Document:

Sales and Servicing Agreement, dated as of May 1, 2004

 Exhibit 10.1 
 EXECUTION VERSION 
  
 SALE
AND SERVICING AGREEMENT 
  
 dated as of May 1, 2004 
  
 by and among 
  
 ACCREDITED MORTGAGE LOAN REIT TRUST, 
 as Seller, 
  
 ACCREDITED HOME
LENDERS, INC., 
 as Sponsor and Master Servicer, 
  
 ACCREDITED MORTGAGE LOAN TRUST 2004-2, 
 as
Issuer, 
  
 COUNTRYWIDE HOME LOANS SERVICING LP, 
 as Backup Servicer, 
  
 and 
  
 LASALLE BANK NATIONAL ASSOCIATION, 
 as Indenture Trustee 
  

 TABLE OF CONTENTS 
  

					
	 	  	 	  	Page

	 ARTICLE I
	  	 
	 DEFINITIONS
	  	 
			
	 Section 1.01.
	  	 Certain Defined Terms
	  	1
	 Section 1.02.
	  	 Provisions of General Application
	  	2
		
	 ARTICLE II
	  	 
	 SALE AND CONVEYANCE OF THE MORTGAGE LOANS
	  	 
			
	 Section 2.01.
	  	 Purchase and Sale of Mortgage Loans; Deposit of Derivatives
	  	2
	 Section 2.02.
	  	 Reserved
	  	3
	 Section 2.03.
	  	 Purchase Price
	  	3
	 Section 2.04.
	  	 Possession of Mortgage Files; Access to Mortgage Files
	  	3
	 Section 2.05.
	  	 Delivery of Mortgage Loan Documents
	  	3
	 Section 2.06.
	  	 Acceptance of the Trust Estate; Certain Substitutions; Certification by the Indenture Trustee
	  	6
	 Section 2.07.
	  	 Grant of Security Interest
	  	8
	 Section 2.08.
	  	 Further Action Evidencing Assignments
	  	9
	 Section 2.09.
	  	 Assignment of Agreement
	  	10
		
	 ARTICLE III
	  	 
	 REPRESENTATIONS, WARRANTIES AND COVENANTS
	  	 
			
	 Section 3.01.
	  	 Representations, Warranties and Covenants of the Master Servicer
	  	10
	 Section 3.02.
	  	 Representations, Warranties and Covenants of the Sponsor
	  	12
	 Section 3.03.
	  	 Representations, Warranties and Covenants of the Backup Servicer
	  	13
	 Section 3.04.
	  	 Representations, Warranties and Covenants of the Indenture Trustee
	  	14
	 Section 3.05.
	  	 Covenants and Representations of the Sponsor and Master Servicer Regarding Prepayment Charges
	  	15
	 Section 3.06.
	  	 Representations, Warranties and Covenants of the Seller
	  	16
		
	 ARTICLE IV
	  	 
	 THE MORTGAGE LOANS
	  	 
			
	 Section 4.01.
	  	 Representations and Warranties Concerning the Mortgage Loans
	  	17
	 Section 4.02.
	  	 Purchase and Substitution
	  	25
		
	 ARTICLE V
	  	 
	 ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
	  	 
			
	 Section 5.01.
	  	 The Master Servicer
	  	27
	 Section 5.02.
	  	 Collection of Certain Mortgage Loan Payments; Collection Account
	  	30
	 Section 5.03.
	  	 Permitted Withdrawals from the Collection Account
	  	31
	 Section 5.04.
	  	 Hazard Insurance Policies; Property Protection Expenses
	  	32

  

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	 Section 5.05.
	  	 Assumption and Modification Agreements
	  	34
	 Section 5.06.
	  	 Realization Upon Defaulted Mortgage Loans
	  	35
	 Section 5.07.
	  	 Indenture Trustee to Cooperate
	  	36
	 Section 5.08.
	  	 Servicing Compensation; Payment of Certain Expenses by Master Servicer
	  	37
	 Section 5.09.
	  	 Annual Statement as to Compliance
	  	37
	 Section 5.10.
	  	 Annual Independent Public Accountants’ Servicing Report
	  	37
	 Section 5.11.
	  	 Access to Certain Documentation
	  	38
	 Section 5.12.
	  	 Maintenance of Fidelity Bond
	  	38
	 Section 5.13.
	  	 Subservicing Agreements Between the Master Servicer and Subservicer and Subservicers
	  	38
	 Section 5.14.
	  	 Reports to the Indenture Trustee; Collection Account Statements
	  	39
	 Section 5.15.
	  	 Optional Purchase of Defaulted Mortgage Loans
	  	40
	 Section 5.16.
	  	 Reports to be Provided by the Master Servicer and the Backup Servicer
	  	40
	 Section 5.17.
	  	 [Reserved]
	  	42
	 Section 5.18.
	  	 Delinquency Advances
	  	42
	 Section 5.19.
	  	 Indemnification; Third Party Claims
	  	43
	 Section 5.20.
	  	 Maintenance of Corporate Existence and Licenses; Merger or Consolidation of the Master Servicer and Backup Servicer
	  	43
	 Section 5.21.
	  	 Assignment of Agreement by Master Servicer and Backup Servicer; Master Servicer and Backup Servicer Not to Resign
	  	44
	 Section 5.22.
	  	 Periodic Filings with the Securities and Exchange Commission Additional Information
	  	44
	 Section 5.23.
	  	 Administrative Duties
	  	45
		
	 ARTICLE VI
	  	 
	 APPLICATION OF FUNDS
	  	 
			
	 Section 6.01.
	  	 Deposits to the Payment Account
	  	46
	 Section 6.02.
	  	 Collection of Money
	  	46
	 Section 6.03.
	  	 Application of Principal and Interest
	  	46
	 Section 6.04.
	  	 [Reserved]
	  	46
	 Section 6.05.
	  	 Compensating Interest
	  	46
	 Section 6.06.
	  	 Effect of Payments by the Note Insurer; Subrogation
	  	47
		
	 ARTICLE VII
	  	 
	 SERVICER DEFAULT
	  	 
			
	 Section 7.01.
	  	 Servicer Events of Default
	  	47
	 Section 7.02.
	  	 Backup Servicer to Act: Appointment of Successor
	  	50
	 Section 7.03.
	  	 Waiver of Defaults
	  	54
	 Section 7.04.
	  	 Rights of the Note Insurer to Exercise Rights of the Noteholders
	  	54
	 Section 7.05.
	  	 Indenture Trustee To Act Solely with Consent of the Note Insurer
	  	55
	 Section 7.06.
	  	 Mortgage Loans, Trust Estate and Accounts Held for Benefit of the Note Insurer
	  	55
	 Section 7.07.
	  	 Note Insurer Default
	  	56

  

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	 ARTICLE VIII
	  	 
	 TERMINATION
	  	 
			
	 Section 8.01.
	  	 Termination
	  	56
	 Section 8.02.
	  	 Additional Termination Requirements
	  	57
	 Section 8.03.
	  	 Accounting Upon Termination of Master Servicer
	  	57
	 Section 8.04.
	  	 Termination of Backup Servicer as Successor Master Servicer
	  	58
		
	 ARTICLE IX
	  	 
	 [RESERVED]
	  	 
		
	 ARTICLE X
	  	 
	 MISCELLANEOUS PROVISIONS
	  	 
			
	 Section 10.01.
	  	 Limitation on Liability
	  	58
	 Section 10.02.
	  	 Acts of Noteholders
	  	59
	 Section 10.03.
	  	 Amendment
	  	59
	 Section 10.04.
	  	 Recordation of Agreement
	  	60
	 Section 10.05.
	  	 Duration of Agreement
	  	60
	 Section 10.06.
	  	 Notices
	  	60
	 Section 10.07.
	  	 Severability of Provisions
	  	61
	 Section 10.08.
	  	 No Partnership
	  	61
	 Section 10.09.
	  	 Counterparts
	  	61
	 Section 10.10.
	  	 Successors and Assigns
	  	61
	 Section 10.11.
	  	 Headings
	  	61
	 Section 10.12.
	  	 No Petition
	  	61
	 Section 10.13.
	  	 Third Party Beneficiary
	  	62
	 Section 10.14.
	  	 Intent of the Parties
	  	62
	 Section 10.15.
	  	 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
	  	62
			
	 Schedule I
	  	 Mortgage Loan Schedule
	  	 
	 Appendix I
	  	 Defined Terms
	  	 
		
	 EXHIBITS
	  	 
			
	 Exhibit A
	  	 Contents of the Mortgage File
	  	 
	 Exhibit B
	  	 Indenture Trustee’s Acknowledgement of Receipt
	  	 
	 Exhibit C
	  	 Indenture Trustee’s Acknowledgement of Receipt
	  	 
	 Exhibit D
	  	 Initial Certification of Indenture Trustee
	  	 
	 Exhibit E
	  	 Final Certification of Indenture Trustee
	  	 
	 Exhibit F
	  	 Request for Release of Documents
	  	 
	 Exhibit G
	  	 AHL Officer’s Certificate
	  	 

  

 iii 

 SALE AND SERVICING AGREEMENT, dated as of May 1, 2004 (this “Agreement”), by and among
ACCREDITED MORTGAGE LOAN REIT TRUST, a Maryland real estate investment trust, as seller (the “Seller”), ACCREDITED HOME LENDERS, INC., a California corporation, as sponsor (the “Sponsor”), ACCREDITED MORTGAGE LOAN
TRUST 2004-2, a Delaware statutory trust, as issuer (the “Trust”), ACCREDITED HOME LENDERS, INC., a California corporation, as master servicer (the “Master Servicer”), COUNTRYWIDE HOME LOANS SERVICING LP, a Texas
limited partnership, as backup servicer (the “Backup Servicer”), and LASALLE BANK NATIONAL ASSOCIATION, a national banking association, as indenture trustee (the “Indenture Trustee”). 
  
 W I T N E S S E T H 
  
 WHEREAS, the Sponsor has contributed the mortgage loans (the
“Mortgage Loans”) listed on Schedule I to this Agreement to the Seller, pursuant to the Contribution Agreement and Assignment, dated May 10, 2004, between the Sponsor and the Seller, Contribution Agreement and Assignment, dated May
11, 2004, between the Sponsor and the Seller, and Contribution Agreement and Assignment, dated May 12, 2004 (collectively, the “Contribution Agreements”), between the Sponsor and the Seller; 
  
 WHEREAS, the Seller desires to sell to the Trust, and the Trust desires to
purchase from the Seller, the Mortgage Loans; 
  
 WHEREAS,
immediately after such purchase, the Trust will pledge such Mortgage Loans to the Indenture Trustee pursuant to the terms of an Indenture, dated as of May 1, 2004 (the “Indenture”), between the Trust and the Indenture Trustee, and
issue the Accredited Mortgage Loan Trust 2004-2, Asset-Backed Notes (the “Notes”); 
  
 WHEREAS, the Master Servicer has agreed to service the Mortgage Loans, which constitute the principal assets of the Trust; 
  
 WHEREAS, the Backup Servicer has agreed to act as backup servicer of the
Mortgage Loans, which constitute the principal assets of the Trust; 
  
 WHEREAS, the Indenture Trustee will hold the Mortgage Loans and certain other assets pledged to the Indenture Trustee pursuant to the Indenture; and 
  
 NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the Seller, the Sponsor, the Trust, the Master Servicer, the
Backup Servicer and the Indenture Trustee hereby agree as follows: 
  
 ARTICLE I 
  
 DEFINITIONS 
  
 Section 1.01. Certain Defined Terms. Capitalized terms used herein but
not defined herein shall have the meanings ascribed to such terms in Appendix I attached hereto. 
  

 1 

 Section 1.02. Provisions of General Application. 
  
 (a) The terms defined herein and in Appendix I to the
Indenture include the plural as well as the singular. 
  
 (b) The words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole. Unless otherwise noted, all references to Articles and Sections shall be deemed to refer to
Articles and Sections of this Agreement. 
  
 (c)
Any reference to statutes are to be construed as including all statutory provisions consolidating, amending or replacing the statute to which reference is made and all regulations promulgated pursuant to such statutes. 
  
 (d) All calculations of interest with respect to the Notes
provided for herein shall be on the basis of a 360-day year and the actual number of days elapsed in the related Accrual Period. All calculations of interest with respect to any Mortgage Loan provided for herein shall be made in accordance with the
terms of the related Mortgage Note and Mortgage or, if such documents do not specify the basis upon which interest accrues thereon, on the basis of a 360 day year consisting of twelve 30-day months, to the extent permitted by applicable law.

  
 (e) Any Mortgage Loan payment is deemed to be
received on the date such payment is actually received by the Master Servicer; provided, however, that, for purposes of calculating payments on the Notes, prepayments with respect to any Mortgage Loan are deemed to be received on the
date they are applied in accordance with Accepted Servicing Practices consistent with the terms of the related Mortgage Note and Mortgage to reduce the outstanding Principal Balance of such Mortgage Loan on which interest accrues. 
  
 ARTICLE II 
  
 SALE AND CONVEYANCE OF THE MORTGAGE LOANS 
  
 Section 2.01. Purchase and Sale of Mortgage Loans; Deposit of
Derivatives. (a) The Sponsor hereby directs the Seller to sell, transfer, assign, set over and convey, and the Seller does hereby sell, transfer, assign, set over and convey to the Trust, to be included as part of Sub-Trust 1 or Sub-Trust 2, as
specified in the Mortgage Loan Schedule, in each case without recourse, but subject to the terms and provisions of this Agreement, all of the right, title and interest of the Seller in and to the Mortgage Loans, including the Cut-Off Date Principal
Balance of, and interest due on, such Mortgage Loans listed on Schedule I attached hereto, and all other assets included or to be included in the Trust Estate. In addition, on or prior to the Closing Date, the Sponsor shall cause the Note Insurer to
deliver the Note Insurance Policy. 
  
 (a) The
Seller may cause the deposit of derivatives at any time into the Accredited Mortgage Loan Trust 2004-2 and any such deposited derivatives shall become part of the Trust Estate. 
  

 2 

 Section 2.02. Reserved. 
  
 Section 2.03. Purchase Price. On the Closing Date, as full consideration for the Seller’s sale of the Mortgage
Loans to the Trust, the Underwriters, on behalf of the Trust, will deliver to, or at the direction of, the Seller an amount in cash equal to $603,207,700.00. Additionally, the Seller will receive the Certificates issued by the Trust pursuant to the
Trust Agreement. 
  
 Section 2.04. Possession of Mortgage
Files; Access to Mortgage Files. 
  
 (a) Upon
the receipt by the Seller, or its designee, of the purchase price for the Mortgage Loans set forth in Section 2.03 hereof, the ownership of each Mortgage Note, each Mortgage and the contents of the Mortgage File related to each Mortgage Loan will be
vested in the Trust, and will be pledged to the Indenture Trustee, for the benefit of the Noteholders and the Note Insurer. 
  
 (b) Pursuant to Section 2.05 hereof, the Seller has delivered, or caused to be delivered the Indenture Trustee’s Mortgage File
related to each Mortgage Loan to the Indenture Trustee. 
  
 (c) The Indenture Trustee will hold the Indenture Trustee’s Mortgage Files in trust pursuant to the terms of the Indenture for the benefit of all present and future Noteholders and the Note Insurer. 

 
 (d) Consistent with the terms of the Indenture, the
Indenture Trustee shall afford the Seller, the Sponsor, the Trust, the Note Insurer, the Master Servicer and the Backup Servicer reasonable access to all records and documentation regarding the Mortgage Loans relating to this Agreement, such access
being afforded at customary charges, upon reasonable prior written request and during normal business hours at the offices of the Indenture Trustee. 
  
 (e) In the event that the Mortgage Loans are required to be recorded in accordance with the provisions of Section 2.05, no later than the
fifth Business Day of each fourth month, commencing in January 2005, the Indenture Trustee shall deliver to the Master Servicer and the Note Insurer a report dated as of the first day of such month, identifying those Mortgage Loans for which it has
not yet received (i) an original recorded Mortgage or a copy thereof certified to be true and correct by the public recording office in possession of such Mortgage or (ii) an original recorded Assignment of Mortgage to the Indenture Trustee and any
required intervening Assignments of Mortgage or a copy thereof certified to be a true and correct copy by the public recording office in possession of such Assignment of Mortgage. 
  
 Section 2.05. Delivery of Mortgage Loan Documents. (a) In connection with the transfer and assignment of the Mortgage
Loans, the Seller shall, on or before the Closing Date, deliver, or cause to be delivered, to the Indenture Trustee (as pledgee of the Trust pursuant to the Indenture), the following documents or instruments constituting the Indenture Trustee’s
Mortgage File with respect to each Mortgage Loan so transferred or assigned: 
  
 (i) the original Mortgage Note, endorsed without recourse in blank or to “LaSalle Bank National Association, as Indenture Trustee under the Indenture dated as of May 1, 2004, Accredited Mortgage Loan Trust
2004-2” by the Sponsor, including all intervening endorsements showing a complete chain of endorsement; 
  

 3 

 (ii) the related original Mortgage with evidence of recording indicated thereon or a copy
thereof certified by the applicable recording office and if the Mortgage Loan is registered on the MERS System, such Mortgage or an assignment of the mortgage shall reflect MERS as the mortgagee of record and shall include the MIN for such Mortgage
Loan; 
  
 (iii) each intervening mortgage
assignment, with evidence of recording indicated thereon or if the original is not available, a copy thereof certified by the applicable recording office, if any, showing a complete chain of assignment from the originator of the related Mortgage
Loan to the Sponsor (or to MERS, if the Mortgage Loan is registered on the MERS System), and noting the presence of a MIN (if the Mortgage Loan is registered on the MERS System), which assignment may, at the Sponsor’s option, be combined with
the assignment referred to in subpart (iv) hereof, in which case it must be in recordable form, but need not have been previously recorded); 
  
 (iv) unless the Mortgage Loan is registered on the MERS System, a mortgage assignment in recordable form (which, if acceptable for
recording in the relevant jurisdiction as evidenced by an Opinion of Counsel addressed to the Indenture Trustee, may be included in a blanket assignment or assignments) of each Mortgage from the Sponsor to the Indenture Trustee; 
  
 (v) originals of all assumption, modification and
substitution agreements in those instances where the terms or provisions of a Mortgage or Mortgage Note have been modified or such Mortgage or Mortgage Note has been assumed (if any); and 
  
 (vi) an original title insurance policy or title opinion (or
(A) a copy of the title insurance policy or title opinion, or (B) the related binder, commitment or preliminary report, or copy thereof in which case the Sponsor hereby certifies that the original Mortgage has been delivered to the title insurance
company that issued such binder, commitment or preliminary report). 
  
 In instances where the original recorded Mortgage or any intervening mortgage assignment or a completed assignment of the Mortgage in recordable form cannot be delivered by the Sponsor to the Indenture Trustee prior to or concurrently with
the execution and delivery of this Agreement due to a delay in connection with recording, the Sponsor may: 
  
 (x) in lieu of delivering such original recorded Mortgage or intervening mortgage assignment, deliver to the Indenture Trustee, a copy
thereof and the Sponsor hereby certifies that the original Mortgage has been delivered to a title insurance company for recordation after receipt of its policy of title insurance or the related binder, commitment or preliminary report therefor; and

  
 (y) with respect to clause (iii) above, in
lieu of delivering the completed assignment in recordable form, deliver to the Indenture Trustee, the assignment in recordable form, otherwise complete except for recording information. 
  

 4 

 The Indenture Trustee is hereby authorized and directed, upon an Event of Default and subject to subsection (b) below,
with respect to each assignment described in Section 2.05(a)(iv) hereof, to endorse such assignment as follows: “LaSalle Bank National Association, as Indenture Trustee under the Indenture dated as of May 1, 2004, Accredited Mortgage Loan Trust
2004-2.” 
  
 (b) As promptly as practicable,
but in any event within thirty (30) days from the Closing Date, the Sponsor shall promptly submit, or cause to be submitted for recording in the appropriate public office for real property records, each assignment referred to in Section 2.05(a)(iv);
provided, that the Sponsor need not cause to be recorded any assignment which (i) is registered on the MERS System, or (ii) relates to a Mortgage Loan in any jurisdiction under the laws of which, as evidenced by an Opinion of Counsel delivered by
the Sponsor (at the Sponsor’s expense) to the Indenture Trustee, acceptable to the Rating Agencies and the Note Insurer, the recordation of such assignment is not necessary to protect the Indenture Trustee’s, the Note Insurer’s, the
Noteholders’ and the Certificates’ interest in the related Mortgage Loan. The Indenture Trustee, shall retain a copy of each assignment submitted for recording. In the event that any such assignment is lost or returned unrecorded because
of a defect therein, the Sponsor shall promptly prepare a substitute assignment or cure such defect, as the case may be, and thereafter the Sponsor shall submit each such assignment for recording. The costs relating to the delivery and recordation
of the documents in connection with the Mortgage Loans as specified in this Article II shall be borne by the Sponsor. With respect to Mortgage Loans (i) not registered on the MERS System, or (ii) not covered by an Opinion of Counsel described in
this section 2.05(b) to the extent that assignments of mortgage have not been recorded within one year after the Closing Date, the Seller shall, and if the Seller fails to, then the Sponsor shall be obligated to repurchase such Mortgage Loans in
accordance with the provisions of Section 4.02. 
  
 In connection
with the assignment of any Mortgage Loan registered on the MERS System, promptly after the Closing Date, the Sponsor will cause, at its own expense, the MERS System to indicate that such Mortgage Loan has been assigned to the Indenture Trustee for
the benefit of the Noteholders by entering (a) the Indenture Trustee’s Org ID in the “Investor” field which identifies the Indenture Trustee and (b) in the “Pool” field a code which identifies the securitization serial
number of the Notes issued in connection with such Mortgage Loans. The Sponsor and the Master Servicer will not alter the entries referenced in this paragraph with respect to any such Mortgage Loan during the term of this Agreement unless and until
such Mortgage Loan is repurchased or otherwise in accordance with the terms of this Agreement. 
  
 (c) The Sponsor shall, within five (5) Business Days after the receipt thereof, deliver, or cause to be delivered, to the Indenture
Trustee: (i) the original recorded Mortgage and related power of attorney, if any, in those instances where a copy thereof certified by the Sponsor was delivered to the Indenture Trustee; (ii) the original recorded assignment of Mortgage from the
last endorsee to the Indenture Trustee, which, together with any intervening assignments of Mortgage, evidences a complete chain of assignment from the originator of the Mortgage Loan to the Indenture Trustee, in those instances where copies of such
assignments certified by the Sponsor were delivered to the Indenture Trustee; and (iii) the title insurance policy or title opinion required in Section 2.05(a)(vi). 
  
 Notwithstanding anything to the contrary contained in this Section 2.05, in those instances where the public recording
office retains the original Mortgage, power of attorney, if 

  

 5 

 
any, assignment or assignment of Mortgage after it has been recorded or such original has been lost, the Sponsor shall be deemed to have satisfied its
obligations hereunder upon delivery to the Indenture Trustee, of a copy of such Mortgage, power of attorney, if any, assignment or assignment of Mortgage certified by the public recording office to be a true copy of the recorded original thereof.

  
 From time to time the Sponsor may forward, or cause to be
forwarded, to the Indenture Trustee, additional original documents evidencing any assumption or modification of a Mortgage Loan. 
  
 (d) All original documents relating to the Mortgage Loans that are not required to be delivered to the Indenture Trustee, pursuant to
Section 2.05(a) hereof are, and shall be, held by the Master Servicer, the Sponsor or the Seller, as the case may be, in trust for the benefit of the Indenture Trustee, on behalf of the Noteholders and the Note Insurer. In the event that any such
original document is required pursuant to the terms of this Section 2.05 to be a part of an Indenture Trustee’s Mortgage File, such document shall be delivered promptly to the Indenture Trustee. From and after the sale of the Mortgage Loans to
the Trust pursuant hereto, to the extent that the last assignee thereof retains title of record to any Mortgage Loans prior to the vesting of legal title in the Trust, such title shall be retained in trust for the Trust as the owner of the Mortgage
Loans, and the Indenture Trustee, as the pledgee of the Trust under the Indenture. In acting as custodian of any original document which is part of the Indenture Trustee’s Mortgage Files, the Master Servicer agrees further that it does not and
will not have or assert any beneficial ownership interest in the related Mortgage Loans or the Mortgage Files. Promptly upon the Master Servicer’s receipt of any such original document, the Master Servicer, on behalf of the Trust, shall mark
conspicuously each such original document, and its master data processing records with a legend evidencing that the Trust has purchased the related Mortgage Loan and all right and title thereto and interest therein, and pledged such Mortgage Loan
and all right and title thereto and interest therein to the Indenture Trustee, on behalf of the Noteholders and the Note Insurer. 
  
 Section 2.06. Acceptance of the Trust Estate; Certain Substitutions; Certification by the Indenture Trustee. (a) The Indenture Trustee agrees to
execute and deliver to the Seller, the Sponsor, the Note Insurer, the Master Servicer and the Backup Servicer on or prior to the Closing Date an acknowledgement of receipt of the Note Insurance Policy in the form attached as Exhibit B hereto.

  
 (b) The Indenture Trustee is authorized and
directed to, and agrees to, do the following: 
  
 (i) execute and deliver to the Seller, the Sponsor, the Note Insurer, the Master Servicer and the Backup Servicer, on or prior to the Closing Date with respect to each Mortgage Loan transferred on such date, an acknowledgement of receipt,
in the form attached as Exhibit C hereto, of the original Mortgage Note as required to be included in the Indenture Trustee’s Mortgage File (with any exceptions noted) and declares that it will hold such documents and any amendments,
replacements or supplements thereto, as well as any other assets included in the definition of Trust Estate 

  

 6 

 
and delivered to the Indenture Trustee, subject to the conditions set forth in the Indenture, for the benefit of the Noteholders and the Note Insurer.

  
 (ii) to review (or cause to be reviewed) each
Indenture Trustee’s Mortgage File within sixty (60) days after the Closing Date (or, with respect to any Qualified Substitute Mortgage Loans, within sixty (60) days after receipt thereof), and to deliver to the Master Servicer, the Backup
Servicer, the Seller, the Sponsor, and the Note Insurer a certification, in the form attached hereto as Exhibit D, to the effect that, except as otherwise noted, as to each Mortgage Loan listed in the related Mortgage Loan Schedule (other
than any Mortgage Loan paid in full or any Mortgage Loan specifically identified in such certification as not covered by such certification), (i) all documents specified in Section 2.05(a)(i)-(iv) and (vi) are in its possession, (ii) each such
document has been reviewed by it and appears, on its face, not to have been mutilated, damaged, torn or otherwise physically altered (handwritten additions, changes or corrections shall not constitute physical alteration if they reasonably appear to
have been initialed), appears regular on its face and relates to such Mortgage Loan, and (iii) based on its examination and only as to the foregoing documents, the information set forth on the Mortgage Loan Schedule with respect to items (i), (ii)
(with respect to property address only, excluding zip code), (iii) and (vi) of the definition of “Mortgage Loan Schedule” accurately reflects the information set forth in the Indenture Trustee’s Mortgage File delivered on such date;
provided however, no certification of the Indenture Trustee shall constitute a determination by the Indenture Trustee of the proper form, adequacy or enforceability of any document included in the Indenture Trustee’s Mortgage
File. 
  
 (iii) to review (or cause to be
reviewed) each Indenture Trustee’s Mortgage File within one hundred eighty (180) days after the Closing Date (or, with respect to any Qualified Substitute Mortgage Loans, within one hundred eighty (180) days after receipt thereof), and to
deliver to the Master Servicer, the Backup Servicer, the Sponsor and the Note Insurer a certification in the form attached hereto as Exhibit E to the effect that, except as otherwise noted, as to each Mortgage Loan listed in the related
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan specifically identified in such certification as not covered by such certification), (i) all documents specified in Section 2.05(a)(i)-(iv) and (vi) are in its
possession, (ii) each such document has been reviewed by it and has not been mutilated, damaged, torn or otherwise physically altered (handwritten additions, changes or corrections shall not constitute physical alteration if they reasonably appear
to be initialed by the Mortgagor), appears regular on its face and relates to such Mortgage Loan, and (iii) based on its examination and only as to the foregoing documents, the information set forth in items (i), (ii) (with respect to property
address only, excluding zip code), (iii) and (vi) of the definition of “Mortgage Loan Schedule” accurately reflects the information set forth in the Indenture Trustee’s Mortgage File delivered on such date. 
  
 In performing any such review, the Indenture Trustee may conclusively rely on
the Sponsor as to the purported genuineness of any such document and any signature thereon. It is understood that the scope of the Indenture Trustee’s review of the Indenture Trustee’s Mortgage Files is limited solely to confirming that
the documents listed in Section 2.05 have been executed and received and relate to the Indenture Trustee’s Mortgage Files identified in the related 

  

 7 

 
Mortgage Loan Schedule. The Indenture Trustee shall be under no duty or obligation to inspect, review or examine any such documents, instruments,
certificates or other papers to determine that they are genuine, enforceable, or appropriate for the represented purpose or that they are other than what they purport to be on their face. 
  
 (c) If the Indenture Trustee during the process of reviewing
the Indenture Trustee’s Mortgage Files finds any document constituting a part of a Indenture Trustee’s Mortgage File which is not executed, has not been received, is unrelated to the Mortgage Loan identified in the related Mortgage Loan
Schedule, or does not conform to the requirements of Section 2.05 or the description thereof as set forth in the related Mortgage Loan Schedule, the Indenture Trustee shall promptly so notify the Master Servicer, the Backup Servicer, the Sponsor and
the Note Insurer. Upon receipt of such notice respecting such defect, the Seller and the Sponsor shall have a sixty (60) day period after such notice within which to correct or cure any such defect, or if the Master Servicer or the Note Insurer
determines that the defect materially and adversely affects the value of the related Mortgage Loan or the interest of the Noteholders and the Note Insurer in the related Mortgage Loan, to either (i) substitute in lieu of such Mortgage Loan a
Qualified Substitute Mortgage Loan in the manner and subject to the conditions set forth in this Section 2.06 or (ii) purchase such Mortgage Loan at a purchase price equal to the Loan Repurchase Price. Upon receipt by the Indenture Trustee of two
copies of a certification, in the form attached hereto as Exhibit F, of a Servicing Officer of such substitution or purchase and, in the case of a substitution, upon receipt by the Indenture Trustee, of the related Indenture Trustee’s
Mortgage File, and the deposit of the Loan Repurchase Price, in the case of a purchase, or the Substitution Adjustment, if any, in connection with a substitution, in the Collection Account, the Indenture Trustee shall release to the Master Servicer
for release to the Seller or the Sponsor, as applicable, the related Indenture Trustee’s Mortgage File and the Indenture Trustee shall execute, without recourse, and deliver such instruments of transfer furnished by the Seller or the Sponsor as
may be necessary to transfer such Mortgage Loan to the Seller or the Sponsor, as applicable. The Indenture Trustee shall provide notice to the Note Insurer if the Seller and the Sponsor fail to repurchase or substitute for a Mortgage Loan in
accordance with the foregoing. 
  
 Section 2.07. Grant of
Security Interest. (a) It is intended that the conveyance of the Mortgage Loans and other property by the Seller to the Trust as provided in this Article II be, and be construed for all purposes other than tax and accounting purposes as, a sale
of the Mortgage Loans and such other property by the Seller to the Trust. It is, for all purposes other than tax and accounting purposes further, not intended that such conveyance be deemed a pledge of the Mortgage Loans or such other property by
the Seller to the Trust to secure a debt or other obligation of the Seller. However, in the event that the Mortgage Loans or any of such other property are held to be property of the Seller, or if for any reason this Agreement is held or deemed to
create a security interest in the Mortgage Loans or any of such other property, then it is intended that: (i) this Agreement shall also be deemed to be a security agreement within the meaning of the Uniform Commercial Code; (ii) the conveyance
provided for in this Article II shall be deemed to be a grant by the Seller to the Trust of a security interest in all of the Seller’s right, title and interest in and to the Mortgage Loans and such other property and all amounts payable to the
holders of the Mortgage Loans in accordance with the terms thereof and all proceeds of the conversion, voluntary or involuntary, of the foregoing into cash, instruments, securities or other property, including, without limitation, all amounts from
time to time held or 

  

 8 

 
invested in the Accounts whether in the form of cash, instruments, securities or other property; (iii) the possession by the Indenture Trustee, of the
Mortgage Notes and such other items of property as constitute instruments, money, negotiable documents or chattel paper shall be deemed to be “possession by the secured party” for purposes of perfecting the security interest pursuant to
the Uniform Commercial Code; and (iv) notifications to persons holding such property, and acknowledgments, receipts or confirmations from persons holding such property, shall be deemed notifications to, or acknowledgments, receipts or confirmations
from financial intermediaries, bailees or agents, as applicable, of the Indenture Trustee for the purpose of perfecting such security interest under applicable law. The Seller, the Sponsor, the Master Servicer, on behalf of the Trust and the
Indenture Trustee, shall, to the extent consistent with this Agreement, take such actions as may be reasonably necessary to ensure that, if this Agreement were deemed to create a security interest in the Mortgage Loans or any of such other property,
such security interest would be deemed to be a perfected security interest of first priority under applicable law and will be maintained as such throughout the term of this Agreement. 
  
 (b) The Seller, the Sponsor, the Master Servicer and the Backup Servicer shall take no action inconsistent
with the Trust’s ownership of the Trust Estate and each shall indicate or shall cause to be indicated in its records and records held on its behalf that ownership of each Mortgage Loan and the other assets in the Trust Estate is vested in the
Trust, as owner, and is pledged to the Indenture Trustee, for the benefit of the Noteholders and the Note Insurer pursuant to the terms of the Indenture. The Indenture Trustee is authorized to act, pursuant to the terms of this Agreement for the
benefit of the Noteholders and Note Insurer and shall be authorized to act at the direction of such parties. In addition, the Seller, the Sponsor, the Master Servicer and the Backup Servicer shall respond to any inquiries from third parties with
respect to ownership of a Mortgage Loan or any other asset in the Trust Estate by stating that it is not the owner of such asset and that the Trust is the owner of such Mortgage Loan or other asset in the Trust Estate, which is pledged to the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer. 
  
 Section 2.08. Further Action Evidencing Assignments. (a) The Master Servicer agrees that, from time to time, at its expense, it shall cause the Sponsor or Seller, as the case may be, to, and each of the Sponsor
and Seller agree that it shall, promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or appropriate, or that the Master Servicer or the Indenture Trustee may reasonably request, in
order to perfect, protect or more fully evidence the transfer of ownership of the Mortgage Loans and other assets in the Trust Estate or to enable the Indenture Trustee, to exercise or enforce any of its rights hereunder. Without limiting the
generality of the foregoing, the Master Servicer, the Sponsor and the Seller shall, upon the request of the Master Servicer or the Indenture Trustee execute and file (or cause to be executed and filed) such real estate filings, financing or
continuation statements, or amendments thereto or assignments thereof, and such other instruments or notices, as may be necessary or appropriate. 
  
 (b) Each of the Sponsor and the Seller hereby grants to the Master Servicer, the Backup Servicer and the Indenture Trustee powers of
attorney to execute all documents on its behalf under this Agreement as may be necessary or desirable to effectuate the foregoing. 
  

 9 

 Section 2.09. Assignment of Agreement. The Sponsor, the Seller and the Master Servicer hereby
acknowledge and agree that the Trust may assign its interest under this Agreement to the Indenture Trustee, for the benefit of the Noteholders and the Note Insurer, as may be required to effect the purposes of the Indenture, without further notice
to, or consent of, the Sponsor or the Master Servicer, and the Indenture Trustee shall succeed to such of the rights of the Trust hereunder as shall be so assigned. The Trust shall, pursuant to the Indenture, assign all of its right, title and
interest in and to the Mortgage Loans and its right to exercise the remedies created by Section 4.02 of this Agreement for breaches of the representations, warranties, agreements and covenants of the Sponsor contained in Sections 3.02 and 4.01 of
this Agreement, assign such right, title and interest to the Indenture Trustee, for the benefit of the Noteholders and the Note Insurer. The Sponsor agrees that, upon such assignment to the Indenture Trustee, such representations, warranties,
agreements and covenants will run to and be for the benefit of the Indenture Trustee and the Indenture Trustee may enforce, without joinder of the Sponsor or the Trust, the repurchase obligations of the Sponsor set forth herein with respect to
breaches of such representations, warranties, agreements and covenants. 
  
 ARTICLE III 
  
 REPRESENTATIONS, WARRANTIES AND
COVENANTS 
  
 Section 3.01. Representations, Warranties and
Covenants of the Master Servicer. The Master Servicer hereby represents, warrants and covenants to the Indenture Trustee, the Seller, the Sponsor, the Trust, the Note Insurer, the Backup Servicer and the Noteholders as of the Closing Date and
during the term of this Agreement that: 
  
 (a)
The Master Servicer is duly organized, validly existing and in good standing under the laws of its state of incorporation and has the power to own its assets and to transact the business in which it is currently engaged. The Master Servicer is duly
qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the character of the business transacted by it or properties owned or leased by it or the performance of its obligations hereunder requires such
qualification and in which the failure so to qualify could reasonably be expected to have a material adverse effect on the business, properties, assets, or condition (financial or other) of the Master Servicer or the performance of its obligations
hereunder. 
  
 (b) The Master Servicer has the
power and authority to make, execute, deliver and perform this Agreement and all of the transactions contemplated under this Agreement, and has taken all necessary corporate action to authorize the execution, delivery and performance of this
Agreement, and assuming the due authorization, execution and delivery hereof by the other parties hereto constitutes, or will constitute, the legal, valid and binding obligation of the Master Servicer, enforceable in accordance with its terms,
except as enforcement of such terms may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights of creditors generally, and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law). 
  
 (c) The Master Servicer is not required to obtain the consent of any other party or any consent, license, approval or authorization from, or registration or declaration with, 

  

 10 

 
any governmental authority, bureau or agency which consent already has not been obtained in connection with the execution, delivery, performance, validity or
enforceability of this Agreement, except such as have been obtained prior to the Closing Date. 
  
 (d) The execution, delivery and performance of this Agreement by the Master Servicer will not violate any provision of any existing law or
regulation or any order or decree of any court or the charter or bylaws of the Master Servicer, or constitute a breach of any mortgage, indenture, contract or other Agreement to which the Master Servicer is a party or by which it may be bound.

  
 (e) There is no action, suit, proceeding or
investigation pending or threatened against the Master Servicer which, either in any one instance or in the aggregate, is, in the Master Servicer’s judgment, likely to result in any material adverse change in the business, operations, financial
condition, properties, or assets of the Master Servicer, or in any material impairment of the right or ability of the Master Servicer to carry on its business substantially as now conducted, or in any material liability on the part of the Master
Servicer, or which would draw into question the validity of this Agreement, the Notes, or the Mortgage Loans or of any action taken or to be taken in connection with the obligations of the Master Servicer contemplated herein or therein, or which
would be likely to impair materially the ability of the Master Servicer to perform its obligations hereunder. 
  
 (f) Neither this Agreement nor any statement, report, or other document furnished by the Master Servicer pursuant to this Agreement or in
connection with the transactions contemplated hereby, including, without limitation, the sale or placement of the Notes, contains any untrue statement of fact provided by or on behalf of the Master Servicer or omits to state a fact necessary to make
the statements provided by or on behalf of the Master Servicer contained herein or therein not misleading. 
  
 (g) The Master Servicer does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement. 
  
 (h) The Master
Servicer is not an “investment company” or a company “controlled by an investment company,” within the meaning of the Investment Company Act of 1940, as amended. 
  
 (i) The Master Servicer shall take all necessary steps to maintain the Indenture Trustee’s perfection
and priority in the Mortgage Loans. 
  
 (j) The
Master Servicer will fully furnish, in accordance with the Fair Credit Reporting Act and its implementing regulations, accurate and complete information (i.e., favorable and unfavorable) on its borrower credit files to Equifax, Experian, and Trans
Union Credit Information Company (three of the credit repositories), on a monthly basis. 
  
 (k) The Master Servicer is a member of MERS in good standing, and will comply in all material respects with the rules and procedures of
MERS in connection with the servicing of the Mortgage Loans that are registered with MERS. 
  

 11 

 It is understood and agreed that the representations, warranties and covenants set forth in this Section
3.01 shall survive the delivery of the respective Indenture Trustee’s Mortgage Files to the Indenture Trustee and inure to the benefit of the Indenture Trustee. 
  
 Section 3.02. Representations, Warranties and Covenants of the Sponsor. The Sponsor hereby represents, warrants and
covenants to the Indenture Trustee, the Seller, the Trust, the Backup Servicer, the Note Insurer and the Master Servicer that as of the date of this Agreement or as of such date specifically provided herein: 
  
 (a) The Sponsor is a corporation duly organized, validly
existing and in good standing under the laws of the State of California. 
  
 (b) The Sponsor has the corporate power and authority to execute, deliver and perform, and to enter into and consummate the transactions contemplated by this Agreement. 
  
 (c) This Agreement has been duly and validly authorized,
executed and delivered by the Sponsor, all requisite corporate action having been taken, and, assuming the due authorization, execution and delivery hereof by the other parties hereto, constitutes or will constitute the legal, valid and binding
agreement of the Sponsor, enforceable against the Sponsor in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights of
creditors generally, and by general equity principles (regardless of whether such enforcement is considered in a proceeding in equity or at law). 
  
 (d) No consent, approval, authorization or order of or registration or filing with, or notice to, any governmental authority or court is
required for the execution, delivery and performance of or compliance by the Sponsor with this Agreement or the consummation by the Sponsor of any of the transactions contemplated hereby, except as have been made on or prior to the Closing Date.

  
 (e) None of the execution and delivery of
this Agreement, the consummation of the transactions contemplated hereby or thereby, or the fulfillment of or compliance with the terms and conditions of this Agreement, (i) conflicts or will conflict with or results or will result in a breach of,
or constitutes or will constitute a default or results or will result in an acceleration under (A) the articles of incorporation or bylaws of the Sponsor, or (B) of any term, condition or provision of any material indenture, deed of trust, contract
or other agreement or instrument to which the Sponsor or any of its subsidiaries is a party or by which it or any of its subsidiaries is bound; (ii) results or will result in a violation of any law, rule, regulation, order, judgment or decree
applicable to the Sponsor of any court or governmental authority having jurisdiction over the Sponsor or its subsidiaries; or (iii) results in the creation or imposition of any lien, charge or encumbrance which would have a material adverse effect
upon the Mortgage Loans or any documents or instruments evidencing or securing the Mortgage Loans. 
  
 (f) There are no actions, suits or proceedings before or against or investigations of, the Sponsor pending, or to the knowledge of the
Sponsor, threatened, before any court, administrative agency or other tribunal, and no notice of any such action, which, in the Sponsor’s reasonable judgment, might materially and adversely affect the performance by the 

  

 12 

 
Sponsor of its obligations under this Agreement, or the validity or enforceability of this Agreement. 
  
 (g) The Sponsor is not in default with respect to any order
or decree of any court or any order, regulation or demand of any federal, state, municipal or governmental agency that may materially and adversely affect its performance hereunder. 
  
 It is understood and agreed that the representations, warranties and covenants set forth in this Section 3.02 shall survive
delivery of the respective Indenture Trustee’s Mortgage Files to the Indenture Trustee and shall inure to the benefit of the Indenture Trustee. 
  
 Section 3.03. Representations, Warranties and Covenants of the Backup Servicer. The Backup Servicer hereby represents, warrants and covenants to
the Indenture Trustee, the Trust, the Master Servicer, the Note Insurer, the Seller and the Sponsor that as of the date of this Agreement: 
  
 (a) The Backup Servicer is a Texas limited partnership duly organized, validly existing and in good standing under the laws of the State
of California. 
  
 (b) The Backup Servicer has
the limited partnership power and authority to execute, deliver and perform, and to enter into and consummate transactions contemplated by this Agreement. 
  
 (c) This Agreement has been duly and validly authorized, executed and delivered by the Backup Servicer, all requisite limited partnership
action having been taken, and, assuming the due authorization, execution and delivery hereof by the other parties hereto, constitutes or will constitute the legal, valid and binding agreement of the Backup Servicer, enforceable against the Backup
Servicer in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights of creditors generally, and by general equity principles
(regardless of whether such enforcement is considered in a proceeding in equity or at law). 
  
 (d) No consent, approval, authorization or order of or registration or filing with, or notice to, any governmental authority or court is
required for the execution, delivery and performance of or compliance by the Backup Servicer with this Agreement or the consummation by the Backup Servicer of any of the transactions contemplated hereby, except as have been made on or prior to the
Closing Date. 
  
 (e) None of the execution and
delivery of this Agreement, the consummation of the transactions contemplated hereby or thereby, or the fulfillment of or compliance with the terms and conditions of this Agreement, (i) conflicts or will conflict with or results or will result in a
breach of, or constitutes or will constitute a default or results or will result in an acceleration under (A) the certificate of incorporation or bylaws of the Backup Servicer, or (B) of any term, condition or provision of any material indenture,
deed of trust, contract or other agreement or instrument to which the Backup Servicer or any of its subsidiaries is a party or by which it or any of its subsidiaries is bound; (ii) results or will result in a violation of any law, rule, regulation,
order, judgment or decree applicable to the Backup Servicer of any court or governmental 

  

 13 

 
authority having jurisdiction over the Backup Servicer or its subsidiaries; or (iii) results in the creation or imposition of any lien, charge or encumbrance
which would have a material adverse effect upon the Mortgage Loans or any documents or instruments evidencing or securing the Mortgage Loans; 
  
 (f) There are no actions, suits or proceedings before or against or investigations of, the Backup Servicer pending, or to the knowledge of
the Backup Servicer, threatened, before any court, administrative agency or other tribunal, and no notice of any such action, which, in the Backup Servicer’s reasonable judgment, might materially and adversely affect the performance by the
Backup Servicer of its obligations under this Agreement, or the validity or enforceability of this Agreement; and 
  
 (g) The Backup Servicer is not in default with respect to any order or decree of any court or any order, regulation or demand of any
federal, state, municipal or governmental agency that may materially and adversely affect its performance hereunder. 
  
 (h) The Backup Servicer is a member of MERS in good standing, and will comply in all material respects with the rules and procedures of
MERS in connection with the servicing of the Mortgage Loans that are registered with MERS. 
  
 It is understood and agreed that the representations, warranties and covenants set forth in this Section 3.03 shall survive delivery of the respective Indenture Trustee’s Mortgage Files to the Indenture Trustee
and shall inure to the benefit of the Indenture Trustee. 
  
 Section 3.04. Representations, Warranties and Covenants of the Indenture Trustee. The Indenture Trustee hereby represents, warrants and covenants to the Backup Servicer, the Trust, the Master Servicer, the Seller, the Note Insurer
and the Sponsor that as of the date of this Agreement or as of such date specifically provided herein: 
  
 (a) The Indenture Trustee is a national banking association duly organized, validly existing and in good standing under the laws of the
United States of America. 
  
 (b) The Indenture
Trustee has the requisite power and authority to execute, deliver and perform, and to enter into and consummate transactions contemplated by this Agreement. 
  
 (c) This Agreement has been duly and validly authorized, executed and delivered by the Indenture Trustee, all requisite action having been
taken, and, assuming the due authorization, execution and delivery hereof by the other parties hereto, constitutes or will constitute the legal, valid and binding agreement of the Indenture Trustee, enforceable against the Indenture Trustee in
accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights of creditors generally, and by general equity principles (regardless
of whether such enforcement is considered in a proceeding in equity or at law). 
  
 (d) No consent, approval, authorization or order of or registration or filing with, or notice to, any governmental authority or court is
required for the execution, delivery and performance of or compliance by the Indenture Trustee with this Agreement or the 

  

 14 

 
consummation by the Indenture Trustee of any of the transactions contemplated hereby, except as have been made on or prior to the Closing Date; 

 
 (e) None of the execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby or thereby, or the fulfillment of or compliance with the terms and conditions of this Agreement, (i) conflicts or will conflict with or results or will result in a breach of, or constitutes or
will constitute a default or results or will result in an acceleration under (A) the articles of association or bylaws of the Indenture Trustee, or (B) to the best of its knowledge, of any term, condition or provision of any material indenture, deed
of trust, contract or other agreement or instrument to which the Indenture Trustee is a party or by which it is bound; or (ii) results or will result in a violation of any statute, rule, regulation, order, judgment or decree applicable to the
Indenture Trustee of any court or governmental authority having jurisdiction over the Indenture Trustee or its subsidiaries which violation would materially and adversely affect the Indenture Trustee’s performance of its duties hereunder; and

  
 (f) There are no actions, suits or
proceedings before or against or investigations of, the Indenture Trustee, pending or to the knowledge of the Indenture Trustee threatened, before any court, administrative agency or other tribunal, and no notice of any such action, which, in the
Indenture Trustee’s reasonable judgment, would materially and adversely affect the performance by the Indenture Trustee of its obligations under this Agreement, or the validity or enforceability of this Agreement. 
  
 It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.04 shall survive delivery of the respective Indenture Trustee’s Mortgage Files to the Indenture Trustee. 
  
 Section 3.05. Covenants and Representations of the Sponsor and Master Servicer Regarding Prepayment Charges. The Master Servicer covenants that it
will not waive any Prepayment Charge or part of a Prepayment Charge unless in connection with a Mortgage Loan that is in default or for which a default is reasonably foreseeable. 
  
 (a) The Sponsor hereby represents and warrants that the information set forth in the Prepayment Charge
Schedule is complete, true and correct in all material respects at the date or dates respecting which such information is furnished and each Prepayment Charge is permissible and enforceable in accordance with its terms (except to the extent that the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium, receivership and other similar laws relating to creditors’ rights generally) under applicable law. 
  
 (b) Upon discovery by the Sponsor or the Indenture Trustee of a breach of the foregoing, the party
discovering such breach shall give prompt written notice to the other parties. Within 60 days of the earlier of discovery by the Master Servicer or receipt of notice by the Master Servicer of breach, the Master Servicer shall cure such breach in all
material respects. If the covenant made by the Master Servicer in clause (a) above is breached the Master Servicer must pay into the Collection Account the amount of the waived Prepayment Charge. If the representation made by the Sponsor in clause
(b) above is breached, the Sponsor must pay into the Collection Account the amount of the scheduled Prepayment Charge, less any amount previously collected and paid by the Master Servicer into the Collection Account. The foregoing 

  

 15 

 
obligations of the Master Servicer and the Sponsor shall be the sole and exclusive remedies for a breach of this Section 3.05(a) or (b). 
  
 Section 3.06. Representations, Warranties and Covenants of the Seller.
The Seller hereby represents, warrants and covenants to the Indenture Trustee, the Trust, the Sponsor, the Backup Servicer, the Note Insurer and the Master Servicer that as of the date of this Agreement or as of such date specifically provided
herein: 
  
 (a) The Seller is a Maryland real
estate investment trust duly organized, validly existing and in good standing under the laws of the State of Maryland. 
  
 (b) The Seller has the trust power and authority to convey the Mortgage Loans and to execute, deliver and perform, and to enter into and
consummate the transactions contemplated by this Agreement. 
  
 (c) This Agreement has been duly and validly authorized, executed and delivered by the Seller, all requisite corporate action having been taken, and, assuming the due authorization, execution and delivery hereof by
the other parties hereto, constitutes or will constitute the legal, valid and binding agreement of the Seller, enforceable against the Seller in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the rights of creditors generally, and by general equity principles (regardless of whether such enforcement is considered in a proceeding in equity or at law). 
  
 (d) No consent, approval, authorization or order of or
registration or filing with, or notice to, any governmental authority or court is required for the execution, delivery and performance of or compliance by the Seller with this Agreement or the consummation by the Seller of any of the transactions
contemplated hereby, except as have been made on or prior to the Closing Date. 
  
 (e) None of the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement, (i) conflicts or will conflict with or results or will result in a breach of, or constitutes or will constitute a default or results or will result in an acceleration
under (A) the certificate of trust or bylaws of the Seller, or (B) of any term, condition or provision of any material indenture, deed of trust, contract or other agreement or instrument to which the Seller or any of its subsidiaries is a party or
by which it or any of its subsidiaries is bound; (ii) results or will result in a violation of any law, rule, regulation, order, judgment or decree applicable to the Seller of any court or governmental authority having jurisdiction over the Seller
or its subsidiaries; or (iii) results in the creation or imposition of any lien, charge or encumbrance which would have a material adverse effect upon the Mortgage Loans or any documents or instruments evidencing or securing the Mortgage Loans.

  
 (f) There are no actions, suits or
proceedings before or against or investigations of, the Seller pending, or to the knowledge of the Seller, threatened, before any court, administrative agency or other tribunal, and no notice of any such action, which, in the 

  

 16 

 
Seller’s reasonable judgment, might materially and adversely affect the performance by the Seller of its obligations under this Agreement, or the
validity or enforceability of this Agreement. 
  
 (g) The Seller is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or governmental agency that may materially and adversely affect its performance hereunder.

  
 It is understood and agreed that the representations,
warranties and covenants set forth in this Section 3.05 shall survive delivery of the respective Indenture Trustee’s Mortgage Files to the Indenture Trustee and shall inure to the benefit of the Indenture Trustee. 
  
 ARTICLE IV 
  
 THE MORTGAGE LOANS 
  
 Section 4.01. Representations and Warranties Concerning the Mortgage
Loans. The Sponsor makes the following representations and warranties to the Seller, the Master Servicer, the Backup Servicer, the Indenture Trustee, the Note Insurer and the Trust as to the Mortgage Loans on which the Trust relies in accepting
the Mortgage Loans in trust and executing the Notes. All uses and variations of the word “enforceable” in this Section 4.01, shall be deemed to be qualified as such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity (whether considered in a proceeding or action in equity or at law). With respect to the representations and warranties
stated in Sections 4.01(i), (r), (ddd), (eee) and (fff), the Sponsor makes such representations and warranties on behalf of itself and the Seller. Such representations, warranties and covenants are made or deemed to be made as of the Closing
Date. 
  
 (a) The information with respect
to each Mortgage Loan set forth in the Mortgage Loan Schedule is true and correct as of the Cut-Off Date, based on Cut-Off Date Principal Balances. 
  
 (b) Each Mortgage Loan is being serviced either (i) through the Master Servicer or (ii) a Person controlling, controlled by or under
common control with the Master Servicer and qualified to service mortgage loans. 
  
 (c) Each Mortgage Loan was underwritten or reunderwritten pursuant to the Underwriting Guidelines which conform in all material respects
to the description thereof set forth in the Prospectus Supplement. 
  
 (d) All of the original or certified documentation required to be delivered to the Indenture Trustee pursuant to this Agreement (including all material documents related thereto) with respect to each Mortgage Loan has
been or will be delivered to the Indenture Trustee in accordance with the terms of this Agreement. Each of the documents and instruments specified to be included therein has been duly executed and in due and proper form, and each such document or
instrument is in a form generally acceptable to prudent mortgage lenders that regularly originate or purchase mortgage loans comparable to the Mortgage Loans for sale to 

  

 17 

 
prudent investors in the secondary market that invest in mortgage loans such as the Mortgage Loans. 
  
 (e) [Reserved]. 
  
 (f) Each Mortgaged Property is improved by a single (one to
four) family residential dwelling, which may include condominiums, individual units in a planned unit development and townhouses but shall not include cooperatives. 
  
 (g) No Mortgage Loan had an LTV at origination in excess of 95%. 
  
 (h) Each Mortgage Loan is a valid, subsisting enforceable
and perfected first lien as identified on the Mortgage Loan Schedule on the Mortgaged Property and subject in all cases to the exceptions to title set forth in the title insurance policy, with respect to the related Mortgage Loan, which exceptions
are generally acceptable to banking institutions in connection with their regular mortgage lending activities, and such other exceptions to which similar properties are commonly subject and which do not individually, or in the aggregate, materially
and adversely affect the benefits of the security intended to be provided by such Mortgage. At the time each Mortgage Loan was originated, the originator was a mortgagee approved by the Secretary of Housing and Urban Development pursuant to Sections
203 and 211 of the National Housing Act or a savings and loan association, a savings bank, a commercial bank or similar banking institution which was supervised and examined by a federal or state authority or a mortgage banker or broker licensed or
authorized to do business in the jurisdiction in which the related Mortgaged Property is located, applying the same standards and procedures used by the Sponsor in originating Mortgage Loans directly. 
  
 (i) Immediately prior to the transfer and assignment of the
Mortgage Loans to the Seller pursuant to the Contribution Agreements, the Sponsor held good and marketable title to, and was the sole owner of each Mortgage Loan, subject to no liens, charges, mortgages or encumbrances or rights of others, except
liens of third party warehouse lenders that will be released simultaneously with the transfer and assignment contemplated herein; and immediately prior to the transfer and assignment herein contemplated, the Seller held good and marketable title to,
and was the sole owner of, each Mortgage Loan subject to no liens, charges, mortgages, encumbrances or rights of others except liens which will be released simultaneously with such transfer and assignment; and immediately upon the transfer and
assignment herein contemplated, the Indenture Trustee will hold good and marketable title to, and be the sole owner of, each Mortgage Loan subject to no liens, charges, mortgages, encumbrances or rights of others except liens which will be released
simultaneously with such transfer and assignment. 
  
 (j) There is no delinquent tax or assessment lien on any Mortgaged Property, and each Mortgaged Property is free of substantial damage and is in good repair. 
  
 (k) There is no valid and enforceable right of rescission, set-off, defense or counterclaim to any Mortgage
Note or Mortgage, including the obligation of the related Mortgagor to pay the unpaid principal of or interest on such Mortgage Note or the defense of usury, nor will the operation of any of the terms of the Mortgage Note or the Mortgage, or the
exercise of any right thereunder, render either the Mortgage Note or the Mortgage unenforceable 

  

 18 

 
in whole or in part, or subject to any right of rescission, set-off, counterclaim or defense, including the defense of usury, and no such right of
rescission, set-off, counterclaim or defense has been asserted with respect thereto. 
  
 (l) There is no mechanics’ lien or claim for work, labor or material affecting any Mortgaged Property which is or may be a lien prior
to, or equal with and no rights are outstanding that under the law gives rise to such liens, the lien of the related Mortgage except those which are insured against by any title insurance policy referred to in paragraph (n) below. 
  
 (m) Each Mortgage Loan at the time it was made complied
with, and each Mortgage Loan at all times was serviced in compliance with, in each case, in all material respects, applicable local, state and federal laws and regulations, including, without limitation, the federal Truth-in-Lending Act and other
consumer protection laws, the Home Ownership and Equity Protection Act of 1994, real estate settlement procedure, usury, equal credit opportunity, disclosure and recording laws and all applicable predatory and abusive lending laws. 
  
 (n) With respect to each Mortgage Loan, a lender’s
title insurance policy, issued in standard California Land Title Association form or American Land Title Association form, or other form acceptable in a particular jurisdiction by a title insurance company authorized to transact business in the
state in which the related Mortgaged Property is situated, in an amount at least equal to the original Principal Balance of such Mortgage Loan insuring the mortgagee’s interest under the related Mortgage Loan as the holder of a valid first
mortgage lien of record on the real property described in the related Mortgage, as the case may be, subject only to exceptions of the character referred to in paragraph (h) above, was effective on the date of the origination of such Mortgage Loan,
and, as of the Closing Date such policy will be valid and inure to the benefit of the Indenture Trustee on behalf of the Noteholders. 
  
 (o) The improvements upon each Mortgaged Property are covered by a valid and existing hazard insurance policy (which may be a blanket
policy of the type described in this Agreement) with a generally acceptable carrier that provides for fire and extended coverage representing coverage not less than the least of (i) the outstanding Principal Balance of the related Mortgage Loan,
(ii) the minimum amount required to compensate for damage or loss on a replacement cost basis or (iii) the full insurable value of the Mortgaged Property. 
  
 (p) If any Mortgaged Property is in an area identified in the Federal Register by the Federal Emergency Management Agency as having
special flood hazards, a flood insurance policy (which may be a blanket policy of the type described in this Agreement) in a form meeting the requirements of the current guidelines of the Federal Insurance Administration is in effect with respect to
such Mortgaged Property with a generally acceptable carrier in an amount representing coverage not less than the least of (i) the outstanding Principal Balance of the related Mortgage Loan (together, in the case of a second mortgage loan, with the
outstanding principal balance of the first mortgage loan), (ii) the minimum amount required to compensate for damage or loss on a replacement cost basis or (iii) the maximum amount of insurance that is available under the Flood Disaster Protection
Act of 1973. 
  
 (q) Each Mortgage and Mortgage
Note is the legal, valid and binding obligation of the maker thereof and is enforceable in accordance with its terms, except only as 

  

 19 

 
such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’
rights generally and by general principles of equity (whether considered in a proceeding or action in equity or at law), and all parties to each Mortgage Loan had full legal capacity to execute all documents relating to such Mortgage Loan and convey
the estate therein purported to be conveyed. 
  
 (r) The Sponsor has directed and the Seller has caused to be performed any and all acts required to be performed to preserve the rights and remedies of the Indenture Trustee in any Insurance Policies applicable to any Mortgage Loan
delivered by the Sponsor or the Seller including, to the extent such Mortgage Loan is not covered by a blanket policy described in this Agreement, any necessary notifications of insurers, assignments of policies or interests therein, and
establishments of coinsured, joint loss payee and mortgagee rights in favor of the Indenture Trustee. 
  
 (s) The Sponsor has caused or will have caused, within ten days, the filing of all appropriate financing statements in the proper filing
office in the appropriate jurisdictions under applicable law in order to perfect the security interest in the original Mortgage Note and all subsequent assignments of the original Mortgage, granted to the Indenture Trustee hereunder, subject to the
provisions of Section 2.05(b) of this Agreement. 
  
 (t) The terms of each Mortgage Note and each Mortgage have not been impaired, altered, waived or modified in any respect, except by a written instrument which has been recorded, if necessary, to protect the interest of the Noteholders and
which has been delivered to the Indenture Trustee. 
  
 (u) The proceeds of each Mortgage Loan have been fully disbursed, and there is no obligation on the part of the mortgagee to make future advances thereunder. All costs, fees and expenses incurred in making or closing or recording such
Mortgage Loans were paid. 
  
 (v) Except as
otherwise required by law or pursuant to the statute under which the related Mortgage Loan was made, the related Mortgage Note is not and has not been secured by any collateral, pledged account or other security except the lien of the corresponding
Mortgage. 
  
 (w) No Mortgage Loan was originated
under a buydown plan. 
  
 (x) No Mortgage Loan
provides for negative amortization, has a shared appreciation feature, or other contingent interest feature. 
  
 (y) Each Mortgaged Property is located in the state identified in the Mortgage Loan Schedule and consists of one or more parcels of real
property with a residential dwelling erected thereon and that no residence or dwelling is a mobile home. 
  
 (z) Each Mortgage securing a Mortgage Note contains a provision for the acceleration of the payment of the unpaid Principal Balance of the
related Mortgage Loan in the event the related Mortgaged Property is sold without the prior consent of the mortgagee thereunder. 
  

 20 

 (aa) Any advances made after the date of origination of a Mortgage Loan but prior to the
Cut-Off Date, have been consolidated with the outstanding principal amount secured by the related Mortgage, and the secured principal amount, as consolidated, bears a single interest rate and single repayment term reflected on the Mortgage Loan
Schedule. The consolidated principal amount does not exceed the original principal amount of the related Mortgage Loan. No Mortgage Note permits or obligates the Seller, the Master Servicer, the Backup Servicer, the Sponsor or any other Person to
make future advances to the related Mortgagor at the option of the Mortgagor. 
  
 (bb) There is no proceeding pending or threatened for the total or partial condemnation of any Mortgaged Property, nor is such a proceeding currently occurring, and each Mortgaged Property is undamaged by waste, fire,
earthquake or earth movement, flood, tornado or other casualty, so as to affect adversely the value of the Mortgaged Property as security for the Mortgage Loan or the use for which the premises were intended. 
  
 (cc) All of the improvements which were included for the
purposes of determining the Appraised Value of any Mortgaged Property lie wholly within the boundaries and building restriction lines of such Mortgaged Property, and no improvements on adjoining properties encroach upon such Mortgaged Property,
except as stated in the related title insurance policy and affirmatively insured. 
  
 (dd) No improvement located on or being part of any Mortgaged Property is in violation of any applicable zoning law or regulation. As of
the related date of origination, all inspections, licenses and certificates required to be made or issued with respect to all occupied portions of each Mortgaged Property and, with respect to the use and occupancy of the same, including, but not
limited to, certificates of occupancy and fire underwriting certificates, have been made or obtained from the appropriate authorities and such Mortgaged Property is lawfully occupied under the applicable law. 
  
 (ee) With respect to each Mortgage constituting a deed of
trust, a trustee, duly qualified under applicable law to serve as such, has been properly designated and currently so serves and is named in such Mortgage, and no fees or expenses are or will become payable by the Sponsor, the Seller, or the Trust
to the trustee under the deed of trust, except in connection with a trustee’s sale after default by the related Mortgagor. 
  
 (ff) [Reserved]. 
  
 (gg) [Reserved]. 
  
 (hh) Each Mortgage contains customary and enforceable provisions which render the rights and remedies of the holder thereof adequate for
the realization against the related Mortgaged Property of the benefits of the security, including (i) in the case of a Mortgage designated as a deed of trust, by trustee’s sale and (ii) otherwise by judicial foreclosure. There is no homestead
or other exemption available which materially interferes with the right to sell the related Mortgaged Property at a trustee’s sale or the right to foreclose the related Mortgage. 
  
 (ii) Except for delinquencies identified in the Mortgage Loan Schedule, there is no default, breach,
violation or event of acceleration existing under any Mortgage or the 

  

 21 

 
related Mortgage Note and no event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default,
breach, violation or event of acceleration; and the Seller has not waived any default, breach, violation or event of acceleration. 
  
 (jj) No instrument of release or waiver has been executed in connection with any Mortgage Loan, and no Mortgagor has been released, in
whole or in part. 
  
 (kk) [Reserved].

  
 (ll) The Sponsor has no actual knowledge that
there exists on any Mortgaged Property any hazardous substances, hazardous wastes or solid wastes, as such terms are defined in the CERCLA, the Resource Conservation and Recovery Act of 1976, or other federal, state or local environmental
legislation. 
  
 (mm) No action, error, omission,
misrepresentation, negligence, fraud or similar occurrence with respect to a Mortgage Loan has taken place on the part of any person, including, without limitation, the Mortgagor, any appraiser, any builder or developer, or any other party involved
in the origination of the Mortgage Loan or in the application of any insurance in relation to such Mortgage Loan. 
  
 (nn) The Sponsor has not solicited the Mortgagor in connection with any refinancing. 
  
 (oo) If the Mortgage Loan is an adjustable rate Mortgage
Loan, all of the adjustments to the Mortgage Interest Rate, to the amount of the monthly payment, and to the principal balance have been made in accordance with the terms of the related Mortgage Note. 
  
 (pp) The origination and collection practices used with
respect to the Mortgage Loan have been in all respects legal, proper, prudent and customary in the mortgage origination and servicing business. 
  
 (qq) An appraisal of the related Mortgaged Property was made and signed, prior to the approval of the Mortgage Loan application, by a
qualified appraiser who met the requirements of the Sponsor’s appraisal policy and procedures and who had no interest, direct or indirect in the Mortgaged Property or in any loan made on the security thereof, whose compensation was not affected
by the approval or disapproval of the Mortgage Loan. 
  
 (rr) The Mortgagor has received all disclosure materials required by applicable law with respect to the making of adjustable rate mortgage loans; and if the Mortgage Loan is a refinanced Mortgage Loan, the Mortgagor has received all
disclosure and rescission materials required by applicable law with respect to the making of a refinanced Mortgage Loan, and evidence of such receipt is and will remain in the Master Servicer’s file. 
  
 (ss) If the residential dwelling on the Mortgaged Property
is a condominium unit or a unit in a planned unit development (other than a de minimis planned unit development), such condominium or planned unit development project meets the Sponsor’s eligibility requirements. 
  

 22 

 (tt) Except for one Mortgage Loan in Group I with a Principal Balance of $236,105.75,
which is between 30 and 60 days delinquent, as of the Cut-Off Date, none of the Mortgage Loans in Group 1 and Group 2 were more than 29 days contractually delinquent or had been dishonored. None of the Mortgage Loans have been thirty or more days
delinquent more than one time in the twelve months preceding the Cut-Off Date. 
  
 (uu) The Sponsor has not advanced funds, or induced, solicited or knowingly received any advance of funds by a person other than the
Mortgagor, directly or indirectly, for the payment of any amount required under the Mortgage Loan, except for interest prepaid upon the closing of the Mortgage Loan. No Mortgage Loan contains any provision pursuant to which Monthly Payments are: (i)
paid or partially paid with funds deposited in any separate account established by the Sponsor, the Mortgagor, or anyone on behalf of the Mortgagor or (ii) paid by any source other than the Mortgagor. The Mortgage Loan is not deemed a graduated
payment mortgage loan and the Mortgage Loan does not have a shared appreciation or other contingent interest feature. 
  
 (vv) No foreclosure proceedings are pending against the Mortgaged Property and the Mortgage Loan is not subject to any pending bankruptcy
or insolvency proceeding, and to the Sponsor’s best knowledge, no material litigation or material lawsuit relating to the Mortgage Loan is pending. 
  
 (ww) Principal payments on the Mortgage Loan commenced or will commence within sixty days after the proceeds of the Mortgage Loan were
disbursed. 
  
 (xx) With respect to escrow
deposits, if any, all such payments are in the possession of, or under the control of, the Master Servicer and there exists no deficiencies in connection therewith for which customary arrangements for repayment thereof have not been made or could be
made. No escrow deposits or escrow advances or other charges or payments due the Master Servicer have been capitalized under any Mortgage or the related Mortgage Note. 
  
 (yy) With respect to the conveyance of the Mortgage Loans by the Sponsor to the Seller, the Sponsor used no
selection procedures that identified the Mortgage Loans as being less desirable or valuable than other comparable mortgage loans originated or acquired by the Sponsor. The Mortgage Loans are representative of the Sponsor’s portfolio of
fixed-rate or adjustable-rate mortgage loans, as applicable. With respect to the conveyance of the Mortgage Loans pursuant to this Agreement, the Seller used no selection procedures that identified the Mortgage Loans as being less desirable or
valuable than other comparable mortgage loans originated or acquired by the Seller. The Mortgage Loans are representative of the Seller’s portfolio of fixed-rate or adjustable-rate mortgage loans, as applicable. 
  
 (zz) Each Mortgage Loan conforms, and all such Mortgage
Loans in the aggregate conform in all material respects to the description thereof set forth in the Prospectus Supplement. 
  
 (aaa) All requirements for the valid transfer of each Insurance Policy, including any assignments or notices required in each Insurance
Policy, have been satisfied. 
  

 23 

 (bbb) This Agreement creates a valid and continuing security interest (as defined in the
applicable UCC) in the Mortgage Loans in favor of the Indenture Trustee, which security interest is prior to all other liens, and is enforceable as such as against creditors of and purchasers from the Seller. 
  
 (ccc) The Mortgage Loans constitute “instruments”
within the meaning of the applicable UCC. 
  
 (ddd) The Sponsor received all consents and approvals required by the terms of the Mortgage Loans to the contribution of the Mortgage Loans pursuant to the Contribution Agreements to the Seller and the Seller has received all consents and
approvals required by the terms of the Mortgage Loans to the sale of the Mortgage Loans hereunder to the Owner Trustee and the subsequent pledge to the Indenture Trustee. 
  
 (eee) Other than the security interest granted to the Indenture Trustee pursuant to the Indenture, neither
the Sponsor nor the Seller has pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of the Mortgage Loans. Neither the Sponsor nor the Seller has authorized the filing of nor is aware of any financing statements against
the Sponsor or the Seller that include a description of collateral covering the Mortgage Loans other than any financing statement relating to the security interest granted to the Indenture Trustee hereunder or that has been terminated. Neither the
Sponsor nor the Seller is aware of any judgment or tax lien filings affecting the Mortgage Loans against either the Seller or the Sponsor. 
  
 (fff) All financing statements filed or to be filed against the Sponsor or the Seller in favor of the Indenture Trustee in connection
herewith describing the Mortgage Loans contain a statement to the following effect: “A purchase of or security interest in any collateral described in this financing statement will violate the rights of the Indenture Trustee.” 

 
 (ggg) None of the Mortgage Loans are classified as (a)
“high cost” loans under the Home Ownership and Equity Protection Act of 1994 or (b) “high cost,” “threshold,” “covered”, “predatory” or “abusive” loans under any other applicable state,
federal or local law (including without limitation any regulation or ordinance) (or a similarly classified loan using different terminology under a law imposing heightened regulatory scrutiny or additional legal liability for residential mortgage
loans having high interest rates, points and/or fees). 
  
 (hhh) No proceeds from any Mortgage Loan were used to finance single-premium credit insurance policies; 
  
 (iii) No Mortgage Loan originated between October 1, 2002 and March 7, 2003 is secured by a Mortgaged Property located in the state of
Georgia. There is no Mortgage Loan that was originated on or after March 7, 2003 that is a “high cost home loan” as defined under the Georgia Fair Lending Act. 
  
 (jjj) No Mortgage Loan is secured by a leasehold interest, unless such leasehold interest extends 60 months
beyond the stated maturity of the Mortgage Note. 
  
 (kkk) There is no pending action or proceeding directly involving the Mortgaged Property in which compliance with any environmental law, rule or regulation is an issue. Based 

  

 24 

 
upon customary and prudent residential mortgage industry underwriting standards, there is no violation of any environmental law, rule or regulation with
respect to the Mortgaged Property, and nothing further remains to be done to satisfy in full all requirements of each such law, rule or regulation constituting a prerequisite to use and enjoyment of said property. 
  
 (lll) The Mortgagor has not notified Accredited, and
Accredited has no knowledge of any relief requested or allowed to the Mortgagor under the Servicemembers Civil Relief Act or any similar state statute. 
  
 (mmm) No Mortgage Loan was made in connection with the construction (other than a “construct to perm” loan) or rehabilitation of
a Mortgaged Property or facilitating the trade in or exchange of a Mortgaged Property. 
  
 (nnn) Accredited has complied with all applicable anti money laundering laws and regulations, including without limitation the USA Patriot
Act of 2001 (collectively, the “Anti-Money Laundering Laws”). 
  
 (ooo) No Mortgage Loan imposes a Prepayment Charge for a term in excess of five years. 
  
 (ppp) With respect to the Mortgage Loans in Group I, (i) no Mortgage Loan imposes a Prepayment Charge for a term in excess of three years,
(ii) the servicer for each Mortgage Loan has fully furnished, in accordance with the Fair Credit Reporting Act and its implementing regulations, accurate and complete information (i.e., favorable and unfavorable) on its borrower credit files to
Equifax, Experian, and Trans Union Credit Information Company (three of the credit repositories), on a monthly basis and (iii) the original Principal Balance of each Mortgage Loan was within Freddie Mac’s dollar amount limits for conforming
one- to four-family mortgage loans, as follows: 
  

													
	 Number of Units

	  	Maximum Original Loan Amount of First Mortgage

	 	  	Continental United States or Puerto Rico

	  	 Alaska, Guam, Hawaii or
 Virgin Islands

	 	  	2003 loan limit

	  	2004 loan limit

	  	2003 loan limit

	  	2004 loan limit

	 1
	  	$	322,700	  	$	333,700	  	$	484,050	  	$	500,550
	 2
	  	 	413,100	  	 	427,150	  	 	619,650	  	 	640,725
	 3
	  	 	499,300	  	 	516,300	  	 	748,950	  	 	774,450
	 4
	  	 	620,500	  	 	641,650	  	 	930,750	  	 	962,475

  
 It is understood and
agreed that the representations, warranties and covenants set forth in this Section 4.01 shall survive delivery of the respective Indenture Trustee’s Mortgage Files to the Indenture Trustee and shall inure to the benefit of the Indenture
Trustee on behalf of the Noteholders and the Note Insurer. 
  
 Section 4.02. Purchase and Substitution. (a) It is understood and agreed that the representations and warranties set forth in Section 4.01 shall survive the transfer of the Mortgage Loans by the Seller to the Trust, the subsequent
pledge thereof by the Trust to the Indenture Trustee, for the benefit of the Noteholders and the Note Insurer, and the delivery of the Notes to 

  

 25 

 
the Noteholders, and shall continue in full force and effect, notwithstanding any restrictive or qualified endorsement on the Mortgage Notes and
notwithstanding subsequent termination of this Agreement. 
  
 (b) Upon discovery by the Seller, the Sponsor, the Master Servicer, the Indenture Trustee, the Note Insurer or a Noteholder of a breach of any of the representations and warranties in Section 4.01 which materially and
adversely affects the value of any Mortgage Loan, or which materially and adversely affects the interests of the Note Insurer or the Noteholders in the related Mortgage Loan, the party discovering such breach or failure shall promptly (and in any
event within five (5) days of the discovery) give written notice thereof to the others. Within sixty (60) days of the earlier of its discovery or its receipt of notice of any breach of a representation or warranty, the Seller shall, and if the
Seller fails to, then the Sponsor shall (a) promptly cure such breach in all material respects, (b) purchase such Mortgage Loan on a Servicer Remittance Date, in the manner and at the price specified in Section 2.06(c) and this Section 4.02, or (c)
remove such Mortgage Loan from the Trust Estate (in which case it shall become a Deleted Mortgage Loan) and substitute one or more Qualified Substitute Mortgage Loans in the manner specified in Section 2.06 and this Section 4.02. The Indenture
Trustee shall deliver prompt written notice to the Note Insurer and the Rating Agencies of any repurchase or substitution made pursuant to this Section 4.02 or Section 2.06(c). 
  
 (c) As to any Deleted Mortgage Loan for which the Seller or the Sponsor substitutes a Qualified Substitute
Mortgage Loan or Loans, the Master Servicer shall cause the Seller or Sponsor to effect such substitution by delivering to the Indenture Trustee a certification, in the form attached hereto as Exhibit F, executed by a Servicing Officer, and
the documents described in Sections 2.05(a)(i)-(vi) for such Qualified Substitute Mortgage Loan or Loans. 
  
 (d) The Master Servicer shall deposit in the Collection Account all payments received in connection with such Qualified Substitute
Mortgage Loan or Loans after the date of such substitution. Monthly Payments due with respect to Qualified Substitute Mortgage Loans in or before the Due Period in which the substitution occurs shall not be part of the Trust Estate and will be
retained by the Sponsor on the next succeeding Payment Date. For the Due Period in which the substitution occurs, distributions to Noteholders will include the Monthly Payment due on any Deleted Mortgage Loan for such Due Period and thereafter the
Sponsor shall be entitled to retain all amounts received in respect of such Deleted Mortgage Loan. The Master Servicer shall give written notice to the Backup Servicer, the Indenture Trustee and the Note Insurer that such substitution has taken
place and shall amend the Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage Loan from the terms of this Agreement and the substitution of the Qualified Substitute Mortgage Loan or Loans. Upon such substitution, such Qualified
Substitute Mortgage Loan or Loans shall be subject to the terms of this Agreement in all respects. 
  
 (e) With respect to any Mortgage Loan that has been converted to an REO Mortgage Loan, all references in this Section 4.02 or Section 2.06
to “Mortgage Loan” shall be deemed to also refer to the REO Mortgage Loan. With respect to any Mortgage Loan that the Seller and Sponsor are required to repurchase that is or becomes a Liquidated Mortgage Loan, in lieu of repurchasing such
Mortgage Loan, the Master Servicer shall deposit into the related Payment Account, pursuant to Section 8.01 of the Indenture, an amount equal to the amount of 

  

 26 

 
the Liquidated Loan Loss, if any, incurred in connection with the liquidation of such Mortgage Loan within the same time period in which the Master Servicer,
Seller or Sponsor would have otherwise been required to repurchase such Mortgage Loan. 
  
 (f) It is understood and agreed that the obligations of the Seller and the Sponsor set forth in Sections 2.06 and 4.02 to cure, purchase
or substitute for a defective Mortgage Loan, or to indemnify as described in Section 4.02(g) constitute the sole remedies of the Indenture Trustee, the Note Insurer and the Noteholders respecting a breach of the representations and warranties of the
Sponsor set forth in Section 4.01 of this Agreement. 
  
 (g) The Sponsor shall be obligated to indemnify the Seller, the Indenture Trustee, the Trust, the Owner Trustee, the Noteholders and the Note Insurer for any third party claims arising out of a breach by the Sponsor of representations or
warranties regarding the Mortgage Loans. 
  
 ARTICLE V

  
 ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS

  
 Section 5.01. The Master Servicer. (a) The Master
Servicer shall service and administer the Mortgage Loans in accordance with this Agreement and in accordance with Accepted Servicing Practices, and shall have full power and authority, acting alone, to do or cause to be done any and all things in
connection with such servicing and administration which it may deem necessary or desirable. 
  
 (b) The Master Servicer shall exercise its discretion consistent with Accepted Servicing Practices and the terms of this Agreement, with
respect to the enforcement of defaulted Mortgage Loans in such manner as will maximize the receipt of principal and interest with respect thereto, including but not limited to the sale of such Mortgage Loan to a third party, the modification of such
Mortgage Loan, or foreclosure upon the related property with a Mortgage and disposition thereof. 
  
 (c) The duties of the Master Servicer shall include collecting and posting of all payments, responding to inquiries of Mortgagors or by
federal, state or local government authorities with respect to the Mortgage Loans, investigating delinquencies, reporting tax information to Mortgagors in accordance with its customary practices and accounting for collections and furnishing monthly
and annual statements to the Indenture Trustee with respect to distributions, paying Compensating Interest and making Delinquency Advances and Servicing Advances pursuant hereto. The Master Servicer shall follow its customary standards, policies and
procedures in performing its duties as Master Servicer. The Master Servicer shall cooperate with the Indenture Trustee and furnish to the Indenture Trustee with reasonable promptness information in its possession as may be necessary or appropriate
to enable the Indenture Trustee to perform its tax reporting duties hereunder. The Indenture Trustee shall furnish the Master Servicer, or the Backup Servicer with any powers of attorney and other documents as the Indenture Trustee shall deem
necessary or appropriate to enable the Master Servicer, and the Backup Servicer to carry out its servicing and administrative duties hereunder; provided, however, the Master Servicer, or the Backup Servicer shall prepare for and deliver to the

  

 27 

 
Indenture Trustee for its execution any such powers of attorney; provided, further, that the Indenture Trustee shall not be responsible for any misuse of any
such power of attorney. Notwithstanding anything contained herein to the contrary, neither the Master Servicer nor the Backup Servicer shall, without the Indenture Trustee’s written consent: (i) initiate any action, suit or proceeding directly
relating to the servicing of the Mortgage Loan solely under the Indenture Trustee’s name without indicating the Master Servicer’s or Backup Servicer’s, as applicable, representative capacity, (ii) initiate any other action, suit or
proceeding not directly relating to the servicing of any Mortgage Loan (including but not limited to actions, suits or proceedings against Noteholders or Certificateholders, or against the Seller for breaches of representations and warranties)
solely under the Indenture Trustee’s name, (iii) engage counsel to represent the Indenture Trustee in any action, suit or proceeding not directly related to the servicing of any Mortgage Loan (including but not limited to actions, suits or
proceedings against Noteholders or Certificateholders, or against the Seller for breaches of representations and warranties, or (iv) prepare, execute or deliver any government filings, forms, permits, registrations or other documents or take any
action with the intent to cause, and that actually causes, the Indenture Trustee to be registered to do business in any state. 
  
 (d) [Reserved]. 
  
 (e) The Master Servicer shall, in accordance with Accepted Servicing Practices, have the right to approve requests of Mortgagors for
consent to (i) partial releases of Mortgage Loans and (ii) alterations, removal, demolition or division of Mortgaged Properties subject to Mortgage Loans. No such request shall be approved by the Master Servicer unless: (x) the provisions of the
related Mortgage Note have been complied with; (y) the LTV (which may, for this purpose, be determined at the time of any such action in a manner reasonably acceptable to the Note Insurer) after any release does not exceed the LTV set forth for such
Mortgage Loan in the Mortgage Loan Schedule; and (z) the lien priority, monthly payment, Mortgage Interest Rate or maturity date of the related Mortgage is not affected except in accordance with Section 5.01(f); provided, however, that
the foregoing requirements (x), (y) and (z) shall not apply to any such situation described in this paragraph if such situation results from any condemnation or easement activity by a governmental entity. 
  
 (f) Notwithstanding anything else contained herein, the
Master Servicer may not, without the consent of the Note Insurer, agree to a modification or extension of any Mortgage Loan unless both (i) such Mortgage Loan is in default or a default thereon is reasonably foreseeable and (ii) such modification or
extension would not result in the Master Servicer agreeing to modifications or extensions on Mortgage Loans with aggregate Cut-Off Date Principal Balances of more than 5.0% of the Maximum Collateral Amount. In addition, the Master Servicer may not
agree to more than (i) one modification or extension with respect to any individual Mortgage Loan in a calendar year or (ii) three modifications or extensions of an individual Mortgage Loan during the life of such Mortgage Loan. 
  
 (g) [Reserved]. 
  
 (h) Without limiting the generality of the foregoing, but
subject to Sections 5.05 and 5.06, the Master Servicer in its own name may be authorized and empowered pursuant to a power of attorney executed and delivered by the Indenture Trustee to execute and deliver, 

  

 28 

 
and may be authorized and empowered by the Indenture Trustee, to execute and deliver, on behalf of itself, the Noteholders and the Indenture Trustee or any
of them, (i) any and all instruments of satisfaction or cancellation or of partial or full release or discharge and all other comparable instruments with respect to the Mortgage Loans and with respect to the Mortgaged Properties, (ii) and to
institute foreclosure proceedings or obtain a deed in lieu of foreclosure so as to effect ownership of any Mortgaged Property on behalf of the Indenture Trustee, and (iii) to hold title to any Mortgaged Property upon such foreclosure or deed in lieu
of foreclosure on behalf of the Indenture Trustee; provided, however, that Section 5.07(a) shall constitute a power of attorney from the Indenture Trustee to the Master Servicer to execute an instrument of satisfaction (or assignment
of mortgage without recourse) with respect to any Mortgage Loan paid in full (or with respect to which payment in full has been escrowed). Subject to Sections 5.05 and 5.06, the Indenture Trustee shall furnish the Master Servicer with any powers of
attorney and other documents as the Master Servicer shall reasonably request to enable the Master Servicer to carry out its servicing and administrative duties hereunder; provided, however, the Master Servicer shall prepare for and deliver to the
Indenture Trustee for its execution any such powers of attorney; provided, further, that the Indenture Trustee shall not be responsible for any misuse of any such power of attorney. Notwithstanding anything contained herein to the contrary, neither
the Master Servicer nor the Backup Servicer shall, without the Indenture Trustee’s written consent: (i) initiate any action, suit or proceeding directly relating to the servicing of the Mortgage Loan solely under the Indenture Trustee’s
name without indicating the Master Servicer’s or Backup Servicer’s, as applicable, representative capacity, (ii) initiate any other action, suit or proceeding not directly relating to the servicing of any Mortgage Loan (including but not
limited to actions, suits or proceedings against Noteholders or Certificateholders, or against the Seller for breaches of representations and warranties) solely under the Indenture Trustee’s name, (iii) engage counsel to represent the Indenture
Trustee in any action, suit or proceeding not directly related to the servicing of any Mortgage Loan (including but not limited to actions, suits or proceedings against Noteholders or Certificateholders, or against the Seller for breaches of
representations and warranties, or (iv) prepare, execute or deliver any government filings, forms, permits, registrations or other documents or take any action with the intent to cause, and that actually causes, the Indenture Trustee to be
registered to do business in any state. 
  
 (i)
The Master Servicer shall give prompt notice to the Backup Servicer, the Indenture Trustee and the Note Insurer of any action, of which the Master Servicer has actual knowledge, to (i) assert a claim against the Trust or (ii) assert jurisdiction
over the Trust. 
  
 (j) Servicing Advances
incurred by the Master Servicer in connection with the servicing of the Mortgage Loans (including any penalties in connection with the payment of any taxes and assessments or other charges) on any Mortgaged Property shall be recoverable by the
Master Servicer to the extent described herein. 
  
 (k) The Master Servicer shall be entitled to rely, and shall be fully protected in relying, upon any promissory note, writing, resolution, notice, consent, certificate, affidavit, letter, e-mail, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document reasonably believed by it to be genuine and correct and to have been signed, sent or made by the proper person or persons and upon advice and statements of legal counsel 

  

 29 

 
(including, without limitation, counsel to the Mortgagor(s)), independent accountants and other experts selected by the Master Servicer. 
  
 (l) The Master Servicer shall have no liability to the
Seller, the Sponsor, the Indenture Trustee, the Owner Trustee, the Note Insurer, any Noteholder or any other Person for any action taken, or for refraining from the taking of any action, in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that the foregoing shall not apply to any breach of representations or warranties made by the Master Servicer herein, or to any specific liability imposed upon the Master Servicer pursuant to this Agreement or any
liability that would otherwise be imposed upon the Master Servicer by reason of its willful misconduct, bad faith or negligence in the performance of its duties hereunder or by reason of its failure to perform its obligations or duties hereunder.

  
 (m) The Master Servicer further is authorized
and empowered by the Indenture Trustee, on behalf of the Noteholders, the Note Insurer and the Indenture Trustee, when the Master Servicer believes it is appropriate in its best judgment to register any Mortgage Loan on the MERS System, or cause the
removal from the registration of any Mortgage Loan on the MERS System, to execute and deliver, on behalf of the Indenture Trustee, the Note Insurer and the Noteholders or any of them, any and all instruments of assignment and other comparable
instruments with respect to such assignment or re-recording of a Mortgage in the name of MERS, solely as nominee for the Indenture Trustee and its successors and assigns. Any expenses incurred in connection with the actions described in the
preceding sentence shall be reimbursable to the Master Servicer as Servicing Advances. 
  
 Section 5.02. Collection of Certain Mortgage Loan Payments; Collection Account. (a) The Master Servicer shall make reasonable efforts to collect all payments called for under the terms and provisions of the
Mortgage Loans, and shall, to the extent such procedures shall be consistent with this Agreement, follow Accepted Servicing Practices. Consistent with the foregoing, the Master Servicer may in its discretion waive any assumption fees or other fees
which may be collected in the ordinary course of servicing such Mortgage Loans. 
  
 (b) The Master Servicer shall establish and maintain, in the name of the Indenture Trustee, a segregated account (the “Collection
Account”), in trust for the benefit of the Noteholders and the Note Insurer. The Collection Account shall be established and maintained as an Eligible Account. 
  
 (c) The Master Servicer shall deposit in the Collection Account any amounts representing Monthly Payments on
the Mortgage Loans due or to be applied as of a date after the Cut-Off Date on each Business Day, not more than two Business Days after the date of collection, the following payments and collections received or made by it (other than in respect of
monthly payments of principal on and interest of the Mortgage Loans that were due on or before the related Cut-Off Date and Monthly Payments due on May 1, 2004): 
  
 (i) payments of interest on the Mortgage Loans including Prepayment Charges; 
  

 30 

 (ii) payments of principal of the Mortgage Loans, including Principal Prepayments;

  
 (iii) the Loan Repurchase Price of Mortgage
Loans repurchased pursuant to Sections 2.06(c) or 4.02; 
  
 (iv) the Substitution Adjustment received in connection with Mortgage Loans for which Qualified Substitute Mortgage Loans are received pursuant to Sections 2.06 and 4.02; 
  
 (v) all Net REO Proceeds; 
  
 (vi) all Net Liquidation Proceeds; and 
  
 (vii) all Insurance Proceeds (including, for this purpose,
any amounts required to be deposited by the Master Servicer pursuant to Section 5.04 hereof). 
  
 It is understood that the Master Servicer need not deposit amounts representing fees, late payment charges or extension or other administrative charges (other than Prepayment Charges) payable by Mortgagors, or amounts
received by the Master Servicer for the account of Mortgagors for application towards the payment of taxes, insurance premiums, assessments and similar items or foreclosure proceeds to the extent payable to the related Mortgagor. 
  
 (d) The Master Servicer shall invest any funds in the
Collection Account in Permitted Investments, which shall mature not later than the Business Day next preceding the Servicer Remittance Date next following the date of such investment (except that any investment held by the Indenture Trustee may
mature on such Servicer Remittance Date) and shall not be sold or disposed of prior to its maturity. All net income and gain realized from any such investment shall be for the benefit of the Master Servicer and shall be subject to its withdrawal or
order on a Servicer Remittance Date. The Master Servicer shall deposit from its own funds the amount of any loss, to the extent not offset by investment income or earnings, in the Collection Account upon the realization of such loss. 
  
 Section 5.03. Permitted Withdrawals from the Collection Account. The
Master Servicer may make withdrawals from the Collection Account, on or prior to any Servicer Remittance Date, for the following purposes: 
  
 (a) to pay to the Sponsor amounts received in respect of any Defective Mortgage Loan purchased or substituted for by the Sponsor to the
extent that the payment of any such amounts on the Servicer Remittance Date upon which the proceeds of such purchase are paid would make the total amount distributed in respect of any such Mortgage Loan on such Servicer Remittance Date greater than
the Loan Repurchase Price or the Substitution Adjustment therefor; 
  
 (b) to reimburse the Master Servicer for unreimbursed Delinquency Advances and unreimbursed Servicing Advances with respect to the Mortgage Loans for which it has made a Delinquency Advance or Servicing Advance, from
late or deferred payments collected, collections other than timely Monthly Payments, Liquidation Proceeds, Insurance Proceeds 

  

 31 

 
and/or the Loan Repurchase Price or Substitution Adjustment of or relating to such Mortgage Loans; 
  
 (c) to reimburse the Master Servicer for any Delinquency
Advances and Servicing Advances determined in good faith to have become Nonrecoverable Advances, such reimbursement to be made from any funds in the Collection Account; 
  
 (d) to withdraw any amount received from a Mortgagor that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy pursuant to the Bankruptcy Code in accordance with a final, nonappealable order of a court having competent jurisdiction; 
  
 (e) to withdraw any funds deposited in the Collection Account that were not required to be deposited
therein; 
  
 (f) to pay the Master Servicer the
Servicing Compensation pursuant to Section 5.08 hereof to the extent not retained or paid; 
  
 (g) to pay the Backup Servicer the Backup Servicing Fee pursuant to Section 5.08 hereof to the extent payments in respect of these amounts
have not been previously retained or paid; 
  
 (h) without duplication, and solely out of amounts which are payable to a former master servicer pursuant to Section 7.02(g), to pay to the Backup Servicer, the Indenture Trustee or any successor master servicer amounts paid by them in
connection with the transfer of the Master Servicer’s servicing obligations pursuant to Article VII hereof and required under such Article VII to be borne by the Master Servicer; 
  
 (i) to withdraw income on the Collection Account as provided in Section 5.02(d); and 
  
 (j) amounts deposited into the Collection Account in respect
of late fees, assumption fees and similar fees (other than Prepayment Charges). 
  
 The Master Servicer shall keep and maintain a separate accounting for each Mortgage Loan for the purpose of accounting for withdrawals from the Collection Account pursuant to this Section 5.03. Furthermore, in the
event that servicing has been transferred to the Backup Servicer, all reimbursements in respect of Servicer Advances and Delinquency Advances shall be made on a first in, first out priority basis (i.e. the longest outstanding reimbursable Servicer
Advance or Delinquency Advance will be reimbursed first). 
  
 Section 5.04. Hazard Insurance Policies; Property Protection Expenses. (a) The Master Servicer shall cause to be maintained with respect to each Mortgage Loan a hazard insurance policy with a carrier licensed in the state in which
the Mortgaged Property is located that provides for fire and extended coverage, and which provides for a recovery by the named insured of insurance proceeds relating to such Mortgage Loan in an amount not less than the least of (i) the outstanding
Principal Balance of the Mortgage Loan plus the outstanding principal balance of any mortgage loan senior to such Mortgage Loan, but in no event shall such amount be less than 

  

 32 

 
is necessary to prevent the Mortgagor from becoming a coinsurer thereunder, (ii) the minimum amount required to compensate for loss or damage on a
replacement cost basis and (iii) the full insurable value of the related Mortgage Property. The Master Servicer shall also maintain on property acquired upon foreclosure, or by deed in lieu of foreclosure, hazard insurance with extended coverage in
an amount which is at least equal to the lesser of (i) the maximum insurable value from time to time of the improvements which are a part of such property or (ii) the sum of the Principal Balance of such Mortgage Loan and the principal balance of
any mortgage loan senior to such Mortgage Loan at the time of such foreclosure plus accrued interest and the good-faith estimate of the Master Servicer of related Liquidation Expenses to be incurred in connection therewith. Amounts collected by the
Master Servicer under any such policies shall be deposited in the Collection Account to the extent that they constitute Liquidation Proceeds or Insurance Proceeds. Each hazard insurance policy shall contain a standard mortgage clause naming the
Master Servicer, its successors and assigns, as mortgagee. The Master Servicer shall be under no obligation to require that any Mortgagor maintain earthquake (except as provided herein) or other additional insurance and shall be under no obligation
itself to maintain any such additional insurance on property acquired in respect of a Mortgage Loan, other than pursuant to such applicable laws and regulations as shall at any time be in force and as shall require such additional insurance.

  
 (b) In the event that the Master Servicer
shall obtain and maintain a blanket policy with an insurer either (i) which satisfies the corresponding requirements of Fannie Mae or Freddie Mac or (ii) approved in writing by the Note Insurer, such approval not to be unreasonably withheld,
insuring against fire, flood and hazards of extended coverage on all of the Mortgage Loans, then, to the extent such policy names the Master Servicer as loss payee and provides coverage in an amount equal to the aggregate unpaid Principal Balance on
the Mortgage Loans without co-insurance, and otherwise complies with the requirements of this Section 5.04, the Master Servicer shall be deemed conclusively to have satisfied its obligations with respect to fire and hazard insurance coverage under
this Section 5.04, it being understood and agreed that such blanket policy may contain a deductible clause (payable by the Master Servicer), in which case the Master Servicer shall, in the event that there shall not have been maintained on the
related Mortgaged Property a policy complying with the preceding paragraph of this Section 5.04, and there shall have been a loss which would have been covered by such policy, deposit in the Collection Account from the Master Servicer’s own
funds the difference, if any, between the amount that would have been payable under a policy complying with the preceding paragraph of this Section 5.04 and the amount paid under such blanket policy. Upon the request of the Indenture Trustee or the
Note Insurer, the Master Servicer shall cause to be delivered to the Indenture Trustee or the Note Insurer, a certified true copy of such policy. 
  
 (c) If the Mortgage Loan at the time of origination relates to a Mortgaged Property in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood hazards as designated to the Master Servicer by the Sponsor, the Master Servicer will cause to be maintained with respect thereto a flood insurance policy in a form meeting the requirements
of the current guidelines of the Federal Insurance Administration with a generally acceptable carrier in an amount representing coverage, and which provides for a recovery by the Master Servicer on behalf of the Trust of insurance proceeds relating
to such Mortgage Loan of not less than the least of (i) the outstanding Principal Balance of the related Mortgage Loan, plus the principal balance of the related first lien, if any, (ii) the minimum 

  

 33 

 
amount required to compensate for damage or loss on a replacement cost basis and (iii) the maximum amount of insurance that is available under the Flood
Disaster Protection Act of 1973. The Master Servicer shall indemnify the Trust and the Note Insurer out of the Master Servicer’s own funds for any loss to the Trust and the Note Insurer resulting from the Master Servicer’s failure to
maintain the insurance required by this Section. 
  
 Section 5.05.
Assumption and Modification Agreements. When a Mortgaged Property has been or is about to be conveyed by the Mortgagor, the Master Servicer shall, to the extent it has knowledge of such conveyance or prospective conveyance, exercise its
rights to accelerate the maturity of the related Mortgage Loan under any “due-on-sale” clause contained in the related Mortgage or Mortgage Note; provided, however, that the Master Servicer shall not exercise any such right
if (i) the “due-on-sale” clause, in the reasonable belief of the Master Servicer, is not enforceable under applicable law or (ii) the Master Servicer reasonably believes that to permit an assumption of the Mortgage Loan would not
materially and adversely affect the interest of the Noteholders or of the Note Insurer. In such event, the Master Servicer shall enter into an assumption and modification agreement with the Person to whom such property has been or is about to be
conveyed, pursuant to which such Person becomes liable under the Mortgage Note and, unless prohibited by applicable law or the mortgage documents, the Mortgagor remains liable thereon. If the foregoing is not permitted under applicable law, the
Master Servicer is authorized to enter into a substitution of liability agreement with such Person, pursuant to which the original Mortgagor is released from liability and such Person is substituted as Mortgagor and becomes liable under the Mortgage
Note; provided, however, that to the extent any such substitution of liability agreement would be delivered by the Master Servicer outside of its usual procedures for mortgage loans held in its own portfolio the Master Servicer shall,
prior to executing and delivering such agreement, obtain the prior written consent of the Note Insurer. The Mortgage Loan, if assumed, shall conform in all respects to the requirements and representations and warranties of this Agreement. The Master
Servicer shall notify the Indenture Trustee that any applicable assumption or substitution agreement has been completed by forwarding to the Indenture Trustee the original copy of such assumption or substitution agreement, which copy shall be added
by the Indenture Trustee to the related Indenture Trustee’s Mortgage File and which shall, for all purposes, be considered a part of such Indenture Trustee’s Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. The Master Servicer shall be responsible for promptly recording any such assumption or substitution agreements. In connection with any such assumption or substitution agreement, the required monthly payment on the
related Mortgage Loan shall not be changed but shall remain as in effect immediately prior to the assumption or substitution, the stated maturity or outstanding Principal Balance of such Mortgage Loan shall not be changed, the Mortgage Interest Rate
shall not be changed nor shall any required monthly payments of principal or interest be deferred or forgiven. Any fee collected by the Master Servicer for consenting to any such conveyance or entering into an assumption or substitution agreement
shall be retained by or paid to the Master Servicer as additional servicing compensation. 
  
 Notwithstanding the foregoing paragraph or any other provision of this Agreement, the Master Servicer shall not be deemed to be in default, breach or any other violation of its obligations hereunder by reason of any
assumption of a Mortgage Loan by operation of law or any assumption which the Master Servicer may be restricted by law from preventing, for any reason whatsoever. 
  

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 Section 5.06. Realization Upon Defaulted Mortgage Loans. (a) The Master Servicer shall foreclose
upon or otherwise comparably effect the ownership on behalf of the Trust of Mortgaged Properties relating to defaulted Mortgage Loans as to which no satisfactory arrangements can be made for collection of Delinquent payments and which the Sponsor
has not purchased pursuant to Section 5.15, unless the Master Servicer reasonably believes that Net Liquidation Proceeds with respect to such Mortgage Loan would not be increased as a result of such foreclosure or other action, in which case, such
Mortgage Loan will be charged-off and will become a Liquidated Mortgage Loan. The Master Servicer shall have no obligation to purchase any Mortgaged Property at any foreclosure sale. In connection with such foreclosure or other conversion, the
Master Servicer shall exercise foreclosure procedures with the same degree of care and skill in their exercise or use, as it would ordinarily exercise or use under the circumstances in the conduct of their own affairs. Any amounts including
Liquidation Expenses, advanced by the Master Servicer in connection with such foreclosure or other action shall constitute Servicing Advances. 
  
 Pursuant to its efforts to sell any REO Property, the Master Servicer either itself or through an agent selected by the Master Servicer shall manage,
conserve, protect and operate such REO Property in the same manner and to such extent as is customary in the locality where such REO Property is located and may, incident to its conservation and protection of the interests of the Master Servicer,
rent the same, or any part thereof, as the Master Servicer deems to be in the best interest of the Trust and Note Insurer for the period prior to the sale of such REO Property. The net income generated from the REO Property and the proceeds from a
sale of any REO Property shall be deposited in the Collection Account. 
  
 (b) If the Master Servicer has reason to believe that a Mortgaged Property which the Master Servicer is contemplating acquiring in foreclosure or by deed in lieu of foreclosure contains environmental or hazardous
waste risks known to the Master Servicer, the Master Servicer shall notify the Backup Servicer, the Indenture Trustee and the Note Insurer and obtain the consent of the Note Insurer prior to acquiring the Mortgaged Property. The Master Servicer
shall not institute foreclosure actions with respect to such a property if it reasonably believes that such action would not be consistent with the Accepted Servicing Practices, and in no event shall the Master Servicer be required to manage,
operate or take any other action with respect thereto which the Master Servicer in good faith believes will result in “clean-up” or other liability under applicable law, unless the Master Servicer receives an indemnity acceptable to it in
its sole discretion. 
  
 (c) The Master Servicer
shall determine, with respect to each defaulted Mortgage Loan, when it has recovered, whether through trustee’s sale, foreclosure sale or otherwise, all amounts if any it expects to recover from or on account of such defaulted Mortgage Loan,
whereupon such Mortgage Loan shall become a Liquidated Mortgage Loan. 
  
 (d) Net Foreclosure Profits, if any, shall be paid directly to the Sponsor. 
  
 (e) With respect to its obligations under this Section 5.06, the Master Servicer shall take all such actions as it reasonably believes are
consistent with Accepted Servicing Practices. 
  

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 Section 5.07. Indenture Trustee to Cooperate. (a) Upon the payment in full of any Mortgage Loan or
the receipt by the Master Servicer of a notification that payment in full will be escrowed in a manner customary for such purposes, the Master Servicer shall deliver to the Indenture Trustee one copy of a Request for Release. Upon receipt of such
copy of the Request for Release, the Indenture Trustee shall promptly release the related Indenture Trustee’s Mortgage File, in trust to (i) the Master Servicer (ii) an escrow agent or (iii) any employee, agent or attorney of the Indenture
Trustee, in each case pending its release by the Master Servicer, such escrow agent or such employee, agent or attorney of the Indenture Trustee, as the case may be. Upon any such payment in full, or the receipt of such notification that such funds
have been placed in escrow, the Master Servicer is authorized to give, as attorney-in-fact for the Indenture Trustee and the mortgagee under the Mortgage which secured the Mortgage Note, an instrument of satisfaction (or assignment of Mortgage
without recourse) regarding the Mortgaged Property relating to such Mortgage, which instrument of satisfaction or assignment, as the case may be, shall be delivered to the Person or Persons entitled thereto against receipt therefor of payment in
full, it being understood and agreed that no expense incurred in connection with such instrument of satisfaction or assignment, as the case may be, shall be chargeable to the Collection Account. 
  
 (b) (i) From time to time and as appropriate in the
servicing of any Mortgage Loan, including, without limitation, foreclosure or other comparable conversion of a Mortgage Loan or collection under any applicable Insurance Policy, the Indenture Trustee shall (except in the case of the payment or
liquidation pursuant to which the related Indenture Trustee’s Mortgage File is released to an escrow agent or an employee, agent or attorney of the Indenture Trustee), upon request of the Master Servicer and delivery to the Indenture Trustee of
one copy of a Request for Release, release the related Indenture Trustee’s Mortgage File to the Master Servicer and shall execute such documents as shall be necessary to the prosecution of any such proceedings, including, without limitation, an
assignment without recourse of the related Mortgage to the Master Servicer. The Indenture Trustee shall complete in the name of the Indenture Trustee any endorsement in blank on any Mortgage Note prior to releasing such Mortgage Note to the Master
Servicer. Such receipt shall obligate the Master Servicer to return the Indenture Trustee’s Mortgage File to the Indenture Trustee when the need therefor by the Master Servicer no longer exists unless the Mortgage Loan shall be liquidated, in
which case, the Master Servicer shall deliver one copy of a Request for Release indicating such loan has been paid in full. 
  
 (ii) Each Request for Release may be delivered to the Indenture Trustee (x) via mail or courier, (y) via facsimile or (z) by such other
means, including, without limitation, electronic or computer readable medium, as the Master Servicer and the Indenture Trustee shall mutually agree. The Indenture Trustee shall promptly release the related Indenture Trustee’s Mortgage File(s)
within five (5) Business Days of receipt of one copy of a properly completed Request for Release pursuant to clauses (x), (y) or (z) above or such shorter period as may be agreed upon by the Master Servicer and the Indenture Trustee. Receipt of a
Request for Release pursuant to clauses (x), (y) or (z) above shall be authorization to the Indenture Trustee to release such Indenture Trustee’s Mortgage Files, provided the Indenture Trustee has determined that such Request for Release has
been executed, with respect to clauses (x) or (y) above, or approved, with respect to clause (z) above, by a Servicing Officer of the Master Servicer. If the Indenture Trustee is unable to release the Indenture Trustee’s Mortgage Files within
the 

  

 36 

 
time frames previously specified, the Indenture Trustee shall immediately notify the Master Servicer, indicating the reason for such delay, but in no event
shall such notification be later than seven (7) Business Days after receipt of a Request for Release. If the Master Servicer, is required to pay penalties or damages due solely to the Indenture Trustee’s negligent failure to release the related
Indenture Trustee’s Mortgage File or the Indenture Trustee’s negligent failure to execute and release documents in a timely manner, the Indenture Trustee shall be liable for such penalties or damages. 
  
 (c) No costs associated with the procedures described in
this Section 5.07 shall be an expense of the Trust. 
  
 Section
5.08. Servicing Compensation; Payment of Certain Expenses by Master Servicer. The Master Servicer shall be entitled to receive and retain, out of collections on the Mortgage Loans for each Due Period, as servicing compensation for such Due
Period, an amount (the “Servicing Fee”) equal to the product of one-twelfth of the Servicing Fee Rate and the aggregate Stated Principal Balance of the Mortgage Loans in each Loan Group as of the beginning of such Due Period.
Additional servicing compensation in the form of assumption fees, late payment charges or extension and other administrative charges (other than Prepayment Charges) shall be retained by the Master Servicer. The Master Servicer shall be required to
pay all expenses incurred by it in connection with its activities hereunder (including payment of all other fees and expenses not expressly stated hereunder to be payable by or from another source) and shall not be entitled to reimbursement therefor
except as specifically provided herein. 
  
 The Backup Servicer
shall be entitled to receive, an amount (the “Backup Servicing Fee”) equal to the product of one-twelfth of the Backup Servicing Fee Rate and the aggregate Stated Principal Balance of the Mortgage Loans in each Loan Group as of the
beginning of such Due Period, subject to a minimum of $2,000 per Collection Period, such amount to be paid pursuant to Section 8.02 of the Indenture. The Backup Servicer will also be entitled to an upfront fee of $7,500.00. 
  
 Section 5.09. Annual Statement as to Compliance. The Master Servicer
will deliver to the Backup Servicer, the Trust, the Indenture Trustee, the Rating Agencies, the Note Insurer and, the Sponsor on or before March 15 of each year, beginning March 15, 2005, an Officer’s Certificate of the Master Servicer stating
that (a) a review of the activities of the Master Servicer during the preceding calendar year and of its performance under this Agreement has been made under such officer’s supervision and (b) to the best of such officer’s knowledge, based
on such review, the Master Servicer has fulfilled all its material obligations under this Agreement throughout such year, or, if there has been a default in the fulfillment of any such obligation, specifying each such default known to such officer
and the nature and status thereof. 
  
 Section 5.10. Annual
Independent Public Accountants’ Servicing Report. On or before March 15 of each year, beginning March 15, 2005, the Master Servicer at its expense shall cause a firm of independent public accountants that is a member of the American
Institute of Certified Public Accountants (who may also render other services to the Master Servicer) to furnish a report to the Backup Servicer, the Trust, the Indenture Trustee, the Rating Agencies, the Note Insurer and the Sponsor to the effect
that such firm has examined certain documents and records relating to the servicing of mortgage loans under servicing agreements (including this 

  

 37 

 
Agreement) substantially similar to this Agreement, and that such examination, which has been conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers or the Audit Guide for Audits of HUD Approved Nonsupervised Mortgagees (to the extent that the procedures in such audit guide are applicable to the servicing obligations set forth in such agreements), has
disclosed no items of noncompliance with the provisions of this Agreement which, in the opinion of such firm, are material, except for such items of noncompliance as shall be set forth in such report. 
  
 Section 5.11. Access to Certain Documentation. The Master Servicer
shall provide to the Backup Servicer, the Indenture Trustee, the Note Insurer, the FDIC and the supervisory agents and examiners (as required in the latter case by applicable State and federal regulations) of each of the foregoing access to the
documentation regarding the Mortgage Loans, such access being afforded without charge but only upon reasonable request and during normal business hours at the offices of the Master Servicer designated by it. 
  
 Upon any change in the format of the computer tape maintained by the Master
Servicer in respect of the Mortgage Loans, the Master Servicer shall deliver a copy of such computer tape to the Indenture Trustee and the Backup Servicer and in addition shall provide a copy of such computer tape to the Indenture Trustee, the
Backup Servicer and the Note Insurer at such other times as the Indenture Trustee or the Note Insurer may reasonably request. 
  
 The Master Servicer shall keep confidential (including from affiliates thereof) information concerning the Mortgage Loans, except as required by law.

  
 Section 5.12. Maintenance of Fidelity Bond. The Master
Servicer and the Backup Servicer shall each, during the term of its service as Master Servicer and Backup Servicer, respectively, maintain in force a fidelity bond and errors and omissions insurance in respect of their respective officers, employees
or agents. Such bond and insurance shall comply with the requirements from time to time of Fannie Mae for Persons performing servicing for mortgage loans purchased by such association. 
  
 Section 5.13. Subservicing Agreements Between the Master Servicer and Subservicer and Subservicers. (a) The Master
Servicer may enter into subservicing agreements for any servicing and administration of Mortgage Loans with any institution which is in compliance with the laws of each state necessary to enable it to perform its obligations under such subservicing
agreement. The Master Servicer shall give notice to the Backup Servicer, the Note Insurer and the Indenture Trustee of the appointment of any subservicer and shall furnish to the Backup Servicer, the Note Insurer and the Indenture Trustee a copy of
the subservicing agreement. The Master Servicer shall give notice to each Rating Agency of the appointment of any subservicer. No such appointment of a subservicer shall be effective without the consent of the Note Insurer. For purposes of this
Agreement, the Master Servicer shall be deemed to have received payments on Mortgage Loans when any subservicer has received such payments. Any such subservicing agreement shall be consistent with and not violate the provisions of this Agreement.

  
 (b) The Master Servicer may, with the consent
of the Note Insurer, terminate any subservicing agreement in accordance with the terms and conditions of such subservicing agreement and thereafter directly service the related Mortgage Loans itself or enter into a 

  

 38 

 
subservicing agreement with a successor subservicer that qualifies under Subsection (a) of this Section 5.13. The Master Servicer shall give notice to each
Rating Agency of the termination of any subservicer and the appointment of any successor subservicer. 
  
 (c) The Master Servicer shall not be relieved of its obligations under this Agreement notwithstanding any subservicing agreement or any of
the provisions of this Agreement relating to agreements or arrangements between the Master Servicer and a subservicer or otherwise, and the Master Servicer shall be obligated to the same extent and under the same terms and conditions as if it alone
were servicing and administering the Mortgage Loans. The Master Servicer shall be entitled to enter into any agreement with a subservicer for indemnification of the Master Servicer by such subservicer and nothing contained in such subservicing
agreement shall be deemed to limit or modify this Agreement. The Trust shall not indemnify the Master Servicer for any losses due to the Master Servicer’s negligence. 
  
 (d) Any subservicing agreement and any other transactions or services relating to the Mortgage Loans
involving a subservicer shall be deemed to be between the subservicer and the Master Servicer alone and the Backup Servicer, the Note Insurer, the Indenture Trustee and the Noteholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to any Subservicer except as set forth in Subsection (e) of this Section 5.13 and the related Subservicing Agreement. 
  
 (e) Notwithstanding any contrary provision contained herein, in connection with the assumption of the
responsibilities, duties and liabilities and of the authority, power and rights of the Master Servicer hereunder by the Backup Servicer, the Indenture Trustee or any other successor master servicer pursuant to Section 7.02, it is understood and
agreed that the Master Servicer’s rights and obligations under any subservicing agreement then in force between the Master Servicer and a subservicer may be assumed or terminated (without cost) by the Backup Servicer, the Indenture Trustee or
any other successor master servicer at its option as successor to the Master Servicer. 
  
 The Master Servicer shall, upon request of the Backup Servicer, the Indenture Trustee or the Note Insurer, but at the expense of the Master Servicer, deliver to the assuming party documents and records relating to
each subservicing agreement and an accounting of amounts collected and held by it and otherwise use its best reasonable efforts to effect the orderly and efficient transfer of the subservicing agreements to the assuming party, without the payment of
any fee by the Backup Servicer, the Indenture Trustee, any Noteholders or the Note Insurer, notwithstanding any contrary provision in any subservicing agreement. 
  
 Section 5.14. Reports to the Indenture Trustee; Collection Account Statements. Not later than twenty-five (25) days
after each Payment Date, the Master Servicer shall provide to the Indenture Trustee, the Backup Servicer and the Note Insurer a statement, certified by a Servicing Officer, setting forth the status of the Collection Account as of the close of
business on the last day of the Due Period preceding such Payment Date, stating that all payments required by this Agreement to be made by the Master Servicer on behalf of the Indenture Trustee have been made (or if any required payment has not been
made by the Master Servicer, specifying the nature and status thereof) and showing, for the period covered by such statement, the aggregate of deposits into and withdrawals from the Collection Account and the aggregate of deposits into each 

  

 39 

 
Payment Account as specified in Section 6.01. Such statement shall also state the aggregate Stated Principal Balance and the aggregate unpaid principal
balance of all the Mortgage Loans as of the close of business on the last day of the month preceding the month in which such Payment Date occurs. 
  
 Section 5.15. Optional Purchase of Defaulted Mortgage Loans. (a) The Seller, in its sole discretion, shall have the right to elect (by written
notice sent to the Master Servicer, the Indenture Trustee and the Note Insurer), but shall not be obligated, to purchase for its own account from the Trust any Mortgage Loan which is ninety (90) days or more Delinquent in the manner at the Loan
Repurchase Price (except that the amount described in the definition of Loan Repurchase Price shall in no case be net of the Servicing Fee and the Backup Servicing Fee). The purchase price for any Mortgage Loan purchased hereunder shall be deposited
in the Collection Account and the Indenture Trustee, upon the Indenture Trustee’s receipt of written notice by the Master Servicer of such deposit, shall release or cause to be released to the purchaser of such Mortgage Loan the related
Indenture Trustee’s Mortgage File and shall execute and deliver such instruments of transfer or assignment prepared by the purchaser of such Mortgage Loan, in each case without recourse, as shall be necessary to vest in the purchaser of such
Mortgage Loan any Mortgage Loan released pursuant hereto and the purchaser of such Mortgage Loan shall succeed to all the Indenture Trustee’s right, title and interest in and to such Mortgage Loan and all security and documents related thereto.
Such assignment shall be an assignment outright and not for security. The purchaser of such Mortgage Loan shall thereupon own such Mortgage Loan, and all security and documents, free of any further obligation to the Indenture Trustee, the Note
Insurer or the Noteholders with respect thereto. The purchaser of such Mortgage Loan shall give written notice to the Note Insurer of the means by which any Mortgage Loan purchased pursuant to this Section 5.15 is ultimately disposed of and any
other information regarding any such Mortgage Loan reasonably requested by the Note Insurer. 
  
 (b) After the Seller or its Affiliate has repurchased any Mortgage Loans which are 90 days or more Delinquent in an aggregate amount equal
to 1% of the Maximum Collateral Amount, then notwithstanding the foregoing, unless the Note Insurer consents, the Seller or its Affiliate may only exercise its option pursuant to this Section 5.15 with respect to the Mortgage Loan or Mortgage Loans
(including REO Mortgage Loans) that have been Delinquent for the longest period at the time of such repurchase. Any request by the Seller or its Affiliate to the Note Insurer for consent to repurchase Mortgage Loans that are not the most Delinquent
shall be accompanied by a description of the Mortgage Loans that have been Delinquent longer than the Mortgage Loan or Mortgage Loans the Seller or its Affiliate proposes to repurchase. If the Note Insurer fails to respond to such request within ten
(10) Business Days after receipt thereof, the Seller or its Affiliate may repurchase the Mortgage Loan or Mortgage Loans proposed to be repurchased without the consent of, or any further action by, the Note Insurer. Notice to the Note Insurer shall
be delivered in accordance with the terms of the Insurance Agreement. 
  
 Section 5.16. Reports to be Provided by the Master Servicer and the Backup Servicer. (a) By 3:00 p.m. eastern time on the second Business Day following the fifteenth (15th) day of each month (the “Servicer Reporting
Date”), the Master Servicer shall deliver to the Indenture Trustee, the Backup Servicer, the Underwriter, Intex, Bloomberg and the Note Insurer a Servicer Remittance Report for the related Servicer Remittance Date in an electronic format
reporting on a loan-by-loan basis in such format as the Master Servicer and the Indenture Trustee may agree, 

  

 40 

 
and setting forth the following information with respect to all Mortgage Loans as well as a break out as to each Loan Group as of the close of business on
the last Business Day of the prior calendar month (except as otherwise provided in clause (v) below): 
  
 (i) the total number of Mortgage Loans and the Aggregate Principal Balances thereof, together with the number, Aggregate Principal
Balances of such Mortgage Loans and the percentage (based on the Aggregate Principal Balances of the Mortgage Loans) of the Aggregate Principal Balances of such Mortgage Loans to the Aggregate Principal Balance of all Mortgage Loans (A) 30-59 days
Delinquent, (B) 60-89 days Delinquent and (C) 90 or more days Delinquent; 
  
 (ii) the number, Aggregate Principal Balances of all Mortgage Loans and percentage (based on the Aggregate Principal Balances of the Mortgage Loans) of the Aggregate Principal Balances of such Mortgage Loans to the
Aggregate Principal Balance of all Mortgage Loans in foreclosure proceedings and the number, Aggregate Principal Balances of all Mortgage Loans and percentage (based on the Aggregate Principal Balances of the Mortgage Loans) of any such Mortgage
Loans also included in any of the statistics described in the foregoing clause (i); 
  
 (iii) the number, Aggregate Principal Balances of all Mortgage Loans and percentage (based on the Aggregate Principal Balances of the
Mortgage Loans) of the Aggregate Principal Balances of such Mortgage Loans to the Aggregate Principal Balance of all Mortgage Loans relating to Mortgagors in bankruptcy proceedings and the number, Aggregate Principal Balances of all Mortgage Loans
and percentage (based on the Aggregate Principal Balances of the Mortgage Loans) of any such Mortgage Loans also included in any of the statistics described in the foregoing clause (i); 
  
 (iv) the number, Aggregate Principal Balances of all Mortgage Loans and percentage (based on the Aggregate
Principal Balances of the Mortgage Loans) of the Aggregate Principal Balances of such Mortgage Loans to the Aggregate Principal Balance of all Mortgage Loans relating to REO Properties and the number, Aggregate Principal Balances of all Mortgage
Loans and percentage (based on the Aggregate Principal Balances of the Mortgage Loans) of any such Mortgage Loans also included in any of the statistics described in the foregoing clause (i); 
  
 (v) the weighted average Mortgage Interest Rate for the
Mortgage Loans in Loan Group 1 and Loan Group 2, in each case, as of the Due Date occurring in the Due Period related to such Payment Date; 
  
 (vi) the weighted average remaining term to stated maturity of all Mortgage Loans; 
  
 (vii) the book value of any REO Property; 
  
 (viii) the Cumulative Loan Loss Percentage and the Rolling
Six Month Delinquency Rate as of the related Payment Date; 
  

 41 

 (ix) with respect to each Monthly Payment, the amount of such remittance allocable to
principal (including a separate breakdown of any Principal Prepayment, including the date of such prepayment, and any Prepayment Charges); 
  
 (x) with respect to each Monthly Payment, the amount of such remittance allocable to interest; 
  
 (xi) the number and the Aggregate Principal Balance of
Mortgage Loans repurchased pursuant to Section 5.15; and 
  
 (xii) such other loan level information as either (a) the Indenture Trustee may reasonably request to enable it to prepare the Indenture Trustee’s Remittance Report or (b) the Note Insurer may reasonably request.

  
 (b) [Reserved]. 
  
 (c) In addition to the contingent obligations of the Backup
Servicer under this Agreement, the Backup Servicer shall establish and maintain a system of transaction accounting in regard to the Mortgage Loans substantially similar to that maintained by the Master Servicer and post to such system all
information relating to the Mortgage Loans obtained by the Backup Servicer pursuant to Section 5.16 and 5.18, to enable the Backup Servicer to perform the obligations of a successor master servicer immediately upon any termination or resignation of
the Master Servicer. The Backup Servicer’s obligations described in this Section 5.16(c) and its obligations pursuant to Section 7.02 shall be the only obligations of the Backup Servicer under this Agreement. All such obligations of the Backup
Servicer are effective as of the date of this Agreement. 
  
 Section 5.17. [Reserved]. 
  
 Section 5.18.
Delinquency Advances. If, on any Servicer Remittance Date, the Master Servicer determines that any Monthly Payments due during the related Due Period have not been received as of the end of the related Due Period, the Master Servicer shall
determine the amount of any Delinquency Advance required to be made with respect to the related Payment Date. The Master Servicer shall deliver, one (1) Business Day after such Servicer Remittance Date, a magnetic tape, diskette (or such other
electronic medium used by the Master Servicer for such purpose) to the Backup Servicer indicating the payment status of each Mortgage Loan as of the date which is two Business Days prior to such Servicer Remittance Date. The Master Servicer shall
include in the amount to be deposited in the related Payment Account on such Servicer Remittance Date an amount equal to the Delinquency Advance, if any, which deposit may be made in whole or in part from funds in the Collection Account being held
for future payment or withdrawal on or in connection with Payment Dates in subsequent months, other than any such amounts which are voluntary Principal Prepayments in full. Any funds being held for future payment to Noteholders and so used shall be
replaced by the Master Servicer from its own funds by deposit in the Collection Account on or before the Business Day preceding any future Servicer Remittance Date to the extent that funds in the Collection Account on such Servicer Remittance Date
shall be less than the Servicer Remittance Amount for such Payment Date. 
  

 42 

 The Master Servicer shall designate on its records the specific Mortgage Loans and related installments
(or portions thereof) as to which such Delinquency Advance shall be deemed to have been made, such determination being conclusive for purposes of withdrawals from the Collection Account pursuant to Section 5.03 hereof. 
  
 Section 5.19. Indemnification; Third Party Claims. The Master Servicer
agrees to indemnify and to hold each of the Trust, the Owner Trustee, the Seller, the Sponsor, the Backup Servicer, the Indenture Trustee, the Note Insurer and each Noteholder harmless against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs, fees and expenses (including attorneys’ fees and expenses) that the Trust, the Owner Trustee, the Seller, the Sponsor, the Backup Servicer, the Indenture Trustee, the
Note Insurer and any Noteholder (or any director, officer, employee or agent of the foregoing) may sustain in any way related to the failure of the Master Servicer to perform its duties and service the Mortgage Loans in compliance with the terms of
this Agreement and the other Basic Documents and in connection with the Indenture as provided in Section 6.16 thereof. Each indemnified party and the Master Servicer shall immediately notify the other indemnified parties if a claim is made by a
third party with respect to this Agreement and the other Basic Documents and the Master Servicer shall assume the defense of any such claim and pay all expenses in connection therewith, including reasonable counsel fees, and promptly pay, discharge
and satisfy any judgment or decree which may be entered against the Trust, the Owner Trustee, the Seller, the Sponsor, the Backup Servicer, the Master Servicer, the Indenture Trustee, the Note Insurer and/or a Noteholder (or any director, officer,
employee or agent of the foregoing) in respect of such claim. The obligations of the Master Servicer under this Section 5.19 arising prior to any resignation or termination of the Master Servicer hereunder shall survive the resignation or
termination of the Master Servicer or the termination of this Agreement or the Indenture. 
  
 Section 5.20. Maintenance of Corporate Existence and Licenses; Merger or Consolidation of the Master Servicer and Backup Servicer. (a) Each of the Master Servicer and the Backup Servicer will keep in full
effect its existence, rights and franchises as a corporation, will obtain and preserve its qualification to do business as a foreign corporation in each jurisdiction necessary to protect the validity and enforceability of this Agreement or any of
the Mortgage Loans and to perform its duties under this Agreement and will otherwise operate its business so as to cause the representations and warranties under Section 3.01 hereof to be true and correct at all times under this Agreement.

  
 (b) Any corporation into which the Master
Servicer or the Backup Servicer may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Master Servicer or the Backup Servicer shall be a party, or any
corporation succeeding to all or substantially all of the business of the Master Servicer or the Backup Servicer, shall be the successor of the Master Servicer or the Backup Servicer, as applicable, hereunder, only with the consent of the Note
Insurer but without the execution or filing of any paper or any further act on the part of any of the parties hereto provided that, in the case of the Master Servicer, such corporation meets the qualifications set forth in Section 7.02(b). The
Master Servicer or the Backup Servicer, as applicable, shall send notice of any such merger or consolidation to the Owner Trustee, the Indenture Trustee, the Note Insurer and the Master Servicer or the Backup Servicer, as applicable. 
  

 43 

 Section 5.21. Assignment of Agreement by Master Servicer and Backup Servicer; Master Servicer and
Backup Servicer Not to Resign. Neither the Master Servicer nor the Backup Servicer shall assign this Agreement nor resign from the obligations and duties hereby imposed on it except with the prior consent of the Note Insurer (a copy of which
will be provided to the Indenture Trustee), or upon the determination that the Master Servicer’s or Backup Servicer’s duties hereunder are no longer permissible under applicable law and that such incapacity cannot be cured by the Master
Servicer or the Backup Servicer, as applicable, without incurring, in the reasonable judgment of the Note Insurer, unreasonable expense. Any such determination that the Master Servicer’s or the Backup Servicer’s duties hereunder are no
longer permissible under applicable law permitting the resignation of the Master Servicer or the Backup Servicer, as applicable, shall be evidenced by a written Opinion of Counsel (who may be counsel for the Master Servicer or the Backup Servicer)
to such effect delivered to the Indenture Trustee, the Trust, the Seller, the Sponsor, the Note Insurer and the Backup Servicer or the Master Servicer, as applicable. No such resignation of the Master Servicer shall become effective until the Backup
Servicer or a successor master servicer appointed in accordance with the terms of this Agreement has assumed the Master Servicer’s responsibilities and obligations hereunder in accordance with Section 7.02. The Master Servicer or the Backup
Servicer, as applicable, shall provide the Indenture Trustee, the Rating Agencies and the Note Insurer with 30 days’ prior written notice of its intention to resign pursuant to this Section 5.21. 
  
 Section 5.22. Periodic Filings with the Securities and Exchange Commission
Additional Information. 
  
 (a) The Indenture
Trustee shall reasonably cooperate with the Master Servicer in connection with the satisfaction of the reporting requirements under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Indenture Trustee shall prepare
on behalf of the Trust Fund any Forms 8-K and 10-K customary for similar securities as required by the Exchange Act and the Rules and Regulations of the Securities and Exchange Commission (the “Commission”) thereunder, and shall file (via
the Commission’s Electronic Data Gathering and Retrieval System) such Forms on behalf of the Master Servicer. The Master Servicer hereby grants to the Indenture Trustee a limited power of attorney to execute and file each such Form 8-K. Such
power of attorney shall continue until the earlier of (i) receipt by the Indenture Trustee from the Master Servicer of written termination of such power of attorney and (ii) termination of the Trust Fund. The Master Servicer shall execute the Form
10-Ks. The Indenture Trustee shall have no liability with respect to any failure to properly prepare or file such periodic reports resulting from or relating to the Indenture Trustee’s inability or failure to obtain any information not
resulting from its own negligence or willful misconduct. 
  
 (b) Each Form 8-K shall be filed by the Indenture Trustee within 15 days after each Payment Date, with a copy of the Indenture Trustee’s Remittance Report for such Payment Date as an exhibit thereto. Prior to
March 30th of each year (or such earlier date as may be required by the Exchange Act and the Rules and Regulations of the Commission) commencing with 2005, the Indenture Trustee shall file a Form 10-K, in substance as required by applicable law or
the Commission’s staff interpretations. Such Form 10-K shall include as exhibits the Master Servicer’s annual statement of compliance described under Section 5.09 and the accountant’s report described under Section 5.10, in each case
to the extent they have been timely delivered to the Indenture Trustee. If they are not so timely delivered, the Indenture 

  

 44 

 
Trustee shall file the incomplete Form 10-K, together with a Form 12b-25, and thereafter shall file an amended Form 10-K including such documents as exhibits
reasonably promptly after they are delivered to the Indenture Trustee. The Indenture Trustee shall have no liability with respect to any failure to properly prepare or file such periodic reports resulting from or relating to the Indenture
Trustee’s inability or failure to obtain any information not resulting from its own negligence or willful misconduct. The Form 10-K shall also include a certification in the form attached hereto as Exhibit G (the
“Certification”), which shall be signed by the senior officer of the Master Servicer in charge of securitization. The Indenture Trustee shall prepare and deliver each Form 10-K to the Master Servicer for execution no later than
March 20th of each year. The Master Servicer shall return the executed Form 10-K and the Certification to the Indenture Trustee for filing no later than March 25th of each year. 
  
 (c) The Master Servicer shall indemnify and hold harmless the Indenture Trustee and its officers, directors
and affiliates from and against any losses, damages, penalties, fines, forfeitures, reasonable and necessary legal fees and related costs, judgments and other costs and expenses arising out of or based upon a breach of the Master Servicer’s
obligations under this Section or the Sponsor’s negligence, bad faith or willful misconduct in connection therewith. 
  
 (d) Upon any filing with the Commission, the Indenture Trustee shall promptly deliver to the Master Servicer a copy of any executed
report, statement or information. 
  
 (e) The
Indenture Trustee shall prepare and file a voluntary suspension of filing on Form 15 as soon as it is permitted to do so under the Exchange Act and the rules and regulations of the Commission. 
  
 Section 5.23. Administrative Duties. (a) Duties with Respect to the
Basic Documents. The Master Servicer shall perform all its duties and the duties of the Trust under the Basic Documents. In addition, the Master Servicer shall consult with the Owner Trustee as the Master Servicer deems appropriate regarding the
duties of the Trust under the Basic Documents. The Master Servicer shall monitor the performance of the Trust and shall advise the Owner Trustee when action is necessary to comply with the Trust’s duties under the Basic Documents. The Master
Servicer shall prepare for execution by the Trust or shall cause the preparation by other appropriate Persons of all such documents, reports, filings, instruments, certificates and opinions as it shall be the duty of the Trust to prepare, file or
deliver pursuant to the Basic Documents. In furtherance of the foregoing, the Master Servicer shall take all necessary action that is the duty of the Trust to take pursuant to the Basic Documents. 
  
 (b) Duties with Respect to the Trust. In addition to
the duties of the Master Servicer set forth in this Agreement or any of the Basic Documents, the Master Servicer shall perform such calculations and shall prepare for execution by the Trust or the Owner Trustee or shall cause the preparation by
other appropriate Persons of all such documents, reports, filings, instruments, certificates and opinions as it shall be the duty of the Trust or the Owner Trustee to prepare, file or deliver pursuant to this Agreement or any of the Basic Documents
or under state and federal tax and securities laws and shall take all appropriate action that it is the duty of the Trust to take pursuant to this Agreement or any of the Basic Documents. In accordance with the directions of the Trust or the Owner
Trustee, the Master Servicer shall administer, perform, or 

  

 45 

 
supervise the performance of such other activities in connection with the Basic Documents as are not covered by any of the foregoing provisions and as are
expressly requested by the Trust or the Owner Trustee and are reasonably within the capability of the Master Servicer. 
  
 In carrying out the foregoing duties under this Agreement, the Master Servicer may enter into transactions with or otherwise deal with any of its
Affiliates; provided, however, that the terms of any such transactions or dealings shall be in accordance with any directions received from the Trust and shall be, in the Master Servicer’s opinion, no less favorable to the Trust in any material
respect. 
  
 (c) Additional Information to be
Furnished to the Issuer. The Master Servicer shall furnish to the Owner Trustee from time to time such additional information regarding the Trust or the Basic Documents as the Owner Trustee shall reasonably request. The Master Servicer shall
prepare, execute and deliver all certificates or other documents required to be delivered by the Issuer pursuant to the Sarbanes-Oxley Act of 2002 or the rules and regulations promulgated thereunder. 
  
 ARTICLE VI 
  
 APPLICATION OF FUNDS 
  
 Section 6.01. Deposits to the Payment Account. By 12:00 noon (Eastern
Time) on each Servicer Remittance Date, the Master Servicer shall remit to the Indenture Trustee for deposit in the related Payment Account, from funds on deposit in the Collection Account, an amount equal to the Servicer Remittance Amount with
respect to the related Payment Date, minus any portion thereof payable to the Master Servicer or the Backup Servicer pursuant to Section 5.03. 
  
 Section 6.02. Collection of Money. Except as otherwise expressly provided herein, the Indenture Trustee may demand payment or delivery of all money
and other property payable to or receivable by the Indenture Trustee pursuant to this Agreement, including (a) all payments due on the Mortgage Loans in accordance with the respective terms and conditions of such Mortgage Loans and required to be
paid over to the Indenture Trustee by the Master Servicer and (b) Insured Amounts. The Indenture Trustee shall hold all such money and property received by it, as part of the Trust Estate and shall apply it as provided in the Indenture. 

 
 Section 6.03. Application of Principal and Interest. In the event
that Net Liquidation Proceeds on a Liquidated Mortgage Loan are less than the Principal Balance of the related Mortgage Loan plus accrued interest thereon, or any Mortgagor makes a partial payment of any Monthly Payment due on a Mortgage Loan, such
Net Liquidation Proceeds or partial payment shall be applied to payment of the related Mortgage Note as provided therein, and if not so provided, first to interest accrued at the Mortgage Interest Rate and then to principal. 
  
 Section 6.04. [Reserved]. 
  
 Section 6.05. Compensating Interest. Not later than the Servicer
Remittance Date, the Master Servicer shall remit to the Indenture Trustee (without right to reimbursement therefor) for deposit into the related Payment Account, an amount equal to, for all of the Mortgage Loans, the lesser of (a) the Prepayment
Interest Shortfalls for all of the Mortgage Loans for the related 

  

 46 

 
Payment Date resulting from Principal Prepayments in full during the related Prepayment Period and (b) its aggregate Servicing Fee with respect to all of the
Mortgage Loans for the related Due Period (the “Compensating Interest”). 
  
 Section 6.06. Effect of Payments by the Note Insurer; Subrogation. Anything herein to the contrary notwithstanding, any payment with respect to principal of or interest on the Notes which is made with moneys
received pursuant to the terms of the Note Insurance Policy shall not be considered payment of the Notes from the Trust Estate. The Seller, the Sponsor, the Master Servicer, the Backup Servicer, the Trust and the Indenture Trustee acknowledge and
agree, that without the need for any further action on the part of the Note Insurer, the Seller, the Sponsor, the Master Servicer, the Backup Servicer, the Trust, the Indenture Trustee or the Note Registrar (a) to the extent the Note Insurer makes
payments, directly or indirectly, on account of principal of or interest on the Notes to the Holders of such Notes, the Note Insurer will be fully subrogated to, and each Noteholder, the Master Servicer, the Backup Servicer, the Seller, the Sponsor,
the Trust and the Indenture Trustee hereby delegate and assign to the Note Insurer, to the fullest extent permitted by law, the rights of such Holders to receive such principal and interest from the Trust Estate, including, without limitation, any
amounts due to the Noteholders in respect of securities law violations arising from the offer and sale of the Notes, and (b) the Note Insurer shall be paid such amounts from the sources and in the manner provided herein for the payment of such
amounts and as provided in the Insurance Agreement. The Indenture Trustee and the Master Servicer shall cooperate in all respects with any reasonable request by the Note Insurer for action to preserve or enforce the Note Insurer’s rights or
interests under this Agreement without limiting the rights or affecting the interests of the Holders as otherwise set forth herein. 
  
 ARTICLE VII 
  
 SERVICER DEFAULT 
  
 Section 7.01. Servicer Events of Default. (a) I. The following events shall each constitute a “Servicer Event of Default” hereunder: 
  
 (i) any failure by the Master Servicer to remit to the Indenture Trustee any payment required to be made by
the Master Servicer under the terms of this Agreement (other than Servicing Advances covered by clause (ii) below and Delinquency Advances, which shall have no cure period), which continues unremedied for one (1) Business Day after the date upon
which notice of such failure, requiring the same to be remedied, shall have been given to the Master Servicer by the Indenture Trustee or to the Master Servicer and Indenture Trustee by the Note Insurer or Noteholders affected thereby evidencing
Percentage Interests of at least 25%; provided however that any failed remittance cured within one Business Day of such failure shall include interest accrued at the Prime Rate (as set forth in the Wall Street Journal) on the amount of such
remittance from and including the date the remittance was required to be made to and including the date the remittance was actually made; 
  
 (ii) the failure by the Master Servicer to make any required Servicing Advance, which failure continues unremedied for a period of thirty
(30) days after the date on which written notice of such failure, requiring the same to be remedied, shall 

  

 47 

	 	 
have been given to the Master Servicer by the Indenture Trustee or to the Master Servicer and the Indenture Trustee by the Note Insurer or Noteholders
affected thereby evidencing Percentage Interests of at least 25%; 

  
 (iii) any failure on the part of the Master Servicer duly to observe or perform in any material respect any other of the covenants or
agreements on the part of the Master Servicer contained in this Agreement, or the failure of any representation and warranty made pursuant to Section 3.01(a) hereof to be true and correct which continues unremedied for a period of thirty (30) days
after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Master Servicer by the Indenture Trustee or to the Master Servicer and the Indenture Trustee by the Note Insurer or Noteholders
affected thereby evidencing Percentage Interests of at least 25%; 
  
 (iv) a decree or order of a court or agency or supervisory authority having jurisdiction in an involuntary case under any present or future federal or state bankruptcy, insolvency or similar law or for the appointment
of a conservator or receiver or liquidation in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of its affairs, shall have been entered against the Master
Servicer and such decree or order shall have remained in force, undischarged or unstayed for a period of ninety (90) days; 
  
 (v) the Master Servicer shall consent to the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings of or relating to the Master Servicer or of or relating to all or substantially all of the Master Servicer’s property; 
  
 (vi) the Master Servicer shall admit in writing its
inability generally to pay its debts as they become due, file a petition to take advantage of any applicable insolvency or reorganization statute, make an assignment for the benefit of its creditors, or voluntarily suspend payment of its
obligations; 
  
 (vii) the Note Insurer shall
notify the Indenture Trustee of any “event of default” under the Insurance Agreement; 
  
 (viii) if on any Payment Date the Rolling Six Month Delinquency Rate exceeds 14.0%; 
  
 (ix) if on any Payment Date, the Cumulative Loan Loss
Percentage exceeds the following percentages on any Payment Date during the following periods: 
  

				
	 Payment Date Occurring During

	  	Percentage

	 
	 June 2004 - May 2006
	  	1.70	%
	 June 2006 - May 2007
	  	2.50	%
	 June 2007 - May 2008
	  	3.20	%
	 June 2008 and thereafter
	  	4.50	%

  

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 (x) if the total stockholders’ equity of the Master Servicer, as determined by the
Master Servicer’s independent accountants in accordance with generally accepted accounting principles, shall be less than $60 million; 
  
 (xi) if the total on- or off-balance sheet financing available to the Master Servicer shall be less than $400 million; or 
  
 (xii) the occurrence of an Event of Default under the
Indenture. 
  
 II. The following events shall
each constitute a “Backup Servicer Event of Default” hereunder: 
  
 (i) any failure on the part of the Backup Servicer duly to observe or perform in any material respect any other of the covenants or agreements on the part of the Backup Servicer contained in this Agreement, or the
failure of any representation and warranty made pursuant to Section 3.03(a) hereof to be true and correct which continues unremedied for a period of thirty (30) days after the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Backup Servicer by the Indenture Trustee or to the Backup Servicer and the Indenture Trustee by the Note Insurer or Noteholders affected thereby evidencing Percentage Interests of at least 25%; 
  
 (ii) a decree or order of a court or agency or supervisory
authority having jurisdiction in an involuntary case under any present or future federal or state bankruptcy, insolvency or similar law or for the appointment of a conservator or receiver or liquidation in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of its affairs, shall have been entered against the Backup Servicer and such decree or order shall have remained in force, undischarged or unstayed
for a period of ninety (90) days; 
  
 (iii) the
Backup Servicer shall consent to the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings of or relating to the Backup Servicer or of or relating
to all or substantially all of the Backup Servicer’s property; and 
  
 (iv) the Backup Servicer shall admit in writing its inability generally to pay its debts as they become due, file a petition to take advantage of any applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors, or voluntarily suspend payment of its obligations. 
  
 So long as a Servicer Event of Default shall have occurred and not have been remedied: (x) with respect solely to Section 7.01(a)(I)(i), if such payment is in respect of Delinquency Advances or Compensating Interest
owing by the Master Servicer and such payment is not made by 12:00 noon New York time on the second Business Day prior to the applicable Payment Date, the Indenture Trustee, upon receipt of written notice or discovery by a Responsible Officer of the
Indenture Trustee of such failure, shall give immediate telephonic and facsimile notice of such failure to a Servicing Officer of the Master Servicer and the Backup Servicer and to the Note Insurer, and the Indenture Trustee may, with the consent of
the Note Insurer, and shall, at the direction of the Note Insurer, terminate all of the rights and obligations of the Master Servicer 

  

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under this Agreement, except for the Master Servicer’s indemnification obligation under Section 5.19, and the Backup Servicer, the Indenture Trustee (if
it is the successor master servicer) or a successor master servicer appointed in accordance with Section 7.02, shall immediately make such Delinquency Advance or payment of Compensating Interest as provided in Section 7.02 and assume, pursuant to
Section 7.02 hereof, the duties of a successor master servicer; (y) with respect to that portion of Section 7.01(a)(I)(i) not referred to in the preceding clause (x) and with respect to clauses (ii), (iii), (iv), (v), (vi) and (xii) of Section
7.01(a)(I) or clauses (i) through (iv) of Section 7.01(a)(II), upon receipt of written notice or actual knowledge by a Responsible Officer of the Indenture Trustee, the Indenture Trustee shall, but only at the direction of the Note Insurer or the
Majority Noteholders, by notice in writing to the Master Servicer, the Backup Servicer and a Responsible Officer of the Indenture Trustee and subject to the prior written consent of the Note Insurer in the case of any removal at the direction of the
Majority Noteholders, and in addition to whatever rights such Noteholders may have at law or equity to damages, including injunctive relief and specific performance, terminate all the rights and obligations of the Master Servicer or Backup Servicer,
as applicable, under this Agreement, except for the Master Servicer’s indemnification obligations under Section 5.19, and in and to the Mortgage Loans and the proceeds thereof, as Master Servicer; and (z) with respect to clauses (vii)-(xi) of
Section 7.01(a)(I), upon receipt of written notice or actual knowledge by a Responsible Officer of the Indenture Trustee, the Indenture Trustee shall, but only at the direction of the Note Insurer, after notice in writing to the Master Servicer, the
Backup Servicer and a Responsible Officer of the Indenture Trustee, terminate all the rights and obligations of the Master Servicer under this Agreement, except for the Master Servicer’s indemnification obligations under Section 5.19, and in
and to the Mortgage Loans and the proceeds thereof, as Master Servicer. Upon receipt by the Master Servicer of such written notice, all authority and power of the Master Servicer under this Agreement, whether with respect to the Mortgage Loans or
otherwise, shall, subject to Section 7.02, pass to and be vested in the Backup Servicer, or another successor master servicer selected by the Note Insurer, and the Backup Servicer or another successor master servicer is hereby authorized and
empowered to execute and deliver, on behalf of the Master Servicer, as attorney-in-fact or otherwise, at the expense of the Master Servicer, any and all documents and other instruments and do or cause to be done all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, including, but not limited to, the transfer and endorsement or assignment of the Mortgage Loans and related documents. The Master Servicer agrees to cooperate (and to pay any related
costs and expenses) with the Indenture Trustee and the Backup Servicer or another successor master servicer in effecting the termination of the Master Servicer’s responsibilities and rights hereunder, including, without limitation, the transfer
to the Backup Servicer or another successor master servicer, for administration by it of all amounts which shall at the time be credited by the Master Servicer to the Collection Account or thereafter received with respect to the Mortgage Loans. The
Indenture Trustee shall promptly notify the Note Insurer and the Rating Agencies of the occurrence of a Servicer Event of Default upon discovery or receipt of notice by a Responsible Officer of the Indenture Trustee; provided, however, the Indenture
Trustee shall not be obligated to monitor the Master Servicer’s compliance with the terms hereof or to determine the occurrence of any Servicer Event of Default. 
  
 Section 7.02. Backup Servicer to Act: Appointment of Successor. (a) (i) On and after the time the Master Servicer
receives a notice of termination pursuant to Section 7.01, or the Indenture Trustee receives the resignation of the Master Servicer evidenced by an Opinion of 

  

 50 

 
Counsel pursuant to Section 5.21, or the Master Servicer is removed as Master Servicer pursuant to this Article VII, in which event the Indenture Trustee
shall promptly notify the Rating Agencies, and except as otherwise provided in this Section 7.02, the Backup Servicer (provided the Backup Servicer receives 20 days’ prior written notice) or another successor master servicer selected by the
Note Insurer shall be the successor in all respects to the Master Servicer in its capacity as master servicer under this Agreement and the transactions set forth or provided for in this Agreement, and shall be subject to all the responsibilities,
restrictions, duties, liabilities and termination provisions relating thereto placed on the Master Servicer by the terms and provisions of this Agreement. The Backup Servicer or another successor master servicer and the Indenture Trustee shall take
such action, consistent with this Agreement, as shall be necessary to effect any such succession. If the Backup Servicer or any other successor master servicer is acting as Master Servicer hereunder, it shall be subject to termination under Section
7.01 upon the occurrence or continuation of a Servicer Event of Default applicable to it as Master Servicer. The Backup Servicer hereby agrees to act as successor master servicer pursuant to the terms of this Agreement upon the termination or
resignation of the Master Servicer as provided in this Section 7.02, provided that the Backup Servicer receives all of the necessary documents relating to the Mortgage Loans and computer records reflecting the status of the Mortgage Loans as of the
date of such transfer of servicing. The Backup Servicer will not be obligated to incur any expenses or costs (including, without limitation, legal fees and the preparation and recording of all intervening assignments of mortgage) in connection with
the transfer of servicing of the Mortgage Loans to the Backup Servicer, or to compel the performance of any obligations by any party to this Agreement. Any successor master servicer and the Backup Servicer prior to its becoming the successor master
servicer shall not be liable for any actions, omissions or defaults of any master servicer prior to it or breaches of representations and warranties of the master servicer prior to it. The Backup Servicer or any other successor master servicer, as
successor master servicer, shall be obligated to pay Compensating Interest pursuant to Section 6.05 in any event and to make Delinquency Advances pursuant to Section 5.18 unless, and only to the extent the Backup Servicer determines reasonably and
in good faith that such advances would not be recoverable from the proceeds of the related Mortgage Loan pursuant to Section 5.03, such determination to be evidenced by a certification of a Responsible Officer of the Backup Servicer delivered to the
Note Insurer. Furthermore, the Backup Servicer shall not be obligated to fund any resulting discrepancy or shortfall in the Collection Account. Upon the transfer of the servicing of the Mortgage Loans, the Indenture Trustee shall provide the Backup
Servicer with an officer’s certificate that contains: (i) a complete description of all Events of Default by the Master Servicer under the Agreement actually known by the Indenture Trustee which have not been fully cured and (ii) confirmation
that the Servicer Remittance Report and the reports described in Sections 5.09 and 5.10 have been timely filed by the Master Servicer with the Indenture Trustee. 
  
 (ii) In the event that the Backup Servicer is terminated or resigns pursuant to this Agreement or otherwise
becomes unable to perform its obligations under this Agreement, the Note Insurer may (or if the Note Insurer fails to do so promptly the Indenture Trustee will) appoint a successor backup servicer in accordance with the provisions of this Section
7.02; provided, that any successor backup servicer, shall satisfy the requirements set forth in Section 7.02(b) and shall be approved by the Rating Agencies and the Note Insurer. 
  

 51 

 (b) Any successor master servicer or successor backup servicer hereunder (other than the
Indenture Trustee) shall be a housing and home finance institution, bank or mortgage servicing institution which has been designated as an approved seller-servicer by Fannie Mae or Freddie Mac, having equity of not less than $5,000,000 as determined
in accordance with GAAP, as the successor to the Master Servicer or the Backup Servicer hereunder in the assumption of all or any part of the responsibilities, duties or liabilities of the Master Servicer or the Backup Servicer, as applicable,
hereunder. 
  
 (c) In the event the Backup
Servicer is the successor master servicer, it shall be entitled to the same Servicing Compensation (including the Servicing Fee as adjusted pursuant to the definition thereof) and other funds pursuant to Section 5.08 hereof as the Master Servicer if
the Master Servicer had continued to act as master servicer hereunder, and shall continue to be entitled to the Backup Servicing Fee. 
  
 (d) The Indenture Trustee, the Backup Servicer and any successor master servicer or backup servicer shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession. The Master Servicer agrees to cooperate with the Indenture Trustee, the Backup Servicer and any successor master servicer in effecting the termination of the Master
Servicer’s servicing responsibilities and rights hereunder and shall promptly provide the Indenture Trustee, the Backup Servicer or such successor master servicer, as applicable, at the Master Servicer’s cost and expense, all documents and
records reasonably requested by it to enable it to assume the Master Servicer’s functions hereunder and shall promptly also transfer to the Indenture Trustee, the Backup Servicer or such successor master servicer, as applicable, all amounts
that then have been or should have been deposited in the Collection Account by the Master Servicer or that are thereafter received with respect to the Mortgage Loans, including without limitation all Liquidation Proceeds and Insurance Proceeds, and
payments of insurance deductible amounts by the Master Servicer pursuant to Section 5.04(b) with respect to all insurance claims arising during the Master Servicer’s tenure. Any collections received by the Master Servicer after such removal or
resignation shall be endorsed by it to the Backup Servicer or (if the Backup Servicer is not the successor master servicer) to the Indenture Trustee and remitted directly to the Backup Servicer or the Indenture Trustee, as applicable (or, at the
direction of the Indenture Trustee, to any other successor master servicer). Neither the Backup Servicer, the Indenture Trustee nor any other successor master servicer shall be held liable by reason of any failure to make, or any delay in making,
any payment hereunder or any portion thereof caused by (i) the failure of the Master Servicer to deliver, or any delay in delivering, cash, documents or records to it, or (ii) restrictions imposed by any regulatory authority having jurisdiction over
the Master Servicer hereunder. Notwithstanding anything to the contrary herein, no appointment of a successor master servicer under this Agreement shall be effective until the Note Insurer shall have consented thereto, and written notice of such
proposed appointment shall have been provided by the Indenture Trustee to the Note Insurer and the Backup Servicer. The Indenture Trustee shall not resign as Master Servicer until a successor master servicer reasonably acceptable to the Note Insurer
has been appointed. The Note Insurer shall have the right to remove the Indenture Trustee as successor Master Servicer under this Section 7.02 without cause, and the Indenture Trustee shall appoint such other successor master servicer as directed by
the Note Insurer. 
  

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 (e) In the event that the Master Servicer is terminated hereunder and no Backup Servicer
is obligated to act as successor master servicer and no other successor master servicer has been appointed hereunder, the Indenture Trustee may appoint a successor master servicer (which may be an affiliate of the Indenture Trustee) or petition a
court of competent jurisdiction to appoint a successor master servicer. Pending appointment of such a successor master servicer hereunder, the Indenture Trustee shall be the successor master servicer and act in such capacity; provided, however, that
the Indenture Trustee, in its capacity as successor master servicer pending appointment of another successor master servicer, (i) shall be obligated to make Delinquency Advances or Servicing Advances only to the extent that the Indenture Trustee
deems such advances to be recoverable, (ii) shall be obligated to make Compensating Interest payments in respect of any Payment Date only to the extent of any Servicing Fee received by the Indenture Trustee in respect of such Payment Date, (iii)
shall not be obligated to perform any other duties or obligations of the Master Servicer hereunder until the Indenture Trustee has received all master servicing records and files from the predecessor master servicer or backup servicer and in no
event later than 90 days following the termination of the Master Servicer; provided, however, the Indenture Trustee shall use its reasonable efforts to perform the duties and obligations of the Master Servicer prior to the end of such 90 day period,
(iv) shall not be obligated to perform any of the administrative duties specified in Section 5.23 hereof, and (v) shall be entitled to payment of all Servicing Compensation and the Backup Servicing Fee. In connection with any appointment and
assumption of duties of a successor master servicer, the Indenture Trustee may make such arrangements for the compensation of such successor master servicer out of payments on Mortgage Loans as the Note Insurer and such successor shall agree;
provided, however, that such compensation may not be in excess of that permitted the Master Servicer pursuant to Section 5.08, together with other Servicing Compensation and the Backup Servicing Fee. The Master Servicer, the Indenture Trustee and
such successor Master Servicer shall take such action, consistent with this Agreement, as shall be necessary to effectuate any such succession. 
  
 (f) In the event the Backup Servicer, the Indenture Trustee, or any successor master servicer incurs out-of-pocket expenses other than
Servicing Advances or Delinquency Advances in connection with the transfer of master servicing hereunder, which expenses are required to be borne by the Master Servicer hereunder, and such expenses are not promptly reimbursed by the Master Servicer
or recoverable out of amounts reimbursable to the Master Servicer out of the Collection Account, the Indenture Trustee shall make such reimbursement to the applicable party out of funds in each Payment Account on any Payment Date after all Payments
to Noteholders on such Payment Date have been made and the Reserve Payment Amount has been made to the Reserve Account but before any distribution to the Certificateholders. The right of the Indenture Trustee to reimbursement from any Payment
Account for any of the Indenture Trustee’s costs and expenses in connection with the transfer of any master servicing hereunder shall be in addition to any rights of the Indenture Trustee to indemnification and reimbursement under the
Indenture. 
  
 (g) In the event that the Master
Servicer is terminated or resigns hereunder, and at such time the Master Servicer has made unreimbursed Delinquency Advances or Servicing Advances out of its own funds, 
  

 53 

 (i) any such Delinquency Advances or Servicing Advances shall be allocated by the
successor master servicer in whole or in part to specific Mortgage Loans which are delinquent at the time of the transfer of master servicing, which allocation shall be based on loan-level accounts of the portion of each Delinquency Advance or
Servicing Advance which has been funded by the Master Servicer from its own funds consistently maintained by the former Master Servicer, or, if no such accounts exist, then in the successor master servicer’s discretion; 
  
 (ii) following the transfer of master servicing, the
successor master servicer shall reimburse the former Master Servicer for such Delinquency Advances and Servicing Advances in accordance with the allocations determined in accordance with clause (i) above only out of the proceeds of the Mortgage
Loans to which they relate and otherwise subject to Section 5.03, or, to the extent the successor master servicer determines any such Delinquency Advance or Servicing Advance to be a Nonrecoverable Advance, out of any funds in the Collection
Account. 
  
 (h) In connection with the
termination or resignation of the Master Servicer hereunder, the successor Master Servicer shall represent and warrant that it is a member of MERS in good standing and shall agree to comply in all material respects with the rules and procedures of
MERS in connection with the servicing of the Mortgage Loans that are registered with MERS, in which case the predecessor Master Servicer shall cooperate with the successor Master Servicer in causing the MERS System to be revised to reflect the
transfer of servicing to the successor Master Servicer as necessary under MERS’ rules and regulations. 
  
 Section 7.03. Waiver of Defaults. The Note Insurer or the Majority Noteholders may, on behalf of all Noteholders, and subject to the consent of the
Note Insurer, waive any events permitting removal of the Master Servicer as master servicer pursuant to this Article VII; provided, however, that the Majority Noteholders may not waive a default in making a required payment on a Note
without the consent of the Holder of such Note. Upon any waiver of a past default, such default shall cease to exist, and any Servicer Event of Default arising therefrom shall be deemed to have been remedied for every purpose of this Agreement. No
such waiver shall extend to any subsequent or other default or impair any right consequent thereto except to the extent expressly so waived. Notice of any such waiver shall be given by the Indenture Trustee to the Rating Agencies and the Note
Insurer. 
  
 Section 7.04. Rights of the Note Insurer to
Exercise Rights of the Noteholders. By accepting its Note, each Noteholder agrees that unless a Note Insurer Default exists, the Note Insurer shall be deemed to be the Noteholders for all purposes (other than with respect to the receipt of
payment on the Notes) and shall have the right to exercise all rights of the Noteholders under this Agreement and under the Notes without any further consent of the Noteholders, including, without limitation: 
  
 (a) the right to require the Sponsor to repurchase or
substitute Mortgage Loans pursuant to Sections 2.06 and 4.02 hereof to the extent set forth therein; 
  

 54 

 (b) the right to give notices of breach or to terminate the rights and obligations of the
Master Servicer as master servicer pursuant to Section 7.01 hereof and to consent to or direct waivers of Master Servicer defaults pursuant to Section 7.03 hereof; 
  
 (c) the right to direct the actions of the Indenture Trustee during the continuance of a Servicer Event of
Default pursuant to Sections 7.01 and 7.02 hereof; 
  
 (d) the right to institute proceedings against the Master Servicer pursuant to Section 7.01 hereof; 
  
 (e) the right to remove the Indenture Trustee pursuant to Section 6.09 of the Indenture; 
  
 (f) the right to direct foreclosures upon the failure of the
Master Servicer to do so in accordance with the provisions of Section 5.06 of this Agreement; and 
  
 (g) any rights or remedies expressly given the Majority Noteholders. 
  
 In addition, each Noteholder agrees that, subject to Section 10.02, unless a Note Insurer Default exists, the rights
specifically enumerated above may only be exercised by the Noteholders with the prior written consent of the Note Insurer. 
  
 Section 7.05. Indenture Trustee To Act Solely with Consent of the Note Insurer. Unless a Note Insurer Default exists, the Indenture Trustee shall
not, without the Note Insurer’s consent or unless directed by the Note Insurer: 
  
 (a) terminate the rights and obligations of the Master Servicer as master servicer pursuant to Section 7.01 hereof; 
  
 (b) agree to any amendment pursuant to Section 10.03 hereof;
or 
  
 (c) undertake any litigation on behalf of
the Noteholders; provided, however, that this clause (c) will not be construed to limit the Indenture Trustee’s right to undertake litigation on its own behalf. 
  
 The Note Insurer may, in writing and in its sole discretion renounce all or any of its rights under Sections 7.04, 7.05 or
7.06 or any requirement for the Note Insurer’s consent for any period of time. 
  
 Section 7.06. Mortgage Loans, Trust Estate and Accounts Held for Benefit of the Note Insurer. (a) The Indenture Trustee shall hold the Trust Estate and the Indenture Trustee’s Mortgage Files, for the
benefit of the Noteholders and the Note Insurer, and all references in this Agreement, the Notes and in any of the other Basic Documents to the benefit of Noteholders shall be deemed to include the Note Insurer. The Indenture Trustee shall cooperate
in all reasonable respects with any reasonable request by the Note Insurer for action to preserve or enforce the Note Insurer’s rights or interests under this Agreement, the Notes and in any of the Basic Documents unless, as stated in an
Opinion of Counsel addressed to the Indenture Trustee 

  

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and the Note Insurer, such action is adverse to the interests of the Noteholders or diminishes the rights of the Noteholders or imposes additional burdens or
restrictions on the Noteholders. 
  
 (b) The
Master Servicer hereby acknowledges and agrees that it shall service the Mortgage Loans for the benefit of the Noteholders and for the benefit of the Note Insurer, and all references in this Agreement and in any of the other Basic Documents to the
benefit of or actions on behalf of the Noteholders shall be deemed to include the Note Insurer. 
  
 Section 7.07. Note Insurer Default. During the continuation of a Note Insurer Default, rights granted or reserved to the Note Insurer hereunder
shall vest instead in the Noteholders; provided, that the Note Insurer shall be entitled to any distributions of reimbursements as set forth in the Indenture and the Insurance Agreement and the Note Insurer shall retain those rights under Section
10.03 to consent to any amendment of this Agreement. 
  
 At such
time as either (i) the outstanding Note Principal Balance of the Notes has been reduced to zero or (ii) the Note Insurance Policy has been terminated and in either case of (i) or (ii) the Note Insurer has been reimbursed for all amounts owed under
the Note Insurance Policy and the Insurance Agreement (and the Note Insurer no longer has any obligation under the Note Insurance Policy, except for breach thereof by the Note Insurer), then the rights and benefits granted or reserved to the Note
Insurer hereunder (including the rights to direct certain actions and receive certain notices) shall terminate and the Certificateholders shall be entitled to the exercise of such rights and to receive such benefits of the Note Insurer following
such termination to the extent that such rights and benefits are applicable to the Certificateholders. 
  
 ARTICLE VIII 
  
 TERMINATION 
  
 Section 8.01. Termination.
(a) Subject to Section 8.02, this Agreement shall terminate upon notice to the Indenture Trustee of either: (i) the disposition of all funds with respect to the last Mortgage Loan and the remittance of all funds due hereunder and the payment of all
amounts due and payable to the Note Insurer and the Indenture Trustee or (ii) mutual consent of the Owner Trustee, on behalf of the Trust, at the direction of all the Certificateholders, the Indenture Trustee, the Master Servicer, the Note Insurer
and all Noteholders in writing. 
  
 (b) In
addition, subject to Section 8.02, the Sponsor may, at its sole option, cost and expense, terminate the Trust in accordance with the terms of Section 10.01 of the Indenture. 
  
 (c) If on any date, the Master Servicer determines that there are no outstanding Mortgage Loans and no other
funds or assets in the Trust Estate other than funds in the Payment Accounts, the Master Servicer shall send a final payment notice promptly to the Indenture Trustee, who shall forward notice to each Noteholder in accordance with Section 8.01(d).

  
 (d) Notice of any termination, specifying the
Payment Date upon which the Trust will terminate and the Noteholders shall surrender their Notes to the Indenture Trustee for final payment and cancellation, shall be given promptly by the Master Servicer to the Indenture 

  

 56 

 
Trustee, who shall forward the notice by letter to Noteholders mailed during the month of such final payment before the Servicer Remittance Date in such
month, specifying (i) the Payment Date upon which final payment of the Notes will be made upon presentation and surrender of Notes at the office of the Indenture Trustee therein designated, (ii) the amount of any such final payment and (iii) that
the Record Date otherwise applicable to such Payment Date is not applicable, payments being made only upon presentation and surrender of the Notes at the office of the Indenture Trustee therein specified. The obligations of the Note Insurer
hereunder shall terminate upon the deposit by the Sponsor with the Indenture Trustee of a sum sufficient to purchase all of the Mortgage Loans and REO Properties as set forth in Section 10.01 of the Indenture or when the Note Principal Balance of
the Notes has been reduced to zero. 
  
 (e) In
the event that all of the Noteholders do not surrender their Notes for cancellation within six (6) months after the time specified in the above-mentioned written notice, the Indenture Trustee shall give a second written notice to the remaining
Noteholders to surrender their Notes for cancellation and receive the final payment with respect thereto. If within six (6) months after the second notice, all of the Notes shall not have been surrendered for cancellation, the Indenture Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps, to contact the remaining Noteholders concerning surrender of their Notes and the cost thereof shall be paid out of the funds and other assets which remain subject hereto. If
within nine (9) months after the second notice all the Notes shall not have been surrendered for cancellation, the Certificateholders shall be entitled to all unclaimed funds and other assets which remain subject hereto and the Indenture Trustee
upon transfer of such funds shall be discharged of any responsibility for such funds and the Noteholders shall look only to the Certificateholders for payment and not to the Note Insurer. Such funds shall remain uninvested. 
  
 Section 8.02. Additional Termination Requirements. By their acceptance
of the Notes, the Holders thereof hereby agree to appoint the Master Servicer as their attorney in fact to: (i) adopt a plan of complete liquidation (and the Noteholders hereby appoint the Indenture Trustee as their attorney in fact to sign such
plan) as appropriate or upon the written request of the Note Insurer and (ii) to take such other action in connection therewith as may be reasonably required to carry out such plan of complete liquidation all in accordance with the terms hereof.

  
 Section 8.03. Accounting Upon Termination of Master
Servicer. Upon termination of the Master Servicer, the Master Servicer shall, at its expense: 
  
 (a) deliver to the successor master servicer or, if none shall yet have been appointed, to the Indenture Trustee, the funds in any Account
administered by the Master Servicer; 
  
 (b)
deliver to the successor master servicer or, if none shall yet have been appointed, to the Indenture Trustee all Mortgage Files and related documents and statements held by it hereunder and a Mortgage Loan portfolio computer tape (such delivery to
take place within 24 hours if the successor master servicer is the Backup Servicer); 
  
 (c) deliver to the successor master servicer, or, if none shall yet have been appointed, to the Indenture Trustee a full accounting of all
funds, including a statement showing 

  

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the Monthly Payments collected by it and a statement of monies held in trust by it for the payments or charges with respect to the Mortgage Loans; and

  
 (d) execute and deliver such instruments and
perform all acts reasonably requested in order to effect the orderly and efficient transfer of servicing of the Mortgage Loans to the successor master servicer and to more fully and definitively vest in such successor all rights, powers, duties,
responsibilities, obligations and liabilities of the Master Servicer under this Agreement. 
  
 Section 8.04. Termination of Backup Servicer as Successor Master Servicer. In the event the Backup Servicer becomes the successor master servicer and is terminated for reasons other than the occurrence of a
Servicer Event of Default, then the Backup Servicer will be entitled to a release fee of $10.00 per Mortgage Loan (subject to a minimum of $5,000.00). 
  
 ARTICLE IX 
  
 [RESERVED] 
  
 ARTICLE X 
  
 MISCELLANEOUS PROVISIONS

  
 Section 10.01. Limitation on Liability. (a) None of
the Trust, the Owner Trustee, the Seller, the Sponsor, the Master Servicer, the Backup Servicer, the Indenture Trustee or any of the directors, officers, employees or agents of such Persons shall be under any liability to the Trust, the Noteholders
or the Note Insurer for any action taken, or for refraining from the taking of any action, in good faith pursuant to this Agreement, or for errors in judgment; provided, however, that this provision shall not protect the Trust, the
Owner Trustee, the Seller, the Sponsor, the Master Servicer, the Backup Servicer, the Indenture Trustee or any such Person against liability for any breach of warranties or representations made herein by such party, or against any specific liability
imposed on each such party pursuant to this Agreement or against any liability which would otherwise be imposed upon such party by reason of willful misfeasance, bad faith or negligence in the performance of duties or by reason of failure to perform
its obligations or duties hereunder. The Trust, the Owner Trustee, the Seller, the Sponsor, the Master Servicer, the Backup Servicer, the Indenture Trustee and any director, officer, employee or agent of such Person may rely in good faith on any
document of any kind which, prima facie, is properly executed and submitted by any appropriate Person respecting any matters arising hereunder. 
  
 (b) It is expressly understood and agreed by the parties hereto that (i) this Agreement is executed and delivered by Wilmington Trust
Company, not individually or personally but solely as Owner Trustee under the Trust Agreement, in the exercise of the powers and authority conferred and vested in it under the Trust Agreement, (ii) each of the representations, undertakings and
agreements herein made on the part of the Trust is made and intended not as personal representations, undertakings and agreements by Wilmington Trust Company but is made and intended for the purpose for binding only the Trust, (iii) nothing herein
contained shall be construed as creating any liability on Wilmington Trust Company, individually or personally, to perform any covenant either expressed or implied contained herein, 

  

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all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto and (iv) under no
circumstances shall Wilmington Trust Company be personally liable for the payment of any indebtedness or expenses of the Trust or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the
Trust under this Agreement or any other related documents. 
  
 Section 10.02. Acts of Noteholders. (a) Subject to Section 7.04 and except as otherwise specifically provided herein, whenever Noteholder action, consent or approval is required under this Agreement, such action, consent or approval
shall be deemed to have been taken or given on behalf of, and shall be binding upon, all Noteholders if the Majority Noteholders or the Note Insurer agrees to take such action or give such consent or approval. 
  
 (b) The death or incapacity of any Noteholder shall not
operate to terminate this Agreement or the Trust, nor entitle such Noteholder’s legal representatives or heirs to claim an accounting or to take any action or proceeding in any court for a partition or winding up of the Trust, nor otherwise
affect the rights, obligations and liabilities of the parties hereto or any of them. 
  
 (c) No Noteholder shall have any right to vote (except as expressly provided for herein) or in any manner otherwise control the operation
and management of the Trust, or the obligations of the parties hereto, nor shall anything herein set forth, or contained in the terms of the Notes, be construed so as to constitute the Noteholders from time to time as partners or members of an
association; nor shall any Noteholder be under any liability to any third person by reason of any action taken by the parties to this Agreement pursuant to any provision hereof. 
  
 Section 10.03. Amendment. (a) This Agreement may be amended from time to time by the Owner Trustee, on behalf of the
Trust, the Master Servicer, the Seller, Sponsor, the Backup Servicer and the Indenture Trustee by written agreement, upon the prior written consent of the Note Insurer, without notice to or consent of the Noteholders to cure any ambiguity, to
correct or supplement any provisions herein, to comply with any changes in the Code, or to make any other provisions with respect to matters or questions arising under this Agreement which shall not be inconsistent with the provisions of this
Agreement; provided, however, that such action shall not adversely affect in any material respect the interests of any Noteholder and will not prevent the Notes from being characterized as debt for United States federal income tax
purposes or cause the Issuer to be characterized as an association (or a publicly traded partnership) taxable as a corporation or a taxable mortgage pool for United States federal income tax purposes, as evidenced by (i) an Opinion of Counsel, at
the expense of the party requesting the change, delivered to the Indenture Trustee to such effect or (ii) a letter from each Rating Agency confirming that such action will not result in the reduction, qualification or withdrawal of the then-current
ratings on the Notes (without taking into account the Note Insurance Policy). The Indenture Trustee shall give prompt written notice to the Rating Agencies of any amendment made pursuant to this Section 10.03. 
  
 (b) This Agreement may be amended from time to time by the
Owner Trustee, on behalf of the Trust, the Master Servicer, the Seller, the Sponsor, the Backup Servicer and the Indenture Trustee, with the consent of the Note Insurer, the Noteholders representing at least 51% of the outstanding Principal Balance
of the Notes of each affected Class and all of the 

  

 59 

 
Certificateholders; provided, however, that no such amendment shall reduce in any manner the amount of, or delay the timing of, payments
received on Mortgage Loans which are required to be paid on either Class of Notes without the consent of the Holders of such Class of Notes or reduce the percentage for the Holders of which are required to consent to any such amendment without the
consent of the Holders of 100% of such Class of Notes affected thereby. 
  
 (c) It shall not be necessary for the consent of Holders under this Section 10.03 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent shall approve the substance
thereof. 
  
 (d) In executing, or accepting the
additional trusts created by, any supplemental indenture permitted by Article IX of the Indenture or the modifications thereby of the trusts created by the Indenture, the Indenture Trustee shall be entitled to receive, and (subject to Section 6.01
of the Indenture) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by the Indenture. The Indenture Trustee may, but shall not be obligated to, enter
into any such supplemental indenture that affects the Indenture Trustee’s own rights, duties or immunities under the Indenture or otherwise. The Master Servicer, on behalf of the Trust, shall cause executed copies of any supplemental indentures
to be delivered to the Note Insurer and the Rating Agencies. 
  
 Section 10.04. Recordation of Agreement. To the extent permitted by applicable law, this Agreement, or a memorandum thereof if permitted under applicable law, is subject to recordation in all appropriate public offices for real
property records in all of the counties or other comparable jurisdictions in which any or all of the properties subject to the Mortgages are situated, and in any other appropriate public recording office or elsewhere, such recordation to be effected
by the Master Servicer at the Noteholders’ expense on direction and at the expense of Majority Noteholders requesting such recordation, but only when accompanied by an Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interests of the Noteholders or is necessary for the administration or servicing of the Mortgage Loans. 
  
 Section 10.05. Duration of Agreement. This Agreement shall continue in existence and effect until terminated as herein provided. 
  
 Section 10.06. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given when delivered to (i) in the case of the Master Servicer, Accredited Home Lenders, Inc., 15090 Avenue of Science, San Diego, California 92128, Attention: Director of
Operations with a copy to General Counsel; (ii) in the case of the Backup Servicer, Countrywide Home Loans Servicing LP, 450 Countrywide Way, MS SV3-A, Simi Valley, California 93065; (iii) in the case of the Trust, Accredited Mortgage Loan Trust
2004-2, c/o the Owner Trustee at its Corporate Trust Office, Attention: Corporate Trust Administration; (iv) in the case of the Indenture Trustee, LaSalle Bank National Association, 135 South LaSalle Street, Suite 1625, Chicago, IL 60603, Attn:
Global Securitization Trust Services Group - Accredited 2004-2; (v) in the case of the Sponsor, Accredited Home Lenders, Inc., 15090 Avenue of Science, San Diego, California 92128, Attention: Investor Reporting; (vi) in the case of the Underwriter,
Credit Suisse First Boston LLC, Eleven Madison Avenue, 5th Floor, New York, New York 10010-3629, Attention: 

  

 60 

 
Transactions Advisory Group; (vii) in the case of the Note Insurer, Financial Guaranty Insurance Company, 125 Park Avenue, New York, New York 10017,
Attention: Research and Risk Management (in each case in which notice or other communication to the Note Insurer refers to an Event of Default, a Servicer Event of Default or a claim on the Note Insurance Policy or with respect to which failure on
the part of the Note Insurer to respond shall be deemed to constitute consent or acceptance, then a copy of such notice or other communication should also be sent to the attention of the General Counsel and shall be marked to indicate “URGENT
MATERIAL ENCLOSED”); (viii) in the case of Standard & Poor’s Rating Services, 55 Water Street, New York, New York 10004, Attention: Residential Mortgage Surveillance Group; (ix) in the case of Moody’s Investors Service, Inc., 99
Church Street, New York, New York 10007, Attention: Keith Wofford; (x) in the case of the Seller, Accredited Mortgage Loan REIT Trust, 15090 Avenue of Science, San Diego, California 92128, Attention: General Counsel and (xi) in the case of the
Noteholders, as set forth in the Note Register. Any such notices shall be deemed to be effective with respect to any party hereto upon the receipt of such notice by such party, except that notices to the Noteholders shall be effective upon mailing
or personal delivery. 
  
 Section 10.07. Severability of
Provisions. If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be held invalid for any reason whatsoever, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other covenants, agreements, provisions or terms of this Agreement. 
  
 Section 10.08. No Partnership. Nothing herein contained shall be
deemed or construed to create a co-partnership or joint venture between the parties hereto and the services of the Master Servicer shall be rendered as an independent contractor and not as agent for the Noteholders. 
  
 Section 10.09. Counterparts. This Agreement may be executed in one or
more counterparts and by the different parties hereto on separate counterparts, each of which, when so executed, shall be deemed to be an original; such counterparts, together, shall constitute one and the same agreement. 
  
 Section 10.10. Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the Trust, the Master Servicer, the Backup Servicer, the Seller, the Sponsor, the Indenture Trustee and the Noteholders and their respective successors and permitted assigns. 
  
 Section 10.11. Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Agreement. 
  
 Section 10.12. No Petition. The Master Servicer and the Backup Servicer, by entering into this Agreement hereby covenant and agree, and the
Noteholders, by the acceptance of their Notes are deemed to covenant and agree, that they will not at any time institute against the Trust, or join in any institution against the Trust of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States Federal or 

  

 61 

 
state bankruptcy law in connection with any obligations relating to the Certificates, the Notes, this Agreement or any of the other Basic Documents.

  
 This Section 10.12 will survive for one year and one day
following the termination of this Agreement. 
  
 Section 10.13.
Third Party Beneficiary. The parties agree that each of the Owner Trustee and the Note Insurer is intended and shall have all rights of a third-party beneficiary of this Agreement. Without limiting the generality of the foregoing, all
covenants and agreements in this Agreement that expressly confer rights upon the Note Insurer shall be for the benefit of and run directly to the Note Insurer, and the Note Insurer shall be entitled to rely on and enforce such covenants to the same
extent as if it were a party to this Agreement. 
  
 Section 10.14.
Intent of the Parties. It is the intent of the parties hereto and Noteholders that, for federal income taxes, state and local income or franchise taxes and other taxes imposed on or measured by income, the Notes be treated as debt. The
parties to this Agreement and the Holder of each Note, by acceptance of its Note, and each Beneficial Owner thereof, agree to treat, and to take no action inconsistent with the treatment of, the related Notes in accordance with the preceding
sentence for purposes of federal income taxes, state and local income and franchise taxes and other taxes imposed on or measured by income. 
  
 Section 10.15. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE OF NEW YORK. 
  
 (b) THE TRUST, THE MASTER SERVICER, THE SELLER, THE SPONSOR, THE BACKUP SERVICER AND THE INDENTURE TRUSTEE HEREBY SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND EACH WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH
SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET FORTH IN SECTION 10.06 HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID.
THE TRUST, THE SELLER, THE SPONSOR, THE MASTER SERVICER, THE BACKUP SERVICER AND THE INDENTURE TRUSTEE EACH HEREBY WAIVE ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION 10.15 SHALL AFFECT THE RIGHT OF THE TRUST, THE SELLER, THE SPONSOR, THE MASTER SERVICER, THE BACKUP SERVICER OR THE INDENTURE TRUSTEE TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT ANY OF THEIR RIGHTS TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION. 
  

 62 

 (c) THE TRUST, THE SELLER, THE SPONSOR, THE MASTER SERVICER, THE BACKUP SERVICER AND THE
INDENTURE TRUSTEE EACH HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY
DISPUTE WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY. 
  
 [Remainder of Page Intentionally Left Blank] 
  

 63 

 IN WITNESS WHEREOF, the Master Servicer, the Backup Servicer, the Trust, the Indenture Trustee, the
Seller and the Sponsor have caused their names to be signed hereto by their respective officers thereunto duly authorized as of the day and year first above written. 
  

					
	 ACCREDITED HOME LENDERS, INC.,
 as Sponsor and Master Servicer

		
	 By:
	 	 /s/ David E. Hertzel

	 	 	 Name:
	 	 David E. Hertzel

	 	 	 Title:
	 	 GC, AVP & Ass’t Sec’y

  

			
	 ACCREDITED MORTGAGE LOAN TRUST 2004-2

		
	By:	 	WILMINGTON TRUST COMPANY, not in its individual capacity, but solely as Owner Trustee under the Trust Agreement

  

					
			
	 	 	By:	 	 /s/ Patricia A. Evans

	 	 	 	 	 Name: Patricia A. Evans

	 	 	 	 	 Title: Assistant Vice President

  

					
	 ACCREDITED MORTGAGE LOAN REIT TRUST
 as Seller

		
	By:	 	 /s/ Charles O. Ryan

	 	 	 Name:
	 	 Charles O. Ryan

	 	 	 Title:
	 	 Securitization Coordinator, AVP & Ass’t Sec’y

  

			
	 LASALLE BANK NATIONAL ASSOCIATION,
 as Indenture Trustee

		
	By:	 	 /s/ Christopher Lewis

	 	 	 Name: Christopher Lewis

	 	 	 Title: Assistant Vice President

  

 64 

			
	 COUNTRYWIDE HOME LOANS SERVICING LP,
as Backup Servicer

		
	By:	 	 /s/ Thomas Lin

	 	 	 Name: Thomas Lin

	 	 	 Title: Senior Vice President

  
 [Signature Page
to Sale and Servicing Agreement] 
  

 65 

 SCHEDULE I 
  
 MORTGAGE LOAN SCHEDULE 
  
 [On File with Dewey Ballantine LLP] 
  

 A-1 

 APPENDIX I 
  
 DEFINED TERMS 
  
 [See Exhibit 4.1: Appendix I to Indenture] 
  

 EXHIBIT A 
  
 CONTENTS OF THE MORTGAGE FILE 
  
 With respect to each Mortgage Loan, the Mortgage File shall include each of the following items (copies to the extent the originals have been delivered to
the Indenture Trustee for the benefit of the Noteholders and the Note Insurer, pursuant to Section 2.05 of the Sale and Servicing Agreement), all of which shall be available for inspection by the Noteholders, to the extent required by applicable
laws: 
  
 1. the original Mortgage Note, endorsed without recourse
in blank from the last endorsee thereof, including all intervening endorsements showing a complete chain of endorsement; 
  
 2. the related original Mortgage with evidence of recording indicated thereon or a copy thereof certified by the applicable recording office and if the
Mortgage Loan is registered on the MERS System, such Mortgage or an assignment of the Mortgage shall reflect MERS as the mortgagee of record and shall include the MIN for such Mortgage Loan; 
  
 3. each intervening mortgage assignment, with evidence of recording indicated
thereon or if the original is not available, a copy thereof certified by the applicable recording office, if any, showing a complete chain of assignment from the last assignee thereof of the related Mortgage Loan to the Sponsor (or to MERS, if the
Mortgage Loan is registered on the MERS System), and noting the presence of a MIN (if the Mortgage Loan is registered on the MERS System) (which assignment may, at the Sponsor’s option, be combined with the assignment referred to in subpart (4)
hereof, in which case it must be in recordable form, but need not have been previously recorded); 
  
 4. Unless the Mortgage Loan is recorded on the MERS System, a mortgage assignment in recordable form (which, if acceptable for recording in the relevant
jurisdiction as evidenced by an Opinion of Counsel addressed to the Indenture Trustee, may be included in a blanket assignment or assignments) of each Mortgage from the Sponsor to the Indenture Trustee; 
  
 5. originals of all assumption, modification and substitution agreements in
those instances where the terms or provisions of a Mortgage or Mortgage Note have been modified or such Mortgage or Mortgage Note has been assumed (if any); and 
  

6. an original title insurance policy or title opinion (or (A) a copy of the title insurance policy or title opinion, or (B) the related binder,
commitment or preliminary report, or copy thereof in which case the Sponsor hereby certifies that the original Mortgage has been delivered to the title insurance company that issued such binder, commitment or preliminary report). 
  

 A-1 

 In instances where the original recorded Mortgage or any intervening mortgage assignment or a completed
assignment of the Mortgage in recordable form cannot be delivered by the Sponsor to the Indenture Trustee prior to or concurrently with the execution and delivery of this Agreement, due to a delay in connection with recording, the Sponsor may:

  
 (a) with respect to item (3) above, in lieu of delivering such
original recorded Mortgage or intervening mortgage assignment, deliver to the Indenture Trustee, a copy thereof; provided, that the Sponsor certifies that the original Mortgage has been delivered to a title insurance company for recordation after
receipt of its policy of title insurance or the related binder, commitment or preliminary report; and 
  
 (b) in lieu of delivering the completed assignment in recordable form, deliver to the Indenture Trustee, the assignment in recordable form, otherwise
complete except for recording information. 
  

 A-2 

 EXHIBIT B 
  
 INDENTURE TRUSTEE’S ACKNOWLEDGMENT OF RECEIPT 
  

			
	 	  	 May 26, 2004

		
	 Credit Suisse First Boston LLC
 Eleven Madison Avenue,
5th Floor
 New York, New York 10010-3629
	  	 Accredited Home Lenders, Inc.
 15090 Avenue of
Science
 San Diego, California 92128

		
	 Countrywide Home Loans Servicing LP
 4500 Park Granada,
Mail Stop CH-143,
 Calabasas, California 91302
	  	 Financial Guaranty Insurance Company
 125 Park
Avenue
 New York, New York 10017

		
	 Accredited Mortgage Loan REIT Trust
 15090 Avenue of
Science
 San Diego, California 92128
	  	 

  

	 	Re:	Sale and Servicing Agreement, dated as of May 1, 2004 among Accredited Home Lenders, Inc., as Sponsor and Master Servicer, Accredited Mortgage Loan REIT Trust, as seller, Accredited
Mortgage Loan Trust 2004-2, Countrywide Home Loans Servicing LP, as Backup Servicer, and LaSalle Bank National Association, as Indenture Trustee 

  

Ladies and Gentlemen: 
  
 In accordance with Section 2.06(a) of the above-captioned Sale and Servicing Agreement, the undersigned, as Indenture Trustee, hereby acknowledges receipt
by it in good faith without notice of adverse claims, of the Note Insurance Policy and declares that it holds and will hold such Note Insurance Policy in trust for the exclusive use and benefit of all present and future Noteholders pursuant to the
terms of the Indenture dated as of May 1, 2004, by and between Accredited Mortgage Loan Trust 2004-2 and the Indenture Trustee. 
  
 Capitalized words and phrases used herein shall have the respective meanings assigned to them in Appendix I to the Indenture. 
  

			
	 LASALLE BANK NATIONAL ASSOCIATION,
 as Indenture Trustee

		
	By:	 	 
	 	 	

	 	 	 Name:

	 	 	 Title:

  

 B-1 

 EXHIBIT C 
  
 INDENTURE TRUSTEE’S ACKNOWLEDGEMENT OF RECEIPT 
  

			
	 	  	 May 26, 2004

		
	 Credit Suisse First Boston LLC
 Eleven Madison Avenue,
5th Floor
 New York, New York 10010-3629
	  	 Accredited Home Lenders, Inc.
 15090 Avenue of
Science
 San Diego, California 92128

		
	 Countrywide Home Loans Servicing LP
 4500 Park Granada,
Mail Stop CH-143,
 Calabasas, California 91302
	  	 Financial Guaranty Insurance Company
 125 Park
Avenue
 New York, New York 10017

		
	 Accredited Mortgage Loan REIT Trust
 15090 Avenue of
Science
 San Diego, California 92128
	  	 

  

	 	Re:	Sale and Servicing Agreement, dated as of May 1, 2004 among Accredited Home Lenders, Inc., as Sponsor and Master Servicer, Accredited Mortgage Loan REIT Trust, as seller, Accredited
Mortgage Loan Trust 2004-2, Countrywide Home Loans Servicing LP, as Backup Servicer, and LaSalle Bank National Association, as Indenture Trustee 

  

Ladies and Gentlemen: 
  
 In accordance with Section 2.06(b)(i) of the above-captioned Sale and Servicing Agreement, the undersigned, as Indenture Trustee, hereby acknowledges
receipt by it in good faith without notice of adverse claims, subject to the provisions of Sections 2.04 and 2.05 of the Sale and Servicing Agreement (as such provisions relate to the Mortgage Loan), of, with respect to each Mortgage Loan, a
Mortgage File containing the original Mortgage Note, except with respect to the list of exceptions attached hereto, and based on its examination and only as to the foregoing, the information set forth in items (i), (ii) (with respect to property
address only, excluding zip code), (iii) and (vi) of the definition of the “Mortgage Loan Schedule” accurately reflects information set forth in the Mortgage Note, and declares that it holds and will hold such documents and the other
documents delivered to it constituting the Indenture Trustee’s Mortgage Files, and that it holds or will hold all such assets and such other assets included in the definition of “Trust Estate” that are delivered to it for the
exclusive use and benefit of all present and future Noteholders and the Note Insurer. 
  

 The Indenture Trustee has made no independent examination of any such documents beyond the review
specifically required in the above-referenced Sale and Servicing Agreement. The Indenture Trustee makes no representations as to: (i) the validity, legality, recordability, sufficiency, perfection, priority, enforceability or genuineness of any such
documents or any of the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the collectability, insurability, effectiveness or suitability of any such Mortgage Loan. 
  
 The Mortgage Loan Schedule is attached to this Receipt. 
  
 Capitalized words and phrases used herein shall have the respective meanings assigned to them in Appendix I to the
Indenture, dated as of May 1, 2004, by and between Accredited Mortgage Loan Trust 2004-2 and the Indenture Trustee. 
  

			
	 LASALLE BANK NATIONAL ASSOCIATION,
 as
Indenture Trustee

		
	By:	 	 
	 	 	

	 	 	 Name:

	 	 	 Title:

  

 EXHIBIT D 
  
 INITIAL CERTIFICATION OF INDENTURE TRUSTEE 
  

			
	 	  	             , 2004

		
	 Credit Suisse First Boston LLC
 Eleven Madison Avenue,
5th Floor
 New York, New York 10010-3629
	  	 Accredited Home Lenders, Inc.
 15090 Avenue of
Science
 San Diego, California 92128

		
	 Countrywide Home Loans Servicing LP,
 as Backup
Servicer
 4500 Park Granada, Mail Stop CH-143,
 Calabasas,
California 91302
	  	 Financial Guaranty Insurance Company
 125 Park
Avenue
 New York, New York 10017

		
	 Accredited Mortgage Loan REIT Trust
 15090 Avenue of
Science
 San Diego, California 92128
	  	 

  

	 	Re:	Sale and Servicing Agreement, dated as of May 1, 2004 among Accredited Home Lenders, Inc., as Sponsor and Master Servicer, Accredited Mortgage Loan REIT Trust, as seller, Accredited
Mortgage Loan Trust 2004-2, Countrywide Home Loans Servicing LP, as Backup Servicer, and LaSalle Bank National Association, as Indenture Trustee 

  

Ladies and Gentlemen: 
  
 In accordance with the provisions of Section 2.06(b)(ii) of the above-referenced Sale and Servicing Agreement, the undersigned, as Indenture Trustee,
hereby certifies that as to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan listed on the attachment hereto), it has reviewed the documents delivered to it pursuant to Section
2.05(a) of the Sale and Servicing Agreement and has determined that, except as noted on the attachment hereto, (i) all documents required to be delivered to it pursuant to Section 2.05(a)(i)-(iv) and (vi) of the above-referenced Sale and Servicing
Agreement are in its possession, (ii) such documents have been reviewed by it and appear regular on their face and have not been mutilated, damaged, torn or otherwise physically altered (handwritten additions, changes or corrections do not
constitute physical alteration if they reasonably appear to have been initialed by the Mortgagor) and relates to such Mortgage Loan and (iii) based on its examination and only as to the foregoing documents, the information set forth in the Mortgage
Loan Schedule with respect to items (i), (ii) (with respect to property address only, excluding zip code), (iii) and (vi) of the definition of “Mortgage Loan Schedule” respecting such Mortgage Loan accurately reflects the information set
forth in Indenture Trustee’s Mortgage File. The 

  

 D-1 

 
Indenture Trustee has made no independent examination of such documents beyond the review specifically required in the above-referenced Sale and Servicing
Agreement. The Indenture Trustee makes no representations as to: (x) the validity, legality, recordability, sufficiency, perfection, priority, enforceability or genuineness of any such documents contained in each or any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (y) the collectability, insurability, effectiveness or suitability of any such Mortgage Loan. 
  
 Capitalized words and phrases used herein shall have the respective meanings assigned to them in the above-captioned Sale and Servicing Agreement.

  

			
	 LASALLE BANK NATIONAL ASSOCIATION,
 as
Indenture Trustee

		
	By:	 	 
	 	 	

	 	 	 Name:

	 	 	 Title:

  

 D-2 

 EXHIBIT E 
  
 FINAL CERTIFICATION OF INDENTURE TRUSTEE 
  

			
	 	  	             , 2004

		
	 Credit Suisse First Boston LLC
 Eleven Madison Avenue,
5th Floor
 New York, New York 10010-3629
	  	 Accredited Home Lenders, Inc.
 15090 Avenue of
Science
 San Diego, California 92128

		
	 Countrywide Home Loans Servicing LP,
 as Backup
Servicer
 4500 Park Granada, Mail Stop CH-143,
 Calabasas,
California 91302
	  	 Financial Guaranty Insurance Company
 125 Park
Avenue
 New York, New York 10017

		
	 Accredited Mortgage Loan REIT Trust
 15090 Avenue of
Science
 San Diego, California 92128
	  	 

  

	 	Re:	Sale and Servicing Agreement, dated as of May 1, 2004 among Accredited Home Lenders, Inc., as Sponsor and Master Servicer, Accredited Mortgage Loan REIT Trust, as seller, Accredited
Mortgage Loan Trust 2004-2, Countrywide Home Loans Servicing LP, as Backup Servicer, and LaSalle Bank National Association, as Indenture Trustee 

  

Ladies and Gentlemen: 
  
 In accordance with the provisions of Section 2.06(b)(iii) of the above-referenced Sale and Servicing Agreement, the undersigned, as Indenture Trustee,
hereby certifies that as to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan listed on the attachment hereto), it has reviewed the documents delivered to it pursuant to Section
2.05(a) of the Sale and Servicing Agreement and has determined that (i) all documents required to be delivered to it pursuant to Section 2.05(a)(i)-(iv) and (vi) of the above referenced Sale and Servicing Agreement are in its possession, (ii) such
documents have been reviewed by it and appear regular on their face and have not been mutilated, damaged, torn or otherwise physically altered (handwritten additions, changes or corrections do not constitute physical alteration if they reasonably
appear to have been initialed by the Mortgagor) and relates to such Mortgage Loan and (iii) based on its examination and only as to the foregoing documents, the information set forth in items (i), (ii) (with respect to property address only,
excluding zip code), (iii) and (vi) of the definition of the Mortgage Loan Schedule respecting 

  

 E-1 

 
such Mortgage Loan that can be determined from the face of such documents accurately reflects the information set forth in the Indenture Trustee’s
Mortgage File. The Indenture Trustee has made no independent examination of such documents beyond the review specifically required in the above-referenced Sale and Servicing Agreement. The Indenture Trustee makes no representations as to: (x) the
validity, legality, recordability, sufficiency, perfection, priority, enforceability or genuineness of any such documents contained in each or any of the Mortgage Loans identified on the Mortgage Loan Schedule, or (y) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan. 
  
 Capitalized words and phrases used herein shall have the respective meanings assigned to them in the above-captioned Sale and Servicing Agreement. 
  

			
	 LASALLE BANK NATIONAL ASSOCIATION,
 as
Indenture Trustee

		
	By:	 	 
	 	 	

	 	 	 Name:

	 	 	 Title:

  

 E-2 

 EXHIBIT F 
  
 REQUEST FOR RELEASE OF DOCUMENTS 
  

					
	To:	 	 LaSalle Bank National Association
 135 South
LaSalle Street, Suite 1625
 Chicago, IL 60603
 Attn: Global
Securitization Trust Services Group - Accredited 2004-2

			
	 	 	Re:	 	Sale and Servicing Agreement, dated as of May 1, 2004 among Accredited Home Lenders, Inc., as Sponsor and Master Servicer, Accredited Mortgage Loan REIT Trust, as seller, Accredited Mortgage
Loan Trust 2004-2, Countrywide Home Loans Servicing LP, as Backup Servicer, and LaSalle Bank National Association, as Indenture Trustee (“Custodian/Indenture Trustee”)

  
 In connection with the
administration of the Mortgage Loans held by you as Indenture Trustee for the Issuer pursuant to the above-captioned Sale and Servicing Agreement, we request the release, and hereby acknowledge receipt, of the Indenture Trustee’s Mortgage File
for the Mortgage Loan described below, for the reason indicated. 
  
 Mortgage Loan Number: 
  
 Mortgagor Name, Address & Zip Code: 
  
 Reason for Requesting Documents (check one): 
  

									
					
	 ̈	  	1.	  	Mortgage Paid in Full	 	 	 	 
					
	 ̈	  	2.	  	Foreclosure	 	 	 	 
					
	 ̈	  	3.	  	Substitution	 	 	 	 
					
	 ̈	  	4.	  	Other Liquidation (Repurchases, etc.)	 	 	 	 
					
	 ̈	  	5.	  	Nonliquidation Reason:	 	Reason:
                                    	 	 

  
 Address to which
Indenture Trustee should 
  

					
	Deliver the Mortgage File:	  	_____________________________	  	 
	 	  	_____________________________	  	 
	 	  	_____________________________	  	 

  

			
		
	 By:
	 	 
	 	 	

	 	 	(authorized signer)
	 Issuer:
	 	 
	 	 	

	 Address:
	 	 
	 	 	

	 	 	 
	 	 	

	 Date:
	 	 
	 	 	

  

 EXHIBIT G 
  
 ACCREDITED HOME LENDERS, INC. 
 OFFICER’S CERTIFICATE 
  
 I,
            , certify that: 
  

	1.	I have reviewed this annual report on Form 10-K, and all reports on Form 8-K containing distribution or servicing reports filed in respect of periods included in the year covered by
this annual report, of Accredited Mortgage Loan Trust 2004-2; 

  

	2.	Based on my knowledge, the information in these reports, taken as a whole, does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading as of the last day of the period covered by this annual report; 

  

	3.	Based on my knowledge, the distribution or servicing information required to be provided to the trustee by the servicer under the pooling and servicing, or similar, agreement is
included in these reports; 

  

	4.	Based on my knowledge and upon the annual compliance statement included in the report and required to be delivered to the trustee in accordance with the terms of the pooling and
servicing, or similar, agreement, and except as disclosed in the reports, the servicer has fulfilled its obligations under the servicing agreement; and 

  

	5.	The reports disclose all significant deficiencies relating to the servicer’s compliance with the minimum servicing standards based upon the report provided by an independent
public accountant, after conducting a review in compliance with the Uniform Single Attestation Program for Mortgage Bankers or similar procedure, as set forth in the pooling and servicing, or similar, agreement that is included in these reports.

  
 In giving the certifications above, I have reasonably relied on
information provided to me by the following unaffiliated parties:                     . 
  
 Date: 
  

	
	
	  
	

	Name:
	Title:1st Amendment to Low Sulfur Fuel Oil Supply Contract

 HECO Exhibit 10(a) 
  
 FIRST AMENDMENT TO 
 LOW SULFUR FUEL OIL SUPPLY CONTRACT 
 BY AND BETWEEN 
 BHP PETROLEUM AMERICAS REFINING INC. 
 AND 
 HAWAIIAN ELECTRIC COMPANY, INC. 
  
 This First Amendment to Low Sulfur Fuel Oil Supply Contract (“Amendment”), dated March 29, 2004 is entered into between Tesoro Hawaii Corporation fka BHP Petroleum Americas Refining Inc., a Hawaii
corporation (referred to as “Tesoro” or “SELLER”), and Hawaiian Electric Company, Inc., a Hawaii corporation, (referred to as “HECO” or “BUYER”). 
  
 WHEREAS, BHP Petroleum Americas Refining Inc. entered into that certain Low Sulfur Fuel Oil Supply Contract dated November
14, 1997, effective as of January 1, 1998 (the “Contract”); and 
  
 WHEREAS, on or about June 1, 1998, Tesoro Petroleum Corporation purchased all the stock of BHP Petroleum Americas Refining Inc., and thereafter changed the name of BHP Petroleum Americas Refining Inc. to Tesoro Hawaii
Corporation; and 
  
 WHEREAS, the Contract provided for the sale
by SELLER and purchase by HECO of Low Sulfur Fuel Oil (referred to as “LSFO” or “Product”) for the period from January 1, 1998 through December 31, 2004, with provision for additional terms of 12-months each, beginning each
successive January 1, unless BUYER or SELLER gives written notice of termination at least 120 days prior to the expiration of the then current term; and 
  

 1 

 WHEREAS, SELLER and BUYER desire to extend the original term of the Contract for an additional ten-year
period under the existing terms and conditions of the Contract, subject to the amendments noted herein; 
  
 NOW THEREFORE, the parties agree to amend the Contract as follows, effective as of January 1, 2005: 
  
 1. All references to “BHP” or “BHP Petroleum Americas Refining Inc.” in
the title of and throughout the Contract shall be replaced by “Tesoro Hawaii Corporation”. 
  
 2. Article I (“Definitions”) is hereby amended by amending the definition of “Original Term” in its entirety to read as follows: 
  
 “22. “Original Term” means the first term of this Contract, which commenced January 1, 1998 and concludes
December 31, 2014.” 
  
 3. Article III (“Term”) is hereby amended
in its entirety to read as follows: 
  
 “The Original Term of
this Contract shall be from January 1, 1998 through December 31, 2014, and shall continue for Additional Terms, unless BUYER or SELLER gives written notice of termination at least one hundred twenty (120) Days prior to the beginning of an Additional
Term.” 
  

 2 

 4. Article V (“Quantity”), Section 5.1 (“Quantity”) is hereby amended in the first paragraph by
replacing the phrase “2000-2004” in the table with “2000-2014/Additional Term”, by replacing the phrase “Years 2001, 2002 and 2003” with “Years 2001, 2002, 2003, 2005, 2006, 2007, 2009,
2010, 2011, 2013, and 2014”, and by replacing the phrase “Years 2000 and 2004” with “Years 2000, 2004, 2008, and 2012”; in the second paragraph, by replacing the phrase “Year 2004” with “Year 2014”; and
in the fourth paragraph, by replacing the phrase “Years 2000, 2001, 2002, 2003 and 2004” with “Years 2000 through 2014.” 
  
 5. Article VI (“Price”), Section 6.1 (“Determination of Product Price”) is hereby amended by replacing all references to [___] and [___] therein with
[___] and by replacing their respective definitions with the definition of [___] below. 
  
 [___] 
  
 6. Article VI (“Price”), Section 6.1 (“Determination of Product Price”) is hereby further amended by replacing the phrase
“2000-2004” in the table following the definition of price component [___] with “2000-2014/Additional Term”; and by amending the sentence immediately following the definition of price formula component
[___] by replacing the phrase “2004” with “2014”. 
  

 3 

 7. Article VIII (“Payment”), Section 8.1 (“Invoices”) is hereby updated by amending the identity of
and address information for the “SELLER” in the second paragraph as follows: 
  

			
	“SELLER:	  	 TESORO HAWAII CORPORATION
 P.O. Box
3379
 Honolulu, Hawaii 96842
 Attn: Manager Utility
Fuel Sales
 Facsimile: (808) 547-3336”

  
 8. Article VIII (“Payment”),
Section 8.2 (“Method of Payment”) is hereby updated by amending the SELLER’s wire transfer information as follows: 
  
 “Bank One, Chicago, Illinois 
 ABA#
071000013 
 Tesoro Hawaii Corporation 
 Account # 5563631” 
  
 9. Article IX (“Notices”) is hereby
clarified and updated by replacing it in its entirety with the following: 
  
 “Except as otherwise expressly provided herein, all notices shall be given in writing, by letter, electronic mail or facsimile to the following addresses, or such other address as the parties may designate by
notice, and shall be deemed to have been duly given upon receipt, provided that notice sent by mail shall be deemed to have been given on the date of actual delivery or at the expiration of the fifth day after the date of mailing, whichever is
earlier. 
  

 4 

			
	BUYER:	  	 Hawaiian Electric Company, Inc.
 P. O. Box
2750
 Honolulu, Hawaii 96840
 Attn: Director Fuels
Resources, Power Supply Process Area, Mail
 Stop WP-2/IF
 Facsimile: (808) 543-4207

		
	SELLER:	  	 Tesoro Hawaii Corporation
 P.O. Box
3379
 Honolulu, Hawaii 96842
 Attn: Manager Utility
Fuel Sales
 Facsimile: (808) 547-3336”

  
 10. Exhibit A (“Product
Specifications”) is hereby replaced by the Exhibit A attached hereto and incorporated herein by reference. 
  
 11. Exhibit B (“Illustrative Schedule Of Prices”) is hereby clarified and updated by replacing it with the Exhibit B attached hereto and incorporated herein by
reference. 
  
 12. Exhibit C (“Illustrative Computation of Price Formula
Component”) is hereby clarified and updated by replacing it with the Exhibit C attached hereto and incorporated herein by reference. 
  
 13. Except as expressly amended in this First Amendment, the provisions of the Contract shall remain in full force and effect, and exactly as written. 
  

 5 

 IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to the Low Sulfur Fuel Oil
Supply Contract as of the day and year first written above. 
  

			
	HAWAIIAN ELECTRIC COMPANY, INC.
		
	By	 	/s/    THOMAS C. SIMMONS        
	 	 	

	 	 	Thomas C. Simmons
	 	 	(Printed or Typed Name)
		
	 Its
	 	Vice President, Power Supply
		
	By	 	/s/    RICHARD A. VON GNECHTEN        
	 	 	

	 	 	Richard A. von Gnechten
	 	 	(Printed or Typed Name)
		
	 Its
	 	Financial Vice President
	 	 	BUYER

  

			
	TESORO HAWAII CORPORATION
		
	By	 	/s/    STEVE L. WORMINGTON        
	 	 	

	 	 	Steve L. Wormington
	 	 	(Printed or Typed Name)
		
	 Its
	 	EVP Marketing
	 	 	SELLER

  

 6 

 EXHIBIT A 
  

PRODUCT SPECIFICATIONS 
  

							
	 LSFO Specification – Test Item

	  	Measurement Unit

	  	Limits

	  	ASTM Method

	 GRAVITY @ 60 DEGREES F.
	  	Degrees API	  	12 Min.
24 Max.	  	D-4052

  
 [_____________________________________________________________________________________________________ 
 __________________________________________________________________________________________________________ 
 __________________________________________________________________________________________________________ 
 __________________________________________________________________________________________________________] 
  

							
				
	 HEAT VALUE, GROSS
	  	MM BTU/BBL	  	6.0 million
Min.	 	D-240,
D-4868
				
	 FLASH POINT
	  	Degrees F.	  	150 Min.	 	D-93,
D-6450
				
	 POUR POINT
	  	Degrees F.	  	125 Max.	 	D-97,
D-5949
				
	 ASH
	  	Percent, Weight	  	0.05 Max.	 	D-482
				
	 SEDIMENT & WATER
	  	Percent, Weight	  	0.50 Max.	 	D-1796

  
 [____________________________________________________________________________________________] 
  
 [_____________________________________________________________________________________________________
_________________________________________________________________________________________________] 
  
  

 1 

 EXHIBIT B 
  
 ILLUSTRATIVE SCHEDULE OF PRICES 
  
 Illustrative Price Calculation for Product Delivered to Meet the Nominated Commitment of 
 October 2003 
  
 Determination of Product Price Under Article VI. The Product Price in U.S. Dollars (USD) per barrel shall be determined according to the following price formula: 
  
 [_________________________________________________________________]

  
 Where: 
  
 [_____________________________________________________________________________________________________ 
 __________________________________________________________________________________________________
__________________________________________________________________________________________________ __________________________________________________________________________________________________ 
 __________________________________________________________________________________________________
__________________________________________________________________________________________________ 
 __________________________________________________________________________________________________ __________________________________________________________________________________________________ 
 __________________________________________________________________________________________________
__________________________________________________________________________________________________ 
 __________________________________________________________________________________________________ __________________________________________________________________________________________________ 
 __________________________________________________________________________________________________
__________________________________________________________________________________________________ 
 __________________________________________________________________________________________________ __________________________________________________________________________________________________ 
 __________________________________________________________________________________________________
__________________________________________________________________________________________________ 
 __________________________________________________________________________________________________ __________________________________________________________________________________________________ 
 __________________________________________________________________________________________________
__________________________________________________________________________________________________ 
 __________________________________________________________________________________________________ _______________________] 
  

	[_] 	=  market price referencing a component (base price) of the price of [_____________________________________________
____________________________________________________________________________________________________ ____________________________________________________________________________________________________
_____________________________________________________________________________________________], expressed in USD per barrel. 

  

 1 

	i.	[______________________________________________________________________________________________
_______________________________________________________________________________________] during the period beginning the 21st Day of the second Month preceding the Nominated Month of Delivery and ending the 20th of the Month
immediately preceding the Nominated Month of Delivery. 

  

							
	 Date of Price

	 	 Price in USD per Barrel

	 Date

	 	 Low

	 	 High

	 	 Average

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

				
	[________]	 	 	 	 	 	[________]

  

	ii.	[______________________________________________________________________________________________
_______________________________________________________________________________________]] during the period beginning the 21st Day of the second Month preceding the Nominated Month of Delivery and ending the 20st of the Month
immediately preceding the Nominated Month of Delivery. 

  

 2 

							
	 Date of Price

	 	 Price in USD per Barrel

	 Date

	 	 Low

	 	 High

	 	 Average

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 	 	 
	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

				
	[________]	 	 	 	 	 	[________]

  

	iii.	Compute the [___________________________________________________________________________________________
______________________________________________________________________________________________________ _______________________________________________________________________________________________________
_________________________________________________] 

  
 [___________________________________________________________________________] 
  

	[_] 	=  market price referencing a component [___________________________________________________________________
______________________________________________________________________________________________________ _______________________], expressed in USD per barrel. 

  
 Determination of [____________________________________________________________________________________________
_________________________________________________________________________________________] 
  

 3 

							
	 Date of Price

	 	 Price in USD per Barrel

	 Date

	 	 Low

	 	 High

	 	 Average

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 	 	 
	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________]

			
	[________]	 	 	 	[________]

  
 [_______________________________]

  

	F1	= a factor to reflect [_____________________________________________________________________________________ __________________________________], expressed in USD per
barrel. 

  
 A factor for
[________________________________________________________________________________] which is computed in accordance with the following formula: 
  
 [_______________________________________________] 
  
 Where: 
  

	    	[___________________________________________________________________________________________________ 

	 	    	________________________________________________________________________________________________ 

	 	    	________________________________________________________________________________________________ 

	 	    	________________________________________________________________________________________________ 

	 	    	________________________________________________________________________________________________ 

	 	    	________________________________________________________________________________________________ 

	 	    	______________________________] 

  

 4 

	    	[___________________________________________________________________________________________________ 

	 	    	________________________________________________________________________________________________ 

	 	    	________________________________________________________________________________________________ 

	 	    	________________________________________________________________________________________________ 

	 	    	________________________________________________________________________________________________ 

	 	    	________________________________________________________________________________________________ 

	 	    	________________________________________________________________________________________________ 

	 	    	________________________________________________________________________________________________ 

	 	    	___________________________________________________________________] 

  

	i.	Determination of the [___________________________________________________________________________________ _______________________________________________] 

 

							
	 Date of Price

	 	 Price in USD per Metric Ton

	 Date

	 	 Low

	 	 High

	 	 Average

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

	 [________]
	 	 [________]
	 	 [________]
	 	 [________] [__]

  
 [______] in USD per metric ton:
[________] 
  

	ii.	Conversion of [________________________________________________________________] from USD per Metric Ton to USD per barrel 

  
 Expressed in USD per Bbl: = [__________] / 6.368 Bbl/MT 
  
 [_____________________________________] 
  

 5 

	iii.	Computation using price formula 

  
 [_____________________________________] 
  
 [____________________________________________________] 
  
 [______________________________________________] 
  
 [__________________________________________] 
  

	[________________________________________________________________________________________________________	

	    	____________________________________________________________________________________________________ 

	    	__________________________________________________________________________________], expressed in USD per barrel. 

  
 A factor for [______________] which is computed in accordance with the following formula:

  
 [_______________] 
  
 Where: 
  

	 	[__]	[_____________] derived by multiplying [_______________________________________________________________ 

	 	    	__________________________________________________________________________________________________ 

	 	    	_______________________________________________________________________________________________] for the three Months in the calendar quarter immediately preceding the calendar
quarter of the Nominated Month of Delivery, by the [_________________________________________________________________________________________ 

	 	    	_________________________________________________________________________________________], applicable to the Year of the quarter of the referenced [___] data, expressed in USD per
barrel. 

  

	 	    	[_______________________________________________________________________________________________] as defined in [________] to reflect the cost of the additional premium for full USD
1 billion coverage of Oil Pollution Liability Insurance on vessels carrying persistent oils to and from the U.S.A., consistent with a typical vessel derived in Exhibit C attached to this Contract. 

  
 [_________________________________________________________________________________________________________ 
 ______________________________________________________________________________________________________ 
 ______________________________________________________________________________________________________ 
 __] for the
three Months in the calendar quarter immediately preceding the calendar quarter of the Nominated Month of Delivery, by [________________________________________________________________________________________ 
 ____________________________________________________________________________________________________] applicable to the Year of the quarter of the
referenced [___] data, expressed in USD per barrel. 
  

 6 

	i.	the [________________________________________________________________________________________________ 

	    	___________________________________________________________________________________________________ 

	    	_____________], for the three Monthly publications in the calendar quarter immediately preceding the calendar quarter of the Nominated Month of Delivery 

  
 Date of Publication:
[_____________________________________________________________________________________ 
 ______________________________________________________________________________________________________ 
 __________________________________________________________________________] 
  

			
	 July 2003
	  	[____]
	 August 2003
	  	[____]
	 September 2003
	  	[____]
		
	 [_________]
	  	[______]

  

	ii.	the [__________________________________________________________________________________________________ 

	    	________________________________________________________________________], applicable to the Year of the quarter of the referenced [____] data, expressed
in [__________________________________________________________________ 

	    	_________________________________________________________________________] 

  
 [_________________________________________________________________________________________] effective January 1, 2003: 
 [______________________________________________________________________________________________________ 
 _______________________________________________________________________________________________________ 
 _______________________________________________________________________________________________________ 
 _________________] 
  
 * prorated due [__________________________________________________________________________________________ 
 _________________________________________________________________________________________________] 
  

	iii.	Computation using price formula 

  
 [________________________] 
  
 [____________________] 
  

	iv.	Conversion of [_____________________________________] from USD per metric ton to USD per barrel 

  
 [______________________] 
  
 [________________] 
  
 [_______________________________________________________________________________________________] as defined 

	    	in [_____] to reflect the cost of the additional premium for full USD 1 billion coverage of Oil Pollution Liability Insurance on vessels carrying persistent oils to and
from the U.S.A., consistent with a typical vessel derived in Exhibit C attached to this Contract. 

  

 7 

 [_______________________], derived as illustrated in Exhibit C attached hereto. 
  
 [________________] 
  
 [______________] 
  
 [_____________________________] 
  

	[_]	= a per barrel [__________________________________________________________________________________________ 

	    	__________________________________________], applicable to volumes sold and Delivered by SELLER and purchased and received by BUYER in each Year of the Contract.

  
 [_______________] 
  
 T = Taxes applicable to sale of Product 
  

	i.	HGET = 4.166% of pre-HGET price, excluding the Hawaii Environmental Response Tax; 

  

	ii.	Hawaii Environmental Response Tax applied after HGET = $0.05 per barrel 

  

	A.	Sample Product Price Computation for Delivery with Standard BTU Content of [-] MM Btu Per Barrel 

  
 [_______________________________] 
  
 [__________________________________________________] 
  
 [__________________________________] 
  
 [_______________________] 
  
 [________________] 
  

 8 

	B.	Sample Product Price Computation for Delivery with BTU Content Other than Standard [__] MM Btu per Barrel 

  
 [___________________________] 
  
 Assume [__] gross heat content [_________________] Product Delivered against the October 2003
Nomination, [________________ 
 ___________________________________________________________________________________________] 
  
 [________________________________________] 
  
 [________________________________________] 
  
 [_____________________] 
  
 [____________] 
  
 EXPLANATION OF TAXES: 
  
 Taxes in the LSFO price currently in effect include the Hawaii Environmental Response Tax of $0.050 per barrel. Also, Hawaii State General
Excise Tax of 4.166% will be paid on all components of the Product Price, except at the execution of this Contract, the Hawaii Environmental Response Tax. 
  

 9 

 EXHIBIT C 
  
 ILLUSTRATIVE COMPUTATION OF PRICE FORMULA COMPONENT 
  
 Article VI of this Contract provides for the determination of the price per
physical barrel of LSFO, which price determination [________________________________________________________________________________________________________ 
 _________________________________________________________________________________________________________ 
 _________________________________________________________________________________________________________ 
 _______________________________________________________________________________________________]. The current edition of [___________________________________________________________________] to reflect the cost of additional insurance
premium for oil pollution liability insurance on vessels carrying “Persistent Oils” (a cargo category which would include any grade of fuel oil, most fuel oil blending components as well as most types of crude oil) applicable to voyages
having a destination in the U.S.A. SELLER acknowledges that any vessel used to transport LSFO that is sold and purchased under this Contract, including its components and the crude oil from which the LSFO is derived, shall be required to possess oil
spill liability insurance coverage in the maximum amount commercially available, $1 billion as of January 1, 2004. 
  
 The price formula component [____] refers to [________________________________________________________________ 
 ___________________________________________________________________________________________________________ 
 ___________________________________________________________________________________________________________ 
 ___________________________________________________________________________________________________________ 
 __________________________________________] In order to derive an approximation of the relationship between Deadweight and Gross Registered Tons, the design characteristic of tankers against which marine insurance, including oil pollution
liability insurance, is levied, for a nominal vessel consistent with [_______________________], the average size characteristics of two vessels that have transported LSFO or crude oil to Barbers Point, Hawaii are used as reference data. These
vessels are described as follows: 
  

					
	 Name

	  	 Deadweight Tons

	  	 Gross Registered Tons(GT)

  
 [____________________________________________________________________________________________________ 
 __________________________________________________________________________________________________________] 
  
 [__________________________________________________________________________________________________________] 
  
 The [____________________________________________________]that is to be included in the computation of [_______] 

[___________________________________________]is consistent with the computation of [__] and is to be derived in the same manner as the following illustrative example
calculations: 
  
 1. [__________________] rate in effect from February 20, 2003
(see note #1 at end) onwards shall include a [______________] computed as follows: 
  

 1 

 [_____________________________________] with respect to the additional insurance premium for oil spill
liability insurance coverage in the maximum amount commercially available, $ 1 billion as of January 1, 2004, on vessels carrying Persistent Oils to and from the U.S.A., [____] is derived: 
  
 [_________________________________________________________________________________________________ 
 ___________________________________________________________________________________] 
  
 [_____________________]                                   
          
  
 For
illustrative purposes, this rate may be expressed in USD per barrel as follows: 
  
 [__________________________________________ 
 ________________________________________________________________________________________________] 
  
 [_________________________________________] 
  
 2. The [________________________] and their related [______________________] applicable for each calendar quarter are based upon an average of [___________________________________] in the calendar quarter immediately
preceding the calendar quarter of the Nominated Month of delivery. Therefore the [________________________] computed above may properly be prorated for certain quarterly periods. Such proration may be computed as follows: 
  

	 	A.	With respect to volumes of LSFO [______________________________________________________________________ 

 _______________________________________________________________________________________] (typically February 20th of each Year), the relevant
[______________________________________] to be included in the computation of the [_______________________________________] shall be prorated for illustrative purposes as follows (for the first calendar quarter of a Year which is not a leap Year):

  
 50/90 multiplied by the [______________________]computed
prior to the rate change and 40/90 multiplied by the [___________________] using the revised rate. 
  

	 	B.	With respect to volumes of [________________________], and continuing for so long as the [______________________] as set forth in [_________________________] shall be applicable,
the relevant [_____________________________] to be included in the computation of the price component [_____________] shall be as derived as in part 1 above. 

  

 2 

	Note	(1): [___________________________] are revised and applicable for each calendar year, however the value of the [_________________________________] that pertains to the cost of oil
pollution liability insurance is revised in accordance with the Protection & Indemnity Club (mutual marine insurance organizations) premium year, generally February 20 through February 19 of the following year. Reference
[________________________] for the [____________________________] in effect from February 20, 2003 onwards and applicable to the October 2003 Product price. 

  

 3

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