced by an
                         amount equal to (a) the aggregate of Funding 1
                         Available Revenue Receipts which are to be applied on
                         the immediately succeeding Funding 1 Interest Payment
                         Date in reduction of deficiencies on the Principal
                         Deficiency Ledger less (b) the amount by which any
                         Mortgages Trust Available Principal Receipts
                         previously allocated to Funding 1 in the current
                         Interest Period have been reduced in accordance with
                         (1)(i)(a) above; and

                 (ii)    Funding 2 on a Distribution Date will be reduced by an
                         amount equal to (a) the aggregate of Funding 2
                         Available Revenue Receipts which are to be applied on
                         the immediately succeeding Funding 2 Interest Payment
                         Date in reduction of deficiencies on the Funding 2
                         Principal Deficiency Ledger less (b) the amount by
                         which any Mortgages Trust Available Principal Receipts
                         previously allocated to Funding 2 in the current
                         Interest Period have been reduced in accordance with
                         (1)(ii)(a) above;

         (2)     Neither Funding 1 nor Funding 2 will be entitled to have
                 allocated to it (nor will have allocated to it or receive) in
                 aggregate an amount of Mortgages Trust Available Principal
                 Receipts on a Distribution Date which is in excess of the
                 Funding 1 Share or the Funding 2 Share of the Trust Property
                 (as applicable) on that Distribution Date;

         (3)     If on any Calculation Date prior to the occurrence of a
                 Trigger Event, the Seller Share of the Trust Property is equal
                 to or less than the Minimum Seller Share, the Mortgages
                 Trustee will make provision for that amount which would have
                 been payable to the Seller if the Seller Share of the Trust
                 Property had been greater than the Minimum Seller Share and
                 the Seller will not have allocated to it or receive that
                 amount until such time as the Seller Share of the Trust
                 Property is greater than the Minimum Seller Share and provided
                 that (i) the Seller will not receive nor have allocated to it
                 any such amount if a Non-Asset Trigger Event occurs and is
                 occurring and (ii) if an Asset Trigger Event occurs and is
                 occurring, the Seller will have allocated to it and will be
                 paid such amount but only to the extent permitted by the rules
                 governing distribution of Principal Receipts after the
                 occurrence of an Asset Trigger Event.

11.3     DISTRIBUTION OF PRINCIPAL RECEIPTS ON OR AFTER THE OCCURRENCE OF A
         NON-ASSET TRIGGER EVENT BUT PRIOR TO THE OCCURRENCE OF AN ASSET
         TRIGGER EVENT

         On each Distribution Date where a Non-Asset Trigger Event has occurred
         on or before the immediately preceding Calculation Date and an Asset
         Trigger Event has not occurred on or before that Calculation Date, all
         Mortgages Trust Available Principal Receipts shall be allocated to the
         Beneficiaries and distributed in the following order by the Cash
         Manager:

         (a)     first, to Funding 1 and Funding 2 pari passu and pro rata
                 according to the Funding 1 Share Percentage and the Funding 2
                 Share Percentage of the Trust Property (each as determined on
                 the Relevant Share Calculation Date) until the Funding 1 Share
                 and the Funding 2 Share of the Trust Property (each as
                 determined on the Relevant Share Calculation Date) have been
                 reduced to zero; and

         (b)     then, the remainder, if any, shall be allocated and paid to
                 the Seller.

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11.4     DISTRIBUTION OF PRINCIPAL RECEIPTS ON OR AFTER THE OCCURRENCE OF AN
         ASSET TRIGGER EVENT

         On each Distribution Date where an Asset Trigger Event has occurred on
         or before the immediately preceding Calculation Date, all Mortgages
         Trust Available Principal Receipts shall be allocated to the
         Beneficiaries and distributed pari passu and pro rata by the Cash
         Manager between Funding 1, Funding 2 and the Seller according to the
         Current Funding 1 Share Percentage, the Current Funding 2 Share
         Percentage and the Current Seller Share Percentage of the Trust
         Property (each as calculated on the Relevant Share Calculation Date)
         respectively until, the Funding 1 Share and the Funding 2 Share of the
         Trust Property are zero (and, for the avoidance of doubt, such
         payments may reduce the Current Seller Share to an amount less than
         the Minimum Seller Share). When the Funding 1 Share and the Funding 2
         Share of the Trust Property are zero, the remaining Mortgages Trust
         Available Principal Receipts (if any) shall be allocated to the
         Seller.

12.      ALLOCATION OF LOSSES

         Subject as provided in this Deed (and in particular, CLAUSE 8), all
         Losses sustained on the Loans during a Calculation Period shall be
         applied in reducing pro rata the Funding 1 Share, the Funding 2 Share
         and the Seller Share of the Trust Property. Funding 1's share, Funding
         2's share and the Seller's share of the Losses shall be determined by
         multiplying the Losses in the relevant Calculation Period by the
         Current Funding 1 Share Percentage, the Current Funding 2 Share
         Percentage and the Current Seller Share Percentage (each as calculated
         on the Relevant Share Calculation Date), the product of which shall be
         allocated to Funding 1, Funding 2 and the Seller, on each Calculation
         Date, in each case prior to calculating the allocation of Mortgages
         Trustee Available Principal Receipts on that Calculation Date.

13.      NEW BENEFICIARY OF THE MORTGAGES TRUST

         On not more than 60 days' written notice nor less than 20 days'
         written notice to the Mortgages Trustee, Funding 1, Funding 2 and the
         Seller may direct the Mortgages Trustee to add a New Beneficiary to
         the Mortgages Trust. The Mortgages Trustee shall include such
         designated entity as a beneficiary of the Mortgages Trust if Funding 1
         (or the Funding 1 Security Trustee) and/or Funding 2 (or the Funding 2
         Security Trustee) notifies the Mortgages Trustee in writing that the
         following conditions precedent are satisfied on the date of such
         inclusion:

         (a)     that the Funding 1 Security Trustee and the Funding 2 Security
                 Trustee has received written confirmation from each of the
                 Rating Agencies that the inclusion of the New Beneficiary of
                 the Mortgages Trust would not have an adverse effect on the
                 then current ratings of any outstanding Notes of the Funding 1
                 Issuers and the Master Issuer (respectively);

         (b)     no deficiency is recorded on the Principal Deficiency Ledger
                 or the Funding 2 Principal Deficiency Ledger as at the most
                 recent Funding 1 Interest Payment Date and Funding 2 Interest
                 Payment Date (respectively);

         (c)     no Note Event of Default or Intercompany Loan Event of Default
                 or Master Intercompany Loan Event of Default shall have
                 occurred which is continuing or unwaived as at the relevant
                 Distribution Date;

         (d)     requisite amendments have been made to the Transaction
                 Documents to enable the inclusion of the New Beneficiary to
                 the Mortgages Trust (including, without limitation, changes to
                 the way in which the Mortgages Trustee will allocate

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                 Mortgages Trust Revenue Receipts and Mortgages Trust Principal
                 Receipts under this Deed); and

         (e)     neither the General Reserve Fund nor the Funding 2 General
                 Reserve Fund has been debited on or before the relevant
                 Distribution Date for the purposes of curing a Principal
                 Deficiency in respect of the Term Advances (in the case of
                 Funding 1) or a Principal Deficiency in respect of a Loan
                 Tranche (in the case of Funding 2) in circumstances where the
                 General Reserve Fund or the Funding 2 General Reserve Fund
                 (respectively) has not been replenished by a corresponding
                 amount by the date; and

         (f)     the New Beneficiary, the Mortgages Trustee, Funding 1, Funding
                 2, the Funding 1 Security Trustee and/or the Funding 2
                 Security Trustee (as applicable) have entered into an
                 assignment agreement to provide for the assignment from the
                 Seller, Funding 1 and/or Funding 2 (as applicable) of a
                 portion of their beneficial interest in the Mortgages Trust to
                 the New Beneficiary.

14.      LEDGERS

         The Mortgages Trustee shall maintain, or shall procure that there are
         maintained, the following Mortgages Trustee Ledgers:

         (a)     the Principal Ledger, which shall record all receipts of
                 Principal Receipts and distribution of the same to Funding 1,
                 Funding 2 and the Seller;

         (b)     the Revenue Ledger, which shall record all receipts of Revenue
                 Receipts and distribution of the same to Funding 1, Funding 2
                 and the Seller;

         (c)     the Losses Ledger, which shall record Losses in relation to
                 the Loans; and

         (d)     the Funding 1 Share/Funding 2 Share/Seller Share Ledger which
                 shall record the Current Funding 1 Share, the Current Funding
                 2 Share, the Current Seller Share of the Trust Property, the
                 Current Funding 1 Share Percentage, the Current Funding 2
                 Share Percentage and the Current Seller Share Percentage.

15.      COSTS AND EXPENSES OF THE MORTGAGES TRUSTEE

         The Mortgages Trustee shall be entitled to charge and be remunerated
         for the work undertaken by it as trustee of the trusts created by this
         Deed. The remuneration shall be on such terms (if any) as the
         Mortgages Trustee may from time to time agree with the Beneficiaries
         in writing. The Beneficiaries shall indemnify the Mortgages Trustee
         from time to time with such regularity as is reasonably agreed between
         the parties, for the documentable costs and expenses directly and
         properly incurred by the Mortgages Trustee in performing its
         obligations hereunder together with any amounts in respect of
         Irrecoverable VAT incurred in respect of such costs and expenses. The
         cost of such indemnity shall be paid in accordance with the priority
         of payments set out in CLAUSE 10.2 of this Deed.

16.      DIRECTIONS FROM BENEFICIARIES

16.1     On the Initial Closing Date, the Mortgages Trustee entered into the
         Servicing Agreement, the Cash Management Agreement, the Mortgage Sale
         Agreement, the Mortgages Trustee Guaranteed Investment Contract and
         the Bank Account Agreement.

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16.2     Subject to CLAUSES 16.3 and 16.4 below and to the Controlling
         Beneficiary Deed and any other agreement between the Beneficiaries,
         the Beneficiaries direct the Mortgages Trustee to, and the Mortgages
         Trustee covenants with the Beneficiaries that the Mortgages Trustee
         shall, take all necessary steps and do everything which the
         Beneficiaries (acting together) may reasonably request or direct it to
         do in order to give effect to the terms of this Deed or the other
         Transaction Documents to which the Mortgages Trustee is a party,
         provided that at any time after the Funding 1 Share or the Funding 2
         Share of the Trust Property have been reduced to zero the Mortgages
         Trustee shall be required to act in accordance with the directions of
         those of the Beneficiaries (acting together) with a share of the Trust
         Property greater than zero.

16.3     Each of Funding 1, Funding 2 and the Seller covenant with each other
         that none of them shall direct or request the Mortgages Trustee to do
         any act or thing which breaches the terms of, or is otherwise
         expressly dealt with (such that the Mortgages Trustee has no
         discretion) by, any of the Transaction Documents.

16.4     Subject to the Controlling Beneficiary Deed and any other agreement
         between the Beneficiaries, in the event of any conflict between the
         directions of the Funding Beneficiaries or the directions of the
         Funding Beneficiaries and of the Seller, then each Beneficiary
         irrevocably agrees that the Controlling Directions (as defined in the
         Controlling Beneficiary Deed) shall apply and that the Mortgages
         Trustee will be bound to follow the Controlling Directions as if the
         Controlling Directions were the direction of all of the Beneficiaries
         but if there are no Controlling Directions the Mortgages Trustee will
         not be bound to accept the directions of one Beneficiary over the
         other.

16.5     The Mortgages Trustee will not be bound and shall have no power to
         take any proceedings, actions or steps under or in connection with any
         of this Deed or the other Transaction Documents to which it is a party
         unless:

         (a)     it shall have been directed to do so by the Beneficiaries or
                 it is required to do so under any express provision of this
                 Deed or the other Transaction Documents (but subject to
                 CLAUSES 16.2 and 16.4 in respect of conflict of directions);
                 and

         (b)     it shall have been indemnified to its satisfaction against all
                 liabilities, proceedings, claims and demands to which it may
                 be or become liable and all costs, charges and expenses which
                 may be incurred by it in connection therewith and the terms of
                 such indemnity may include the provision of a fighting fund,
                 non-recourse loan or other similar arrangement.

16.6     COVENANT OF THE MORTGAGES TRUSTEE

         Subject to CLAUSES 16.2 and 16.4, the Mortgages Trustee covenants with
         each of the Seller, Funding 1 and Funding 2 to exercise all of its
         rights arising under the Trust Property (including without limitation
         any rights of enforcement) for the benefit of and on behalf of the
         Beneficiaries.

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<PAGE>

17.      TRANSFERS

17.1     FUNDING 1 SHALL NOT ASSIGN

         Subject to the terms of the Transaction Documents (including for the
         avoidance of doubt, the Funding 1 Deed of Charge, the Deed of
         Accession and Release Supplemental to the Funding 1 Deed of Charge,
         the Second Supplemental Funding 1 Deed of Charge and each Deed of
         Accession) and the right of Funding 1 (or the Funding 1 Security
         Trustee or a Receiver on its behalf) to sell the Funding 1 Share of
         the Trust Property following the service of an Intercompany Loan
         Acceleration Notice (which right is hereby conferred), Funding 1
         covenants with each of the Seller and Funding 2 that it shall not, and
         shall not purport to, sell, assign, transfer, convey, charge, declare
         a trust over, create any beneficial interest in, or otherwise dispose
         of the Funding 1 Share in the Trust Property and/or its rights under
         this Deed, or any of Funding 1's rights, title and interest or benefit
         in the Trust Property and/or this Deed to or in favour of a third
         party.

17.2     FUNDING 2 SHALL NOT ASSIGN

         Subject to the terms of the Transaction Documents (including for the
         avoidance of doubt, the Funding 2 Deed of Charge) and the right of
         Funding 2 (or the Funding 2 Security Trustee or a Receiver on its
         behalf) to sell the Funding 2 Share of the Trust Property following
         the service of a Master Intercompany Loan Acceleration Notice (which
         right is hereby conferred), Funding 2 covenants with each of the
         Seller and Funding 1 that it shall not, and shall not purport to,
         sell, assign, transfer, convey, charge, declare a trust over, create
         any beneficial interest in, or otherwise dispose of the Funding 2
         Share in the Trust Property and/or its rights under this Deed, or any
         of Funding 2's rights, title and interest or benefit in the Trust
         Property and/or this Deed to or in favour of a third party.

17.3     SELLER SHALL NOT ASSIGN

         Subject to the terms of the Transaction Documents, the Seller
         covenants with each of Funding 1 and Funding 2 that it shall not, and
         shall not purport to, sell, assign, transfer, convey, charge, declare
         a trust over, create any beneficial interest in, or otherwise dispose
         of the Seller Share in the Trust Property and/or its rights under this
         Deed or any of the Seller's rights, title and interest or benefit in
         the Trust Property and/or this Deed to or in favour of a third party,
         without the prior consent of Funding 1 and Funding 2 (such consent not
         to be unreasonably withheld).

17.4     TRANSFERS TO NEW BENEFICIARY

         Subject to CLAUSE 13, the parties hereby acknowledge that a designated
         entity approved by the Beneficiaries may become a beneficiary to the
         Mortgages Trust after the Programme Date and if such entity is to
         become such a beneficiary then the Beneficiaries covenant with each
         other that the Seller and/or Funding 1 and/or Funding 2 shall be
         entitled to sell, assign, transfer, convey, charge, declare a trust
         over, create a beneficial interest in, or otherwise dispose of all or
         part of their respective shares in the Trust Property to such entity
         or, as the case may be, Funding 1, Funding 2 or the Seller.

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<PAGE>

18.      COVENANTS OF THE MORTGAGES TRUSTEE

         Save with the prior written consent of each of the Beneficiaries or as
         provided in or envisaged by this Deed and the other Transaction
         Documents to which the Mortgages Trustee is a party, the Mortgages
         Trustee shall not, so long as it is acting as Mortgages Trustee
         hereunder:

         (a)     NEGATIVE PLEDGE

                 create or permit to subsist any mortgage, standard security,
                 pledge, lien, charge, assignation in security or other
                 security interest whatsoever (unless arising by operation of
                 law), upon the whole or any part of its assets (including any
                 uncalled capital) or its undertakings, present or future;

         (b)     DISPOSAL OF ASSETS

                 transfer, sell, lend, part with or otherwise dispose of, or
                 deal with, or grant any option or present or future right to
                 acquire any of its assets or undertakings or any interest,
                 estate, right, title or benefit therein or thereto or agree or
                 attempt or purport to do so;

         (c)     EQUITABLE INTEREST

                 permit any person other than the Beneficiaries to have any
                 equitable or beneficial interest in any of its assets or
                 undertakings or any interest, estate, right, title or benefit
                 therein;

         (d)     BANK ACCOUNTS

                 have an interest in any bank account, other than as set out in
                 the Transaction Documents;

         (e)     RESTRICTIONS ON ACTIVITIES

                 carry on any business other than as described in this Deed and
                 the Mortgage Sale Agreement;

         (f)     BORROWINGS

                 incur any indebtedness in respect of borrowed money whatsoever
                 or give any guarantee or indemnity in respect of any such
                 indebtedness;

         (g)     MERGER

                 consolidate or merge with any other person or convey or
                 transfer its properties or assets substantially as an entirety
                 to any other person;

         (h)     EMPLOYEES OR PREMISES

                 have any employees or premises or subsidiaries;

         (i)     FURTHER SHARES

                 issue any further shares;

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<PAGE>

         (j)     ACQUISITIONS

                 acquire any assets other than pursuant to the terms of the
                 Mortgage Sale Agreement and this Mortgages Trust Deed (whereby
                 any New Portfolio shall be held by the Mortgages Trustee
                 subject to the Mortgages Trust); or

         (k)     UNITED STATES ACTIVITIES

                 engage in any activities in the United States (directly or
                 through agents) or derive any income from United States
                 sources as determined under United States income tax
                 principles or hold any property if doing so would cause it to
                 be engaged or deemed to be engaged in a trade or business
                 within the United States as determined under United States tax
                 principles.

19.      POWER TO DELEGATE

19.1     POWER TO DELEGATE

         Subject to CLAUSE 19.2, the Mortgages Trustee may (notwithstanding any
         rule of law or equity to the contrary) delegate (revocably or
         irrevocably and for a limited or unlimited period of time) the
         performance of all or any of its obligations and the exercise of all
         or any of its powers under this Deed or imposed or conferred on it by
         law or otherwise to any person or body of persons fluctuating in
         number selected by it and any such delegation may be by power of
         attorney or in such other manner as the Mortgages Trustee may think
         fit and may be made upon such terms and conditions (including the
         power to sub-delegate) as the Mortgages Trustee may think fit.

19.2     NO FURTHER APPOINTMENTS

         Notwithstanding the provisions of CLAUSE 19.1, the Mortgages Trustee
         shall not appoint any agent, attorney or other delegate having power
         to act in respect of the Trust Property unless it is directed in
         writing to do so by the Beneficiaries. The appointment of any agent,
         attorney or other delegate shall terminate immediately upon the
         occurrence of a Trigger Event.

20.      POWERS OF INVESTMENT

         Save as expressly provided for in this Deed, the Mortgages Trustee
         Guaranteed Investment Contract and the Bank Account Agreement, the
         Mortgages Trustee shall have no further or other powers of investment
         with respect to the Trust Property and neither the Trustee Act 2000
         nor any other provision relating to trustee powers of investment
         implied by statute or general law shall apply to the Mortgages Trust
         and, for the avoidance of doubt, the statutory power to accumulate
         income conferred on trustees by Section 31 of the Trustee Act 1925 is
         expressly excluded.

21.      OTHER PROVISIONS REGARDING THE MORTGAGES TRUSTEE

21.1     NO ACTION TO IMPAIR TRUST PROPERTY

         Except for actions expressly authorised by this Deed, the Mortgages
         Trustee shall take no action reasonably likely to impair the interests
         of the Beneficiaries in any Trust Property now existing or hereafter
         created or to impair the value of any Loan or its Related Security
         subject to the Mortgages Trust.

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<PAGE>

21.2     LITIGATION

         The Mortgages Trustee must not prosecute or defend any legal or other
         proceedings anywhere in the world (at the cost of the Trust Property)
         unless it obtains legal or other advice that it is in the interests of
         the Beneficiaries to do so.

21.3     NO IMPLIED DUTIES

         The duties and obligations of the Mortgages Trustee under the
         Mortgages Trust shall be determined solely by the express provisions
         of this Deed (but without prejudice to the duties and obligations of
         the Mortgages Trustee under any of the other Transaction Documents).
         The Mortgages Trustee shall not be liable under this Deed except for
         the performance of such duties and obligations as shall be
         specifically set forth in this Deed. No implied covenants or
         obligations shall be read into this Deed against the Mortgages
         Trustee, and the permissible right of the Mortgages Trustee to do
         things set out in this Deed shall not be construed as a duty.

21.4     NO LIABILITY

         None of the Mortgages Trustee, Funding 1 (in its capacity as a
         Beneficiary hereunder), Funding 2 (in its capacity as a Beneficiary
         hereunder) or the Seller (in its capacity as a Beneficiary hereunder)
         shall be liable to any other such party, in the absence of wilful
         default, negligence or breach of the terms of this Deed, in respect of
         any loss or damage which arises out of the exercise or attempted or
         purported exercise or failure to exercise any of their respective
         powers.

21.5     RELIANCE ON CERTIFICATES

         The Mortgages Trustee may rely on and shall be protected in acting on,
         or in refraining from acting in accordance with, any resolution,
         officer's certificate, certificate of auditors or any other
         certificate, statement, instrument, opinion, report, notice, request,
         consent, order, appraisal, bond or other paper or document believed by
         it to be genuine and to have been signed or presented to it pursuant
         to the Transaction Documents by the proper party or parties.

21.6     RELIANCE ON THIRD PARTIES

         The Mortgages Trustee may, in relation to these presents, act on the
         opinion or advice of or a certificate or any information obtained from
         any lawyer, banker, valuer, broker, accountant, financial adviser,
         securities dealer, merchant bank, computer consultant or other expert
         in the United Kingdom or elsewhere and shall not, provided that it
         shall not have acted fraudulently or in breach of any of the
         provisions of the Transaction Documents, be responsible for any loss
         occasioned by so acting. Any such opinion, advice, certificate or
         information may be sent or obtained by letter, telemessage, telex,
         cable or facsimile device and the Mortgages Trustee shall not be
         liable for acting on any opinion, advice, certificate or information
         purporting to be so conveyed although the same shall contain some
         error or shall not be authentic, provided that such error or lack of
         authenticity shall not be manifest.

22.      NO RETIREMENT OF MORTGAGES TRUSTEE

22.1     NO RETIREMENT

         The Mortgages Trustee shall not, and shall not purport to, retire as
         the trustee of the Mortgages Trust or appoint any additional trustee
         of the Mortgages Trust and shall have no power to retire or appoint
         any additional trustee under the Trustee Act 1925 or otherwise.

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22.2     NO REPLACEMENT

         None of the Seller, Funding 1 or Funding 2 shall at any time remove or
         purport to remove and/or replace the Mortgages Trustee as the trustee
         of the Mortgages Trust.

22.3     NO TERMINATION

         Prior to the payment by Funding 1 and Funding 2 of all amounts owing
         under the Intercompany Loan Agreements or the Master Intercompany Loan
         Agreement (respectively) and any other Transaction Documents, none of
         the Beneficiaries shall at any time, except in accordance with the
         provisions of CLAUSES 16 and 23 hereof, terminate or purport to
         terminate the Mortgages Trust and, in particular, but without
         prejudice to the generality of the foregoing, none of the
         Beneficiaries shall in reliance on their absolute beneficial interests
         in the Trust Property call for the transfer to them or vesting in them
         of the legal estate in all or any part of the Trust Property.

23.      TERMINATION

         The Mortgages Trust shall terminate in respect of the Trust Property
         (if any then remains) upon the later to occur of:

         (a)     the date upon which all amounts due from Funding 1 and Funding
                 2 to the Funding 1 Secured Creditors and the Funding 2 Secured
                 Creditors (respectively) have been paid in full; and

         (b)     any other date agreed in writing by the Beneficiaries.

24.      FURTHER ASSURANCES

         The parties agree that they will co-operate fully to do all such
         further acts and things and execute any further documents as may be
         necessary or desirable to give full effect to the arrangements
         contemplated by this Deed.

25.      AMENDMENTS

25.1     AMENDMENTS, WAIVERS AND CONSENTS

         Subject to CLAUSE 3 of the Controlling Beneficiary Deed and (in the
         case of Funding 1) CLAUSE 25.8 of the Funding 1 Deed of Charge and (in
         the case of Funding 2) CLAUSE 24.8 of the Funding 2 Deed of Charge no
         amendment or waiver of any provision of this Deed nor consent to any
         departure by any of the parties therefrom shall in any event be
         effective unless the same shall be in writing and signed by each of
         the parties to this Deed. In the case of a waiver or consent, such
         waiver or consent shall be effective only in the specific instance and
         as against the party or parties giving it for the specific purpose for
         which it is given.

25.2     ENTIRE AGREEMENT

         This Deed contains a final and complete integration of all prior
         expressions by the parties with respect to the subject matter of this
         Deed and constitutes the entire agreement among the parties with
         respect to the subject matter of this Deed superseding all prior oral
         or written understandings other than the other Transaction Documents.

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26.      NON PETITION COVENANT

         Each of the parties hereto hereby agrees that it shall not institute
         against either Funding 1, Funding 2 or the Mortgages Trustee any
         winding-up, administration, insolvency or similar proceedings so long
         as any sum is outstanding under any Funding 1 Intercompany Loan
         Agreement (in the case of Funding 1 and the Mortgages Trustee) or the
         Master Intercompany Loan Agreement (in the case of Funding 2 and the
         Mortgages Trustee) for the duration of one year plus one day since the
         last day on which any such sum was outstanding.

27.      NO PARTNERSHIP OR AGENCY

         Nothing in this Deed shall be taken to constitute or create a
         partnership between any of the parties to this Deed or to make or
         appoint the Seller the agent of Funding 1 (or vice versa) or the agent
         of Funding 2 (or vice versa) or Funding 1 the agent of Funding 2 (or
         vice versa).

28.      CALCULATIONS

         In the absence of manifest error, any determination or calculation
         made by or on behalf of the Mortgages Trustee in connection with the
         provisions of this Deed shall be deemed to be conclusive.

29.      NO WAIVER; REMEDIES

         No failure on the part of any party to this Deed to exercise, and no
         delay in exercising, any right hereunder shall operate as a waiver
         thereof, nor shall any single or partial exercise of any right or
         remedy preclude any other or further exercise thereof or the exercise
         of any other right or remedy. The remedies in this Deed are cumulative
         and not exclusive of any remedies provided by law.

30.      EXECUTION IN COUNTERPARTS/SEVERABILITY

30.1     This Deed may be executed in any number of counterparts (manually or
         by facsimile) and by different parties hereto in separate
         counterparts, each of which when so executed shall be deemed to be an
         original and all of which when taken together shall constitute one and
         the same instrument.

30.2     Where any provision in or obligation under this Deed shall be invalid,
         illegal or unenforceable in any jurisdiction, the validity, legality
         and enforceability of the remaining provisions or obligations under
         this Deed, or of such provision or obligation in any other
         jurisdiction, shall not be affected or impaired thereby.

31.      TAX

31.1     Any payment by Funding 1 or Funding 2 to the other or to the Seller to
         increase its share of the Trust Property shall be inclusive of VAT (if
         any).

31.2     Any payment by the Seller to Funding 1 or Funding 2 which would
         increase its share of the Trust Property shall be exclusive of VAT (if
         any).

31.3     Any stamp duty or stamp duty reserve tax in respect of any increase in
         the Funding 1 Share or the Funding 2 Share of the Trust Property shall
         be payable by the Seller.

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32.      CONFIDENTIALITY

32.1     GENERAL OBLIGATION OF CONFIDENTIALITY

         Unless otherwise required by applicable law, and subject to CLAUSE
         32.2 below, each of the parties agrees not to disclose to any person
         any information relating to the business, finances or other matters of
         a confidential nature of or relating to any other party to this Deed
         or any of the Transaction Documents which it may have obtained as a
         result of having entered into this Deed or otherwise.

32.2     EXCEPTIONS

         The provisions of CLAUSE 32.1 above shall not apply:

         (a)     to the disclosure of any information to any person who is a
                 party to any of the Transaction Documents as expressly
                 permitted by the Transaction Documents;

         (b)     to the disclosure of any information which is or becomes
                 public knowledge otherwise than as a result of the wrongful
                 conduct of the recipient;

         (c)     to the extent that the recipient is required to disclose the
                 same pursuant to any law or order of any court or pursuant to
                 any direction or requirement (whether or not having the force
                 of law) of any central bank or any governmental or other
                 regulatory or Taxation authority;

         (d)     to the disclosure of any information to professional advisers
                 who receive the same under a duty of confidentiality;

         (e)     to the disclosure of any information with the consent of the
                 parties to this Deed;

         (f)     to the disclosure to the Rating Agencies or any of them of
                 such information as may be requested by any of them for the
                 purposes of setting or reviewing the rating assigned to the
                 Notes of any of the Funding 1 Issuers or of the Master Issuer
                 (or any of them), provided that no information which would
                 disclose the identity of a Borrower shall be disclosed to the
                 Rating Agencies or any of them;

         (g)     to the disclosure of any information disclosed to a
                 prospective assignee of Funding 1 or Funding 2 (provided that
                 it is disclosed on the basis that the recipient will hold it
                 confidential); or

         (h)     to any disclosure for the purposes of collecting in or
                 enforcing the Trust Property or any of it.

33.      EXCLUSION OF THIRD PARTY RIGHTS

         Except in the case of the Funding 1 Security Trustee and the Funding 2
         Security Trustee as expressly provided hereunder, the parties to this
         Deed do not intend that any term of this Deed should be enforced, by
         virtue of the Contracts (Rights of Third Parties) Act 1999, by any
         person who is not a party to this Deed.

                                      29

<PAGE>

34.      ADDRESSES FOR NOTICES

         Any notices to be given pursuant to this Deed will be sufficiently
         served if sent by prepaid first class post, by hand or facsimile
         transmission and will be deemed to be given (in the case of facsimile
         transmission) when despatched (where delivered by hand) on the day of
         delivery if delivered before 17:00 hours on a London Business Day or
         on the next London Business Day if delivered thereafter or (in the
         case of first class post) when it would be received in the ordinary
         course of the post and shall be sent:

         (a)     in the case of the Seller: to Bank of Scotland plc, Halifax
                 Division, at Level 3, Lovell Park, 1 Lovell Park Road, Leeds
                 LS1 1NS (facsimile number +44 (020) 1132 357511) for the
                 attention of the Head of Mortgage Securitisation with a copy
                 to Bank of Scotland plc, Treasury Division, 33 Old Broad
                 Street, London EC2N 1HZ (facsimile number +44 (0)20 7574 8303)
                 for the attention of Head of Mortgage Securitisation and
                 Covered Bonds;

         (b)     in the case of the Mortgages Trustee: to Permanent Mortgages
                 Trustee Limited, 47 Esplanade, St Helier, Jersey JE1 0BD,
                 Channel Islands (facsimile number +44 (0) 1534 726391) for the
                 attention of the Company Secretary with a copy to Bank of
                 Scotland plc, Treasury Division, 33 Old Broad Street, London
                 EC2N 1HZ (facsimile number +44 (0)20 7574 8303) for the
                 attention of Head of Mortgage Securitisation and Covered
                 Bonds;

         (c)     in the case of Funding 1: to Permanent Funding (No. 1)
                 Limited, 35 Great St. Helen's, London EC3A 6AP (facsimile
                 number +44 (0) 20 7398 6325) for the attention of the
                 Secretary with a copy to Bank of Scotland plc, Treasury
                 Division, 33 Old Broad Street, London EC2N 1HZ (facsimile
                 number +44 (0)20 7574 8303) for the attention of Head of
                 Mortgage Securitisation and Covered Bonds;

         (d)     in the case of Funding 2: to Permanent Funding (No. 2)
                 Limited, 35 Great St. Helen's, London EC3A 6AP (facsimile
                 number +44 (0) 20 7398 6325) for the attention of the
                 Secretary with a copy to Bank of Scotland plc, Treasury
                 Division, 33 Old Broad Street, London EC2N 1HZ (facsimile
                 number +44 (0)20 7574 8303) for the attention of Head of
                 Mortgage Securitisation and Covered Bonds;

         (e)     in the case of the Share Trustee: to 47 Esplanade, St Helier,
                 Jersey JE1 0BD, Channel Islands (facsimile number +44 (0) 1534
                 726391) for the attention of the Company Secretary with a copy
                 to Bank of Scotland plc, Treasury Division, 33 Old Broad
                 Street, London EC2N 1HZ (facsimile number +44 (0)20 7574 8303)
                 for the attention of Head of Mortgage Securitisation and
                 Covered Bonds; and

         (f)     in each case of the Funding 1 Security Trustee and the Funding
                 2 Security Trustee: to The Bank of New York, One Canada
                 Square, London E14 5AL, (facsimile number +44 (0)20 7964 2533)
                 for the attention of Corporate Trust Administration - ABS/MBS,

         or to such other address or facsimile number or for the attention of
         such other person or entity as may from time to time be notified by
         any party to the others by written notice in accordance with the
         provisions of this CLAUSE 34.

                                      30

<PAGE>

35.      GOVERNING LAW AND SUBMISSION TO JURISDICTION

35.1     GOVERNING LAW

         This Deed is governed by English law.

35.2     SUBMISSION TO JURISDICTION

         Each party to this Deed hereby irrevocably submits to the exclusive
         jurisdiction of the English courts in any action or proceeding arising
         out of or relating to this Deed, and hereby irrevocably agrees that
         all claims in respect of such action or proceeding may be heard and
         determined by such courts. Each party to this Deed hereby irrevocably
         waives, to the fullest extent it may possibly do so, any defence or
         claim that the English courts are an inconvenient forum for the
         maintenance or hearing of such action or proceeding. The Mortgages
         Trustee irrevocably appoints Structured Finance Management Limited at
         35 Great St. Helen's, London EC3A 6AP as its agent for service of
         process.

36.      EXCLUSION OF TRUSTEE ACT 2000

         The Trustee Act 2000 is hereby excluded to the maximum extent
         permissible, to the intent that it shall not apply to the trusts
         constituted by this Deed and that the parties shall be in the same
         position as they would be had that Act not come into force.

IN WITNESS of which this Deed has been executed by the parties hereto as a deed
which has been delivered on the date first appearing on page one.

                                      31

<PAGE>

                                  SIGNATORIES

SELLER, CASH MANAGER AND BENEFICIARY

EXECUTED as a DEED by                                   ) /S/ IAN STEWART
BANK OF SCOTLAND PLC                                    )
acting by its attorney                                  ) /S/ DAVID WILKINSON
in the presence of:                                     )

Witness's Signature: /S/ CHRIS WALL

Name:

Address: ALLEN & OVERY LLP
         40 BANK STREET
         LONDON E14 5DU

FUNDING 1

EXECUTED as a DEED by                                   ) /S/ CLAUDIA WALLACE
PERMANENT FUNDING (NO. 1)                               )
LIMITED acting by two directors                         ) /S/ HELENA WHITAKER

FUNDING 2

EXECUTED as a DEED by                                   ) /S/ CLAUDIA WALLACE
PERMANENT FUNDING (NO. 2)                               )
LIMITED acting by two directors                         ) /S/ HELENA WHITAKER

MORTGAGES TRUSTEE

EXECUTED as a DEED on behalf of                         )
PERMANENT MORTGAGES TRUSTEE                             )
LIMITED, a company incorporated in Jersey,              )
Channel Islands, by                                     )
being a person who, in                                  ) /S/ ABU KAPADIA
accordance with the laws of that territory is acting    )
under the authority of the company, in the presence     )
of:                                                     )

Witness's Signature: /S/ CHRIS WALL

Name:

Address: ALLEN & OVERY LLP
         40 BANK STREET
         LONDON E14 5DU

                                      32

<PAGE>

SHARE TRUSTEE OF THE MORTGAGES TRUSTEE

EXECUTED as a DEED by                                   ) /S/ ABU KAPADIA
SFM OFFSHORE                                            )
LIMITED                                                 )
acting by its attorney                                  )
in the presence of:                                     )

Witness's Signature: /S/ CHRIS WALL

Name:

Address: ALLEN & OVERY LLP
         40 BANK STREET
         LONDON E14 5DU

                                      33AMENDED AND RESTATED MORTGAGE SALE AGREEMENT      EXHIBIT 4.3.1

                               21 NOVEMBER 2007

                             BANK OF SCOTLAND PLC
                          AS SELLER AND A BENEFICIARY

                                      AND

                       PERMANENT FUNDING (NO. 1) LIMITED
                        AS FUNDING 1 AND A BENEFICIARY

                                      AND

                       PERMANENT FUNDING (NO. 2) LIMITED
                        AS FUNDING 2 AND A BENEFICIARY

                                      AND

                      PERMANENT MORTGAGES TRUSTEE LIMITED
                             AS MORTGAGES TRUSTEE

                                      AND

                             THE BANK OF NEW YORK
         AS FUNDING 1 SECURITY TRUSTEE AND FUNDING 2 SECURITY TRUSTEE

<PAGE>

                                   CONTENTS

CLAUSE                                                                     PAGE

1.       Definitions and Construction.........................................3
2.       Sale and Purchase of Initial Portfolio...............................3
3.       Initial Closing Date.................................................4
4.       Sale and Purchase of New Portfolios..................................5
5.       Trust of Monies.....................................................11
6.       Completion of the Transfer of Loans.................................12
7.       Undertakings........................................................14
8.       Warranties and Repurchase by the Seller.............................16
9.       Other Warranties....................................................20
10.      Further Assurance...................................................20
11.      Consequences of Breach..............................................20
12.      Subordination.......................................................21
13.      Non-Merger..........................................................21
14.      No Agency or Partnership............................................21
15.      Payments............................................................21
16.      Amendments, Waivers and Consents....................................21
17.      Notices.............................................................22
18.      Assignment..........................................................22
19.      Change of Funding 1 Security Trustee and/or Funding 2 Security
         Trustee.............................................................23
20.      Third Party Rights..................................................23
21.      Execution in Counterparts; Severability.............................23
22.      Governing Law.......................................................24

SCHEDULE

1.       Representations and Warranties......................................27
2.       Registered Transfer.................................................35
3.       Unregistered Transfer...............................................36
4.       Lending Criteria....................................................39
5.       Power of Attorney in Favour of Funding 1, Funding 2, the Mortgages
         Trustee, the Funding 1 Security Trustee and the Funding 2 Security
         Trustee.............................................................43
6.       Loan Repurchase Notice..............................................46
7.       Assignment of Third Party Rights....................................48
8.       Assignment of Halifax Mortgage Re Limited MIG Policies..............51
9.       Halifax Mortgage Re Limited MIG Policies Assignment Notice..........55
10.      Insurance Endorsement...............................................56
11.      Insurance Acknowledgements..........................................57
12.      New Portfolio Notice................................................61
13.      Forms of Scottish Transfer..........................................64
14.      Forms of Scottish Transfer..........................................67
15.      Form of Scottish Declaration of Trust...............................70
16.      Form of Memorandum of Release.......................................77
17.      Re-Assignment of MIG Policies.......................................78
18.      Halifax Mortgage Re Limited MIG Policies Re-Assignment Notice.......82
19.      Re-Assignment of Third Party Rights.................................83

Signatories..................................................................24

<PAGE>

THIS AMENDED AND RESTATED MORTGAGE SALE AGREEMENT (this AGREEMENT) is made as a
deed on 21 November 2007

BETWEEN:

(1)      BANK OF SCOTLAND PLC (registered number SC327000) (formerly The
         Governor and Company of the Bank of Scotland), a public limited
         company incorporated under the laws of Scotland whose registered
         office is at The Mound, Edinburgh, EH1 1YZ (acting in its capacities
         as the SELLER and a BENEFICIARY);

(2)      PERMANENT FUNDING (NO. 1) LIMITED (registered number 4267660), a
         private limited company incorporated under the laws of England and
         Wales, whose registered office is at 35 Great St. Helen's, London EC3A
         6AP (acting in its capacities as FUNDING 1 and a BENEFICIARY);

(3)      PERMANENT FUNDING (NO. 2) LIMITED (registered number 04441772), a
         private limited company incorporated under the laws of England and
         Wales, whose registered office is at 35 Great St. Helen's, London EC3A
         6AP (acting in its capacities as FUNDING 2 and a BENEFICIARY);

(4)      PERMANENT MORTGAGES TRUSTEE LIMITED (registered number 83116), a
         private limited company incorporated under the laws of Jersey, Channel
         Islands, whose registered office is at 47 Esplanade, St Helier, Jersey
         JE1 0BD, Channel Islands (acting in its capacity as the MORTGAGES
         TRUSTEE); and

(5)      THE BANK OF NEW YORK, a New York banking corporation, acting through
         its offices at One Canada Square, London E14 5AL (acting in its
         capacities as the FUNDING 1 SECURITY TRUSTEE, which expression shall
         include such company and all other persons or companies for the time
         being acting as security trustee (or co-trustee) pursuant to the terms
         of the Funding 1 Deed of Charge and the FUNDING 2 SECURITY TRUSTEE,
         which expression shall include such company and all other persons or
         companies for the time being acting as security trustee (or
         co-trustee) pursuant to the terms of the Funding 2 Deed of Charge).

WHEREAS:

(A)      The Seller carries on the business of, inter alia, originating
         mortgage loans to individual borrowers secured on residential
         properties in England, Wales or Scotland.

(B)      Halifax (then in its capacity as the Seller) sold to the Mortgages
         Trustee certain of the above mentioned mortgage loans together with
         the benefit of their related security on the Initial Closing Date on
         the terms and subject to the conditions set out in the Mortgage Sale
         Agreement dated 14 June 2002.

(C)      On 12 March 2004 the parties to the Mortgage Sale Agreement agreed to
         amend the terms of the Mortgage Sale Agreement as set out in an
         Amended and Restated Mortgage Sale Agreement of the same date and
         Halifax (then in its capacity as the Seller) sold a new portfolio of
         mortgage loans to the Mortgages Trustee on 12 March 2004 on such
         amended terms.

(D)      On 22 July 2004 the parties to the Mortgage Sale Agreement agreed to
         amend the terms of the Mortgage Sale Agreement as set out in an
         Amended and Restated Mortgage Sale Agreement of the same date and
         Halifax (then in its capacity as the Seller) sold a new portfolio of
         mortgage loans to the Mortgages Trustee on 22 July 2004 on such
         amended terms.

(E)      On 18 November 2004 the parties to the Mortgage Sale Agreement agreed
         to amend the terms of the Mortgage Sale Agreement as set out in an
         Amended and Restated Mortgage Sale Agreement of the

                                       1

<PAGE>

         same date and Halifax (then in its capacity as the Seller) sold a new
         portfolio of mortgage loans to the Mortgages Trustee on 18 November
         2004 on such amended terms.

(F)      On 23 March 2005 the parties to the Mortgage Sale Agreement agreed to
         amend the terms of the Mortgage Sale Agreement as set out in an
         Amended and Restated Mortgage Sale Agreement of the same date and
         Halifax (then in its capacity as the Seller) sold a new portfolio of
         mortgage loans to the Mortgages Trustee on 23 March 2005 on such
         amended terms.

(G)      On 22 June 2005 the parties to the Mortgage Sale Agreement agreed to
         amend the terms of the Mortgage Sale Agreement as set out in an
         Amended and Restated Mortgage Sale Agreement of the same date and
         Halifax (then in its capacity as the Seller) sold a new portfolio of
         mortgage loans to the Mortgages Trustee on 22 June 2005 on such
         amended terms.

(H)      On 22 March 2006 the parties to the Mortgage Sale Agreement agreed to
         amend the terms of the Mortgage Sale Agreement as set out in an
         Amended and Restated Mortgage Sale Agreement of the same date and
         Halifax (then in its capacity as the Seller) sold a new portfolio of
         mortgage loans to the Mortgages Trustee on 22 March 2006 on such
         amended terms.

(I)      On 17 October 2006 Funding 2 and the Funding 2 Security Trustee became
         parties to the Mortgage Sale Agreement and the parties to the Mortgage
         Sale Agreement agreed to amend the terms of the Mortgage Sale
         Agreement as set out in an Amended and Restated Mortgage Sale
         Agreement of the same date and Halifax (then in its capacity as the
         Seller) sold a new portfolio of mortgage loans to the Mortgages
         Trustee on 17 October 2006 on such amended terms.

(J)      The Mortgages Trustee holds all of the above mentioned mortgage loans
         as bare trustee for the Beneficiaries upon, with and subject to the
         trusts, powers and provisions of the Mortgages Trust Deed.

(K)      On the Reorganisation Date, pursuant to the HBOS Group Reorganisation
         Act 2006, The Governor and Company of the Bank of Scotland was
         registered as a public company under the Companies Act 1985 and
         changed its name to Bank of Scotland plc and the business and all
         property and liabilities of Halifax (including its business of
         originating mortgage loans and its rights and obligations under the
         Mortgage Sale Agreement) were transferred to Bank of Scotland.

(L)      The parties to the Mortgage Sale Agreement have agreed to further
         amend and restate the terms of the Mortgage Sale Agreement on the date
         hereof as set out herein and the Seller may sell new portfolios of
         mortgage loans originated by Halifax and transferred to it on the
         Reorganisation Date or by it under the Halifax brand and their related
         security to the Mortgages Trustee on such amended terms.

                                       2

<PAGE>

IT IS HEREBY AGREED as follows:

1.       DEFINITIONS AND CONSTRUCTION

1.1      The amended and restated master definitions and construction schedule
         signed by, amongst others, the parties to this Agreement and dated 21
         November 2007 (as the same may be amended, varied or supplemented from
         time to time with the consent of the parties to this Agreement) (the
         MASTER DEFINITIONS AND CONSTRUCTION SCHEDULE) is expressly and
         specifically incorporated into this Agreement and, accordingly, the
         expressions defined in the Master Definitions and Construction
         Schedule (as so amended, varied or supplemented from time to time)
         shall, except where the context otherwise requires and save where
         otherwise defined herein, have the same meanings in this Agreement,
         including the Recitals hereto and this Agreement shall be construed in
         accordance with the interpretation provisions set out in Clause 3 of
         the Master Definitions and Construction Schedule.

1.2      Any reference in this Agreement to any discretion, power, right, duty
         or obligation on the part of the Mortgages Trustee shall be as
         exercised by the Mortgages Trustee subject in each case to the
         provisions of Clause 16 of the Mortgages Trust Deed.

1.3      For the purposes of Section 2 of the Law of Property (Miscellaneous
         Provisions) Act 1989, the terms of the Transaction Documents are, so
         far as applicable, incorporated herein.

1.4      The Initial Portfolio contained as Part 1 of the Exhibit to the
         Original Mortgage Sale Agreement and any schedule of New Loans
         attached to any New Portfolio Notice may be provided in a document
         stored upon electronic media (including, but not limited to, a CD-ROM)
         in a form acceptable to the Mortgages Trustee, Funding 1 and the
         Funding 1 Security Trustee and, as of the Programme Date, Funding 2
         and the Funding 2 Security Trustee (each acting reasonably).

1.5      This Agreement amends and restates the Mortgage Sale Agreement made on
         the 14 June 2002 as amended and restated on the 6 March 2003, 25
         November 2003, 12 March 2004, 22 July 2004, 18 November 2004, 23 March
         2005, 22 June 2005, 22 March 2006 and 17 October 2006 (the PRINCIPAL
         AGREEMENT). As of the date of this Agreement, any future rights or
         obligations (excluding such obligations accrued to the date of this
         Agreement) of a party under the Principal Agreement shall be
         extinguished and shall instead be governed by this Agreement.

2.       SALE AND PURCHASE OF INITIAL PORTFOLIO

2.1      Subject to Clause 2.2, in consideration of the Purchase Price (which
         shall be paid in accordance with Clause 3.3) and the covenant of the
         Mortgages Trustee to hold the Trust Property upon trust, with and
         subject to all the trusts, powers and provisions of the Mortgages
         Trust Deed, the Seller hereby agrees to sell to the Mortgages Trustee
         with full title guarantee, the Initial Portfolio on the Initial
         Closing Date.

2.2      The obligation of the Seller under Clause 2.1 shall be subject to and
         conditional upon:

         (a)     the issue by the First Issuer of the Issuer Notes on the
                 Initial Closing Date and the borrowing by Funding 1 of the
                 Term Advances under the First Issuer Intercompany Loan
                 Agreement;

         (b)     the constitution of the Mortgages Trust on or prior to the
                 Initial Closing Date; and

         (c)     the Transaction Documents in existence on the Initial Closing
                 Date having been executed and delivered by the parties thereto
                 on or before the Initial Closing Date.

                                       3

<PAGE>

2.3      The sale of the Portfolio shall not include any obligation to pay any
         Delayed Cashbacks, Home Cash Reserve Drawings, Flexible Loan Drawings
         or Retention Drawings (if any), which obligation shall at all times,
         and notwithstanding the sale of the Portfolio, remain an obligation of
         the Seller.

3.       INITIAL CLOSING DATE

3.1      (a)     A meeting shall take place at 11.00 a.m. on the Initial
                 Closing Date at the offices of Allen & Overy, One New Change,
                 London EC4M 9QQ or such other time or offices as the parties
                 may agree at which the Seller shall deliver to the Funding 1
                 Security Trustee or its representative the following
                 documents:

                 (i)     two originals of the power of attorney dated as at the
                         Initial Closing Date and substantially in the form set
                         out in Schedule 5 of the Original Mortgage Sale
                         Agreement , duly executed by the Seller;

                 (ii)    a certified copy of each of the duly executed
                         Insurance Acknowledgements;

                 (iii)   a certified copy of each of the duly executed
                         Insurance Endorsements;

                 (iv)    a duly executed assignment of the Halifax Mortgage Re
                         Limited MIG Policies to the extent that they relate to
                         the Mortgages comprised in the Initial Portfolio from
                         the Seller to the Mortgages Trustee and a certified
                         copy of a notice (the original of which shall be
                         served by the Seller by courier or by special
                         delivery) of such assignment from the Seller to HBOS
                         Insurance (PCC) Guernsey Limited dated as at the
                         Initial Closing Date and in the form (mutatis
                         mutandis) set out in Schedule 8 and Schedule 9 of the
                         Original Mortgage Sale Agreement respectively and a
                         certified copy of consent to assignment of the Halifax
                         Mortgage Re Limited MIG Policies (or acknowledgement
                         that the Mortgages Trustee will be an insured in
                         respect of the Initial Portfolio under the Halifax
                         Mortgage Re Limited MIG Policies following such
                         assignment) from HBOS Insurance (PCC) Guernsey Limited
                         in such form as HBOS Insurance (PCC) Guernsey Limited
                         reasonably requires;

                 (v)     a certificate of a duly authorised officer of the
                         Seller dated as at the Initial Closing Date attaching
                         a copy of the board minute of the Seller authorising
                         its duly appointed representatives to agree the sale
                         of the Portfolio and authorising execution and
                         performance of this Agreement, the Servicing
                         Agreement, the other Transaction Documents to which
                         the Seller is a party (in any capacity) and all of the
                         documentation to be entered into pursuant to this
                         Agreement and confirming that the resolutions referred
                         to therein are in full force and effect and have not
                         been amended or rescinded as at the date of the
                         certificate;

                 (vi)    a duly executed assignment of rights against third
                         parties comprised in the Initial Portfolio dated as at
                         the Initial Closing Date and in the form of the
                         Assignment of Third Party Rights; and

                 (vii)   a solvency certificate from an authorised signatory of
                         the Seller dated the Initial Closing Date in a form
                         acceptable to the Mortgages Trustee, Funding 1 and the
                         Funding 1 Security Trustee (each acting reasonably).

         (b)     The parties hereto acknowledge that completion on the Initial
                 Closing Date of the sale to the Mortgages Trustee of all of
                 the Seller's right, title, interest and benefit in and to the
                 Initial Portfolio subject to the terms and provisions of the
                 Mortgages Trust Deed shall occur as indicated in this Clause
                 3, provided that the matters described in Clauses 6.2, 6.3,
                 6.4 and 6.5 shall not occur until the relevant time indicated
                 in Clause 6 or, as applicable, Clause 7.4.

                                       4

<PAGE>

3.2      The Seller undertakes that from the Initial Closing Date until the
         perfection of the assignment or assignation (as appropriate) in
         accordance with Clauses 6.1, 6.2, 6.3, 6.4 and 6.5, the Seller shall
         hold the Title Deeds and Customer Files relating to the Portfolio that
         are in its possession or under its control or held to its order to the
         order of the Mortgages Trustee or as the Mortgages Trustee shall
         otherwise direct.

3.3      Subject to fulfilment of the conditions referred to in Clauses 2.2 and
         3, the Seller shall be paid the Purchase Price by telegraphic transfer
         by Funding 1 on the Initial Closing Date.

3.4      The Seller shall provide all reasonable co-operation to the Mortgages
         Trustee, Funding 1, the Funding 1 Security Trustee, and, on and after
         the Programme Date, Funding 2 and the Funding 2 Security Trustee to
         enable them to carry out their respective duties and enforce their
         rights under the Transaction Documents. Without prejudice to the
         generality of the foregoing, the Seller shall:

         (a)     upon reasonable prior notice and during normal office hours,
                 permit the Mortgages Trustee and/or Funding 1 and/or Funding 2
                 and/or the Funding 1 Security Trustee and/or the Funding 2
                 Security Trustee and their respective authorised employees and
                 agents and other persons nominated by them and approved by the
                 Seller (such approval not to be unreasonably withheld or
                 delayed), to review the Customer Files and the Title Deeds in
                 relation to the Portfolio (subject to such person(s) agreeing
                 to keep the same confidential but provided that disclosure
                 shall be permitted to the professional advisors and auditors
                 of the party to whom such disclosure is made and/or to the
                 extent that such disclosure is required by law or for the
                 purpose of any judicial or other proceedings); and/or

         (b)     give promptly all such information and explanations relating
                 to the Loans and their Related Security as the Mortgages
                 Trustee and/or Funding 1 and/or Funding 2 and/or the Funding 1
                 Security Trustee and/or the Funding 2 Security Trustee may
                 reasonably request (including a list of the Loans and their
                 Related Security in the Portfolio along with details of the
                 location of the Title Deeds relating thereto),

         provided that prior to completion in accordance with Clause 6, the
         Seller shall be under no obligation to provide any information or
         documentation to any person other than the Mortgages Trustee and/or
         Funding 1 and/or Funding 2 and/or the Funding 1 Security Trustee
         and/or the Funding 2 Security Trustee or their respective employees
         and/or professional advisors or allow such person access to the
         Customer Files or Title Deeds if to do so would result in a breach of
         the applicable Mortgage Terms or the Data Protection Act 1998.

4.       SALE AND PURCHASE OF NEW PORTFOLIOS

4.1      Subject to fulfilment of the conditions set out in Clauses 2.2, 3.1,
         4.2 (or as applicable, 4.3) and 4.4 and the restriction set out in
         Clause 2.3, if the Seller shall, at any time and from time to time
         serve a properly completed New Portfolio Notice on the Mortgages
         Trustee, Funding 1 and Funding 2 with a copy to each of the Funding 1
         Security Trustee and the Funding 2 Security Trustee (such service to
         be in the Seller's sole discretion), the Seller agrees that on the
         date for completion of the sale specified in such New Portfolio Notice
         the Seller shall sell with full title guarantee (or in relation to
         rights and assets situated in or governed by the law of Scotland with
         absolute warrandice) to the Mortgages Trustee the relevant New
         Portfolio.

4.2      The conditions to be met as at each Sale Date are:

         (a)     no event of default under the Transaction Documents shall have
                 occurred which is continuing as at the relevant Sale Date;

                                       5

<PAGE>

         (b)     (i) (in the case of Funding 1) the Principal Deficiency Ledger
                 shall not have a debit balance as at the most recent Funding 1
                 Interest Payment Date after applying all Funding 1 Available
                 Revenue Receipts on that Funding 1 Interest Payment Date and
                 (ii) (in the case of Funding 2) the Funding 2 Principal
                 Deficiency Ledger (other than the Subordinated Loan Tranche
                 Principal Deficiency Sub-Ledger) shall not have a debit
                 balance as at the most recent Funding 2 Interest Payment Date
                 after applying all Funding 2 Available Revenue Receipts on
                 that Funding 2 Interest Payment Date;

         (c)     the Mortgages Trustee is not aware that the purchase of the
                 New Portfolio on the relevant Sale Date would adversely affect
                 the then current rating by the Rating Agencies of any of the
                 Notes of any Funding 1 Issuer or of the Master Issuer;

         (d)     as at the relevant Sale Date, the Seller has not received any
                 notice that the short term, unsecured, unguaranteed and
                 unsubordinated debt obligations of the Seller are not rated at
                 least P-1 by Moody's, A-1 by S&P and F1 by Fitch at the time
                 of, and immediately following, the sale of New Loans to the
                 Mortgages Trustee;

         (e)     as at the relevant Sale Date, the aggregate Outstanding
                 Principal Balance of the Loans in the Mortgages Trust, in
                 respect of which the aggregate amount in arrears is more than
                 three times the Monthly Payment then due, is less than 5% of
                 the aggregate Outstanding Principal Balance of the Loans in
                 the Mortgages Trust unless the Rating Agencies have confirmed
                 to Funding 1 and Funding 2 or to the Funding 1 Security
                 Trustee and the Funding 2 Security Trustee that the then
                 current ratings of the Notes of any Funding 1 Issuer or of the
                 Master Issuer will not be reduced, withdrawn of qualified;

         (f)     except where Funding 1 and/or Funding 2 (as applicable) pays
                 amounts to the Seller in consideration of New Loans to be sold
                 to the Mortgages Trustee on the relevant Sale Date, the
                 aggregate Outstanding Principal Balance (excluding Arrears of
                 Interest) of New Loans transferred in any one Interest Period
                 must not exceed 15% of the aggregate Outstanding Principal
                 Balance of Loans (excluding Arrears of Interest) in the
                 Mortgages Trust as at the beginning of that Interest Period;

         (g)     the sale of the New Portfolio on the relevant Sale Date does
                 not result in the product of WAFF and WALS for the Loans in
                 the Portfolio after such purchase calculated on the relevant
                 Sale Date (in the same way as for the Initial Portfolio (or as
                 agreed by the Servicer and the Rating Agencies from time to
                 time)) exceeding the product of WAFF and WALS (when tested by
                 Fitch at the "AAA level" as calculated in accordance with
                 Fitch's methodology) for the Loans in the Portfolio calculated
                 on the most recent Closing Date (or on another date as agreed
                 by the Servicer and the Rating Agencies from time to time)
                 plus 0.25%;

         (h)     the yield (as calculated below) of the Loans in the Mortgages
                 Trust together with the yield of the New Loans to be sold to
                 the Mortgages Trustee on the relevant Sale Date (together for
                 the purposes of this paragraph, the RELEVANT LOANS) is at
                 least 0.50% greater than the weighed average of Sterling-LIBOR
                 for three-month sterling deposits as at the previous Funding 2
                 Interest Payment Date and Sterling-LIBOR for three-month
                 sterling deposits as at the previous Funding 1 Interest
                 Payment Date, after taking into account the average yield on
                 the Loans which are Variable Rate Loans, Tracker Rate Loans
                 and Fixed Rate Loans and the margins on the Funding 1 Swap(s)
                 and the Funding 2 Swap(s), in each case as at the relevant
                 Sale Date. The yield of the Relevant Loans is to be calculated
                 as follows:

                         (AxB)+(Cx(D-E+F))+(Gx(H+I))/J

                                       6

<PAGE>

                 where,

                 (i)     =       the Outstanding Principal Balance, on the
                                 relevant Sale Date, of the Relevant Loans
                                 which are Fixed Rate Loans;

                 (ii)    =       the fixed interest rate receivable by Funding
                                 1 under the Funding 1 Swap(s) and by Funding 2
                                 under the Funding 2 Swap(s), in each case as
                                 at the relevant Sale Date;

                 (iii)   =       the Outstanding Principal Balance, on the
                                 relevant Sale Date, of the Relevant Loans
                                 which are Variable Rate Loans;

                 (iv)    =       the weighted average Variable Base Rate of the
                                 Relevant Loans which are Variable Rate Loans
                                 on the relevant Sale Date;

                 (v)     =       the Variable Rate Swap SVR for the Relevant
                                 Loans which are Variable Rate Loans on the
                                 relevant Sale Date;

                 (vi)    =       the variable interest rate receivable by
                                 Funding 1 under the Funding 1 Swap(s) and by
                                 Funding 2 under the Funding 2 Swap(s), in each
                                 case as at the relevant Sale Date;

                 (vii)   =       the Outstanding Principal Balance, on the
                                 relevant Sale Date, of the Relevant Loans
                                 which are Tracker Rate Loans;

                 (viii)  =       the tracker interest rate receivable by
                                 Funding 1 under the Funding 1 Swap(s) and by
                                 Funding 2 under the Funding 2 Swap(s), in each
                                 case as at the relevant Sale Date;

                 (ix)    =       the weighted average margin of the Relevant
                                 Loans which are Tracker Rate Loans over or
                                 under the Bank of England repo rate on the
                                 relevant Sale Date; and

                 (x)     =       the Outstanding Principal Balance of the
                                 Relevant Loans on the relevant Sale Date;

         (i)     the sale of the New Loans on the relevant Sale Date does not
                 result in the loan-to-value ratio of the Loans and the New
                 Loans after application of the LTV Test on the relevant Sale
                 Date exceeding the loan-to-value ratio (based on the LTV Test)
                 of Loans in the Portfolio on the most recent Closing Date plus
                 0.25%;

         (j)     the sale of the New Loans on the relevant Sale Date does not
                 result in Loans (other than Fixed Rate Loans) which, after
                 taking into account the Funding 1 Swap(s) and the Funding 2
                 Swap(s), will yield less than Sterling-LIBOR plus 0.50% as at
                 the relevant Sale Date and that have more than two years
                 remaining on their incentive period accounting for more than
                 15% of the aggregate Outstanding Principal Balance of all
                 Loans comprising the Trust Property;

         (k)     the sale of the New Loans on the relevant Sale Date does not
                 result in the Fixed Rate Loans which have more than one year
                 remaining on their incentive period accounting for more than
                 50% of the aggregate Outstanding Principal Balance of Loans
                 comprised in the Trust Property;

                                       7

<PAGE>

         (l)     no sale of New Loans may occur, if, as at the relevant Sale
                 Date, the Step-up Date in respect of any Note issued by a
                 Funding 1 Issuer issued after 1 January 2003 and still
                 outstanding has been reached and such Note issued by any
                 Funding 1 Issuer has not been redeemed in full. For the
                 avoidance of doubt, this prohibition on the sale of New Loans
                 to the Mortgages Trustee shall remain in effect only for so
                 long as any such Note issued by any Funding 1 Issuer remains
                 outstanding and, upon its redemption, the sale of New Loans to
                 the Mortgages Trustee may be resumed in accordance with the
                 terms of this Agreement;

         (m)     no sale of new Loans may occur, if, as at the relevant Sale
                 Date, the Step-up Date in respect of any Note issued by the
                 Master Issuer after the Programme Date and still outstanding
                 has been reached and such Note has not been redeemed in full.
                 For the avoidance of doubt, this prohibition on the sale of
                 New Loans to the Mortgages Trustee shall remain in effect only
                 for so long as any such Note remains outstanding and, upon its
                 redemption, the sale of New Loans to the Mortgages Trustee may
                 be resumed in accordance with the terms of this Agreement;

         (n)     as at the Sale Date, (i) (in the case of Funding 1) the
                 adjusted General Reserve Fund is equal to or greater than the
                 General Reserve Fund Threshold and (ii) (in the case of
                 Funding 2) the Funding 2 General Reserve Fund is equal to or
                 greater than the Funding 2 General Reserve Fund Threshold;

         (o)     if the sale of New Loans includes the sale of New Loan Types
                 to the Mortgages Trustee, the Funding 1 Security Trustee and
                 the Funding 2 Security Trustee have received written
                 confirmation from each of the Rating Agencies that such New
                 Loan Types may be sold and assigned to the Mortgages Trustee
                 and that such sale of New Loan Types would not have an adverse
                 effect on the then current ratings of the Notes of any Funding
                 1 Issuer or of the Master Issuer;

         (p)     each of the Funding 1 Swap Agreement and the Funding 2 Swap
                 Agreement has been modified as required (or, if appropriate,
                 Funding 1 and/or Funding 2 has entered into a new swap
                 agreement) to hedge against the interest rates payable in
                 respect of such New Loans and the floating rate of interest
                 payable on the Intercompany Loan and the Master Intercompany
                 Loan (respectively); and

         (q)     no Trigger Event has occurred on or before the relevant Sale
                 Date;

         provided that the Mortgages Trustee may vary or waive the conditions
         set out in this Clause 4.2 where it has received written confirmation
         from each Rating Agency that such variation or waiver will not cause
         the ratings of the Notes of any Funding 1 Issuer or of the Master
         Issuer to be reduced, withdrawn or qualified. In this Clause 4.2
         references to any Monthly Payment due at any date means the Monthly
         Payment payable in respect of the month in which that date falls.

4.3      The obligations of the Seller under Clause 4.1 shall be subject to and
         conditional upon no Insolvency Event having occurred which is
         continuing as at the relevant Sale Date.

4.4      Subject to fulfilment of the conditions referred to in Clauses 4.2,
         4.3, 4.4, 4.5 and 4.6, the consideration to be provided to the Seller
         for the sale and assignment of the New Portfolio to the Mortgages
         Trustee on a Sale Date shall be the aggregate of:

         (a)     the payment by Funding 1 and/or Funding 2 (as applicable) to
                 the Seller by telegraphic transfer on the relevant Sale Date
                 of the proceeds of:

                                       8

<PAGE>

                 (i)     (in the case of Funding 1) the Term Advances under any
                         Intercompany Loan Agreement advanced to Funding 1 by a
                         Funding 1 Issuer for such purpose; and/or

                 (ii)    (in the case of Funding 2) any Loan Tranche under the
                         Master Intercompany Agreement advanced to Funding 2 by
                         the Master Issuer for such purpose; and/or

                 (iii)   (in the case of Funding 1 or Funding 2) any New
                         Intercompany Loan made by a New Issuer to Funding 1 or
                         Funding 2 under a New Intercompany Loan Agreement for
                         such purpose;

         (b)     the covenant by Funding 1 and Funding 2 to pay, at a later
                 date, Deferred Consideration to the Seller; and/or

         (c)     the covenant of the Mortgages Trustee to hold the Trust
                 Property on trust for the Seller (as to the Seller Share),
                 Funding 1 (as to the Funding 1 Share) and Funding 2 (as to the
                 Funding 2 Share) pursuant to the terms of the Mortgages Trust
                 Deed.

4.5      (a)     On the date of the sale of the relevant New Portfolio the
                 Seller shall deliver to the Funding 1 Security Trustee and the
                 Funding 2 Security Trustee or their respective representatives
                 the following documents:

                 (i)     on the date of the first sale of a relevant New
                         Portfolio including Scottish Loans:

                         (A)     two originals of the power of attorney dated
                                 as at the Sale Date and substantially in the
                                 form set out in Schedule 5 hereof duly
                                 executed by the Seller;

                         (B)     a certified copy of each of the duly executed
                                 Insurance Acknowledgements; and

                         (C)     a certified copy of each of the duly executed
                                 Insurance Endorsements;

                 (ii)    a duly executed assignment of the Halifax Mortgage Re
                         Limited MIG Policies to the extent that they relate to
                         the Mortgages comprised in the relevant New Portfolio
                         from the Seller to the Mortgages Trustee and a
                         certified copy of a notice (the original of which
                         shall be served by the Seller by courier or by special
                         delivery) of such assignment from the Seller to HBOS
                         Insurance (PCC) Guernsey Limited dated as of the
                         relevant Sale Date and in the form (mutatis mutandis)
                         set out in Schedule 8 and Schedule 9 hereof
                         respectively and a certified copy of consent to
                         assignment of the Halifax Mortgage Re Limited MIG
                         policies (or acknowledgement that the Mortgages
                         Trustee will be an insured under the Halifax Mortgage
                         Re Limited MIG Policies following the assignment) from
                         HBOS Insurance (PCC) Guernsey Limited in such form as
                         HBOS Insurance (PCC) Guernsey Limited reasonably
                         requires;

                 (iii)   a duly executed assignment of rights against third
                         parties comprised in the relevant New Portfolio dated
                         as at the relevant Sale Date and in the form of the
                         Assignment of Third Party Rights;

                                       9

<PAGE>

                 (iv)    on any Sale Date that Funding 1 and/or Funding 2 (as
                         applicable) provides consideration for New Loans to be
                         sold to the Mortgages Trustee pursuant to Clause
                         4.4(a) above, a certificate of a duly authorised
                         officer of the Seller dated as at the relevant Sale
                         Date attaching either (A) a copy of the board minute
                         referred to in Clause 3.1(a)(v) or (B) any board
                         minutes or considerations, notes and resolutions of
                         the Seller or its duly authorised delegate (as
                         applicable) authorising its duly appointed
                         representatives to agree the sale of a New Portfolio,
                         and authorising the execution and performance of the
                         Transaction Documents to which the Seller is party, in
                         each case confirming that the resolutions referred to
                         therein are in full force and effect and have not been
                         amended or rescinded as at the date of the
                         certificate;

                 (v)     on any Sale Date that Funding 1 and/or Funding 2 (as
                         applicable) provides consideration for New Loans to be
                         sold to the Mortgages Trustee pursuant to Clause
                         4.4(a) above, a solvency certificate from an
                         authorised signatory of the Seller dated as at the
                         relevant Sale Date; and

                 (vi)    a Scottish Declaration of Trust in respect of any
                         Scottish Loans and their Related Security comprised in
                         the relevant New Portfolio, in the form (mutatis
                         mutandis) set out in Schedule 15 and with the annexure
                         thereto duly completed, duly executed by the Seller,
                         the Mortgages Trustee, Funding 1 and Funding 2.

         (b)     The parties hereto acknowledge that completion on each
                 relevant Sale Date of the sale to the Mortgages Trustee of all
                 of the Seller's right, title, interest and benefit in and to
                 the relevant New Portfolio subject to the terms and provisions
                 of the Mortgages Trust Deed shall occur as indicated in this
                 Clause 4 PROVIDED THAT the matters described in Clauses 6.5
                 and 6.6 shall not occur until the relevant time indicated in
                 Clause 6 or, as applicable, Clause 7.4.

4.6      (a)     The Seller undertakes that from the relevant Sale Date until
                 the perfection of the assignment or assignation (as
                 appropriate) in accordance with Clauses 6.1, 6.2, 6.3, 6.4 and
                 6.5, the Seller shall hold the Title Deeds and Customer Files
                 relating to the New Portfolio that are in its possession or
                 under its control or held to its order to the order of the
                 Mortgages Trustee or as the Mortgages Trustee shall direct.

         (b)     The Seller undertakes that within three (3) London Business
                 Days of the Sale Date to provide the Mortgages Trustee, the
                 Funding 1 Security Trustee and the Funding 2 Security Trustee
                 with an updated, complete and accurate list of the Loans and
                 their Related Security which comprise the New Portfolio which
                 may be provided in a document stored upon electronic media
                 (including, but not limited to a CD-Rom) in a form acceptable
                 to the Mortgages Trustee, the Funding 1 Security Trustee and
                 the Funding 2 Security Trustee (each acting reasonably).

4.7      Prior to the earlier to occur of:

         (a)     a Trigger Event; and

         (b)     the later of:

                 (i)     (A) if Funding 1 does not enter into a New
                         Intercompany Loan Agreement, the Funding 1 Interest
                         Payment Date in September 2012; or (B) on each
                         occasion that Funding 1 enters into a New Intercompany
                         Loan Agreement, the latest Funding 1 Interest Payment
                         Date specified by Funding 1 by notice in writing to
                         the Seller, Funding 2 and the Mortgages Trustee as
                         applying in relation to this covenant; and

                                      10

<PAGE>

                 (ii)    (A) the latest occurring Step-up Date for any Series
                         and Class of Notes of the Master Issuer the proceeds
                         of which the Master Issuer advances to Funding 2 as a
                         Rated Loan Tranche under the Master Intercompany Loan
                         Agreement; or (B) any later Funding 2 Interest Payment
                         Date specified by Funding 2 by notice in writing to
                         the Seller, Funding 1 and the Mortgages Trustee as
                         applying in relation to this covenant,

         the Seller undertakes to use all reasonable endeavours to offer to
         sell, in accordance with the provisions of this Clause 4, to the
         Mortgages Trustee and the Mortgages Trustee undertakes to use all
         reasonable endeavours to acquire from the Seller and to hold pursuant
         to the terms of the Mortgages Trust Deed until the earlier of the
         occurrence of a Trigger Event and the dates set out in paragraph (b)
         above, sufficient New Loans and their Related Security so that the
         aggregate Outstanding Principal Balance of Loans in the Portfolio
         during the period from and including the most recent Closing Date to
         but excluding the later of the dates specified in any notice from
         Funding 1 or Funding 2 (as applicable) given pursuant to paragraph (b)
         above is not less than the amount specified in such notice provided
         that the Seller shall not be obliged to sell to the Mortgages Trustee,
         and the Mortgages Trustee shall not be obliged to acquire, New Loans
         and their Related Security if in the reasonable opinion of the Seller
         the sale to the Mortgages Trustee of New Loans and their Related
         Security would adversely affect the business of the Seller.

4.8      On each Sale Date that Funding 1 and/or Funding 2 (as applicable)
         provides consideration for New Loans to be sold to the Mortgages
         Trustee pursuant to Clause 4.4(a) above, the Beneficiaries shall
         appoint a firm of independent auditors to undertake a due diligence
         exercise on a sample of the Customer Files relating to the New Loans
         to be sold to the Mortgages Trustee on the relevant Sale Date. The
         costs of such independent auditors shall be borne by the relevant
         Funding 1 Issuer or the Master Issuer (as applicable) which is making
         a Term Advance or a Loan Tranche (as applicable) to Funding 1 or
         Funding 2 (as applicable) (which shall be procured by Funding 1 or
         Funding 2 (as applicable)).

4.9      By way of additional consideration for the Initial Portfolio and the
         New Portfolios, Funding 1 and Funding 2 shall pay Deferred
         Consideration to the Seller in the amount and in the manner provided
         in the Funding 1 Deed of Charge and the Funding 2 Deed of Charge
         respectively. The amount payable under this Clause 4.9 shall be
         payable without allocation among the Initial Portfolio and the New
         Portfolios and is payable notwithstanding the actual amount of the
         Portfolio.

5.       TRUST OF MONIES

5.1      Notwithstanding the sales effected by this Agreement, if at, or at any
         other time after, a Closing Date (but prior to any repurchase in
         accordance with Clause 8.5) the Seller holds, or there is held to its
         order, or it receives, or there is received to its order any property,
         interests, rights or benefits and/or the proceeds thereof hereby
         agreed to be sold, the Seller undertakes to each of the Mortgages
         Trustee, Funding 1, Funding 2, the Funding 1 Security Trustee and the
         Funding 2 Security Trustee that, subject to Clause 6, it will promptly
         remit, assign and/or transfer the same to the Mortgages Trustee or, if
         appropriate, the Funding 1 Security Trustee and the Funding 2 Security
         Trustee and until it does so or to the extent that the Seller is
         unable to effect such remittance, assignment, assignation or transfer,
         it will hold such property, interests, rights or benefits and/or the
         proceeds thereof upon trust for the Mortgages Trustee subject at all
         times to the Mortgages Trust.

5.2      If at, or any time after, the Initial Closing Date the Mortgages
         Trustee holds, or there is held to its order, or it receives, or there
         is received to its order, any property, interests, rights or benefits
         relating to:

         (a)     any Loan or Loans under a Mortgage Account and its Related
                 Security repurchased by the Seller pursuant to Clause 8.5; or

                                      11

<PAGE>

         (b)     (without prejudice to Clause 12) amounts owed by a Borrower to
                 the Seller which the Seller has not agreed to sell under
                 Clause 2.1,

         and/or the proceeds thereof, the Mortgages Trustee undertakes to the
         Seller that it will remit, assign, re-assign, retrocess or transfer
         the same to the Seller, as the case may require, and until it does so
         or to the extent that the Mortgages Trustee is unable to effect such
         remittance, assignation, assignment, re-assignment, retrocession or
         transfer, the Mortgages Trustee undertakes to hold such property,
         interests, rights or benefits and/or the proceeds thereof upon trust
         for the Seller as the beneficial owner thereof or as the Seller may
         direct provided that the Mortgages Trustee shall not be in breach of
         its obligations under this Clause 5 if, having received any such
         monies and paid them to third parties in error, it pays an amount
         equal to the monies so paid in error to the Seller in accordance with
         the Servicing Agreement.

6.       COMPLETION OF THE TRANSFER OF LOANS

6.1      The assignments or assignations (as appropriate) contemplated by this
         Agreement shall be perfected on the twentieth London Business Day
         after the earliest to occur of:

         (a)     the service of an Intercompany Loan Acceleration Notice (in
                 relation to any Intercompany Loan), a Master Intercompany Loan
                 Acceleration Notice (in relation to the Master Intercompany
                 Loan) or a Note Acceleration Notice (in relation to any Notes
                 of any Funding 1 Issuer or the Master Issuer); or

         (b)     the Seller being required to perfect the Mortgages Trustee's
                 legal title to the Mortgages, or procure any or all of the
                 acts referred to in this Clause 6 by an order of a court of
                 competent jurisdiction or by any regulatory authority of which
                 the Seller is a member or any organisation whose members
                 comprise (but are not necessarily limited to) mortgage lenders
                 and with whose instructions it is customary for the Seller to
                 comply; or

         (c)     it becoming necessary by law to do any or all of the acts
                 referred to in this Clause 6; or

         (d)     (i)     the Funding 1 Security Trustee certifying that, in its
                         reasonable opinion, the property, assets and rights of
                         Funding 1 comprised in the security constituted by the
                         Funding 1 Deed of Charge or any material part thereof
                         is/are in jeopardy; or

                 (ii)    the Funding 2 Security Trustee certifying that, in its
                         reasonable opinion, the property, assets and rights of
                         Funding 2 comprised in the security constituted by the
                         Funding 2 Deed of Charge or any material part thereof
                         is/are in jeopardy,

                 and (in either case) that the doing of any or all of the acts
                 referred to in Clauses 6.2 to 6.6 inclusive is necessary in
                 order materially to reduce such jeopardy; or

         (e)     unless otherwise agreed in writing by the Rating Agencies, the
                 Funding 1 Security Trustee and the Funding 2 Security Trustee,
                 the termination of the Seller's role as Servicer under the
                 Servicing Agreement; or

         (f)     the Seller calling for perfection by serving notice in writing
                 to that effect on the Mortgages Trustee, Funding 1, Funding 2,
                 the Funding 1 Security Trustee and the Funding 2 Security
                 Trustee; or

         (g)     the date on which the Seller ceases to be assigned a long term
                 unsecured, unsubordinated debt obligation rating from S&P of
                 at least BBB- or from Moody's of at least Baa3 or from Fitch
                 of at least BBB-; or

                                      12

<PAGE>

         (h)     the occurrence of an Insolvency Event in relation to the
                 Seller; or

         (i)     the latest of the last repayment dates of the Intercompany
                 Loan Agreements, the Master Intercompany Loan Agreement and
                 any New Intercompany Loan Agreement where such Loan has not
                 been discharged in full.

6.2      Completion of the transfer of the English Mortgages in the Portfolio
         shall be effected by:

         (a)     a Registered Transfer, in the case of English Mortgages over
                 Registered Land (in the form set out in Schedule 2); and

         (b)     an Unregistered Transfer, in the case of English Mortgages
                 over Unregistered Land (in the form set out in Schedule 3).

6.3      Completion of the transfer of the Scottish Mortgages in the Portfolio
         shall be effected by:

         (a)     the completion and registration in the Land Register of
                 Scotland of an SLR Transfer or SLR Transfers (in the
                 applicable form set out in Schedule 13), in the case of
                 Scottish Mortgages over Properties title to which is
                 registered in the Land Register of Scotland; and

         (b)     the completion and recording in the General Register of
                 Sasines of a Sasine Transfer or Sasine Transfers (in the
                 applicable form set out in Schedule 14), in the case of
                 Scottish Mortgages over Properties title to which is recorded
                 in the General Register of Sasines.

6.4      Completion of the transfer of any other matter comprised in the
         Portfolio shall be effected by a transfer, conveyance or assignation
         in such form as the Mortgages Trustee may reasonably require.

6.5      Subject to Clause 7.5, prior to perfection pursuant to Clause 6.1,
         none of the Mortgages Trustee, Funding 1, Funding 2, the Funding 1
         Security Trustee or the Funding 2 Security Trustee will:

         (a)     submit or require the submission of any notice, form, request
                 or application to or pay any fee for the registration or
                 recording of, or the noting of any interest at the Land
                 Charges Department of the Land Registry or at the Land
                 Registry or Registers of Scotland in relation to, the
                 Mortgages Trustee's and/or Funding 1's and/or Funding 2's
                 interests in the Portfolio;

         (b)     give or require the giving of any notice to any Borrower of
                 the assignment or assignation of that Borrower's Loan and its
                 Related Security to the Mortgages Trustee, the making of any
                 Scottish Declaration of Trust, the charge by Funding 1 of
                 Funding 1's interest in that Borrower's Loan and its Related
                 Security to the Funding 1 Security Trustee pursuant to the
                 Funding 1 Deed of Charge or the charge by Funding 2 of Funding
                 2's interest in that Borrower's Loan and its Related Security
                 to the Funding 2 Security Trustee pursuant to the Funding 2
                 Deed of Charge; or

         (c)     send or require to be sent to any solicitor who has acted on
                 behalf of the Seller in respect of any Mortgage with respect
                 to which the Seller has not received a complete set of the
                 Title Deeds a letter or other communication requiring such
                 solicitor to hold such documents to the order of the Mortgages
                 Trustee, the Funding 1 Security Trustee and the Funding 2
                 Security Trustee.

6.6      Within 25 London Business Days following perfection pursuant to Clause
         6.1, the Seller will do such of the acts or things referred to in
         Clauses 6.2 to 6.5 as the Funding 1 Security Trustee and the Funding 2
         Security Trustee or the Mortgages Trustee requires the Seller to do.

                                      13

<PAGE>

6.7      The Seller shall indemnify each of the Mortgages Trustee, Funding 1,
         Funding 2, the Funding 1 Security Trustee and the Funding 2 Security
         Trustee from and against any and all costs, fees and expenses
         (including, without limitation, legal fees and expenses and any
         applicable VAT thereon) which may be incurred by the Mortgages Trustee
         and/or Funding 1 and/or Funding 2 and/or the Funding 1 Security
         Trustee and/or the Funding 2 Security Trustee by reason of the doing
         of any act, matter or thing referred to in this Clause 6 and Clause
         7.5.

7.       UNDERTAKINGS

7.1      The Mortgages Trustee, Funding 1 and Funding 2 undertake to the Seller
         that they will at all times (or will direct the Servicer at all times
         to) use reasonable endeavours to administer and enforce (and exercise
         their powers and rights and perform their obligations under) the Loans
         comprised in the Portfolio and their Related Security in accordance
         with the Seller's Policy (for so long as it exists and thereafter in
         accordance with such policies as would be applied by a Reasonable,
         Prudent Mortgage Lender in the conduct of its business), provided that
         if the Seller fails to comply with its obligations to repurchase any
         Loan and its Related Security pursuant to Clause 8.5 the Mortgages
         Trustee shall be entitled to waive any Early Repayment Fee in respect
         of such Loan and its Related Security if, in the Mortgages Trustee's
         reasonable opinion, such waiver is reasonably necessary in order to
         effect an interest rate change.

7.2      The Seller hereby undertakes to the Mortgages Trustee, Funding 1 and
         Funding 2 that, in the event that any Borrower establishes that it has
         at any time prior to the Initial Closing Date or, as the case may be,
         the relevant Sale Date, paid to the Seller any amounts in excess of
         sums due to the Seller as at the date of payment under the Mortgage
         Conditions applicable to that Loan, the Seller will reimburse the
         Borrower for such overpayment together with any interest, cost or
         other expense associated therewith. The Seller further agrees to hold
         the Mortgages Trustee, Funding 1 and Funding 2 harmless against any
         such claims and to indemnify the Mortgages Trustee, Funding 1 and
         Funding 2 on an after Tax basis in relation to any costs, expense,
         loss or other claim which may arise in connection therewith. Any
         payment made by the Seller to the Mortgages Trustee, Funding 1 and
         Funding 2 in discharge of the foregoing indemnity shall be regarded as
         a rebate of part of the Purchase Price of the relevant Loan.

7.3      Each of the Seller, the Mortgages Trustee, Funding 1 and Funding 2
         undertakes to each other and to the Funding 1 Security Trustee and the
         Funding 2 Security Trustee that if and to the extent that any
         determination shall be made by any court or other competent authority
         or any ombudsman in respect of any Loan and its Related Security that:

         (a)     any term which relates to the recovery of interest under the
                 Standard Documentation applicable to that Loan and its Related
                 Security is unfair; or

         (b)     the interest payable under any Loan is to be set by reference
                 to HVR 1 or HVR 2 (as applicable) (and not a rate set by the
                 Seller's successors or assigns or those deriving title from
                 them); or

         (c)     the variable margin above the Bank of England repo rate under
                 any Tracker Rate Loan must be set by the Seller (rather than
                 by its successors or assigns or those deriving title from
                 them) and such rate is lower than the rate set by the Seller's
                 successors or assigns or those deriving title from them; or

         (d)     the interest payable under any Loan is to be set by reference
                 to an interest rate other than that set or purported to be set
                 by either the Servicer or the Mortgages Trustee as a result of
                 the Seller having more than one variable mortgage rate,

                                      14

<PAGE>

         then the Mortgages Trustee will serve upon the Seller a notice in the
         form of the Loan Repurchase Notice requiring the Seller to repurchase
         the relevant Loan and all other Loans under the relevant Mortgage
         Account and its Related Security in accordance with Clause 8.5 (but in
         the case of a determination in respect of (b) above, only if at any
         time on or after such determination, HVR 1 or HVR 2 (as applicable)
         shall be below or shall fall below the standard variable rate of
         interest set by such successors or assigns or those deriving title
         from them).

7.4      The Seller hereby undertakes to the Mortgages Trustee, Funding 1,
         Funding 2, the Funding 1 Security Trustee and the Funding 2 Security
         Trustee that:

         (a)     if the long term unsecured, unsubordinated and unguaranteed
                 debt obligations of the Seller cease to be assigned a rating
                 of Baa2 or higher from Moody's and BBB or higher from S&P and
                 BBB or higher from Fitch, the Seller shall deliver to the
                 Mortgages Trustee, Funding 1, Funding 2, the Funding 1
                 Security Trustee, the Funding 2 Security Trustee and the
                 Rating Agencies a draft letter of notice to each of the
                 Borrowers of the sale and purchase effected by this Agreement;
                 and

         (b)     if the long term unsecured, unsubordinated and unguaranteed
                 debt obligations of the Seller cease to be assigned a rating
                 of Baa3 or higher from Moody's and BBB- or higher from S&P and
                 BBB- or higher from Fitch, then the Seller shall, within 20
                 London Business Days of it becoming aware of such a rating
                 being assigned, give notice of the sale and purchase effected
                 by this Agreement to each Borrower.

7.5      The Seller undertakes to the Mortgages Trustee, Funding 1, Funding 2,
         the Funding 1 Security Trustee and the Funding 2 Security Trustee
         that, pending perfection under Clause 6, the Seller:

         (a)     shall not do or omit to do any act or thing which might, in
                 the reasonable opinion of the Funding 1 Security Trustee and
                 the Funding 2 Security Trustee, prejudice the respective
                 interests of the Mortgages Trustee and/or Funding 1 and/or
                 Funding 2 and/or the Funding 1 Security Trustee and/or the
                 Funding 2 Security Trustee (respectively) in the Portfolio;

         (b)     shall promptly notify the Mortgages Trustee, Funding 1,
                 Funding 2, the Funding 1 Security Trustee and the Funding 2
                 Security Trustee in writing if it receives written notice of
                 any litigation or claim calling into question in any material
                 way the Seller's or the Mortgages Trustee's title to any Loan
                 comprised in the Portfolio or its Related Security or if it
                 becomes aware of any material breach of any of the
                 Representations and Warranties or other obligations under this
                 Agreement;

         (c)     shall, if reasonably required so to do by the Mortgages
                 Trustee or the Funding 1 Security Trustee and the Funding 2
                 Security Trustee, participate or join in any legal proceedings
                 to the extent necessary to protect preserve and enforce the
                 Seller's and/or the Mortgages Trustee's and/or Funding 1's
                 and/or Funding 2's and/or the Funding 1 Security Trustee's
                 and/or the Funding 2 Security Trustee's title to or interest
                 in any Loan or its Related Security;

         (d)     shall use all reasonable endeavours to obtain as soon as
                 reasonably possible:

                 (i)     the title number to each Property in respect of which
                         a Mortgage is registered at the Land Registry to the
                         extent that such title number does not appear in the
                         Exhibit to this Agreement (or, as the case may be, the
                         relevant New Portfolio Notice); and

                 (ii)    the title number to each Property in respect of which
                         a Mortgage is registered in the Land Register of
                         Scotland to the extent that such title number does not
                         appear in the

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                         Exhibit to this Agreement (or, as the case may be, the
                         relevant New Portfolio Notice or Scottish Declaration
                         of Trust); and

         (e)     shall make and enforce claims under the Buildings Policies and
                 the Halifax Insurance Policies and hold the proceeds of such
                 claims on trust for the Mortgages Trustee or as the Mortgages
                 Trustee may direct.

7.6      The Seller hereby further undertakes to the Mortgages Trustee, Funding
         1 and Funding 2 that it is and at all times shall remain solely
         responsible for funding any Delayed Cashbacks, any Home Cash Reserve
         Drawings, any Flexible Loan Drawings and any Retention Drawings made
         by a Borrower and for funding any request for any Further Advance made
         by a Borrower and, for the avoidance of doubt, none of the Mortgages
         Trustee, Funding 1 or Funding 2 will be required to advance moneys to
         the Seller or to a Borrower in order to fund such a Delayed Cashback,
         Home Cash Reserve Drawing, Flexible Loan Drawing, Retention Drawing or
         Further Advance in any circumstances whatsoever.

7.7      The Seller shall grant security powers of attorney to the Mortgages
         Trustee, Funding 1, Funding 2, the Funding 1 Security Trustee and the
         Funding 2 Security Trustee in the form set out in Schedule 5 allowing
         any of the Mortgages Trustee, Funding 1, Funding 2, the Funding 1
         Security Trustee and the Funding 2 Security Trustee and their
         delegates from time to time (inter alia) to set the Seller's Variable
         Base Rate in the circumstances referred to in clause 4 of the
         Servicing Agreement and/or following perfection pursuant to Clause 6.1
         PROVIDED THAT nothing in this Clause 7.7 shall prevent the Seller (or
         any of its attorneys from time to time) from setting a higher Seller's
         Variable Base Rate than those set or to be set or required or to be
         required by the Mortgages Trustee, Funding 1, Funding 2, the Funding 1
         Security Trustee or the Funding 2 Security Trustee.

8.       WARRANTIES AND REPURCHASE BY THE SELLER

8.1      (a)     The Seller (which, in this Clause 8, shall mean Halifax (prior
                 to the Reorganisation Date) and Bank of Scotland (from the
                 Reorganisation Date)) hereby made or (following the date
                 hereof) makes the Representations and Warranties:

                 (i)     in respect of each Loan and its Related Security in
                         the Initial Portfolio on the Initial Closing Date; and

                 (ii)    in relation to each New Loan and its Related Security
                         in a New Portfolio, on the date of the service of the
                         relevant New Portfolio Notice and on the relevant Sale
                         Date.

         (b)     Each statement comprised in the Representations and Warranties
                 shall be construed as a separate statement and (save as
                 expressly provided to the contrary) shall not be limited or
                 restricted by reference to or inference from the terms of any
                 other such statement.

         (c)     The Seller acknowledges:

                 (i)     that the Representations and Warranties are made with
                         a view to inducing the Mortgages Trustee, Funding 1,
                         Funding 2, the Funding 1 Security Trustee and the
                         Funding 2 Security Trustee (as the case may be) either
                         to enter into this Agreement and the other Transaction
                         Documents to which it is a party or to agree to
                         purchase the New Loans and their Related Security
                         comprised in each New Portfolio, and

                 (ii)    that each of the Mortgages Trustee, Funding 1, Funding
                         2, the Funding 1 Security Trustee and the Funding 2
                         Security Trustee has entered into this Agreement and
                         the other Transaction Documents to which it is a party
                         in reliance upon the Representations and Warranties
                         notwithstanding any information in fact possessed

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<PAGE>

                         or discoverable by the Mortgages Trustee, Funding 1,
                         Funding 2, the Funding 1 Security Trustee and/or the
                         Funding 2 Security Trustee or otherwise disclosed to
                         any of them, and

                 (iii)   that prior to entering into this Agreement and the
                         other Transaction Documents to which each is a party
                         none of the Mortgages Trustee, Funding 1, Funding 2,
                         the Funding 1 Security Trustee or the Funding 2
                         Security Trustee has made any enquiries of any matter.

8.2      The Mortgages Trustee's, Funding 1's, Funding 2's, the Funding 1
         Security Trustee's and the Funding 2 Security Trustee's sole remedy in
         respect of a breach of any of the Representations and Warranties shall
         be to take action under this Clause 8 or under Clause 8.4 of the
         Mortgages Trust Deed.

8.3      In the event of a material breach of any of the Representations or
         Warranties in respect of any Loan and/or its Related Security made
         under Clause 8.1 or if any of those Representations or Warranties
         proves to be materially untrue as at the Initial Closing Date or, as
         the case may be, the relevant Sale Date, and provided that:

         (a)     the Mortgages Trustee has given the Seller not less than 20
                 London Business Days' notice in writing (or such shorter
                 period of notice as may be agreed between the Mortgages
                 Trustee and the Seller);

         (b)     such breach or untruth, where capable of remedy, is not
                 remedied to the reasonable satisfaction of Funding 1 and
                 Funding 2, the Funding 1 Security Trustee and the Funding 2
                 Security Trustee within the 20 London Business Days period
                 referred to in (a) (or such longer period as Funding 1 and
                 Funding 2 and the Funding 1 Security Trustee and the Funding 2
                 Security Trustee may direct the Mortgages Trustee in writing),

         the Mortgages Trustee shall then serve upon the Seller a notice in the
         form of the Loan Repurchase Notice set out in Schedule 6 requiring the
         Seller to repurchase the relevant Loan and its Related Security (and
         any other Loan secured or intended to be secured by that Related
         Security or any part of it) in accordance with Clause 8.5.

8.4      (a)     If the Seller accepts an application from, or makes an offer
                 (which is accepted) to, a Borrower for a Further Advance or a
                 Home Cash Reserve Advance then (save in the case of any Loan
                 which is then in arrears) the Seller shall give notice to the
                 Mortgages Trustee and the Mortgages Trustee will serve upon
                 the Seller a notice in the form of the Loan Repurchase Notice
                 requiring the Seller to repurchase the relevant Loan and its
                 Related Security (and any other Loan secured or intended to be
                 secured by that Related Security or any part of it) in
                 accordance with Clause 8.5.

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<PAGE>

         (b)     If the Seller accepts an application from, or makes an offer
                 (which is accepted) to, a Borrower for a Product Switch and
                 (except as provided in paragraph (c) below) on the immediately
                 preceding Distribution Date, the Seller is in breach of the
                 conditions referred to in Clauses 4.2(a) to (p) inclusive as
                 if references therein to NEW LOANS and NEW PORTFOLIO were
                 references to the Loan which would result from the
                 implementation of such Product Switch and as if references to
                 SALE DATE were references to the date when the Seller and
                 relevant Borrower complete such Product Switch then (save in
                 the case of any Loan which is then in arrears) from and
                 including the relevant Distribution Date to but excluding the
                 date when such conditions have been satisfied the Mortgages
                 Trustee will serve upon the Seller a notice in the form of the
                 Loan Repurchase Notice requiring the Seller to repurchase the
                 relevant Loan and its Related Security (and any other Loan
                 secured or intended to be secured by that Related Security or
                 any part of it) in accordance with Clause 8.5.

         (c)     If the Seller accepts an application from, or makes an offer
                 (which is accepted) to, a Borrower for a Product Switch, the
                 effect of which is to extend the final maturity date of the
                 relevant Loan beyond June 2040 then the Mortgages Trustee will
                 serve upon the Seller a notice in the form of the Loan
                 Repurchase Notice requiring the Seller to repurchase the
                 relevant Loan and its Related Security in accordance with
                 Clause 8.5 notwithstanding that the conditions referred to in
                 Clauses 4.2(a) to 4.2(q) have been satisfied.

         (d)     For the avoidance of doubt, the Seller shall not accept an
                 application from nor make an offer (which is accepted) to a
                 Borrower for a Further Advance, a Home Cash Reserve Advance or
                 a Product Switch if the relevant Loan to which such Further
                 Advance, Home Cash Reserve Advance or Product Switch relates
                 is then in arrears subject only to such exceptions as made on
                 a case by case basis as would be acceptable to a Reasonable,
                 Prudent Mortgage Lender provided that the Seller shall not so
                 act if it would result in any Funding I Issuer, the Master
                 Issuer, Funding 1, Funding 2 or the Mortgages Trustee
                 arranging or advising in respect of, administering (servicing)
                 or entering into a regulated mortgage contract or agreeing to
                 carry on any of these activities, if any Funding I Issuer, the
                 Master Issuer, Funding 1, Funding 2 or the Mortgages Trustee
                 would be required to be authorised under the FMSA to do so.

8.5      Upon receipt of a Loan Repurchase Notice substantially in the form set
         out in Schedule 6 duly signed on behalf of the Mortgages Trustee, the
         Seller shall sign and return a duplicate copy and shall repurchase
         from the Mortgages Trustee, and the Mortgages Trustee shall re-assign
         or re-transfer to the Seller free from the Security Interests created
         by the Funding 1 Deed of Charge and the Second Supplemental Funding 1
         Deed of Charge (and any further supplement to the Funding 1 Deed of
         Charge) and the Funding 2 Deed of Charge (and any supplement to the
         Funding 2 Deed of Charge), the relevant Loan (and any other Loan
         secured or intended to be secured by that Related Security or any part
         of it) and their Related Security. Completion of such repurchase shall
         take place on the Distribution Date after receipt by the Seller of
         such Loan Repurchase Notice or such other date as the Mortgages
         Trustee may direct in the Loan Repurchase Notice (provided that the
         date so specified by the Mortgages Trustee shall not be later than 90
         days after receipt by the Seller of such notice) when the Seller shall
         pay to the Mortgages Trustee GIC Account (or as the Mortgages Trustee
         shall direct) an amount equal to the aggregate Outstanding Principal
         Balance of such Loan or Loans and any Related Security and all Arrears
         of Interest and Accrued Interest relating thereto (save for the
         repurchase of any Loan and its Related Security which is subject to a
         Further Advance, a Home Cash Reserve Advance or a Product Switch
         pursuant to Clause 8.4 in which case the Seller shall pay to the
         Mortgages Trustee GIC Account (or as the Mortgages Trustee shall
         direct) an amount equal to the aggregate Outstanding Principal Balance
         of such Loan and its Related Security and Accrued Interest relating
         thereto only) as at the date of such repurchase and the provisions of
         Clause 8.6 shall apply.

8.6      On the date of completion of any repurchase of a Loan and its Related
         Security in accordance with Clause 8.5 above, the Funding 1 Security
         Trustee, the Funding 2 Security Trustee, the Mortgages

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<PAGE>

         Trustee, Funding 1 and Funding 2 shall at the cost of the Seller
         execute and deliver, or cause their respective duly authorised
         attorneys to execute and deliver, to the Seller:

         (a)     a memorandum of release of such Loan and its Related Security
                 from the security constituted by the Funding 1 Deed of Charge,
                 the Second Supplemental Funding 1 Deed of Charge (and any
                 further supplement to the Funding 1 Deed of Charge) and the
                 Funding 2 Deed of Charge (and any supplement to the Funding 2
                 Deed of Charge) substantially in the form set out in Schedule
                 16;

         (b)     in relation to the English Mortgages, if perfection of the
                 assignment to the Mortgages Trustee has occurred in accordance
                 with Clause 6:

                 (i)     if the relevant English Mortgage is over Registered
                         Land, a transfer of such Mortgage to the Seller in the
                         form of the Registered Transfer; or

                 (ii)    if the relevant English Mortgage is over Unregistered
                         Land, a transfer of such English Mortgage to the
                         Seller in the form of the Unregistered Transfer;

         (c)     in relation to the Scottish Mortgages, if perfection of the
                 assignation to the Mortgages Trustee has occurred in
                 accordance with Clause 6:

                 (i)     if the relevant Scottish Mortgage is over a Property
                         title to which is registered in the Land Register of
                         Scotland, a transfer by the Mortgages Trustee in
                         favour of the Seller in a form substantially similar
                         to an SLR Transfer; and

                 (ii)    if the relevant Scottish Mortgage is over a Property
                         title to which is recorded in the General Register of
                         Sasines, a transfer by the Mortgages Trustee in favour
                         of the Seller in a form substantially similar to a
                         Sasine Transfer;

         (d)     a re-assignment or retrocession (as appropriate) of the rights
                 of the Mortgages Trustee in respect of the relevant Related
                 Security and a notice of such re-assignment or retrocession
                 (as appropriate) each in a form reasonably acceptable to the
                 Seller (which shall, in the case of the re-assignment of the
                 MIG Policies and notice of such re-assignment, be
                 substantially in the form set out in Schedule 17 and Schedule
                 18 hereto respectively and in the case of the re-assignment of
                 rights against third parties, be substantially in the form set
                 out in Schedule 19); and

         (e)     a notification to the Servicer that all further sums due in
                 respect of such repurchased Loan are for the Seller's account.

         Upon such completion the Seller shall cease to be under any further
         obligation to hold any Title Deeds or other documents relating to such
         Loan or Loans and its/their Related Security to the order of the
         Mortgages Trustee and if the Mortgages Trustee holds the Title Deeds
         it will return them to the Seller. Any repurchase by the Seller of or
         in respect of a Loan or Loans and its or their Related Security shall
         constitute a discharge and release of the Seller from any claims which
         the Mortgages Trustee and/or Funding 1 and/or Funding 2 and/or the
         Funding 1 Security Trustee and/or the Funding 2 Security Trustee may
         have against the Seller arising from the relevant Representation or
         Warranty in relation to that Loan or Loans and its or their Related
         Security only but shall not affect any rights arising from a breach of
         any other express provision of this Agreement or any Representation or
         Warranty in relation to any other Loan and other Related Security.

8.7      After the Seller becomes aware of any event and/or fact which may
         reasonably give rise to an obligation under any clause of this
         Agreement to repurchase any Loan it shall notify the Mortgages

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<PAGE>

         Trustee, Funding 1, Funding 2, the Funding 1 Security Trustee and the
         Funding 2 Security Trustee in writing thereof as soon as reasonably
         practicable.

8.8      The terms of this Clause 8 shall not prejudice the rights of the
         Mortgages Trustee or the Beneficiaries under the Mortgages Trust Deed.

8.9      The parties to this Agreement may, with the prior written consent of
         the Funding 1 Security Trustee and the Funding 2 Security Trustee,
         waive or amend the Representations and Warranties. In determining
         whether to give its consent to the proposed waiver or amendments to
         the Representations and Warranties, each of the Funding 1 Security
         Trustee and the Funding 2 Security Trustee shall exercise its
         discretion (in the case of the Funding 1 Security Trustee) in
         accordance with the terms of Clause 25.8 of the Funding 1 Deed of
         Charge and (in the case of the Funding 2 Security Trustee) the terms
         of Clause 24.8 of the Funding 2 Deed of Charge and (in both cases) in
         accordance with Clause 4 of the Controlling Beneficiary Deed.

9.       OTHER WARRANTIES

         On the date of this Agreement, each Closing Date, and each Sale Date,
         the Seller represents and warrants to each of the Mortgages Trustee,
         Funding 1, Funding 2, the Funding 1 Security Trustee and the Funding 2
         Security Trustee that:

         (a)     the Seller has not acquired or owned or possessed any rights
                 in any Funding 1 Issuer, the Master Issuer, the Mortgages
                 Trustee, Funding 1 or Funding 2 such that it would CONTROL any
                 of Funding 1, Funding 2, any Funding 1 Issuer or the Master
                 Issuer within the meaning of Section 416 ICTA; and

         (b)     there is not any CONNECTION (within the meaning of Section 87
                 Finance Act 1996) between (i) any Funding 1 Issuer, the Master
                 Issuer, Funding 1 and/or Funding 2 and (ii) any Borrower.

10.      FURTHER ASSURANCE

         The parties hereto agree that they will co-operate fully to do all
         such further acts and things and execute any further documents that
         may be necessary or desirable to give full effect to the transactions
         contemplated by this Agreement (but subject always to Clause 6).

11.      CONSEQUENCES OF BREACH

         Without prejudice to Clauses 7 and 8, Funding 1, Funding 2, the
         Mortgages Trustee, the Funding 1 Security Trustee and the Funding 2
         Security Trustee severally acknowledge to and agree with the Seller,
         and each of the Funding 1 Security Trustee and the Funding 2 Security
         Trustee acknowledges to and agrees with Funding 1, Funding 2 and the
         Mortgages Trustee, that the Seller shall have no liability or
         responsibility (whether, in either case, contractual, tortious or
         delictual, express or implied) for any loss or damage for or in
         respect of any breach of, or any act or omission in respect of, any of
         its obligations hereunder other than loss or damage directly (and not
         indirectly or consequentially) suffered by the Mortgages Trustee
         and/or Funding 1 and/or Funding 2 and/or the assets comprised in the
         Funding 1 Security constituted by the Funding 1 Deed of Charge and/or
         the Funding 2 Security constituted by the Funding 2 Deed of Charge
         respectively by reason of such breach, act or omission. For this
         purpose (and without limiting the scope of the above exclusion in
         respect of indirect or consequential loss or damage) any loss or
         damage suffered by the Mortgages Trustee and/or Funding 1 and/or
         Funding 2 or such assets as a result of the breach, act or omission in
         question also having been or given rise to an Intercompany Loan Event
         of Default and/or a Master Intercompany Loan Event of Default or
         enforcement of the Funding 1 Security constituted by the Funding 1
         Deed of Charge and/or the Funding 2 Security constituted by the
         Funding 2 Deed of

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<PAGE>

         Charge shall be treated as indirect or consequential loss or damage
         PROVIDED THAT this sentence shall not apply to any direct or
         non-consequential loss or damage arising from any such breach, act or
         omission.

12.      SUBORDINATION

         The Seller agrees with Funding 1, Funding 2, the Mortgages Trustee,
         the Funding 1 Security Trustee and the Funding 2 Security Trustee that
         on the enforcement of any Mortgage any sums owed to the Seller by a
         Borrower and which are secured under such Mortgage and the rights and
         remedies of the Seller in respect of the sums owed to the Seller shall
         at all times be subject and subordinated to any sums owed to the
         Mortgages Trustee by the Borrower and which are secured under such
         Mortgage and to the rights and remedies of the Mortgages Trustee in
         respect of such sums owed to the Mortgages Trustee by the Borrower.

13.      NON-MERGER

         Any term of this Agreement to which effect is not given on the Initial
         Closing Date or on any Sale Date (including in particular, but without
         limitation, the liability of the Seller under the Representations and
         Warranties and the indemnity in Clause 6.7 and the provisions of
         Clause 4) shall not merge and shall remain in full force and effect
         notwithstanding the sale and purchases contemplated by this Agreement.

14.      NO AGENCY OR PARTNERSHIP

         It is hereby acknowledged and agreed by the parties that nothing in
         this Agreement shall be construed as giving rise to any relationship
         of agency, save as expressly provided herein, or partnership between
         the parties and that in fulfilling its obligations hereunder, each
         party shall be acting entirely for its own account.

15.      PAYMENTS

         Except as otherwise specifically provided, all payments to be made
         pursuant to this Agreement shall be made in sterling in immediately
         available funds without exercising or seeking to exercise any right of
         set-off as may otherwise exist and shall be deemed to be made when
         they are received by the payee and shall be accounted for accordingly
         unless failure to receive any payment is due to an error by the
         payee's bank.

16.      AMENDMENTS, WAIVERS AND CONSENTS

16.1     Subject to Clauses 2, 3 and 4 of the Controlling Beneficiary Deed (as
         applicable) and (in the case of Funding 1) Clause 25 of the Funding 1
         Deed of Charge and (in the case of Funding 2) Clause 12 of the Funding
         2 Deed of Charge, no amendment or waiver of any provision of this
         Agreement shall be effective unless the same shall be in writing and
         signed by (or by some person duly authorised by) each of the parties
         to this Agreement. In the case of a waiver, such waiver shall be
         effective only in the specific instance and as against the party or
         parties giving it for the specific purpose for which it is given. No
         single or partial exercise of, or failure or delay in exercising, any
         right under this Agreement shall constitute a waiver or preclude any
         other or further exercise of that or any other right.

16.2     Funding 1, Funding 2, the Funding 1 Security Trustee and the Funding 2
         Security Trustee will each exercise all rights, powers, benefits
         and/or discretions conferred on it under this Agreement (including,
         without limitation, in giving its consent, approval or authorisation
         to any event, matter or thing requested hereunder) in accordance with
         Clauses 2, 3 and 4 of the Controlling Beneficiary

                                      21

<PAGE>

         Deed (as applicable) and (in the case of Funding 1) Clause 25 of the
         Funding 1 Deed of Charge and (in the case of Funding 2) Clause 12 of
         the Funding 2 Deed of Charge.

17.      NOTICES

         Any notices to be given pursuant to this Agreement to any of the
         parties hereto shall be in writing and shall be sufficiently served if
         sent by prepaid first class post, by hand or by facsimile transmission
         and shall be deemed to be given (in the case of facsimile
         transmission) when despatched or (in the case of first class post)
         when it would be received in the ordinary course of the post and shall
         be sent:

         (a)     in the case of the Seller: to Bank of Scotland plc Halifax
                 Division, Level 3, Lovell Park, 1 Lovell Park Road, Leeds LS1
                 1NS (facsimile number +44 (0) 113 235 7511) for the attention
                 of the Head of Mortgage Securitisation with a copy to Bank of
                 Scotland plc, Treasury Division, 33 Old Broad Street, London
                 EC2N 1HZ (facsimile number +44 (0)20 7574 8303) for the
                 attention of Head of Mortgage Securitisation and Covered
                 Bonds;

         (b)     in the case of Funding 1: to Permanent Funding (No. 1)
                 Limited, 35 Great St. Helen's, London EC3A 6AP (facsimile
                 number +44 (0)20 7398 6325) for the attention of the Secretary
                 with a copy to Bank of Scotland plc, Treasury Division, 33 Old
                 Broad Street, London EC2N 1HZ (facsimile number +44 (0)20 7574
                 8303) for the attention of Head of Mortgage Securitisation and
                 Covered Bonds;

         (c)     in the case of Funding 2: to Permanent Funding (No. 2)
                 Limited, 35 Great St. Helen's, London EC3A 6AP (facsimile
                 number +44 (0)20 7398 6325) for the attention of the Secretary
                 with a copy to Bank of Scotland plc, Treasury Division, 33 Old
                 Broad Street, London EC2N 1HZ (facsimile number +44 (0)20 7574
                 8303) for the attention of Head of Mortgage Securitisation and
                 Covered Bonds;

         (d)     in the case of the Mortgages Trustee: to Permanent Mortgages
                 Trustee Limited, 47 Esplanade, St Helier, Jersey JE1 0BD,
                 (facsimile number +44 (0) 1534 726391) for the attention of
                 the Secretary with a copy to Bank of Scotland plc, Treasury
                 Division, 33 Old Broad Street, London EC2N 1HZ (facsimile
                 number +44 (0)20 7574 8303) for the attention of Head of
                 Mortgage Securitisation and Covered Bonds; and

         (e)     in the case of the Funding 1 Security Trustee and the Funding
                 2 Security Trustee: to The Bank of New York, One Canada
                 Square, London E14 5AL (facsimile number + 44 (0)20 7964 2533)
                 for the attention of Corporate Trust Administration - ABS/MBS,

         or to such other address or facsimile number or for the attention of
         such other person or entity as may from time to time be notified by
         any party to the others by written notice in accordance with the
         provisions of this Clause 17.

18.      ASSIGNMENT

18.1     Subject always to the provisions of Clause 19, no party hereto shall
         be entitled to assign all or any part of its rights or obligations
         hereunder to any other party without the prior written consent of each
         of the other parties hereto (which shall not, if requested, be
         unreasonably withheld) save that Funding 1 and Funding 2 shall be
         entitled to assign whether by way of security or otherwise all or any
         of its rights under this Agreement without such consent to:

         (a)     (in the case of Funding 1) the Funding 1 Security Trustee
                 pursuant to the Funding 1 Deed of Charge; and

                                      22

<PAGE>

         (b)     (in the case of Funding 2) the Funding 2 Security Trustee
                 pursuant to the Funding 2 Deed of Charge,

         and each of the Funding 1 Security Trustee and the Funding 2 Security
         Trustee may at its sole discretion assign all or any of its rights
         under or in respect of this Agreement without such consent to any
         successor security trustee in exercise of its rights under the Funding
         1 Deed of Charge and the Funding 2 Deed of Charge (respectively).

18.2     The Seller acknowledges that on the assignment pursuant to the Funding
         1 Deed of Charge by Funding 1 to the Funding 1 Security Trustee of
         Funding 1's rights under this Agreement and pursuant to the Funding 2
         Deed of Charge by Funding 2 to the Funding 2 Security Trustee of
         Funding 2's rights under this Agreement, each of the Funding 1
         Security Trustee and the Funding 2 Security Trustee (respectively) may
         enforce such rights in its own name without joining Funding 1 or
         Funding 2 (respectively) in any such action (which right the Seller
         hereby waives) and the Seller hereby waives as against the Funding 1
         Security Trustee and the Funding 2 Security Trustee any rights or
         equities in its favour arising from any course of dealing between the
         Seller and Funding 1 and Funding 2 (respectively).

19.      CHANGE OF FUNDING 1 SECURITY TRUSTEE AND/OR FUNDING 2 SECURITY TRUSTEE

19.1     If there is any change in the identity of the Funding 1 Security
         Trustee and/or the Funding 2 Security Trustee in accordance with the
         Funding 1 Deed of Charge and the Funding 2 Deed of Charge
         (respectively), the Seller, the Mortgages Trustee, Funding 1 and/or
         Funding 2 shall execute such documents and take such action as the
         successor Funding 1 Security Trustee and/or successor Funding 2
         Security Trustee (as applicable) and the outgoing Funding 1 Security
         Trustee or outgoing Funding 2 Security Trustee (as applicable) may
         reasonably require for the purpose of vesting in the successor Funding
         1 Security Trustee or successor Funding 2 Security Trustee (as
         applicable) the rights and obligations of the outgoing Funding 1
         Security Trustee or outgoing Funding 2 Security Trustee (as
         applicable) hereunder and releasing the outgoing Funding 1 Security
         Trustee or outgoing Funding 2 Security Trustee (as applicable) from
         its future obligations under this Agreement and the Seller shall give
         notice thereof to the Rating Agencies.

19.2     It is hereby acknowledged and agreed that by their execution of this
         Agreement, neither the Funding 1 Security Trustee nor the Funding 2
         Security Trustee shall assume or have any of the obligations or
         liabilities of the Seller or Funding 1 or Funding 2 or the Mortgages
         Trustee hereunder.

20.      THIRD PARTY RIGHTS

         A person who is not a party to this agreement may not enforce any of
         its terms under the Contracts (Rights of Third Parties) Act 1999.

21.      EXECUTION IN COUNTERPARTS; SEVERABILITY

21.1     This Agreement may be executed in any number of counterparts (manually
         or by facsimile) and by different parties hereto in separate
         counterparts, each of which when so executed shall be deemed to be an
         original and all of which when taken together shall constitute one and
         the same instrument.

21.2     Where any provision in or obligation under this Agreement shall be
         invalid, illegal or unenforceable in any jurisdiction, the validity,
         legality and enforceability of the remaining provisions or obligations
         under this Agreement or of such provision or obligation in any other
         jurisdiction shall not be affected or impaired thereby.

                                      23

<PAGE>

22.      GOVERNING LAW

22.1     This Agreement shall be governed by the laws of England (provided that
         any terms of this Agreement which are particular to Scots law shall be
         construed in accordance with the laws of Scotland).

22.2     Each party to this Agreement hereby irrevocably submits to the
         non-exclusive jurisdiction of the English courts in any action or
         proceeding arising out of or relating to this Agreement, and hereby
         irrevocably agrees that all claims in respect of such action or
         proceeding may be heard and determined by such courts. Each party to
         this Agreement hereby irrevocably waives, to the fullest extent it may
         possibly do so, any defence or claim that the English courts are an
         inconvenient forum for the maintenance or hearing of such action or
         proceeding. The Mortgages Trustee irrevocably appoints Structured
         Finance Management Limited of 35 Great St. Helen's London EC3A 6AP as
         its agent for service of process.

IN WITNESS WHEREOF the parties hereto have executed and delivered this
Agreement as a deed on the day and year first before written.

                                  SIGNATORIES
SELLER

EXECUTED as a DEED by                                  ) /S/ IAN STEWART
BANK OF SCOTLAND PLC acting by
its attorney in the presence of                        ) /S/ DAVID WILKINSON

Witness's Signature: /S/ CHRIS WALL
Name:

Address: ALLEN & OVERY LLP
         40 BANK STREET
         LONDON E14 5DU

BENEFICIARY

EXECUTED as a DEED by                                  ) /S/ IAN STEWART
BANK OF SCOTLAND PLC acting by
its attorney in the presence of                        ) /S/ DAVID WILKINSON

Witness's Signature: /S/ CHRIS WALL
Name:

Address: ALLEN & OVERY LLP
         40 BANK STREET
         LONDON E14 5DU

                                      24

<PAGE>

BENEFICIARY

EXECUTED as a DEED by                                  ) /S/ CLAUDIA WALLACE
PERMANENT FUNDING (NO. 1) LIMITED
acting by two directors                                ) /S/ HELENA WHITAKER

BENEFICIARY

EXECUTED as a DEED by                                  ) /S/ CLAUDIA WALLACE
PERMANENT FUNDING (NO. 2) LIMITED
acting by two directors                                ) /S/ HELENA WHITAKER
MORTGAGES TRUSTEE

EXECUTED as a DEED by                                  ) /S/ ABU KAPADIA
PERMANENT MORTGAGES                                    )
TRUSTEE LIMITED, a company
incorporated in Jersey,                                )
Channel Islands, by                                    )
being a person who, in                                 )
accordance with the laws of that territory is acting   )
under the authority of the company, in the presence    )
of:                                                    )

Witness's Signature: /S/ CHRIS WALL
Name:

Address: ALLEN & OVERY LLP
         40 BANK STREET
         LONDON E14 5DU

FUNDING 1 SECURITY TRUSTEE

EXECUTED as a DEED                                     ) /S/ VINCENT GIRAUD
for and on behalf of                                   )
THE BANK OF NEW YORK                                   )
by its authorised signatory, in the presence of:       )

Witness's signature: /S/ CHRIS WALL

Name:

Address: ALLEN & OVERY LLP
         40 BANK STREET
         LONDON E14 5DU

                                      25

<PAGE>

FUNDING 2 SECURITY TRUSTEE

EXECUTED as a DEED                                     ) /S/ VINCENT GIRAUD
for and on behalf of                                   )
THE BANK OF NEW YORK                                   )
by its authorised signatory, in the presence of        )

Witness's signature: /S/ CHRIS WALL

Name:

Address: ALLEN & OVERY LLP
         40 BANK STREET
         LONDON E14 5DU

                                      26

<PAGE>

                                  SCHEDULE 1

                        REPRESENTATIONS AND WARRANTIES

1.       LOANS

1.1      The particulars of the Loans set out in the Exhibit (or, as the case
         may be, the relevant New Portfolio Notice and in each Scottish
         Declaration of Trust) are true, complete and accurate in all material
         respects.

1.2      Each Loan was originated by Halifax or by the Seller under the Halifax
         brand and was originated and is denominated in pounds sterling (or was
         originated and is denominated in euro if the euro has been adopted as
         the lawful currency for the time being of the United Kingdom).

1.3      Each Loan in the Portfolio as at the most recent Closing Date was made
         not earlier than 1 February 1996 and not later than the later of (a)
         30 June 2007 and (b) the date specified in the most recent Final
         Terms.

1.4      Each Loan matures for repayment not later than (a) June 2040 or (b)
         such later date specified in the most recent Final Terms.

1.5      No Loan has or will have an Outstanding Principal Balance of more than
         [POUND]500,000.

1.6      The Lending Criteria are the lending criteria applicable to the Loans
         and their Related Security.

1.7      Prior to the making of each Initial Advance and Further Advance:

         (a)     the Lending Criteria and all preconditions to the making of
                 any Loan were satisfied in all material respects subject only
                 to such exceptions as made on a case by case basis as would be
                 acceptable to a Reasonable, Prudent Mortgage Lender; and

         (b)     the requirements of the relevant MIG Policy were met, so far
                 as applicable to that Loan.

1.8      (a)     Each Loan was made and its Related Security taken or received
                 substantially on the terms of the Standard Documentation
                 without any material variation thereto and nothing has been
                 done subsequently to add to, lessen, modify or otherwise vary
                 the express provisions of any of the same in any material
                 respect.

         (b)     The brochures, application forms, offers, offer conditions and
                 marketing material distributed by the Seller to the Borrower
                 when offering a Loan to a Borrower:

                 (i)     do not conflict in any material respect with the terms
                         applicable to the relevant Loan and its Related
                         Security at the time that the Loan was entered into;
                         and

                 (ii)    do not conflict with and would not prohibit or
                         otherwise limit the terms of, the Transaction
                         Documents or the matters contemplated thereby,
                         including for the avoidance of doubt and without
                         limitation:

                         (A)     the assignment or assignation (as appropriate)
                                 of the Loans and their Related Security to the
                                 Mortgages Trustee or the placing of the Loans
                                 and their Related Security into trust;

                                      27

<PAGE>

                         (B)     the administration of the Loans and their
                                 Related Security by the Servicer or a delegate
                                 or sub-contractor of the Servicer or (for as
                                 long as the Seller and the Servicer are the
                                 same legal entity) the appointment of a new
                                 Servicer following the occurrence of an
                                 Insolvency Event in relation to the Seller;
                                 and

                         (C)     so far as the Seller is aware to the best of
                                 its knowledge, information and belief, the
                                 ability of the Mortgages Trustee or the
                                 Security Trustee to set the variable rate
                                 payable under any Variable Rate Loan
                                 independently of (and without regard to the
                                 level of) the Seller's standard variable rate
                                 of interest or if the Seller has more than one
                                 standard variable rate of interest, the
                                 relevant Seller's standard variable rate of
                                 interest, subject to any applicable cap on
                                 that variable rate which is not itself linked
                                 to any rate set by the Seller and to set the
                                 variable margin above the Bank of England repo
                                 rate under any Tracker Rate Loan independently
                                 of (and without regard to the level of) any
                                 differential set by the Seller, subject to any
                                 applicable cap on that variable margin above
                                 the Bank of England repo rate which is not
                                 itself linked to any margin set by the Seller.

         (c)     There is no restriction on the Seller's successors and assigns
                 and assignees to the legal title of the Loans (including,
                 without limitation, the Mortgages Trustee if and when legal
                 title to the Loans is transferred to it) right:

                 (i)     to set the variable rate payable under any Variable
                         Rate Loan independently of (and without regard to the
                         level of) the Seller's standard variable rate of
                         interest or if the Seller has more than one standard
                         variable rate of interest, the relevant Seller's
                         standard variable rate of interest, subject to any
                         applicable cap on that variable rate which is not
                         itself linked to any rate set by the Seller (subject
                         to complying with the obligations under the Standard
                         Documentation as to changes in interest rates
                         generally and so that in particular the successors
                         will not be able to change the interest rate following
                         a transfer of legal title unless the reasons for
                         changing the interest rate set out in the Standard
                         Documentation apply) and provided that in relation to
                         Loans which are subject to HVR 2, the differential
                         between that rate and the Loans which are subject to
                         HVR 1 is maintained; and

                 (ii)    to set the variable margin above the Bank of England
                         repo rate under any Tracker Rate Loan independently of
                         (and without regard to the level of) any differential
                         set by the Seller, subject to any applicable cap on
                         that variable margin above the Bank of England repo
                         rate which is not itself linked to any margin set by
                         the Seller (subject to complying with the obligations
                         under the Standard Documentation as to changes in
                         margins generally and so that in particular the
                         successors will not be able to change the margin
                         following a transfer of legal title unless the reasons
                         for changing the margin set out in the Standard
                         Documentation apply).

1.9      The Seller is under no obligation to make Further Advances (other than
         Flexible Loan Drawings (if any), Delayed Cashbacks, Home Cash Reserve
         Drawings and Retention Drawings) or to pay fees or other sums relating
         to any Loan or its Related Security to any Borrower.

1.10     Each Borrower has made at least two Monthly Payments in respect of
         each Loan.

1.11     Other than with respect to monthly interest payments or as provided in
         paragraph 1.12 below, no Borrower is or has, since the date of the
         relevant Mortgage, been in material breach of any obligation owed in
         respect of the relevant Loan or under the Related Security and
         accordingly no steps have been taken by the Seller to enforce any
         Related Security.

                                      28

<PAGE>

1.12     The total amount of arrears of interest or principal, together with
         any fees, commissions and premiums payable at the same time as such
         interest payment or principal repayment, on any Loan is not on the
         relevant Sale Date in respect of any Loan, nor has been during the 12
         months immediately preceding the relevant Sale Date more than the
         amount of the Monthly Payment then due.

1.13     No Loan is guaranteed by a third party save where the guarantee
         constitutes legal, valid and binding obligations of the guarantor
         enforceable in accordance with their terms.

1.14     Each Flexible Loan was originated not earlier than 1 November 2004 and
         was made either under the 2004 Mortgage Conditions (2nd Edition) or
         the 2007 Mortgage Conditions.

1.15     Interest on each Loan is charged in accordance with the Standard
         Documentation.

1.16     Interest on each Loan is payable monthly in arrear.

1.17     Each Loan and its Related Security is valid, binding and enforceable
         in accordance with its terms and is non-cancellable:

         (a)     save in relation to any term in any Loan or in its Related
                 Security, in each case which is not binding by virtue of the
                 Unfair Terms in Consumer Contracts Regulations 1994 or (as the
                 case may be) the Unfair Terms in Consumer Contracts
                 Regulations 1999; and

         (b)     save in relation to any amount advanced under a Flexible Loan,
                 any Delayed Cashback, any Home Cash Reserve Drawing and any
                 other Further Advance, in each case which is not enforceable
                 by virtue of the Consumer Credit Act 1974.

1.18     To the best of the Seller's knowledge, none of the terms in any Loan
         or in its Related Security is not binding by virtue of its either (a)
         being unfair within the meaning of the Unfair Terms in Consumer
         Contracts Regulations 1994 or (as the case may be) the Unfair Terms in
         Consumer Contracts Regulations 1999 or (b) not being compliant with
         the terms of the Consumer Credit Act 1974. In this WARRANTY 1.18,
         reference to any legislation shall be construed as a reference to that
         legislation as amended, extended or re-enacted from time to time.

1.19     All of the Borrowers are individuals and were aged 18 years or older
         at the date he or she executed the relevant Mortgage.

1.20     At least two Monthly Payments have been made in respect of each Loan.

1.21     Each loan in the relevant Portfolio is either:

         (a)     a Variable Rate Loan, Tracker Rate Loan or Fixed Rate Loan; or

         (b)     a New Loan Type which each of the Rating Agencies has
                 confirmed in writing may be included in the relevant New
                 Portfolio.

2.       MORTGAGES

2.1      The whole of the Outstanding Principal Balance on each Loan and any
         Arrears of Interest and all Accrued Interest is secured by a Mortgage.

2.2      Each Mortgage is in the form of the relevant pro forma contained in
         the Standard Documentation which was applicable at the time the
         Mortgage was executed.

                                      29

<PAGE>

2.3      Each Mortgage constitutes a valid and subsisting first charge by way
         of legal mortgage or (in the case of Scottish Mortgages) first ranking
         standard security over the relevant Property subject only in certain
         appropriate cases to applications for registration or recording at the
         Land Registry or Registers of Scotland which where requisite have been
         made and are pending and in relation to such cases the Seller is not
         aware of any caution, notice, inhibition or any other matter that
         would prevent such registration or recording.

2.4      Each Mortgage has first priority for the whole of the Outstanding
         Principal Balance on the Loan and all Arrears of Interest and Accrued
         Interest thereon and all future interest, fees, costs and expenses
         payable under or in respect of such Mortgage.

2.5      The Seller has and will maintain, all consents, authorisations,
         approvals, licences and orders, including without limitation all
         authorisations under the FSMA requirements to originate, advise upon
         and administer the Loans and Mortgages.

2.6      The Seller has complied and will comply, in all material respects,
         with all applicable laws and regulations, including without limitation
         the FSA's rules in MCOB, in respect of its advisory activities
         relating to, and the origination and administration of the Loans and
         Mortgages.

2.7      Each Mortgage in respect of a RTB Loan was made to a Borrower for the
         purposes of exercising the right-to-buy or for another approved
         purpose (save where a Deed of Postponement has been entered into by
         the relevant landlord) and has (or the Seller has the evidence
         necessary to ensure that the relevant Mortgage will have) priority
         over any statutory charge or standard security granted in favour of
         the relevant landlord save in cases where the Mortgage is originated
         at a time where there is no more than one year remaining of the RTB
         Disposal Period or where adequate insurance is in place.

2.8      The Seller has complied and will comply, in all material respects,
         with all applicable laws and regulations including, without
         limitation, the ICOB with regard to any insurance related activities
         in respect of the Properties.

2.9      Each intermediary who has introduced a Loan to the Seller was, at the
         time of the relevant introduction and insofar as required, registered
         with the Mortgage Code Register of Intermediaries, the Mortgage Code
         Compliance Board or, if the Loan was originated after 31 October 2004,
         authorised by the FSA.

3.       THE PROPERTIES

3.1      All of the Properties are in England, Wales or Scotland.

3.2      Each Property constitutes a separate dwelling unit (subject to limited
         case by case exceptions) and is either freehold, leasehold or (in
         Scotland) heritable or held under a long lease.

3.3      Save for children of Borrowers and children of someone living with the
         Borrower, every person who, at the date upon which any English
         Mortgage was granted, had attained the age of eighteen and was in or
         about to be in actual occupation of the relevant Property, is either
         named as a Borrower or has signed a Deed of Consent in the form of the
         pro forma contained in the Standard Documentation which was applicable
         at the time the Mortgage was executed.

3.4      At the date upon which any Scottish Mortgage was granted all necessary
         MHA Documentation had been obtained so as to ensure that neither that
         Scottish Mortgage nor the related Property is subject to or affected
         by any statutory right of occupancy under the Matrimonial Homes
         (Family Protection) (Scotland) Act 1981 or the Civil Partnership Act
         2004.

                                      30

<PAGE>

3.5      No Property has been let otherwise than by way of:

         (a)     an assured shorthold tenancy which meets the requirements of
                 Section 19A or Section 20 of the Housing Act 1988; or

         (b)     a short assured tenancy which meets the requirements of
                 section 32 of the Housing (Scotland) Act 1988; or

         (c)     an assured tenancy;

         in each case which meets the Seller's Policy in connection with
         lettings to non-owners.

3.6      No Property is the subject of a shared ownership lease arrangement or
         staircase purchasing arrangement.

4.       VALUERS' AND SOLICITORS' REPORTS

4.1      Not more than twelve months (or a longer period (including in the case
         of an inter-group remortgage) as may be acceptable to a Reasonable,
         Prudent Mortgage Lender) prior to the grant of each Mortgage (or such
         longer period (including in the case of an inter-group remortgage) as
         may be acceptable to a Reasonable, Prudent Mortgage Lender) the Seller
         received a Valuation Report from a Valuer on the relevant Property (or
         such other form of report concerning the valuation of the relevant
         Property as would be acceptable to a Reasonable, Prudent Mortgage
         Lender), the contents of which were such as would be acceptable to a
         Reasonable, Prudent Mortgage Lender.

4.2      The principal amount of the Initial Advance (including any
         retention(s) subsequently advanced to the Borrower but disregarding
         Capitalised Expenses) is either:

         (a)     not more than 75% of the lower of the purchase price and the
                 appraised value of the Property as stated in the Valuation
                 Report referred to above in paragraph 4.1 (the APPRAISED
                 VALUE) (or, in case of a remortgage, of the appraised value)
                 of the Property; or

         (b)     greater than 75% (but not more than 97%) of the lower of
                 purchase price or the appraised value, or in the case of Loans
                 secured against new build properties, not more than 97% of the
                 appraised value of the lower of the purchase price and the
                 appraised value (or, in the case of a remortgage, of the
                 appraised value), in which case for those Loans originated
                 prior to 1 January 2001 only that part of the Initial Advance
                 which exceeds 75% of the lower of the purchase price and the
                 appraised value (or, in the case of a remortgage, of the
                 appraised value) is covered under the terms of a MIG Policy.

4.3      Prior to the taking of each Mortgage (other than a remortgage), the
         Seller:

         (a)     instructed the Seller's solicitor, licensed conveyancer or (in
                 Scotland) qualified conveyancer to carry out an investigation
                 of title to the relevant Property and to undertake such other
                 searches, investigation, enquiries and other actions on behalf
                 of the Seller as are set out in the instructions which the
                 Seller issued to the relevant solicitor as are set out in:

                 (i)     the CML's Lenders' Handbook for England and Wales in
                         relation to English Mortgages;

                 (ii)    the Seller's Mortgage Practice Notes in relation to
                         Scottish Mortgages taken before the CML's Lenders'
                         Handbook for Scotland was adopted in 2000; or

                                      31

<PAGE>

                 (iii)   the CML's Lenders' Handbook for Scotland in relation
                         to Scottish Mortgages taken after the CML's Lenders'
                         Handbook for Scotland was adopted in 2000,

                 (or such comparable, predecessor or successor instructions
                 and/or guidelines as may for the time being be in place),
                 subject only to such variations made on a case by case basis
                 as would have been acceptable to a Reasonable, Prudent
                 Mortgage Lender at the relevant time; or

         (b)     received a Certificate of Title from the solicitor or licensed
                 conveyancer or (in Scotland) qualified conveyancer referred to
                 in paragraph (a) relating to such Property the contents of
                 which were such as would have been acceptable to a Reasonable,
                 Prudent Mortgage Lender at that time.

4.4      The benefit of all Valuation Reports, any other valuation report
         referred to in paragraph 4.1 and Certificates of Title which were
         provided to the Seller not more than two years prior to the date of
         this Agreement can be validly assigned to the Mortgages Trustee
         without obtaining the consent of the relevant Valuer, solicitor or
         licensed conveyancer or (in Scotland) qualified conveyancer.

5.       BUILDINGS INSURANCE

5.1      Each Property is insured under:

         (a)     a buildings insurance policy arranged by the Borrower in
                 accordance with the relevant Mortgage Conditions or in
                 accordance with the Alternative Insurance Recommendations; or

         (b)     the Halifax Policies; or

         (c)     a Seller-introduced building insurance policy; or

         (d)     a buildings insurance policy arranged by the relevant
                 landlord; or

         (e)     the Properties in Possession Cover.

5.2      No act, event or circumstance has occurred which would adversely
         affect the Properties in Possession Cover or entitle the insurers to
         refuse to make payment thereunder or to reduce the amount payable in
         respect of any claim thereunder.

5.3      All claims under the Properties in Possession Cover have been paid in
         full within a reasonable time of the date of submission of the claim
         and, save in respect of minor claims, there are no claims outstanding.

5.4      The Seller has maintained and will maintain all consents,
         authorisations, approvals, licences and orders, including without
         limitation all authorisations under the FSMA, to carry on any
         insurance related activities in respect of the Properties.

6.       MIG POLICIES

6.1      Where applicable, the MIG Policies are in full force and effect in
         relation to the Initial Portfolio or, as the case may be, each New
         Portfolio and all premiums thereon have been paid.

6.2      The benefit of the Halifax Mortgage Re Limited MIG Policies can be and
         will have been, with effect from the Initial Closing Date or the
         relevant Sale Date, as applicable, validly assigned to the Mortgages
         Trustee and charged to the Funding 1 Security Trustee and, on and from
         the Programme Date, the Funding 2 Security Trustee, insofar as they
         relate to the Initial Portfolio or, as the case may

                                      32

<PAGE>

         be, each New Portfolio in each case in the manner and to the extent
         contemplated by the Transaction Documents.

6.3      To the best of the knowledge of the Seller no act, event or
         circumstance has occurred which would adversely affect the MIG
         Policies or entitle the insurers to refuse to make payment thereunder
         or to reduce the amount payable in respect of any claim thereunder
         insofar as they relate to the Initial Portfolio or, as the case may
         be, each New Portfolio.

6.4      All valid claims under the MIG Policies have been paid in full within
         a reasonable time of the date of submission of the claim.

7.       THE SELLER'S TITLE

7.1      The Seller has good title to, and is the absolute unencumbered legal
         and beneficial owner of, all property, interests, rights and benefits
         agreed to be sold and/or assigned by the Seller to the Mortgages
         Trustee pursuant to this Agreement free and clear of all mortgages,
         charges, liens, Encumbrances, claims and equities (including, without
         limitation, rights of set-off or counterclaim and unregistered or
         overriding interests which fall within any of the paragraphs of
         Schedule 1 or Schedule 3 to the Land Registration Act 2002 (as such
         schedules have effect in accordance with section 90(5) and Schedule 12
         of the Land Registration Act 2002) or Section 28(1) of the Land
         Registration (Scotland) Act 1979 and the Seller is not in breach of
         any covenant implied by reason of its selling the Portfolio with full
         title guarantee or absolute warrandice (or which would be implied if
         the Registered Transfers, Unregistered Transfers or Scottish
         Transfers, as applicable, were completed).

7.2      All steps necessary to perfect the Seller's title to the Loans and the
         Related Security were duly taken at the appropriate time or are in the
         process of being taken, in each case (where relevant) within any
         applicable priority periods or time limits for registration with all
         due diligence and without undue delay.

7.3      Save for Title Deeds held at the Land Registry or Registers of
         Scotland, the Title Deeds and the Customer Files relating to each of
         the Loans and their Related Security are held by, or are under the
         control of:

         (a)     the Seller; or

         (b)     the Seller's solicitors or licensed conveyancers or (in
                 Scotland) qualified conveyancers to the order of the Seller,

         and the Title Deeds held at the Land Registry have been sent to it
         with a request that any such Title Deeds will be returned to the
         Seller or its solicitors on its behalf.

7.4      Neither the entry by the Seller into this Agreement nor any transfer,
         assignment, assignation or creation of trust contemplated by this
         Agreement affects or will adversely affect any of the Loans and their
         Related Security (including, without limitation, the Insurance
         Policies) and the Seller may freely assign and create a trust or
         trusts in respect of all its rights, title, interests and benefits
         therein as contemplated in this Agreement without breaching any term
         or condition applying to any of them.

7.5      The Seller has not knowingly waived or acquiesced in any breach of any
         of its rights in respect of a Loan or its Related Security, other than
         waivers and acquiescence such as a Reasonable, Prudent Mortgage Lender
         might make on a case by case basis.

                                      33

<PAGE>

8.       GENERAL

8.1      The Seller has, since the making of each Loan, kept or procured the
         keeping of full and proper accounts, books and records showing clearly
         all transactions, payments, receipts, proceedings and notices relating
         to such Loan.

8.2      Neither the Seller nor as far as the Seller is aware any of its agents
         has received written notice of any litigation, claim, dispute or
         complaint (in each case, subsisting, threatened or pending) in respect
         of any Borrower, Property, Loan, Related Security, Halifax Policy, MIG
         Policy or Properties in Possession Cover which (if adversely
         determined) might have a material adverse effect on the Trust Property
         or any part of it.

8.3      The Seller has received from each Borrower a variable direct debit
         instruction in favour of the Seller signed by the relevant Borrower
         and addressed to its bank, variable as to the amount payable by such
         Borrower by unilateral notice given from time to time by the Seller to
         such Borrower's bank without further instruction or consent from such
         Borrower or such other method of payment as may be acceptable to a
         Reasonable, Prudent Mortgage Lender.

8.4      There are no authorisations, approvals, licences, orders,
         notifications or consents required as appropriate for the Seller to
         enter into or to perform the obligations under this Agreement or to
         render this Agreement legal, valid, binding, enforceable and
         admissible in evidence.

8.5      The Insurance Acknowledgements are valid, binding and enforceable
         against the relevant insurer by the Mortgages Trustee, Funding 1
         Security Trustee and, on and from the Programme Date, the Funding 2
         Security Trustee.

                                      34

<PAGE>

                                  SCHEDULE 2

                              REGISTERED TRANSFER

IN THE FORM OF THE LAND REGISTRY FORM TR4 AS SHOWN OVERLEAF WITH SUCH
AMENDMENTS AS THE MORTGAGES TRUSTEE MAY REASONABLY REQUIRE TO GIVE EFFECT TO
THIS AGREEMENT OR IN SUCH OTHER FORM AS THE MORTGAGES TRUSTEE MAY REASONABLY
REQUIRE TO TAKE ACCOUNT OF CHANGES IN LAW OR PRACTICE.

                                      35

<PAGE>

                                  SCHEDULE 3

                             UNREGISTERED TRANSFER

THIS DEED OF TRANSFER OF MORTGAGES is made the day of

BY:

(1)      BANK OF SCOTLAND PLC a public limited company incorporated under the
         Companies Acts, whose registered office is at The Mound, Edinburgh,
         EH1 1YZ (registered number SC327000) (hereinafter called the
         TRANSFEROR) of the one part; and

IN FAVOUR OF:

(2)      PERMANENT MORTGAGES TRUSTEE LIMITED whose registered office is 47
         Esplanade, St Helier, Jersey JE1 0BD (hereinafter called the
         TRANSFEREE) of the other part.

WHEREAS:

(A)      By the charges by way of legal mortgage (the MORTGAGES) brief
         particulars of which are set out in the Annexure hereto the properties
         brief particulars of which are similarly set out became security for
         the repayment of the monies therein mentioned.

(B)      By a mortgage sale agreement (as amended and/or restated from time to
         time) made between, inter alios, Halifax and the Transferee on 14 June
         2002 (as the same may be or have been amended, varied or supplemented
         from time to time with the consent of the parties hereto, the MORTGAGE
         SALE AGREEMENT), the Transferor agreed to sell and the Transferee
         agreed to buy all right, title, interest, benefit and obligation (both
         present and future) of the Transferor in and under those Mortgages and
         all other mortgages in favour of the Transferor over such properties
         which do not relate to registered land for the consideration mentioned
         in the said Mortgage Sale Agreement.

NOW THIS DEED WITNESSETH as follows:

1.       In consideration for the sums payable and other consideration
         indicated under the Mortgage Sale Agreement (receipt of which is
         hereby acknowledged), the Transferor hereby transfers unto the
         Transferee with full title guarantee all rights, title, interests,
         benefits and obligations (except for the Seller's obligations as set
         out in Clause 2.3 of the Mortgage Sale Agreement) (both present and
         future) of the mortgagee in and under the Mortgages including for the
         avoidance of doubt:

         (a)     the right to demand, sue for, recover, receive and give
                 receipts for all principal moneys payable or to become payable
                 under the relevant Mortgages or the unpaid part thereof and
                 the interest due or to become due thereon;

         (b)     the benefit of all securities for such principal moneys and
                 interest, the benefit of all consents to mortgage signed by
                 occupiers of the mortgaged properties and the benefit of and
                 the right to sue on all covenants with, or vested in, the
                 mortgagee in relation to each Mortgage and the rights to
                 exercise all powers of the mortgagee in relation to each
                 Mortgage;

         (c)     all the estate and interest in the relevant mortgaged
                 properties vested in the mortgagee subject to redemption or
                 cesser; and

                                      36

<PAGE>

         (d)     all causes of action of the mortgagee against any person in
                 connection with any report, valuation, opinion, certificate,
                 consent to mortgage or other statement of fact or opinion
                 given in connection with any Mortgage or affecting the
                 decision to make the relevant advance.

2.       This Deed shall be governed by and construed in accordance with
         English law.

IN WITNESS WHEREOF this document has been executed and delivered as a deed the
day and year first before written.

EXECUTED as a DEED by                  )
BANK OF SCOTLAND PLC                   )
acting by its attorney in              )
the presence of:                       ) _______________

Witness's Signature:      ________________________

Name:                     ________________________

Address:                  ________________________

                                      37

<PAGE>

                                    ANNEX 1

                                      [ ]

Account No.     Property address     Date of Mortgage     Borrower

                                      38

<PAGE>

                                  SCHEDULE 4

                               LENDING CRITERIA

LENDING CRITERIA

The Loans in the Initial Portfolio or, as the case may be, the relevant New
Portfolio were originated according to the Seller's lending policy at the
applicable time the Loan was offered. At the Programme Date the Seller's
lending policy included the criteria set out in Schedule 4 of the Mortgage Sale
Agreement dated the Programme Date. At the date of this Agreement, the Seller's
leading policy included the criteria set out below. However, the Seller retains
the right to revise its lending policy from time to time, and so the criteria
applicable to New Loans may not be the same as those set out below.

1.       Types of Property

         Properties may be either freehold, leasehold or (in Scotland)
         heritable or held under a long lease. In the case of leasehold
         properties, the unexpired portion of the lease must in most cases not
         expire earlier than 30 years after the term of the Loan, although this
         can be reduced to ten years under certain circumstances. The property
         must be used solely for residential purposes (with extremely limited
         case by case exceptions) and must be in sound structural condition and
         repair or be capable of being put into such state. House boats, mobile
         homes and any property on which buildings insurance cannot be arranged
         are not acceptable. All persons who are to be legal owners of the
         Property on completion of the relevant Mortgage must be Borrowers.

         All properties have been valued by a valuer approved by the Seller or,
         where appropriate, according to a methodology which would meet the
         standards of a Reasonable, Prudent Mortgage Lender and which has been
         approved by the Seller.

2.       Term of Loan

         There is no minimum term on home purchase Loans and the maximum term
         is 40 years for all loans. A repayment period for a new Further
         Advance that would extend beyond the term of the original advance may
         also be accepted at the Seller's discretion, subject to the following:

         (a)     the consent of any subsequent lender or guarantor to the
                 Further Advance;

         (b)     the Seller may in its discretion extend the period of the
                 original advance, provided that, in all leasehold cases, not
                 less than 30 years (or ten years in certain circumstances) of
                 the lease must be left unexpired at the end of the term of the
                 Mortgage; and

         (c)     the approval of the valuer where the valuer has previously
                 recommended a term which is shorter than the maximum Loan
                 terms referred to above.

         If a Borrower requests to increase the term of the existing Loan, the
         maximum term for a repayment Loan is 25 years from the date from which
         the extended term is granted. However, the total term from the start
         date of the account must not exceed 40 years.

         If a Borrower or guarantor is already retired or a mortgage term is
         requested that will take the Borrower/guarantor's term beyond the
         anticipated retirement age, specific procedures must be followed by
         the Seller.

                                      39

<PAGE>

3.       Age of Applicant

         All Borrowers must be aged 18 or over. There is no maximum age limit.
         However, if the term of the Mortgage extends into retirement, the
         Seller will attempt to ascertain the Borrower's anticipated income in
         retirement. If the Seller determines the Borrower will not be able to
         afford the Mortgage into retirement, the application will be declined.
         If the Borrower is already retired, the Seller will consider the
         Borrower's ability to support the Loan.

4.       Loan to Value (or LTV) Ratio

         The maximum original LTV ratio of Loans in each expected Portfolio
         will be 97%. For Properties of [POUND]250,000 or less, the Seller may
         currently lend up to 97% of the improved valuation of the Property
         (the original valuation plus the increase in value deriving from any
         improvements). For Properties in excess of [POUND]250,000, the
         permissible LTV ratio decreases as the property value increases. The
         Seller does not provide Loans in excess of 100% of the sum of the
         purchase price and the increase in value deriving from any
         improvements.

         All lending (with the exception of loans secured against new build
         properties) for new purchases is based on a maximum of 97% of the
         lower of purchase price or valuation. For example, if the value of a
         property was [POUND]100,000 and the purchase price was [POUND]97,000,
         the maximum the Seller would lend is [POUND]94,090 (97% of
         [POUND]97,000). In the case of loans secured against new build
         properties, lending is based on a maximum of 97% of value provided
         that this does not exceed 100% of the purchase price. So, if the value
         of a new build property was [POUND]100,000 and the purchase price was
         [POUND]97,000, the maximum that the Seller would lend is
         [POUND]97,000.

5.       Mortgage Indemnity Guarantee Policies/High LTV Fees

         Borrowers are currently required to pay high LTV fees to the Seller
         for each Mortgage account where the aggregate of the outstanding
         principal balance of the relevant Loan(s) at origination (excluding
         any capitalised high LTV fees and/or booking fees and/or valuation
         fees) exceeds certain specified percentages.

         If the LTV ratio exceeds 90%, the Borrower pays high LTV fees based on
         the difference between the actual LTV ratio and a 75% LTV ratio.

         Prior to 1 January 2001, the Seller required cover under mortgage
         indemnity guarantee, or MIG, policies for Mortgages where the LTV
         ratio exceeded 75%, though during 1999 and 2000 the Seller paid the
         premium for the MIG cover if the LTV ratio was between 75% and 90%.
         Since 1 January 2001, the Seller has not required cover under MIG
         policies for any Loans.

6.       Status of Applicant(s)

         The maximum amount of the aggregate Loan(s) under a mortgage account
         is determined by the application of an affordability model. This model
         delivers an individualised result that reflects the applicant's net
         income, existing credit commitments and burden of family expenditure.
         The model also calculates the full debt servicing cost at a stressed
         rate of interest before comparing this cost to the net disposable
         income that the applicant has available. The credit score also
         influences the decision of how much to lend using the principle that
         high credit scores infer a proven ability to manage financial affairs.
         The Seller maintains rules on the amount of variable income (overtime,
         bonus, commission) that it will allow into the model and as a general
         rule will allow no more than 60% of these items. Benefit payments are
         allowed (including tax credits) as these quite often compensate for
         the taxation and National Insurance deductions that would normally
         cause lower levels of income to fall below the minimum wage levels.
         This model returns "answers" of zero up to

                                      40

<PAGE>

         amounts that would equate to over five times income. Regardless, the
         Seller maintains a policy rule that it will not lend more than an
         amount equal to five times income.

         In cases where a single Borrower is attempting to have the Seller take
         a secondary income into account, the Seller will consider the
         sustainability of the Borrower's work hours, the similarity of the
         jobs and/or skills, the commuting time and distance between the jobs,
         the length of employment at both positions and whether the salary is
         consistent with the type of employment. The Seller will determine,
         after assessing the above factors, if it is appropriate to use both
         incomes. If so, both incomes will be used as part of the normal income
         calculation.

         When there are two applicants, the Seller adds joint incomes together
         for the purpose of calculating the applicant's total income. The
         Seller may, at its discretion, consider the income of one additional
         applicant as well but only a maximum rate of one times that income.

         Positive proof of the borrower's identity and address must be
         established. In exceptional circumstances this requirement can be
         waived (provided money laundering regulations are complied with), but
         the reasons for doing so must be fully documented.

         The Seller may exercise discretion within its lending criteria in
         applying those factors which are used to determine the maximum amount
         of the Loan(s). Accordingly, these parameters may vary for some Loans.
         The Seller may take the following into account when exercising
         discretion: credit score result, existing customer relationship,
         percentage of LTV, stability of employment and career progression,
         availability of living allowances and/or mortgage subsidy from the
         employer, employer's standing, regularity of overtime, bonus or
         commission (up to a maximum of 60% of the income), credit commitments,
         quality of security (such as type of property, repairs, location or
         saleability), and the increase in income needed to support the Loan.

         The Seller may not exercise discretion where it is lending over 95% of
         value or the Borrower's credit score fails. There is an exception from
         this policy for existing Borrowers who are moving home and the
         Seller's overall position is improved.

7.       Credit History

         7.1     Credit Search

         A credit search is carried out in respect of all applicants.
         Applications may be declined where an adverse credit history (for
         example, county court judgment (or the Scottish equivalent), default,
         or bankruptcy notice) is revealed or the score does not meet the
         required risk/reward trade-off.

         7.2     Bank Reference

         A bank reference may be sought or the applicants may be required to
         provide bank statements in support of his or her application.

8.       Scorecard

         The Seller uses some of the above criteria and various other criteria
         to provide an overall score for the application that reflects a
         statistical analysis of the risk of advancing the Loan. The lending
         policies and processes are determined centrally to ensure consistency
         in the management and monitoring of credit risk exposure. Full use is
         made of software technology in credit scoring new applications. Credit
         scoring applies statistical analysis to publicly available data and
         customer-provided data to assess the likelihood of an account going
         into arrears.

                                      41

<PAGE>

         The Seller reserves the right to decline an application that has
         received a passing score. The Seller does have an appeals process if
         an applicant believes his or her application to be unfairly denied. It
         is the Seller's policy to allow only authorised individuals to
         exercise discretion in granting variances from the scorecard.

                                      42

<PAGE>

                                  SCHEDULE 5

      POWER OF ATTORNEY IN FAVOUR OF FUNDING 1, FUNDING 2, THE MORTGAGES
      TRUSTEE, THE FUNDING 1 SECURITY TRUSTEE AND THE FUNDING 2 SECURITY
                                    TRUSTEE

THIS DEED OF POWER OF ATTORNEY is made on the [*] by:

(1)      BANK OF SCOTLAND PLC a public limited company incorporated under the
         laws of Scotland, whose registered office is at The Mound, Edinburgh,
         EH1 1YZ (registered number SC 327000) (the GRANTOR);

IN FAVOUR OF each of:

(2)      PERMANENT FUNDING (NO. 1) LIMITED whose registered office is at 35
         Great St. Helen's, London EC3A 6AP (registered number 4267660)
         (FUNDING 1);

(3)      PERMANENT FUNDING (NO. 2) LIMITED whose registered office is at 35
         Great St. Helen's, London EC3A 6AP (registered number 04441772)
         (FUNDING 2);

(4)      PERMANENT MORTGAGES TRUSTEE LIMITED whose registered office is at 47
         Esplanade, St Helier, Jersey JE1 0BD (registered number 83116) (the
         MORTGAGES TRUSTEE);

(5)      THE BANK OF NEW YORK, a New York banking corporation, acting through
         its offices at 48th Floor, One Canada Square, London E14 5AL in its
         capacity as security trustee under the Funding 1 Deed of Charge and
         the Funding 2 Deed of Charge (the FUNDING 1 SECURITY TRUSTEE and the
         FUNDING 2 SECURITY TRUSTEE (respectively), which expressions shall
         include such company and all other persons or companies for the time
         being acting as the security trustee or security trustees under the
         Funding 1 Deed of Charge and the Funding 2 Deed of Charge
         (respectively)).

WHEREAS:

(A)      By virtue of a mortgage sale agreement (the MORTGAGE SALE AGREEMENT)
         dated 14 June 2002 and as subsequently amended and restated on 6 March
         2003, 25 November 2003, 12 March 2004, 22 July 2004, 18 November 2004,
         23 March 2005, 22 June 2005, 22 March 2006, 17 October 2006 and 21
         November 2007 and made between the Grantor (1) Funding 1 (2) Funding 2
         (3) the Mortgages Trustee (4) the Funding 1 Security Trustee and (5)
         the Funding 2 Security Trustee provision was made for the execution by
         the Grantor of this Power of Attorney.

(B)      Words and phrases in this Power of Attorney shall (save where
         expressed to the contrary) have the same meanings respectively as the
         words and phrases in the Master Definitions and Construction Schedule
         dated 21 November 2007 as amended, varied or supplemented from time to
         time and signed by amongst others, the parties to the Power of
         Attorney.

NOW THIS DEED WITNESSETH as follows:

1.       The Grantor irrevocably and by way of security for the performance of
         the covenants, conditions and undertakings on the part of the Grantor
         contained in the Mortgage Sale Agreement and the Servicing Agreement
         HEREBY APPOINTS each of Funding 1, Funding 2, the Mortgages Trustee,
         the Funding 1 Security Trustee and the Funding 2 Security Trustee and
         any receiver and/or administrator appointed from time to time in
         respect of Funding 1 and/or Funding 2 and/or the Mortgages Trustee or
         their assets (each an ATTORNEY) severally to be its true and lawful
         attorney for the Grantor and in the Grantor's name or otherwise to do
         any act matter or thing which any Attorney considers

                                      43

<PAGE>

         necessary or desirable for the protection, preservation or enjoyment
         of that Attorney's interest in the Loans and their Related Security
         and/or which ought to be done under the covenants, undertakings and
         provisions contained in the Mortgage Sale Agreement including (without
         limitation) any or all of the following:

         (a)     to execute, sign, seal and deliver (using the company seal of
                 the Grantor where appropriate) any conveyance, assignation or
                 transfer (including, for the avoidance of doubt any Scottish
                 Declaration of Trust) of the Loans or any of them to the
                 Mortgages Trustee and its successors in title or to any other
                 person or persons entitled to the benefit thereof;

         (b)     to execute, sign, seal and deliver (using the company seal of
                 the Grantor where appropriate) any conveyance, assignment,
                 assignation or transfer (including for the avoidance of doubt,
                 each Scottish Declaration of Trust) of the Related Security or
                 any item comprised therein (to the extent only that such item
                 or items relate to the Loans) to the Mortgages Trustee and its
                 successors in title or to any other person or persons entitled
                 to the benefit thereof or entitled to be registered at the
                 Land Registry as proprietor thereof or to be registered in the
                 Land Register of Scotland or recorded in the General Register
                 of Sasines as heritable creditor thereof (as the case may be);

         (c)     to do every other act or thing which the Grantor is obliged to
                 do under the Mortgage Sale Agreement or which that Attorney
                 may otherwise consider to be necessary proper or expedient for
                 fully and effectually vesting or transferring the interests
                 sold thereunder in the Loans and their Related Security or any
                 or each of them and/or the Grantor's estate right and title
                 therein or thereto in or to the Mortgages Trustee and its
                 successors in title or to any other person or persons entitled
                 to the benefit thereof (as the case may be) in the same manner
                 and as fully and effectually in all respects as the Grantor
                 could have done including, without limitation, any of the acts
                 referred to in clause 6.5(a) to (c) of the Mortgage Sale
                 Agreement;

         (d)     to exercise its rights, powers and discretions under the Loans
                 including the right to fix the rate or rates of interest
                 payable under the Loans in accordance with the terms thereof
                 including, for the avoidance of doubt, whilst such Loans
                 subsist and subject to the consent of the Mortgages Trustee
                 being given to the setting of such rates, setting the
                 Grantor's Variable Base Rate in the circumstances referred to
                 in clause 4.4 of the Servicing Agreement and/or following
                 perfection pursuant to clause 6.1 of the Mortgages Sale
                 Agreement PROVIDED THAT nothing in the Clause shall prevent
                 the Grantor (or any of its attorneys from time to time) from
                 setting a higher rate than those set or to be set or required
                 or to be required by the Mortgages Trustee or Funding 1 or
                 Funding 2 under this Power of Attorney;

         (e)     to discharge the Mortgages or any of them and to sign, seal,
                 deliver and execute such receipts, releases, surrenders,
                 instruments, discharges, retrocessions and deeds as may be
                 requisite or advisable in order to discharge the relevant
                 Property or Properties from the Mortgages or any of them; and

         (f)     to exercise all the powers of the Grantor in relation to such
                 Loans and their Related Security.

2.       Each Attorney shall have the power by writing under its hand by an
         officer of the Attorney from time to time to appoint a substitute who
         shall have power to act on behalf of the Grantor as if that substitute
         shall have been originally appointed Attorney by this Power of
         Attorney (including, without limitation, the power of further
         substitution) and/or to revoke any such appointment at any time
         without assigning any reason therefor.

                                      44

<PAGE>

3.       The Grantor hereby agrees at all times hereafter to ratify and confirm
         whatsoever the said Attorney or its attorneys shall lawfully do or
         cause to be done in and concerning the Loans or their Related Security
         by virtue of this Power of Attorney.

4.       The laws of England shall apply to this Power of Attorney and the
         interpretation thereof.

IN WITNESS WHEREOF the Grantor has executed and delivered this document as a
deed the day and year first before written.

THE COMMON SEAL of                      )
BANK OF SCOTLAND PLC                    )
was hereunto affixed in                 )
the presence of:                        )

                                   Authorised Signatory

                                   Authorised Signatory

                                      45

<PAGE>

                                  SCHEDULE 6

                            LOAN REPURCHASE NOTICE

Dated [ ]

1.       It is hereby agreed that for the purpose of this notice the PRINCIPAL
         AGREEMENT shall mean the Mortgage Sale Agreement dated 14 June 2002 as
         amended and restated on 6 March 2003, 25 November 2003, 12 March 2004,
         22 July 2004, 18 November 2004, 23 March 2005, 22 June 2005 and 22
         March 2006 and as further amended and restated on 17 October 2006 and
         21 November 2007 and from time to time, made laterally between (1)
         BANK OF SCOTLAND PLC (the SELLER) (2) PERMANENT FUNDING (NO. 1)
         LIMITED (3) PERMANENT FUNDING (NO. 2) LIMITED (4) PERMANENT MORTGAGES
         TRUSTEE LIMITED (the MORTGAGES TRUSTEE), (5) THE BANK OF NEW YORK (as
         FUNDING 1 SECURITY TRUSTEE) and (6) THE BANK OF NEW YORK (as FUNDING 2
         SECURITY TRUSTEE) (as the same may be or have been amended, varied or
         supplemented from time to time with the consent of those parties).

2.       Save where the context otherwise requires, words and expressions in
         this notice shall have the same meanings respectively as when used in
         the Principal Agreement.

3.       In accordance with clause 8.5 of the Principal Agreement, upon receipt
         of this Loan Repurchase Notice by the Seller there shall exist between
         the Seller and the Mortgages Trustee an agreement (the AGREEMENT FOR
         SALE) for the sale by the Mortgages Trustee to the Seller of the Loans
         and their Related Security more particularly described in the Schedule
         hereto. Completion of such sale shall take place on [ ].

4.       The Agreement for Sale shall incorporate, mutatis mutandis, the
         relevant provisions of the Principal Agreement.

________________________

Signed for and on behalf of

PERMANENT MORTGAGES TRUSTEE LIMITED

[On duplicate

We hereby acknowledge receipt of and confirm the contents of the Loan
Repurchase Notice dated [ ].

________________________

Signed for and on behalf of

BANK OF SCOTLAND PLC]

                                      46

<PAGE>

                                   SCHEDULE

<TABLE>
<CAPTION>
1                 2          3               4                     5
<S>               <C>        <C>             <C>                   <C>
Title No. (if     Brower     Account No.     Property Postcode     Date of Mortgage
registered)
</TABLE>

                                      47

<PAGE>

                                  SCHEDULE 7

                       ASSIGNMENT OF THIRD PARTY RIGHTS

THIS DEED OF ASSIGNMENT is made on [*]

BY:

(1)      BANK OF SCOTLAND PLC (registered number SC327000), a public limited
         company incorporated under the laws of Scotland, whose registered
         office is at The Mound, Edinburgh, EH1 1YZ (the TRANSFEROR);

IN FAVOUR OF:

(2)      PERMANENT MORTGAGES TRUSTEE LIMITED (registered number 83116), a
         private limited company incorporated under the laws of Jersey, Channel
         Islands, whose registered office is at 47 Esplanade, St Helier, Jersey
         JE1 0BD (the TRANSFEREE).

WHEREAS:

(A)      By the charges by way of legal mortgage or standard security (the
         MORTGAGES) brief particulars of which are set out in the Annexure
         hereto the properties brief particulars of which are similarly set out
         became security for the repayment of the moneys therein mentioned.

(B)      By the Mortgage Sale Agreement, the Transferor agreed to sell and the
         Transferee agreed to buy all right, title, interest and benefit (both
         present and future) of the Transferor in and under those Mortgages and
         all their Related Security and all monies secured by those Mortgages
         and Related Security.

NOW THIS DEED WITNESSETH as follows:

1.       Terms used (but not defined) in this Deed (including the recitals)
         shall, except where the context otherwise requires and save where
         otherwise defined in this Deed, have the meanings given to them in the
         master definitions and construction schedule dated 21 November 2007 as
         amended and/or restated from time to time, signed by, amongst others,
         the parties to this Deed (as the same may be amended, varied or
         supplemented from time to time with the consent of the parties to this
         Deed) (the MASTER DEFINITIONS AND CONSTRUCTION SCHEDULE) and this Deed
         shall be construed in accordance with the interpretation provisions
         set out in Clause 2 thereof.

2.       The Transferor hereby assigns absolutely unto the Transferee with full
         title guarantee or, in the case of any Related Security or rights of
         action (as described in Clause (b) below) governed by Scots law, with
         absolute warrandice:

         (a)     the benefit of all Related Security relating to the Mortgages
                 (including without limitation all securities for the principal
                 moneys and interest secured by the Mortgages and the benefit
                 of all consents to mortgage signed by occupiers of the
                 mortgaged properties and MHA Documentation and the benefit of
                 all guarantees, indemnities and surety contracts relating to
                 the Mortgages) other than any such Related Security which has
                 been transferred to the Transferee by other means or which is
                 not otherwise capable of such transfer; and

                                      48

<PAGE>

         (b)     all causes and rights of action of the Transferor against any
                 person in connection with any report, valuation, opinion,
                 certificate, consent or other statement of fact or opinion
                 given in connection with any Related Security relating to the
                 Mortgages or affecting the decision to make any advance in
                 connection with such Mortgages.

3.       The Transferor on behalf of the Transferee agrees to intimate the
         assignation contained in Clause 2 hereof to all relevant third parties
         where required to do so pursuant to clause 6 of the Mortgage Sale
         Agreement or as otherwise required by the Funding 1 Security Trustee
         or the Funding 2 Security Trustee.

4.       This Deed shall be governed by and construed in accordance with
         English law.

IN WITNESS WHEREOF this document has been executed and delivered as a deed the
day and year first before written.

EXECUTED as a DEED by                   )
BANK OF SCOTLAND PLC                    )
acting by its attorney in               )
the presence of:                        )  _________________________

Witness's Signature:    ________________

Name:                   ________________

Address:

                                      49

<PAGE>

               ANNEXURE REFERRED TO IN THE FOREGOING ASSIGNMENT

Account No.     Property     address     Borrower     Date of Mortgage

                                      50

<PAGE>

                                  SCHEDULE 8

            ASSIGNMENT OF HALIFAX MORTGAGE RE LIMITED MIG POLICIES

THIS DEED is made on [*]

BY:

(1)      BANK OF SCOTLAND PLC (registered number SC 327000), a public limited
         company incorporated under the laws of Scotland, whose registered
         office is at The Mound, Edinburgh, EH1 1YZ (the SELLER);

IN FAVOUR OF:

(2)      PERMANENT MORTGAGES TRUSTEE LIMITED (registered number 83116), a
         private limited company incorporated under the laws of Jersey, Channel
         Islands, whose registered office is at 47 Esplanade, St Helier,
         Jersey, JE1 0BD (the MORTGAGES TRUSTEE).

WHEREAS:

(A)      By a Mortgage Sale Agreement dated 14 June 2002, as amended and
         restated on 6 March 2003, 25 November 2003, 12 March 2004, 22 July
         2004, 18 November 2004, 23 March 2005, 22 June 2005, 22 March 2006 and
         17 October 2006 and as further amended and restated on 21 November
         2007 and from time to time made laterally between, amongst others, the
         parties hereto, the Seller agreed to transfer to the Mortgages Trustee
         certain charges by way of legal mortgage or standard security secured
         on residential property in England, Wales and Scotland together with
         the benefit of any monies secured thereby from time to time.

(B)      The Seller has acquired the benefit of mortgage indemnity insurance
         policies brief details of which are set out in the Schedule to this
         Deed (the HMRL MIG POLICIES) from Halifax pursuant to the HBOS Group
         Reorganisation Act 2006.

(C)      The Seller has agreed with the Mortgages Trustee to assign to the
         Mortgages Trustee the benefit of the HMRL MIG Policies to the extent
         that they relate to the Loans in the Portfolio.

(D)      The insurance businesses (including, for the avoidance of doubt, the
         HMRL MIG Policies) of Halifax Mortgage Re Limited were acquired by
         HBOS Insurance (PCC) Guernsey Limited on 21 December 2001.

NOW THIS DEED WITNESSETH as follows:

1.       Terms used (but not defined) in this Deed (including the recitals)
         shall, except where the context otherwise requires and save where
         otherwise defined in this Deed, have the meanings given to them in the
         master definitions and construction schedule dated 21 November 2007 as
         amended and/or restated from time to time, signed by amongst others,
         the parties to this Deed, (as the same may be amended, varied or
         supplemented from time to time with the consent of the parties to this
         Deed) (the MASTER DEFINITIONS CONSTRUCTION SCHEDULE) and this Deed
         shall be construed in accordance with the interpretation provisions
         set out in Clause 2 thereof.

2.       The Seller with full title guarantee hereby conveys, transfers and
         assigns to the Mortgages Trustee absolutely all its right, title,
         interest and benefit in the HMRL MIG Policies to the extent that they
         relate to the Mortgages which as at this date are comprised in the
         Portfolio, and all moneys and

                                      51

<PAGE>

         proceeds to become payable under any of the same and all covenants
         relating thereto and all powers and remedies for enforcing the same.

3.       This Deed shall be governed by and construed in accordance with
         English law.

IN WITNESS WHEREOF which this document has been executed and delivered as a
deed the day and year first before written.

EXECUTED as a DEED by                   )
BANK OF SCOTLAND PLC                    )
acting by its attorney in               )
the presence of:                        )   _________________________

Witness's Signature:   _________________

Name:                  _________________

Address:               _________________

                                      52

<PAGE>

                                  SCHEDULE 1

[Mortgage indemnity guarantee policies numbered 227001, 227001(A), 227002,
227003 and 227006 respectively issued to Halifax plc by Halifax Mortgage Re
Limited.]

                                      53

<PAGE>

                                  SCHEDULE 2

<TABLE>
<CAPTION>
1                 2            3              4                     5
<S>               <C>          <C>            <C>                   <C>
Title No. (if     Borrower     Account No     Property Postcode     Date of Mortgage
registered)
</TABLE>

                                      54

<PAGE>

                                  SCHEDULE 9

          HALIFAX MORTGAGE RE LIMITED MIG POLICIES ASSIGNMENT NOTICE

To:      HBOS Insurance (PCC) Guernsey Ltd
         c/o AON Insurance Managers (Guernsey) Limited
         (as Managers of HBOS Insurance (PCC) Ltd)
         PO Box 33
         Maison Trinity
         Trinity Square
         St Peter Port
         Guernsey GY1 4AT

[*]

Dear Sirs,

RE: [ASSIGNMENT OF MORTGAGE INDEMNITY INSURANCE POLICIES NUMBERED 227001,
227001(A), 227002, 227003 AND 227006 RESPECTIVELY (THE MIG POLICIES)]

We hereby give you notice that, by an Assignment dated [*] and made between
ourselves and Permanent Mortgages Trustee Limited (the MORTGAGES TRUSTEE) (a
copy of which is attached to this notice), we assigned all of our right, title,
benefit and interest in the MIG Policies to the Mortgages Trustee (to the
extent that they relate to the loans and the mortgages in a portfolio referred
to in [the Mortgage Sale Agreement dated 14 June 2002 as amended and/or
restated on 6 March 2003, 25 November 2003, 12 March 2004, 22 July 2004, 18
November 2004, 23 March 2005, 22 June 2005, 22 March 2006 and 17 October 2006
and as further amended and restated on 21 November 2007 laterally between
ourselves, Permanent Funding (No. 1) Limited, Permanent Funding (No. 2)
Limited, the Mortgages Trustee, The Bank of New York (as FUNDING 1 SECURITY
TRUSTEE) and The Bank of New York (as FUNDING 2 SECURITY TRUSTEE)/the New
Portfolio Notice dated [*] between ourselves, Permanent Funding (No.1) Limited,
Permanent Funding (No. 2) Limited and the Mortgages Trustee)]<F1>.

Yours faithfully,

_____________________________
For and on behalf of
BANK OF SCOTLAND PLC

Copy: Permanent Mortgages Trustee Limited
      Permanent Funding (No. 1) Limited
      Permanent Funding (No. 2) Limited
      The Bank of New York
______________________________________

Delete as applicable.

                                      55

<PAGE>

                                  SCHEDULE 10

                             INSURANCE ENDORSEMENT

ON THE HEADED NOTEPAPER OF [THE RELEVANT INSURER]

ENDORSEMENT [X] attaching to, supplemental to and forming part of policy number
[policy number] (the POLICY) issued by [name of Insurer] (the INSURER).

Expressions defined in the Policy shall unless indicated otherwise, have the
same meanings in this endorsement.

It is hereby noted and agreed that with effect from the date of this
Endorsement:

1.       The definition of INSURED shall be deleted in its entirety and
         replaced with the following wording:

         (a)     "Halifax plc (HALIFAX) whose registered office is at Trinity
                 Road, Halifax, HX1 2RG;

         (b)     any assignee or person to whom Halifax has assigned (whether
                 legally or equitably and whether by way of security or
                 otherwise) or has declared a trust in respect of any loans
                 and/or mortgages and/or standard securities and related
                 collateral and/or assets to which this Policy relates (an
                 ASSIGNEE) (whether or not any such Assignee holds the same on
                 trust for another or others); and

         (c)     any person benefiting from security granted by Halifax or its
                 Assignee over any loans and/or mortgages and/or standard
                 securities and related collateral and/or assets to which this
                 Policy relates in connection with the financing or
                 re-financing of such loans and/or mortgages and/or standard
                 securities and related collateral and/or assets."

2.       Each term of the Policy which is inconsistent with the intent and/or
         effect of the amended definition of INSURED contemplated in paragraph
         1 above (the NEW DEFINITION) shall be subject to the New Definition
         and shall not apply to the extent that such term of the Policy is
         inconsistent with the New Definition.

3.       This endorsement does not have, nor is intended by the parties to
         have, the effect of conferring on the Insurer any greater liabilities
         under the Policy than those of the Insurer immediately prior to this
         endorsement being entered into between parties to this endorsement.

4.       The Insurer acknowledges and agrees that any Insured under the Policy
         may from time to time appoint Halifax or any other person as agent of
         that Insured to deal with the Insurer on its behalf in the
         administration of and making and payment of claims under the Policy.

All other terms, clause and conditions of the Policy remain unchanged.

This Endorsement is signed for and on behalf of the Insurer by a duly
authorised signatory:

__________________________

[Name]
[Position]
[Insurer]

Dated[*]

                                      56

<PAGE>

                                  SCHEDULE 11

                          INSURANCE ACKNOWLEDGEMENTS

                                    PART 1

ON THE HEADED NOTEPAPER OF GE MORTGAGE INSURANCE LIMITED

To:      Halifax plc (the SELLER)
         Trinity Road
         Halifax
         HX1 2RG

         Permanent Mortgages Trustee Limited (the MORTGAGES TRUSTEE)
         47 Esplanade
         St Helier
         Jersey
         JE1 08D
         Channel Islands

         Permanent Funding (No. 1) Limited (FUNDING 1)
         35 Great St Helen's
         London EC3A 6AP

         Permanent Funding (No. 2) Limited (FUNDING 2)
         35 Great St Helen's
         London EC3A 6AP

         The Bank of New York (the Funding 1 Security Trustee and the Funding 2
         Security Trustee)
         One Canada Square
         London
         E14 5AL

                                                                         [date]

Dear Sirs,

[MORTGAGE INDEMNITY GUARANTY POLICIES NUMBERS GECM-UK-003 AND GECM-UK-004 (THE
MIG POLICIES)]

We refer to the transaction entered into or to be entered into between, inter
alios, each of the parties to whom this letter is addressed, pursuant to which:

(a)      the Seller may assign or agree to transfer or declare a trust in
         respect of its interest in properties which are (or may from time to
         time be) covered by the MIG Policies to the Mortgages Trustee;

(b)      the Mortgages Trustee may declare a trust over its interest in such
         properties in favour of Funding 1, Funding 2 and the Seller; and

(c)      Funding 1 and Funding 2 may charge their respective interests in such
         properties to the Funding 1 Security Trustee (in the case of Funding
         1) and the Funding 2 Security Trustee (in the case of Funding 2).

                                      57

<PAGE>

In consideration of the payment of [POUND]1 made by each of the Seller, the
Mortgages Trustee, Funding 1, Funding 2, the Funding 1 Security Trustee and the
Funding 2 Security Trustee (receipt whereof is hereby acknowledged), we hereby
confirm that the arrangements set out in paragraphs (a) to (c) inclusive above
will not cause the MIG Policies to lapse or terminate and, notwithstanding any
such arrangements, we will continue to pay claims under the MIG Policies in the
same way and in the same amount as we would have paid them, had the said
arrangements not been entered into.

Yours faithfully,

FOR AND ON BEHALF OF GE MORTGAGE INSURANCE LIMITED

                                      58

<PAGE>

                                    PART 2

         ON THE HEADED NOTEPAPER OF HBOS INSURANCE (PCC) GUERNSEY LTD

To:      Halifax plc (the SELLER)
         Trinity Road
         Halifax
         HX1 2RG

         Permanent Mortgages Trustee Limited (the MORTGAGES TRUSTEE)
         47 Esplanade
         St Helier
         Jersey
         JE1 08D
         Channel Islands

         Permanent Funding (No. 1) Limited (FUNDING 1)
         35 Great St. Helen's
         London
         EC3A 6AP

         Permanent Funding (No. 2) Limited (FUNDING 2)
         35 Great St. Helen's
         London
         EC3A 6AP

         The Bank of New York (the FUNDING 1 SECURITY TRUSTEE and the FUNDING 2
         SECURITY TRUSTEE)
         48th Floor
         One Canada Square
         London
         E14 5AL

                                                                            [*]

Dear Sirs,

[MORTGAGE INDEMNITY GUARANTEE POLICY NUMBERS 227001, 227001(A), 227002, 227003
AND 227006 (the MIG POLICIES)]

We refer to the transaction entered into or to be entered into between, inter
alios, each of the parties to whom this letter is addressed, pursuant to which:

(a)      all of the Seller's right, title, benefit and interest in the MIG
         Policies (to the extent that the same relate to the mortgage loans and
         their collateral security sold or to be sold by the Seller to the
         Mortgages Trustee pursuant to a mortgage sale agreement to be entered
         into between each of the parties to whom this letter is addressed)
         shall be assigned by the Seller to the Mortgages Trustee;

(b)      the Seller may sell and assign or agree to sell and assign or declare
         a trust in respect of its interest in properties which are (or may
         from time to time be) covered by the MIG Policies to or in favour of
         the Mortgages Trustee;

                                      59

<PAGE>

(c)      the Mortgages Trustee may declare a trust over its interest in such
         properties in favour of Funding 1, Funding 2 and the Seller; and

(d)      Funding 1 and/or Funding 2 may charge their respective beneficial
         interests in such properties to the Funding 1 Security Trustee (in the
         case of Funding 1) and the Funding 2 Security Trustee (in the case of
         Funding 2).

In consideration of the payment of [POUND]1 made by each of the Seller, the
Mortgages Trustee, Funding 1, Funding 2, the Funding 1 Security Trustee and the
Funding 2 Security Trustee (receipt whereof is hereby acknowledged), we hereby
confirm that the arrangements set out in paragraphs (a) to (d) inclusive above
will not cause the MIG Policies to lapse or terminate and, notwithstanding any
such arrangements, we will continue to pay claims under the MIG Policies in the
same way and in the same amount as we would have paid them, had the said
arrangements not been entered into.

Yours faithfully,

FOR AND ON BEHALF OF HBOS INSURANCE (PCC) GUERNSEY LIMITED

                                      60

<PAGE>

                                  SCHEDULE 12

                             NEW PORTFOLIO NOTICE

Dated [ ]

1.       It is hereby agreed for the purpose of this notice the PRINCIPAL
         AGREEMENT shall mean the Mortgage Sale Agreement dated 14 June 2002 as
         amended and restated on 6 March 2003, 25 November 2003, 12 March 2004,
         22 July 2004, 18 November 2004, 23 March 2005, 22 June 2005, 22 March
         2006, 17 October 2006 and as further amended and restated on 21
         November 2007 made laterally between (1) BANK OF SCOTLAND PLC (the
         SELLER) (2) PERMANENT FUNDING (NO. 1) LIMITED (FUNDING 1) (3)
         PERMANENT FUNDING (NO. 2) LIMITED (FUNDING 2) (4) PERMANENT MORTGAGES
         TRUSTEE LIMITED (the MORTGAGES TRUSTEE), (5) THE BANK OF NEW YORK (as
         FUNDING 1 SECURITY TRUSTEE) and (6) THE BANK OF NEW YORK (as FUNDING 2
         SECURITY TRUSTEE) (as the same may be or have been amended, varied or
         supplemented from time to time with the consent of those parties).

2.       Save where the context otherwise requires, words and expressions in
         this notice shall have the same meanings respectively as when used in
         the Principal Agreement.

3.       In accordance with and subject to clause 4.1 of the Principal
         Agreement, upon receipt by the Seller of the duplicate of this notice
         signed by Funding 1, Funding 2 and the Mortgages Trustee, there shall
         exist between the Seller, Funding 1, Funding 2 and the Mortgages
         Trustee an agreement (the AGREEMENT FOR SALE) for the sale by the
         Seller to the Mortgages Trustee of the New Loans and their Related
         Security more particularly described in the Schedule hereto (other
         than any New Loans and their Related Security which have been redeemed
         in full prior to the next following Sale Date). Completion of such
         sale shall take place on [ ].

4.       The Agreement for Sale shall incorporate, mutatis mutandis, the
         relevant provisions of the Principal Agreement.

_______________________________

Signed for and on behalf of

BANK OF SCOTLAND PLC

[On duplicate:

We hereby acknowledge receipt of the New Portfolio Notice dated [ ], and
confirm that we are prepared to purchase New Loans as set out in that notice.
_______________________________

Signed for and on behalf of

PERMANENT FUNDING (NO. 1) LIMITED

_______________________________

Signed for and on behalf of

                                      61

<PAGE>

PERMANENT FUNDING (NO. 2) LIMITED
_______________________________

Signed for and on behalf of

PERMANENT MORTGAGES TRUSTEE LIMITED]

                                      62

<PAGE>

                                   SCHEDULE

<TABLE>
<CAPTION>
1                 2            3                     4               5
<S>               <C>          <C>                   <C>             <C>
Title No. (if     Borrower     Property Postcode     Account No.     Date of Mortgage
registered)
</TABLE>

                                      63

<PAGE>

                                  SCHEDULE 13

                          FORMS OF SCOTTISH TRANSFER

LAND REGISTER

We, BANK OF SCOTLAND PLC, incorporated under the Companies Acts (registered
number SC327000) and having our Registered Office at The Mound, Edinburgh EH1
1YZ (the TRANSFEROR) CONSIDERING THAT in terms of a Mortgage Sale Agreement
among Halifax plc, incorporated under the Companies Acts (registered number
02367076) and having its Registered Office at Trinity Road, Halifax, West
Yorkshire HX1 2RG, PERMANENT MORTGAGES TRUSTEE LIMITED, a private limited
company incorporated under the laws of Jersey, Channel Islands (registered
number 83116) and having its registered office at 47 Esplanade, St Helier,
Jersey JE1 0BD (the TRANSFEREE) and others dated 14 June 2002 as amended and
restated on 6 March 2003, 25 November 2003, 12 March 2004, 22 July 2004, 18
November 2004, 23 March 2005, 22 June 2005, 22 March 2006, 17 October 2006 and
as further amended and restated by an Amended and Restated Mortgage Sale
Agreement among us the Transferor, the Transferee and others dated 21 November
2007 (the MORTGAGE SALE AGREEMENT) the whole right, title and interest in and
to the Standard Securities and others hereinafter mentioned has been sold to
the Transferee NOW THEREFORE we, the Transferor, IN CONSIDERATION of the sums
payable in terms of and in implement of the Mortgage Sale Agreement HEREBY
ASSIGN to the Transferee as trustee under and in terms of the Mortgages Trust
Deed among the said Halifax plc, the Transferee and others dated 13 June 2002
as amended and restated on 6 March 2003, 25 November 2003, 12 March 2004, 22
July 2004, 18 November 2004, 23 March 2005, 22 March 2006, 17 October 2006 and
as further amended and restated by the Amended and Restated Mortgages Trust
Deed among us the Transferor, the Transferee and others dated 21 November 2007
(the MORTGAGES TRUST DEED) and its successor or successors as trustee or
trustees under and in terms of the Mortgages Trust Deed:

(a)      the Standard Securities granted by the respective parties whose names
         are specified in Column 3 of the Schedule annexed and executed as
         relative hereto in favour of [us the Transferor/the said Halifax plc]
         for all sums due and to become due, to the extent of the sums
         specified in the relative entry in Column 6 of the said Schedule being
         the amounts now due under the said respective Standard Securities,
         registered said Standard Securities in the Land Register under the
         Title Number specified in the relative entry in Column 4 of the said
         Schedule on the date specified in the relative entry in Column 5 of
         the said Schedule; and

(b)      the whole rights, title and interest of us the Transferor in and under
         all and any personal bonds, credit agreements or agreements for loan
         (however constituted) secured by the said Standard Securities and
         granted by or entered into with the said respective parties whose
         names are specified in Column 3 of the said Schedule, the dates of the
         respective personal bonds, credit agreements or agreements for loan
         being specified in the relative entry in Column 7 of the said
         Schedule;

With interest from and also arrears and accumulations of interest due and
unpaid as at [ ]; [Which Standard Securities granted in favour of the said
Halifax plc were last vested in that company as aforesaid and from whom we the
Transferor acquired right in terms of the HBOS Group Reorganisation Act 2006]
And we grant warrandice:

IN WITNESS WHEREOF these presents typewritten on this [and the preceding] page
are together with the Schedule annexed hereto executed at [ ] on the [ ] day of
[ ] as follows:

SUBSCRIBED for and on behalf of BANK OF SCOTLAND PLC by

__________________     ___________________     Authorised Signatory

                                      64

<PAGE>

(Print Full Name)

before this witness

______________________     Witness

______________________

(Print Full Name)

_____________________

_____________________

(Address)

                                      65

<PAGE>

THIS IS THE SCHEDULE REFERRED TO IN THE FOREGOING ASSIGNATION BY BANK OF
SCOTLAND PLC IN FAVOUR OF PERMANENT MORTGAGES TRUSTEE LIMITED

<TABLE>
<CAPTION>

1               2           3              4          5                6           7
<S>             <C>         <C>            <C>        <C>              <C>         <C>

Account No.     Address     Borrowers      Title      Registration     Sum Due     Date of
                            Full Names     Number     Date                         Bond or Loan
                                                                                   Agreement
</TABLE>

_____________________ Authorised Signatory

                                      66

<PAGE>

                                  SCHEDULE 14

                          FORMS OF SCOTTISH TRANSFER

                                SASINE REGISTER

We, BANK OF SCOTLAND PLC, incorporated under the Companies Acts (registered
number SC327000) and having our Registered Office at The Mound, Edinburgh EH1
1YZ (the TRANSFEROR) CONSIDERING THAT in terms of a Mortgage Sale Agreement
among Halifax plc, incorporated under the Companies Acts (registered number
02367076) and having its Registered Office at Trinity Road, Halifax, West
Yorkshire HX1 2RG, PERMANENT MORTGAGES TRUSTEE LIMITED, a private limited
company incorporated under the laws of Jersey, Channel Islands (registered
number 83116) and having its registered office at 47 Esplanade, St Helier,
Jersey JE1 0BD (the TRANSFEREE) and others dated 14 June 2002 as amended and
restated on 6 March 2003, 25 November 2003, 12 March 2004, 22 July 2004, 18
November 2004, 23 March 2005, 22 June 2005, 22 March 2006 and as further
amended and restated on 17 October 2006 and as further amended and restated by
an Amended and Restated Mortgage Sale Agreement among us the Transferor, the
Transferee and others dated 21 November 2007 (the MORTGAGE SALE AGREEMENT) we
have sold our whole right, title and interest in and to the Standard Securities
and others hereinafter mentioned to the Transferee NOW THEREFORE we the
Transferor IN CONSIDERATION of the sums payable in terms of and in implement of
the Mortgage Sale Agreement HEREBY ASSIGN to the Transferee as trustee under
and in terms of the Mortgages Trust Deed among the said Halifax plc, the
Transferee and others dated 13 June 2002 as amended and restated on 6 March
2003, 25 November 2003, 12 March 2004, 22 July 2004, 18 November 2004, 23 March
2005, 22 March 2006, 17 October 2006 and as further amended and restated by the
Amended and Restated Mortgages Trust Deed among us the Transferor, the
Transferee and others dated 21 November 2007 (the MORTGAGES TRUST DEED) and its
successor or successors as trustee or trustees under and in terms of the
Mortgages Trust Deed:

(a)      the Standard Securities granted by the respective parties whose names
         are specified in Column 3 of the Schedule annexed and executed as
         relative hereto in favour of [us the Transferor/the said Halifax plc]
         for all sums due and to become due, to the extent of the sums
         specified in the relative entry in Column 6 of the said Schedule being
         the amounts now due under the said respective Standard Securities,
         recorded said Standard Securities in the Register for the County
         specified in the relative entry in Column 4 of the said Schedule on
         the date specified in the relative entry in Column 5 of the said
         Schedule; and

(b)      the whole rights, title and interest of us the Transferor in and under
         all and any personal bonds, credit agreements or agreements for loan
         (however constituted) secured by the said Standard Securities and
         granted by or entered into with the said respective parties whose
         names are specified in Column 3 of the said Schedule, the dates of the
         respective personal bonds, credit agreements or agreements for loan
         being specified in the relative entry in Column 7 of the said
         Schedule;

With interest from and also arrears and accumulations of interest due and
unpaid as at [ ]; [Which Standard Securities granted in favour of the said
Halifax plc were last vested in that company as aforesaid and from whom we the
Transferor acquired right in terms of the HBOS Group Reorganisation Act 2006]
And we grant warrandice:

IN WITNESS WHEREOF these presents typewritten on this [and the preceding] page
are together with the Schedule annexed hereto executed at [ ] on the [ ] day of
[ ] as follows:

                                      67

<PAGE>

SUBSCRIBED for and on behalf of BANK OF SCOTLAND PLC by

____________________     ____________________      Authorised Signatory

(Print Full Name)

before this witness

_______________________        Witness

_______________________

(Print Full Name)

______________________

______________________

(Address)

                                      68

<PAGE>

THIS IS THE SCHEDULE REFERRED TO IN THE FOREGOING ASSIGNATION BY BANK OF
SCOTLAND PLC IN FAVOUR OF PERMANENT MORTGAGES TRUSTEE LIMITED

<TABLE>
<CAPTION>

1           2           3              4          5             6           7
<S>         <C>         <C>            <C>        <C>           <C>         <C>

Account     Address     Borrowers'     County     Recording     Sum Due     Date of
No.                     Full Names     Date                                 Bond or Loan
                                                                            Agreement
</TABLE>

____________________ Authorised Signatory

                                      69

<PAGE>

                                  SCHEDULE 15

                     FORM OF SCOTTISH DECLARATION OF TRUST

DECLARATION OF TRUST

among

(1)      BANK OF SCOTLAND PLC, incorporated under the Companies Act 1985
         (registered number SC327000) and having its registered office at The
         Mound, Edinburgh, EH1 1YZ (the SELLER);

(2)      PERMANENT MORTGAGES TRUSTEE LIMITED, a private limited company
         incorporated under the laws of Jersey, Channel Islands (registered
         number 83116), and having its registered office at 47 Esplanade, St
         Helier, Jersey JE1 0BD, Channel Islands as trustee under and in terms
         of the mortgages trust deed after mentioned (the MORTGAGES TRUSTEE);

(3)      PERMANENT FUNDING (NO. 1) LIMITED, incorporated under the Companies
         Acts (registered number 4267660) and having its registered office at
         35 Great St. Helen's, London EC3A 6AP (FUNDING 1); and

(4)      PERMANENT FUNDING (NO. 2) LIMITED, incorporated under the Companies
         Acts (registered number 04441772) and having its registered office at
         35 Great St. Helen's, London EC3A 6AP (FUNDING 2, and together with
         Funding 1 and the Seller, each in its capacity as a beneficiary of the
         Mortgages Trust, the BENEFICIARIES).

WHEREAS:

(A)      Title to the Scottish Trust Property after mentioned is held by and
         vested in the Seller (having been originated by it under the Halifax
         brand or by Halifax plc and acquired by it pursuant to the HBOS Group
         Reorganisation Act 2006 (the REORGANISATION ACT)).

(B)      In terms of a Mortgages Trust Deed entered into among Halifax plc,
         Funding 1, Funding 2 and the Mortgages Trustee dated 13 June 2002 as
         amended and restated on 6 March 2003, 25 November 2003, 12 March 2004,
         22 July 2004, 18 November 2004, 23 March 2005, 22 March 2006, 17
         October 2006 and as further amended and restated in terms of an
         amended and restated mortgages trust deed among, inter alios, the
         parties hereto dated 21 November 2007 and the Mortgages Trust
         constituted in terms thereof, the Mortgages Trustee holds the Trust
         Property on trust for the Beneficiaries.

(C)      In terms of a Mortgage Sale Agreement entered into among, inter alios,
         Halifax plc, Funding 1, Funding 2 and the Mortgages Trustee dated 14
         June 2002, as amended on 6 March 2003, 25 November 2003, 12 March
         2004, 22 July 2004, 18 November 2004, 23 March 2005, 22 June 2005, 22
         March 2006 and as amended and restated on 17 October 2006 and as
         further amended and restated in terms of an amended and restated
         mortgage sale agreement among, inter alios, the parties hereto dated
         21 November 2007 (the MORTGAGE SALE AGREEMENT) the Seller has agreed
         to sell inter alia the said Scottish Trust Property to the Mortgages
         Trustee to be held thereafter by the Mortgages Trustee under and in
         terms of the Mortgages Trust.

(D)      On the Reorganisation Date, pursuant to the Reorganisation Act, The
         Governor and Company of the Bank of Scotland was registered as a
         public company under the Companies Act 1985 and changed its name to
         Bank of Scotland plc and the business and all property and liabilities
         of Halifax plc (including its existing mortgage loan book, the ongoing
         business of originating mortgage loans and

                                      70

<PAGE>

         its rights and obligations under the Mortgage Sale Agreement) were
         transferred to Bank of Scotland plc.

(E)      In implement of clause 4.5(a)(vi) of the Mortgage Sale Agreement and
         pending the taking of legal title to the said Scottish Trust Property
         by the Mortgages Trustee, the Seller has undertaken to grant this
         deed.

NOW THEREFORE the parties HEREBY AGREE and DECLARE as follows:

1.       INTERPRETATION

         In this deed:

         (a)     the amended and restated master definitions and construction
                 schedule signed by, amongst others, the parties to this deed
                 and dated 21 November 2007 (as the same may be amended, varied
                 or supplemented from time to time with the consent of the
                 parties to this deed) (the MASTER DEFINITIONS AND CONSTRUCTION
                 SCHEDULE) is expressly and specifically incorporated into this
                 deed and, accordingly, the expressions defined in the Master
                 Definitions and Construction Schedule (as so amended, varied
                 or supplemented from time to time) shall, except where the
                 context otherwise requires and save where otherwise defined
                 herein, have the same meanings in this deed, including the
                 Recitals and this deed shall be construed in accordance with
                 the interpretation provisions set out in clause 3 of the
                 Master Definitions and Construction Schedule; and

         (b)     SCOTTISH TRUST PROPERTY shall mean the Scottish Loans and
                 their Related Security brief particulars of which are detailed
                 in the schedule annexed and executed as relative hereto (the
                 SCHEDULE) and any Further Advances, Flexible Loan Drawings,
                 Delayed Cashbacks and Home Cash Reserve Advances made in
                 respect of such Scottish Loans, and all right, title, interest
                 and benefit of the Seller to:

                 (i)     all payments of principal and interest (including, for
                         the avoidance of doubt, all Accrued Interest, Arrears
                         of Interest, Capitalised Expenses and Capitalised
                         Arrears) and other sums due or to become due in
                         respect of such Scottish Loans and their Related
                         Security including, without limitation, the right to
                         demand, sue for, recover and give receipts for all
                         principal monies, interest and costs and the right to
                         sue on all covenants and undertakings made or
                         expressed to be made in favour of the Seller (or to
                         which the Seller is entitled) under the applicable
                         Mortgage Terms;

                 (ii)    subject where applicable to the subsisting rights of
                         redemption of Borrowers, all MHA Documentation, Deeds
                         of Postponement, all third party guarantees and any
                         other collateral security for the repayment of the
                         relevant Scottish Loans;

                 (iii)   the right to exercise all the powers of the Seller in
                         relation thereto;

                 (iv)    heritable interests in respect of which the Seller is
                         uninfeft proprietor;

                 (v)     all proceeds resulting from the enforcement of any of
                         such Scottish Loans and their Related Security;

                 (vi)    each Certificate of Title and Valuation Report
                         relevant to such Scottish Loans and any right of
                         action of the Seller against any solicitor, qualified
                         conveyancer, valuer or other person in connection with
                         any report, valuation, opinion, certificate or other
                         statement of fact or opinion given in connection with
                         any of such Scottish Loans and their Related Security,
                         or any part thereof or affecting the decision of the
                         Seller (or

                                      71

<PAGE>

                         the relevant originator) to make or offer to make any
                         of such Scottish Loans or part thereof;

                 (vii)   the proceeds of all claims made by or on behalf of the
                         Seller or to which the Seller is entitled in relation
                         to the Scottish Properties secured by the Scottish
                         Mortgages detailed in the Schedule under the Buildings
                         Policies and the Properties in Possession Cover; and

                 (viii)  the MIG Policies, so far as they relate to the
                         relevant Scottish Loans and their Related Security,
                         including the right to receive the proceeds of any
                         claims.

2.       DECLARATION OF TRUST

         The Seller hereby DECLARES that from and after the date hereof the
         Seller holds and, subject to Clause 8 below, shall henceforth hold the
         Scottish Trust Property and its whole right, title and interest,
         present and future, therein and thereto in trust absolutely for the
         Mortgages Trustee and its assignees (whether absolutely or in
         security) whomsoever.

3.       INTIMATION

         The Seller hereby intimates to the Mortgages Trustee the coming into
         effect of the trust hereby declared and created and the Mortgages
         Trustee by its execution of this deed immediately subsequent to the
         execution hereof by the Seller acknowledges such intimation.

4        DEALINGS WITH SCOTTISH TRUST PROPERTY AND NEGATIVE PLEDGE

         The Seller warrants and undertakes that:

         (a)     as at the date hereof it holds, subject to any pending
                 registration or recording in the Land Register of Scotland or
                 the General Register of Sasines, legal title to the Scottish
                 Trust Property unencumbered by any fixed or floating charge,
                 diligence or other Security Interest;

         (b)     it shall not create or agree to create any fixed or floating
                 charge or other Security Interest over or which may attach to
                 or affect the whole or any part of the Scottish Trust Property
                 or otherwise dispose of the same at any time when such
                 Scottish Trust Property or part thereof remains subject to the
                 trust hereby created; and

         (c)     it shall deal with the Scottish Trust Property (including
                 without prejudice to said generality the calculation and
                 setting of any interest rate applicable thereto) in accordance
                 with the provisions of the Transaction Documents and the
                 specific written instructions (if any) of the Mortgages
                 Trustee or its foresaids and shall take, subject to Clause 8
                 below, any such action as may be necessary (including for the
                 avoidance of doubt the raising or defending of any proceedings
                 in any court of law whether in Scotland or elsewhere) to
                 secure or protect the title to the Scottish Trust Property but
                 only in accordance with the specific written instructions (if
                 any) of the Mortgages Trustee or its foresaids.

5.       TRANSFER OF TITLE

5.1      The Mortgages Trustee and its foresaids as beneficiary hereunder shall
         have the right to call upon the Seller to execute and deliver to the
         Mortgages Trustee, subject to the terms of Clause 6 of the Mortgage
         Sale Agreement, valid assignations of the Scottish Trust Property or
         any part thereof, and that notwithstanding the winding up of the
         Seller, the making of any administration order or the filing of
         documents with the court for the appointment of an administrator or
         the service of a notice

                                      72

<PAGE>

         of intention to appoint an administrator in respect of the Seller or
         the appointment of a receiver to all or any part of the Scottish Trust
         Property.

5.2      The Seller undertakes to the Mortgages Trustee and binds and obliges
         itself that, upon the occurrence of any one of the events specified in
         Clause 6.1 of the Mortgage Sale Agreement, it will within five London
         Business Days of such occurrence provide such information as is
         necessary to enable the Mortgages Trustee to complete Scottish
         Transfers (including all schedules and annexures thereto) in relation
         to the whole of the Scottish Trust Property.

5.3      For further assuring the said rights and powers specified in this
         Clause 5, the Seller has granted a power of attorney in favour of the
         Mortgages Trustee, Funding 1, Funding 2, the Funding 1 Security
         Trustee and the Funding 2 Security Trustee substantially in the form
         set out in Schedule 5 to the Mortgage Sale Agreement.

6.       MORTGAGES TRUSTEE DECLARATION OF TRUST

         The Mortgages Trustee by its said execution of this deed hereby
         DECLARES that its whole right, title and beneficial interest in and to
         the Scottish Trust Property in terms of this deed are and shall be
         held (to the extent not already so held) by the Mortgages Trustee and
         its foresaids under and in terms of the Mortgages Trust and all sums
         and amounts received or held by the Mortgages Trustee relating thereto
         or deriving therefrom have been and shall be added (to the extent
         aforesaid) to the Trust Property and held by the Mortgages Trustee
         under the Mortgages Trust Deed.

7.       MORTGAGES TRUST INTIMATION

         The Mortgages Trustee hereby intimates to the Beneficiaries of the
         Mortgages Trust, the declaration of trust made in terms of Clause 6
         above and the Beneficiaries by executing this deed acknowledge such
         intimation.

8.       TERMINATION OF TRUST

         If:

         (a)     legal title to any part or parts of the Scottish Trust
                 Property is taken by the Mortgages Trustee or its foresaids in
                 accordance with the provisions of Clause 5 above (which in the
                 case of any Scottish Mortgage shall be constituted by the
                 registration or recording of the title thereto in the Land
                 Register of Scotland or the General Register of Sasines (as
                 appropriate));

         (b)     any part or parts of the Scottish Trust Property forms the
                 subject of a repurchase in accordance with the terms of Clause
                 8.5 of the Mortgage Sale Agreement, or

         (c)     any Scottish Loan and its Related Security comprised within
                 the Scottish Trust Property is redeemed in full,

         the trust hereby declared and created pursuant to Clauses 2 and 3
         above shall (but only when any of the events or transactions before
         stated has been completed irrevocably, validly and in full) ipso facto
         fall and cease to be of effect in respect of such part or parts of the
         Scottish Trust Property but shall continue in full force and effect in
         respect of the whole remainder (if any) of the Scottish Trust
         Property.

9.       CHANGE OF TRUSTEE

         Except with the prior consent of the Mortgages Trustee and (for so
         long as each retains any right or interest in the Scottish Trust
         Property) Funding 1, Funding 2, the Funding 1 Security Trustee and the

                                      73

<PAGE>

         Funding 2 Security Trustee, the Seller shall not be entitled to resign
         office as a trustee or assume a new trustee or trustees under this
         deed.

10.      VARIATION

         This deed and the trusts hereby declared and created pursuant to
         Clauses 2 and 3 and Clauses 6 and 7 above shall not be varied in any
         respect without the consent in writing of the Mortgages Trustee and
         (for so long as each retains any right or interest in the Scottish
         Trust Property) Funding 1, Funding 2, the Funding 1 Security Trustee
         and the Funding 2 Security Trustee.

11.      GOVERNING LAW

         This deed shall be governed by and construed in accordance with the
         law of Scotland and each of the parties hereby prorogates the
         non-exclusive jurisdiction of the Scottish courts so far as not
         already subject thereto and waives any right or plea of forum non
         conveniens in respect of such jurisdiction.

12.      REGISTRATION

         The parties hereto consent to the registration of these presents for
         preservation:

IN WITNESS WHEREOF these presents typewritten on this and the preceding [ ]
pages together with the Schedule annexed hereto are executed for and on behalf
of the Seller, the Mortgages Trustee, Funding 1 and Funding 2 at [ ] on [ ] as
follows:

SUBSCRIBED for and on behalf of
BANK OF SCOTLAND PLC by [ ], its
Attorney, at London on [ ] before this
witness:

.............................Witness......................Attorney
(Signature)     (Signature)

............................
(Print Full Name)

............................

(Address)

                                      74

<PAGE>

SUBSCRIBED for and on behalf of
PERMANENT MORTGAGES TRUSTEE LIMITED by [ ],
one of its Directors, at London on [ ]
before this witness:

.............................Witness......................Director
(Signature)     (Signature)

............................
(Print Full Name)

............................

(Address)

SUBSCRIBED for an on behalf of
PERMANENT FUNDING (NO. 1) LIMITED by [ ], one
of its Directors, at London on [ ] before
this witness:

.............................Witness......................Director
(Signature)     (Signature)

............................
(Print Full Name)

............................

(Address)

SUBSCRIBED for an on behalf of
PERMANENT FUNDING (NO. 2) LIMITED by [ ], one
of its Directors, at London on [ ] before
this witness:

.............................Witness......................Director
(Signature)     (Signature)

............................
(Print Full Name)

............................
(Address)

                                      75

<PAGE>

         THIS [AND THE FOLLOWING PAGES COMPRISE] THE SCHEDULE REFERRED
     TO IN THE FOREGOING DECLARATION OF TRUST AMONG BANK OF SCOTLAND PLC,
    PERMANENT MORTGAGES TRUSTEE LIMITED, PERMANENT FUNDING (NO. 1) LIMITED
                     AND PERMANENT FUNDING (NO. 2) LIMITED

                DETAILS OF SCOTTISH LOANS AND RELATED SECURITY

<TABLE>
<CAPTION>

1.          2.          3.             4.          5.                6.          7.               8.
<S>         <C>         <C>            <C>         <C>               <C>         <C>              <C>

Account     Address     Borrowers'     Title       Registration/     Sum Due     Date of Loan     Originator
No.                     full names     Number/     Recording                     Agreement        [Halifax/Bank
                                       County      Date                                           of Scotland]
</TABLE>

______________________________________ Attorney
Bank of Scotland plc

______________________________________ Director
Permanent Mortgages Trustee Limited

______________________________________ Director
Permanent Funding (No.1) Limited

______________________________________ Director
Permanent Funding (No.2) Limited

                                      76

<PAGE>

                                  SCHEDULE 16

                         FORM OF MEMORANDUM OF RELEASE

                                            Permanent Mortgages Trustee Limited
                                                                   47 Esplanade
                                                                      St Helier
                                                                         Jersey
                                                                        JE1 0BD
                                                                Channel Islands

                                                                            [*]

Bank of Scotland plc
LP/3/3/SEC
Trinity Road
Halifax
West Yorkshire
HX1 2RG

Attn: Head of Mortgage Securitisation

Dear Sirs,

Pursuant to clause 8.6 of the Mortgage Sale Agreement, we hereby acknowledge:

(a)      that the loans detailed in the Annexure to the attached Assignment of
         Third Party Rights are released from the security created by the
         Funding 1 Deed of Charge, the Supplemental Funding 1 Deed of Charge,
         the Second Supplemental Funding 1 Deed of Charge, the Third
         Supplemental Funding 1 Deed of Charge, [list any other supplement to
         the Funding 1 Deed of Charge], the Funding 2 Deed of Charge, the
         Supplemental Funding 2 Deed of Charge, the Second Supplemental Funding
         2 Deed of Charge [and list any other supplement to the Funding 2 Deed
         of Charge]; and

(b)      that all further monies due and received on the loans are now for the
         account of Bank of Scotland.

Terms used (but not defined) herein shall have the meanings given to them in
the Master Definitions and Construction Schedule dated 21 November 2007 signed
by, amongst others, Permanent Mortgages Trustee Limited and Bank of Scotland
plc.

Yours faithfully

.............................
For and on behalf of
Permanent Mortgages Trustee Limited

                                      77

<PAGE>

                                  SCHEDULE 17

                         RE-ASSIGNMENT OF MIG POLICIES

THIS DEED is made on [*]

BY:

(1)      PERMANENT MORTGAGES TRUSTEE LIMITED (registered number 83116), a
         private limited company incorporated under the laws of Jersey, Channel
         Islands, whose registered office is at 47 Esplanade, St Helier,
         Jersey, JE1 0BD (the MORTGAGES TRUSTEE);

IN FAVOUR OF:

(2)      BANK OF SCOTLAND PLC (registered number SC327000), a public limited
         company incorporated under the laws of Scotland, whose registered
         office is at The Mound, Edinburgh, EH1 1YZ (the SELLER).

WHEREAS:

(A)      By the Mortgage Sale Agreement dated 14 June 2002, as amended and
         re-stated on 6 March 2003, 25 November 2003, 12 March 2004, 22 July
         2004, 18 November 2004, 23 March 2005, 22 June 2005, 22 March 2006 and
         17 October 2006 and as further amended and restated on and 21 November
         2007 made laterally between, amongst others, the parties hereto, the
         Seller agreed to transfer to the Mortgages Trustee certain charges by
         way of legal mortgage or standard security secured on residential
         property in England, Wales and Scotland together with the benefit of
         any monies secured thereby.

(B)      By the Mortgage Sale Agreement, the Mortgages Trustee has agreed to
         re-transfer to the Seller the Mortgages listed in Schedule 2 to this
         Deed and to re-assign to the Seller the benefit of the mortgage
         indemnity insurance policies brief details of which are set out in
         Schedule 1 to this Deed (the HMRL MIG POLICIES) to the extent that
         they relate to the Mortgages listed in Schedule 2 to this Deed.

(C)      The insurance businesses (including, for the avoidance of doubt, the
         HMRL MIG Policies) of Halifax Mortgage Re Limited were acquired by
         HBOS Insurance (PCC) Guernsey Limited on 21 December 2001.

NOW THIS DEED WITNESSETH as follows:

1.       Terms used (but not defined) in this Deed (including the recitals)
         shall, except where the context otherwise requires and save where
         otherwise defined in this Deed, have the meanings given to them in the
         amended and restated master definitions and construction schedule
         dated 21 November 2007, signed by amongst others, the parties to this
         Deed, (as the same may be amended, varied or supplemented from time to
         time with the consent of the parties to this Deed) (the MASTER
         DEFINITIONS AND CONSTRUCTION SCHEDULE) and this Deed shall be
         construed in accordance with the interpretation provisions set out in
         Clause 2 thereof.

2.       The Mortgages Trustee with full title guarantee hereby conveys,
         transfers and assigns to the Seller absolutely all its right, title,
         interest and benefit in the HMRL MIG Policies to the extent that they
         relate to the Mortgages which are listed in Schedule 2 to this Deed,
         and all moneys and proceeds to become payable under any of the same
         and all covenants relating thereto and all powers and remedies for
         enforcing the same.

                                      78

<PAGE>

3.       This Deed shall be governed by and construed in accordance with
         English law.

IN WITNESS WHEREOF which this document has been executed and delivered as a
deed the day and year first before written.

EXECUTED as a DEED by                   )
PERMANENT MORTGAGES                     )
TRUSTEE LIMITED acting by               )
its attorney in the presence of:        )

Witness:

Name:

Address:

                                      79

<PAGE>

                                  SCHEDULE 1

[Mortgage indemnity guarantee policies numbered 227001, 227001(A), 227002,
227003 and 227006 respectively issued to Halifax plc by Halifax Mortgage Re
Limited.]

                                      80

<PAGE>

                                  SCHEDULE 2

<TABLE>
<CAPTION>
1.                2.           3.              4.                    5.
<S>               <C>          <C>             <C>                   <C>
Title No. (if     Borrower     Account No.     Property Postcode     Date of Mortgage
registered)
</TABLE>

                                      81

<PAGE>

                                  SCHEDULE 18

         HALIFAX MORTGAGE RE LIMITED MIG POLICIES RE-ASSIGNMENT NOTICE

To:      HBOS Insurance (PCC) Guernsey Ltd
         c/o AON Insurance Managers (Guernsey) Limited
         (as Managers of HBOS Insurance (PCC) Ltd)
         PO Box 33
         Maison Trinity
         Trinity Square
         St Peter Port
         Guernsey GY1 4AT

[*]

Dear Sirs,

RE:      [ASSIGNMENT OF MORTGAGE INDEMNITY INSURANCE POLICIES NUMBERED 227001,
         227001(A), 227002, 227003 AND 227006 RESPECTIVELY (the MIG POLICIES)]

We hereby give you notice that, by an Assignment dated [*] and made between
ourselves and Bank of Scotland plc (the ASSIGNMENT), a copy of which is
attached to this notice, we assigned all of our right, title, benefit and
interest in the MIG Policies to Bank of Scotland plc (to the extent that they
relate to the loans and the mortgages listed in Schedule 2 to the Assignment).

Yours faithfully,

.............................
For and on behalf of

PERMANENT MORTGAGES TRUSTEE LIMITED

Copy:    Bank of Scotland plc
         Permanent Funding (No. 1) Limited
         Permanent Funding (No. 2) Limited
         The Bank of New York

                                      82

<PAGE>

                                  SCHEDULE 19

                      RE-ASSIGNMENT OF THIRD PARTY RIGHTS

THIS DEED OF ASSIGNMENT is made on [*]

BY:

(1)      PERMANENT MORTGAGES TRUSTEE LIMITED (registered number 83116), a
         private limited company incorporated under the laws of Jersey, Channel
         Islands, whose registered office is at 47 Esplanade, St Helier, Jersey
         JE1 0BD (the TRANSFEROR);

IN FAVOUR OF:

(2)      BANK OF SCOTLAND PLC (registered number SC327000), a public limited
         company incorporated under the laws of Scotland, whose registered
         office is at The Mound, Edinburgh EH1 1YZ (the TRANSFEREE).

WHEREAS:

(A)      By the charges by way of legal mortgage or standard security (the
         MORTGAGES) brief particulars of which are set out in the Annexure
         hereto the properties brief particulars of which are similarly set out
         became security for the repayment of the moneys therein mentioned.

(B)      By the Mortgage Sale Agreement, the Transferee sold and the Transferor
         purchased all right, title, interest and benefit of the Transferee in
         and under the Mortgages and all their Related Security and all monies
         secured by those Mortgages on or about [*].

(C)      By clause 8.5 of the Mortgage Sale Agreement, the Transferor has now
         agreed to sell and the Transferee has agreed to repurchase all right,
         title, interest and benefit (both present and future) of the
         Transferor in and under the Mortgages and all their Related Security
         and all monies secured by those Mortgages and Related Security.

NOW THIS DEED WITNESSETH as follows:

1.       Terms used (but not defined) in this Deed (including the recitals)
         shall, except where the context otherwise requires and save where
         otherwise defined in this Deed, have the meanings given to them in the
         amended and restated master definitions and construction schedule
         dated 21 November 2007 signed by, amongst others, the parties to this
         Deed (as the same may be amended, varied or supplemented from time to
         time with the consent of the parties to this Deed) (the MASTER
         DEFINITIONS AND CONSTRUCTION SCHEDULE) and this Deed shall be
         construed in accordance with the interpretation provisions set out in
         Clause 2 thereof.

2.       The Transferor hereby assigns absolutely unto the Transferee with full
         title guarantee or, in the case of any Related Security or rights of
         action (as described in Clause 2(b) below) governed by Scots Law, with
         absolute warrandice:

                                      83

<PAGE>

         (a)     the benefit of all Related Security relating to the Mortgages
                 (including without limitation all securities for the principal
                 moneys and interest secured by the Mortgages and the benefit
                 of all consents to mortgage signed by occupiers of the
                 mortgaged properties and MHA Documentation and the benefit of
                 all guarantees, indemnities and surety contracts relating to
                 the Mortgages) other than any such Related Security which has
                 been transferred to the Transferee by other means or which is
                 not otherwise capable of such transfer; and

         (b)     all causes and rights of action of the Transferor against any
                 person in connection with any report, valuation, opinion,
                 certificate, consent or other statement of fact or opinion
                 given in connection with any Related Security relating to the
                 Mortgages or affecting the decision to make any advance in
                 connection with such Mortgages.

3.       This Deed shall be governed by and construed in accordance with
         English law (provided that any terms of the Deed which are particular
         to Scots law shall be construed in accordance with the laws of
         Scotland).

IN WITNESS WHEREOF this document has been executed and delivered as a deed the
day and year first before written.

EXECUTED as a DEED by                   )
PERMANENT MORTGAGES                     )
TRUSTEE LIMITED                         )
acting by its attorney in               )
the presence of:                        )

Witness's signature:

Name:

Address:

                                      84

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