Document:

Exhibit 4.1

 

FIELDSTONE MORTGAGE INVESTMENT TRUST, SERIES 2005-[], as Issuer

 

 

FIELDSTONE MORTGAGE INVESTMENT CORPORATION, as Depositor

 

 

[               ], as Trust
Administrator and Master Servicer

 

 

FIELDSTONE SERVICING CORP., as Servicer

 

 

[               ], as Subservicer

 

 

FIELDSTONE INVESTMENT CORPORATION, as Seller

 

 

and

 

 

[               ], as Indenture
Trustee

 

 

 

TRANSFER AND SERVICING AGREEMENT

 

Dated as of [               ],
2005

 

 

 

FIELDSTONE MORTGAGE INVESTMENT TRUST, SERIES 2005-[]

MORTGAGE-BACKED NOTES

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I DEFINITIONS

  
	
   

  
	
  Section 1.01.

  	
  Definitions

  	
   

  
	
  Section 1.02.

  	
  Calculations With Respect to the Mortgage
  Loans

  	
   

  
	
  Section 1.03.

  	
  Calculations With Respect to Accrued
  Interest

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II CONVEYANCE OF MORTGAGE
  LOANS

  
	
   

  
	
  Section 2.01.

  	
  Creation and Declaration of Trust Estate;
  Conveyance of Initial Mortgage Loans

  	
   

  
	
  Section 2.02.

  	
  Acceptance of Trust Estate; Review of
  Documentation

  	
   

  
	
  Section 2.03.

  	
  Grant
  Clause

  	
   

  
	
  Section 2.04.

  	
  Subsequent Transfers

  	
   

  
	
  Section 2.05.

  	
  Option to Contribute Derivative Instrument

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III REPRESENTATIONS AND
  WARRANTIES

  
	
   

  
	
  Section 3.01.

  	
  Representations and Warranties of the
  Depositor and the Seller

  	
   

  
	
  Section 3.02.

  	
  Discovery of Breach

  	
   

  
	
  Section 3.03.

  	
  Repurchase, Purchase or Substitution of
  Mortgage Loans

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV ADMINISTRATION AND
  SERVICING OF THE MORTGAGE LOANS BY THE SERVICER

  
	
   

  
	
  Section 4.01.

  	
  Seller’s Engagement of Servicer to Perform
  Servicing Responsibilities

  	
   

  
	
  Section 4.02.

  	
  Servicing of the Mortgage Loans

  	
   

  
	
  Section 4.03.

  	
  Payments To the Master Servicer

  	
   

  
	
  Section 4.04.

  	
  General Servicing Procedures

  	
   

  
	
  Section 4.05.

  	
  Representations, Warranties and Agreements

  	
   

  
	
  Section 4.06.

  	
  The Servicer and the Subservicer

  	
   

  
	
  Section 4.07.

  	
  Termination for Cause

  	
   

  
	
  Section 4.08.

  	
  Successor to Servicer and Subservicer,
  Miscellaneous Provisions

  	
   

  
	
  Section 4.09.

  	
  Miscellaneous Servicing Provisions

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V ADMINISTRATION AND MASTER
  SERVICING OF MORTGAGE LOANS BY THE MASTER SERVICER AND THE TRUST
  ADMINISTRATOR

  
	
   

  	
   

  	
   

  
	
  Section 5.01.

  	
  Duties of the Master Servicer;
  Representations and Warranties

  	
   

  
	
  Section 5.02.

  	
  Master Servicer Fidelity Bond and Master
  Servicer Errors and Omissions Insurance Policy

  	
   

  
	
  Section 5.03.

  	
  Master Servicer’s Financial Statements and
  Related Information

  	
   

  
	
  Section 5.04.

  	
  Power to Act; Procedures

  	
   

  
	
  Section 5.05.

  	
  Enforcement of Servicer’s and Master
  Servicer’s Obligations

  	
   

  
	
  Section 5.06.

  	
  [Reserved]

  	
   

  
	
  Section 5.07.

  	
  Collection Account

  	
   

  
	
  Section 5.08.

  	
  Application of Funds in the Collection
  Account

  	
   

  

 

i

 

	
  Section 5.09.

  	
  Reports to Indenture Trustee and
  Noteholders

  	
   

  
	
  Section 5.10.

  	
  Termination of Servicer or Subservicer;
  Successor Servicers

  	
   

  
	
  Section 5.11.

  	
  Master Servicer Liable for Enforcement

  	
   

  
	
  Section 5.12.

  	
  Assumption of Master Servicing by Indenture
  Trustee

  	
   

  
	
  Section 5.13.

  	
  [Reserved]

  	
   

  
	
  Section 5.14.

  	
  Release of Mortgage Files

  	
   

  
	
  Section 5.15.

  	
  Documents, Records and Funds in Possession
  of Master Servicer To Be Held for Indenture Trustee

  	
   

  
	
  Section 5.16.

  	
  Opinion

  	
   

  
	
  Section 5.17.

  	
  [Reserved]

  	
   

  
	
  Section 5.18.

  	
  [Reserved]

  	
   

  
	
  Section 5.19.

  	
  [Reserved]

  	
   

  
	
  Section 5.20.

  	
  Indenture Trustee To Retain Possession of
  Certain Insurance Policies and Documents

  	
   

  
	
  Section 5.21.

  	
  Compensation to the Master Servicer

  	
   

  
	
  Section 5.22.

  	
  [Reserved]

  	
   

  
	
  Section 5.23.

  	
  Reports to the Indenture Trustee

  	
   

  
	
  Section 5.24.

  	
  Annual Officer’s Certificate as to
  Compliance

  	
   

  
	
  Section 5.25.

  	
  Annual Independent Accountants’ Servicing
  Report

  	
   

  
	
  Section 5.26.

  	
  Merger or Consolidation

  	
   

  
	
  Section 5.27.

  	
  Resignation of Master Servicer

  	
   

  
	
  Section 5.28.

  	
  Assignment or Delegation of Duties by the
  Master Servicer

  	
   

  
	
  Section 5.29.

  	
  Limitation on Liability of the Master
  Servicer and Others

  	
   

  
	
  Section 5.30.

  	
  Indemnification; Third-Party Claims

  	
   

  
	
  Section 5.31.

  	
  Alternative
  Index

  	
   

  
	
  Section 5.32.

  	
  Transfer of Servicing

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI DEPOSITS AND PAYMENTS TO
  HOLDERS

  
	
   

  	
   

  	
   

  
	
  Section 6.01.

  	
  The Collection Account

  	
   

  
	
  Section 6.02.

  	
  Payments from the Collection Account

  	
   

  
	
  Section 6.03.

  	
  Net Swap Payments and Net Swap Receipts

  	
   

  
	
  Section 6.04.

  	
  Control of the Trust Account and Deferred
  Interest

  	
   

  
	
  Section 6.05.

  	
  Advances by Master Servicer and Servicer

  	
   

  
	
  Section 6.06.

  	
  Pre-Funding Account

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII ADMINISTRATION OF THE
  AGREEMENTS

  
	
   

  	
   

  	
   

  
	
  Section 7.01.

  	
  Duties of the Trust Administrator

  	
   

  
	
  Section 7.02.

  	
  Duties of the Trust Administrator With
  Respect to the Indenture, the Trust Agreement and this Agreement

  	
   

  
	
  Section 7.03.

  	
  Records

  	
   

  
	
  Section 7.04.

  	
  Compensation

  	
   

  
	
  Section 7.05.

  	
  Additional Information to be Furnished to
  the Issuer

  	
   

  
	
  Section 7.06.

  	
  Independence of the Trust Administrator

  	
   

  
	
  Section 7.07.

  	
  No
  Joint Venture

  	
   

  
	
  Section 7.08.

  	
  Other Activities of Trust Administrator and
  the Depositor

  	
   

  
	
  Section 7.09.

  	
  Resignation and Removal of Trust
  Administrator

  	
   

  

 

ii

 

	
  Section 7.10.

  	
  Action upon Termination, Resignation or
  Removal of the Trust Administrator

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII MASTER SERVICER EVENTS OF
  DEFAULT

  
	
   

  	
   

  	
   

  
	
  Section 8.01.

  	
  Master Servicer Events of Default;
  Indenture Trustee To Act; Appointment of Successor

  	
   

  
	
  Section 8.02.

  	
  Additional Remedies of Indenture Trustee
  Upon Event of Default

  	
   

  
	
  Section 8.03.

  	
  Waiver of Defaults

  	
   

  
	
  Section 8.04.

  	
  Notification to Holders

  	
   

  
	
  Section 8.05.

  	
  Directions by Noteholders and Duties of
  Indenture Trustee During Master Servicer Event of Default

  	
   

  
	
  Section 8.06.

  	
  Action Upon Certain Failures of the Master
  Servicer and Upon Master Servicer Event of Default

  	
   

  
	
  Section 8.07.

  	
  Preparation of Reports

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX TERMINATION

  
	
   

  	
   

  	
   

  
	
  Section 9.01.

  	
  Termination

  	
   

  
	
  Section 9.02.

  	
  Termination Prior to Maturity Date; and
  Optional Redemption

  	
   

  
	
  Section 9.03.

  	
  Certain Notices upon Final Payment

  	
   

  
	
  Section 9.04.

  	
  Beneficiaries

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE X MISCELLANEOUS PROVISIONS

  
	
   

  	
   

  	
   

  
	
  Section 10.01.

  	
  Binding Nature of Agreement; Assignment

  	
   

  
	
  Section 10.02.

  	
  Entire
  Agreement

  	
   

  
	
  Section 10.03.

  	
  Amendment

  	
   

  
	
  Section 10.04.

  	
  Acts of Noteholders

  	
   

  
	
  Section 10.05.

  	
  Recordation of Agreement

  	
   

  
	
  Section 10.06.

  	
  Governing
  Law

  	
   

  
	
  Section 10.07.

  	
  Notices

  	
   

  
	
  Section 10.08.

  	
  Severability of Provisions

  	
   

  
	
  Section 10.09.

  	
  Indulgences; No Waivers

  	
   

  
	
  Section 10.10.

  	
  Headings Not To Affect Interpretation

  	
   

  
	
  Section 10.11.

  	
  Benefits of Agreement

  	
   

  
	
  Section 10.12.

  	
  Special Notices to the Rating Agencies

  	
   

  
	
  Section 10.13.

  	
  Counterparts

  	
   

  
	
  Section 10.14.

  	
  Execution by the Issuer

  	
   

  

 

iii

 

ATTACHMENTS

 

	
  Exhibit A-1

  	
  Form of
  Initial Certification

  	
   

  
	
  Exhibit A-2

  	
  Form of
  Interim Certification

  	
   

  
	
  Exhibit A-3

  	
  Form of
  Final Certification

  	
   

  
	
  Exhibit A-4

  	
  Form of
  Endorsement

  	
   

  
	
  Exhibit B

  	
  Form of
  Swap Agreement

  	
   

  
	
  Exhibit C

  	
  Form of
  Lost Note Affidavit

  	
   

  
	
  Exhibit D

  	
  Custodial
  Agreement

  	
   

  
	
  Exhibit E

  	
  Custodial Account
  Letter Agreement

  	
   

  
	
  Exhibit F

  	
  Escrow
  Account Letter Agreement

  	
   

  
	
  Exhibit G-1

  	
  Form of
  Monthly Remittance Advice

  	
   

  
	
  Exhibit G-2

  	
  Standard
  Layout For Monthly Defaulted Loan Report

  	
   

  
	
  Exhibit G-3

  	
  Form 332
  Realized Loss Report

  	
   

  
	
  Exhibit H

  	
  CMMC
  Form of Sarbanes Back-up Certification

  	
   

  
	
  Exhibit I

  	
  Form of
  Subsequent Transfer Agreement

  	
   

  
	
  Exhibit J

  	
  Subsequent
  Mortgage Loan Criteria

  	
   

  
	
  Exhibit K

  	
  Fannie
  Mae Guide Announcement 95-19

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule A

  	
  Mortgage
  Loan Schedule

  	
   

  

 

iv

 

This TRANSFER AND SERVICING AGREEMENT, dated as
of [                ], 2005 (the “Agreement”
or the “Transfer and Servicing Agreement”), is by and among FIELDSTONE MORTGAGE
INVESTMENT TRUST, SERIES 2005-[ ], a Delaware statutory trust, as issuer (the “Issuer”),
FIELDSTONE MORTGAGE INVESTMENT CORPORATION, a Maryland corporation, as
depositor (the “Depositor”), [                             ], as indenture
trustee (the “Indenture Trustee”), [                              ], as trust
administrator (the “Trust Administrator”) and master servicer (the “Master
Servicer”), FIELDSTONE SERVICING CORP., as servicer (the “Servicer”), [                              ], as subservicer
(the “Subservicer”) and FIELDSTONE INVESTMENT CORPORATION, as seller (the “Seller”).

 

PRELIMINARY STATEMENT

 

WHEREAS, the Depositor has acquired all of
the rights, title and interest of the Seller in certain conventional,
adjustable rate, residential mortgage loans identified in Schedule A
hereto (the “Mortgage Loans”) on a servicing-retained basis from the Seller
pursuant to the Mortgage Loan Purchase Agreement, and at the Closing Date is
the owner of the Mortgage Loans and the other property being conveyed by it to
the Issuer hereunder for inclusion in the Trust Estate;

 

WHEREAS, the Depositor has duly authorized
the execution and delivery of this Agreement to provide for the conveyance to
the Issuer of the Mortgage Loans and the other property constituting the Trust
Estate;

 

WHEREAS, on the Closing Date, the Depositor
will acquire the Notes from the Issuer as consideration for its transfer to the
Issuer of the Mortgage Loans and the other property constituting the Trust
Estate;

 

WHEREAS, pursuant to the Indenture, the
Issuer will pledge the Mortgage Loans and the other property constituting the
Trust Estate to the Indenture Trustee as security for the Notes;

 

WHEREAS, the Seller desires that the Servicer
service the Mortgage Loans upon such transfer to the Issuer pursuant to this
Agreement, and the Servicer has agreed to do so;

 

WHEREAS, the Servicer, the Subservicer, the
Indenture Trustee, the Master Servicer and the Trust Administrator have agreed
pursuant to this Agreement that the Subservicer shall service the Mortgage
Loans beginning on the Closing Date pursuant to this Agreement but that the
Servicer will have ultimate responsibility for the servicing of the Mortgage
Loans;

 

WHEREAS, the Master Servicer shall be
obligated under this Agreement, among other things, to supervise the servicing
of the Mortgage Loans on behalf of the Indenture Trustee, and shall have the
right, under certain circumstances, to terminate the rights and obligations of
the Servicer and the Subservicer under this Agreement upon the occurrence and
continuance of a Servicing Event of Default as provided herein;

 

WHEREAS, the parties hereto acknowledge and
agree that, at the direction of the Depositor, the Seller will assign all of
its rights with respect to the Mortgage Loans (other than the servicing rights)
to the Indenture Trustee, and that each reference herein to the Seller is
intended, unless otherwise specified, to mean the Seller or the Indenture
Trustee, as assignee of the Seller.

 

 

WHEREAS, the Issuer has entered into certain
agreements in connection with the issuance of the Notes, including (i) the
Depository Agreement and (ii) the Indenture (the Depository Agreement, the
Indenture and the Trust Agreement being hereinafter referred to collectively as
the “Related Agreements”);

 

WHEREAS, pursuant to the Related Agreements,
the Issuer is required to perform certain duties in connection with (a) the
Notes and the collateral therefor pledged pursuant to the Indenture (the “Collateral”)
and (b) the undivided subordinate beneficial ownership interest in the
Issuer represented by the Ownership Certificate;

 

WHEREAS, the Issuer desires to have the Trust
Administrator perform certain of the duties of the Issuer referred to in the
preceding clause, and to provide such additional services consistent with the
terms of this Agreement and the Related Agreements as the Issuer or the Owner
Trustee may from time to time reasonably request; and

 

WHEREAS, the Trust Administrator has the
capacity to provide the services required hereby and is willing to perform such
services for the Issuer or the Owner Trustee on the terms set forth herein.

 

NOW, THEREFORE, in consideration of the
mutual agreements herein contained, the parties hereto agree as follows:

 

2

 

[General Note:  This Agreement includes references to a
securities structure involving a notional class and a Swap Agreement.  The Securities Structure is illustrative of
securities structures that FMIC may include in future takedowns from its
shelf-registration statement.  Please
note that this is a different securities structure from that presented in the
accompanying offices document.]

 

The following table sets forth (or describes)
the Class designation, Interest Rate, initial Class Principal Amount
(or Class Notional Amount) and minimum denomination for each Class of
Notes issued pursuant to the Indenture.

 

	
  Class

  Designation

  	
   

  	
  Interest Rate

  	
   

  	
  Initial

  Security Principal

  Amount or

  Security Notional

  Amount

  	
   

  	
  Minimum

  Denominations

  	
   

  
	
  Class l-A1

  	
   

  	
   

  	
  (1)

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
  [ 25,000

  	
  ]

  
	
  Class 1-A2

  	
   

  	
   

  	
  (2)

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
  [ 25,000

  	
  ]

  
	
  Class 2-A1

  	
   

  	
   

  	
  (3)

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
  [ 25,000

  	
  ]

  
	
  Class 2-A2

  	
   

  	
   

  	
  (4)

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
  [ 25,000

  	
  ]

  
	
  Class A-IO

  	
   

  	
   

  	
   [          ]%

  	
   

  	
  (12)

  	
   

  	
  $

  	
  [ 100,000

  	
  ]

  
	
  Class M1

  	
   

  	
   

  	
  (5)

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
  [ 100,000

  	
  ]

  
	
  Class M2

  	
   

  	
   

  	
  (6)

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
  [ 100,000

  	
  ]

  
	
  Class M3

  	
   

  	
   

  	
  (7)

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
  [ 100,000

  	
  ]

  
	
  Class M4

  	
   

  	
   

  	
  (8)

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
  [ 100,000

  	
  ]

  
	
  Class M5

  	
   

  	
   

  	
  (9)

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
  [ 100,000

  	
  ]

  
	
  Class M6

  	
   

  	
   

  	
  (10)

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
  [ 100,000

  	
  ]

  
	
  Class M7

  	
   

  	
   

  	
  (11)

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
  [ 100,000

  	
  ]

  

 

(1)           The
Interest Rate with respect to any Payment Date (and the related Accrual Period)
for the Class l-A1 Notes is the per annum rate equal to the least of (i) LIBOR
plus [     ]% per annum, (ii) the
Available Funds Rate and (iii) the Group 1 Fixed Rate Cap for such Payment
Date; provided, that the per
annum rate calculated pursuant to clause (i) above with respect to the Class 1-A
Notes will be equal to LIBOR plus [    
]% per annum beginning on the Step-up Date and each Payment Date
thereafter.

 

(2)           The
Interest Rate with respect to any Payment Date (and the related Accrual Period)
for the Class l-A2 Notes is the per annum rate equal to the least of (i) LIBOR
plus [     ]% per annum, (ii) the
Available Funds Rate and (iii) the Group 1 Fixed Rate Cap for such Payment
Date; provided, that the per
annum rate calculated pursuant to clause (i) above with respect to the Class l-A2
Notes will be equal to LIBOR plus [    
]% per annum beginning on the Stepup Date and each Payment Date
thereafter.

 

(3)           The
Interest Rate with respect to any Payment Date (and the related Accrual Period)
for the Class 2-A1 Notes is the per annum rate equal to the least of (i) LIBOR
plus [     ]% per annum, (ii) the
Available Funds Rate and (iii) the Group 2 Fixed Rate Cap for such Payment
Date; provided, that the per
annum rate calculated pursuant to clause (i) above

 

3

 

with respect to the Class 2-A1 Notes will be equal to LIBOR plus
[     ]% per annum beginning on the
Stepup Date and each Payment Date thereafter.

 

(4)           The
Interest Rate with respect to any Payment Date (and the related Accrual Period)
for the Class 2-A2 Notes is the per annum rate equal to the least of (i) LIBOR
plus [     ]% per annum, (ii) the
Available Funds Rate and (iii) the Group 2 Fixed Rate Cap for such Payment
Date; provided, that the per
annum rate calculated pursuant to clause (i) above with respect to the Class 2-A2
Notes will be equal to LIBOR plus [     ]% per annum beginning on the Stepup Date and
each Payment Date thereafter.

 

(5)           The
Interest Rate with respect to any Payment Date (and the related Accrual Period)
for the Class M1 Notes is the per annum rate equal to the least of (i) LIBOR
plus [     ]% per annum, (ii) the
Available Funds Rate and (iii) the Subordinate Fixed Rate Cap for such
Payment Date; provided, that the
per annum rate calculated pursuant to clause (i) above with respect to the
Class M1 Notes will be equal to LIBOR plus [     ]% per annum beginning on the Stepup Date
and each Payment Date thereafter.

 

(6)           The
Interest Rate with respect to any Payment Date (and the related Accrual Period)
for the Class M2 Notes is the per annum rate equal to the least of (i) LIBOR
plus [     ]% per annum, (ii) the
Available Funds Rate and (iii) the Subordinate Fixed Rate Cap for such
Payment Date; provided, that the
per annum rate calculated pursuant to clause (i) above with respect to the
Class M2 Notes will be equal to LIBOR plus [     ]% per annum beginning on the Stepup Date
and each Payment Date thereafter.

 

(7)           The
Interest Rate with respect to any Payment Date (and the related Accrual Period)
for the Class M3 Notes is the per annum rate equal to the least of (i) LIBOR
plus [     ]% per annum, (ii) the
Available Funds Rate and (iii) the Subordinate Fixed Rate Cap for such
Payment Date; provided, that the
per annum rate calculated pursuant to clause (i) above with respect to the
Class M3 Notes will be equal to LIBOR plus [     ]% per annum beginning on the Stepup Date
and each Payment Date thereafter.

 

(8)           The
Interest Rate with respect to any Payment Date (and the related Accrual Period)
for the Class M4 Notes is the per annum rate equal to the least of (i) LIBOR
plus [     ]% per annum, (ii) the Available
Funds Rate and (iii) the Subordinate Fixed Rate Cap for such Payment Date;
provided, that the per annum rate
calculated pursuant to clause (i) above with respect to the Class M4
Notes will be equal to LIBOR plus [    
]% per annum beginning on the Stepup Date and each Payment Date
thereafter.

 

(9)           The
Interest Rate with respect to any Payment Date (and the related Accrual Period)
for the Class M5 Notes is the per annum rate equal to the least of (i) LIBOR
plus [     ]% per annum, (ii) the
Available Funds Rate and (iii) the Subordinate Fixed Rate Cap for such
Payment Date; provided, that the
per annum rate calculated pursuant to clause (i) above with respect to the
Class M5 Notes will be equal to LIBOR plus [     ]% per annum beginning on the Stepup Date
and each Payment Date thereafter.

 

(10)         The
Interest Rate with respect to any Payment Date (and the related Accrual Period)
for the Class M6 Notes is the per annum rate equal to the least of (i) LIBOR
plus [     ]% per

 

4

 

annum, (ii) the Available Funds Rate and (iii) the
Subordinate Fixed Rate Cap for such Payment Date; provided, that the per annum rate calculated pursuant to
clause (i) above with respect to the Class M6 Notes will be equal to
LIBOR plus [     ]% per annum beginning
on the Stepup Date and each Payment Date thereafter.

 

(11)         The
Interest Rate with respect to any Payment Date (and the related Accrual Period)
for the Class M7 Notes is the per annum rate equal to the least of (i) LIBOR
plus [     ]% per annum, (ii) the
Available Funds Rate and (iii) the Subordinate Fixed Rate Cap for such
Payment Date; provided, that the
per annum rate calculated pursuant to clause (i) above with respect to the
Class M7 Notes will be equal to LIBOR plus [     ]% per annum beginning on the Stepup Date
and each Payment Date thereafter.

 

(12)         The
Class A-IO Notes are interest-only notes; they will not be entitled to
payments of principal and will accrue interest on the Class A-IO Class Notional
Amount.  Interest will not be payable on
the Class A-IO Notes after the Payment Date in [     ].

 

5

 

ARTICLE I

DEFINITIONS

 

Section 1.01.          Definitions.  The following words and phrases, unless the
context otherwise requires, shall have the following meanings:

 

A-IO(1) Component:  The component of the Class A-IO Notes
relating to Group 1.

 

A-IO(2) Component:  The component of the Class A-IO Notes
relating to Group 2.

 

Accounts.  Any or all of the Custodial Accounts, Escrow
Accounts, Collection Account, the Pre-Funding Account and any other accounts
created or maintained by the Trust Administrator, the Servicer or the
Subservicer pursuant to this Agreement.

 

Accountant:  A Person engaged in the practice of
accounting who (except when this Agreement provides that an Accountant must be
Independent) may be employed by or affiliated with the Depositor or an
Affiliate of the Depositor.

 

Accrual Period:  With respect to any Payment Date and any Class of
Notes (other than the Class A-IO Notes), the period beginning on the
Payment Date in the calendar month immediately preceding the month in which the
related Payment Date occurs (or, in the case of the first Payment Date,
beginning on the Closing Date) and ending on the day immediately preceding the
related Payment Date, and in the case of the Class A-IO Notes, the
calendar month preceding the month in which such Payment Date occurs.

 

Addition Notice:  The notice given pursuant to Section 2.04
with respect to the transfer of Subsequent Mortgage Loans to the Trust pursuant
to such Section.

 

Advance:  With respect to each Servicer Remittance Date
and each Mortgage Loan, an amount equal to the Scheduled Payment (with the
interest portion of such Scheduled Payment adjusted to the Net Mortgage Rate)
that was due on the Mortgage Loan on the Due Date in the related Due Period,
and that (i) was delinquent at the close of business on the related
Determination Date and (ii) was not the subject of a previous Monthly
Advance, but only to the extent that such amount is expected, in the reasonable
judgment of the Servicer, the Subservicer or Master Servicer, as applicable, to
be recoverable from collections or other recoveries in respect of such Mortgage
Loan.

 

Affiliate:  With respect to any specified Person, any
other Person controlling or controlled by or under common control with such
specified Person.  For the purposes of
this definition, “control” when used with respect to any specified Person means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms “controlling” and “controlled” have meanings
correlative to the foregoing.

 

Aggregate Expense Rate:  With respect to any Mortgage Loan, the sum of
the applicable Servicing Administration Fee Rate and the applicable Master
Servicing Fee Rate.

 

6

 

Aggregate Collateral Balance:  As of any date of determination, an amount
equal to the Aggregate Loan Balance plus the amount, if any, then on deposit in
the Pre-Funding Account exclusive of investment income.

 

Aggregate Loan Balance:  As of any date of determination, an amount
equal to the aggregate of the Stated Principal Balances of the Mortgage Loans
as of such date.

 

Aggregate Overcollateralization Release
Amount:  With
respect to any Payment Date, the lesser of (x) the sum of the Principal Funds
of each Mortgage Group for such Payment Date and (y) the amount, if any, by
which (1) the Overcollateralization Amount for such Payment Date
(calculated for this purpose on the basis of the assumption that 100% of the
aggregate of the Principal Funds of both Mortgage Groups for such date is
applied on such Payment Date in reduction of the aggregate of the Note
Principal Amounts of the related Notes) exceeds (2) the Targeted
Overcollateralization Amount for such Payment Date.

 

Agreement:  This 
and all amendments and supplements hereto.

 

Ancillary Income:  All income derived from the Mortgage Loans,
excluding Servicing Administration Fees, Master Servicing Fees and Prepayment
Premiums attributable to the Mortgage Loans and other amounts treated as
payment proceeds of the Mortgage Loans, including but not limited to, late
charges, fees received with respect to checks or bank drafts returned by the
related bank for non-sufficient funds, assumption fees, optional insurance
administrative fees and all other incidental fees and charges.

 

Appraised Value:  With respect to any Mortgage Loan, the amount
set forth in an appraisal made in connection with the origination of such
Mortgage Loan as the value of the related Mortgaged Property.

 

Assignment of Mortgage:  An assignment of the Mortgage, notice of
transfer or equivalent instrument, in recordable form, sufficient under the
laws of the jurisdiction wherein the related Mortgaged Property is located to
reflect the assignment of the Mortgage to the Indenture Trustee for the benefit
of Noteholders, which assignment, notice of transfer or equivalent instrument
may be in the form of one or more blanket assignments covering the Mortgage
Loans secured by Mortgaged Properties located in the same jurisdiction, if
permitted by law; provided, however,
that neither the Issuer nor the Indenture Trustee shall be responsible for determining
whether any such assignment is in recordable form.

 

Authorized Officer:  Any Person who may execute an Officer’s
Certificate on behalf of the Issuer.

 

Available Funds Rate:  With respect to any Payment Date and for any Class of
Notes (other than the Class A-IO Notes), a per annum rate equal to the
quotient of (a) the sum of (i) Interest Funds for Group 1, (ii) Interest
Funds for Group 2, and (iii) any Net Swap Receipt for such Payment Date,
less for the first [     ] Payment Dates
only, Current Interest on the Class A-IO Notes for such Payment Date,
divided by (b) the product of (i) the sum of the Class Principal
Amounts of the Class l-A1, Class l-A2, Class 2-A1, Class 2-A2,
Class M1, Class M2, Class M3, Class M4, Class M5, Class M6
and Class M7 Notes before taking into account any payments of

 

7

 

principal on such Payment Date,
multiplied by (ii) a fraction, the numerator of which is actual number of
days in the related Accrual Period, and the denominator of which is 360.

 

Available Funds Shortfall:  With respect to any Class of Notes,
other than the Class A-IO Notes, and any Payment Date, the sum of (a) the
excess, if any, of (i) the amount that would have been the Current
Interest for such Class had the Interest Rate for such Class been
determined without regard to the Available Funds Rate over (ii) the actual
amount of Current Interest for such Class, plus (b) any excess described
in clause (a) above for any prior Payment Date that remains unpaid, plus (c) interest
accrued during the Accrual Period related to such Payment Date on the amount
described in clause (b) above at the Interest Rate applicable to such
Class, determined without regard to the Available Funds Rate.

 

Bankruptcy:  As to any Person, the making of an assignment
for the benefit of creditors, the filing of a voluntary petition in bankruptcy,
adjudication as a bankrupt or insolvent, the entry of an order for relief in a
bankruptcy or insolvency proceeding, the seeking of reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief, or seeking, consenting to or acquiescing in the appointment of a
trustee, receiver or liquidator, dissolution, or termination, as the case may
be, of such Person pursuant to the provisions of either the United States
Bankruptcy Code of 1986, as amended, or any other similar state laws.

 

Bankruptcy Code:  The United States Bankruptcy Code of 1986, as
amended.

 

Benefit Plan Opinion:
An Opinion of Counsel satisfactory to the Owner Trustee and the Certificate
Registrar to the effect that any proposed transfer of Certificates will not (i) cause
the assets of the Trust Estate to be regarded as plan assets for purposes of
the Plan Asset Regulations or (ii) give rise to any fiduciary duty on the
part of the Depositor or the Indenture Trustee.

 

Book-Entry Notes:  As defined in the Indenture.

 

Business Day:  Any day other than (i) a Saturday or a
Sunday or (ii) a day on which banking institutions in New York, New York
or, if other than New York, the city in which the Corporate Trust Office of the
Indenture Trustee is located, or the States of Arizona, California, Delaware,
Maryland or Minnesota are authorized or obligated by law or executive order to
be closed.

 

Certificate Registrar:
 As defined in the Trust Agreement, the
initial Certificate Registrar shall be the Trust Administrator.

 

Certificate:  The Ownership Certificate.

 

Certificateholder:  Any registered holder of the Ownership
Certificate.

 

Civil Relief Act:  The Servicemembers Civil Relief Act, as such
may be amended from time to time, and any similar state laws.

 

Class:  All Notes bearing the same class designation.

 

8

 

Class l-A2 Trigger Event:  A Class l-A2 Trigger Event shall have
occurred with respect to any Payment Date prior to the Stepdown Date if the
quotient (expressed as a percentage) of (a) the aggregate Realized Losses
incurred from the Initial Cut-off Date through the last day of the calendar
month preceding such Payment Date divided by (b) the Aggregate Collateral
Balance as of the Closing Date exceeds [    
]%.

 

Class A Notes:  Collectively, the Class l-A, Class l-A2,
Class 2-A1, Class 2-A2 and Class A-IO Notes.

 

Class M Notes:  Collectively, the Class M1, Class M2,
Class M3, Class M4, Class M5, Class M6 and Class M7
Notes.

 

Class Notional Amount:  With respect to the Class A-IO Notes,
will be equal to the sum of the A-IO(1) Component and the A-IO(2) Component.

 

Class Principal Amount:  With respect to each Class of Notes
(other than the Class A-IO Notes), the aggregate of the Note Principal
Amounts of all Notes of such Class at the date of determination.

 

Clearing Agency:  An organization registered as a “clearing
agency” pursuant to Section 17A of the Exchange Act, as amended.  As of the Closing Date, the Clearing Agency
shall be The Depository Trust Company.

 

Closing Date:  [                        ],
2005.

 

Code:  The Internal Revenue Code of 1986, as
amended, and as it may be further amended from time to time, any successor
statutes thereto, and applicable U.S. Department of Treasury regulations issued
pursuant thereto in temporary or final form.

 

Collateral:  As defined in the Indenture.

 

Collection Account:  A separate account established and maintained
by the Trust Administrator for the benefit of the Indenture Trustee pursuant to
Section 5.07.

 

Compensating Interest Payment:  With respect to any Payment Date, an amount
equal to the lesser of (x) the aggregate Prepayment Interest Shortfall Amount
with respect to such Payment Date and (y) the Servicing Administration Fee
payable to the Servicer, with respect to the Servicer, and the portion of the
Servicing Administration Fee payable to the Subservicer, with respect to the
Subservicer, in respect of such Payment Date.

 

Component Notional Amount:  With respect to any Payment Date, the sum of
the notional amount of the A-IO(1) Component and A-IO(2) Component,
as set forth below:

 

9

 

	
  Payment Date

  	
   

  	
  A-IO(1)

  Component

  Notional

  Amount

  	
   

  	
  A-IO(2)

  Component

  Notional

  Amount

  	
   

  
	
  [              ] 25, 2005

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [              ] 25, 2005

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [              ] 25, 2005

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [              ] 25, 2005

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [              ] 25, 2005

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [              ] 25, 2005

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [              ] 25, 2005

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [              ] 25, 2005

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [              ] 25, 2005

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [              ] 25, 2005

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [              ] 25, 2005

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [              ] 25, 2005

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [              ] 25, 2005

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [              ] 25, 2005

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [              ] 25, 2005

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [              ] 25, 2005

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [              ] 25, 2005

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [              ] 25, 2006 and thereafter

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Condemnation Proceeds:  All awards of settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan documents.

 

Control:  The meaning specified in Section 8-106
of the New York UCC.

 

Conventional Loan:  A Mortgage Loan that is not insured by the
United States Federal Housing Administration or guaranteed by the United States
Department of Veterans Affairs.

 

Corporate Trust Office:  With respect to (i) the Trust
Administrator, the principal corporate trust office of the Trust Administrator
at which, at any particular time, its corporate trust business shall be
administered, which office at the date of execution of this Agreement for
purposes of transfers and exchanges and for presentment and surrender of the
Notes and for payment thereof is located at [                      ], and for all other
purposes is located at [               
]; (ii) the Certificate Registrar, the principal office of the
Certificate Registrar at which at any particular time its corporate trust
business shall be administered, which office at the date of execution of this
Agreement is located at the Corporate Trust Office of the Trust Administrator, or at such other address
as the Certificate Registrar may designate from time to time by notice to the
Noteholders and the Trust, or the principal corporate trust office of any
successor Certificate Registrar at the address designated by such successor
Certificate Registrar by notice to the Noteholders and the Trust; and (iii) the
Indenture Trustee, the principal office of the Indenture Trustee at which at
any particular time its corporate trust business shall be administered, which
office at the date of execution of this Agreement is located at [                       ], or at such other

 

10

 

address as the Indenture Trustee may
designate from time to time by notice to the Noteholders and the Trust, or the
principal corporate trust office of any successor Indenture Trustee at the
address designated by such successor Indenture Trustee by notice to the
Noteholders and the Trust.

 

Current Interest:  With respect to any Class of Notes
(other than the Class A-IO Notes) or any Component of the Class A-IO
Notes and any Payment Date, will equal the aggregate amount of interest accrued
at the applicable Interest Rate during the related Accrual Period on the Class Principal
Amount or Class Notional Amount of such Class or Component Notional
Amount of such component immediately prior to such Payment Date, provided, however,
that for any Class of Class M Notes and for any Payment Date, Current
Interest shall be reduced by the amount specified in clause (a) of the
definition of Deferred Interest, if any, for such Class and Payment
Date.  With respect to the Class A-IO
Notes and any Payment Date, the aggregate Current Interest on the components of
such Class for such Payment Date.

 

Custodial Account:  The separate custodial account (other than an
Escrow Account) established and maintained by the Servicer pursuant to Section 4.02(d) of
this Agreement.

 

Custodial Agreement:  The custodial agreement relating to the
custody of certain of the Mortgage Loans, substantially in the form attached as
Exhibit D hereto, between the Custodian, the Issuer and the Indenture
Trustee, as acknowledged by the Seller, the Depositor, the Master Servicer, the
Trust Administrator, the Servicer and the Subservicer, dated as of [                ], 2005.

 

Custodian:  The custodian appointed by the Indenture
Trustee pursuant to the Custodial Agreement, and any successor thereto.  The initial Custodian is [                       ].

 

Cut-off Date:  With respect to the Initial Mortgage Loans,
the Initial Cut-off Date, and with respect to the Subsequent Mortgage Loans,
the Subsequent Cut-off Date.

 

Cut-off Date Balance:  With respect to the Initial Mortgage Loans,
the Aggregate Loan Balance as of the Initial Cut-off Date.

 

Debt Service Reduction:  With respect to any Mortgage Loan, a reduction
of the Scheduled Payment that the related Mortgagor is obligated to pay on any
Due Date as a result of any proceeding under Bankruptcy law or any similar
proceeding.

 

Deferred Interest:  For any Class of Class M Notes and
any Payment Date, the sum of(a) the aggregate amount of interest accrued
at the applicable Interest Rate during the related Accrual Period on the
Principal Deficiency Amount for the Class, (b) any amounts due pursuant to
clause (a) for such Class for prior Payment Dates that remains unpaid
and (c) interest accrued during the Accrual Period related to such Payment
Date on the amount in clause (b) at the Interest Rate applicable to such
Class.

 

Definitive Note:  A Note of any Class issued in
definitive, fully registered, certificated form.

 

11

 

Deleted Mortgage Loan:  A Mortgage Loan that is repurchased from the
Trust Estate pursuant to the terms hereof or as to which one or more Qualifying
Substitute Mortgage Loans are substituted therefor.

 

Depositor:  Fieldstone Mortgage Investment Corporation, a
Maryland corporation having its principal place of business in New York, or its
successors in interest.

 

Depository Agreement:  The agreement dated [            ], 2005, among the Issuer, the
Indenture Trustee and The Depository Trust Company, as the initial Clearing
Agency, relating to the Book-Entry Notes.

 

Determination Date:  With respect to each Payment Date, the 15th
day of the month in which such Payment Date occurs, or, if such 15th day is not
a Business Day, the next succeeding Business Day.

 

Due Date:  The day of the calendar month on which the
Scheduled Payment is due on a Mortgage Loan, exclusive of any days of
grace.  Pursuant to Section 4.03(d),
with respect to any Mortgage Loans for which payment from the Mortgagor is due
on a day other than the first day of the month, such Mortgage Loans will be
treated as if the Scheduled Payment is due on the first day of the immediately
succeeding month.

 

Due Period:  With respect to any Payment Date and Mortgage
Loan, the period commencing on the second day of the month immediately
preceding the month in which such Payment Date occurs and ending on the first
day of the month in which such Payment Date occurs.

 

Eligible Account:  Either (i) an account or accounts
maintained with a federal or state chartered depository institution or trust
company that complies with the definition of Eligible Institution or (ii) an
account or accounts the deposits in which are insured by the FDIC to the limits
established by such corporation, provided that any such deposits not so insured
shall be maintained in an account at a depository institution or trust company
whose commercial paper or other short term debt obligations (or, in the case of
a depository institution or trust company which is the principal subsidiary of
a holding company, the commercial paper or other short term debt or deposit
obligations of such holding company or depository institution, as the case may
be) have been rated by each Rating Agency in its highest short-term rating
category, or (iii) a segregated trust account or accounts (which shall be
a “special deposit account”) maintained with the Indenture Trustee, the Trust
Administrator or any other federal or state chartered depository institution or
trust company, acting in its fiduciary capacity, in a manner acceptable to the
Indenture Trustee and the Rating Agencies. 
Eligible Accounts may bear interest.

 

Eligible Institution:  Any of the following:

 

(i)            An
institution whose:

 

(A)          commercial
paper, short-term debt obligations, or other short-term deposits are rated at
least “A-l+” or long-term unsecured debt obligations are rated at least “Aa-”
by S&P (or assigned comparable

 

12

 

ratings by the other Rating Agencies), if the
amounts on deposit are to be held in the account for no more than 365 days; or

 

(B)           commercial
paper, short-term debt obligations, demand deposits, or other short-term
deposits are rated at least “A-2” by S&P Rating Agencies, if the amounts on
deposit are to be held in the account for no more than 30 days and are not
intended to be used as credit enhancement. 
Upon the loss of the required rating set forth in this clause (ii), the
accounts shall be transferred immediately to accounts which have the required
rating.  Furthermore, commingling by the
Servicer is acceptable at the A-2 rating level if the Servicer is a bank,
thrift or depository and provided the Servicer has the capability to
immediately segregate funds and commence remittance to an Eligible Deposit
Account upon a downgrade; or

 

(ii)           the
corporate trust department of a federal depositor institution or
state-chartered depositor institution subject to regulations regarding
fiduciary funds on deposit similar to Title 12 of the U.S. Code of Federal
Regulation Section 9.10(b), which, in either case, has corporate trust
powers and is acting in its fiduciary capacity.

 

Eligible Investments:  Any one or more of the following obligations
or securities:

 

(i)            direct
obligations of, and obligations fully guaranteed as to timely payment of
principal and interest by, the United States of America or any agency or
instrumentality of the United States of America the obligations of which are
backed by the full faith and credit of the United States of America (“Direct
Obligations”);

 

(ii)           federal
funds, or demand and time deposits in, certificates of deposits of, or bankers’
acceptances issued by, any depository institution or trust company (including
U.S. subsidiaries of foreign depositories and the Indenture Trustee or any
agent of the Indenture Trustee, acting in its respective commercial capacity)
incorporated or organized under the laws of the United States of America or any
state thereof and subject to supervision and examination by federal or state
banking authorities, so long as at the time of investment or the contractual
commitment providing for such investment the commercial paper or other
short-term debt obligations of such depository institution or trust company
(or, in the case of a depository institution or trust company which is the
principal subsidiary of a holding company, the commercial paper or other
short-term debt or deposit obligations of such holding company or deposit
institution, as the case may be) have been rated by each Rating Agency in its
highest short-term rating category or one of its two highest long-term rating
categories;

 

(iii)          repurchase
agreements collateralized by Direct Obligations or securities guaranteed by
GNMA, Fannie Mae or FHLMC with any registered broker/dealer subject to Notes
Investors’ Protection Corporation jurisdiction or any commercial bank insured
by the FDIC, if such broker/dealer or bank has an uninsured,

 

13

 

unsecured and unguaranteed obligation rated
by each Rating Agency in its highest short-term rating category;

 

(iv)          securities
bearing interest or sold at a discount issued by any corporation incorporated
under the laws of the United States of America or any state thereof which have
a credit rating from each Rating Agency, at the time of investment or the
contractual commitment providing for such investment, at least equal to one of
the two highest long-term credit rating categories of each Rating Agency; provided, however, that securities issued
by any particular corporation will not be Eligible Investments to the extent
that investment therein will cause the then outstanding principal amount of
securities issued by such corporation and held as part of the Trust Estate to
exceed 20% of the sum of the Aggregate Loan Balance and the aggregate principal
amount of all Eligible Investments in the Note Account; provided, further, that such securities
will not be Eligible Investments if they are published as being under review
with negative implications from any Rating Agency;

 

(v)           commercial
paper (including both non-interest-bearing discount obligations and
interest-bearing obligations payable on demand or on a specified date not more
than 180 days after the date of issuance thereof) rated by each Rating Agency
in its highest short-term rating category;

 

(vi)          a
Qualified GIC;

 

(vii)         certificates
or receipts representing direct ownership interests in future interest or
principal payments on obligations of the United States of America or its agencies
or instrumentalities (which obligations are backed by the full faith and credit
of the United States of America) held by a custodian in safekeeping on behalf
of the holders of such receipts; and

 

(viii)        any
other demand, money market, common trust fund or time deposit or obligation, or
interest-beating or other security or investment (including those managed or
advised by the Indenture Trustee, the Master Servicer, the Trust Administrator,
or any Affiliate thereof), (A) rated in the highest rating category by
each Rating Agency or (B) that would not adversely affect the then current
rating assigned by each Rating Agency of any of the Notes.  Such investments in this subsection (viii) may
include money market mutual funds or common Trust Estates, including any fund
for which [the corporate entity that serves in the capacity of the Master
Servicer or Trust Administrator] [the “Entity”] in its capacity other than as
the Master Servicer, the Trust Administrator or an affiliate thereof serves as
an investment advisor, administrator, shareholder servicing agent, and/or
custodian or subcustodian, notwithstanding that (x) the Entity, the Indenture
Trustee, the Master Servicer or any affiliate thereof charges and collects fees
and expenses from such funds for services rendered, (y) the Entity, the
Indenture Trustee, the Trust Administrator, the Master Servicer or any
affiliate thereof charges and collects fees and expenses for services rendered
pursuant to this Agreement, and (z) services performed for such funds and
pursuant to this

 

14

 

Agreement may
converge at any time.  The Indenture
Trustee specifically authorizes the Entity or an affiliate thereof to charge
and collect from the Indenture Trustee such fees as are collected from all
investors in such funds for services rendered to such funds (but not to exceed
investment earnings thereon);

 

provided, however,
that no such instrument shall be an Eligible Investment if such instrument
evidences either (i) a right to receive only interest payments with
respect to the obligations underlying such instrument, or (ii) both
principal and interest payments derived from obligations underlying such
instrument and the principal and interest payments with respect to such instrument
provide a yield to maturity of greater than 120% of the yield to maturity at
par of such underlying obligations, provided that any such investment will be a
“permitted investment” within the meaning of Section 860G(a)(5) of
the Code.

 

Entitlement Holder:  The meaning specified in Section 8-102(a)(7) of
the New York UCC.

 

Entitlement Order:  The meaning specified in Section 8-102(a)(8) of
the New York UCC (i.e.,
generally, orders directing the transfer or redemption of any Financial Asset).

 

Environmental Problem Property:  A Mortgaged Property or REO Property that is
in violation of any environmental law, rule or regulation.

 

ERISA:  The Employee Retirement Income Security Act
of 1974, as amended.

 

Errors and Omissions Insurance:  Errors and Omissions Insurance to be
maintained by the Servicer in accordance with Section 4.02(m).

 

Errors and Omission Insurance Policy:  Any Errors and Omission Insurance policy
required to be obtained by the Servicer satisfying the requirements of this
Agreement.

 

Escrow Account:  The separate escrow account (other than a
Custodial Account) established and maintained by the Servicer pursuant to Section 4.02(f) of
this Agreement.

 

Escrow Payments:  With respect to any Mortgage Loan, the
amounts constituting ground rents, taxes, assessments, water rates, sewer
rents, municipal charges, mortgage insurance premiums, fire and hazard
insurance premiums, condominium charges, and any other payments required to be
escrowed by the Mortgagor with the mortgagee pursuant to the Mortgage or any
other document.

 

Event of Default:  A Servicer Event of Default or a Subservicer
Event of Default.

 

Excess Funding Amount:  The amount remaining on deposit in the
Pre-Funding Account at the end of the Pre-Funding Period, exclusive of
investment income.

 

Exchange Act:  The Securities Exchange Act of 1934, as
amended.

 

15

 

Fannie Mae or FNMA:  Fannie Mae, a federally chartered and
privately owned corporation organized and existing under the Federal National
Mortgage Association Charter Act, or any successor thereto.

 

FDIC:  The Federal Deposit Insurance Corporation or
any successor thereto.

 

FIC:  Fieldstone Investment Corporation.

 

Fidelity Bond:  Any fidelity bond to be maintained by the
Servicer in accordance with Section 4.02(m).

 

Financial Asset:  The meaning specified in Section 8-102(a) of
the New York UCC.

 

Fixed Rate Cap:  Any of the Group 1 Fixed Rate Cap, the Group
2 Fixed Rate Cap or the Subordinate Fixed Rate Cap, as applicable.

 

FMC:  Fieldstone Mortgage Company.

 

FOC:  Fieldstone Mortgage Ownership Corp.

 

Freddie Mac or FHLMC:  The Federal Home Loan Mortgage Corporation, a
corporate instrumentality of the United States created and existing under Title
III of the Emergency Home Finance Act of 1970, as amended, or any successor
thereto.

 

FSC:  Fieldstone Servicing Corp.

 

GNMA:  The Government National Mortgage Association,
a wholly owned corporate instrumentality of the United States within HUD.

 

Group 1:  The portion of the Mortgage Pool identified
as Group 1.

 

Group 1 Fixed Rate Cap:  With respect to a Payment Date, the per annum
rate equal to [     ]%.

 

Group 1 Monthly Excess Interest:  With respect to a Payment Date, means any
Interest Funds for Group 1 remaining after application pursuant to subclauses
(A)(i) through (xi) of Section 6.02(b).

 

Group 1 Percentage:  With respect to Group 1 and any Payment Date,
the fraction, expressed as a percentage, the numerator of which is the Group
Balance for Group 1 for such date and the denominator of which is the Aggregate
Collateral Balance for such date.

 

Group 2:  The portion of the Mortgage Pool identified
as Group 2.

 

Group 2 Fixed Rate Cap:  With respect to a Payment Date, the per annum
rate equal to [     ]%.

 

16

 

Group 2 Monthly Excess Interest:  With respect to a Payment Date, means any
Interest Funds for Group 2 remaining after application pursuant to subclauses
(A)(i) through (xi) of Section 6.02(c).

 

Group 2 Percentage:  With respect to Group 2 and any Payment Date,
the fraction, expressed as a percentage, the numerator of which is the Group
Balance for Group 2 for such date and the denominator of which is the Aggregate
Collateral Balance for such date.

 

Group Balance:  With respect to each Mortgage Group and any
Payment Date, the aggregate of the Stated Principal Balances of the Mortgage
Loans in such Mortgage Group. 
Guidelines:  As defined in Section 4.02(u)

 

Holder or Noteholder:  The registered holder of any Note or
Ownership Certificate as recorded on the books of the Note Registrar or the
Certificate Registrar except that, solely for the purposes of taking any action
or giving any consent pursuant to this Agreement, any Note registered in the
name of the Depositor, the Master Servicer, the Servicer, the Subservicer, the
Trust Administrator or the Indenture Trustee or any Affiliate thereof (unless
any such Person owns 100% of a Class) shall be deemed not to be outstanding in
determining whether the requisite percentage necessary to effect any such
consent has been obtained, except that, in determining whether the Indenture
Trustee shall be protected in relying upon any such consent, only Notes and an
Ownership Certificate which a Responsible Officer of the Indenture Trustee
knows to be so held shall be disregarded. 
The Indenture Trustee may request and conclusively rely on
certifications by the Depositor in determining whether any Note, or Ownership
Certificate are registered to an Affiliate of the Depositor.

 

HUD:  The United States Department of Housing and
Urban Development, or any successor thereto.

 

Indenture:  The Indenture dated as of [  ], 2005, among the Issuer, the Trust
Administrator and the Indenture Trustee, as such may be amended or supplemented
from time to time.

 

Indenture Events of Default:  As defined in Section 5.01 of the
Indenture.

 

Indenture Trustee:  [                         ], not in its
individual capacity but solely as Indenture Trustee, or any successor in
interest.

 

Independent:  When used with respect to any Accountants, a
Person who is “independent” within the meaning of Rule 2-01(b) of the
Securities and Exchange Commission’s Regulation S-X.  When used with respect to any other Person, a
Person who (a) is in fact independent of another specified Person and any
Affiliate of such other Person, (b) does not have any material direct
financial interest in such other Person or any Affiliate of such other Person,
and (c) is not connected with such other Person or any Affiliate of such
other Person as an officer, employee, promoter, underwriter, trustee, partner,
director or Person performing similar functions.

 

Index:  The index specified in the related Mortgage
Note for calculation of the Mortgage Rate thereof.

 

17

 

Initial Cut-off Date:  [                ], 2005.

 

Initial Mortgage Loans:  The Mortgage Loans included in the Trust as
of the Closing Date.

 

Initial Mortgage Loan Schedule:  The schedule of Initial Mortgage Loans
included in the Trust as of the Closing Date.

 

Insurance Policy:  Any primary mortgage insurance policy, any
standard hazard insurance policy, flood insurance policy, earthquake insurance
policy or title insurance policy relating to the Mortgage Loans or the
Mortgaged Properties, to be in effect as of the Closing Date or thereafter
during the term of this Agreement.

 

Insurance Proceeds:  With respect to each Mortgage Loan, proceeds
of insurance policies insuring the Mortgage Loan or the related Mortgaged
Property, if applicable, including the proceeds of any hazard or flood
insurance policy reduced by expenses incurred by the Servicer or the
Subservicer in connection with procuring such proceeds, applied to the
restoration and repair of the related Mortgaged Property or to be paid to the
related Mortgagor pursuant to the Mortgage Note or applicable state law.

 

Interest Funds:  With respect to each Mortgage Group and any
Payment Date, (a) the sum of, without duplication, (1) all interest
collected (other than the interest portion of Payaheads and Prepayment Premiums)
or advanced in respect of Scheduled Payments on the Mortgage Loans in such
Mortgage Group during the related Due Period by the Servicer, the Subservicer,
the Master Servicer or the Indenture Trustee (solely in its capacity as
successor Master Servicer), minus,
(x) to the extent provided under Sections 4.02(e)(3) and (4) and
Sections 5.08(i) and (ii) herein, previously unreimbursed Advances
and Nonrecoverable Advances due to the Servicer, the Subservicer, the Master
Servicer or the Indenture Trustee (solely in its capacity as successor master
servicer) to the extent allocable to interest and the allocable portion of
previously unreimbursed Servicing Advances with respect to the Mortgage Loans
in such Mortgage Group, (y) the Servicing Administration Fee and Master
Servicing Fee with respect to such Mortgage Loans in such Mortgage Group and
(z) any fees and expenses of any Custodian with respect to the Mortgage Loans
in such Mortgage Group to the extent not paid by the Seller or its Affiliates, (2) any
Compensating Interest Payments or payments in respect of Prepayment Interest
Shortfalls paid by the Master Servicer pursuant to Section 5.21 with
respect to the related Prepayment Period with respect to the Mortgage Loans in
such Mortgage Group, (3) the portion of any Purchase Price or Substitution
Amount paid with respect to the Mortgage Loans in such Mortgage Group during
the related Prepayment Period allocable to interest, and (4) all Net
Liquidation Proceeds, Insurance Proceeds and any other recoveries collected
with respect to the Mortgage Loans in such Mortgage Group during the related
Prepayment Period, to the extent allocable to interest, as reduced by (b) such
Mortgage Group’s pro rata share
of:  (i) the Owner Trustee Fee, (ii) any
costs, expenses or liabilities reimbursable or otherwise due to the Master
Servicer, Servicer, the Subservicer, the Indenture Trustee, any Custodian, the
Owner Trustee or the Trust Administrator to the extent provided in this
Agreement, the Trust Agreement, the Indenture and any Custodial Agreement and (iii) any
Net Swap Payment.

 

18

 

Interest Margin:  For each Class of Notes (other than the Class A-IO
Notes), for any Payment Date prior to the Stepup Date, the following per annum
rate:  Class l-A1, [     ]%; Class l-A2, [     ]%; Class 2-A1, [     ]%; Class 2-A2, [     ]; Class M1, [     ]%; Class M2, [     ]%; Class M3, [     ]%; Class M4, [     ]%; Class M5, [     ]%; Class M6, [     ]% and Class M7, [     ]%; and for the Stepup Date and each
Payment Date thereafter, the following per annum rate:  Class l-A1, [     ]%; Class l-A2, [     ]%; Class 2-A1, [     ]%; Class 2-A2, [     ]%; Class M1, [     ]%; Class M2, [     ]%; Class M3, [     ]%; Class M4, [     ]%; Class M5, [     ]%; Class M6, [     ]% and Class M7, [     ]%.

 

Interest-only Notes:  The Class A-IO Notes.

 

Interest Rate:  With respect to (a) each Class of
Notes (other than the Class A-IO Notes) on any Payment Date, the least of (1) LIBOR
plus the Interest Margin for such Class, (2) the applicable Available
Funds Rate and (3) the applicable Fixed Rate Cap and (b) the Class A-IO
Notes, a per annum rate of [     ]%.

 

Intervening Assignments:  The original intervening assignments of the
Mortgage, notices of transfer or equivalent instrument.

 

Issuer:  The Delaware statutory trust known as the “Fieldstone
Mortgage Investment Trust, Series 2005-[ ].”

 

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

 

LIBOR:  (a) With respect to the first Accrual
Period, the per annum rate of [     ]%.  With respect to each subsequent Accrual
Period, a per annum rate determined on the LIBOR Determination Date in the following
manner by the Trust Administrator on the basis of the “Interest Settlement Rate”
set by the British Bankers’ Association (the “BBA”) for one-month United States
dollar deposits, as such rates appear on the Telerate Page 3750, as of
11:00 a.m. (London time) on such LIBOR Determination Date.

 

(b)           If on such a LIBOR Determination Date, the BBA’s Interest
Settlement Rate does not appear on the Telerate Page 3750 as of 11:00 a.m.
(London time), or if the Telerate Page 3750 is not available on such date,
the Trust Administrator will determine such rate on the basis of the offered
rates of the Reference Banks for one-month United States dollar deposits, as
such rates appear on the Reuters Screen LIBO Page, as of 11:00 a.m.
(London time) on such LIBOR Determination Date.

 

(c)           If LIBOR is determined under clause (b) above, on each
LIBOR Determination Date, LIBOR for the related Accrual Period for the Notes
will be established by the Trust Administrator as follows:

 

(1)           If
on such LIBOR Determination Date two or more Reference Banks provide such
offered quotations, LIBOR for the related Accrual Period for the Notes shall be
the arithmetic mean of such offered quotations (rounded upwards if necessary to
the nearest whole multiple of 0.03125%).

 

19

 

(2)           If
on such LIBOR Determination Date fewer than two Reference Banks provide such
offered quotations, LIBOR for the related Accrual Period shall be the higher of
(x) LIBOR as determined on the previous LIBOR Determination Date and (y) the
Reserve Interest Rate.

 

(d)           The establishment of LIBOR by the Trust Administrator and
the Trust Administrator’s subsequent calculation of the Interest Rate
applicable to the LIBOR Notes for the relevant Accrual Period, in the absence
of manifest error, will be final and binding.

 

LIBOR Business Day:  Any day on which banks in London, England and
The City of New York are open and conducting transactions in foreign currency
and exchange.

 

LIBOR Determination Date:  The second LIBOR Business Day immediately
preceding the commencement of each Accrual Period for any LIBOR Notes.

 

LIBOR Note:  Any Class l-A1, Class l-A2, Class 2-A1,
Class 2-A2, Class M1, Class M2, Class M3, Class M4, Class M5,
Class M6 or Class M7 Note.

 

Liquidated Mortgage Loan:  Any defaulted Mortgage Loan as to which the
Master Servicer, the Servicer or the Subservicer, as applicable, has determined
that all amounts that it expects to recover from or on account of such Mortgage
Loan have been recovered.

 

Liquidation Expenses:  Expenses that are incurred by the Master
Servicer, the Servicer or the Subservicer, as applicable, in connection with
the liquidation of any defaulted Mortgage Loan and are not recoverable under
the applicable primary mortgage insurance policy, if any, including, without
limitation, foreclosure and rehabilitation expenses, legal expenses and
unreimbursed amounts, if any, expended pursuant to Sections 4.06, 4.18 or 4.23.

 

Liquidation Proceeds:  Cash received in connection with the
liquidation of a defaulted Mortgage Loan, whether through the sale or
assignment of such Mortgage Loan, trustee’s sale, foreclosure sale, payment in
full, discounted payoff or otherwise, or the sale of the related REO Property,
if the Mortgaged Property is acquired in satisfaction of the Mortgage Loan.

 

M1 Principal Deficiency Amount:  With respect to any Payment Date, the lesser
of (a) the excess, if any, of (1) the Total Principal Deficiency
Amount over (2) the sum of (i) the M2 Principal Deficiency Amount, (ii) the
M3 Principal Deficiency Amount, (iii) the M4 Principal Deficiency Amount, (iv) the
M5 Principal Deficiency Amount, (v) the M6 Principal Deficiency Amount and
(vi) the M7 Principal Deficiency Amount, in each case for that Payment
Date and (b) the Class Principal Amount of the Class M1 Notes
immediately prior to such Payment Date.

 

M1 Principal Payment Amount:  With respect to any Payment Date on or after
the Stepdown Date and as long as a Trigger Event is not in effect with respect
to such Payment Date, the excess of (x) the sum of (i) the aggregate Class Principal
Amount of the Class l-A1, Class l- A2, Class 2-A1 and Class 2-A2
Notes, in each case after giving effect to payments on such Payment Date and (ii) the
Class Principal Amount of the Class M1 Notes immediately prior to such
Payment Date over (y) the M1 Target Amount.

 

20

 

M1 Target Amount:  With respect to any Payment Date, an amount
equal to the lesser of (a) the product of (i) [    ]% and (ii) the Aggregate Collateral
Balance for such Payment Date determined as of the last day of the related Due
Period and (b) the excess of (i) the Aggregate Collateral Balance for
such Payment Date determined as of the last day of the related Due Period over (ii) 0.50%
of the Aggregate Collateral Balance as of the Closing Date.

 

M2 Principal Deficiency Amount:  With respect to any Payment Date, the lesser
of (a) the excess, if any, of (l) the Total Principal Deficiency Amount
over (2) the sum of (i) the M3 Principal Deficiency Amount, (ii) the
M4 Principal Deficiency Amount, (iii) the M5 Principal Deficiency Amount, (iv) the
M6 Principal Deficiency Amount and (v) the M7 Principal Deficiency Amount,
in each case for that Payment Date and (b) the Class Principal Amount
of the Class M2 Notes immediately prior to such Payment Date.

 

M2 Principal Payment Amount:  With respect to any Payment Date on or after
the Stepdown Date and as long as a Trigger Event is not in effect with respect
to such Payment Date, the excess of (x) the sum of (i) the aggregate Class Principal
Amount of the Class l-A1, Class l- A2, Class 2-A1, Class 2-A2
and Class M1 Notes, in each case after giving effect to payments on such
Payment Date and (ii) the Class Principal Amount of the Class M2
Notes immediately prior to such Payment Date over (y) the M2 Target Amount.

 

M2 Target Amount:  With respect to any Payment Date, an amount
equal to the lesser of (a) the product of (i) [     ]%
and (ii) the Aggregate Collateral Balance for such Payment Date determined
as of the last day of the related Due Period and (b) the excess of (i) the
Aggregate Collateral Balance for such Payment Date determined as of the last
day of the related Due Period over (ii) 0.50% of the Aggregate Collateral
Balance as of the Closing Date.

 

M3 Principal Deficiency Amount:  With respect to any Payment Date, the lesser
of (a) the excess, if any, of (l) the Total Principal Deficiency Amount
over (2) the sum of (i) the M4 Principal Deficiency Amount, (ii) the
M5 Principal Deficiency Amount, (iii) the M6 Principal Deficiency Amount
and (iv) the M7 Principal Deficiency Amount, in each case for that Payment
Date and (b) the Class Principal Amount of the Class M3 Notes
immediately prior to such Payment Date.

 

M3 Principal Payment Amount:  With respect to any Payment Date on or after
the Stepdown Date and as long as a Trigger Event is not in effect with respect
to such Payment Date, the excess of(x) the sum of (i) the aggregate Class Principal
Amount of the Class l-A1, Class l- A2, Class 2-A1, Class 2-A2,
Class M1 and Class M2 Notes, in each case after giving effect to
payments on such Payment Date and (ii) the Class Principal Amount of
the Class M3 Notes immediately prior to such Payment Date over (y) the M3
Target Amount.

 

M3 Target Amount:  With respect to any Payment Date, an amount
equal to the lesser of (a) the product of (i) [     ]%
and (ii) the Aggregate Collateral Balance for such Payment Date determined
as of the last day of the related Due Period and (b) the excess of (i) the
Aggregate Collateral Balance for such Payment Date determined as of the last
day of the related Due Period over (ii) 0.50% of the Aggregate Collateral
Balance as of the Closing Date.

 

21

 

M4 Principal Deficiency Amount:  With respect to any Payment Date, the lesser
of (a) the excess, if any, of (1) the Total Principal Deficiency
Amount over (2) the sum of (i) the M5 Principal Deficiency Amount, (ii) the
M6 Principal Deficiency Amount and (iii) the M7 Principal Deficiency
Amount, in each case for that Payment Date and (b) the Class Principal
Amount of the Class M4 Notes immediately prior to such Payment Date.

 

M4 Principal Payment Amount:  With respect to any Payment Date on or after
the Stepdown Date and as long as a Trigger Event is not in effect with respect
to such Payment Date, the excess of (x) the sum of (i) the aggregate Class Principal
Amount of the Class l-A1, Class l- A2, Class 2-A1, Class 2-A2,
Class M1, Class M2 and Class M3 Notes, in each case after giving
effect to payments on such Payment Date and (ii) the Class Principal
Amount of the Class M4 Notes immediately prior to such Payment Date over
(y) the M4 Target Amount.

 

M4 Target Amount:  With respect to any Payment Date, an amount
equal to the lesser of (a) the product of (i) [     ]%
and (ii) the Aggregate Collateral Balance for such Payment Date determined
as of the last day of the related Due Period and (b) the excess of (i) the
Aggregate Collateral Balance for such Payment Date determined as of the last
day of the related Due Period over (ii) 0.50% of the Aggregate Collateral
Balance as of the Closing Date.

 

M5 Principal Deficiency Amount:  With respect to any Payment Date, the lesser
of (a) the excess, if any, of (1) the Total Principal Deficiency
Amount over (2) the sum of (i) the M6 Principal Deficiency Amount and
(ii) the M7 Principal Deficiency Amount, in each case for that Payment
Date and (b) the Class Principal Amount of the Class M5 Notes
immediately prior to such Payment Date.

 

M5 Principal Payment Amount:  With respect to any Payment Date on or after
the Stepdown Date and as long as a Trigger Event is not in effect with respect
to such Payment Date, the excess of (x) the sum of (i) the aggregate Class Principal
Amount of the Class l-A1, Class l- A2, Class 2-A1, Class 2-A2,
Class M1, Class M2, Class M3 and Class M4 Notes, in each
case after giving effect to payments on such Payment Date and (ii) the Class Principal
Amount of the Class M5 Notes immediately prior to such Payment Date over
(y) the M5 Target Amount.

 

M5 Target Amount:  With respect to any Payment Date, an amount
equal to the lesser of (a) the product of(i) [     ]%
and (ii) the Aggregate Collateral Balance for such Payment Date determined
as of the last day of the related Due Period and (b) the excess of (i) the
Aggregate Collateral Balance for such Payment Date determined as of the last
day of the related Due Period over (ii) 0.50% of the Aggregate Collateral
Balance as of the Closing Date.

 

M6 Principal Deficiency Amount:  With respect to any Payment Date, the lesser
of (a) the excess, if any, of (1) the Total Principal Deficiency
Amount over (2) the M7 Principal Deficiency Amount, in each case for that
Payment Date and (b) the Class Principal Amount of the Class M6
Notes immediately prior to such Payment Date.

 

M6 Principal Payment Amount:  With respect to any Payment Date on or after
the Stepdown Date and as long as a Trigger Event is not in effect with respect
to such Payment Date, the excess of (x) the sum of (i) the aggregate Class Principal
Amount of the Class l-A1, Class l- A2, Class 2-A1, Class 2-A2,
Class M1, Class M2, Class M3, Class M4 and Class M5
Notes, in

 

22

 

each case after giving effect
to payments on such Payment Date and (ii) the Class Principal Amount
of the Class M6 Notes immediately prior to such Payment Date over (y) the
M6 Target Amount.

 

M6 Target Amount:  With respect to any Payment Date, an amount
equal to the lesser of (a) the product of (i) [     ]%
and (ii) the Aggregate Collateral Balance for such Payment Date determined
as of the last day of the related Due Period and (b) the excess of (i) the
Aggregate Collateral Balance for such Payment Date determined as of the last
day of the related Due Period over (ii) 0.50% of the Aggregate Collateral
Balance as of the Closing Date.

 

M7 Principal Deficiency Amount:  With respect to any Payment Date, the lesser
of (a) the Total Principal Deficiency Amount for that Payment Date and (b) the
Class Principal Amount of the Class M7 Notes immediately prior to
such Payment Date.

 

M7 Principal Payment Amount:  With respect to any Payment Date on or after
the Stepdown Date and as long as a Trigger Event is not in effect with respect
to such Payment Date, the excess of (x) the sum of(i) the aggregate Class Principal
Amount of the Class l-A1, Class l- A2, Class 2-A1, Class 2-A2,
Class M1, Class M2, Class M3, Class M4, Class M5 and Class M6
Notes, in each case after giving effect to payments on such Payment Date and (ii) the
Class Principal Amount of the Class M7 Notes immediately prior to
such Payment Date over (y) the M7 Target Amount.

 

M7 Target Amount:  With respect to any Payment Date, an amount
equal to the lesser of (a) the product of (i) [     ]%
and (ii) the Aggregate Collateral Balance for such Payment Date determined
as of the last day of the related Due Period and (b) the excess of (i) the
Aggregate Collateral Balance for such Payment Date determined as of the last
day of the related Due Period over (ii) 0.50% of the Aggregate Collateral
Balance as of the Closing Date.

 

Majority Noteholders:  Until such time as the sum of the Class Principal
Amounts of all Classes of Notes has been reduced to zero, the holder or holders
of in excess of 50% of the aggregate Class Principal Amount of all Classes
of Notes (accordingly, the holder of the Ownership Certificate shall be
excluded from any rights or actions of the Majority Noteholders during such
period); and thereafter, the holder of the Ownership Certificate.

 

Master Servicer:  [                  ], or any successor in
interest, or if any successor master servicer shall be appointed as herein
provided, then such successor master servicer.

 

Master Servicer Event of Default:  Any one of the conditions or circumstances enumerated in Section 8.01(a).

 

Master Servicing Fee:  As to any Payment Date, an amount equal to
the product of (i) one-twelfth of the Master Servicing Fee Rate and (ii) the
Aggregate Loan Balance as of the first day of the related Due Period.

 

Master Servicing Fee Rate:  With respect to each Mortgage Loan, [       ]% per annum.  Material Defect:  With respect to any Mortgage Loan, as defined
in Section 2.02(c) hereof.

 

23

 

Maturity Date:  With respect to any Class of Notes,
other than the Class A-IO Notes, the Payment Date in [       ]. 
With respect to the Class A-IO Note, the Payment Date in [       ].

 

MERS:  Mortgage Electronic Registration Systems, Inc.,
a Delaware corporation, or any successor in interest thereto.

 

MERS Mortgage Loan:  Any Mortgage Loan as to which the related
Mortgage, or an Assignment of Mortgage, has been or will be recorded in the
name of MERS, as nominee for the holder from time to time of the Mortgage Note.

 

Monthly Excess Cashflow:  For any Payment Date, the sum of the Group 1
Monthly Excess Interest and the Group 2 Monthly Excess Interest for any Payment
Date and the Aggregate Overcollateralization Release Amount for such Payment
Date.

 

Moody’s:  Moody’s Investors Service, Inc., or any
successor in interest.

 

Mortgage:  A mortgage, deed of trust or other instrument
encumbering a fee simple interest in real property securing a Mortgage Note,
together with improvements thereto.

 

Mortgage File:  The mortgage documents listed in Section 2.01(b) pertaining
to a particular Mortgage Loan required to be delivered to the Indenture Trustee
pursuant to this Agreement.

 

Mortgage Group:  Any of Group 1 or Group 2.

 

Mortgage Impairment Insurance Policy:  A mortgage impairment or blanket hazard
insurance policy to be maintained by the Servicer in accordance with Section 5.02(1).

 

Mortgage Index:  The Six-Month LIBOR Index, as specified for
any Mortgage Loan in the Mortgage Loan Schedule.

 

Mortgage Loan:  A mortgage loan that is conveyed to the
Issuer pursuant to this Agreement on the Closing Date, with respect to the
Initial Mortgage Loans, and on each Subsequent Transfer Date, with respect to
the Subsequent Mortgage Loans, which mortgage loan includes, without
limitation, the mortgage loan documents, the Scheduled Payments, Principal
Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds,
any related REO Property, REO Disposition Proceeds, and all other rights,
benefits, proceeds and obligations arising from or in connection with such
mortgage loan.  The Initial Mortgage
Loans subject to this Agreement are
identified on the Initial Mortgage Loan Schedule annexed hereto as Schedule A
and have an aggregate Stated Principal Balance as of the Initial Cut-off Date
of $[     ].  The Subsequent Mortgage Loans
subject to this Agreement will be identified on each Subsequent Mortgage Loan Schedule to
be annexed hereto as Schedule A on each Subsequent Transfer Date.

 

Mortgage Loan Purchase Agreement:  The mortgage loan purchase agreement dated as
of [                ], 2005, for the sale
of the Mortgage Loans by the Seller to the Depositor.

 

24

 

Mortgage Loan Remittance Rate:  With respect to each Mortgage Loan, the
Mortgage Rate minus the Servicing Administration Fee Rate.

 

Mortgage Loan Schedule:  Each Initial Mortgage Loan Schedule and
any Subsequent Mortgage Loan Schedule attached hereto as Schedule A,
which shall identify each Mortgage Loan, as such schedule may be amended
from time to time to reflect the addition of Mortgage Loans to, or the deletion
of Mortgage Loans from, the Trust Estate. 
Such schedule shall set forth, among other things, the following
information with respect to each Mortgage Loan: 
(i) the Mortgage Loan identifying number; (ii) the Mortgagor’s
name; (iii) the street address of the Mortgaged Property including the
city, state and zip code; (iv) the original principal balance of the
Mortgage Loan; (v) the Mortgage Rate at origination; (vi) the
Mortgage Index; (vii) the first Mortgage Rate adjustment date; (viii) the
monthly payment of principal and interest at origination; (ix) the
Servicing Administration Fee Rate; (x) the Master Servicer Fee Rate and (xi)
whether such Mortgage Loan is subject to a Prepayment Premium for voluntary
prepayments by the Mortgagor, the term during which such Prepayment Premiums
are imposed and the method of calculation of the Prepayment Premium.  The Servicer shall be responsible for
providing the Indenture Trustee and the Master Servicer with all amendments to
the Mortgage Loan Schedule.

 

Mortgage Note:  The note or other evidence of the
indebtedness of a Mortgagor secured by a Mortgage under a Mortgage Loan.

 

Mortgage Pool:  The aggregate of all the Mortgage Loans.

 

Mortgage Rate:  As to any Mortgage Loan, the per annum rate
at which interest accrues on such Mortgage Loan, as determined under the
related Mortgage Note as reduced by the applications of the Civil Relief Act.

 

Mortgaged Property:  The fee simple interest in real property,
together with improvements thereto including any exterior improvements to be
completed within 120 days of disbursement of the related Mortgage Loan proceeds.

 

Mortgagor:  The obligor on a Mortgage Note.

 

Net Liquidation Proceeds:  With respect to any Liquidated Mortgage Loan,
the related Liquidation Proceeds received and retained in connection with the
liquidation of such Mortgage Loan net of(i) Liquidation Expenses and (ii) any
related unreimbursed Advances and Servicing Advances, if any.

 

Net Mortgage Rate:  With respect to any Mortgage Loan, the
Mortgage Rate thereof reduced by the Aggregate Expense Rate for such Mortgage
Loan.

 

Net Swap Payment:  With respect to the second Business Day prior
to any Payment Date, the amount paid by the Trust under the Swap Agreement to
the Swap Counterparty in excess of the amounts received by the Trust from the
Swap Counterparty, as calculated by the Swap Counterparty and reported to the
Trust Administrator.

 

Net Swap Receipt:  With respect to the second Business Day prior
to any Payment Date, the amount received by the Trust under the Swap Agreement
from the Swap Counterparty in

 

25

 

excess of the amount paid by
the Trust to the Swap Counterparty, as calculated by the Swap Counterparty and
reported to the Trust Administrator.

 

New York UCC:  The Uniform Commercial Code as in effect in
the State of New York.

 

Non-MERS Mortgage Loan:  Any Mortgage Loan other than a MERS Mortgage
Loan.

 

Nonrecoverable Advance:  Any Servicing Advance or Monthly Advance
previously made or proposed to be made in respect of a Mortgage Loan by the
Servicer which, in the reasonable discretion of the Servicer will not or, in
the case of a proposed Servicing Advance or Monthly Advance, would not,
ultimately be recoverable by the Servicer from the related Mortgagor, related
Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds, REO Disposition
Proceeds or otherwise.  The determination
by the Servicer that all or a portion of a Servicing Advance or Monthly Advance
would be a Nonrecoverable Advance shall be evidenced by an Officer’s
Certificate delivered to the Master Servicer setting forth such determination
and a reasonable explanation thereof.

 

Note:  As defined in the Indenture.

 

Note Principal Amount:  With respect to any Note (other than a Class A-IO
Note), the initial principal amount thereof on the Closing Date, less the
amount of all principal payments previously paid with respect to such Note.

 

Note Register and Note
Registrar:  As defined in the
Indenture.

 

Notional Amount:  With respect to any Notional Note and any
Payment Date, such Note’s Percentage Interest of the Class Notional Amount
of the applicable Class of Notes for such Payment Date.

 

Notional Note:  Any Class A-IO Note.

 

Offering Document:  The Prospectus.

 

Officer’s Certificate:  A certificate signed by the Chairman of the
Board, any Vice Chairman, the President, any Senior Vice President, any Vice
President or any Assistant Vice President of a Person.

 

Operative Agreements:  The Trust Agreement, the Certificate of Trust
of the Issuer, this Agreement, the Mortgage Loan Purchase Agreement, the
Indenture, the Custodial Agreement and each other document contemplated by any
of the foregoing to which the Depositor, the Seller, the Master Servicer, the
Servicer, the Subservicer, the Owner Trustee, the Trust Administrator, the
Indenture Trustee or the Issuer is a party.

 

Opinion of Counsel:  A written opinion of counsel, reasonably
acceptable in form and substance to the
Seller, the Trust Administrator,
the Indenture Trustee and/or the Master Servicer, as applicable, and who may be in-house or outside counsel to
the Seller, the Servicer, the Subservicer, the Depositor, the Master Servicer,
the Trust Administrator or the Indenture

 

26

 

Trustee but which must be Independent outside
counsel with respect to any such opinion of counsel concerning federal income
tax or ERISA matters.

 

Original Loan-to-Value Ratio:  With respect to any Mortgage Loan, the ratio
of the principal balance of such Mortgage Loan at origination, or such other
date as is specified, to the Original Value of the related Mortgaged Property.

 

Original Value:  The lesser of (a) the Appraised Value of
a Mortgaged Property at the time the related Mortgage Loan was originated and (b) if
the Mortgage Loan was made to finance the acquisition of the related Mortgaged
Property, the purchase price paid for the Mortgaged Property by the Mortgagor
at the time the related Mortgage Loan was originated.

 

Overcollateralization Amount:  With respect to any Payment Date will be
equal to the amount, if any, by which (x) the Aggregate Collateral Balance for
such Payment Date exceeds (y) the aggregate Class Principal Amount of the
LIBOR Notes, in each case after giving effect to payments on such Payment Date.

 

Overcollateralization Deficiency Amount:  With respect to any Payment Date, the excess,
if any, of the Targeted Overcollateralization Amount for that Payment Date over
the Overcollateralization Amount for that Payment Date.

 

Ownership Certificate:  An equity certificate representing a 100%
undivided beneficial ownership interest in the Trust, substantially in the form
attached as part of Exhibit A to the Trust Agreement.

 

Ownership Certificate Holder:  The holder of the Ownership Certificate.

 

Owner Trustee:  [     ], a
[     ], and any successor in interest, not in its
individual capacity, but solely as owner trustee under the Trust Agreement.

 

Owner Trustee Fee:  The annual fee of
$[     ], payable to the Owner Trustee pursuant to the
Fee Letter Agreement specified in Section 7.03 of the Trust Agreement on a
monthly basis on each Payment Date during the term of this Agreement; provided
that the Owner Trustee Fee for the first year shall be payable on the Closing
Date by the Seller.

 

Payahead:  With respect to any Mortgage Loan and any Due
Date therefor, any Scheduled Payment received by the Servicer during any Due
Period in addition to the Scheduled Payment due on such Due Date, intended by
the related Mortgagor to be applied on a subsequent Due Date or Due Dates.

 

Paying Agent:  As defined in the Indenture.  The initial Paying Agent shall be the Trust
Administrator.

 

Payment Date:  The 25th day of each month or, if such 25th
day is not a Business Day, the next succeeding Business Day, commencing in
[     ] 2005.

 

Percentage Interest:  With respect to any Note, the Percentage
Interest evidenced thereby shall equal (i) with respect to the Ownership
Certificate, the Percentage Interest on the face of

 

27

 

such certificate or (ii) with
respect to any LIBOR Note, the initial Note Principal Amount thereof, divided
by the initial Class Principal Amount of all LIBOR Notes of the same
Class.  With respect to any Class A-IO
Certificate, the Percentage Interest evidenced thereby shall equal the initial
Notional Amount of such Class as set forth on the face thereof divided by
the initial Class Notional Amount thereof.

 

Person:  Any individual, corporation, partnership,
joint venture, association, joint-stock company, limited liability company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.

 

Plan:  An employee benefit plan or other retirement
arrangement which is subject to Section 406 of ERISA and/or Section 4975
of the Code or any entity whose underlying assets include such plan’s or
arrangement’s assets by reason of their investment in the entity.

 

Plan Asset Regulations:  The Department of Labor regulations set forth
in 29 C.F.R. 2510.3-101.

 

Pre-Funding Account:  The account established by the Trust
Administrator for the benefit of Noteholders, into which the Seller is required
to deposit or cause to be deposited an amount equal to
$[             ]
on the Closing Date.

 

Pre-Funding Period:  The period from Closing Date through and
including [     ], 2005, during which the Seller may
transfer Subsequent Mortgage Loans to the Trust.

 

Prepayment Interest Excess Amount:  For any Servicer Remittance Date and any
Principal Prepayment in full (including any liquidation) received during the
portion of the related Prepayment Period occurring from and including the first
day through the fifteenth day of the calendar month in which such Servicer
Remittance Date occurs, an amount equal to interest (to the extent received)
due in connection with such Principal Prepayment.

 

Prepayment Interest Shortfall Amount:  With respect to any Payment Date and (x) any
Principal Prepayment in part during the preceding calendar month or (y) any
Principal Prepayment in full from the sixteenth day of the preceding calendar
month through the end of such calendar month, the amount, if any, by which one
month’s interest at the Net Mortgage Rate for such Mortgage Loan on the amount
of such Principal Prepayment exceeds the amount of interest received from such
Mortgagor in respect of such Principal Prepayment.

 

Prepayment Period:  With respect to any Payment Date and any
Principal Prepayment other than 
Principal Prepayment in part by a Mortgagor, the period beginning from
and including the sixteenth day of the month preceding the month in which such
Payment Date occurs to and including the fifteenth day of the month in which
such Payment Date occurs.  With respect
to any Payment Date and any Principal Prepayment in part by a Mortgagor, the
calendar month immediately preceding the month in which such Payment Date
occurs.

 

Prepayment Premiums:  Any prepayment fees and penalties to be paid
by the Mortgagor on a Mortgage Loan in the case of a full or partial voluntary
prepayment of such Mortgage Loan during the related Prepayment Period.

 

28

 

Prime Rate:  The prime rate of the United States money
center commercial banks as published in The Wall Street Journal,
Northeast Edition.

 

Principal Deficiency Amount:  Any of the M1 Principal Deficiency Amount,
the M2 Principal Deficiency Amount, the M3 Principal Deficiency Amount, the M4
Principal Deficiency Amount, the M5 Principal Deficiency Amount, the M6
Principal Deficiency Amount or the M7 Principal Deficiency Amount, as
applicable.

 

Principal Funds:  With respect to any Payment Date and for each
Mortgage Group, (a) the sum of (i) all principal collected (other
than the principal portion of Payaheads) or advanced in respect of Scheduled
Payments on the Mortgage Loans in such Mortgage Group during the related Due
Period whether by the Servicer, the Master Servicer or the Indenture Trustee
(less unreimbursed Advances and Nonrecoverable Advances due to the Master
Servicer, the Servicer, the Subservicer or the Indenture Trustee, solely in its
capacity as successor Master Servicer, with respect to such Mortgage Group) and
any unreimbursed Servicing Advances, in each case, to the extent allocable to
principal and to the extent provided under Sections 4.02(e)(3) and (4) and
Sections 5.08(i) and (ii)), (ii) all Principal Prepayments in full or
in part received during the related Prepayment Period on the Mortgage Loans in
such Mortgage Group, (iii) the Stated Principal Balance of each Mortgage
Loan in such Mortgage Group that was purchased from the Trust Estate, during
the related Prepayment Period, (iv) the portion of any Substitution Amount
paid with respect to any Deleted Mortgage Loan relating to a Mortgage Loan in
such Mortgage Group during the related Prepayment Period allocable to
principal, (v) all Net Liquidation Proceeds, Insurance Proceeds, REO
Disposition Proceeds and other Recoveries collected with respect to such
Mortgage Loans in such Mortgage Group during the related Prepayment Period, to
the extent allocable to principal, as
reduced by (b) such Mortgage Group’s pro rata share of: 
other costs, expenses or liabilities reimbursable to the Indenture
Trustee, the Owner Trustee, the Custodian, the Trust Administrator, the Master
Servicer and the Servicer to the extent provided in this Agreement, the Trust
Agreement, the Indenture and the Custodial Agreement and to the extent not
reimbursed from Interest Funds, or otherwise and (vi) with respect to the
[     ] 2005 Payment Date, the amount remaining in the
Pre-Funding Account at the end of the Pre- Funding Period in respect of that
Mortgage Group, exclusive of investment income.

 

Principal Payment Amount:  With respect to each Mortgage Group and for
any Payment Date, an amount equal to the Principal Funds for such Mortgage
Group for such date minus the Aggregate Overcollateralization Release Amount
attributable to such Mortgage Group, if any, and such Payment Date.

 

Principal Prepayment:  Any payment or other recovery of principal on
a Mortgage Loan including any payment or other recovery of principal in
connection with the repurchase of a Mortgage Loan by the Seller, the Servicer
or any other Person received in advance of such Mortgage Loan’s scheduled Due
Date.

 

Proceeding:  Any suit in equity, action at law or other
judicial or administrative proceeding.

 

Property Changes:  As defined in Section 4.02(i).

 

29

 

Prospectus:  The prospectus supplement dated
[     ], 2005, together with the accompanying
prospectus dated [     ], 2005, relating to the Class 1-A1,
Class l-A2, Class A-IO, Class 2-A1,
Class 2-A2, Class M1, Class M2, Class M3, Class M4, Class M5,
Class M6 and Class M7 Notes.

 

Purchase Price:  With respect to the purchase of a Mortgage
Loan or related REO Property pursuant to this Agreement, an amount equal to the
sum of (a) 100% of the unpaid principal balance of such Mortgage Loan, (b) accrued
interest thereon at the applicable Mortgage Rate, from the date as to which
interest was last paid to (but not including) the Due Date in the Due Period
during which such Mortgage Loan or REO Property is being so purchased; (c) the
fair market value of the REO Property and all other property being purchased; (d) .any
unreimbursed Servicing Advances with respect to such Mortgage Loan; and (e) any
costs and damages incurred by the Trust Estate associated with any violation of
applicable federal, state or local anti-predatory or anti-abusive lending laws
with respect to the related Mortgage Loan. 
The Master Servicer and the Servicer shall be reimbursed from the
Purchase Price for any Mortgage Loan or related REO Property for any Advances
made or other amounts advanced with respect to such Mortgage Loan that are
reimbursable to the Master Servicer or the Servicer under this Agreement,
together with any accrued and unpaid Servicing Administration Fee and Master
Servicing Fee with respect to such Mortgage Loan.

 

Qualified GIC:  A guaranteed investment contract or surety
bond providing for the investment of funds in the Collection Account or the
Note Account and insuring a minimum, fixed or floating rate of return on
investments of such funds, which contract or surety bond shall:

 

(i)                                     be an obligation
of an insurance company or other corporation whose long-term debt is rated by
each Rating Agency in one of its two highest rating categories or, if such
insurance company has no long term debt, whose claims paying ability is rated
by each Rating Agency in one of its two highest rating categories, and whose
short-term debt is rated by each Rating Agency in its highest rating category;

 

(ii)                                  provide that the
Indenture Trustee may exercise all of the rights under such contract or surety
bond without the necessity of taking any action by any other Person;

 

(iii)                               provide that if at any
time the then current credit standing of the obligor under such guaranteed
investment contract is such that continued investment pursuant to such contract
of funds would result in a downgrading of any rating of the Notes, the
Indenture Trustee shall terminate such contract without penalty and be entitled
to the return of all funds previously invested thereunder, together with
accrued interest thereon at the interest rate provided under such contract to
the date of delivery of such funds to the Indenture Trustee;

 

(iv)                              provide that the
Indenture Trustee’s interest therein shall be transferable to any successor
trustee hereunder; and

 

30

 

(v)                                 provide that the funds
reinvested thereunder and accrued interest thereon be returnable to the
Collection Account or the Note Account, as the case may be, not later than the
Business Day prior to any Payment Date.

 

Qualified Insurer:  An insurance company duly qualified as such
under the laws of the states in which the related Mortgaged Properties are
located, duly authorized and licensed in such states to transact the applicable
insurance business and to write the insurance provided and whose claims paying
ability is rated by each Rating Agency in its highest rating category or whose
selection as an insurer will not adversely affect the rating of the Notes.

 

Qualified REIT Subsidiary:  A direct or indirect 100% owned subsidiary of
a REIT that satisfies the requirements of Section 856(i) of the Code.

 

Qualifying Substitute Mortgage Loan:  In the case of a Mortgage Loan substituted
for a Deleted Mortgage Loan pursuant to the terms of this Agreement, a Mortgage
Loan that, on the date of such substitution, (i) has an outstanding Stated
Principal Balance (or in the case of a substitution of more than one mortgage
loan for a Deleted Mortgage Loan, an aggregate Stated Principal Balance), after
application of all Scheduled Payments due during or prior to the month of
substitution, not in excess of, and not more than 5% less than, the outstanding
Stated Principal Balance of the Deleted Mortgage Loan as of the Due Date in the
calendar month during which the substitution occurs, (ii) has a Mortgage
Rate not less than, and not more than 0.50% higher than, the Mortgage Rate on
the Deleted Mortgage Loan, (iii) if applicable, has a maximum Mortgage
Rate not less than the maximum Mortgage Rate on the Deleted Mortgage Loan, (iv) has
a minimum Mortgage Rate not less than the minimum Mortgage Rate of the Deleted
Mortgage Loan, (v) has a gross margin equal to or greater than the gross
margin of the Deleted Mortgage Loan, (vi) has a next adjustment date not
later than the next adjustment date on the Deleted Mortgage Loan, (vii) has
the same Due Date as the Deleted Mortgage Loan, (viii) has a remaining
stated term to maturity not longer than 18 months and not more than 18 months
shorter than the remaining stated term to maturity of the related Deleted
Mortgage Loan, (ix) is current as of the date of substitution, (x) has a
Loan-to-Value Ratio as of the date of substitution equal to or lower than the
Loan-to-Value Ratio of the Deleted Mortgage Loan as of such date, (xi) has been
underwritten by the Seller in accordance with the same underwriting criteria
and guidelines as the Deleted Mortgage Loan, (xii) has a risk grading
determined by the Seller at least equal to the risk grading assigned on the
Deleted Mortgage Loan, (xiii) is secured by the same property type as the
Deleted Mortgage Loan, (xiv) conforms to each representation and warranty
applicable to the Deleted Mortgage Loan made in the Mortgage Loan Purchase
Agreement, (xv) has the same first lien position as the Deleted Mortgage Loan,
(xvi) is covered by a primary mortgage insurance policy if the Deleted Mortgage
Loan was so covered, (xvii) contains provisions covering the payment of
Prepayment Premium by the Mortgager for early prepayment of the Mortgage Loan
at least as favorable to the Trust as the Deleted Mortgage Loan, (xviii) has a
maturity date not later than the maturity date of the latest maturing Mortgage
Loan in the Mortgage Pool as of the Closing Date, (xix) has the same Mortgage
Index as the Deleted Mortgage Loan, (xx) if originated on or after November 27,
2003, is not a “high cost” loan subject to the New Jersey Home Ownership
Security Act of 2003 and (xxi) if originated on or after January 1, 2004
is not a “high-cost” loan subject to the New Mexico Home Loan Protection
Act.  In the event that one or more
mortgage loans are substituted for one or more Deleted Mortgage Loans, the
amounts described in clause (i) hereof shall be determined on the

 

31

 

basis of aggregate Stated
Principal Balances, the Mortgage Rates described in clause (ii) hereof
shall be determined on the basis of weighted average Mortgage Rates, the risk
gradings described in clause (xii) hereof shall be satisfied as to each such
mortgage loan, the terms described in clause (viii) hereof shall be
determined on the basis of weighted average remaining term to maturity, the
Loan-to-Value Ratios described in clause (x) hereof shall be satisfied as to
each such mortgage loan and, except to the extent otherwise provided in this
sentence, the representations and warranties described in clause (xiv) hereof
must be satisfied as to each Qualified Substitute Mortgage Loan or in the
aggregate, as the case may be.

 

Rating Agency:  Each of Moody’s and S&P.

 

Realized Loss:  With respect to each Liquidated Mortgage
Loan, an amount equal to (i) the unpaid principal balance of such Mortgage
Loan as of the date of liquidation, minus (ii) Liquidation Proceeds
received, to the extent allocable to principal, net of amounts that are
reimbursable therefrom to the Master Servicer or the Servicer with respect to
such Mortgage Loan (other than Advances of principal) including Liquidation
Expenses.  In determining whether a Realized
Loss is a Realized Loss of principal, Liquidation Proceeds shall be allocated,
first, to payment of Liquidation Expenses, then to accrued unpaid interest and
finally to reduce the principal balance of the Mortgage Loan.

 

Record Date:  With respect to each Payment Date and each Class of
Notes (other than the Class A-IO Notes), the Business Day prior to the
related Payment Date, and with respect to the Class A-IO Notes, and any Class of
Definitive Notes, the last Business Day of the month immediately preceding the
month in which the Payment Date occurs (or, in the case of the first Payment
Date, the Closing Date).

 

Recovery:  With respect to any Liquidated Mortgage Loan,
an amount received in respect of principal on such Mortgage Loan which has
previously been allocated as a Realized Loss to a Class or Classes of
Notes net of reimbursable expenses.

 

Redemption Date:  The first Payment Date on which the Servicer
is permitted to exercise its right to purchase the assets of the Trust pursuant
to Section 9.02 hereof.

 

Redemption Price:  The sum of (a) 100% of the aggregate
outstanding principal balance of the Mortgage Loans, plus accrued interest
thereon at the applicable Mortgage Rate, (b) the fair market value of all
other property being purchased, (c) any unreimbursed Servicing Advances, (d) the
amount of any swap breakage costs resulting from the termination of the Swap
Agreement as a result of redemption (as reported to the Trust Administrator by
the Swap Counterparty), (e) any Available Funds Shortfalls, (f) all
other amounts to be paid or reimbursed to the Master Servicer, the Trust
Administrator, the Indenture Trustee, the Owner Trustee and the Custodian and (g) an
amount equal to the required payment to the Holders of the Class A-IO
Notes of (i) any Current Interest due (after taking into account payments
made on such date from Interest Funds for Group 1 and Group 2) on the Class A-IO
Notes and (ii) the present value, as of the date of such termination, of
the remaining payments scheduled to be made on the Class A-IO Notes (such
present value to be based on a discount rate that will approximate the expected
yield to maturity of the Class A-IO Notes).

 

32

 

Reference Banks:  Leading banks selected by the Trust
Administrator and engaged in transactions in Eurodollar deposits in the
international Eurocurrency market (1) with an established place of
business in London, (2) whose quotations appear on the Reuters Screen LIBO
Page on the Determination Date in question, (3) which have been
designated as such by the Trust Administrator and (4) not controlling,
controlled by, or under common control with, the Depositor, the Indenture
Trustee, the Trust Administrator, the Master Servicer, the Servicer, the Seller
or any successor servicer.

 

REIT:  A real estate investment trust within the
meaning of section 856 of the Code.

 

Related Senior Principal Payment Amount:  With respect to each Mortgage Group and for
any Payment Date, an amount equal to the lesser of (x) the aggregate Class Principal
Amounts of the Class l-A1 and Class l-A2 Notes (with respect to Group
1) or of the Class 2-A1 and Class 2-A2 Notes (with respect to Group
2) immediately prior to that Payment Date and (y) the product of (a) the
Senior Principal Payment Amount and (b) the related Senior Proportionate
Percentage in each case for such date.

 

Relevant UCC:  The Uniform Commercial Code as in effect in
the applicable jurisdiction.

 

REO Disposition:  The final sale by the Servicer or the
Subservicer of any REO Property.

 

REO Disposition Proceeds:  All amounts received with respect to an REO
Disposition pursuant to Section 4.02(p).

 

REO Property:  A Mortgaged Property acquired by the Servicer
through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.

 

Representing Party:  Each of the Servicer and the Subservicer
making the representations and warranties under Section 4.05(a) and
4.05(b), respectively.

 

Required Loss Percentage:  With respect to any Payment Date, the
applicable percentage for such Payment Date as set forth in the following
table:

 

	
  Payment
  Date

  	
   

  	
  Required Loss Percentage

  
	
  [     ] 2007 through [     ] 2008

  	
   

  	
  [     ]% with respect to [     ]
  2007, plus an additional 1/12th of [     ]%
  for each month thereafter

  
	
   

  	
   

  	
   

  
	
  [     ] 2008 through [     ] 2009

  	
   

  	
  [     ]% with respect to [     ],
  plus an additional 1/12th of [    
  ]% for each month thereafter

  
	
   

  	
   

  	
   

  
	
  [     ] 2009 through [     ] 2010

  	
   

  	
  [     ]% with respect to [     ],
  plus an additional 1/12th of [    
  ]% for each month thereafter

  
	
   

  	
   

  	
   

  
	
  [     ] 2010 and thereafter

  	
   

  	
  [     ]%

  

 

33

 

Required Percentage:  With respect to a Payment Date on or after
the Stepdown Date, the quotient of (a) the Aggregate Collateral Balance,
less the Class Principal Amount of the most senior class of Notes (other
than the Class A-IO Notes) outstanding as of such Payment Date, prior to
giving effect to payments to be made on such Payment Date, divided by (b) the
Aggregate Collateral Balance.  As used
herein, the Class Principal Amount of the most senior class of Notes
outstanding will equal the aggregate Class Principal Amount of the Class A
Notes as of such date of calculation.

 

Reserve Interest Rate:  The rate per annum that the Trust
Administrator determines to be either (1) the arithmetic mean (rounded
upwards if necessary to the nearest whole multiple of 0.03125%) of the
one-month United States dollar lending rates which New York City banks selected
by the Trust Administrator are quoting on the relevant Interest Determination
Date to the principal London offices of leading banks in the London interbank
market or, (2) in the event that the Trust Administrator can determine no
such arithmetic mean, the lowest one-month United States dollar lending rate
which New York City banks selected by the Trust Administrator are quoting on
such Determination Date to leading European banks.

 

Responsible Officer:  Any Vice President, any Assistant Vice
President, any Assistant Secretary, any Assistant Treasurer, any Corporate
Trust officer or any other officer of the Indenture Trustee or the Trust
Administrator, as applicable, customarily performing functions similar to those
performed by any of the above-designated officers and, in each case, having
direct responsibility for the administration of the Operative Agreements and
also, with respect to a particular matter, any other officer to whom such
matter is referred because of such officer’s knowledge of and familiarity with
the particular subject.

 

Reuters Screen LIBO Page:  The display designated as page ”LIBO” on
the Reuters Monitor Money Rates Service (or such other page as may replace
the LIBO page on that service for the purpose of displaying London
interbank offered rates of major banks).

 

S&P:  Standard & Poor’s Ratings Services,
a division of The McGraw-Hill Companies, Inc., or any successor in
interest.

 

Sarbanes Certifying Party:  Any person who provides a certification
pursuant to the Sarbanes-Oxley Act of 2002 on behalf of the Trust.

 

Scheduled Payment:  Each scheduled payment of principal and interest
(or of interest only, if applicable) to be paid by the Mortgagor on a Mortgage
Loan, as reduced (except where otherwise specified herein) by the amount of any
related Debt Service Reduction or pursuant to the Civil Relief Act (excluding
all amounts of principal and interest that were due on or before the Cut-off
Date whenever received) and, in the case of an REO Property, an amount
equivalent to the Scheduled Payment that would have been due on the related
Mortgage Loan if such Mortgage Loan had remained in existence.

 

Securities Intermediary:  The Person acting as Securities Intermediary
under this Agreement (which is [     ]), its successor
in interest, and any successor Securities Intermediary appointed pursuant to Section 6.04.

 

34

 

Security Entitlement:  The meaning specified in Section 8-102(a)(17)
of the New York UCC.

 

Seller:  FIC.

 

Senior Note:  Any Class l-A1, Class l-A2, Class 2-A1,
Class 2-A2 or Class A-IO Note.

 

Senior Principal Payment Amount:  With respect to any Payment Date and the Class l-
A1, Class l-A2, Class 2-A1 and Class 2-A2 Notes, an amount equal
to (a) prior to the Stepdown Date or if Trigger Event is in effect with
respect to such Payment Date, 100% of the Principal Payment Amount for both
Mortgage Groups and (b) on or after the Stepdown Date and as long as a
Trigger Event is not in effect with respect to such Payment Date, the lesser of
(x) the Principal Payment Amount for both Mortgage Groups and (y) the amount,
if any, by which (A) the aggregate Class Principal Amounts of the Class l-A1,
Class l-A2, Class 2-A1 and Class 2- A2 Notes immediately prior
to that Payment Date exceeds (B) the Senior Target Amount.

 

Senior Priorities:  The priority of payments to the Class A
Notes described in clauses (i)(1)(B) and (C) and (i)(2)(B) and
(C), as applicable, in Section 6.02(d) herein for the related
Mortgage Group.

 

Senior Proportionate Percentage:  With respect to Group 1 and any Payment Date,
the fraction, expressed as a percentage, the numerator of which is the
Principal Funds for Group 1 for such Payment Date and the denominator of which
is the aggregate of the Principal Funds for Group 1 and Group 2 for such
date.  With respect to Group 2 and any
Payment Date, the fraction, expressed as a percentage, the numerator of which
is the Principal Funds for Group 2 for such Payment Date and the denominator of
which is the aggregate of the Principal Funds for Group 1 and Group 2 for such
date.

 

Senior Target Amount:  With respect to any Payment Date, an amount
equal to the lesser of (a) the product of (i) approximately
[     ]% and (ii) the Aggregate Collateral
Balance for such Payment Date determined as of the last day of the related Due
Period and (b) the amount, if any, by which (i) the Aggregate
Collateral Balance for such Payment Date determined as of the last day of the
related Due Period exceeds (ii) approximately 0.50% of the Aggregate
Collateral Balance as of the Closing Date.

 

Servicer:  FSC or its successor in interest or assigns
or any successor to the Servicer under this Agreement as herein provided.

 

Servicer Event of Default:  Any one of the conditions or circumstances
enumerated in Section 4.07 with respect to the Servicer.

 

Servicer Remittance Date:  The day in each calendar month on which the
Servicer is required to remit payments to the Collection Account, which is the
20th day of each calendar month (or, if such day is not a Business
Day, the next Business Day), commencing in December 2004.

 

Servicing Administration Fee:  As to any Payment Date and each Mortgage
Loan, an amount equal to the product of (a) one-twelfth of the Servicing
Administration Fee Rate and 

 

35

 

(b) the outstanding
principal balance of such Mortgage Loan as of the first day of the related Due
Period.

 

Servicing Administration Fee Rate:  With respect to each Mortgage Loan, 0.50% per
annum.

 

Servicing Advances:  All customary, reasonable and necessary “out
of pocket” costs and expenses other than Advances (including reasonable
attorneys’ fees and disbursements) incurred in the performance by the Servicer
of its servicing obligations, including, but not limited to, the cost of (a) the
preservation, inspection, restoration and protection of the Mortgaged Property,
(b) any enforcement or administrative or judicial proceedings, including
foreclosures, (c) the management and liquidation of the Mortgaged Property
if the Mortgaged Property is acquired in satisfaction of the Mortgage, (d) taxes,
assessments, water rates, sewer rents and other charges which are or may become
a lien upon the Mortgaged Property and fire and hazard insurance coverage and (e) any
losses sustained by the Servicer with respect to the liquidation of the
Mortgaged Property.  Notwithstanding
anything to the contrary herein, in the event the Servicer determines in its
reasonable judgment that a Servicing Advance is a Nonrecoverable Advance, the
Servicer shall be under no obligation to make such Servicing Advance.

 

Servicing File:  The items pertaining to a particular Mortgage
Loan including, but not limited to, the computer files, data disks, books,
records, data tapes, notes, and all additional documents generated as a result
of or utilized in originating and/or servicing each Mortgage Loan, which are held
in trust for the Indenture Trustee by the Servicer initially, and beginning on
or about [                ], 2005, by the
Subservicer.

 

Servicing Officer:  Any officer of the Servicer or the
Subservicer involved in or responsible for, the administration and servicing of
the Mortgage Loans whose name appears on a list of servicing officers furnished
by the Servicer and the Subservicer to the Master Servicer upon request, as
such list may from time to time be amended.

 

Servicing Standard:  The servicing and administration of the
Mortgage Loans for which the Servicer or the Subservicer is responsible
hereunder (a) in the same manner in which, and with the same care, skill,
prudence and diligence with which, the Servicer or the Subservicer, as
applicable, generally services and administers similar mortgage loans with
similar mortgagors (i) for other third parties, giving due consideration
to customary and usual standards of practice of prudent institutional
residential mortgage lenders servicing their own loans or (ii) held in the
Servicer’s or the Subservicer’s own portfolio, as applicable, whichever
standard is higher, (b) with a view to the maximization of the recovery on
such Mortgage Loans on a net present value basis and the best interests of the
Trust or any Person to which the Mortgage Loans may be transferred by the
Trust, (c) without regard to (i) any relationship that the Servicer
or the Subservicer or any affiliate thereof may have with the related Mortgagor
or any other party to the transactions; (ii) the right of the Servicer or
the Subservicer to receive compensation or other fees for its services rendered
pursuant to this Agreement; (iii) the obligation of the Servicer or the
Subservicer to make Servicing Advances; (iv) the ownership, servicing or
management by the Servicer or the Subservicer or any affiliate thereof for
others of any other mortgage loans or mortgaged properties; and (v) any
debt the Servicer or any affiliate of the Servicer or the

 

36

 

Subservicer has extended to any
mortgagor or any affiliate of such mortgagor, and (d) in accordance with
the applicable state, local and federal laws, rules and regulations.

 

Stated Principal Balance:  With respect to any Payment Date, either (a) in
the case of any Mortgage Loan, the principal balance of such Mortgage Loan at
the close of business on the  Cut-off
Date after giving effect to principal payments due on or before the Cut-off
Date, whether or not received, less an amount equal to principal payments due
after the Cut-off Date and on or before the Due Date in the related Due Period,
whether or not received from the Mortgagor or advanced by the Servicer or the
Master Servicer, and all amounts allocable to unscheduled principal payments
(including Principal Prepayments, Liquidation Proceeds, Insurance Proceeds and
condemnation proceeds, in each case to the extent identified and applied prior
to or during the related Prepayment Period), provided that the Stated Principal
Balance of any Liquidated Mortgage Loan shall be zero and (b) in the case
of any REO Property, the Stated Principal Balance of the related Mortgage Loan
on the Due Date immediately preceding the date of acquisition of such REO
Property by or on behalf of the Indenture Trustee (reduced by any amount
applied as a reduction of principal on the related Mortgage Loan).

 

Stepdown Date:  The later to occur of (l) the Payment Date in
[           ] or (2) the first
Payment Date on which the aggregate Class Principal Amount of the Class A
Notes (other than the Class A-IO Notes) (after giving effect to payments
of the Principal Funds amount for such Payment Date) is less than  [          
]% of the Aggregate Collateral Balance as of the end of the immediately
preceding Due Period.

 

Stepup Date:  The first Payment Date after the Payment Date
on which the Aggregate Loan Balance at the beginning of the Due Period related
to that Payment Date is less than 10% of the Aggregate Collateral Balance as of
the Closing Date.

 

Subordinate Fixed Rate Cap:  With respect to a Payment Date, the per annum
rate equal to [      ]%.

 

Subordinate Note:  Any Class M1, Class M2, Class M3,
Class M4, Class M5, Class M6 or Class M7 Note.

 

Subsequent Cut-off Date:  With respect to any Subsequent Mortgage Loan,
the date that Mortgage Loan is transferred to the Trust.

 

Subsequent Mortgage Loans:  The Mortgage Loans transferred to the Trust
during the Pre-Funding Period.

 

Subsequent Transfer Agreement:  A Subsequent Transfer Agreement entered into
between the Seller, [                        ], the Issuer, the Depositor, the
Indenture Trustee and the Trust Administrator, substantially in the form
attached as Exhibit I.

 

Subservicer:  [                        ] or any successor in
interest.

 

Subservicer Event of Default:  Any one of the conditions or circumstances
enumerated in Section 4.07 with respect to the Subservicer.

 

37

 

Substitution Amount:  The amount, if any, by which the Stated
Principal Balance of a Deleted Mortgage Loan exceeds the Stated Principal
Balance of the related Qualifying Substitute Mortgage Loan, or aggregate Stated
Principal Balance, if applicable, plus unpaid interest thereon, any related
unpaid Advances or Servicing Advances or unpaid Servicing Administration Fees
or unpaid Master Servicing Fees and the amount of any costs and damages
incurred by the Trust Fund associated with a violation of any applicable
federal, state or local predatory or abusive lending law in connection with the
origination of such Deleted Mortgage Loan.

 

Swap Agreement:  The swap agreement dated [                        ], 200[ ], by and
between the Swap Counterparty and the Issuer, including the ISDA Master
Agreement dated as of [        ], 200[ ]
between the Swap Counterparty and the Issuer, the schedule thereto and the
related confirmation [                       
], substantially in the form of Exhibit B hereto.

 

Swap Counterparty:  [   ].

 

Targeted Overcollateralization Amount:  With respect to any Payment Date prior to the
Stepdown Date, an amount equal to [    ]%
of the Aggregate Collateral Balance as of the Closing Date, and with respect to
any Payment Date on or after the Stepdown Date, an amount equal to the lesser
of (x) [          ]% of the
Aggregate Collateral Balance as of the Closing Date and (y) 1.70% of the
Aggregate Collateral Balance as of the end of the related Due Period, subject
to a floor equal to 0.50% of the Aggregate Collateral Balance as of the Closing
Date; provided, however, that on any Payment Date with respect to which a
Trigger Event has occurred and is continuing, the Targeted
Overcollateralization Amount will be an amount equal to the Targeted
Overcollateralization Amount for the Payment Date immediately preceding such
Payment Date.

 

Telerate Page 3750:  The display currently so designated as “Page 3750”
on the Moneyline Telerate Service (or such other page selected by the
Master Servicer as may replace Page 3750 on that service for the purpose
of displaying daily comparable rates on prices).

 

Title Insurance Policy:  A title insurance policy maintained with
respect to a Mortgage Loan.

 

Total Remittance Amount:  With respect to any Payment Date, the sum of (i) the
Interest Funds for both Mortgage Groups for such Payment Date and (ii) the
Principal Funds for both Mortgage Groups for such Payment Date.

 

Total Principal Deficiency Amount:  With respect to any Payment Date, the excess,
if any, of the aggregate Class Principal Amount of the Notes immediately
prior to such Payment Date over the sum of the Aggregate Collateral Balance and
any Recoveries, each as of the last day of the related Due Period.

 

Trigger Event:  A Trigger Event shall have occurred with
respect to any Payment Date on or after the Stepdown Date, if (a) the
quotient of (1) the aggregate Stated Principal Balance of all Mortgage
Loans 60 or more days delinquent, measured on a rolling three-month basis
(including Mortgage Loans in foreclosure, REO Properties and Mortgage Loans
with respect to which the applicable mortgagor is in bankruptcy) divided by (2) the
Aggregate Collateral Balance as of the preceding Servicer Remittance Date,
equals or exceeds the product of (i) [    
]% and (ii) the Required Percentage, (b) the quotient
(expressed as a percentage) of (1) the aggregate Realized

 

38

 

Losses incurred from the
Initial Cut-off Date through the last day of the calendar month preceding such
Payment Date divided by (2) the Aggregate Collateral Balance as of the
Closing Date exceeds the Required Loss Percentage or (c) a Principal
Deficiency Amount exists for such Payment Date.

 

Trust or Trust Fund:  The Issuer.

 

Trust Account Property:  The Trust Account, all amounts and
investments held from time to time in the Trust Account (whether in the form of
deposit accounts, physical property, book-entry securities, uncertificated
securities, securities entitlements, investment property or otherwise) and all
proceeds of the foregoing.

 

Trust Account:  The Collection Account.

 

Trust Agreement:  The trust agreement dated as of [                    ], 2005, between the
Depositor and the Owner Trustee, as amended and restated on [                    ], 2005 among the
Depositor, the Trust Administrator and the Owner Trustee, as such may be
amended or supplemented from time to time.

 

Trust Estate:  The assets of the Issuer and pledged by the
Issuer to the Indenture Trustee under the Indenture, which assets consist of
all accounts, accounts receivable, contract rights, general intangibles,
chattel paper, instruments, documents, money, deposit accounts, certificates of
deposit, goods, notes, drafts, letters of credit, advices of credit, investment
property, uncertificated securities and rights to payment of any and every kind
consisting of, arising from or relating to any of the following:  (a) the Mortgage Loans listed in the
Mortgage Loan Schedule, and principal due and payable after the Cut-off Date,
but not including interest and principal due and payable on any Mortgage Loans
on or before the Cut-off Date, together with the Mortgage Files relating to
such Mortgage Loans; (b) any Insurance Proceeds, REO Property, Liquidation
Proceeds, REO Disposition Proceeds and other recoveries (in each case, subject
to clause (a) above), (c) the Collection Account, any Custodial
Account, any Escrow Account, the Pre-Funding Account and all amounts deposited
therein pursuant to the applicable provisions of this Agreement, (d) any
Insurance Policies, (e) the rights of the Depositor under the Mortgage
Loan Purchase Agreement, (f) all income, revenues, issues, products,
revisions, substitutions, replacements, profits, rents and all cash and
non-cash proceeds of the foregoing and (g) the rights of the Trust under
the Swap Agreement.

 

UCC:  The Uniform Commercial Code as enacted in the
relevant jurisdiction.

 

Underwriters:  [                    ].

 

Voting Interests:  The portion of the voting rights of all the
Notes that is allocated to any Note for purposes of the voting provisions of
this Agreement.  At all times during the
term of this Agreement, [    ]% of all
voting rights will be allocated among the holders of the Notes (other than the Class A-IO
Notes) as provided below.  The portion of
such voting rights allocated to such Notes will be based on the fraction,
expressed as a percentage, the numerator of which is the aggregate Class Principal Amount then
outstanding and the denominator of which is the aggregate outstanding principal
balance of the Notes.  At all times
during the term of the Indenture and this Agreement, the holders of the Class A-IO
Notes and the Ownership

 

39

 

Certificate will each be
allocated [    ]% of the voting rights
for so long as the related Class remains outstanding.  After the Payment Date in [           ], the voting rights allocable to
the Class A-IO Notes shall transfer to the Ownership Certificate and
thereafter, the Ownership Certificate shall be allocated [    ]% of the voting rights.  The voting rights allocation to any Class of
Notes or the Ownership Certificate will be allocated among all holders of each
such Class or Certificate in proportion to the outstanding Class Principal
Amount or Class Notional Amount of such Notes or Percentage Interest of
the Ownership Certificate.

 

Section 1.02.                             Calculations With Respect to the
Mortgage Loans.  Calculations required to be made pursuant to
this Agreement with respect to any Mortgage Loan in the Trust Estate shall
be made based upon current information as to the terms of the Mortgage Loans
and reports of payments received from the Mortgagor on such Mortgage Loans
provided by the Servicer or the Subservicer to the Master Servicer.  Payments to be made by the Trust
Administrator shall be based on information provided by the Master Servicer.  The Trust Administrator shall not be required
to recompute, verify or recalculate the information supplied to it by the
Master Servicer, the Servicer or the Subservicer.

 

Section 1.03.                             Calculations With Respect to
Accrued Interest.  Accrued interest, if any, on any LIBOR Note
shall be calculated based upon a 360-day year and the actual number of days in
each Accrual Period.  Accrued interest,
if any, on any Class A-IO Notes shall be calculated based upon a 360-day
year consisting of twelve 30-day months.

 

ARTICLE II

CONVEYANCE OF MORTGAGE LOANS

 

Section 2.01.                             Creation and Declaration of
Trust Estate; Conveyance of Initial Mortgage Loans.

 

(a)                                  Mortgage Loans.  As of the Closing Date, in consideration of
the Issuer’s delivery of the Notes to the Depositor or its designee, and
concurrently with the execution and delivery of this Agreement, the Depositor
does hereby transfer, assign, set over, deposit with and otherwise convey to
the Issuer, without recourse, subject to Section 3.01, in trust, all the
right, title and interest of the Depositor in and to the Initial Mortgage
Loans.  Such conveyance includes, without
limitation, the right to all payments of principal and interest received on or
with respect to the Initial Mortgage Loans on and after the Initial Cut-off
Date (other than payments of principal and interest due on or before such
date), and all such payments due after such date but received prior to such
date and intended by the related Mortgagors to be applied after such date
together with all of the Depositor’s right, title and interest in any REO
Property and the proceeds thereof, the Depositor’s rights under any Insurance
Policies related to the Mortgage Loans, the Depositor’s security interest in
any collateral pledged to secure the Mortgage Loans, including the Mortgaged
Properties and any proceeds of the foregoing, to have and to hold, in trust;
and the Indenture Trustee declares that, subject to the review provided for in Section 2.02,
it has received and shall hold the Trust Estate, as Indenture Trustee, in
trust, for the benefit and use of the Noteholders and for the purposes and
subject to the terms and conditions set forth in this Agreement, and,
concurrently with such receipt, the Issuer has issued and delivered the Notes
to

 

40

 

or upon the order of the Depositor, in
exchange for the Mortgage Loans and the other property of the Trust Estate.

 

Concurrently with the execution and delivery
of this Agreement, the Depositor does hereby assign to the Issuer all of its
rights and interest under the Mortgage Loan Purchase Agreement but without
delegation of any of its obligations thereunder.  The Issuer hereby accepts such assignment,
and shall be entitled to exercise all the rights of the Depositor under the
Mortgage Loan Purchase Agreement as if, for such purpose, it were the
Depositor.  Upon the issuance of the
Notes, ownership in the Trust Estate shall be vested in the Issuer, subject to
the lien created by the Indenture in favor of the Indenture Trustee, for the
benefit of the Noteholders.  The Issuer
hereby accepts such assignment and shall be entitled to exercise all rights of
the Depositor under the Mortgage Loan Purchase Agreement as if, for such
purpose, it were the Depositor.  The
foregoing sale, transfer, assignment, set-over, deposit and conveyance does not
and is not intended to result in creation or assumption by the Indenture
Trustee of any obligation of the Depositor, the Seller, or any other Person in
connection with the Mortgage Loans or any other agreement or instrument relating
thereto except as specifically set forth herein.

 

(b)                                 In connection with such transfer
and assignment, the Depositor does hereby deliver to, and deposit with, or
cause to be delivered to and deposited with, the Indenture Trustee, and/or the
Custodian acting on the Indenture Trustee’s behalf, the following documents or
instruments with respect to each Initial Mortgage Loan (each a “Mortgage File”)
so transferred and assigned:

 

(i)                                     the original
Mortgage Note, endorsed either (A) in blank or (B) in the form of the
Form of Endorsement set forth in Exhibit A-4 hereto (or Exhibit B-6
to the Custodial Agreement), or with respect to any lost Mortgage Note, an
original Lost Note Affidavit, in the form set forth in Exhibit C hereto
(or Exhibit B-5 to the Custodial Agreement), stating that the original
Mortgage Note was lost, misplaced or destroyed, together with a copy of the
related Mortgage Note;

 

(ii)                                  the original of any
guarantee executed in connection with the Mortgage Note assigned to the
Indenture Trustee;

 

(iii)                               the original Mortgage
with evidence of recording thereon, and the original recorded power of
attorney, if the Mortgage was executed pursuant to a power of attorney, with
evidence of recording thereon or, if such Mortgage or power of attorney has been
submitted for recording but has not been returned from the applicable public
recording office, has been lost or is not otherwise available, a copy of such
Mortgage or power of attorney, as the case may be, certified by an Officer’s
Certificate of the Seller to be a true and complete copy of the original
submitted for recording, together with a written Opinion of Counsel acceptable
to the Indenture Trustee and the Depositor that an original recorded Mortgage
is not required to enforce the Indenture Trustee’s interest in the Mortgage
Loan;

 

(iv)                              with respect to each
Non-MERS Mortgage Loan, an original Assignment of Mortgage, in form and
substance acceptable for recording.  The
Mortgage shall be assigned either (A) in blank, without recourse, or (B) to
[                          ],
as Indenture

 

41

 

Trustee of the Fieldstone Mortgage Investment
Trust, series 2005-[ ]”, without recourse or (C) to the order of the
Indenture Trustee;

 

(v)                                 an original copy of
any intervening assignment of Mortgage showing a complete chain of assignments
or, in the case of an intervening assignment that has been lost, a written
Opinion of Counsel for the Seller acceptable to the Indenture Trustee that such
original intervening assignment is not required to enforce the Indenture
Trustee’s interest in the Mortgage Loans;

 

(vi)                              the original or a
certified copy of lender’s title insurance policy (or, in lieu thereof, a
commitment to issue such title insurance policy, with an original or a certified
copy of such title insurance policy to follow as soon after the Closing Date as
reasonably practicable);

 

(vii)                           the original or copies of
each assumption, modification, written assurance or substitution agreement, if
any, or as to any such agreement which cannot be delivered prior to the Closing
Date because of a delay caused by the public recording office where such
assumption, modification or substitution agreement has been delivered for
recordation, a photocopy of such assumption, modification or substitution
agreement, pending delivery of the original thereof, together with an Officer’s
Certificate of the Seller certifying that the copy of such assumption,
modification or substitution agreement delivered to the Custodian is a true
copy and that the original of such agreement has been forwarded to the public
recording office; and

 

(viii)                        the original of any security
agreement or equivalent instrument executed in connection with the Mortgage or
as to any security agreement or equivalent instrument that cannot be delivered
on or prior to the Closing Date because of a delay caused by the public
recording office where such document has been delivered for recordation, a
photocopy of such document, pending delivery of the original thereof, together
with an Officer’s Certificate of the Seller certifying that the copy of such
security agreement, chattel mortgage or their equivalent delivered to the
Custodian is a true copy and that the original of such document has been
forwarded to the public recording office.

 

The Depositor and the Seller acknowledge and
agree that the form of endorsement attached hereto as Exhibit A-4 is
intended to effect the transfer to the Indenture Trustee, for the benefit of the Noteholders, of the Mortgage
Notes and the Mortgages.

 

(c)                                  MERS is the record owner of all
of the Initial Mortgage Loans.  The
Seller shall, or shall cause the Servicer or the Subservicer, at the expense of
the Seller, to take such actions as are necessary to cause the Indenture
Trustee to be clearly identified as the owner of each such Mortgage Loan on the
records of MERS for purposes of the system of recording transfers of beneficial
ownership of mortgages maintained by MERS. 
With respect to each Cooperative Loan, the Seller shall, or at its
expense, shall cause the Servicer or the Subservicer to, take such actions as
are necessary under applicable law in order to perfect the interest of the
Indenture Trustee in the related Mortgaged Property.  Assignments of Mortgage with respect to each
Non- MERS Mortgage Loan shall be recorded; provided, however, that such
Assignments need not be recorded if, on or prior to the Closing Date, the
Seller delivers an Opinion of Counsel (which

 

42

 

must be Independent counsel) acceptable to
the Indenture Trustee and the Rating Agencies, to the effect that recording in
such states is not required to protect the Indenture Trustee’s interest in the
related Non-MERS Mortgage Loans; provided, further, that notwithstanding the
delivery of any Opinion of Counsel, the Servicer shall submit each Assignment
of Mortgage for recording upon the occurrence of a bankruptcy, insolvency or
foreclosure relating to the Mortgagor under the related Mortgage.  Subject to the preceding sentence, as soon as
practicable after the Closing Date (but in no event more than three months
thereafter except to the extent delays are caused by the applicable recording
office), the Servicer, at the expense of the Seller shall cause to be properly
recorded in each public recording office where the related Mortgages are
recorded each Assignment of Mortgage referred to in subsection (b)(iv) above
with respect to each Non-MERS Mortgage Loan.

 

(d)                                 In instances where a Title
Insurance Policy is required to be delivered to the Indenture Trustee or the
Custodian on behalf of the Indenture Trustee under clause (b)(vii) above
and is not so delivered, the Seller will provide a copy of such Title Insurance
Policy to the Indenture Trustee, or to the Custodian on behalf of the Indenture
Trustee, as promptly as practicable after the execution and delivery hereof,
but in any case within 180 days of the Closing Date.

 

(e)                                  For Initial Mortgage Loans (if
any) that have been prepaid in full after the Cut-off Date and prior to the
Closing Date, the Depositor, in lieu of delivering the above documents,
herewith delivers to the Indenture Trustee, or to the Custodian on behalf of
the Indenture Trustee, an Officer’s Certificate of the Seller which shall
include a statement to the effect that all amounts received in connection with
such prepayment that are required to be deposited in the Collection Account
pursuant to Section 5.07 have been so deposited.  All original documents that are not delivered
to the Indenture Trustee or the Custodian on behalf of the Indenture Trustee
shall be held by the Servicer or the Subservicer in trust for the benefit of
the Indenture Trustee and the Noteholders.

 

Section 2.02.                             Acceptance of Trust Estate;
Review of Documentation.

 

(a)                                  Subject to the provisions of Section 2.01,
the Issuer acknowledges receipt of the assets transferred by the Depositor of
the assets included in the Trust Estate and has directed that the documents
referred to in Section 2.01 and all other assets included in the
definition of “Trust Estate” be delivered to the Indenture Trustee (or the
Custodian) on its behalf.

 

The Indenture Trustee, by execution and
delivery hereof, acknowledges receipt by it or by the applicable Custodian on
its behalf of the Mortgage Files pertaining to the Mortgage Loans listed on the
Mortgage Loan Schedule, subject to review thereof by the Indenture Trustee, or
by the Custodian on behalf of the Indenture Trustee, under this Section 2.02.  The Indenture Trustee, or the Custodian on
behalf of the Indenture Trustee, will execute and deliver to the Depositor, the
Master Servicer, the Servicer, the Subservicer (and the Indenture Trustee if
delivered by the Custodian) on the Closing Date an Initial Certification in the
form annexed hereto as Exhibit A-1 (or in the form annexed to the
Custodial Agreement as Exhibit A-l, as applicable).

 

43

 

(b)                                 Within 45 days after the Closing
Date, the Indenture Trustee or the Custodian on behalf of the Indenture
Trustee, will, for the benefit of Noteholders, review each Mortgage File to
ascertain that all required documents set forth in Section 2.01 have been
received and appear on their face to contain the requisite signatures by or on
behalf of the respective parties thereto, and shall deliver to the Depositor,
the Master Servicer, the Servicer and the Subservicer (and the Indenture
Trustee if delivered by the Custodian) an Interim Certification in the form
annexed hereto as Exhibit A-2 (or in the form annexed to the Custodial
Agreement as Exhibit A-2, as applicable) to the effect that, as to each
Mortgage Loan listed in the Mortgage Loan Schedule (other than any
Mortgage Loan prepaid in full or any specifically identified in such
certification as not covered by such certification), (i) all of the
applicable documents specified in Section 2.01(b) are in its
possession and (ii) such documents have been reviewed by it and appear to
relate to such Mortgage Loan.  The
Indenture Trustee, or the Custodian on behalf of the Indenture Trustee, shall
determine whether such documents are executed and endorsed, but shall be under
no duty or obligation to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that the same are valid,
binding, legally effective, properly endorsed, genuine, enforceable or
appropriate for the represented purpose or that they have actually been
recorded or are in recordable form or that they are other than what they
purport to be on their face.  Neither the
Indenture Trustee nor the Custodian shall have any responsibility for verifying
the genuineness or the legal effectiveness of or authority for any signatures
of or on behalf of any party or endorser.

 

(c)                                  If, in the course of the review
described in paragraph (b) above or paragraph (d) below, the
Indenture Trustee or the Custodian discovers any document or documents
constituting a part of a Mortgage File that is missing, does not appear regular
on its face (i.e., is mutilated, damaged, defaced, torn or otherwise physically
altered) or appears to be unrelated to the Mortgage Loans identified in the
Mortgage Loan Schedule, as applicable (each, a “Material Defect”), the
Indenture Trustee, or the Custodian on behalf of the Indenture Trustee,
discovering such Material Defect shall identify the Mortgage Loan to which such
Material Defect relates in the Interim Certification delivered to the Depositor
and the Master Servicer.  Within 90 days
of its receipt of such notice, the Seller shall be required to cure such
Material Defect (and, in such event, the Seller shall provide the Indenture
Trustee with an Officer’s Certificate confirming that such cure has been
effected).  If the Seller does not so
cure such Material Defect, if a loss has been incurred with respect to such
Mortgage Loan that would, if such Mortgage Loan were not purchased from the
Trust Estate, constitute a Realized Loss, and such loss is attributable to the
failure of the Seller to cure such Material Defect, the Seller shall repurchase
the related Mortgage Loan from the Trust Estate at the Purchase Price.  A loss shall be deemed to be attributable to
the failure of the Seller to cure a Material Defect if, as determined by the
Seller, upon mutual agreement with the Indenture Trustee each acting in good
faith, absent such Material Defect, such loss would not have been
incurred.  The Seller may, in lieu of
repurchasing a Mortgage Loan pursuant to this Section 2.02, substitute for
such Mortgage Loan a Qualifying Substitute Mortgage Loan subject to the
provisions of Section 3.03.  The failure
of the Indenture Trustee or the Custodian to deliver the Interim Certification
within 45 days after the Closing Date shall not affect or relieve the Seller of
its obligation to repurchase any Mortgage Loan pursuant to this Section 2.02
or any other Section of this Agreement requiring the repurchase of
Mortgage Loans from the Trust Estate.

 

44

 

(d)                                 Within 180 days following the
Closing Date, the Indenture Trustee, or the Custodian, shall deliver to the Depositor,
the Master Servicer, the Servicer and the Subservicer (and the Indenture
Trustee if delivered by the Custodian) a Final Certification substantially in
the form attached as Exhibit A-3 (or in the form annexed to the Custodial
Agreement as Exhibit A-3, as applicable) evidencing the completeness of
the Mortgage Files in its possession or control, with any exceptions noted
thereto.

 

(e)                                  Nothing in this Agreement shall
be construed to constitute an assumption by the Trust Estate the Indenture
Trustee, the Custodian or the Noteholders of any unsatisfied duty, claim or
other liability on any Mortgage Loan or to any Mortgagor.

 

(f)                                    Notwithstanding anything to the
contrary contained herein, each of the parties hereto acknowledges that the
Custodian shall perform the applicable review of the Mortgage Loans and
respective certifications thereof as provided in the Custodial Agreement.

 

(g)                                 Upon execution of this
Agreement, the Depositor hereby delivers to the Indenture Trustee and the
Indenture Trustee acknowledges a receipt of the Mortgage Loan Purchase
Agreement.

 

Section 2.03.                             Grant Clause.

 

(a)                                  It is intended that the
conveyance by the Depositor to the Issuer of the Mortgage Loans, as provided
for in Section 2.01 be construed as a sale by the Depositor to the Issuer
of the Mortgage Loans and other assets in the Trust Estate for the benefit of
the Noteholders.  Further, it is not
intended that any such conveyance be deemed to be a pledge of the Mortgage
Loans by the Depositor to the Issuer to secure a debt or other obligation of
the Depositor.  However, in the event
that the Mortgage Loans are held to be property of the Depositor or if for any
reason this Agreement is held or deemed to create a security interest in the
Mortgage Loans and other assets in the Trust Estate, then it is intended that (a) this
Agreement shall also be deemed to be a security agreement within the meaning of
Articles 8 and 9 of the New York UCC (or the Relevant UCC if not the New York
UCC); (b) the conveyances provided for in Section 2.01 shall be
deemed to be (1) a grant by the Depositor to the Issuer of a security
interest in all of the Depositor’s right (including the power to convey title
thereto), title and interest, whether now owned or hereafter acquired, in and
to (A) the Mortgage Loans, including the Mortgage Notes, the Mortgages,
any related insurance policies and all other documents in the related Mortgage
Files, (B) all amounts payable pursuant to the Mortgage Loans in
accordance with the terms thereof and (C) any and all general intangibles
consisting of, arising from or relating to any of the foregoing, and all
proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including without limitation
all Liquidation Proceeds, all Insurance Proceeds, all amounts from time to time
held or invested in the Collection Account, whether in the form of cash,
instruments, securities or other property and (2) an assignment by the
Depositor to the Issuer of any security interest in any and all of the
Depositor’s right (including the power to convey title thereto), title and
interest, whether now owned or hereafter acquired, in and to the property
described in the foregoing clauses (1)(A) through (C); (c) the
possession by the Indenture Trustee or any other agent of the Issuer of
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,” or

 

45

 

possession by a purchaser or a person
designated by such secured party, for purposes of perfecting the security
interest pursuant to the New York UCC and any other Relevant UCC (including,
without limitation, Section 9-313, 8-313 or 8-321 thereof); and (d) 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 Issuer for the purpose
of perfecting such security interest under applicable law.

 

(b)                                 The Depositor and, at the
Depositor’s direction, the Issuer shall, to the extent consistent with this
Agreement, take such reasonable actions as may be necessary to ensure that, if
this Agreement were deemed to create a security interest in the Mortgage Loans
and the other property of the Trust Estate, 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.  Without limiting the generality of the
foregoing, the Depositor shall prepare and file any UCC financing statements
that are necessary to perfect the Indenture Trustee’s security interest in or
lien on the Mortgage Loans, as evidenced by an Officer’s Certificate of the
Depositor, and furnish a copy of each such filed financing statement to the
Trust Administrator.  The Trust
Administrator shall prepare and file, at the expense of the Issuer, all filings
necessary to maintain the effectiveness of any original filings necessary under
the Relevant UCC to perfect the Indenture Trustee’s security interest in or
lien on the Mortgage Loans, including without limitation (x) continuation
statements, and (y) to the extent that a Responsible Officer of the Trust
Administrator has received written notice of such change or transfer, such
other statements as may be occasioned by (1) any change of name of the
Seller, the Depositor or the Issuer, (2) any change of location of the
place of business or the chief executive office of the Seller or the Depositor
or (3) any transfer of any interest of the Seller or the Depositor in any
Mortgage Loan.

 

Neither the Depositor nor the Issuer shall
organize under the law of any jurisdiction other than the State under which
each is organized as of the Closing Date (whether changing its jurisdiction of
organization or organizing under an additional jurisdiction) without giving 30
days prior written notice of such action to its immediate and mediate
transferee, including the Indenture Trustee. 
Before effecting such change, each of the Depositor or the Issuer
proposing to change its jurisdiction of organization shall prepare and file in
the appropriate filing office any financing statements or other statements
necessary to continue the perfection of the interests of its immediate and
mediate transferees, including the Indenture Trustee, in the Mortgage
Loans.  In connection with the
transactions contemplated by this Agreement and the Indenture, each of the
Depositor and the Issuer authorizes its immediate or mediate transferee,
including the Indenture Trustee, to file in any filing office any initial
financing statements, any amendments to financing statements, any continuation
statements, or any other statements or filings described in this Section 2.03(b).

 

(c)                                  The Depositor shall not take any
action inconsistent with the sale by the Depositor of all of its right, title
and interest in and to the Trust Estate and 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 property of the Issuer is held by the Issuer.  In addition, the Depositor shall respond to
any inquiries from third parties with respect to ownership of a Mortgage Loan
or any other property of the Trust Estate by stating that it is not the owner
of such Mortgage Loan and that

 

46

 

ownership of such Mortgage Loan or other
property of the Trust Estate is held by the Issuer on behalf of the
Noteholders.

 

Section 2.04.                             Subsequent Transfers.

 

(a)                                  Subject to the satisfaction of
the conditions set forth in paragraph (b) below and pursuant to the terms
of each Subsequent Transfer Agreement, in consideration of the Trust
Administrator’s delivery, on behalf of the Trust, on the related Subsequent
Transfer Date to or upon the order of the Seller of the purchase price
therefor, (i) the Seller shall on any Subsequent Transfer Date sell,
transfer, assign, set over and otherwise convey without recourse to the
Depositor and (ii) the Depositor shall sell, transfer, assign, set over
and otherwise convey without recourse to the Trust, all right, title and
interest of the Seller and the Depositor, as applicable, in and to each
Subsequent Mortgage Loan transferred pursuant to such Subsequent Transfer
Agreement, including (i) the related Scheduled Principal Balance as of the
Subsequent Cut-Off Date after giving effect to payments of principal due on or
before the Subsequent Cut-Off Date; (ii) all collections in respect of
interest and principal received after the Subsequent Cut-Off Date (other than
principal and interest due on or before such Subsequent Cut-off Date); (iii) property
which secured such Subsequent Mortgage Loan and which has been acquired by
foreclosure or deed in lieu of foreclosure; (iv) its interest in any
insurance policies in respect of such Subsequent Mortgage Loan; and (v) all
proceeds of any of the foregoing.  The
transfers by the Seller to the Depositor and by the Depositor to the Trust of
the Subsequent Mortgage Loans set forth on the Subsequent Mortgage Loan Schedule attached
thereto shall be absolute and shall be intended by the Seller, the Depositor and
all parties hereto, other than for federal income tax purposes, to be treated
as a sale by the Seller to the Depositor and as a sale by the Depositor to the
Trust.  The parties hereto intend that
for federal income tax purposes the transfer of Subsequent Mortgage Loans will
be characterized as described in Section 8.7 of the Mortgage Loan Purchase
Agreement.  If the assignment and
transfer of the Mortgage Loans and the other property specified in this Section 2.04
from the Seller to the Depositor and by the Depositor to the Trust pursuant to
this Agreement and each Subsequent Transfer Agreement is held or deemed not to
be a sale or is held or deemed to be a pledge of security for a loan, each of
the Seller and the Depositor intend that the rights and obligations of the
parties shall be established pursuant to the terms of this Agreement and that,
in such event, (i) the Seller shall be deemed to have granted and does
hereby grant to the Depositor and the Depositor shall be deemed to have granted
and does hereby grant to the Trust as of such Subsequent Transfer Date a first
priority security interest in the entire right, title and interest of the
Seller and of the Depositor in and to the Subsequent Mortgage Loans and all
other property conveyed to the Trust pursuant to this Section 2.04 and all
proceeds thereof and (ii) this Agreement shall constitute a security
agreement under applicable law.  The
purchase price shall be one hundred Percent (100%) of the aggregate Scheduled
Principal Balance of the Subsequent Mortgage Loans as of the Subsequent Cut-Off
Date.  On or before each Subsequent
Transfer Date, the Seller shall deliver to, and deposit with the Indenture
Trustee or the Custodian on behalf of the Indenture Trustee, the related
documents with respect to each Subsequent Mortgage Loan transferred on such
Subsequent Transfer Date, and the related Subsequent Mortgage Loan Schedule in
computer readable format with respect to such Subsequent Mortgage Loans.

 

(b)                                 The Seller shall transfer and
deliver to the Indenture Trustee or the Custodian on behalf of the Indenture
Trustee the Subsequent Mortgage Loans and the other property and rights

 

47

 

related thereto described in paragraph (a) of
this Section 2.04 only upon the satisfaction of each of the following
conditions on or prior to the applicable Subsequent Transfer Date:

 

(i)                                     The Seller shall
have provided the Servicer, the Indenture Trustee, the Depositor, the Trust
Administrator, the Master Servicer, the Subservicer and the Rating Agencies
with an Addition Notice, which notice shall be given not less than two Business
Days prior to the applicable Subsequent Transfer Date and shall designate the
Subsequent Mortgage Loans to be sold to the Trust and the aggregate Scheduled
Principal Balance of such Mortgage Loans and the Rating Agencies shall have
informed the Seller, the Depositor, the Indenture Trustee, the Trust
Administrator, the Master Servicer, the Servicer or the Subservicer prior to
the applicable Subsequent Transfer Date that the inclusion of such Subsequent
Mortgage Loans will not result in the downgrade or withdrawal of the ratings
assigned to the Offered Certificates;

 

(ii)                                  The Seller shall have
delivered to the Indenture Trustee, the Depositor, the Trust Administrator, the
Master Servicer, the Subservicer and the Servicer a duly executed Subsequent
Transfer Agreement in substantially the form of Exhibit I;

 

(iii)                               The Seller shall have
delivered to the Trust Administrator for deposit in the Collection Account all
principal collected and interest collected to the extent accrued and due after
the Subsequent Cut-off Date;

 

(iv)                              As of each Subsequent
Transfer Date, the Seller was not insolvent, the Seller will not be made
insolvent by such transfer and the Seller is not aware of any pending
insolvency;

 

(v)                                 Such addition will not
result in a material adverse tax consequence to any Noteholder;

 

(vi)                              The Pre-Funding Period
shall not have terminated;

 

(vii)                           The Seller shall have
provided the Indenture Trustee, the Trust Administrator, the Depositor and the
Rating Agencies with an Opinion of Counsel relating to the sale (i.e., “True
Sale Opinion”) of the Subsequent Mortgage Loans from the Seller to the
Depositor and the enforceability of the Subsequent Transfer Agreement with
respect to the Seller, which matters may be covered in the opinions delivered
on the Closing Date;

 

(viii)                        The Depositor shall have
provided the Indenture Trustee, the Trust Administrator and the Rating Agencies
with an Opinion of Counsel relating to the sale (i.e., “True Sale Opinion”) of
the Subsequent Mortgage Loans from the Depositor to the Trust, the
enforceability of the Subsequent Transfer Agreement with respect to the
Depositor and to the effect that the transfer of such Subsequent Mortgage Loans
will not adversely affect the tax status of the Notes, which matters may be
covered in the opinions delivered on the Closing Date;

 

48

 

(ix)                                The aggregate Scheduled
Principal Balance of Subsequent Mortgage Loans does not exceed the amount
deposited in the Pre-Funding Account as of the Closing Date;

 

(x)                                   The conditions
specified in Exhibit J hereto shall be met; and

 

(xi)                                On the last Subsequent
Transfer Date, the Indenture Trustee and the Trust Administrator shall have
received an accountant’s letter confirming that the characteristics of the
Mortgage Loans (including the Subsequent Mortgage Loans), satisfy the
parameters set forth in Exhibit J hereto.

 

(c)                                  Each party hereto shall comply
with their respective obligations set forth in Sections 2.01, 2.02, 3.01, 3.02
and 3.03 with respect to the Subsequent Mortgage Loans delivered on each
Subsequent Transfer Date.  References in
such Sections to the Initial Mortgage Loans or Mortgage Loans shall be deemed
to refer to the Subsequent Mortgage Loans and references to the Initial Cut-Off
Date or the Closing Date, as applicable, shall be deemed to refer to the
applicable related Subsequent Cut-Off Date or Subsequent Transfer Date,
respectively, except that references to 360 days after the Closing Date shall
remain unchanged as shall representations made with specific reference to the
Initial Mortgage Loans.

 

Section 2.05.                             Option to Contribute Derivative
Instrument.

 

At any time on or after the Closing Date, the
Seller shall have the right to contribute to, and deposit into, the Trust a
derivative contract or comparable instrument (a “Derivative Instrument”).  The Derivative Instrument may have a notional
amount in excess of the sum of the beneficial interests in the Trust.  Any such instrument shall constitute a fully
prepaid agreement.  The Trust
Administrator shall have no tax reporting duties with respect to any such
Derivative Instrument.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

Section 3.01.                             Representations and Warranties
of the Depositor and the Seller.

 

(a)                                  The Depositor hereby represents
and warrants to the Issuer, the Indenture Trustee for the benefit of
Noteholders, the Trust Administrator, the Master Servicer, the Servicer and the
Subservicer as of the Closing Date or such other date as is specified, that:

 

(i)                                     This Agreement
constitutes a legal, valid and binding obligation of the Depositor, enforceable
against the Depositor in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect affecting the enforcement of
creditors’ rights in general and except as such enforceability may be limited
by general principles of equity (whether considered in a proceeding at law or
in equity);

 

(ii)                                  Immediately prior to
the transfer by the Depositor to the Trust Estate of each Mortgage Loan, the
Depositor had good and equitable title to each Initial Mortgage

 

49

 

Loan (insofar as such title was conveyed to
it by the Seller) subject to no prior lien, claim, participation interest,
mortgage, security interest, pledge, charge or other encumbrance or other
interest of any nature;

 

(iii)                               As of the Closing Date,
the Depositor has transferred all right, title and interest in the Initial
Mortgage Loans to the Trust Estate;

 

(iv)                              The Depositor has not
transferred the Initial Mortgage Loans to the Trust Estate with any intent to
hinder, delay or defraud any of its creditors;

 

(v)                                 The Depositor has been
duly organized and is validly existing as a corporation in good standing under
the laws of Delaware, with full power and authority to own its assets and
conduct its business as presently being conducted; and

 

(b)                                 The Seller hereby represents and
warrants to the Issuer, the Indenture Trustee for the benefit of Noteholders,
the Trust Administrator, the Master Servicer, the Subservicer and the Depositor
as of the Closing Date or such other date as is specified, that:

 

(i)                                     the Seller is a
Maryland corporation, duly organized validly existing and in good standing
under the laws of the State of Maryland, and has the corporate power to own its
assets and to transact the business in which it is currently engaged.  The Seller 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 any properties owned or
leased by it requires such qualification and in which the failure so to qualify
would have a material adverse effect on the business, properties, assets, or
condition (financial or other) of the Seller;

 

(ii)                                  the Seller has the
corporate power and authority to make, execute, deliver and perform this
Agreement and all of the transactions contemplated under the Agreement, and has
taken all necessary corporate action to authorize the execution, delivery and
performance of this Agreement.  When
executed and delivered, this Agreement will constitute the legal, valid and
binding obligation of the Seller enforceable in accordance with its terms,
except as enforcement of such terms may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors’ rights generally and by
the availability of equitable remedies;

 

(iii)                               the Seller is not
required to obtain the consent of any other party or any consent, license,
approval or authorization from, or registration or declaration with, any
governmental authority, bureau or agency in connection with the execution,
delivery, performance, validity or enforceability of this Agreement, except for
such consent, license, approval or authorization, or registration or
declaration, as shall have been obtained or filed, as the case may be, prior to
the Closing Date;

 

(iv)                              the execution, delivery
and performance of this Agreement by the Seller will not violate any provision
of any existing law or regulation or any order or decree of any court
applicable to the Seller or any provision of the articles of incorporation or
bylaws of the Seller, or constitute a material breach of any mortgage,
indenture, contract or other agreement to which the Seller is a party or by
which the Seller may be bound;

 

50

 

(v)                                 no litigation or
administrative proceeding of or before any court, tribunal or governmental body
is currently pending, or to the knowledge of the Seller threatened, against the
Seller or any of its properties or with respect to this Agreement which in the
opinion of the Seller has a reasonable likelihood of resulting in a material
adverse effect on the transactions contemplated by this Agreement; and

 

(vi)                              the Seller has been
organized in conformity with the requirements for qualification as a REIT; the
Seller will file with its federal income tax return for its taxable years ended
December 31, 2003 and December 31, 2004, an election to be treated as
a REIT for federal income tax purposes; and the Seller currently qualifies as,
and it proposes to operate in a manner that will enable it to continue to
qualify as, a REIT.

 

(c)                                  The Seller hereby represents and
warrants to the Issuer, the Indenture Trustee for the benefit of Noteholders,
the Trust Administrator, the Master Servicer, the Subservicer and the Depositor
as of the Closing Date or such other date as is specified, with respect to the
Mortgage Loans, the representations and warranties set forth in Section 3.2
of the Mortgage Loan Purchase Agreement.

 

(d)                                 To the extent that any fact,
condition or event with respect to a Mortgage Loan constitutes a breach of a
representation or warranty of the Seller under subsection (c) above
or the Mortgage Loan Purchase Agreement, the only right or remedy of the
Indenture Trustee or any Certificateholder hereunder shall be their rights to
enforce the obligations of the Seller under any applicable representation or
warranty made by it.  The Indenture
Trustee acknowledges that the Depositor shall have no obligation or liability
with respect to any breach of any representation or warranty with respect to
the Mortgage Loans (except as set forth in Section 3.01(a)(ii)) under any
circumstances.

 

Section 3.02.                             Discovery of Breach.  It is understood and agreed that the
representations and warranties (i) of the Depositor set forth in Section 3.01(a),
(ii) of the Seller set forth in Section 3.01(b) and (c) and
(iii) of the Servicer and the Subservicer pursuant to Section 4.05 of
this Agreement, shall each survive delivery of the Mortgage Files and the
Assignment of Mortgage of each Mortgage Loan to the Indenture Trustee and shall
continue throughout the term of this Agreement. 
With respect to the representations and warranties which are made to the
best of the Seller’s knowledge, if it is discovered by the Depositor, the
Seller, the Trust Administrator, the Indenture Trustee, the Master Servicer,
the Underwriters, the Servicer or the Subservicer that the substance of such
representation and warranty is inaccurate and such inaccuracy materially and
adversely affects the value of the Mortgage Loans or the interests of the
Noteholders or the Indenture Trustee therein, notwithstanding such Seller’s
lack of knowledge with respect to the substance of such representation or
warranty, remedies for breach will apply to such inaccuracy.  Any breach of the representation and warranty
set forth in clauses (xxi), (xxxiv), (lxxii), (lxxiv), (lxxv), (lxxvi),
(lxxxv), (lxxxvi), (lxxxvii) and (lxxxviii) of Section 3.2 of the Mortgage
Loan Purchase Agreement shall be deemed to materially and adversely affect the
interest of the Trust in that Mortgage Loan, notwithstanding the Seller’s lack
of knowledge with respect to the substance of such representation and
warranty.  Upon discovery by any of the
Depositor, the Master Servicer, the Trust Administrator or the Indenture
Trustee of a breach of any of such representations and warranties made by the
Seller that adversely and materially affects the value of the related Mortgage
Loan, the party discovering such breach shall

 

51

 

give prompt written notice to the other
parties.  Within 60 days of the discovery
by the Seller of a breach of any representation or warranty given to the
Indenture Trustee by the Seller or the Seller’s receipt of written notice of
such a breach, the Seller shall either (a) cure such breach in all
material respects, (b) repurchase such Mortgage Loan or any property
acquired in respect thereof from the Indenture Trustee at the Purchase Price or
(c) substitute a Qualifying Substitute Mortgage Loan for the affected
Mortgage Loan.

 

Section 3.03.                             Repurchase, Purchase or
Substitution of Mortgage Loans.

 

(a)                                  With respect to any Mortgage
Loan repurchased by the Seller pursuant to Section 3.02(b) of this
Agreement, the principal portion of the funds in respect of such repurchase of
a Mortgage Loan will be considered a Principal Prepayment and the Purchase
Price shall be deposited in the Collection Account.  Upon receipt by the Trust Administrator of
the full amount of the Purchase Price for a Deleted Mortgage Loan, or upon
receipt of notification from the Custodian that it had received the Mortgage
File for a Qualifying Substitute Mortgage Loan substituted for a Deleted
Mortgage Loan (and any applicable Substitution Amount), the Indenture Trustee
shall release or cause to be released and reassign to the Depositor or the
Seller, as applicable, the related Mortgage File for the Deleted Mortgage Loan
and shall execute and deliver such instruments of transfer or assignment, in
each case without recourse, representation or warranty, as shall be necessary
to vest in such party or its designee or assignee title to any Deleted Mortgage
Loan released pursuant hereto, free and clear of all security interests, liens
and other encumbrances created by this Agreement and the Indenture, which
instruments shall be prepared by the Servicer or the Subservicer and the
Indenture Trustee shall have no further responsibility with respect to the
Mortgage File relating to such Deleted Mortgage Loan.

 

(b)                                 With respect to each Qualifying
Substitute Mortgage Loan to be delivered to the Indenture Trustee (or its
custodian) in exchange for a Deleted Mortgage Loan:  (i) the Depositor or the Seller, as
applicable, must deliver to the Indenture Trustee (or a Custodian) the Mortgage
File for the Qualifying Substitute Mortgage Loan containing the documents set
forth in Section 2.01(b) along with a written certification
certifying as to the delivery of such Mortgage File and containing the granting
language set forth in Section 2.01(a); and (ii) the Seller and the
Depositor will be deemed to have made, with respect to such Qualifying
Substitute Mortgage Loan, each of the representations and warranties made by it
with respect to the related Deleted Mortgage Loan.  As soon as practicable after the delivery of
any Qualifying Substitute Mortgage Loan hereunder, the Indenture Trustee, at
the expense of the Depositor and at the direction and with the cooperation of
the Servicer shall (i) with respect to a Qualifying Substitute Mortgage
Loan that is a Non-MERS Mortgage Loan, cause the Assignment of Mortgage to be
recorded by the Servicer if required pursuant to Section 2.01(c), or (ii) with
respect to a Qualifying Substitute Mortgage Loan that is a MERS Mortgage Loan,
cause to be taken such actions as are necessary to cause the Indenture Trustee
(on behalf of the Issuer) to be clearly identified as the owner of each such
Mortgage Loan on the records of MERS if required pursuant to Section 2.01(c).

 

52

 

ARTICLE IV

ADMINISTRATION AND SERVICING OF THE

MORTGAGE LOANS BY THE SERVICER

 

Section 4.01.                             Seller’s Engagement of Servicer
to Perform Servicing Responsibilities.

 

(a)                                  Contract for Servicing;
Possession of Servicing Files.  The Seller, as the owner of the servicing
rights, by execution and delivery of this Agreement, does hereby contract with
the Servicer and the Subservicer, each subject to the terms of this Agreement,
for the servicing of the Mortgage Loans for the benefit of the Issuer and the
Indenture Trustee.  The Servicer or
Subservicer shall maintain a Servicing File with respect to each Mortgage Loan
in order to service such Mortgage Loans pursuant to this Agreement and each
Servicing File delivered to the Servicer or Subservicer shall be held in trust
by the Servicer or Subservicer for the benefit of the Issuer and the Indenture
Trustee; provided, however, that neither the
Servicer nor the Subservicer shall have any liability for any Servicing Files
(or portions thereof) not delivered by the Seller.  The Servicer’s or Subservicer’s possession of
any portion of the Mortgage Loan documents shall be at the will of the
Indenture Trustee for the sole purpose of facilitating servicing of the related
Mortgage Loan pursuant to this Agreement, and such retention and possession by
the Servicer or Subservicer shall be in a custodial capacity only.  The ownership of each Mortgage Note,
Mortgage, and the contents of the Servicing File shall be vested in the
Indenture Trustee and the ownership of all records and documents with respect
to the related Mortgage Loan prepared by or which come into the possession of
the Servicer or Subservicer shall immediately vest in the Indenture Trustee and
shall be retained and maintained, in trust, by the Servicer or Subservicer at
the will of the Indenture Trustee in such custodial capacity only.  The Servicing File retained by the Servicer
or Subservicer pursuant to this Agreement shall be identified in accordance
with the Servicer’s or Subservicer’s file tracking system to reflect the
ownership of the related Mortgage Loan by the Indenture Trustee.  The Servicer or Subservicer shall release
from its custody the contents of any Servicing File retained by it only in
accordance with this Agreement.

 

(b)                                 Books and Records.  All rights arising out of the Mortgage Loans
shall be vested in the Indenture Trustee, subject to the Servicer’s and the
Subservicer’s rights to service and administer the Mortgage Loans hereunder in
accordance with the terms of this Agreement. 
All funds received on or in connection with a Mortgage Loan, other than
the Master Servicing Fee, the Servicing Administration Fee and other
compensation and reimbursement to which the Servicer, the Subservicer and the
Master Servicer are entitled as set forth herein, including but not limited to
Sections 4.04 and 4.21 below, shall be received and held by them in trust for
the benefit of the Indenture Trustee pursuant to the terms of this Agreement.

 

The Servicer or the Subservicer, as
applicable, shall forward to the Custodian original documents evidencing an assumption,
modification, consolidation or extension of any Mortgage Loan entered into in
accordance with Section 3.01 within one week of their execution; provided, however, that the Servicer or Subservicer shall provide the
Custodian with a Servicer or Subservicer certified true copy of any such
document submitted for recordation within one week of its execution, and shall
provide the original of any document submitted for recordation or a copy of
such document certified by the appropriate public recording office to be a true
and complete copy of the original within 120 days of its submission for
recordation.

 

53

 

Section 4.02.                             Servicing of the Mortgage Loans.

 

(a)                                  Servicer and Subservicer to
Service.  The Servicer shall service and administer the
Mortgage Loans from and after the Closing Date and, except where prior consent
or approval of the Master Servicer is required under this Agreement, shall have
full power and authority, acting alone, to do any and all things in connection
with such servicing and administration which the Servicer may deem necessary or
desirable, consistent with the terms of this Agreement and with Servicing
Standards.  The Servicer hereby delegates
to the Subservicer such power and authority, but only to the extent provided in
this Section 4.02(a).  Beginning on
the Closing Date, the Subservicer shall perform all of the obligations of the
Servicer under this Agreement relating to the servicing of the Mortgage Loans,
on behalf of the Servicer.  All
references to the “Servicer” in this Agreement relating to a servicing right or
a servicing obligation in respect of the Mortgage Loans shall mean the “Subservicer”
beginning on the Closing Date, except in the case where this Agreement
expressly states that FSC, in its capacity as Servicer, shall retain such right
or perform such obligation. 
Notwithstanding any of the provisions of this Agreement referring to
actions taken through the Subservicer, the Servicer shall not be relieved of
any of its obligations hereunder with respect to the servicing of the Mortgage
Loans and the Servicer shall remain responsible hereunder for all acts and
omissions of the Subservicer as fully as if such acts and omissions were those
of the Servicer.  However, FSC, in its
capacity as Servicer hereunder, shall not directly service any Mortgage Loan
unless and until FSC has obtained all necessary licenses and approvals in each
jurisdiction as may be necessary for FSC to directly service such Mortgage
Loans; provided, however, that FSC shall promptly obtain all such licenses and
approvals if required to directly service any Mortgage Loans pursuant to the
terms of this Agreement.

 

Consistent with the terms of this Agreement,
the Servicer may waive, modify or vary any term of any Mortgage Loan or consent
to the postponement of strict compliance with any such term or in any manner
grant indulgence to any Mortgagor if in the Servicer’s reasonable and prudent
determination such waiver, modification, postponement or indulgence is not
materially adverse to the interests of the Issuer, the Indenture Trustee and
the Noteholders; provided, however, that unless
the Servicer has obtained the prior written consent of the Master Servicer, the
Servicer shall not permit any modification with respect to any Mortgage Loan
that would change the Mortgage Rate, defer or forgive the payment of principal
or interest, reduce or increase the outstanding principal balance (except for
actual payments of principal) or change the final maturity date on such
Mortgage Loan.  In the event of any such
modification which permits the deferral of interest or principal payments on
any Mortgage Loan, the Servicer shall, on the Business Day immediately
preceding the Servicer Remittance Date in any month in which any such principal
or interest payment has been deferred, make an Advance in accordance with Section 4.03(c) in
an amount equal to the difference between (a) such month’s principal and
one month’s interest at the Mortgage Loan Remittance Rate on the unpaid principal
balance of such Mortgage Loan and (b) the amount paid by the
Mortgagor.  The Servicer shall be
entitled to reimbursement for such advances to the same extent as for all other
Advances made pursuant to Section 4.03. 
Without limiting the generality of the foregoing, the Servicer shall
continue, and is hereby authorized and empowered, to execute and deliver on
behalf of itself, the Issuer and the Indenture Trustee, all instruments of
satisfaction or cancellation, or of partial or full release, discharge and all
other comparable instruments, with respect to the Mortgage Loans and with
respect to the Mortgaged Properties.  The
Indenture Trustee shall execute and deliver to the

 

54

 

Servicer powers of attorney and other
documents, furnished to it by the Servicer and reasonably satisfactory to the
Indenture Trustee, necessary or appropriate to enable the Servicer to carry out
its servicing and administrative duties under this Agreement; provided that the Indenture Trustee shall not be liable for
the actions of the Servicer under any such powers of attorney.  Promptly after the execution of any
assumption, modification, consolidation or extension of any Mortgage Loan, the
Servicer shall forward to the Master Servicer copies of any documents
evidencing such assumption, modification, consolidation or extension.

 

In servicing and administering the Mortgage
Loans, the Servicer shall adhere to the Servicing Standard.

 

(b)                                 FSC Discretion.  In managing the liquidation of defaulted
Mortgage Loans, FSC, in its capacity as Servicer, will have sole discretion,
subject to the terms of this Agreement, to sell defaulted Mortgage Loans; provided, however, that FSC shall not take any action
that is inconsistent with or prejudices the interests of the Noteholders in any
Mortgage Loan or the rights and interests of the Depositor, the Indenture
Trustee and the Noteholders under this Agreement.

 

(c)                                  Collection and Liquidation of
Mortgage Loans.  Continuously from the Closing Date, until the
date each Mortgage Loan ceases to be subject to this Agreement, the Servicer
shall proceed diligently to collect all payments due under each of the Mortgage
Loans when the same shall become due and payable and shall take special care in
ascertaining and estimating Escrow Payments and all other charges that will
become due and payable with respect to the Mortgage Loans and each related
Mortgaged Property, to the end that the installments payable by the Mortgagors
will be sufficient to pay such charges as and when they become due and payable.

 

The Servicer shall use its best efforts,
consistent with the Servicing Standard to foreclose upon or otherwise
comparably convert the ownership of such Mortgaged Properties as come into and
continue in default and as to which no satisfactory arrangements can be made
for collection of delinquent payments pursuant to Section 3.01.  The Servicer shall use its best efforts to
realize upon defaulted Mortgage Loans in such a manner as will maximize the
receipt of principal and interest by the Trust, taking into account, among
other things, the timing of foreclosure proceedings.  The foregoing is subject to the provisions
that, in any case in which Mortgaged Property shall have suffered damage, the
Servicer shall not be required to expend its own funds toward the restoration
of such property unless it shall determine in its discretion (i) that such
restoration will increase the proceeds of liquidation of the related Mortgage
Loan to the Issuer and the Indenture Trustee after reimbursement to itself for
such expenses, and (ii) that such expenses will be recoverable by the
Servicer through Insurance Proceeds or Liquidation Proceeds from the related
Mortgaged Property.  In the event that
any payment due under any Mortgage Loan and not otherwise postponed, deferred
or waived pursuant to Section 4.02 is not paid when the same becomes due
and payable, or in the event the Mortgagor fails to perform any other covenant
or obligation under the Mortgage Loan and such failure continues beyond any
applicable grace period, the Servicer shall take such action as (1) shall
be consistent with Servicing Standards and (2) the Servicer shall
determine prudently to be in the best interest of the Issuer, the Indenture
Trustee and the Noteholders.  In the
event that any payment due under any Mortgage Loan is not otherwise postponed,
deferred or waived pursuant to Section 4.02(a) and

 

55

 

remains delinquent for a period of 105 days
or any other default continues for a period of 105 days beyond the expiration
of any grace or cure period, the Servicer shall commence foreclosure
proceedings.  The Servicer shall notify
the Master Servicer in writing of the commencement of foreclosure proceedings
on a monthly basis no later than the fifth Business Day of each month (which
notification may be included within the monthly reports submitted to the Master
Servicer under Section 4.03(b) this Agreement).  In such connection, the Servicer shall be
responsible for all costs and expenses incurred by it in any such proceedings; provided, however, that
it shall be entitled to reimbursement thereof from the related Mortgaged
Property, as contemplated in Sections 4.02(e) and 4.02(p).

 

Notwithstanding the generality of the preceding
paragraph, the Servicer shall take such actions generally in accordance with
the Servicer’s established default timeline and in accordance with Servicing
Standards with respect to each Mortgage Loan and Mortgagor for which there is a
delinquency until such time as the related Mortgagor is current with all
payments due under the Mortgage Loan.

 

(d)                                 Establishment of and Deposits to
Custodial Account.

 

(i)                                     The Servicer shall
segregate and hold all funds collected and received pursuant to the Mortgage
Loans separate and apart from any of its own funds and general assets and shall
initially establish and maintain one or more Custodial Accounts, in the form of
time deposit or demand accounts, each of which accounts shall be titled “Fieldstone
Servicing Corp. (or [                     
], as Subservicer) in trust for [                ], as Indenture Trustee, for
the Fieldstone Mortgage Investment Trust, Series 2005-[ ] Mortgage-Backed
Notes” and referred to herein as a “Custodial Account.”  Each Custodial Account shall be an Eligible
Account.  Any funds deposited in the
Custodial Account may be invested in Eligible Investments subject to the
provisions of Section 4.02(j) hereof. 
Funds deposited in the Custodial Account may be drawn on by the Servicer
in accordance with Section 4.02(e) hereof.  The creation of any Custodial Account shall
be evidenced by a letter agreement in the form of Exhibit E hereto.  A copy of such certification or letter
agreement shall be furnished to the Indenture Trustee, the Master Servicer and,
upon request, to any subsequent owner of the Mortgage Loans.

 

(ii)                                  The Servicer shall
deposit in the Custodial Account on a daily basis, but not more than two (2) Business
Days after receipt by the Servicer and retain therein, the following collections
received by the Servicer and payments made by the Servicer after the related
Cut-off Date (other than scheduled payments of principal and interest due on or
before the related Cut-off Date), as applicable:

 

(1)                                  all payments on
account of principal on the Mortgage Loans, including all Principal Prepayments
and all Prepayment Premiums;

 

(2)                                  all payments on
account of interest on the Mortgage Loans adjusted to the Mortgage Loan
Remittance Rate;

 

(3)                                  all Liquidation
Proceeds (net of Liquidation Expenses);

 

56

 

(4)                                  all Insurance
Proceeds including amounts required to be deposited pursuant to Section 4.02(k)
(other than proceeds to be held in the Escrow Account and applied to the
restoration and repair of the Mortgaged Property or released to the Mortgagor
in accordance with the related Mortgage Loan documents and Servicing
Standards);

 

(5)                                  all Condemnation
Proceeds that are not applied to the restoration or repair of the Mortgaged
Property or released to the Mortgagor in accordance with the related Mortgage
Loan documents and Servicing Standards;

 

(6)                                  with respect to each
Principal Prepayment in full or in part, the Prepayment Interest Shortfall
Amount, if any, for the month of payment. 
Such deposit shall be made from the Servicer’s own funds, without
reimbursement therefore, up to a maximum amount per month in the aggregate of
the Servicing Administration Fee, actually received for such month for the
Mortgage Loans;

 

(7)                                  all Advances made by
the Servicer pursuant to Section 4.03(c);

 

(8)                                  any amounts received
from the Seller, the Depositor or any other person giving representations and
warranties with respect to the Mortgage Loans, in connection with the
repurchase of any Mortgage Loan;

 

(9)                                  any amounts required
to be deposited by the Servicer pursuant to Section 4.02(k) in connection
with the deductible clause in any blanket hazard insurance policy;

 

(10)                            any amounts received with
respect to or related to any REO Property or REO Disposition Proceeds pursuant
to Section 4.02(p); and

 

(11)                            any other amounts required
to be deposited in the Custodial Account pursuant to this Agreement.

 

The foregoing requirements for deposit into
the Custodial Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, payments in the nature of the
Servicing Administration Fee, Prepayment Interest Excess Amounts and Ancillary
Income need not be deposited by the Servicer into the Custodial Account.  Any interest paid on funds deposited in the
Custodial Account by the depository institution maintaining such account shall
accrue to the benefit of the Servicer and the Servicer shall be entitled to
retain and withdraw such interest from the Custodial Account pursuant to Section 3.04.  Additionally, any other benefit derived from
the Custodial Account associated with the receipt, disbursement and
accumulation of principal, interest, taxes, hazard insurance, mortgage
insurance, etc. shall accrue to the Servicer.

 

(e)                                  Permitted Withdrawals from
Custodial Account.

 

The Servicer
shall, from time to time, withdraw funds from the Custodial Account for the
following purposes:

 

57

 

(1)                                  to make payments to
the Master Servicer in the amounts and in the manner provided for in Section 4.03(a);

 

(2)                                  in the event the
Servicer has elected not to retain the Servicing Administration Fee out of any
Mortgagor payments on account of interest or other recovery of interest with
respect to a particular Mortgage Loan (including late collections of interest
on such Mortgage Loan, or interest portions of Insurance Proceeds, Liquidation
Proceeds or Condemnation Proceeds) prior to the deposit of such Mortgagor
payment or recovery into the Custodial Account, to pay to itself the related
Servicing Administration Fee from all such Mortgagor payments on account of
interest or other such recovery for interest with respect to that Mortgage
Loan;

 

(3)                                  to reimburse itself
for unreimbursed Advances and Servicing Advances, the Servicer’s right to
reimburse itself pursuant to this subclause (3) with respect to any
Mortgage Loan being limited to related Liquidation Proceeds (net of Liquidation
Expenses), Condemnation Proceeds, Insurance Proceeds, REO Disposition Proceeds
and other amounts received in respect of the related REO Property, and such
other amounts as may be collected by the Servicer from the Mortgagor or
otherwise relating to such Mortgage Loan, it being understood that, in the case
of any such reimbursement, the Servicer’s right thereto shall be prior to the
rights of the Noteholders;

 

(4)                                  to reimburse itself
for any previously unreimbursed Advances or Servicing Advances that it
determines are Nonrecoverable Advances, it being understood, in the case of
each such reimbursement, that the Servicer’s right thereto shall be prior to
the rights of the Noteholders;

 

(5)                                  to pay itself
investment earnings on funds deposited in the Custodial Account;

 

(6)                                  to transfer funds to
another Eligible Account in accordance with Section 4.02(j) hereof;

 

(7)                                  to invest funds in
certain Eligible Investments in accordance with Section 4.02(d)(i) and
Section 4.02(i) hereof;

 

(8)                                  to withdraw funds
deposited in error;

 

(9)                                  to clear and
terminate the Custodial Account upon the termination of this Agreement; and

 

(10)                            to pay itself any
Prepayment Interest Excess Amount.

 

(f)                                    Establishment of and Deposits to
Escrow Account.  The Servicer shall segregate and hold all
funds collected and received pursuant to a Mortgage Loan constituting Escrow
Payments separate and apart from any of its own funds and general assets and
shall establish and maintain one or more Escrow Accounts, in the form of time
deposit or demand accounts, titled

 

58

 

“Fieldstone Servicing Corp. (or [                      ], as Subservicer) in
trust for [                      ], as
Indenture Trustee, for the Fieldstone Mortgage Investment Trust, Series 2005-[ ].” 
The Escrow Accounts shall be established with an Eligible Institution in
a manner that shall provide maximum available insurance thereunder.  Nothing herein shall require the Servicer to
compel a Mortgagor to establish an Escrow Account in violation of applicable
law.  Funds deposited in the Escrow
Account may be drawn on by the Servicer in accordance with Section 4.02(g).  The creation of any Escrow Account shall be
evidenced by a letter agreement in the form of Exhibit F hereto.  A copy of such certification or letter
agreement shall be furnished to the Master Servicer.

 

The Servicer shall deposit in the Escrow
Account or Accounts on a daily basis, and retain therein:

 

(i)                                     all Escrow
Payments collected on account of the Mortgage Loans, for the purpose of
effecting timely payment of any such items as required under the terms of this
Agreement; and

 

(ii)                                  all amounts
representing Insurance Proceeds or Condemnation Proceeds which are to be
applied to the restoration or repair of any Mortgaged Property.

 

The Servicer shall make withdrawals from the
Escrow Account only to effect such payments as are required under this
Agreement, as set forth in Section 4.02(g).  The Servicer shall be entitled to retain any
interest earnings paid on funds deposited in the Escrow Account by the
depository institution, other than interest on escrowed funds required by law
to be paid to the Mortgagor.  To the
extent required by law, the Servicer shall pay interest on escrowed funds to
the Mortgagor notwithstanding that the Escrow Account may be non-interest
bearing or the interest earnings paid thereon are insufficient for such
purposes.

 

(g)                                 Permitted Withdrawals from
Escrow Account.  Withdrawals from the Escrow Account or
Accounts may be made by the Servicer only:

 

(i)                                     to effect timely
payments of ground rents, taxes, assessments, water rates, mortgage insurance premiums,
condominium charges, fire and hazard insurance premiums or other items
constituting Escrow Payments for the related Mortgage;

 

(ii)                                  to reimburse the
Servicer for any Servicing Advance of an Escrow Payment made by the Servicer
with respect to a related Mortgage Loan, but only from amounts received on the
related Mortgage Loan which represent late collections of Escrow Payments
thereunder;

 

(iii)                               to refund to any
Mortgagor any funds found to be in excess of the amounts required to be
escrowed under the terms of the related Mortgage Loan;

 

(iv)                              to the extent permitted
by applicable law, for transfer to the Custodial Account and application to
reduce the principal balance of the Mortgage Loan in accordance with the terms
of the related Mortgage and Mortgage Note;

 

(v)                                 for application to
restoration or repair of the Mortgaged Property in accordance with Section 4.02(o);

 

59

 

(vi)                              to pay to the Servicer,
or any Mortgagor to the extent required by law, any interest paid on the funds
deposited in the Escrow Account; and

 

(vii)                           to clear and terminate the
Escrow Account on the termination of this Agreement.

 

The Servicer will be responsible for the
administration of the Escrow Accounts and will be obligated to make Servicing
Advances to the Escrow Account in respect of its obligations under this
4.02(g), reimbursable from the Escrow Accounts or Custodial Account to the
extent not collected from the related Mortgagor, anything to the contrary
notwithstanding, when and as necessary to avoid the lapse of insurance coverage
on the Mortgaged Property, or which the Servicer knows, or in servicing the
Mortgage Loans in accordance with Servicing Standards should know, is necessary
to avoid the loss of the Mortgaged Property due to a tax sale or the
foreclosure as a result of a tax lien. 
If any such payment has not been made and the Servicer receives notice
of a tax lien with respect to the Mortgage being imposed, the Servicer will advance
or cause to be advanced funds necessary to discharge such lien on the Mortgaged
Property in order to prevent loss of title to the Mortgaged Property.

 

(h)                                 Notification of Adjustments.  With respect to each Mortgage Loan, the
Servicer shall adjust the Mortgage Rate on the related interest rate adjustment
date and shall adjust the Scheduled Payment on the related mortgage payment
adjustment date, if applicable, in compliance with the requirements of
applicable law and the related Mortgage and Mortgage Note.  The Servicer shall execute and deliver any
and all necessary notices required under applicable law and the terms of the
related Mortgage Note and Mortgage regarding the Mortgage Rate and Scheduled
Payment adjustments.  The Servicer shall
promptly, upon written request therefor, deliver to the Master Servicer such
notifications and any additional applicable data regarding such adjustments and
the methods used to calculate and implement such adjustments.  Upon the discovery by the Servicer or the
receipt of notice from the Master Servicer that the Servicer has failed to
adjust a Mortgage Rate or Scheduled Payment in accordance with the terms of the
related Mortgage Note, the Servicer shall immediately deposit in the Custodial
Account from its own funds the amount of any interest loss or deferral caused
the Seller thereby.

 

(i)                                     Payment of Taxes, Insurance and
Other Charges.

 

(i)                                     With respect to
each Mortgage Loan which provides for Escrow Payments, the Servicer shall
maintain accurate records reflecting the status of ground rents, taxes,
assessments, water rates, sewer rents, and other charges which are or may
become a lien upon the Mortgaged Property and the status of fire and hazard
insurance coverage and shall obtain, from time to time, all bills for the
payment of such charges (including renewal premiums) (“Property Charges”)
and shall effect payment thereof prior to the applicable penalty or termination
date, employing for such purpose deposits of the Mortgagor in the Escrow
Account which shall have been estimated and accumulated by the Servicer in
amounts sufficient for such purposes, as allowed under the terms of the
Mortgage.  The Servicer shall effect
timely payment of all such charges irrespective of each Mortgagor’s faithful
performance in the payment of the same or the making of the Escrow Payments.

 

60

 

(ii)                                  To the extent that a
Mortgage does not provide for Escrow Payments, the Servicer shall make
Servicing Advances from its own funds to effect payment of all Property Charges
upon receipt of notice of any failure to pay on the part of the Mortgagor, or
at such other time as the Servicer determines to be in the best interest of the
Trust; provided, that in any event the Servicer
shall pay such charges on or before any date by which payment is necessary to
preserve the lien status of the Mortgage. 
The Servicer shall pay any late fee or penalty which is payable due to
any delay in payment of any Property Charge and necessary to avoid a lien on or
loss on Mortgage Property.

 

(j)                                     Protection of Accounts.  The Servicer may transfer the Custodial
Account or the Escrow Account to a different Eligible Institution from time to
time.  Such transfer shall be made only
upon obtaining the consent of the Master Servicer, which consent shall not be
withheld unreasonably, and the Servicer shall give notice to the Master
Servicer and the Indenture Trustee of any change in the location of the
Custodial Account.

 

The Servicer shall bear any expenses, losses
or damages sustained by the Master Servicer or the Indenture Trustee if the
Custodial Account and/or the Escrow Account are not Eligible Accounts.

 

Amounts on deposit in the Custodial Account
and the Pre-Funding Account may be invested at the option of the Servicer and
the Seller, respectively, but only in Eligible Investments.  Any such Eligible Investment with respect to
the Custodial Account shall mature no later than two (2) Business Days
prior to the Servicer Remittance Date in each month; provided, however, that if such
Eligible Investment is an obligation of an Eligible Institution (other than the
Servicer) that maintains the Custodial Account, then such Eligible Investment
may mature on the related Servicer Remittance Date.  Any such Eligible Investment shall be made in
the name of the Servicer (with respect to the Custodial Account) and the Seller
(with respect to the Pre-Funding Account) in trust for the benefit of the
Indenture Trustee.  All income on or gain
realized from any such Eligible Investment shall be for the benefit of the
Servicer (with respect to the Custodial Account) and the Seller (with respect
to the Pre-Funding Account) and may be withdrawn at any time by the Servicer
(with respect to the Custodial Account) and the Seller (with respect to the
Pre-Funding Account).  Any losses
incurred in respect of any such investment shall be deposited in the Custodial
Account by the Servicer (with respect to the Custodial Account) and the Seller
(with respect to the Pre-Funding Account) out of its own funds immediately as
realized.  If, at any time, the amount on
deposit in the Custodial Account or the Pre-Funding Account exceeds the amount
of the applicable FDIC insurance, such excess above the amount of the
applicable FDIC insurance shall be invested in Eligible Investments.

 

(k)                                  Maintenance of Hazard Insurance.  The Servicer shall cause to be maintained for
each Mortgage Loan hazard insurance such that all buildings upon the Mortgaged
Property are insured by a generally acceptable insurer acceptable under
Servicing Standards against loss by fire, hazards of extended coverage and such
other hazards as are customary in the area where the Mortgaged Property is
located, in an amount which is at least equal to the lesser of (i) the
replacement value of the improvements securing such Mortgage Loan and (ii) the
greater of (a) the outstanding principal balance of the Mortgage Loan and (b) an
amount such that the proceeds thereof shall be sufficient to prevent the
Mortgagor or the loss payee from becoming a co-insurer.

 

61

 

If upon origination of the Mortgage Loan the
related Mortgaged Property was located in an area identified in the Federal
Register by the Flood Emergency Management Agency as having special flood
hazards (and such flood insurance has been made available), a flood insurance
policy meeting the requirements of the current guidelines of the Federal
Insurance Administration shall be in effect with a generally acceptable
insurance carrier acceptable under Servicing Standards in an amount
representing coverage equal to the lesser of (i) the minimum amount
required, under the terms of coverage, to compensate for any damage or loss on
a replacement cost basis (or the unpaid balance of the mortgage if replacement
cost coverage is not available for the type of building insured) and (ii) the
maximum amount of insurance which is available under the Flood Disaster
Protection Act of 1973, as amended.  If
at any time during the term of the Mortgage Loan, the Servicer determines in
accordance with applicable law and pursuant to Servicing Standards that a
Mortgaged Property is located in a special flood hazard area and is not covered
by flood insurance or is covered in an amount less than the amount required by
the Flood Disaster Protection Act of 1973, as amended, the Servicer shall
notify the related Mortgagor that the Mortgagor must obtain such flood
insurance coverage, and if said Mortgagor fails to obtain the required flood
insurance coverage within thirty (30) days after such notification, the
Servicer shall immediately force place the required flood insurance on the
Mortgagor’s behalf.

 

The Servicer shall cause to be maintained on
each Mortgaged Property such other or additional insurance as may be required
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance, or pursuant to the
requirements of any private mortgage guaranty insurer, or as may be required to
conform with Servicing Standards.

 

In the event that the Master Servicer or the
Servicer shall determine that the Mortgaged Property should be insured against
loss or damage by hazards and risks not covered by the insurance required to be
maintained by the Mortgagor pursuant to the terms of the Mortgage, the Servicer
shall communicate and consult with the Mortgagor with respect to the need for
such insurance and bring to the Mortgagor’s attention the desirability of
protection of the Mortgaged Property.

 

All policies required hereunder shall name
the Servicer as loss payee and shall be endorsed with standard or union
mortgagee clauses, without contribution, which shall provide for at least 30
days prior written notice of any cancellation, reduction in amount or material
change in coverage.

 

The Servicer shall not interfere with the
Mortgagor’s freedom of choice in selecting either his insurance carrier or
agent; provided, however, that the Servicer shall not
accept any such insurance policies from insurance companies unless such
companies are generally acceptable under Servicing Standards.  The Servicer shall determine that such
policies provide sufficient risk coverage and amounts, that they insure the
property owner, and that they properly describe the property address.  The Servicer shall furnish to the Mortgagor a
formal notice of expiration of any such insurance in sufficient time for the
Mortgagor to arrange for renewal coverage by the expiration date.

 

62

 

Pursuant to Section 4.02(d), any amounts
collected by the Servicer under any such policies (other than amounts to be
deposited in the Escrow Account and applied to the restoration or repair of the
related Mortgaged Property, or property acquired in liquidation of the Mortgage
Loan, or to be released to the Mortgagor, in accordance with the Servicer’s
normal servicing procedures) shall be deposited in the Custodial Account
subject to withdrawal pursuant to Section 4.02(e).

 

Notwithstanding anything set forth in the
preceding paragraph, the Servicer agrees to indemnify the Indenture Trustee, the
Issuer, the Noteholders and the Master Servicer for any claims, losses,
damages, penalties, fines, forfeitures, legal fees and related costs, judgments
and any other costs, fees and expenses that any such indemnified party may
sustain in any way related to the failure of the Mortgagor (or the Servicer) to
maintain hazard or flood insurance with respect to the related Mortgaged
Property which complies with the requirements of this section.

 

(l)                                     Maintenance of Mortgage
Impairment Insurance.  In the event that the Servicer shall obtain
and maintain a blanket policy insuring against losses arising from fire and
hazards covered under extended coverage on all of the Mortgage Loans, then, to
the extent such policy provides coverage in an amount equal to the amount
required pursuant to Section 4.02(k) and otherwise complies with all other
requirements of Section 4.02(k), it shall conclusively be deemed to have
satisfied its obligations as set forth in Section 4.02(k).  Any amounts collected by the Servicer under any
such policy relating to a Mortgage Loan shall be deposited in the Custodial
Account subject to withdrawal pursuant to Section 4.02(e).  Such policy may contain a deductible clause,
in which case, in the event that there shall not have been maintained on the
related Mortgaged Property a policy complying with Section 4.02(k), and
there shall have been a loss which would have been covered by such policy, the
Servicer shall deposit in the Custodial Account at the time of such loss the
amount not otherwise payable under the blanket policy because of such
deductible clause, such amount to deposited from the Servicer’s funds, without
reimbursement therefor.  Upon request of
the Master Servicer or the Indenture Trustee, the Servicer shall cause to be
delivered to such person a certified true copy of such policy and a statement
from the insurer thereunder that such policy shall in no event be terminated or
materially modified without 30 days’ prior written notice to the Master
Servicer and the Indenture Trustee.

 

(m)                               Maintenance of Fidelity Bond and
Errors and Omissions Insurance.  The Servicer shall
maintain with responsible companies, at its own expense, a blanket Fidelity
Bond and an Errors and Omissions Insurance Policy, with broad coverage on all
officers, employees or other persons acting in any capacity requiring such
persons to handle funds, money, documents or papers relating to the Mortgage
Loans (“Servicer Employees”).  Any
such Fidelity Bond and Errors and Omissions Insurance Policy shall be in the
form of the Mortgage Banker’s Blanket Bond and shall protect and insure the
Servicer against losses, including forgery, theft, embezzlement, fraud, errors
and omissions and negligent acts of such Servicer Employees.  Such Fidelity Bond and Errors and Omissions Insurance
Policy also shall protect and insure the Servicer against losses in connection
with the release or satisfaction of a Mortgage Loan without having obtained
payment in full of the indebtedness secured thereby.  No provision of this Section 4.02(m) requiring
such Fidelity Bond and Errors and Omissions Insurance Policy shall diminish or
relieve the Servicer from its duties and obligations as set forth in this
Agreement.

 

63

 

The minimum coverage under any such bond and
insurance policy shall be at least equal to the coverage amounts which are
acceptable for the Servicer as determined by Fannie Mae and Freddie Mac.  Upon the request of the Master Servicer or
the Indenture Trustee, the Servicer shall cause to be delivered to such party a
certified true copy of such fidelity bond and insurance policy and a statement
from the surety and the insurer that such fidelity bond and insurance policy
shall in no event be terminated or materially modified without 30 days’ prior
written notice to the Master Servicer and the Indenture Trustee.

 

(n)                                 Inspections.  The Servicer shall inspect the Mortgaged
Property as often as deemed necessary by the Servicer to assure itself that the
value of the Mortgaged Property is being preserved.  In addition, the Servicer shall inspect the
Mortgaged Property and/or take such other actions as may be necessary or
appropriate in accordance with Servicing Standards or as may be required by the
primary mortgage guaranty insurer.  The
Servicer shall keep a written report of each such inspection.

 

(o)                                 Restoration of Mortgaged
Property.  The Servicer need not obtain the approval of
the Master Servicer or the Indenture Trustee prior to releasing any Insurance
Proceeds or Condemnation Proceeds to the Mortgagor to be applied to the
restoration or repair of the Mortgaged Property if such release is in
accordance with Servicing Standards.  At
a minimum, the Servicer shall comply with the following conditions in connection
with any such release of Insurance Proceeds or Condemnation Proceeds:

 

(i)                                     the Servicer shall
receive satisfactory independent verification of completion of repairs and
issuance of any required approvals with respect thereto;

 

(ii)                                  the Servicer shall
take all steps necessary to preserve the priority of the lien of the Mortgage,
including, but not limited to requiring waivers with respect to mechanics’ and
materialmen’s liens; and

 

(iii)                               pending repairs or
restoration, the Servicer shall place the Insurance Proceeds or Condemnation
Proceeds in the Escrow Account.

 

(p)                                 Title, Management and
Disposition of REO Property.  In the event that title to any Mortgaged
Property is acquired in foreclosure or by deed in lieu of foreclosure, the deed
or certificate of sale shall be taken in the name of the Indenture Trustee or
its nominee in trust for the benefit of the Noteholders, or in the event the
Indenture Trustee is not authorized or permitted to hold title to real property
in the state where the REO Property is located, or would be adversely affected
under the “doing business” or tax laws of such state by so holding title, the
deed or certificate of sale shall be taken in the name of such Person or
Persons as shall be consistent with an Opinion of Counsel obtained by the
Servicer (with a copy delivered to the Indenture Trustee) from any attorney
duly licensed to practice law in the state where the REO Property is
located.  The Person or Persons holding
such title other than the Indenture Trustee shall acknowledge in writing that
such title is being held as nominee for the Indenture Trustee.

 

The Servicer shall manage, conserve, protect
and operate each REO Property for the Indenture Trustee solely for the purpose
of its prompt disposition and sale.  The
Servicer, either itself or through an agent selected by the Servicer, shall
manage, conserve, protect and

 

64

 

operate the REO Property in the same manner
that it manages, conserves, protects and operates other foreclosed property for
its own account, and in the same manner that similar property in the same
locality as the REO Property is managed. 
The Servicer shall attempt to sell the same (and may temporarily rent
the same for a period not greater than one year, except as otherwise provided
below) on such terms and conditions as the Servicer deems to be in the best
interest of the Issuer, the Indenture Trustee and the Noteholders.

 

If the Servicer hereafter becomes aware that
a Mortgaged Property is an Environmental Problem Property, the Servicer will
notify the Master Servicer of the existence of the Environmental Problem
Property.  Additionally, the Servicer
shall set forth in such notice a description of such problem, a recommendation
to the Master Servicer relating to the proposed action regarding the
Environmental Problem Property, and the Servicer shall carry out the
recommendation set forth in such notice. 
Notwithstanding the foregoing, the Servicer shall obtain the Master
Servicer’s prior written consent to any expenditures proposed to remediate
Environmental Problem Properties or to defend any claims associated with
Environmental Problem Properties if such expenses, in the aggregate, are
expected to exceed $100,000.  Failure to
provide written notice of disapproval of the expenditure within five (5) Business
Days of receipt of such request for prepaid expenditures shall be deemed an
approval of such expenditure.  If the
Servicer has received reliable instructions to the effect that a Property is an
Environmental Problem Property (e.g., Servicer obtains a broker’s price opinion
which reveals the potential for such problem), the Servicer will not accept a
deed-in-lieu of foreclosure upon any such Property without first obtaining a
preliminary environmental investigation for the Property.

 

The Servicer shall also maintain on each REO
Property fire and hazard insurance with extended coverage in amount which is at
least equal to the maximum insurable value of the improvements which are a part
of such property and, to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance in the amount
required above.

 

The proceeds of sale of the REO Property
shall be promptly deposited in the Custodial Account.  As soon as practical thereafter the expenses
of such sale shall be paid and the Servicer shall reimburse itself for any
related unreimbursed Servicing Advances, unpaid Servicing Administration Fees
and unreimbursed advances made pursuant to this Section or Section 4.03.

 

The Servicer shall make Servicing Advances of
all funds necessary for the proper operation, management and maintenance of the
REO Property, including the cost of maintaining any hazard insurance pursuant
to Section 4.02(k), such advances to be reimbursed from the disposition or
liquidation proceeds of the REO Property. 
The Servicer shall make monthly remittances on each Servicer Remittance
Date to the Master Servicer of the net cash flow from the REO Property (which
shall equal the revenues from such REO Property net of the expenses described
in this Section 4.02(p) and of any reserves reasonably required from time
to time to be maintained to satisfy anticipated liabilities for such expenses).

 

(q)                                 Real Estate Owned Reports.  Together with the statement furnished
pursuant to Section 4.03(b), the Servicer shall furnish to the Master
Servicer on or before the 10th calendar

 

65

 

day in each month a statement with respect to
any REO Property covering the operation of such REO Property for the previous month and the Servicer’s efforts in
connection with the sale of such REO Property and any rental of such REO
Property incidental to the sale thereof for the previous month.  That statement shall be accompanied by such
other information as the Master Servicer shall reasonably request.

 

(r)                                    Liquidation Reports.  Upon the foreclosure sale of any Mortgaged
Property or the acquisition thereof by the Indenture Trustee pursuant to a deed
in lieu of foreclosure, the Servicer shall submit to the Indenture Trustee and
the Master Servicer a monthly liquidation report with respect to such Mortgaged
Property.

 

(s)                                  Reports of Foreclosures and
Abandonments of Mortgaged Property.  Following the
foreclosure sale or abandonment of any Mortgaged Property, the Servicer shall report
such foreclosure or abandonment as required pursuant to Section 6050J of
the Code.

 

(t)                                    Prepayment Premiums.  The Servicer or any designee of the Servicer
shall not waive any Prepayment Premium with respect to any Mortgage Loan which
contains a Prepayment Premium which prepays during the term of the
premium.  If the Servicer or its designee
fails to collect the Prepayment Premium upon any prepayment of any Mortgage
Loan which contains a Prepayment Premium, the Servicer shall pay to the Master
Servicer or the Trust Administrator at such time (by deposit to the Custodial
Account) an amount equal to amount of the Prepayment Premium which was not
collected.  Notwithstanding the above,
the Servicer or its designee may waive a Prepayment Premium without paying the
Issuer the amount of the Prepayment Premium if (i) the Mortgage Loan is in
default (defined as 61 days or more delinquent) and such waiver would maximize
recovery of total proceeds taking into account the value of such Prepayment
Premium and the related Mortgage Loan or (ii) if the prepayment is not a
result of a refinancing by the Servicer or any of its affiliates and (a) the
Mortgage Loan is foreseen to be in default and such waiver would maximize
recovery of total proceeds taking into account the value of such Prepayment
Premium and the related Mortgage Loan or (b) the collection of the
Prepayment Premium would be in violation of applicable federal, state or local
laws or would be deemed “predatory” thereunder.

 

(u)                                 Compliance with Safeguarding Customer
Information Requirements.  The Servicer has implemented and will
maintain security measures designed to meet the objectives of the Interagency
Guidelines Establishing Standards for Safeguarding Customer Information
published in final form on February 1, 2001, 66 Fed. Reg. 8616, and the rules promulgated
thereunder, as amended from time to time (the “Guidelines”).

 

(v)                                 Presentment of Claims and
Collection of Proceeds.  The Servicer shall prepare and present on
behalf of the Indenture Trustee and the Noteholders all claims under the
Insurance Policies with respect to the Mortgage Loans, and take such actions
(including the negotiation, settlement, compromise or enforcement of the
insured’s claim) as shall be necessary to realize recovery under such policies.  Any proceeds disbursed to the Servicer in
respect of such policies or bonds shall be promptly deposited in the Custodial
Account upon receipt, except that any amounts realized that are to be applied
to the repair or restoration of the related Mortgaged Property as a condition
requisite to the presentation of claims on the related Mortgage Loan to the
insurer under any applicable Insurance Policy need not be so deposited (or
remitted).

 

66

 

Section 4.03.                             Payments To the Master Servicer.

 

(a)                                  Remittances.  On each Servicer Remittance Date, the
Servicer shall remit on a scheduled/scheduled basis by wire transfer of
immediately available funds to the Master Servicer (a) all amounts
deposited in the Custodial Account as of the close of business on the last day
of the related Due Period (net of charges against or withdrawals from the
Custodial Account pursuant to Section 4.02(e)), plus (b) all
Advances, if any, which the Servicer is obligated to make pursuant to Section 4.03(c),
minus (c) any amounts attributable to Principal Prepayments, Liquidation
Proceeds, Insurance Proceeds, Condemnation Proceeds or REO Disposition Proceeds
received after the applicable Prepayment Period, which amounts shall be
remitted on the following Servicer Remittance Date, together with any
additional interest required to be deposited in the Custodial Account in
connection with such Principal Prepayment in accordance with Section 4.02(d)(ii)(7) and
Section 4.04(c), and minus (d) any
amounts attributable to Scheduled Payments collected but due on a Due Date or
Due Dates subsequent to the first day of the month in which such Servicer
Remittance Date occurs, which amounts shall be remitted on the Servicer
Remittance Date next succeeding the Due Date related to such Scheduled Payment.

 

With respect to any remittance received by
the Master Servicer after the Servicer Remittance Date on which such remittance
was due, the Servicer shall pay to the Master Servicer interest on any such
late remittance at an annual rate equal to the Prime Rate, adjusted as of the
date of each change, plus three percentage points, but in no event greater than
the maximum amount permitted by applicable law. 
Such interest shall be deposited in the Custodial Account by the
Servicer on the date such late remittance is made and shall cover the period
commencing with the day following such Servicer Remittance Date and ending with
the Business Day on which such remittance is made, both inclusive.  Such interest shall be remitted on the next
succeeding Servicer Remittance Date.  The
payment by the Servicer of any such interest shall not be deemed an extension
of time for payment or a waiver of any Event of Default by the Servicer.

 

All remittances required to be made to the Master
Servicer shall be made to the following wire account or to such other account
as may be specified by the Master Servicer from time to time:

 

[                                 ]

ABA#:  [                      ]

Account Name: 
[                      ]

Account Number:  [                      ]

For further credit to:  [                      ], Fieldstone 2005-[ ]

 

(b)                                 Statements to Master Servicer
and Trust Administrator.  On the 18th day of each calendar
month (or, if such 18th day is not a Business Day, then no later
than noon (Eastern Time) on the next succeeding Business Day), the Servicer
shall furnish to the Master Servicer (i) a monthly remittance advice in
the format set forth in Exhibit G-1 hereto, a monthly defaulted loan
report in the format set forth in Exhibit G-2 hereto and a realized loss
report in the format set forth in Exhibit G-3 hereto (or in such other
format mutually agreed to between the Servicer and the Master Servicer)
relating to the period ending on the last day of the preceding calendar month
and (ii) all such information required pursuant to clause (i) above
on a magnetic tape or other similar media reasonably acceptable to the Master
Servicer.  No later than two Business

 

67

 

Days after the end of each Prepayment Period,
the Servicer shall furnish to the Master Servicer a monthly report containing
such information regarding prepayments of Mortgage Loans during such Prepayment
Period and in a format as mutually agreed to between the Servicer and the
Master Servicer.

 

Such monthly remittance advice shall also be
accompanied by a supplemental report provided to the Master Servicer and the
Seller which includes on an aggregate basis for the previous calendar month (i) the
amount of any insurance claims filed, (ii) the amount of any claim
payments made and (iii) the amount of claims denied or curtailed.  The Master Servicer will convert such data
into a format acceptable to the Trust Administrator and provide monthly reports
to the Trust Administrator pursuant to the Trust Agreement.

 

In addition, not more than 75 days after the
end of each calendar year, commencing December 31, 2005, the Servicer
shall provide (as such information becomes reasonably available to the
Servicer) to the Master Servicer and the Trust Administrator such information
concerning the Mortgage Loans and annual remittances to the Master Servicer
therefrom as is necessary for the Trust Administrator to prepare the reports
required by Section 5.09(c).  Such
obligation of the Servicer shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Servicer to
the Master Servicer and the Trust Administrator pursuant to any requirements of
the Code as from time to time are in force. 
The Servicer shall also provide to the Trust Administrator such
information as may be requested by it and required for the completion of any
tax reporting responsibility of the Trust Administrator within such reasonable
time frame as shall enable the Trust Administrator to timely file each Schedule Q
(or other applicable tax report or return) required to be filed by it.

 

(c)                                  Advances by Servicer.  On the Business Day immediately preceding
each Servicer Remittance Date, the Servicer shall deposit in the Custodial
Account from its own funds or from amounts held for future payment, or a
combination of both, an amount equal to all Scheduled Payments (with interest
adjusted to the Mortgage Loan Remittance Rate) which were due on the Mortgage
Loans during the applicable Due Period and which were delinquent at the close
of business on the immediately preceding Determination Date.  Any amounts held for future payment and so
used shall be replaced by the Servicer by deposit in the Custodial Account on or
before any future Servicer Remittance Date if funds in the Custodial Account on
such Servicer Remittance Date shall be less than remittances to the Master
Servicer required to be made on such Servicer Remittance Date.  The Servicer shall keep appropriate records
of such amounts and will provide such records to the Master Servicer upon
request.

 

The Servicer’s obligation to make such
Advances as to any Mortgage Loan will continue through the last Scheduled
Payment due prior to the payment in full of the Mortgage Loan, or through the
last Remittance Date prior to the Remittance Date for the payment of all
Liquidation Proceeds and other payments or recoveries (including Insurance
Proceeds and Condemnation Proceeds) with respect to the related Mortgage Loan.

 

Notwithstanding the foregoing, if the
Subservicer fails to make any Advance required to be made by this Section 4.03
with respect to any Remittance Date, then the Servicer shall be obligated to
make such Advance, subject to its determination of the recoverability of such
Advance.

 

68

 

(d)                                 Due Dates Other Than the First
of the Month.  Mortgage Loans having Due Dates other than
the first day of a month shall be accounted for as described in this Section 4.03(d).  Any Scheduled Payment due on a day other than
the first day of each month shall be considered due on the first day of the
month following the month in which that payment is due as if such payment were
due on the first day of that month.  For
example, a Scheduled Payment due on August 15 shall be considered to be
due on September 1.  Any Scheduled
Payment due and collected on a Mortgage Loan after the Cut-off Date shall be
deposited in the Custodial Account.  For
Mortgage Loans with Due Dates on the first day of a month, deposits to the
Custodial Account begin with the Scheduled Payment due on the first of the
month following the Cut-off Date.

 

(e)                                  Credit Reporting.  For each Mortgage Loan, in accordance with
its current servicing practices, the Servicer will accurately and fully report
its underlying borrower credit files to each of the following credit
repositories or their successors: 
Equifax Credit Information Services, Inc., Trans Union, LLC and
Experian Information Solution, Inc., on a monthly basis in a timely
manner.  In addition, with respect to any
Mortgage Loan serviced for a Fannie Mae pool, the Servicer shall transmit full
credit reporting data to each of such credit repositories in accordance with
Fannie Mae Guide Announcement 95-19 (November 11, 1995), a copy of which
is attached hereto as Exhibit K, reporting each of the following statuses,
each month with respect to a Mortgage Loan in a Fannie Mae pool:  New origination, current, delinquent (30-60-90-days,
etc), foreclosed or charged off.

 

Section 4.04.                             General Servicing Procedures.

 

(a)                                  Transfers of Mortgaged Property.  The Servicer shall use its best efforts to
enforce any “due-on-sale” provision contained in any Mortgage or Mortgage Note
and to deny assumption by the person to whom the Mortgaged Property has been or
is about to be sold whether by absolute conveyance or by contract of sale, and
whether or not the Mortgagor remains liable on the Mortgage and the Mortgage
Note.  When the Mortgaged Property has
been conveyed by the Mortgagor, the Servicer shall, to the extent it has
knowledge of such conveyance, exercise its rights to accelerate the maturity of
such Mortgage Loan under the “due-on-sale” clause applicable thereto; provided, however, that the Servicer shall not exercise such rights if
prohibited by law from doing so.

 

If the Servicer reasonably believes it is
unable under applicable law to enforce such “due-on-sale” clause, the Servicer
shall enter into (i) an assumption and modification agreement with the
person to whom such property has been conveyed pursuant to which such person
becomes liable under the Mortgage Note and the original Mortgagor remains
liable thereon or (ii) in the event the Servicer is unable under
applicable law to require that the original Mortgagor remain liable under the
Mortgage Note and the Servicer has the prior consent of the primary mortgage
guaranty insurer, a substitution of liability agreement with the seller of the
Mortgaged Property pursuant to which the original Mortgagor is released from
liability and the buyer of the Mortgaged Property is substituted as Mortgagor
and becomes liable under the Mortgage Note. 
In connection with any such assumption, neither the Mortgage Rate borne
by the related Mortgage Note, the timing of principal or interest payments on
the Mortgage Loan, the term of the Mortgage Loan nor the outstanding principal
amount of the Mortgage Loan shall be changed.

 

69

 

To the extent that any Mortgage Loan is
assumable, the Servicer shall inquire diligently into the creditworthiness of
the proposed transferee, and shall use the underwriting criteria for approving
the credit of the proposed transferee which are used by the Servicer, its
affiliates or Fannie Mae with respect to underwriting mortgage loans of the
same type as the Mortgage Loans.  If the
credit of the proposed transferee does not meet such underwriting criteria, the
Servicer diligently shall, to the extent permitted by the Mortgage or the Mortgage
Note and by applicable law, accelerate the maturity of the Mortgage Loan.

 

(b)                                 Satisfaction of Mortgages and
Release of Mortgage Files.  Upon the payment in full of any Mortgage
Loan, or the receipt by the Servicer of a notification that payment in full
will be escrowed in a manner customary for such purposes, the Servicer shall
notify the Master Servicer in the monthly remittance advice as provided in Section 4.03(b),
and may request the release of any Mortgage Loan Documents from the Custodian
in accordance with the Custodial Agreement.

 

If the Servicer satisfies or releases a
Mortgage without first having obtained payment in full of the indebtedness
secured by the Mortgage or should the Servicer otherwise prejudice any rights
the Seller, the Indenture Trustee or the Issuer may have under the mortgage
instruments, the Servicer shall deposit into the Custodial Account the entire
outstanding principal balance, plus all accrued interest on such Mortgage Loan,
on the day preceding the Servicer Remittance Date in the month following the
date of such release.  The Servicer shall
maintain the Fidelity Bond and Errors and Omissions Insurance Policy as
provided for in Section 4.02(m) insuring the Servicer against any loss it
may sustain with respect to any Mortgage Loan not satisfied in accordance with
the procedures set forth herein.

 

(c)                                  Servicing Compensation.  As consideration for servicing the Mortgage
Loans subject to this Agreement, the Servicer and the Subservicer shall be paid
in the aggregate the relevant Servicing Administration Fee for each Mortgage
Loan remaining subject to this Agreement during any month or part thereof.  Such Servicing Administration Fee shall be
payable monthly and retained by the Servicer or the Subservicer, as applicable.  Additional servicing compensation in the form
of Ancillary Income shall be retained by the Subservicer only and is not
required to be deposited in the Custodial Account.  The obligation of the Issuer to pay the
Servicing Administration Fee is limited to, and the Servicing Administration
Fee is payable from, the interest portion (including recoveries with respect to
interest from Liquidation Proceeds) of such Scheduled Payment collected by the
Servicer, or as otherwise provided in Section 4.02(e)(2).

 

Each of the Servicer and the Subservicer
shall be required to pay all expenses incurred by it in connection with its
servicing activities hereunder and shall not be entitled to reimbursement
thereof except as specifically provided for herein.

 

The Servicing Administration Fee payable to
or retained by the Servicer or the Subservicer, as applicable, with respect to
any Due Period shall be reduced by the Prepayment Interest Shortfall Amount for
the related Prepayment Period required to be deposited in the Custodial Account
and remitted to the Master Servicer on the related Servicer Remittance
Date.  The Servicer and the Subservicer
shall be obligated to remit to the Master Servicer on each Servicer Remittance
Date the Prepayment Interest Shortfall Amount, only up to an amount equal

 

70

 

to in the aggregate the Servicing
Administration Fee the Servicer and the Subservicer are entitled to receive for
such Due Period.

 

(d)                                 Annual Audit Report.  The Subservicer shall, at its own expense,
cause a firm of independent public accountants (who may also render other
services to the Subservicer), which is a member of the American Institute of
Certified Public Accountants, to furnish, as soon as practicable in each year
beginning with 2005, but in no event later than March 15 of each calendar
year, to the Seller, the Master Servicer, the Indenture Trustee and the
Sarbanes Certifying Party (i) year-end audited (if available) financial
statements of the Subservicer and (ii) a statement to the effect that such
firm has examined certain documents and records for the preceding fiscal year
(or during the period from the date of commencement of such Subservicer’s
duties hereunder until the end of such preceding fiscal year in the case of the
first such certificate) and that, on the basis of such examination conducted
substantially in compliance with the Uniform Single Attestation Program for
Mortgage Bankers, such firm is of the opinion that the Subservicer’s overall
servicing operations have been conducted in compliance with the Uniform Single
Attestation Program for Mortgage Bankers except for such exceptions that, in
the opinion of such firm, the Uniform Single Attestation Program for Mortgage
Bankers requires it to report, in which case such exceptions shall be set forth
in such statement.

 

(e)                                  Annual Compliance Certifications.

 

(i)                                     No later than March 15
of each calendar year, commencing with the year 2005, the Subservicer shall, at
its own expense, deliver to the Seller, the Master Servicer, the Indenture
Trustee, the Trust Administrator and the Servicer a servicer’s certificate
stating, as to each signer thereof, that (i) a review of the activities of
the Subservicer during such preceding fiscal year and of performance under this
Agreement has been made under such officers’ supervision, and (ii) to the
best of such officers’ knowledge, based on such review, the Subservicer has
fulfilled all its obligations under this Agreement for such year, or, if there
has been a default in the fulfillment of all such obligations, specifying each
such default known to such officers and the nature and status thereof including
the steps being taken by the Subservicer to remedy such default.

 

(ii)                                  For so long as a
certificate under the Sarbanes-Oxley Act of 2002, as amended (“Sarbanes-Oxley”),
is required to be given on behalf of the Issuer, no later than March 15 of
each calendar year, commencing with the year 2005, or at any other time that the Master Servicer provides a
certification pursuant to Sarbanes-Oxley and upon thirty (30) days written
request of such parties, an officer of the Subservicer shall execute and
deliver an Officer’s Certificate to the Depositor, the Master Servicer, the
Trust Administrator and the Servicer for the benefit of the Issuer and the
Sarbanes Certifying Party and its officers, directors and affiliates, in the
form of Exhibit H hereto.

 

(iii)                               The Subservicer shall
indemnify and hold harmless the Issuer, the Depositor, the Indenture Trustee,
the Owner Trustee, the Trust Administrator, the Servicer and the Master
Servicer and their respective officers, directors, agents and affiliates from
and against any losses, damages, penalties, fines, forfeitures, reasonable
legal fees and related costs, judgments and other costs and expenses arising
out of or based upon a breach by the Subservicer or any of its officers,
directors, agents or

 

71

 

affiliates of its obligations under this Section 4.04(e) for
the negligence, bad faith or willful misconduct of the Subservicer in
connection therewith.  If the indemnification
provided for herein is unavailable or insufficient to hold harmless any of the
foregoing parties, then the Subservicer agrees that it shall contribute to the
amount paid or payable by the Master Servicer as a result of the losses,
claims, damages or liabilities of the Master Servicer in such proportion as is
appropriate to reflect the relative fault of the Master Servicer on the one
hand and the Subservicer on the other in connection with a breach of the
Subservicer’s obligations under this Section 4.04(e) or the
Subservicer’s negligence, bad faith or willful misconduct in connection
therewith.

 

(iv)                              In addition, the Servicer
shall provide the certifications and reports specified in this Section 4.04(e) (with
the exception of the certification required by Section 4.04(e)(ii)) to the
Persons specified therein within the time period specified therein.  The Servicer hereby agrees to indemnify the
Master Servicer and the other Persons specified in Section 4.04(e)(iii) to
the same extent as though such provisions referred to the Servicer rather than
the Subservicer.

 

(f)                                    Inspection.  The Servicer shall provide the Indenture
Trustee and the Master Servicer, upon five (5) Business Days’ advance notice, during normal business
hours, access to all records maintained by the Servicer in respect of its
rights and obligations hereunder and access to officers of the Servicer
responsible for such obligations.  Upon
request, the Servicer shall furnish to the Indenture Trustee and the Master
Servicer its most recent publicly available financial statements and such other
information relating to its capacity to perform its obligations under this
Agreement.

 

Section 4.05.                             Representations, Warranties and
Agreements.

 

(a)                                  Representations, Warranties and
Agreements of FSC.  FSC, in its capacity as Servicer, as a
condition to the consummation of the transactions contemplated hereby, hereby
makes the following representations and warranties to the Master Servicer, the
Subservicer, the Depositor and the Indenture Trustee and the Trust
Administrator, as of the Closing Date:

 

(i)                                     Due
Organization and Authority.  FSC is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its formation and has all licenses necessary to
carry on its business as now being conducted; FSC has the full corporate power
and authority to execute and deliver this Agreement and to perform in
accordance herewith; the execution, delivery and performance of this Agreement
(including all instruments of transfer to be delivered pursuant to this
Agreement) by FSC and the consummation of the transactions contemplated hereby
have been duly and validly authorized; this Agreement evidences the valid,
binding and enforceable obligation of FSC (except to the extent bankruptcy,
insolvency, reorganization, fraudulent conveyance or similar laws affect the
enforcement of creditor’s rights generally) and all requisite corporate action
has been taken by FSC to make this Agreement valid and binding upon FSC in
accordance with its terms;

 

(ii)                                  Ordinary Course of
Business.  The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of FSC;

 

72

 

(iii)                               No Conflicts.  Neither the execution and delivery of this
Agreement, the acquisition of the servicing responsibilities by FSC or the
transactions contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement, will (a) conflict with or result
in a breach of any of the terms, conditions or provisions of FSC’s charter or
by-laws or any legal restriction or any agreement or instrument to which FSC is
now a party or by which it is bound, (b) constitute a default under any of
the foregoing, (c) result in an acceleration under any of the foregoing, (d) result
in the violation of any law, rule, regulation, order, judgment or decree to
which FSC or its property is subject or (e) impair the ability of FSC to
act as Servicer hereunder with respect to the Mortgage Loans, or impair the
value of the Mortgage Loans;

 

(iv)                              Ability to Perform.  FSC 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;

 

(v)                                 No Litigation
Pending.  There is no action, suit,
proceeding or investigation pending or, to FSC’s knowledge, threatened against
FSC which, either in any one instance or in the aggregate, may result in any
material adverse change in the business, operations, financial condition, properties
or assets of FSC, or in any material impairment of the right or ability of FSC
to carry on its business substantially as now conducted, or in any material
liability on the part of FSC, or which would draw into question the validity of
this Agreement or of any action taken or to be taken in connection with the
obligations of FSC contemplated herein, or which would be likely to impair
materially the ability of FSC to perform under the terms of this Agreement;

 

(vi)                              No Consent Required.  No consent, approval, authorization or order
of any court or governmental agency or body is required for the execution,
delivery and performance by FSC of or compliance by FSC with this Agreement, or
if required, such approval has been obtained prior to the Closing Date;

 

(vii)                           No Default.  FSC is not in default, and no event or
condition exists that after the giving of notice or lapse of time or both,
would constitute an event of default under any material mortgage, indenture,
contract, agreement, judgment, or other undertaking, to which FSC is a party or
which purports to be binding upon it or upon any of its assets, which default
could impair materially the ability of FSC to perform under the terms of this
Agreement;

 

(viii)                        Ability to Service.  FSC or an affiliate is an approved
seller/servicer of conventional residential mortgage loans for Fannie Mae and
Freddie Mac, with the facilities, procedures and experienced personnel
necessary for the sound servicing of mortgage loans of the same type as the
Mortgage Loans.  FSC or an affiliate is
in good standing to service mortgage loans for either Fannie Mae or Freddie
Mac, and no event has occurred, including but not limited to a change in
insurance coverage, which would make FSC or an affiliate unable to comply with
either Fannie Mae or Freddie Mac eligibility requirements or which would
require notification to either of Fannie Mae or Freddie Mac;

 

73

 

(ix)                                No Untrue
Information.  Neither this Agreement
nor any statement, report or other document furnished or to be furnished
pursuant to this Agreement or in connection with the transactions contemplated
hereby contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained therein not
misleading; and

 

(x)                                   No Commissions to
Third Parties.  FSC has not dealt
with any broker or agent or anyone else who might be entitled to a fee or
commission in connection with this transaction other than the Seller.

 

(b)                                 Representations, Warranties and
Agreements of the Subservicer.  The Subservicer, as a condition to the
consummation of the transactions contemplated hereby, hereby makes the
following representations and warranties to the Servicer, the Master Servicer,
the Depositor and the Issuer, the Indenture Trustee and the Trust
Administrator, as of the Closing Date:

 

(i)                                     Due
Organization and Authority.  The
Subservicer is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its formation and has all
licenses necessary to carry on its business as now being conducted and is
licensed, qualified and in good standing in each state where a Mortgaged
Property is located if the laws of such state require licensing or
qualification in order to conduct business of the type conducted by the
Subservicer, and in any event the Subservicer is in compliance with the laws of
any such state to the extent necessary to ensure the enforceability of the
terms of this Agreement; the Subservicer has the full corporate power and
authority to execute and deliver this Agreement and to perform in accordance
herewith; the execution, delivery and performance of this Agreement (including
all instruments of transfer to be delivered pursuant to this Agreement) by the
Subservicer and the consummation of the transactions contemplated hereby have
been duly and validly authorized; this Agreement evidences the valid, binding
and enforceable obligation of the Subservicer (except to the extent bankruptcy,
insolvency, reorganization, fraudulent conveyance or similar laws affect the
enforcement of creditor’s rights generally) and all requisite corporate action
has been taken by the Subservicer to make this Agreement valid and binding upon
the Subservicer in accordance with its terms;

 

(ii)                                  Ordinary Course of
Business.  The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Subservicer;

 

(iii)                               No Conflicts.  Neither the execution and delivery of this
Agreement, the acquisition of the servicing responsibilities by the Subservicer
or the transactions contemplated hereby, nor the fulfillment of or compliance
with the terms and conditions of this Agreement, will (a) conflict with or
result in a breach of any of the terms, conditions or provisions of the
Subservicer’s charter or by-laws or any legal restriction or any agreement or
instrument to which the Subservicer is now a party or by which it is bound, (b) constitute
a material default under any of the foregoing, (c) result in an
acceleration under any of the foregoing, (d) result in the violation of
any law, rule,

 

74

 

regulation, order, judgment or decree to
which the Subservicer or its property is subject or (e) impair the ability
of the Subservicer to service the Mortgage Loans, or impair the value of the
Mortgage Loans;

 

(iv)                              Ability to Perform.  The Subservicer 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;

 

(v)                                 No Litigation
Pending.  There is no action, suit,
proceeding or investigation pending or, to the Subservicer’s knowledge,
threatened against the Subservicer which, either in any one instance or in the
aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Subservicer, or in
any material impairment of the right or ability of the Subservicer to carry on
its business substantially as now conducted, or in any material liability on
the part of the Subservicer, or which would draw into question the validity of
this Agreement or of any action taken or to be taken in connection with the
obligations of the Subservicer contemplated herein, or which would be likely to
impair materially the ability of the Subservicer to perform under the terms of
this Agreement;

 

(vi)                              No Consent Required.  No consent, approval, authorization or order
of any court or governmental agency or body is required for the execution,
delivery and performance by the Subservicer of or compliance by the Subservicer
with this Agreement, or if required, such approval has been obtained prior to
the Closing Date;

 

(vii)                           No Default.  The Subservicer is not in default, and no
event or condition exists that after the giving of notice or lapse of time or
both, would constitute an event of default under any material mortgage,
indenture, contract, agreement, judgment, or other undertaking, to which the
Subservicer is a party or which purports to be binding upon it or upon any of
its assets, which default could impair materially the ability of the
Subservicer to perform under the terms of this Agreement;

 

(viii)                        Ability to Service.  The Subservicer is an approved
seller/Subservicer of conventional residential mortgage loans for Fannie Mae
and Freddie Mac, with the facilities, procedures and experienced personnel
necessary for the sound servicing of mortgage loans of the same type as the
Mortgage Loans.  The Subservicer is in
good standing to service mortgage loans for either Fannie Mae or Freddie Mac,
and no event has occurred, including but not limited to a change in insurance
coverage, which would make the Subservicer unable to comply with either Fannie
Mae or Freddie Mac eligibility requirements or which would require notification
to either of Fannie Mae or Freddie Mac; and

 

(ix)                                No Commissions to
Third Parties.  The Subservicer has
not dealt with any broker or agent or anyone else who might be entitled to a
fee or commission in connection with this transaction other than the Seller.

 

(c)                                  Remedies for Breach of
Representations and Warranties of FSC and the Subservicer.  It is understood and agreed that the
representations and warranties set forth in

 

75

 

Sections 4.05(a) and 4.05(b) shall
survive the engagement of each Representing Party to perform the servicing
responsibilities as of the Closing Date hereunder and the delivery of the
Servicing Files to the Servicer and the Subservicer, as applicable, and shall
inure to the benefit of the Master Servicer and the Indenture Trustee.  Upon discovery by either the Servicer, the
Subservicer, the Master Servicer or the Indenture Trustee of a breach of any of
the foregoing representations and warranties which materially and adversely
affects the ability of the such Representing Party to perform its duties and
obligations under this Agreement or otherwise materially and adversely affects
the value of the Mortgage Loans, the Mortgaged Property or the priority of the
security interest on such Mortgaged Property or the interests of the Master
Servicer or the Indenture Trustee, the party discovering such breach shall give
prompt written notice to the other parties.

 

Within 60 days of the earlier of either
discovery by or notice to a Representing Party of any breach of a
representation or warranty set forth in Section 4.05(a) or Section 4.05(b),
as applicable, which materially and adversely affects the ability of such
Representing Party to perform its duties and obligations under this Agreement
or otherwise materially and adversely affects the value of the Mortgage Loans,
the Mortgaged Property or the priority of the security interest on such
Mortgaged Property, such Representing Party shall use its best efforts promptly
to cure such breach in all material respects and, if such breach cannot be
cured, such Representing Party shall, at the Indenture Trustee’s or the Master
Servicer’s option, assign its rights and obligations under this Agreement (or
respecting the affected Mortgage Loans) to a successor servicer.  Such assignment shall be made in accordance
with Sections 4.06(e) and 4.06(f).

 

In addition, such Representing Party shall
indemnify all other parties to this Agreement and hold each of them harmless
against any losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments, and other costs and expenses
resulting from any claim, demand, defense or assertion based on or grounded
upon, or resulting from, a breach of such Representing Party’s representations
and warranties contained in Section 4.05.

 

Any cause of action against a Representing
Party relating to or arising out of the breach of any representations and
warranties made in Section 4.05(a) or Section 4.05(b), as applicable,
shall accrue upon (i) discovery of such breach by such Representing Party
or notice thereof by the Master Servicer, the Depositor or the Indenture
Trustee to such Representing Party, (ii) failure by the Representing Party
to cure such breach within the applicable cure period, and (iii) demand
upon the Representing Party by the Master Servicer or the Indenture Trustee for
compliance with this Agreement.

 

(d)                                 Additional Indemnification by
FSC.  FSC shall indemnify the Master Servicer, the
Depositor, the Issuer, the Indenture Trustee, the Owner Trustee, and the Trust
Administrator and hold each of them harmless against any and all claims,
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments, and any other costs, fees and expenses
(collectively, the “Liabilities”) that the indemnified party may sustain in any
way related to the failure of FSC to perform its duties and service the
Mortgage Loans in accordance with the terms of this Agreement.  FSC shall immediately notify the Master
Servicer, the Depositor, the Indenture Trustee, the Owner Trustee and the Trust
Administrator if a claim is

 

76

 

made by a third party with respect to this
Agreement or the Mortgage Loans that may result in such Liabilities, and FSC
shall assume (with the prior written consent of the indemnified party) the
defense of any such claim and pay all expenses in connection therewith,
including counsel fees, promptly pay, discharge and satisfy any judgment or
decree which may be entered against it or any indemnified party in respect of
such claim and follow any written instructions received from such indemnified
party in connection with such claim.  FSC
shall be reimbursed promptly from the Trust Fund for all amounts advanced by it
pursuant to the preceding sentence except when the claim is in any way related
to FSC’s indemnification pursuant to this Section 4.05(d), or the failure
of FSC to service and administer the Mortgage Loans in accordance with the
terms of this Agreement.

 

(e)                                  Additional Indemnification by
the Subservicer.  The Subservicer shall indemnify the Master
Servicer, the Servicer, the Depositor, the Indenture Trustee, the Owner
Trustee, the Issuer and the Trust Administrator and hold each of them harmless
against any and all claims, losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments, and any other
costs, fees and expenses (collectively, the “Liabilities”) that the indemnified
party may sustain in any way related to the failure of the Subservicer to
perform its duties and service the Mortgage Loans in accordance with the terms
of this Agreement.  The Subservicer shall
immediately notify the Master Servicer, the Servicer, the Depositor, the
Indenture Trustee, the Owner Trustee and the Trust Administrator if a claim is
made by a third party with respect to this Agreement or the Mortgage Loans that
may result in such Liabilities, and the Subservicer shall assume (with the
prior written consent of the indemnified party) the defense of any such claim
and pay all expenses in connection therewith, including counsel fees, promptly
pay, discharge and satisfy any judgment or decree which may be entered against
it or any indemnified party in respect of such claim and follow any written
instructions received from the such indemnified party in connection with such
claim.  The Subservicer shall be
reimbursed promptly from the Trust Fund for all amounts advanced by it pursuant
to the preceding sentence except when the claim is in any way related to the
Subservicer’s indemnification pursuant to this Section 4.05(e), or the failure of the Subservicer
to service and administer the Mortgage Loans in accordance with the terms of
this Agreement.

 

Section 4.06.                             The Servicer and the Subservicer.

 

(a)                                  Merger or Consolidation of FSC.  FSC shall keep in full effect its existence,
rights and franchises as a corporation, and shall obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans and to perform
its duties under this Agreement.

 

Any Person into which FSC may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which FSC shall be a party, or any Person succeeding to the
business of FSC, shall be the successor of FSC hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding, provided,
however, that the successor or surviving Person shall be an
institution (i) having a net worth of not less than $15,000,000, and (ii) which
is a Fannie Mae- and Freddie Mac-approved servicer in good standing.

 

77

 

(b)                                 Limitation on Liability of FSC
and Others.  Neither FSC nor any of the directors,
officers, employees or agents of FSC shall be under any liability to the Master
Servicer, the Depositor, the Issuer, the Indenture Trustee or the Trust
Administrator 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 FSC or any such person against any breach of
warranties or representations made herein, or failure to perform its
obligations in strict compliance with any standard of care set forth in this
Agreement, or any liability which would otherwise be imposed by reason of any
breach of the terms and conditions of this Agreement.  FSC and any director, officer, employee or
agent of FSC may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder.  FSC shall not be under any
obligation to appear in, prosecute or defend any legal action which is not
incidental to its duties to service the Mortgage Loans in accordance with this
Agreement and which in its opinion may involve it in any expense or liability; provided, however, that FSC may undertake any such action which it may deem
necessary or desirable in respect of this Agreement and the rights and duties
of the parties hereto.  In such event,
FSC shall be entitled to reimbursement from the Trust Fund for the reasonable
legal expenses and costs of such action.

 

(c)                                  Limitation on Resignation and
Assignment by FSC.  This Agreement has been entered into with FSC
in reliance upon the independent status of FSC, and the representations as to
the adequacy of its servicing facilities, plant, personnel, records and
procedures, its integrity, reputation and financial standing, and the
continuance thereof.  Therefore, except
as expressly provided in this Section 4.06(c) and Section 4.02(a),
FSC shall neither assign its rights under this Agreement or the servicing
hereunder nor delegate its duties hereunder or any portion thereof, or sell or
otherwise dispose of all or substantially all of its property or assets
without, in each case, the prior written consent of the Seller, the Indenture
Trustee, the Master Servicer and the Trust Administrator, which consent, in the
case of an assignment of rights or delegation of duties, shall be granted or
withheld in the discretion of the Seller, the Indenture Trustee, the Master
Servicer and the Trust Administrator; provided, that in each
case, there must be delivered to the Seller, the Master Servicer, the Indenture
Trustee and the Trust Administrator a letter from each Rating Agency to the
effect that such transfer of servicing or sale or disposition of assets will
not result in a qualification, withdrawal or downgrade of the then-current
rating of any of the Notes.

 

FSC shall not resign from the obligations and
duties hereby imposed on it except by mutual consent of FSC and the Master
Servicer, or upon the determination that its duties hereunder are no longer
permissible under applicable law and such incapacity cannot be cured by FSC.  Any such determination permitting the
resignation of FSC shall be evidenced by an Opinion of Counsel to such effect
delivered to the Seller, the Master Servicer and the Indenture Trustee which
Opinion of Counsel shall be in form and substance reasonably acceptable to each
of them.  No such resignation shall
become effective until a successor shall have assumed FSC’s responsibilities
and obligations hereunder in the manner provided in Section 4.08.

 

Without in any way limiting the generality of
this Section 4.06, in the event that FSC either shall assign this
Agreement or the servicing responsibilities hereunder or delegate its duties
hereunder or any portion thereof or sell or otherwise dispose of all or
substantially all of its property or assets, except to the extent permitted by
and in accordance with this Section 4.06 and Section 4.02(a), without
the prior written consent of the Seller, the Master Servicer, the

 

78

 

Indenture Trustee and the Trust Administrator,
then such parties shall have the right to terminate this Agreement upon notice
given as set forth in Section 11.07 of the Agreement, without any payment
of any penalty or damages and without any liability whatsoever to FSC or any
third party.

 

(d)                                 Merger or Consolidation of the
Subservicer.  The Subservicer shall keep in full effect its
existence, rights and franchises as a corporation, and shall obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to protect
the validity and enforceability of this Agreement or any of the Mortgage Loans
and to perform its duties under this Agreement.

 

Any Person into which the Subservicer may be
merged or consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Subservicer shall be a party, or any
Person succeeding to the business of the Subservicer, shall be the successor of
the Subservicer hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding, provided, however, that the successor or surviving
Person shall be a Person that shall be qualified and approved to service mortgage
loans for Fannie Mae or FHLMC and shall have a net worth of not less than
$15,000,000.

 

(e)                                  Limitation on Liability of the
Subservicer and Others.  Neither the Subservicer nor any of the
directors, officers, employees or agents of the Subservicer shall be under any
liability to the Master Servicer, the Depositor, the Issuer, Indenture Trustee
or the Trust Administrator 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 Subservicer or any
such person against any breach of warranties or representations made herein, or
failure to perform its obligations in strict compliance with any standard of
care set forth in this Agreement, or any liability which would otherwise be
imposed by reason of any breach of the terms and conditions of this
Agreement.  The Subservicer and any
director, officer, employee or agent of the Subservicer may rely in good faith
on any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder.  The Subservicer shall not be under any
obligation to appear in, prosecute or defend any legal action which is not
incidental to its duties to service the Mortgage Loans in accordance with this
Agreement and which in its opinion may involve it in any expense or liability, provided, however, that
the Subservicer may undertake any such action which it may deem necessary or
desirable in respect of this Agreement and the rights and duties of the parties
hereto.  In such event, the Subservicer
shall be entitled to reimbursement from the Trust Fund for the reasonable legal
expenses and costs of such action.

 

(f)                                    Limitation on Resignation and
Assignment by the Subservicer.  This Agreement has been entered into with the
Subservicer in reliance upon the independent status of the Subservicer, and the
representations as to the adequacy of its servicing facilities, plant,
personnel, records and procedures, its integrity, reputation and financial
standing, and the continuance thereof. 
Therefore, except as expressly provided in this Section 4.06(f) and
Section 4.02(a), the Subservicer shall neither assign its rights under
this Agreement or the servicing hereunder nor delegate its duties hereunder or
any portion thereof, without the prior written consent of the Seller, the
Indenture Trustee, the Master Servicer and the Trust Administrator,

 

79

 

which consent, in the case of an assignment
of rights or delegation of duties, shall be granted or withheld in the
discretion of the Seller, the Indenture Trustee, the Master Servicer and the
Trust Administrator, and which consent, in the case of a sale or disposition of
all or substantially all of the property or assets of the Subservicer, shall
not be unreasonably withheld by any of them; provided, that
in each case, there must be delivered to the Seller, the Master Servicer, the
Indenture Trustee and the Trust Administrator a letter from each Rating Agency
to the effect that such transfer of servicing or sale or disposition of assets
will not result in a qualification, withdrawal or downgrade of the then-current
rating of any of the Notes.

 

The Subservicer shall not resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Subservicer and the Master Servicer, or upon the determination that its duties
hereunder are no longer permissible under applicable law and such incapacity
cannot be cured by the Subservicer.  Any
such determination permitting the resignation of the Subservicer shall be
evidenced by an Opinion of Counsel to such effect delivered to the Seller, the
Master Servicer and the Indenture Trustee which Opinion of Counsel shall be in
form and substance reasonably acceptable to each of them.  No such resignation shall become effective
until a successor shall have assumed the Subservicer’s responsibilities and
obligations hereunder in the manner provided in Section 4.08.

 

Without in any way limiting the generality of
this Section 4.06, in the event that the Subservicer either shall assign
this Agreement or the servicing responsibilities hereunder or delegate its
duties hereunder or any portion thereof or sell or otherwise dispose of all or
substantially all of its property or assets, except to the extent permitted by
and in accordance with this Section 4.06(f) and Section 4.02(a),
without the prior written consent of the Seller, the Master Servicer, the
Indenture Trustee and the Trust Administrator, then such parties shall have the
right to terminate this Agreement upon notice given as set forth in Section 11.07
of this Agreement, without any payment of any penalty or damages and without
any liability whatsoever to the Subservicer or any third party.

 

(g)                                 Successor Servicers.  The provisions of Sections 4.06(a), (b), and (c) shall
apply to any successor to FSC as Servicer hereunder other than the Subservicer.

 

Section 4.07.                             Termination for Cause.

 

Any of the following occurrences shall constitute
an event of default (each, a “Servicer Event of Default” or “Subservicer Event
of Default,” as applicable) on the part of the Servicer or the Subservicer:

 

(1)                                  any failure by the
Servicer or the Subservicer, as applicable, to remit to the Master Servicer any
payment required to be made under the terms of this Agreement which continues
unremedied for a period of two Business Days after the date upon which written
notice of such failure, requiring the same to be remedied, shall have been
given to the Servicer or the Subservicer, as applicable, by the Master Servicer
or the Servicer; or

 

(2)                                  failure by the
Servicer or the Subservicer, as applicable, duly to observe or perform in any
material respect any other of the covenants or

 

80

 

agreements on the part of the Servicer or the
Subservicer, as applicable, set forth in this Agreement which continues
unremedied for a period of 30 days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given to the
Servicer or the Subservicer, as applicable, by the Master Servicer or the
Servicer; or

 

(3)                                  failure by the
Servicer or the Subservicer, as applicable, to maintain its license to do
business or service residential mortgage loans in any jurisdiction where the
Mortgaged Properties are located except where the failure to so maintain such
license does not have a material adverse effect on the Servicer’s or the
Subservicer’s, as applicable, ability to service the Mortgage Loans; or

 

(4)                                  a decree or order of
a court or agency or supervisory authority having jurisdiction for the
appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, including bankruptcy, marshalling of assets and liabilities
or similar proceedings, or for the winding-up or liquidation of its affairs,
shall have been entered against the Servicer or the Subservicer, as applicable,
and such decree or order shall have remained in force undischarged or unstayed
for a period of 60 days; or

 

(5)                                  the Servicer or the
Subservicer, as applicable, 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 Servicer
or the Subservicer, as applicable, or of or relating to all or substantially
all of its property; or

 

(6)                                  the Servicer or the
Subservicer, as applicable, shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of any
applicable insolvency, bankruptcy or reorganization statute, make an assignment
for the benefit of its creditors, voluntarily suspend payment of its
obligations or cease its normal business operations for three Business Days; or

 

(7)                                  the Servicer or the
Subservicer, as applicable, ceases to meet the qualifications of a Fannie Mae
or Freddie Mac lender/servicer;

 

(8)                                  the Servicer or the
Subservicer, as applicable, attempts to assign the servicing of the Mortgage Loans
or its right to servicing compensation hereunder or the Servicer or the
Subservicer, as applicable, or attempts to assign this Agreement or the
servicing responsibilities hereunder or to delegate its duties hereunder or any
portion thereof in a manner not permitted under this Agreement;

 

(9)                                  if (x) any of the
Rating Agencies reduces or withdraws the rating of any of the Notes due to a
reason attributable to the Subservicer or (y) the Subservicer’s residential
primary servicer rating for servicing of subprime loans issued by any of the
Rating Agencies is reduced below its rating in effect on the

 

81

 

Closing Date or withdrawn; provided that if
the Subservicer’s rating by any Rating Agency is reduced by not more than two
levels, the Subservicer shall have 180 days to cure such default by having the
applicable Rating Agency restore the Subservicer’s rating to its level in
effect on the Closing Date; or

 

(10)                            the net worth of the
Servicer or the Subservicer, as applicable, shall be less than $15,000,000; or

 

(11)                            failure by the Servicer or
Subservicer, as applicable, to duly perform, within the required time period,
its obligations under Sections 4.04(e) or 4.04(d) which failure
continues unremedied for a period of 7 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been
given to the Servicer by the Master Servicer or to the Subservicer by the
Servicer, as applicable.

 

In each and every such case, so long as an
Event of Default shall not have been remedied, in addition to whatsoever rights
the Master Servicer, the Indenture Trustee or the Servicer (in the case of a
Subservicer Event of Default) may have at law or equity to damages, including
injunctive relief and specific performance, the Master Servicer, the Indenture
Trustee or the Servicer (in the case of a Subservicer Event of Default), by
notice in writing to the Servicer or the Subservicer, as applicable, may
terminate all the rights and obligations of the Servicer or the Subservicer, as
applicable, under this Agreement and in and to the servicing contract
established hereby and the proceeds thereof.

 

Upon receipt by the Subservicer of such
written notice of termination, all authority and power of the Subservicer under
this Agreement, whether with respect to the Mortgage Loans or otherwise, shall
pass to and be vested in the Servicer, an Affiliate of the Servicer or a
successor Subservicer appointed by the Servicer with the consent of the Master
Servicer and the Indenture Trustee, which consent shall not be unreasonably
withheld, and the Servicer (or the successor Subservicer) shall be subject to
all of the responsibilities, duties and liabilities relating thereto, including
the obligation to make Monthly Advances, provided however, any assumption of such duties by
the Servicer or an Affiliate of the Servicer pursuant to this paragraph shall
be conditioned upon the receipt by the Master Servicer, the Seller, the
Depositor, the Indenture Trustee and the Trust Administrator of a letter from
each Rating Agency to the effect that such transfer of servicing to the
Servicer or its Affiliate will not result in a qualification, withdrawal or
downgrade of the then-current rating of any of the Notes.  Upon receipt by the Servicer, of such written
termination notice, all authority and power of the Servicer, under this
Agreement, whether with respect to the Mortgage Loans or otherwise, shall pass
to and be vested in a successor servicer appointed by the Master Servicer, in
accordance with Section 4.08(a). 
Upon written request from the Master Servicer, the Servicer or the
Subservicer, as applicable, shall prepare, execute and deliver to the successor
servicer or Subservicer any and all documents and other instruments, place in
such successor’s possession all Servicing Files, 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, at the
Servicer’s or the Subservicer’s, as applicable, sole expense.  The Servicer or the Subservicer, as
applicable, shall cooperate with the Seller, the Master Servicer, the Indenture
Trustee and such successor in

 

82

 

effecting the termination of the Servicer’s
or the Subservicer’s, as applicable, responsibilities and rights hereunder,
including without limitation, the transfer to such successor for administration
by it of all cash amounts which shall at the time be credited by the Servicer
or the Subservicer, as applicable, to the Custodial Account or Escrow Account
or thereafter received with respect to the Mortgage Loans.

 

By a written notice, the Master Servicer,
with the consent of the other parties, may waive any default by the Servicer or
the Subservicer, as applicable, in the performance of its obligations hereunder
and its consequences.  Upon any waiver of
a past default, such default shall cease to exist, and any 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
thereon except to the extent expressly so waived.

 

The Master Servicer shall promptly notify the
Servicer at any time that the Master Servicer obtains actual knowledge of the
occurrence of a Subservicer Event of Default.

 

Section 4.08.                             Successor to Servicer and
Subservicer, Miscellaneous Provisions.

 

(a)                                  Successor to the Servicer.  Simultaneously with the termination of the
Servicer’s responsibilities and duties under this Agreement pursuant to
Sections 4.05, 4.06, or 4.07, the Master Servicer shall (i) within 90 days
of the Servicer’s notice of such termination, succeed to and assume all of the
Servicer’s responsibilities, rights, duties and obligations under this
Agreement, or (ii) appoint a successor having the characteristics set
forth in clauses (i) and (ii) of Section 4.06(d) and which
shall succeed to all rights and assume all of the responsibilities, duties and
liabilities of the Servicer under this Agreement simultaneously with the
termination of the Servicer’s responsibilities, duties and liabilities under
this Agreement.  Any successor to the
Servicer shall be subject to the approval of the Master Servicer, the Indenture
Trustee and the Trust Administrator.  Any
approval of a successor servicer by the Master Servicer, the Indenture Trustee
and the Trust Administrator, shall, if the successor servicer is not at that
time a servicer of other Mortgage Loans for the Trust, be conditioned upon the
receipt by the Master Servicer, the Seller, the Indenture Trustee and the Trust
Administrator of a letter from each Rating Agency to the effect that such
transfer of servicing will not result in a qualification, withdrawal or
downgrade of the then-current rating of any of the Notes.  In connection with such appointment and
assumption, the Master Servicer may make such arrangements for the compensation
of such successor out of payments on Mortgage Loans as it and such successor
shall agree; provided, however, that no such
compensation shall be in excess of that permitted the Servicer under this
Agreement.  In the event that the
Servicer’s duties, responsibilities and liabilities under this Agreement should
be terminated pursuant to the aforementioned sections, the Servicer shall
discharge such duties and responsibilities during the period from the date it
acquires knowledge of such termination until the effective date thereof with
the same degree of diligence and prudence which it is obligated to exercise
under this Agreement, and shall take no action whatsoever that might impair or
prejudice the rights or financial condition of its successor.  The resignation or removal of the Servicer
pursuant to the aforementioned sections shall not become effective until a
successor shall be appointed pursuant to this Section 4.08(a) and
shall in no event relieve the Servicer of the representations and warranties
made pursuant to Sections 4.05 and the remedies available to the Master
Servicer, the Indenture Trustee and the Seller under Sections 4.08(c), 4.05(d) and
4.05(e), it being understood and agreed that the provisions of such

 

83

 

Sections 4.08(c), 4.05(d) and 4.05(e) shall
be applicable to the Servicer notwithstanding any such resignation or
termination of the Servicer, or the termination of this Agreement.  Neither the Master Servicer, in its capacity
as successor servicer, nor any other successor servicer shall be responsible
for the lack of information and/or documents that it cannot otherwise obtain
through reasonable efforts.

 

Within a reasonable period of time, but in no
event longer than 30 days of the appointment of a successor entity, the
Servicer shall prepare, execute and deliver to the successor entity any and all
documents and other instruments, place in such successor’s possession all
Servicing Files, 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 of any Mortgage Notes and the related
documents.  The Servicer shall cooperate
with the Indenture Trustee, the Master Servicer or the Seller, as applicable,
and such successor in effecting the termination of the Servicer’s
responsibilities and rights hereunder and the transfer of servicing
responsibilities to the successor Servicer, including without limitation, the
transfer to such successor for administration by it of all cash amounts which
shall at the time be credited by the Servicer to the Custodial Account or
Escrow Account or thereafter received with respect to the Mortgage Loans.

 

Any successor appointed as provided herein
shall execute, acknowledge and deliver to the Indenture Trustee, the Servicer,
the Master Servicer, the Trust Administrator and the Seller an instrument (i) accepting
such appointment, wherein the successor shall make the representations and
warranties set forth in Section 4.05(a) and provide for the same
remedies set forth in such Section herein and (ii) an assumption of
the due and punctual performance and observance of each covenant and condition
to be performed and observed by the Servicer under this Agreement, whereupon
such successor shall become fully vested with all the rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer, with like effect
as if originally named as a party to this Agreement.  Any termination or resignation of the
Servicer or termination of this Agreement pursuant to Sections 4.05, 4.06 and
4.07 shall not affect any claims that the Seller, the Master Servicer, the
Indenture Trustee or the Trust Administrator may have against the Servicer
arising out of the Servicer’s actions or failure to act prior to any such
termination or resignation.

 

The Servicer shall deliver promptly to the
successor servicer the funds in the Custodial Account and Escrow Account and
all Mortgage Loan documents and related documents and statements held by it
hereunder and the Servicer shall account for all funds and shall execute and
deliver such instruments and do such other things as may reasonably be required
to more fully and definitively vest in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer.

 

Upon a successor’s acceptance of appointment
as such, it shall notify the Indenture Trustee, the Trust Administrator, the
Seller and Master Servicer and the Depositor of such appointment.

 

(b)                                 Successor to the Subservicer.  Notwithstanding anything to the contrary in Section 4.08(a),
any successor to the Subservicer (but not the Servicer acting as successor to
the Subservicer, in which case the Servicer shall be governed by Section 4.08(a))
shall be governed

 

84

 

by this Section 4.08(b).  Simultaneously with the termination of the
Subservicer’s responsibilities and duties under this Agreement pursuant to
Sections 4.05, 4.06 or 4.07, the Servicer shall (i) within 90 days of the
Subservicer’s notice of such termination, succeed to and assume all of the
Subservicer’s responsibilities, rights, duties and obligations under this
Agreement, or (ii) appoint a successor having the characteristics set forth
in clauses (i) and (ii) of Section 4.06(d) and which shall
succeed to all rights and assume all of the responsibilities, duties and
liabilities of the Subservicer under this Agreement simultaneously with the
termination of the Subservicer’s responsibilities, duties and liabilities under
this Agreement.  Any successor to the
Subservicer pursuant to (i) or (ii) above, in either case shall be
subject to the approval of the Master Servicer, the Indenture Trustee and the
Trust Administrator.  Any approval of a
successor Subservicer by the Servicer, the Master Servicer, the Indenture
Trustee and the Trust Administrator, shall, if the successor Subservicer is not
at that time a Subservicer of other Mortgage Loans for the Trust, be
conditioned upon the receipt by the Master Servicer, the Seller, the Indenture
Trustee and the Trust Administrator of a letter from each Rating Agency to the
effect that such transfer of servicing will not result in a qualification,
withdrawal or downgrade of the then-current rating of any of the Notes.  In connection with such appointment and
assumption, the Servicer, as applicable, may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and such
successor shall agree, provided, however, that
no such compensation shall be in excess of that permitted the Subservicer under
this Agreement.  In the event that the
Subservicer’s duties, responsibilities and liabilities under this Agreement
should be terminated pursuant to the aforementioned sections, the Subservicer
shall discharge such duties and responsibilities during the period from the
date it acquires knowledge of such termination until the effective date thereof
with the same degree of diligence and prudence which it is obligated to exercise
under this Agreement, and shall take no action whatsoever that might impair or
prejudice the rights or financial condition of its successor.  The resignation or removal of the Subservicer
pursuant to the aforementioned sections shall not become effective until a
successor shall be appointed pursuant to this Section 4.08(b) and
shall in no event relieve the Subservicer of the representations and warranties
made pursuant to Sections 4.05 and the remedies available to the Servicer, the
Master Servicer, the Indenture Trustee, the Trust Administrator and the Seller
under Sections 4.05(c), 4.05(d) and 4.05(e), it being understood and
agreed that the provisions of such Sections 4.05(c), 4.05(d) and 4.05(e) shall
be applicable to the Subservicer notwithstanding any such resignation or
termination of the Subservicer, or the termination of this Agreement.  Neither the Servicer, in its capacity as
successor Subservicer, nor any other successor Subservicer shall be responsible
for the lack of information and/or documents that it cannot otherwise obtain
through reasonable efforts.

 

Within a reasonable period of time, but in no
event longer than 30 days of the appointment of a successor entity, the
Subservicer shall prepare, execute and deliver to the successor entity any and
all documents and other instruments, place in such successor’s possession all
Servicing Files, 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 of any Mortgage Notes and the related
documents.  The Subservicer shall
cooperate with the Servicer, the Indenture Trustee, the Master Servicer or the
Seller, as applicable, and such successor in effecting the termination of the
Subservicer’s responsibilities and rights hereunder and the transfer of
servicing responsibilities to the successor Subservicer, including without
limitation, the transfer to such successor for administration by it of all cash
amounts which shall

 

85

 

at the time be credited by the Subservicer to
the Custodial Account or Escrow Account or thereafter received with respect to
the Mortgage Loans.

 

Any successor appointed as provided herein
shall execute, acknowledge and deliver to the Servicer, the Indenture Trustee,
the Subservicer, the Master Servicer and the Seller an instrument (i) accepting
such appointment, wherein the successor shall make the representations and
warranties set forth in Section 4.05(a) and provide for the same
remedies set forth in such Section herein and (ii) an assumption of
the due and punctual performance and observance of each covenant and condition
to be performed and observed by the Subservicer under this Agreement, whereupon
such successor shall become fully vested with all the rights, powers, duties,
responsibilities, obligations and liabilities of the Subservicer, with like
effect as if originally named as a party to this Agreement.  Any termination or resignation of the
Subservicer or termination of this Agreement pursuant to Sections 4.05, 4.06
and 4.07 shall not affect any claims that the Seller, the Servicer, the Master
Servicer, the Trust Administrator or the Indenture Trustee may have against the
Subservicer arising out of the Subservicer’s actions or failure to act prior to
any such termination or resignation.

 

The Subservicer shall deliver promptly to the
successor Subservicer the funds in the Custodial Account and Escrow Account and
all Mortgage Loan documents and related documents and statements held by it
hereunder and the Subservicer shall account for all funds and shall execute and
deliver such instruments and do such other things as may reasonably be required
to more fully and definitively vest in the successor all such rights, powers,
duties, responsibilities, obligations and liabilities of the Subservicer.

 

Upon a successor’s acceptance of appointment
as such, it shall notify the Indenture Trustee, the Trust Administrator, the
Seller, Master Servicer and the Depositor of such appointment.

 

(c)                                  Costs.  The Seller shall pay the legal fees and
expenses of its attorneys.  Costs and
expenses incurred in connection with the transfer of the servicing
responsibilities, including fees for delivering Servicing Files, shall be paid
by (i) the terminated or resigning Servicer if such termination or
resignation is a result of an occurrence of a termination event under Sections
4.05(c) or 4.07, and (ii) in all other cases by the Trust.

 

Section 4.09.                             Miscellaneous Servicing
Provisions.

 

(a)                                  Protection of Confidential
Information.  The Servicer shall keep confidential and
shall not divulge to any party, without the Seller’s prior written consent, any
nonpublic information pertaining to the Mortgage Loans or any borrower
thereunder, except to the extent that it is appropriate for the Servicer to do
so in working with legal counsel, Subservicers, special servicers, auditors,
taxing authorities or other governmental agencies.

 

(b)                                 [No Solicitation.  Any solicitations of either the Servicer or
the Subservicer to solicit for prepayment or refinancing of any of the Mortgage
Loans by the related mortgagors.]

 

(c)                                  Intention of the Parties.  It is the intention of the Seller, Servicer
and Subservicer that the Seller is conveying, and the Servicer is receiving
only a contract for servicing the Mortgage Loans.  Accordingly, the parties hereby acknowledge
that the Trust remains the sole

 

86

 

and absolute owner of the Mortgage Loans
(other than the servicing rights) and all rights related thereto, subject to
the lien of the Indenture.

 

ARTICLE V

ADMINISTRATION AND MASTER SERVICING OF
MORTGAGE LOANS BY THE MASTER SERVICER AND THE TRUST ADMINISTRATOR

 

Section 5.01.                             Duties of the Master Servicer;
Representations and Warranties.

 

(a)                                  For and on behalf of the Issuer,
the Indenture Trustee and the Noteholders, the Master Servicer shall master
service the Mortgage Loans from and after the Closing Date in accordance with
the provisions of this Article V. 
The Master Servicer hereby represents and warrants to the Depositor, the
Issuer, the Indenture Trustee, the Trust Administrator, the Servicer and the
Subservicer, as of the Closing Date, that:

 

(i)                                     it is validly
existing and in good standing as a [                      ] and as Master Servicer
has full power and authority to transact any and all business contemplated by
this Agreement and to execute, deliver and comply with its obligations under
the terms of this Agreement, the execution, delivery and performance of which have
been duly authorized by all necessary corporate action on the part of the
Master Servicer;

 

(ii)                                  the execution and
delivery of this Agreement by the Master Servicer and its performance and
compliance with the terms of this Agreement will not (A) violate the
Master Servicer’s charter or bylaws, (B) violate any law or regulation or
any administrative decree or order to which it is subject or (C) constitute
a default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any material contract,
agreement or other instrument to which the Master Servicer is a party or by
which it is bound or to which any of its assets are subject, which violation,
default or breach would materially and adversely affect the Master Servicer’s
ability to perform its obligations under this Agreement;

 

(iii)                               this Agreement
constitutes, assuming due authorization, execution and delivery hereof by the
other respective parties hereto, a legal, valid and binding obligation of the
Master Servicer, enforceable against it in accordance with the terms hereof,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the enforcement of
creditors’ rights in general, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at law);

 

(iv)                              the Master Servicer is
not in default with respect to any order or decree of any court or any order or
regulation of any federal, state, municipal or governmental agency to the
extent that any such default would materially and adversely affect its
performance hereunder;

 

(v)                                 the Master Servicer is
not a party to or bound by any agreement or instrument or subject to any
charter provision, bylaw or any other corporate restriction or

 

87

 

any judgment, order, writ, injunction,
decree, law or regulation that may materially and adversely affect its ability
as Master Servicer to perform its obligations under this Agreement or that
requires the consent of any third person to the execution of this Agreement or
the performance by the Master Servicer of its obligations under this Agreement;

 

(vi)                              no litigation is pending
or, to the best of the Master Servicer’s knowledge, threatened against the
Master Servicer which would prohibit its entering into this Agreement or
performing its obligations under this Agreement;

 

(vii)                           the Master Servicer, or an
affiliate thereof the primary business of which is the servicing of
conventional residential mortgage loans, is a Fannie Mae- or FHLMC-approved
seller/servicer;

 

(viii)                        no consent, approval,
authorization or order of any court or governmental agency or body is required
for the execution, delivery and performance by the Master Servicer of or
compliance by the Master Servicer with this Agreement or the consummation of
the transactions contemplated by this Agreement, except for such consents,
approvals, authorizations and orders (if any) as have been obtained;

 

(ix)                                the consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Master Servicer;

 

(x)                                   the Master Servicer
has obtained an Errors and Omissions Insurance Policy and a Fidelity Bond in
accordance with Section 5.02 each
of which is in full force and effect, and each of which provides at least such
coverage as is required hereunder; and

 

(xi)                                the information about
the Master Servicer under the heading “The Master Servicer” in the Offering
Documents relating to the Master Servicer does not include an untrue statement
of a material fact and does not omit to state a material fact, with respect to
the statements made, necessary in order to make the statements in light of the
circumstances under which they were made not misleading.

 

(b)                                 It is understood and agreed that
the representations and warranties set forth in this Section 5.01 shall
survive the execution and delivery of this Agreement.  The Master Servicer shall indemnify the
Depositor, the Issuer, the Indenture Trustee, the Owner Trustee, the Trust
Administrator, the Servicer and the Subservicer and hold them harmless against
any loss, damages, penalties, fines, forfeitures, legal fees and related costs,
judgments, and other costs and expenses resulting from any claim, demand,
defense or assertion based on or grounded upon, or resulting from, a breach of
the Master Servicer’s representations and warranties contained in this Section 5.01.  It
is understood and agreed that the enforcement of the obligation of the Master
Servicer set forth in this Section to indemnify the foregoing parties as
provided in this Section constitutes the sole remedy (other than as set
forth in Section 8.01) of such parties respecting a breach of the
foregoing representations and warranties. 
Such indemnification shall survive any termination of the Master
Servicer as Master Servicer hereunder, and any termination of this Agreement.

 

88

 

Any cause of action against the Master Servicer
relating to or arising out of the breach of any representations and warranties
made in this Section shall accrue upon discovery of such breach by the
Depositor, the Issuer, the Indenture Trustee, the Trust Administrator, the
Servicer or the Subservicer or notice thereof by any one of such parties to the
other parties.  Notwithstanding anything
in this Agreement to the contrary, the Master Servicer shall not be liable for
special, indirect or consequential losses or damages of any kind whatsoever
(including, but not limited to, lost profits).

 

Section 5.02.                             Master Servicer Fidelity Bond
and Master Servicer Errors and Omissions Insurance Policy.

 

(a)                                  The Master Servicer, at its
expense, shall maintain in effect a Master Servicer Fidelity Bond and a Master
Servicer Errors and Omissions Insurance Policy, affording coverage with respect
to all directors, officers, employees and other Persons acting on such Master
Servicer’s behalf, and covering errors and omissions in the performance of the
Master Servicer’s obligations hereunder. 
The Master Servicer Errors and Omissions Insurance Policy and the Master
Servicer Fidelity Bond shall be in such form and amount that would be
consistent with coverage customarily maintained by master servicers of mortgage
loans similar to the Mortgage Loans and shall by its terms not be cancelable
without thirty days’ prior written notice to the Indenture Trustee.  The Master Servicer shall provide the
Depositor and the Indenture Trustee, upon request, with a copy of such policy
and fidelity bond.  The Master Servicer
shall (i) require the Servicer to maintain an Errors and Omissions
Insurance Policy and a Servicer Fidelity Bond in accordance with the provisions
of Section 4.02(m) of this Agreement, (ii) cause the Servicer to
provide to the Master Servicer certificates evidencing that such policy and
bond is in effect and to furnish to the Master Servicer any notice of
cancellation, non-renewal or modification of the policy or bond received by it,
as and to the extent provided in Section 4.02(m) of the Agreement, and (iii) furnish
copies of such policies and of the certificates and notices referred to in
clause (ii) to the Indenture Trustee upon request.

 

(b)                                 The Master Servicer shall
promptly report to the Indenture Trustee and the Trust Administrator any
material changes that may occur in the Master Servicer’s Fidelity Bond or the
Master Servicer Errors and Omissions Insurance Policy and shall furnish either
such party, on request, certificates evidencing that such bond and insurance policy
are in full force and effect.  The Master
Servicer shall promptly report to the Indenture Trustee and the Trust
Administrator all cases of embezzlement or fraud, if such events involve funds
relating to the Mortgage Loans.  The
total losses, regardless of whether claims are filed with the applicable
insurer or surety, shall be disclosed in such reports together with the amount
of such losses covered by insurance.  If
a bond or insurance claim report is filed with any of such bonding companies or
insurers, the Master Servicer shall promptly furnish a copy of such report to
the Indenture Trustee and the Trust Administrator.  Any amounts relating to the Mortgage Loans
collected by the Master Servicer under any such bond or policy shall be
promptly remitted by the Master Servicer to the Indenture Trustee for deposit
into the Collection Account.  Any amounts
relating to the Mortgage Loans collected by the Servicer under any such bond or
policy shall be remitted to the Master Servicer.

 

Section 5.03.                             Master Servicer’s Financial
Statements and Related Information.  For each year this
Agreement is in effect, the Master Servicer shall deliver to the Trust
Administrator, the

 

89

 

Indenture Trustee, each Rating Agency and the
Depositor a copy of its annual unaudited financial statements on or prior to May 31
of each year, beginning May 31, 2005. 
Such financial statements shall include a balance sheet, income
statement, statement of retained earnings, statement of additional paid-in
capital, statement of changes in financial position and all related notes and
schedules and shall be in comparative form, certified by a nationally
recognized firm of Independent Accountants to the effect that such statements
were examined and prepared in accordance with generally accepted accounting
principles applied on a basis consistent with that of the preceding year.

 

Section 5.04.                             Power to Act; Procedures.

 

(a)                                  The Master Servicer shall master
service the Mortgage Loans, provided that the Master Servicer shall not take,
or knowingly permit the Servicer to take, any action that is inconsistent with
or prejudices the interests of the Issuer, the Indenture Trustee or the
Noteholders in any Mortgage Loan or the rights and interests of the Depositor,
the Issuer, the Indenture Trustee and the Noteholders under this Agreement and
the Indenture.  The Master Servicer shall
represent and protect the interests of the Issuer, the Indenture Trustee and
the Noteholders in the same manner as it protects its own interests in mortgage
loans in its own portfolio in any claim, proceeding or litigation regarding a
Mortgage Loan.  Without limiting the
generality of the foregoing, the Master Servicer in its own name, and the
Servicer, to the extent such authority is delegated to such Servicer under this
Agreement, is hereby authorized and empowered by the Indenture Trustee when the
Master Servicer or such Servicer, as the case may be, believes it appropriate
in its best judgment and in accordance with Servicing Standards, to execute and
deliver, on behalf of itself and the Noteholders, the Trust Administrator, the
Indenture Trustee or any of them, 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.  The Indenture
Trustee (or the Trust Administrator acting for the Indenture Trustee) shall
furnish the Master Servicer, upon request, with any powers of attorney
empowering the Master Servicer or the Servicer to execute and deliver
instruments of satisfaction or cancellation, or of partial or full release or
discharge, and to foreclose upon or otherwise liquidate Mortgaged Property, and
to appeal, prosecute or defend in any court action relating to the Mortgage
Loans or the Mortgaged Property, in accordance with this Agreement, and the
Indenture Trustee shall execute and deliver such other documents as the Master
Servicer may request, necessary or appropriate to enable the Master Servicer to
master service the Mortgage Loans and carry out its duties hereunder, and to
allow the Servicer to service the Mortgage Loans in each case in accordance
with Servicing Standards (and the Indenture Trustee or the Trust Administrator
shall have no liability for misuse of any such powers of attorney by the Master
Servicer or the Servicer).  If the Master
Servicer or the Indenture Trustee has been advised that it is likely that the
laws of the state in which action is to be taken prohibit such action if taken
in the name of the Indenture Trustee or that the Indenture Trustee would be
adversely affected under the “doing business” or tax laws of such state if such
action is taken in its name, then upon request of the Indenture Trustee, the
Master Servicer shall join with the Indenture Trustee in the appointment of a
co-trustee pursuant to Section 6.10 of the Indenture.  In no event shall the Master Servicer,
without the Indenture Trustee’s written consent:  (i) initiate any action, suit or
proceeding solely under the Indenture Trustee’s name without indicating the
Master Servicer’s representative capacity or (ii) take any action with the
intent to cause, and which actually does cause, the Indenture Trustee to be
registered to do

 

90

 

business in any state.  The Master Servicer shall indemnify the
Indenture Trustee for any and all costs, liabilities and expenses incurred by
the Indenture Trustee in connection with the negligent or willful misuse of
such powers of attorney by the Master Servicer. 
In the performance of its duties hereunder, the Master Servicer shall be
an independent contractor and shall not, except in those instances where it is
taking action in the name of the Indenture Trustee, be deemed to be the agent
of the Indenture Trustee.

 

(b)                                 In master servicing and
administering the Mortgage Loans, the Master Servicer shall employ procedures
and exercise the same care that it customarily employs and exercises in master
servicing and administering loans for its own account, giving due consideration
to Servicing Standards where such practices do not conflict with this
Agreement.  Consistent with the
foregoing, the Master Servicer may, and may permit the Servicer to, in its
discretion (i) waive any late payment charge and (ii) extend the due
dates for payments due on a Mortgage Note for a period not greater than 120 days; provided,
however, that the maturity of any Mortgage Loan shall not be
extended past the date on which the final payment is due on the latest maturing
Mortgage Loan as of the Cut-off Date.  In
the event of any extension described in clause (ii) above, the Master
Servicer shall make or cause the Servicer to make Advances on the related
Mortgage Loan in accordance with the provisions of Section 4.03 on the
basis of the amortization schedule of such Mortgage Loan without
modification thereof by reason of such extension.

 

Section 5.05.                             Enforcement of Servicer’s and
Master Servicer’s Obligations.

 

(a)                                  The Master Servicer shall not be
required to (i) take any action with respect to the servicing of any
Mortgage Loan that the Servicer is not required to take under this Agreement
and (ii) cause the Servicer to take any action or refrain from taking any
action if this Agreement does not require the Servicer to take such action or
refrain from taking such action.

 

(b)                                 The Master Servicer, for the
benefit of the Issuer, the Indenture Trustee and the Noteholders, shall enforce
the obligations of the Servicer hereunder, and shall, in the event that the
Servicer fails to perform its obligations in accordance herewith, terminate the
rights and obligations of the Servicer hereunder and either act as servicer of
the related Mortgage Loans or cause other parties hereto to either assume the
obligations of the Servicer-under this Agreement (or agree to execute and
deliver a successor servicing or sub-servicing agreement with a successor
servicer).  Such enforcement, including,
without limitation, the legal prosecution of claims, termination of servicing
or sub-servicing rights and the pursuit of other appropriate remedies, shall be
in such form and carried out to such an extent and at such time as the Master
Servicer, in its good faith business judgment, would require were it the owner
of the related Mortgage Loans.  The
Master Servicer shall pay the costs of such enforcement at its Own expense, and
shall be reimbursed therefor initially (i) from a general recovery
resulting from such enforcement only to the extent, if any, that such recovery
exceeds all amounts due in respect of the related Mortgage Loans, (ii) from
a specific recovery of costs, expenses or attorneys’ fees against the party
against whom such enforcement is directed, and then, (iii) to the extent
that such amounts are insufficient to reimburse the Master Servicer for the
costs of such enforcement, from the Collection Account.

 

Section 5.06.                             [Reserved]

 

91

 

Section 5.07.                             Collection Account.

 

(a)                                  On the Closing Date, the Trust
Administrator shall open and shall thereafter maintain a segregated account
held in trust in the name of the Securities Intermediary (the “Collection
Account”), entitled “Collection Account, [                      ], as Indenture Trustee,
in trust for Holders of the Fieldstone Mortgage Investment Trust, Series 2005-[
], Mortgage-Backed Notes.”  The
Collection Account shall relate solely to the Notes issued by the Issuer, and
funds deposited in the Collection Account shall not be commingled with any
other monies.

 

(b)                                 The Collection Account shall be
an Eligible Account.  If an existing
Collection Account ceases to be an Eligible Account, the Trust Administrator
shall establish a new Collection Account that is an Eligible Account within 10
days and transfer all funds and investment property on deposit in such existing
Collection Account into such new Collection Account.

 

(c)                                  The Trust Administrator shall
give to the Master Servicer and the Indenture Trustee prior written notice of
the name and address of the depository institution at which the Collection
Account is maintained and the account number of such Collection Account.  The Trust Administrator shall take such
actions as are necessary to cause the depository institution holding the
Collection Account to hold such account in the name of the Indenture
Trustee.  On each Payment Date, the
entire amount on deposit in the Collection Account relating to the Mortgage
Loans (subject to permitted withdrawals set forth in Section 5.08), other
than amounts not included in Interest Funds or Principal Funds to be paid to
Noteholders for such Payment Date, shall be applied to make the requested
payment of principal and/or interest on each class of Notes.

 

(d)                                 The Master Servicer shall
deposit or cause to be deposited into the Collection Account, no later than the
Business Day following the Closing Date, any amounts received with respect to
the Mortgage Loans representing Scheduled Payments on the Mortgage Loans due
after the Cut-off Date and unscheduled payments received on or after the
Cut-off Date and on or before the Closing Date. 
Thereafter, the Master Servicer shall deposit or cause to be deposited
in the Collection Account on the earlier of the applicable Payment Date and one
Business Day following receipt thereof, the following amounts received or
payments made by the Master Servicer (other than in respect of principal of and
interest on the Mortgage Loans due on or before the Cut-off Date):

 

(i)                                     all remittances
from the Custodial Account to the Master Servicer pursuant to Section 4.03;

 

(ii)                                  all Advances made by
the Servicer or the Master Servicer pursuant to Section 6.05 hereof and
any payment in respect of Prepayment Interest Shortfalls paid by the Master
Servicer pursuant to Section 5.21 hereof;

 

(iii)                               the Purchase Price of
any Mortgage Loan repurchased by the Depositor or the Seller during the related
Prepayment Period or any other Person and any Substitution Amount related to
any Qualifying Substitute Mortgage Loan; and

 

92

 

(iv)                              any Net Swap Receipts or
any swap breakage costs (as reported to the Trust Administrator by the Swap
Counterparty) received by the Trust Administrator.

 

(e)                                  Funds in the Collection Account
may be invested by the Trust Administrator in Eligible Investments selected by
and at the written direction of the Trust Administrator, which shall mature not
later than one Business Day prior to the next Payment Date (or on the Payment
Date with respect to any Eligible Investment of the Trust Administrator or any
other fund managed or advised by it or any Affiliate) and any such Eligible
Investment shall not be sold or disposed of prior to its maturity.  All such Eligible Investments shall be made
in the name of the Master Servicer in trust for the benefit of the Indenture
Trustee and the Noteholders.  All income
and gain realized from any Eligible Investment shall be for the benefit of the
Master Servicer and shall be subject to its withdrawal or order from time to
time, subject to Section 5.08 and shall not be part of the Trust
Estate.  The amount of any losses
incurred in respect of any such investments shall be deposited in such
Collection Account by the Master Servicer out of its own funds, without any
right of reimbursement therefor, immediately as realized.  The foregoing requirements for deposit in the
Collection Account are exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments of interest on funds in the
Collection Account and payments in the nature of late payment charges,
assumption fees and other incidental fees and charges relating to the Mortgage
Loans need not be deposited by the Master Servicer in the Collection Account
and may be retained by the Master Servicer or the Servicer, as applicable, as additional
servicing compensation.  If the Master
Servicer deposits in the Collection Account any amount not required to be
deposited therein, it may at any time withdraw such amount from such Collection
Account.

 

Section 5.08.                             Application of Funds in the Collection
Account.  The Trust Administrator may, from time to
time, make, or cause to be made, withdrawals from the Collection Account for
the following purposes:

 

(i)                                     to reimburse the
Master Servicer or the Servicer, as applicable, for any previously unreimbursed
Advances or Servicing Advances made by any such party, such right to
reimbursement pursuant to this subclause (i) being limited to amounts
received on or in respect of a particular Mortgage Loan (including, for this
purpose, Liquidation Proceeds and amounts representing Insurance Proceeds with
respect to the property subject to the related Mortgage) which represent late
recoveries (net of the applicable Servicing Administration Fee) of payments of
principal or interest respecting which any such Advance was made, it being
understood, in the case of any such reimbursement, that the Master Servicer’s
or Servicer’s right thereto shall be prior to the rights of the Noteholders;

 

(ii)                                  to reimburse the
Master Servicer or the Servicer following a final liquidation of a Mortgage
Loan for any previously unreimbursed Advances made by any such party (A) that
such party determines in good faith will not be recoverable from amounts
representing late recoveries of payments of principal or interest respecting
the particular Mortgage Loan as to which such Advance was made or from
Liquidation Proceeds or Insurance Proceeds with respect to such Mortgage Loan
and/or (B) to the extent that such unreimbursed Advances exceed the
related Liquidation Proceeds or Insurance Proceeds, it being understood, in the
case of each such reimbursement, that the

 

93

 

Master Servicer’s or Servicer’s right thereto
shall be prior to the rights of the Noteholders;

 

(iii)                               to reimburse the Master
Servicer or the Servicer from Liquidation Proceeds for Liquidation Expenses and
for amounts expended by it pursuant to Section 4.02(o) in good faith in
connection with the restoration of damaged property and, to the extent that
Liquidation Proceeds after such reimbursement exceed the unpaid principal
balance of the related Mortgage Loan, together with accrued and unpaid interest
thereon at the applicable Mortgage Rate less the applicable Servicing
Administration Fee Rate and Master Servicing Fee Rate for such Mortgage Loan to
the Due Date next succeeding the date of its receipt of such Liquidation
Proceeds, to pay to the Master Servicer or the Servicer out of such excess the
amount of any unpaid assumption fees, late payment charges or other Mortgagor
charges on the related Mortgage Loan and to retain any excess remaining
thereafter as additional servicing compensation, it being understood, in the
case of any such reimbursement or payment, that such Master Servicer’s or
Servicer’s right thereto shall be prior to the rights of the Noteholders;

 

(iv)                              to pay to the Depositor
or the Seller or any other Person, as applicable, with respect to each Mortgage
Loan or REO Property acquired in respect thereof that has been purchased
pursuant to this Agreement, all amounts received thereon and not paid on the
date on which the related repurchase was effected, and to pay to the applicable
party any Advances and Servicing Advances to the extent specified in the
definition of Purchase Price;

 

(v)                                 to the extent not paid
by the Servicer, to pay any Insurance Premium with respect to a Mortgage Loan;

 

(vi)                              to pay to the Master
Servicer income earned on the investment of funds on deposit in the Collection
Account;

 

(vii)                           on each Payment Date, to
make payment to the Noteholders in the amounts and in the manner provided for
in Section 6.02 for the related Payment Date (to the extent collected by
the Master Servicer or the Servicer);

 

(viii)                        on each Payment Date, to make
payment for distribution to the Ownership Certificate, all Prepayment Premiums
received during the immediately preceding Prepayment Period;

 

(ix)                                to make payment to
itself, the Master Servicer, the Servicer, the Subservicer, the Indenture
Trustee, the Custodian, the Owner Trustee and others pursuant to any provision
of this Agreement, the Trust Agreement, the Indenture or the Custodial
Agreement;

 

(x)                                   to withdraw funds
deposited in error in the Collection Account;

 

(xi)                                to clear and terminate
the Collection Account pursuant to Article IX;

 

94

 

(xii)                             to reimburse a successor
master servicer (solely in its capacity as successor master servicer), for any
fee or advance occasioned by a termination of the Master Servicer, and the
assumption of such duties by the Indenture Trustee or a successor master
servicer appointed by the Indenture Trustee pursuant to Section 8.01, in
each case to the extent not reimbursed by the terminated Master Servicer, it
being understood, in the case of any such reimbursement or payment, that the
right of the Master Servicer or the Indenture Trustee thereto shall be prior to
the rights of the Noteholders;

 

(xiii)                          to pay the Swap Counterparty
any Net Swap Payments and any swap termination payments (as reported to the
Trust Administrator by the Swap Counterparty) two Business Days prior to each
applicable Payment Date; and

 

(xiv)                         to make payment to the Owner
Trustee, the Owner Trustee Fee for such Payment Date, if any.

 

In connection with withdrawals pursuant to
subclauses (i), (ii), (iii) and (iv) above, the Master Servicer’s or
the Servicer’s or such other Person’s entitlement thereto is limited to
collections or other recoveries on the related Mortgage Loan.  The Trust Administrator shall therefore keep
and maintain a separate accounting for each Mortgage Loan for the purpose of
justifying any withdrawal from the Collection Account it maintains pursuant to
such subclauses.

 

Section 5.09.                             Reports to Indenture Trustee and
Noteholders.

 

(a)                                  On each Payment Date, the Trust
Administrator shall make available to the Indenture Trustee and each
Noteholder, a report setting forth the following information (on the basis of
Mortgage Loan level information obtained from the Servicer or Subservicer and
information provided by the Swap Counterparty):

 

(i)                                     the aggregate amount
of the payment to be made on such Payment Date to the Holders of each Class of
Notes other than any Class of Notional Notes, to the extent applicable,
allocable to principal on the Mortgage Loans, including Liquidation Proceeds
and Insurance Proceeds, stating separately the amount attributable to scheduled
principal payments and unscheduled payments in the nature of principal;

 

(ii)                                  the aggregate amount
of the payment to be made on such Payment Date to the Holders of each Class of
Notes allocable to interest and the calculation thereof;

 

(iii)                               the amount, if any, of
any payment to the Holder of the Ownership Certificate;

 

(iv)                              (A) the aggregate
amount of any Advances required to be made by or on behalf of the Servicer (or
the Master Servicer) with respect to such Payment Date, (B) the aggregate
amount of such Advances actually made, and (C) the amount, if any, by
which (A) above exceeds (B) above;

 

(v)                                 the total number of
Mortgage Loans, the aggregate Stated Principal Balance of all the Mortgage
Loans as of the close of business on the last day of the

 

95

 

related Due Period, after giving effect to
payments allocated to principal reported under clause (i) above;

 

(vi)                              the Class Principal
Amount (or Class Notional Amount) of each Class of Notes, to the
extent applicable, as of such Payment Date after giving effect to payments
allocated to principal reported under clause (i) above;

 

(vii)                           the amount of all Prepayment
Premiums distributed to the Ownership Certificate;

 

(viii)                        the amount of any Realized
Losses incurred with respect to the Mortgage Loans (x) in the applicable
Prepayment Period and (y) in the aggregate since the Cut-off Date;

 

(ix)                                the amount of the Owner
Trustee Fee, Master Servicing Fee and Servicing Administration Fee paid during
the Due Period to which such payment relates;

 

(x)                                   the number and aggregate
Stated Principal Balance of Mortgage Loans, as reported to the Trust
Administrator by the Servicer or Subservicer, (a) remaining outstanding, (b) delinquent
30 to 59 days on a contractual
basis, (c) delinquent 60 to 89 days on a contractual basis, (d) delinquent
90 or more days on a contractual basis, (e) as to which foreclosure
proceedings have been commenced as of the close of business on the last
Business Day of the calendar month immediately preceding the month in which
such Payment Date occurs, (f) in bankruptcy and (g) that are REO
Properties;

 

(xi)                                the number and
aggregate Stated Principal Balance as of the related Determination Date of any
Mortgage Loans with respect to which the related Mortgaged Property became an
REO Property as of the close of business on the last Business Day of the
calendar month immediately preceding the month in which such Payment Date
occurs;

 

(xii)                             with respect to
substitution of Mortgage Loans in the preceding calendar month, the Stated
Principal Balance of each Deleted Mortgage Loan and of each Qualifying
Substitute Mortgage Loan;

 

(xiii)                          whether a Trigger Event or a Class 1-A2
Trigger Event has occurred;

 

(xiv)                         the Interest Rate applicable
to such Payment Date with respect to each Class of Notes;

 

(xv)                            the Interest Funds and the
Principal Funds applicable to such Payment Date;

 

(xvi)                         if applicable, the amount of
any shortfall (i.e., the difference between the aggregate amounts of principal
and interest which Noteholders would have received if there were sufficient
available amounts in the Collection Account and the amounts actually paid);

 

96

 

(xvii)                      the amount of any
Overcollateralization Deficiency after giving effect to the payments made on
such Payment Date;

 

(xviii)                   LIBOR with respect to such Payment
Date;

 

(xix)                           the Available Funds
Shortfall of each Class of Notes (other than the Class A-IO Notes),
if any; and

 

(xx)                              to the extent such
information is provided to the Master Servicer by the Servicer or the Subservicer,
the number of Mortgage Loans with respect to which (a) a reduction in the
Mortgage Rate has occurred or (b) the related Mortgagor’s obligation to
repay interest on a monthly basis has been suspended or reduced pursuant to the
Civil Relief Act or the California Military and Veterans Code, as amended; and
the amount of interest not required to be paid with respect to any such
Mortgage Loans during the related Due Period as a result of such reductions, in
the aggregate and with respect to the Group 1 Mortgage Loans and the Group 2
Mortgage Loans.

 

In the case of information furnished pursuant
to subclauses (i), (ii) and (vi) above, the amounts shall (except in
the case of the report delivered to the holder of the Ownership Certificate) be
expressed as a dollar amount per $1,000 of original principal amount of Notes.

 

The Trust Administrator will make such report
and additional loan level information (and, at its option, any additional files
containing the same information in an alternative format) available each month
to the Rating Agencies and Noteholders via the Trust Administrator’s
website.  The Trust Administrator’s
website can be accessed at www.ctslink.com.  Assistance in using the website
can be obtained by calling the Trust Administrator’s customer service desk at
[        ].  Such parties that are unable to use the
website are entitled to have a paper copy mailed to them via first class mail
by notifying the Trust Administrator at [                                ], and
indicating such.  The Trust Administrator
shall have the right to change the way such statements are distributed in order
to make such distribution more convenient and/or more accessible to the above
parties and the Trust Administrator shall provide timely and adequate
notification to all above parties regarding any such changes.

 

The foregoing information and reports shall
be prepared and determined by the Trust Administrator based solely on Mortgage
Loan data provided to the Trust Administrator by the Master Servicer (in a
format agreed to by the Trust Administrator and the Master Servicer) no later
than 12:00 p.m.(noon) Eastern Standard Time four Business Days prior to
the Payment Date.  In preparing or
furnishing the foregoing information, the Trust Administrator and the Master Servicer
shall be entitled to rely conclusively on the accuracy of the information or
data regarding the Mortgage Loans and the related REO Property that has been
provided to the Master Servicer by the Servicer or the Subservicer, and neither
the Trust Administrator nor the Master Servicer shall be obligated to verify,
recompute, reconcile or recalculate any such information or data.  The Trust Administrator and the Master
Servicer shall be entitled to conclusively rely on the Mortgage Loan data
provided to the Master Servicer and shall have no liability for any errors in
such Mortgage Loan data.

 

97

 

(b)                                 Upon the reasonable advance
written request of any Noteholder that is a savings and loan, bank or insurance
company, which request, if received by the Indenture Trustee shall be forwarded
promptly to the Trust Administrator, the Trust Administrator shall provide, or
cause to be provided (or, to the extent that such information or documentation
is not required to be provided by the Servicer, shall use reasonable efforts to
obtain such information and documentation from the Servicer, and provide), to
such Noteholder such reports and access to information and documentation
regarding the Mortgage Loans as such Noteholder may reasonably deem necessary
to comply with applicable regulations of the Office of Thrift Supervision or
its successor or other regulatory authorities with respect to an investment in
the Notes; provided, however, that the Trust
Administrator shall be entitled to be reimbursed by such Noteholder for actual
expenses incurred in providing such reports and access.

 

(c)                                  Within 90 days, or such shorter
period as may be required by statute or regulation, after the end of each
calendar year, the Trust Administrator shall have prepared and shall make
available to each Person who at any time during the calendar year was a
Noteholder of record, and make available to Security Owners (identified as such
by the Clearing Agency) in accordance with applicable regulations, a report
summarizing the items provided to the Noteholders pursuant to Section 5.09(a) on an annual basis as may be
required to enable such Holders to prepare their federal income tax returns; provided, however, that this Section 5.09(c) shall
not be applicable where relevant reports or summaries are required elsewhere in
this Agreement.  Such information shall
include the amount of original issue discount accrued on each Class of
Notes and information regarding the expenses of the Issuer.  The Trust Administrator shall be deemed to
have satisfied such requirement if it forwards such information in any other
format permitted by the Code.  The Master
Servicer shall provide the Trust Administrator with such information as is
necessary for the Indenture Trustee to prepare such reports.

 

(d)                                 The Trust Administrator shall
furnish any other information that is required by the Code and regulations
thereunder to be made available to Noteholders. 
The Master Servicer shall provide the Trust Administrator with such
information as is necessary for the Trust Administrator to prepare such reports
(and the Trust Administrator may rely solely upon such information).

 

Section 5.10.                             Termination of Servicer or
Subservicer; Successor Servicers.

 

(a)                                  The Master Servicer shall be
entitled to terminate the rights and obligations of the Servicer or
Subservicer, as applicable, upon the occurrence of a Servicer Event of Default
as set forth in Section 4.07; provided, however, that in the event of termination of the
Servicer or of both the Servicer and the Subservicer by the Master Servicer,
the Master Servicer shall provide for the servicing of the Mortgage Loans by a
successor servicer as provided in Section 4.08.

 

The parties acknowledge that notwithstanding
the preceding sentence, there may be a transition period, not to exceed 90
days, in order to effect the transfer of servicing to a successor
servicer.  The Master Servicer shall be
entitled to be reimbursed by the Servicer or Subservicer, as applicable (or by
the Trust Estate, if the Servicer or Subservicer is unable to fulfill its
obligations hereunder) for all costs associated with the transfer of servicing,
including without limitation, any costs or expenses associated with the
complete transfer of all servicing data and

 

98

 

the completion, correction or
manipulation of such servicing data, as may be required by the Master Servicer
to correct any errors or insufficiencies in the servicing data or otherwise to
enable the Master Servicer to service the Mortgage Loans properly and
effectively.

 

(b)                                 If the Master Servicer acts as a
successor Servicer, it shall not assume liability for the representations and
warranties of the Servicer that it replaces. 
The Master Servicer shall use reasonable efforts to have the successor
Servicer assume liability for the representations and warranties made by the
terminated Servicer and in the event of any such assumption by the successor
servicer, the Master Servicer may, in the exercise of its business judgment,
release the terminated Servicer from liability for such representations and
warranties.

 

(c)                                  If the Master Servicer acts as a
successor Servicer, it will have no obligation to make an Advance if it
determines in its reasonable judgment that such Advance would constitute a
Nonrecoverable Advance.

 

Section 5.11.                             Master Servicer Liable for
Enforcement.  The Master Servicer shall use commercially
reasonable efforts to ensure that the Mortgage Loans are serviced in accordance
with the provisions of this Agreement and shall use commercially reasonable
efforts to enforce the provisions of Article IV for the benefit of the
Noteholders.  The Master Servicer shall
be entitled to enter into any agreement with any Servicer for indemnification
of the Master Servicer and nothing contained in this Agreement shall be deemed
to limit or modify such indemnification. 
Except as expressly set forth herein, the Master Servicer shall have no
liability for the acts or omissions of either the Servicer or Subservicer in
the performance by such Servicer of its obligations under Article IV.

 

Section 5.12.                             Assumption of Master Servicing
by Indenture Trustee.

 

(a)                                  In the event the Master Servicer
shall for any reason no longer be the Master Servicer (including by reason of
any Master Servicer Event of Default under Section 8.01 of this
Agreement), the Indenture Trustee shall thereupon assume all of the rights and
obligations of such Master Servicer hereunder. 
The Indenture Trustee, its designee or any successor master servicer
appointed by the Indenture Trustee shall be deemed to have assumed all of the
Master Servicer’s interest herein, except that the Master Servicer shall not
thereby be relieved of any liability or obligations of the Master Servicer
accruing prior to its replacement as Master Servicer, and shall be liable to
the Indenture Trustee, and hereby agrees to indemnify and hold harmless the
Indenture Trustee from and against all costs, damages, expenses and liabilities
(including reasonable attorneys’ fees) incurred by the Indenture Trustee as a
result of such liability or obligations of the Master Servicer and in
connection with the Indenture Trustee’s assumption (but not its performance,
except to the extent that costs or liability of the Indenture Trustee are
created or increased as a result of negligent or wrongful acts or omissions of
the Master Servicer prior to its replacement as Master Servicer) of the Master
Servicer’s obligations, duties or responsibilities thereunder.

 

(b)                                 The Master Servicer that has
been terminated shall, upon request of the Indenture Trustee but at the expense
of such Master Servicer, deliver to the assuming party all documents and
records relating to the Mortgage Loans and an accounting of amounts collected
and held by

 

99

 

it and otherwise use its best efforts to
effect the orderly and efficient transfer of master servicing to the assuming
party.

 

Section 5.13.                             [Reserved]

 

Section 5.14.                             Release of Mortgage Files.

 

(a)                                  Upon (i) becoming aware of
the payment in full of any Mortgage Loan or (ii) the receipt by the Master
Servicer of a notification that payment in full has been or will be escrowed in
a manner customary for such purposes, the Master Servicer will, or will cause
the Servicer to, promptly notify the Indenture Trustee (or the Custodian) by a
certification (which certification shall include a statement to the effect that
all amounts received in connection with such payment that are required to be
deposited in the Collection Account maintained by the Trust Administrator
pursuant to Section 5.07 have been or will be so deposited) of a Servicing
Officer and shall request (on the form attached to the Custodial Agreement) the
Indenture Trustee or the Custodian, to deliver to the Servicer or Subservicer
the related Mortgage File.  Upon receipt
of such certification and request, the Indenture Trustee or the Custodian (with
the consent, and at the direction of the Indenture Trustee), shall promptly release
the related Mortgage File to the Servicer and the Indenture Trustee shall have
no further responsibility with regard to such Mortgage File.  Upon any such payment in full, the Master
Servicer is authorized, and the Servicer is authorized, to give, as agent for
the Indenture Trustee, as the mortgagee under the Mortgage that secured the
Mortgage Loan, an instrument of satisfaction (or assignment of mortgage without
recourse) regarding the Mortgaged Property subject to the 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
such payment, it being understood and agreed that no expenses incurred in
connection with such instrument of satisfaction or assignment, as the case may
be, shall be chargeable to the Collection Account.

 

(b)                                 From time to time and as
appropriate for the servicing or foreclosure of any Mortgage Loan, the
Indenture Trustee shall execute such documents as shall be prepared and
furnished to the Indenture Trustee by the Master Servicer, or by the Servicer,
as applicable, (in form reasonably acceptable to the Indenture Trustee) and as
are necessary to the prosecution of any such proceedings.  The Indenture Trustee or the Custodian,
shall, upon request of the Master Servicer or of the Servicer, as applicable,
and delivery to the Indenture Trustee or the Custodian, of a trust receipt
signed by a Servicing Officer substantially in the form attached to the
Custodial Agreement, release the related Mortgage File held in its possession
or control to the Master Servicer (or the Servicer, as applicable).  Such trust receipt shall obligate the Master
Servicer or the Servicer, as applicable, to return the Mortgage File to the
Indenture Trustee or the Custodian, as applicable, when the need therefor by
the Master Servicer or the Servicer, as applicable, no longer exists unless the
Mortgage Loan shall be liquidated, in which case, upon receipt of a certificate
of a Servicing Officer similar to that hereinabove specified, the trust receipt
shall be released by the Indenture Trustee or the Custodian, as applicable, to
the Master Servicer or the Servicer as applicable.

 

100

 

Section 5.15.                             Documents, Records and Funds in
Possession of Master Servicer To Be Held for Indenture Trustee.

 

(a)                                  The Master Servicer shall
transmit, or cause the Servicer to transmit, to the Indenture Trustee such
documents and instruments coming into the possession of the Master Servicer or
the Servicer from time to time as are required by the terms hereof to be
delivered to the Indenture Trustee or the Custodian.  Any funds received by the Master Servicer or
by the Servicer in respect of any Mortgage Loan or which otherwise are collected
by the Master Servicer or the Servicer as Liquidation Proceeds or Insurance
Proceeds in respect of any Mortgage Loan shall be held for the benefit of the
Indenture Trustee and the Noteholders subject to the Master Servicer’s right to
retain or withdraw amounts provided in this Agreement and to the right of the
Servicer to retain its Servicing Administration Fee and other amounts as
provided herein.  The Master Servicer
shall, and shall cause the Servicer to, provide access to information and documentation
regarding the Mortgage Loans to the Indenture Trustee, their respective agents
and accountants at any time upon reasonable request and during normal business
hours, and to Noteholders that are savings and loan associations, banks or
insurance companies, the Office of Thrift Supervision, the FDIC and the
supervisory agents and examiners of such Office and Corporation or examiners of
any other federal or state banking or insurance regulatory authority if so
required by applicable regulations of the Office of Thrift Supervision or other
regulatory authority, such access to be afforded without charge but only upon
reasonable request in writing and during normal business hours at the offices
of the Master Servicer designated by it. 
In fulfilling such a request the Master Servicer shall not be
responsible for determining the sufficiency of such information.

 

(b)                                 All Mortgage Files and funds
collected or held by, or under the control of, the Master Servicer or the
Servicer, in respect of any Mortgage Loans, whether from the collection of
principal and interest payments or from Liquidation Proceeds or Insurance
Proceeds, shall be held by the Master Servicer or by the Servicer for and on
behalf of the Indenture Trustee as the Indenture Trustee’s agent and bailee for
purposes of perfecting the Indenture Trustee’s security interest therein as
provided by relevant Uniform Commercial Code or laws; provided,
however, that the Master Servicer and the Servicer shall be entitled
to setoff against, and deduct from, any such funds any amounts that are properly
due and payable to the Master Servicer or the Servicer under this Agreement and
shall be authorized to remit such funds to the Indenture Trustee in accordance
with this Agreement.

 

(c)                                  The Master Servicer hereby
acknowledges that concurrently with the execution of this Agreement, the
Indenture Trustee shall own or, to the extent that a court of competent
jurisdiction shall deem the conveyance of the Mortgage Loans from the Seller to
the Depositor not to constitute a sale, the Indenture Trustee shall have a
security interest in the Mortgage Loans and in all Mortgage Files representing
such Mortgage Loans and in all funds and investment property now or hereafter
held by, or under the control of, the Servicer or the Master Servicer that are
collected by the Servicer or the Master Servicer in connection with the
Mortgage Loans, whether as scheduled installments of principal and interest or
as full or partial prepayments of principal or interest or as Liquidation
Proceeds or Insurance Proceeds or otherwise, and in all proceeds of the
foregoing and proceeds of proceeds (but excluding any fee or other amounts to
which the Servicer or the Master Servicer is entitled to hereunder); and the
Master Servicer agrees that so long as the Mortgage Loans are assigned to and held
by the Indenture Trustee or

 

101

 

the Custodian, all documents or instruments
constituting part of the Mortgage Files, and such funds relating to the
Mortgage Loans which come into the possession or custody of, or which are
subject to the control of, the Master Servicer or the Servicer shall be held by
the Master Servicer or the Servicer for and on behalf of the Indenture Trustee
as the Indenture Trustee’s agent and bailee for purposes of perfecting the Indenture
Trustee’s security interest therein as provided by the applicable Uniform
Commercial Code or other applicable laws.

 

(d)                                 The Master Servicer agrees that
it shall not, and shall not authorize the Servicer to, create, incur or subject
any Mortgage Loans, or any funds that are deposited in any Custodial Account,
Escrow Account or the Collection Account, or any funds that otherwise are or
may become due or payable to the Indenture Trustee, to any claim, lien,
security interest, judgment, levy, writ of attachment or other encumbrance, nor
assert by legal action or otherwise any claim or right of setoff against any
Mortgage Loan or any funds collected on, or in connection with, a Mortgage
Loan.

 

Section 5.16.                             Opinion.  On or before the Closing Date, the Master
Servicer shall cause to be delivered to the Depositor, the Seller, the
Indenture Trustee, the Issuer, the Trust Administrator, the Servicer and the
Subservicer one or more Opinions of Counsel, dated the Closing Date, in form
and substance reasonably satisfactory to the Depositor and a representative of
the Underwriters, as to the due authorization, execution and delivery of this
Agreement by the Master Servicer and the enforceability thereof.

 

Section 5.17.                             [Reserved]

 

Section 5.18.                             [Reserved]

 

Section 5.19.                             [Reserved]

 

Section 5.20.                             Indenture Trustee To Retain
Possession of Certain Insurance Policies and Documents.  The Indenture Trustee (or the Custodian on
behalf of the Indenture Trustee) shall retain possession and custody of the
originals of the primary mortgage insurance policies or certificate of
insurance if applicable and any certificates of renewal as to the foregoing as
may be issued from time to time as contemplated by this Agreement.  Until all amounts payable in respect of the
Notes have been paid in full and the Master Servicer otherwise has fulfilled
its obligations under this Agreement, the Indenture Trustee (or the Custodian)
shall also retain possession and custody of each Mortgage File in accordance
with and subject to the terms and conditions of this Agreement.  The Master Servicer shall promptly deliver or
cause the Servicer to deliver to the Indenture Trustee (or the Custodian), upon
the execution or receipt thereof the originals of the primary mortgage
insurance policies and any certificates of renewal thereof, and such other
documents or instruments that constitute portions of the Mortgage File that
come into the possession of the Master Servicer or the Servicer or Subservicer
from time to time.

 

Section 5.21.                             Compensation to the Master
Servicer.  Pursuant to Section 5.07(e), all income
and gain realized from any investment of funds in the Collection Account shall
be for the benefit of the Master Servicer as compensation.  Notwithstanding the foregoing, the Master
Servicer shall deposit in the Collection Account, on or before the related
Payment Date, an amount equal to the lesser of (i) its master servicing
compensation with respect to such Payment

 

102

 

Date and (ii) the amount of any
Compensating Interest Payment required to be paid by the Servicer with respect
to such Payment Date pursuant to this Agreement, but which is not paid by the
Servicer or by the Subservicer on its behalf. 
The Master Servicer shall be required to pay all expenses incurred by it
in connection with its activities hereunder and shall not be entitled to
reimbursement therefor except as provided in this Agreement.

 

Section 5.22.                             [Reserved]

 

Section 5.23.                             Reports to the Indenture Trustee.

 

(a)                                  Not later than 30 days after
each Payment Date, the Trust Administrator shall, upon request, forward to the
Indenture Trustee a statement, deemed to have been certified by a officer of
the Trust Administrator, setting forth the status of the Collection Account
maintained by the Trust Administrator as of the close of business on the
related Payment Date, indicating that all payments required by this Agreement
to be made by the Trust Administrator have been made (or if any required
payment has not been made by the Trust Administrator, 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
maintained by the Trust Administrator. 
Copies of such statement shall be provided by the Trust Administrator,
upon request, to the Depositor, Attention: 
Contract Finance and any Noteholders (or by the Indenture Trustee at the
Trust Administrator’s expense if the Trust Administrator shall fail to provide
such copies to the Noteholders (unless (i) the Trust Administrator shall
have failed to provide the Indenture Trustee with such statement or (ii) the
Indenture Trustee shall be unaware of the Trust Administrator’s failure to
provide such statement)).

 

(b)                                 Not later than two Business Days
following each Payment Date, the Trust Administrator shall deliver to one
Person designated by the Depositor, in a format consistent with other
electronic loan level reporting supplied by the Master Servicer in connection
with similar transactions, “loan level” information with respect to the
Mortgage Loans as of the related Determination Date, to the extent that such
information has been provided to the Master Servicer by the Servicer or
Subservicer or by the Depositor.

 

(c)                                  All information, reports and
statements prepared by the Master Servicer under this Agreement shall be based
on information supplied to the Master Servicer by the Servicer without
independent verification thereof and the Master Servicer shall be entitled to
rely on such information.

 

Section 5.24.                             Annual Officer’s Certificate as
to Compliance.

 

(a)                                  The Master Servicer shall
deliver to the Indenture Trustee no later than five Business Days after the
15th of March of each calendar year, commencing in March 2005, an
Officer’s Certificate, certifying that with respect to the period ending on the
immediately preceding December 31:  (i) such
Servicing Officer has reviewed the activities of such Master Servicer during
the preceding calendar year or portion thereof and its performance under this
Agreement, (ii) to the best of such Servicing Officer’s knowledge, based
on such review, such Master Servicer has performed and fulfilled its duties,
responsibilities and obligations under this Agreement in all material respects
throughout such year, or, if there has been a default in the

 

103

 

fulfillment of any such duties,
responsibilities or obligations, specifying each such default known to such
Servicing Officer and the nature and status thereof, (iii) nothing has
come to the attention of such Servicing Officer to lead such Servicing Officer
to believe that the Servicer has failed to perform any of its duties,
responsibilities and obligations set forth in Article IV hereunder in all
material respects throughout such year, or, if there has been a material
default in the performance or fulfillment of any such duties, responsibilities
or obligations, specifying each such default known to such Servicing Officer
and the nature and status thereof, and (iv) the Master Servicer has
received from the Servicer an annual certificate of compliance and a copy of
such Servicer’s or Subservicer’s annual audit report, or, if any such
certificate or report has not been received by the Master Servicer, the Master
Servicer is using its best reasonable efforts to obtain such certificate or
report.

 

(b)                                 Copies of such statements shall
be provided to any Noteholder upon request, by the Master Servicer or by the
Indenture Trustee at the Master Servicer’s expense if the Master Servicer
failed to provide such copies (unless (i) the Master Servicer shall have
failed to provide the Indenture Trustee with such statement or (ii) the
Indenture Trustee shall be unaware of the Master Servicer’s failure to provide
such statement).

 

Section 5.25.                             Annual Independent Accountants’
Servicing Report.  If the Master Servicer (or any of its
Affiliates) has, during the course of any fiscal year, directly serviced, as a
successor Servicer, any of the Mortgage Loans, then the Master Servicer at its
expense shall cause a nationally recognized firm of independent certified
public accountants to furnish a statement to the Indenture Trustee and the
Depositor no later than five Business Days after the fifteenth of March of
each calendar year, commencing in March 2005 to the effect that, with
respect to the most recently ended calendar year, such firm has examined
certain records and documents relating to the Master Servicer’s performance of
its servicing obligations under this Agreement and pooling and servicing and
trust agreements in material respects similar to this Agreement and to each
other and that, on the basis of such examination conducted substantially in
compliance with the audit program for mortgages serviced for FHLMC or the
Uniform Single Attestation Program for Mortgage Bankers, such firm is of the
opinion that the Master Servicer’s activities have been conducted in compliance
with this Agreement, or that such examination has disclosed no material items
of noncompliance except for (i) such exceptions as such firm believes to
be immaterial, (ii) such other exceptions as are set forth in such
statement and (iii) such exceptions that the Uniform Single Attestation
Program for Mortgage Bankers or the Audit Program for Mortgages Serviced by
FHLMC requires it to report.  Copies of
such statements shall be provided to any Noteholder upon request by the Master
Servicer, or by the Indenture Trustee at the expense of the Master Servicer if
the Master Servicer shall fail to provide such copies.  If such report discloses exceptions that are
material, the Master Servicer shall advise the Indenture Trustee whether such
exceptions have been or are susceptible of cure, and will take prompt action to
do so.

 

Section 5.26.                             Merger or Consolidation.  Any Person into which the Master Servicer may
be merged or consolidated, or any Person resulting from any merger, conversion,
other change in form or consolidation to which the Master Servicer shall be a
party, or any Person succeeding to the business of the Master Servicer, shall
be the successor to the Master Servicer hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; provided, however, that the successor or

 

104

 

resulting Person to the Master Servicer shall
be a Person that shall be qualified and approved (or that have an Affiliate
that is qualified and approved) to service mortgage loans for Fannie Mae or FHLMC
and shall have a net worth of not less than $15,000,000.

 

Section 5.27.                             Resignation of Master Servicer.  Except as otherwise provided in Sections 5.26 and this Section 5.27 hereof, the
Master Servicer shall not resign from the obligations and duties hereby imposed
on it unless it or the Indenture Trustee determines that the Master Servicer’s
duties hereunder are no longer permissible under applicable law or are in
material conflict by reason of applicable law with any other activities carried
on by it and cannot be cured.  Any such
determination permitting the resignation of the Master Servicer shall be
evidenced by an Opinion of Counsel that shall be Independent to such effect
delivered to the Indenture Trustee.  No
such resignation shall become effective until the Indenture Trustee shall have
assumed, or a successor master servicer shall have been appointed by the
Indenture Trustee and until such successor shall have assumed, the Master
Servicer’s responsibilities and obligations under this Agreement.  Notice of such resignation shall be given
promptly by the Master Servicer and the Depositor to the Indenture Trustee.

 

Section 5.28.                             Assignment or Delegation of
Duties by the Master Servicer.  Except as expressly provided herein, the
Master Servicer shall not assign or transfer any of its rights, benefits or
privileges hereunder to any other Person, or delegate to or subcontract with,
or authorize or appoint any other Person to perform any of the duties,
covenants or obligations to be performed by the Master Servicer hereunder,
unless the Indenture Trustee and the Depositor shall have consented to such
action; provided, however, that
the Master Servicer shall have the right without the prior written consent of
the Indenture Trustee or the Depositor to delegate or assign to or subcontract
with or authorize or appoint an Affiliate of the Master Servicer to perform and
carry out any duties, covenants or obligations to be performed and carried out
by the Master Servicer hereunder.  In no
case, however, shall any such delegation, subcontracting or assignment to an
Affiliate of the Master Servicer relieve the Master Servicer of any liability
hereunder.  Notice of such permitted
assignment shall be given promptly by the Master Servicer to the Depositor and
the Indenture Trustee.  If, pursuant to
any provision hereof, the duties of the Master Servicer are transferred to a
successor master servicer, the entire amount of compensation payable to the
Master Servicer pursuant hereto, including amounts payable to or permitted to
be retained or withdrawn by the Master Servicer pursuant to Section 5.21
hereof, shall thereafter be payable to such successor master servicer.

 

Section 5.29.                             Limitation on Liability of the
Master Servicer and Others.

 

(a)                                  The Master Servicer undertakes
to perform such duties and only such duties as are specifically set forth in
this Agreement.

 

(b)                                 No provision of this Agreement
shall be construed to relieve the Master Servicer from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct; provided, however, that the duties and
obligations of the Master Servicer shall be determined solely by the express
provisions of this Agreement, the Master Servicer shall not be liable except
for the performance of such duties and obligations as are specifically set
forth in this Agreement; no implied covenants or obligations shall be read into
this Agreement against the Master Servicer and, in absence of bad faith on the
part of the Master Servicer, the Master

 

105

 

Servicer may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the Master Servicer and
conforming to the requirements of this Agreement.

 

(c)                                  Neither the Master Servicer nor
any of the directors, officers, employees or agents of the Master Servicer
shall be under any liability to the Indenture Trustee or the Noteholders 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 Master Servicer
or any such person against any liability that would otherwise be imposed by
reason of willful misfeasance, bad faith or negligence in its performance of
its duties or by reason of reckless disregard for its obligations and duties
under this Agreement.  The Master
Servicer and any director, officer, employee or agent of the Master Servicer
shall be entitled to indemnification by the Trust Estate and will be held
harmless against any loss, liability or expense incurred in connection with any
legal action relating to this Agreement or the Notes other than any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
negligence in the performance of his or its duties hereunder or by reason of
reckless disregard of his or its obligations and duties hereunder.  The Master Servicer and any director,
officer, employee or agent of the Master Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. 
The Master Servicer shall be under no obligation to appear in, prosecute
or defend any legal action that is not incidental to its duties to master
service the Mortgage Loans in accordance with this Agreement and that in its
opinion may involve it in any expenses or liability; provided,
however, that the Master Servicer may in its sole discretion
undertake any such action that it may deem necessary or desirable in respect to
this Agreement and the rights and duties of the parties hereto and the
interests of the Noteholders hereunder. 
In such event, the legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities of the
Issuer and the Master Servicer shall be entitled to be reimbursed therefor out
of the Collection Account it maintains as provided by Section 5.08.

 

Section 5.30.                             Indemnification; Third-Party
Claims.  The Master Servicer agrees to indemnify the
Depositor, the Issuer and the Indenture Trustee, the Owner Trustee, the
Servicer and the Subservicer and hold them harmless against any and all claims,
losses, penalties, fines, forfeitures, legal fees and related costs, judgments,
and any other costs, liability, fees and expenses that the Depositor, the
Issuer, the Indenture Trustee, the Owner Trustee, the Servicer or Subservicer
may sustain as a result of the failure of the Master Servicer to perform its
duties and master service the Mortgage Loans in compliance with the terms of
this Agreement.  The Depositor, the
Issuer, the Indenture Trustee, the Owner Trustee, the Servicer and the
Subservicer shall immediately notify the Master Servicer if a claim is made by
a third party with respect to this Agreement, the Mortgage Loans entitling the
Depositor, the Issuer, the Indenture Trustee, the Owner Trustee, the Servicer
or Subservicer to indemnification under this Section 5.30, whereupon the
Master Servicer shall assume the defense of any such claim and pay all expenses
in connection therewith, including counsel fees, and promptly pay, discharge
and satisfy any judgment or decree which may be entered against it or them in respect
of such claim.

 

Section 5.31.                             Alternative Index.  In the event that the Index for any Mortgage
Loan, as specified in the related Mortgage Note, becomes unavailable for any
reason, the Master Servicer shall select an alternative index in accordance with
the terms of such Mortgage Note or, if such

 

106

 

Mortgage Note does not make provision for the
selection of an alternative index in such event, the Master Servicer shall,
subject to applicable law, select an alternative index based on information
comparable to that used in connection with the original Index and, in either
case, such alternative index shall thereafter be the Index for such Mortgage
Loan.

 

Section 5.32.                             Transfer of Servicing.  The Seller agrees that it shall provide
written notice to the Master Servicer and the Indenture Trustee thirty days
prior to any proposed transfer or assignment by the Seller of the servicing of
the Mortgage Loans other than transfer or assignment to the Subservicer.  In addition, the ability of the Seller to
transfer or assign the servicing hereunder to a successor servicer shall be
subject to the following conditions:

 

(i)                                     receipt of written
consent of the Master Servicer and Indenture Trustee to such transfer;

 

(ii)                                  Such successor
servicer must be qualified to service loans for FNMA or FHLMC, and must be a
member in good standing of MERS;

 

(iii)                               Such successor servicer
must satisfy the servicer eligibility standards set forth in Section 4.06(d);

 

(iv)                              Such successor servicer
must execute and deliver to the Indenture Trustee an agreement, in form and
substance reasonably satisfactory to the Indenture Trustee, that contains an
assumption by such successor servicer of the due and punctual performance and
observance of each covenant and condition to be performed and observed by the
Servicer;

 

(v)                                 If the successor
servicer is not a Servicer of Mortgage Loans at the time of the transfer, there
must be delivered to the Indenture Trustee a letter from each Rating Agency to
the effect that such transfer of servicing will not result in a qualification,
withdrawal or downgrade of the then-current rating of any of the Notes; and

 

(vi)                              The Seller shall, at its
cost and expense, take such steps, or cause the terminated Servicer to take such
steps, as may be necessary or appropriate to effectuate and evidence the
transfer of the servicing of the Mortgage Loans to such successor servicer,
including, but not limited to, the following: 
(A) to the extent required by the terms of the Mortgage Loans and
by applicable federal and state laws and regulations, the Seller shall cause
the prior Servicer to timely mail to each obligor under a Mortgage Loan any
required notices or disclosures describing the transfer of servicing of the
Mortgage Loans to the successor servicer; (B) prior to the effective date
of such transfer of servicing, the Seller shall cause the prior Servicer to
transmit to any related insurer notification of such transfer of servicing; (C) on
or prior to the effective date of such transfer of servicing, the Seller shall
cause the prior Servicer to deliver to the successor servicer all Mortgage Loan
Documents and any related records or materials; (D) on or prior to the
effective date of such transfer of servicing, the Seller shall cause the prior
Servicer to transfer to the successor servicer, or, if such transfer occurs
after a Servicer Remittance Date but before the next succeeding Payment Date,
to the Indenture Trustee, all funds held by the prior Servicer in respect of
the Mortgage Loans; (E) on or prior to

 

107

 

the effective date of such transfer of
servicing, the Seller shall cause the prior Servicer to, after the effective
date of the transfer of servicing to the successor servicer, continue to
forward to such successor servicer, within one Business Day of receipt, the
amount of any payments or other recoveries received by the prior Servicer, and
to notify the successor servicer of the source and proper application of each
such payment or recovery; and (F) the Seller shall cause the prior
Servicer to, after the effective date of transfer of servicing to the successor
servicer, continue to cooperate with the successor servicer to facilitate such
transfer in such manner and to such extent as the successor servicer may
reasonably request.  Notwithstanding the
foregoing, the prior Servicer shall be obligated to perform the items listed
above to the extent provided in the applicable Servicing Agreement.

 

ARTICLE VI

DEPOSITS AND PAYMENTS TO HOLDERS

 

Section 6.01.                             The Collection Account.

 

(a)                                  The Trust Administrator shall
establish and maintain in the name of the Notes Intermediary the Collection
Account as provided in Section 5.07, which account shall be pledged to the
Indenture Trustee for the benefit of the Noteholders.

 

(b)                                 The Trust Administrator shall
make withdrawals from the Collection Account only for the purposes set forth in
Section 5.08.

 

Section 6.02.                             Payments from the Collection
Account.

 

(a)                                  On each Payment Date, the
Indenture Trustee (or the Paying Agent on behalf of the Indenture Trustee)
shall withdraw from the Collection Account the Total Remittance Amount (to the
extent such amount is on deposit in the Collection Account) and shall pay such
amount as specified in this Section.  All
allocations and payments made between and with respect to Group 1 and Group 2
in this Section shall be made concurrently.

 

(b)                                 On each Payment Date, the
Indenture Trustee (or the Paying Agent on behalf of the Indenture Trustee)
shall pay the Interest Funds for Group 1 for such date in the following order
of priority in accordance with the report of the Trust Administrator:

 

(i)                                     to the Swap
Counterparty, to the extent not previously paid from the Collection Account,
the Group 1 Percentage of any Net Swap Payment for such Payment Date and swap
termination amounts payable to the Swap Counterparty in the event that the
Trust is a defaulting party or an affected party under the terms of the Swap
Agreement;

 

(ii)                                  pro rata, to
the Class 1-Al Notes, the Class 1-A2 Notes and the A-IO(1) Component,
Current Interest thereon for such Payment Date;

 

108

 

(iii)                               pro rata, to
the Class 2-Al Notes, the Class 2-A2 Notes and the A-IO(2) Component,
Current Interest thereon (after giving effect to the payment of the Interest
Funds for Group 2) for such Payment Date;

 

(iv)                              to the Class Ml
Notes, Current Interest for such class for such Payment Date;

 

(v)                                 to the Class M2
Notes, Current Interest for such class for such Payment Date;

 

(vi)                              to the Class M3
Notes, Current Interest for such class for such Payment Date;

 

(vii)                           to the Class M4 Notes,
Current Interest for such class for such Payment Date;

 

(viii)                        to the Class M5 Notes,
Current Interest for such class for such Payment Date;

 

(ix)                                to the Class M6
Notes, Current Interest for such class for such Payment Date;

 

(x)                                   to the Class M7
Notes, Current Interest for such class for such Payment Date;

 

(xi)                                to the Indenture
Trustee, the Owner Trustee, the Master Servicer, the Trust Administrator, the
Servicer and the Subservicer, previously unreimbursed extraordinary costs,
liabilities and expenses to the extent provided in this Agreement;

 

(xii)                             for application as part of
Monthly Excess Cashflow for such Payment Date, as provided in subsection (e) of
this Section, any Interest Funds remaining after application pursuant to
clauses (i)’through (xi) above.

 

(c)                                  On each Payment Date, the
Indenture Trustee (or the Paying Agent on behalf of the Indenture Trustee)
shall pay the Interest Funds for Group 2 for such date in the following order
of priority in accordance with the report of the Trust Administrator:

 

(i)                                     to the Swap
Counterparty, to the extent not previously paid from the Collection Account,
the Group 2 Percentage of any Net Swap Payment for such Payment Date and swap
termination amounts payable to the Swap Counterparty in the event that the
Trust is a defaulting party or an affected party under the terms of the Swap
Agreement;

 

(ii)                                  pro rata, to
Class 2-Al Notes, Class 2-A2 Notes and the A-IO(2) Component,
Current Interest thereon for such Payment Date;

 

109

 

(iii)                               pro rata, to
the Class 1-Al Notes, Class 1-A2 Notes and the A-IO(1) Component,
Current Interest thereon (after giving effect to the payment of the Interest
Funds for Group 1) for such Payment Date;

 

(iv)                              to the Class Ml
Notes, Current Interest for such class for such Payment Date;

 

(v)                                 to the Class M2
Notes, Current Interest for such class for such Payment Date;

 

(vi)                              to the Class M3
Notes, Current Interest for such class for such Payment Date;

 

(vii)                           to the Class M4 Notes,
Current Interest for such class for such Payment Date;

 

(viii)                        to the Class MS Notes,
Current Interest for such class for such Payment Date;

 

(ix)                                to the Class M6
Notes, Current Interest for such class for such Payment Date;

 

(x)                                   to the Class M7
Notes, Current Interest for such class for such Payment Date;

 

(xi)                                to the Indenture
Trustee, the Owner Trustee, the Master Servicer, the Trust Administrator, the
Servicer and the Subservicer, previously unreimbursed extraordinary costs,
liabilities and expenses to the extent provided in this Agreement;

 

(xii)                             for application as part of
Monthly Excess Cashflow for such Payment Date, as provided in subsection (e) of
this Section, any Interest Funds remaining after application pursuant to
clauses (i) through (xi) above.

 

(d)                                 On each Payment Date, the
Indenture Trustee (or the Paying Agent on behalf of the Indenture Trustee)
shall pay the Principal Funds for such date in accordance with the report of
the Trust Administrator as follows:

 

(i)                                     On each Payment
Date (a) prior to the Stepdown Date or (b) with respect to which a
Trigger Event is in effect, the Indenture Trustee (or the Paying Agent on
behalf of the Indenture Trustee) shall make the following payments to the
extent of funds then in the Collection Account available therefor,
concurrently:

 

(1)                                  For Group 1:  The
Principal Payment Amount for Group 1 will be paid in the following order of
priority:

 

(A)                              to the Swap Counterparty,
to the extent not previously paid from the Collection Account, swap termination
amounts payable to the

 

110

 

Swap Counterparty in the event that the Trust
is a defaulting party or an affected party under the terms of the Swap
Agreement;

 

(B)                                if no Trigger Event or Class 1-A2
Trigger Event has occurred and is continuing, pro rata, to
the Class 1-Al Notes and Class 1 -A2 Notes, until the respective Class Principal
Amount of such Classes has been reduced to zero, and if a Trigger Event or Class 1-A2
Trigger Event has occurred and is continuing, then sequentially, to the Class 1-Al
Notes, until the Class Principal Amount of such Class has been
reduced to zero, and then to the Class 1-A2 Notes, until the Class Principal
Amount of such Class has been reduced to zero;

 

(C)                                sequentially, first to
the Class 2-Al Notes after giving effect to payments pursuant to subsection 6.02(d)(i)(2)(B),
until the Class Principal Amount of such Class has been reduced to
zero, and then to the Class 2-A2 Notes, after giving effect to payments
pursuant to subsection 6.02(d)(i)(2)(B), until the Class Principal
Amount of such Class has been reduced to zero;

 

(D)                               to the Class Ml
Notes, until the Class Principal Amount of such class has been reduced to
zero;

 

(E)                                 to the Class M2
Notes, until the Class Principal Amount of such class has been reduced to
zero;

 

(F)                                 to the Class M3
Notes, until the Class Principal Amount of such class has been reduced to
zero;

 

(G)                                to the Class M4
Notes, until the Class Principal Amount of such class has been reduced to
zero;

 

(H)                               to the Class M5
Notes, until the Class Principal Amount of such class has been reduced to
zero;

 

(I)                                    to the Class M6
Notes, until the Class Principal Amount of such class has been reduced to
zero;

 

(J)                                   to the Class M7
Notes, until the Class Principal Amount of such class has been reduced to
zero;

 

(K)                               to the Swap
Counterparty, to the extent not previously paid, swap termination amounts
payable to the Swap Counterparty in the event that the Swap Counterparty is a
defaulting party or the sole affected party under the terms of the Swap
Agreement; and

 

(L)                                 for application as
part of Monthly Excess Cashflow for such Payment Date, as provided for in subsection (e) of
this Section, any

 

111

 

such Principal Payment Amount for Group 1
remaining after application pursuant to clauses (A) through (K) above.

 

(2)                                  For Group 2:  The
Principal Payment Amount for Group 2 will be paid in the following order of
priority:

 

(A)                              to the Swap Counterparty,
to the extent not previously paid from the Collection Account, swap termination
amounts payable to the Swap Counterparty in the event that the Trust is a
defaulting party or an affected party under the terms of the Swap Agreement;

 

(B)                                sequentially, first to
the Class 2-Al Notes, until the Class Principal Amount of such Class has
been reduced to zero, and then to the Class 2-A2 Notes, until the Class Principal
Amount of such Class has been reduced to zero;

 

(C)                                if no Trigger Event or Class l-A2
Trigger Event has occurred and is continuing, pro rata, to
the Class 1-Al Notes and Class 

1-A2 Notes, after giving effect to payments pursuant to subsection 6.02(d)(i)(1)(B),
until the respective Class Principal Amount of such Classes has been
reduced zero, and if a Trigger Event or Class 1-A2 Trigger Event has
occurred and is continuing, then sequentially, to the Class 1-Al Notes,
until the Class Principal Amount of such Class has been reduced to
zero, and then to the Class 1-A2 Notes, until the Class Principal
Amount of such Class has been reduced to zero, in each case after giving
effect to payments pursuant to subsection 6.02(d)(i)(1)(B);

 

(D)                               to the Class Ml
Notes, until the Class Principal Amount of such class has been reduced to
zero;

 

(E)                                 to the Class M2
Notes, until the Class Principal Amount of such class has been reduced to
zero;

 

(F)                                 to the Class M3
Notes, until the Class Principal Amount of such class has been reduced to
zero;

 

(G)                                to the Class M4
Notes, until the Class Principal Amount of such class has been reduced to
zero;

 

(H)                               to the Class M5
Notes, until the Class Principal Amount of such class has been reduced to
zero;

 

(I)                                    to the Class M6
Notes, until the Class Principal Amount of such class has been reduced to
zero;

 

(J)                                   to the Class M7
Notes, until the Class Principal Amount of such class has been reduced to
zero;

 

112

 

(K)                               to the Swap
Counterparty, to the extent not previously paid, swap termination amounts
payable to the Swap Counterparty in the, event that the Swap Counterparty is a
defaulting party or the sole affected party under the terms of the Swap
Agreement; and

 

(L)                                 for application as
part of Monthly Excess Cashflow for such Payment Date, as provided for in subsection (e) of
this Section, any such Principal Payment Amount for Group 2 remaining after
application pursuant to clauses (A) through (K) above.

 

(ii)                                  On each Payment Date (a) on
or after the Stepdown Date and (b) with respect to which a Trigger Event
is not in effect, the Indenture Trustee (or the Paying Agent on behalf of the
Indenture Trustee) shall pay the Principal Payment Amount for such date in the
following order of priority:

 

(1)                                  to the Swap
Counterparty, to the extent not previously paid from the Collection Account,
swap termination amounts payable to the Swap Counterparty in the event that the
Trust is a defaulting party or an affected party under the terms of the Swap
Agreement;

 

(2)                                  (a) so long as
the Class Ml, Class M2, Class M3, Class M4, Class M5, Class M6
or Class M7 Notes are outstanding, to the Class 1-Al Notes and Class 1-A2
Notes, pro rata,
(from amounts in Group 1 except as provided below) and,
sequentially, first to the Class 2-Al Notes, until the Class Principal
Amount of such Class has been reduced to zero, and second, to the Class 2-A2
Notes, until the Class Principal Amount of such Class has been
reduced to zero, (from amounts in Group 2 except as provided below), in each
case, an amount equal to the lesser of(x) the Principal Payment Amount for the
related Mortgage Group for such Payment Date and (y) the Related Senior
Principal Payment Amount for such Mortgage Group for such Payment Date, in each
case until the Class Principal Amount of each such class or classes has
been reduced to zero; provided, however, to
the extent that the Principal Payment Amount for a Mortgage Group exceeds the
Related Senior Principal Payment Amount for such Mortgage Group, such excess
shall be applied to the Class or Classes of Class A Notes of the
other Mortgage Group (with respect to the Class 1-Al Notes and Class 1
-A2 Notes, pro rata based upon Class Principal
Amount, and with respect to the Class 2-Al Notes and Class 2-A2
Notes, sequentially, first to the Class 2-Al Notes, until the Class Principal
Amount of such Class has been reduced to zero, and second, to the Class 2-A2
Notes, until the Class Principal Amount of such Class has been
reduced to zero), but in an amount not to exceed the Senior Principal Payment
Amount for such Payment Date (as reduced by any payments pursuant to subclauses
(x) and (y) of this Subsection (1)(a) on such Payment Date; or (b) otherwise
to the Class 1-Al, Class l-A2, Class 2-Al and Class 2-A2
Notes (in accordance with their related Senior Priorities), the Principal
Payment Amount for the related Mortgage Group for such Payment Date;

 

113

 

(3)                                  to the Class Ml
Notes, an amount equal to the lesser of (x) the excess of (a) the
aggregate Principal Payment Amounts for each of Group 1 and Group 2 for such
Payment Date over (b) the amount paid to the Class 1-Al, Class 1
-A2, Class 2-Al and Class 2-A2 Notes on such Payment Date pursuant to
clause (2) above, and (y) the Ml Principal Payment Amount for such Payment
Date, until the Class Principal Amount of such class has been reduced to
zero;

 

(4)                                  to the Class M2
Notes, an amount equal to the lesser of (x) the excess of (a) the
aggregate Principal Payment Amounts for each of Group 1 and Group 2 for such
Payment Date over (b) the amount paid to the Class 1-Al, Class 1-A2,
Class 2-Al, Class 2-A2 and Class Ml Notes on such Payment Date
pursuant to clauses (2) and (3) above, respectively, and (y) the M2
Principal Payment Amount for such Payment Date, until the Class Principal
Amount of such class has been reduced to zero;

 

(5)                                  to the Class M3
Notes, an amount equal to the lesser of (x) the excess of (a) the
aggregate Principal Payment Amounts for each of Group 1 and Group 2 for such
Payment Date over (b) the amount paid to the Class 1-Al, Class 1-A2,
Class 2-Al, Class 2-A2, Class Ml and Class M2 Notes on such
Payment Date pursuant to clauses (2), (3) and (4) above,
respectively, and (y) the M3 Principal Payment Amount for such Payment Date,
until the Class Principal Amount of such class has been reduced to zero;

 

(6)                                  to the Class M4
Notes, an amount equal to the lesser of (x) the excess of (a) the
aggregate Principal Payment Amounts for each of Group 1 and Group 2 for such
Payment Date over (b) the amount paid to the Class 1-Al, Class l-A2,
Class 2-Al, Class 2-A2, Class Ml, Class M2 and Class M3
Notes on such Payment Date pursuant to clauses (2), (3), (4) and (5) above, respectively, and (y)
the M4 Principal Payment Amount for such Payment Date, until the Class Principal
Amount of each such class has been reduced to zero;

 

(7)                                  to the Class M5
Notes, an amount equal to the lesser of (x) the excess of (a) the
aggregate Principal Payment Amounts for each of Group 1 and Group 2 for such
Payment Date over (b) the amount paid to the Class 1-Al, Class 1-A2,
Class 2-Al, Class 2-A2, Class Ml, Class M2, Class M3
and Class M4 Notes on such Payment Date pursuant to clauses (2), (3), (4),
(5) and (6) above,
respectively, and (y) the M5 Principal Payment Amount for such Payment Date,
until the Class Principal Amount of each such class has been reduced to
zero;

 

(8)                                  to the Class M6
Notes, an amount equal to the lesser of (x) the excess of(a) the aggregate
Principal Payment Amounts for each of Group 1 and Group 2 for such Payment Date
over (b) the amount paid to the Class 1-Al, Class l-A2, Class 2-Al,
Class 2-A2, Class Ml, Class M2, Class M3, Class M4 and
Class M5 Notes on such Payment Date pursuant to clauses (2), (3), (4), (5), (6) and (7) above,
respectively, and (y) the M6 Principal Payment Amount for such Payment Date,
until the Class Principal Amount of each such class has been reduced to
zero;

 

114

 

(9)                                  to the Class M7
Notes, an amount equal to the lesser of (x) the excess of (a) the
aggregate Principal Payment Amounts for each of Group 1 and Group 2 for such
Payment Date over (b) the amount paid to the Class 1-Al, Class l-A2,
Class 2-Al, Class 2-A2, Class Ml, Class M2, Class M3, Class M4,
Class M5 and Class M6 Notes on such Payment Date pursuant to clauses
(2), (3), (4), (5), (6), (7) and (8) above,
respectively, and (y) the M7 Principal Payment Amount for such Payment Date,
until the Class Principal Amount of each such class has been reduced to
zero; and

 

(10)                            to the Swap Counterparty,
to the extent not previously paid, swap termination amounts payable to the Swap
Counterparty in the event that the Swap Counterparty is a defaulting party or
the sole affected party under the terms of the Swap Agreement; and

 

(11)                            for application as part of
Monthly Excess Cashflow for such Payment Date, as provided in subsection (e) of
this Section, any Principal Payment Amount remaining after application pursuant
to clauses (1) through (10) above.

 

(e)                                  On each Payment Date, the
Indenture Trustee (or the Paying Agent on behalf of the Indenture Trustee)
shall pay the Monthly Excess Cashflow for such date in accordance with the
report of the Trust Administrator as follows:

 

(i)                                     for each Payment
Date occurring (a) before the Stepdown Date or (b) on or after the
Stepdown Date but for which a Trigger Event is in effect:

 

(a)                                  up
to the Overcollateralization Deficiency Amount for such Payment Date, in the
following order of priority:

 

i.                                          concurrently,
in proportion to the aggregate Class Principal Amounts of each Class of
Class A Notes, after giving effect to previous principal payments on such
Payment Date pursuant to subsections 6.02(d)(i)(1) and 6.02(d)(i)(2), to
the Class 1-Al, Class l-A2, Class 2-Al and Class 2-A2
Notes, until the Class Principal Amount of each such class has been
reduced to zero, but paid in accordance with their Senior Priorities;

 

ii.                                       to
the Class Ml Notes, in reduction of their Class Principal Amount,
until the Class Principal Amount of such class has been reduced to zero;

 

iii.                                    to
the Class M2 Notes, in reduction of their Class Principal Amount,
until the Class Principal Amount of such class has been reduced to zero;

 

iv.                                   to
the Class M3 Notes, in reduction of their Class Principal Amount,
until the Class Principal Amount of such class has been reduced to zero;

 

115

 

v.                                      to
the Class M4 Notes, in reduction of their Class Principal Amount,
until the Class Principal Amount of such class has been reduced to zero;

 

vi.                                   to
the Class M5 Notes, in reduction of their Class Principal Amount,
until the Class Principal Amount of such class has been reduced to zero;

 

vii.                                to
the Class M6 Notes, in reduction of their Class Principal Amount,
until the Class Principal Amount of such class has been reduced to zero;
and

 

viii.                             to
the Class M7 Notes, in reduction of their Class Principal Amount,
until the Class Principal Amount of such class has been reduced to zero;

 

(b)                                 to
the extent of any Available Funds Shortfall, to the payment of such amounts to
the Notes (other than the Class A-IO Notes), in the order of priority of
the classes of Notes as set forth immediately above in proportion to their
amount of unpaid Available Funds Shortfalls, until each such class has received
in full all amounts of any Available Funds Shortfall.

 

(c)                                  to
the Swap Counterparty, to the extent not previously paid, swap termination
amounts payable to the Swap Counterparty in the event that the Swap
Counterparty is a defaulting party or the sole affected party under the terms
of the Swap Agreement;

 

(d)                                 sequentially,
to the Class Ml Notes, the Class M2 Notes, the Class M3 Notes,
the Class M4 Notes, the Class M5 Notes, the Class M6 Notes and
the Class M7 Notes, in that order, Deferred Interest, if any, for such
class, until each such class has received in full its Deferred Interest;

 

(e)                                  sequentially,
to the Class Ml Notes, the Class M2 Notes, the Class M3 Notes,
the Class M4 Notes, the Class M5 Notes, the Class M6 Notes and
the Class M7 Notes, in that order, the applicable Principal Deficiency
Amount, if any, for such class, until the Principal Deficiency Amount of such
class has been reduced to zero;

 

(f)                                    until
the aggregate Class Principal Amount of the Notes equals the Aggregate
Collateral Balance for such Payment Date minus the Target Overcollateralization
Amount for such Payment Date, to each class of Notes (other than the Class A-IO
Notes) in the order of priority set forth in clause (1)(a) above; and

 

(g)                                 to
the Ownership Certificate, any amount remaining on such date after application
pursuant to clauses (a) through (f) above; or

 

116

 

(ii)                                  for each Payment Date
occurring on or after the Stepdown Date and for which a Trigger Event is not in
effect, the Indenture Trustee (or the Paying Agent on behalf of the Indenture
Trustee) shall pay, in accordance with the report of the Trust Administrator,
in the following order of priority:

 

(a)                                  concurrently, in
proportion to the aggregate Class Principal Amounts of each Class of Class A
Notes, after giving effect to previous principal payments on such Payment Date
pursuant to subsections 6.02(d)(i)(1) and 6.02(d)(i)(2), to the Class 1-Al,
Class l-A2, Class 2-Al and Class 2-A2 Notes, until the aggregate
Class Principal Amount of the Class A Notes, after giving effect to
payments on such Payment Date, equals the Senior Target Amount, but paid in
accordance with their Senior Priorities;

 

(b)                                 to
the Class Ml Notes, in reduction of their Class Principal Amount,
until the aggregate Class Principal Amount of the Class 1-Al, Class 1-A2,
Class 2-Al, Class 2-A2 and Class Ml Notes, after giving effect
to payments on such Payment Date, equals the Ml Target Amount;

 

(c)                                  to
the Class M2 Notes, in reduction of their Class Principal Amount,
until the aggregate Class Principal Amount of the Class 1-Al, Class l-A2,
Class 2-Al, Class 2-A2, Class Ml and Class M2 Notes, after
giving effect to payments on such Payment Date, equals the M2 Target Amount;

 

(d)                                 to
the Class M3 Notes, in reduction of their Class Principal Amount,
until the aggregate Class Principal Amount of the Class 1-Al, Class l-A2,
Class 2-Al, Class 2-A2, Class Ml, Class M2 and Class M3
Notes, after giving effect to payments on such Payment Date, equals the M3
Target Amount;

 

(e)                                  to
the Class M4 Notes, in reduction of their Class Principal Amount,
until the aggregate Class Principal Amount of the Class 1-Al, Class 1-A2,
Class 2-Al, Class 2-A2, Class Ml, Class M2, Class M3
and Class M4 Notes, after giving effect to payments on such Payment Date,
equals the M4 Target Amount;

 

(f)                                    to
the Class MS Notes, in reduction of their Class Principal Amount,
until the aggregate Class Principal Amount of the Class 1-Al, Class 1-A2,
Class 2-Al, Class 2-A2, Class Ml, Class M2, Class M3, Class M4
and Class M5 Notes, after giving effect to payments on such Payment Date,
equals the M5 Target Amount;

 

(g)                                 to
the Class M6 Notes, in reduction of their Class Principal Amount,
until the aggregate Class Principal Amount of the Class 1-Al, Class 1
-A2, Class 2-Al, Class 2-A2, Class Ml, Class M2, Class M3,
Class M4, Class M5 and Class M6 Notes, after giving effect to
payments on such Payment Date, equals the M6 Target Amount;

 

117

 

(h)                                 to
the Class M7 Notes, in reduction of their Class Principal Amount,
until the aggregate Class Principal Amount of the Class 1-Al, Class l-A2,
Class 2-Al, Class 2-A2, Class Ml, Class M2, Class M3, Class M4,
Class M5, Class M6 and Class M7 Notes, after giving effect to
payments on such Payment Date, equals the M6 Target Amount;

 

(i)                                     to
the extent of any Available Funds Shortfall, to the payment of such amounts to
the Notes (other than the Class A-IO Notes), in the order of priority of
the classes of Notes as set forth immediately above in proportion to their
amount of unpaid Available Funds Shortfalls, until each such class has received
in full all amounts of any Available Funds Shortfall;

 

(j)                                     to
the Swap Counterparty, to the extent not previously paid, swap termination
amounts payable to the Swap Counterparty in the event that the Swap
Counterparty is a defaulting party or the sole affected party under the terms
of the Swap Agreement under the Swap Agreement;

 

(k)                                  sequentially,
to the Class Ml Notes, the Class M2 Notes, the Class M3 Notes,
the Class M4 Notes, the Class M5 Notes, the Class M6 Notes and
the Class M7 Notes, in that order, Deferred Interest, if any, for such
class, until each such class has received in full its Deferred Interest;

 

(l)                                     sequentially,
to the Class Ml Notes, the Class M2 Notes, the Class M3 Notes,
the Class M4 Notes, the Class M5 Notes, the Class M6 Notes and
the Class M7 Notes, in that order, the applicable Principal Deficiency
Amount, if any, for such class, until the Principal Deficiency Amount of such
class has been reduced to zero;

 

(m)                               until
the aggregate Class Principal Amount of the Notes equals the Aggregate
Collateral Balance for such Payment Date minus the Target Overcollateralization
Amount for such Payment Date, to each class of Notes (other than the Class A-IO
Notes) in the order of priority set forth in clause (1)(a) above; and

 

(n)                                 to
the Ownership Certificate, any amount remaining on such date after application
pursuant to clauses (a) through (m) above.

 

On the Redemption Date, the Indenture Trustee
(or the Paying Agent on behalf of the Indenture Trustee) shall distribute to
each Class of Notes the related Redemption Price therefor, as set forth in
the Indenture.

 

Section 6.03.                             Net Swap Payments and Net Swap
Receipts.

 

(a)                                  On any Payment Date for which
the Trust Administrator receives a Net Swap Receipt, the Indenture Trustee (or
the Paying Agent on behalf of the Indenture Trustee) shall apply the Group 1
Percentage of such Net Swap Receipt to pay to the Notes in the following order
of priority:  first, Current
Interest, in the order and priority described in Section 6.02(b)(ii) through
(x), second, Available Funds Shortfalls, on
the Notes and in the order and priority

 

118

 

described in Section 6.02(e)(i)(b) or
(e)(ii)(i), as applicable, and third, Deferred
Interest, on the Notes and in the order and priority described in Section 6.02(e)(i)(d) or
(e)(ii)(k), as applicable, but only after Interest Funds for Group 1 have been
applied to the payment of Current Interest, Available Funds Shortfalls and Deferred
Interest on such Payment Date.  On any
Payment Date, the Group 1 Percentage of such Net Swap Receipt that are not
applied to the payment of Current Interest, Available Funds Shortfalls and
Deferred Interest in the manner described in the preceding sentence shall be
distributed by the Indenture Trustee (or the Paying Agent on behalf of the
Indenture Trustee) to the holder of the Ownership Certificate.

 

(b)                                 On any Payment Date for which
the Trust Administrator receives a Net Swap Receipt, the Indenture Trustee (or
the Paying Agent on behalf of the Indenture Trustee) shall apply the Group 2
Percentage of such Net Swap Receipt to pay to the Notes in the following order
of priority: first, Current Interest, in the
order and priority described in Section 6.02(c)(ii) through (x), second, Available Funds Shortfalls, on the Notes and in the
order and priority described in Section 6.02(e)(i)(b) or (e)(ii)(i),
as applicable, and third, Deferred
Interest, on the Notes and in the order and priority described in Section 6.02(e)(i)(d) or
(e)(ii)(k), as applicable, but only after Interest Funds for Group 2 have been
applied to the payment of Current Interest, Available Funds Shortfalls and
Deferred Interest on such Payment Date. 
On any Payment Date, the Group 2 Percentage of such Net Swap Receipt
that are not applied to the payment of Current Interest, Available Funds
Shortfalls and Deferred Interest in the manner described in the preceding
sentence shall be distributed by the Indenture Trustee (or the Paying Agent on
behalf of the Indenture Trustee) to the holder of the Ownership Certificate.

 

Section 6.04.                             Control of the Trust Account and
Deferred Interest.

 

(a)                                  The Depositor, the Issuer and
the Indenture Trustee hereby appoint [                      ] as Securities Intermediary
with respect to the Trust Account, and the Issuer has, pursuant to the
Indenture, granted to the Indenture Trustee, for the benefit of the
Noteholders, a security interest to secure all amounts due Noteholders
hereunder in and to the Trust Account and the Security Entitlements to all
Financial Assets credited to the Trust Account, including without limitation
all amounts, securities, investments, Financial Assets, investment property and
other property from time to time deposited in or credited to the Trust Account
and all proceeds thereof.  Amounts held
from time to time in the Trust Account will continue to be held by the
Securities Intermediary for the benefit of the Indenture Trustee, as collateral
agent, for the benefit of the Noteholders. 
Upon the termination of the Issuer or the discharge of the Indenture,
the Indenture Trustee shall inform the Securities Intermediary of such
termination.  By acceptance of their
Notes or interests therein, the Noteholders shall be deemed to have appointed [                      ] as Securities
Intermediary, [                      ]
hereby accepts such appointment as Securities Intermediary.

 

(b)                                 With respect to the Trust
Account Property credited to the Trust Account, the Securities Intermediary
agrees that:

 

(i)                                     with respect to
any Trust Account Property that is held in deposit accounts, each such deposit
account shall be subject to the exclusive custody and control of the Securities
Intermediary, and the Securities Intermediary shall have sole signature authority
with respect thereto;

 

119

 

(ii)                                  the sole assets
permitted in the Trust Account shall be those as the Securities Intermediary
agrees to treat as Financial Assets; and

 

(iii)                               any such Trust Account
Property that is, or is treated as, a Financial Asset shall be physically
delivered (accompanied by any required endorsements) to, or credited to an
account in the name of, the Securities Intermediary or other eligible
institution maintaining the Trust Account in accordance with the Securities
Intermediary’s customary procedures such that the Securities Intermediary or
such other institution establishes a Security Entitlement in favor of the
Indenture Trustee with respect thereto over which the Securities Intermediary
or such other institution has Control;

 

(c)                                  The Securities Intermediary
hereby confirms that (A) the Trust Account is an account to which
Financial Assets are or may be credited, and the Securities Intermediary shall,
subject to the terms of this Agreement, treat the Indenture Trustee, as
collateral agent, as entitled to exercise the rights that comprise any
Financial Asset credited to the Trust Account, (B) all Trust Account
Property in respect of the Trust Account will be promptly credited by the Securities
Intermediary to such account, and (C) all securities or other property
underlying any Financial Assets credited to the Trust Account shall be
registered in the name of the Securities Intermediary, endorsed to the
Securities Intermediary or in blank or credited to another securities account
maintained in the name of the Securities Intermediary and in no case will any
Financial Asset credited to the Trust Account be registered in the name of the
Depositor or the Issuer, payable to the order of the Depositor or the Issuer or
specially endorsed to the Depositor or the Issuer, except to the extent the
foregoing have been specially endorsed to the Securities Intermediary or in
blank;

 

(d)                                 The Securities Intermediary
hereby agrees that each item of property (whether investment property,
Financial Asset, security, instrument or cash) credited to the Trust Account
shall be treated as a Financial Asset;

 

(e)                                  If at any time the Securities
Intermediary shall receive an Entitlement Order from the Indenture Trustee
directing transfer or redemption of any Financial Asset relating to the Trust
Account, the Securities Intermediary shall comply with such Entitlement Order
without further consent by the Depositor, the Issuer or any other Person.  If at any time the Indenture Trustee or the
Trust Administrator notifies the Securities Intermediary in writing that the
Issuer has been terminated or the Indenture discharged in accordance herewith
and with the Trust Agreement or the Indenture, as applicable, and the security
interest granted pursuant to the Indenture has been released, then thereafter
if the Securities Intermediary shall receive any order from the Depositor or
the Issuer directing transfer or redemption of any Financial Asset relating to
the Trust Account, the Securities Intermediary shall comply with such
Entitlement Order without further consent by the Indenture Trustee or any other
Person;

 

(f)                                    In the event that the Securities
Intermediary has or subsequently obtains by agreement, operation of law or
otherwise a security interest in the Trust Account or any Financial Asset
credited thereto, the Securities Intermediary hereby agrees that such security
interest shall be subordinate to the security interest of the Indenture
Trustee.  The Financial Assets credited
to the Trust Account will not be subject to deduction, set-off, banker’s lien,
or any other right in favor of any Person other than the Indenture Trustee
(except that the Securities Intermediary may

 

120

 

set-off (i) all amounts due to it in
respect of its customary fees and expenses for the routine maintenance and
operation of the Trust Account and (ii) the face amount of any checks
which have been credited to the Trust Account but are subsequently returned
unpaid because of uncollected or insufficient funds);

 

(g)                                 There are no other agreements
entered into between the Securities Intermediary in such capacity and the
Depositor or the Issuer with respect to the Trust Account.  In the event of any conflict between this
Agreement (or any provision of this Agreement) and any other agreement now
existing or hereafter entered into, the terms of this Agreement shall prevail;

 

(h)                                 The rights and powers granted
under the Indenture and herein to the Indenture Trustee have been granted in
order to perfect its security interest in the Trust Account and the Security
Entitlements to the Financial Assets credited thereto, and are powers coupled
with an interest and will neither be affected by the bankruptcy of the Depositor
or the Issuer nor by the lapse of time. 
The obligations of the Securities Intermediary hereunder shall continue
in effect until the security interest of the Indenture Trustee in the Trust
Account, and in such Security Entitlements, has been terminated pursuant to the
terms of this Agreement and the Indenture Trustee or the Issuer, as applicable,
has notified the Securities Intermediary of such termination in writing; and

 

(i)                                     Notwithstanding anything else
contained herein, the Depositor and the Issuer agree that the Trust Account
will be established only with the Securities Intermediary or another
institution meeting the requirements of this Section, which by acceptance of
its appointment as Securities Intermediary agrees substantially as follows:  (1) it will comply with Entitlement
Orders related to the Trust Account issued by the Indenture Trustee, as
collateral agent, without further consent by the Depositor or the Issuer,
without further consent by the Depositor; (2) until termination of the
Issuer or discharge of the Indenture, it will not enter into any other
agreement related to such accounts pursuant to which it agrees to comply with
Entitlement Orders of any Person other than the Indenture Trustee, as
collateral agent; and (3) all assets delivered or credited to it in
connection with such account and all investments thereof will be promptly
credited to the applicable account.

 

(j)                                     Notwithstanding the foregoing,
the Issuer shall have the power, revocable by the Indenture Trustee or by the
Owner Trustee with the consent of the Indenture Trustee, to instruct the
Indenture Trustee, the Trust Administrator and the Master Servicer to make
withdrawals and payments from the Trust Account for the purpose of permitting
the Master Servicer, the Trust Administrator or the Owner Trustee to carry out
its respective duties hereunder or permitting the Indenture Trustee to carry
out its duties under the Indenture.

 

(k)                                  Each of the Depositor and the
Issuer agrees to take or cause to be taken such further actions, to execute,
deliver and file or cause to be executed, delivered and filed such further
documents and instruments (including, without limitation, any financing
statements under the Relevant UCC or this Agreement) as may be necessary to
perfect the interests created by this Section in favor of the Issuer and
the Indenture Trustee and otherwise fully to effectuate the purposes, terms and
conditions of this Section.  The
Depositor shall:

 

121

 

(i)                                     promptly execute,
deliver and file any financing statements, amendments, continuation statements,
assignments, certificates and other documents with respect to such interests
and perform all such other acts as may be necessary in order to perfect or to
maintain the perfection of the Issuer’s and the Indenture Trustee’s security
interest in the Trust Account Property; and

 

(ii)                                  make the necessary
filings of financing statements or amendments thereto within five days after
the occurrence of any of the following:  (1) any
change in its corporate name or any trade name or its jurisdiction of
organization; (2) any change in the location of its chief executive office
or principal place of business; and (3) any merger or consolidation or
other change in its identity or corporate structure and promptly notify the
Issuer and the Indenture Trustee of any such filings.

 

(iii)                               Neither the Depositor
nor the Issuer shall organize under the law of any jurisdiction other than the
State under which each is organized as of the Closing Date (whether changing
its jurisdiction of organization or organizing under an additional
jurisdiction) without giving 30 days prior written notice of such action to its
immediate and mediate transferee, including the Indenture Trustee.  Before effecting such change, each of the
Depositor or the Issuer proposing to change its jurisdiction of organization
shall prepare and file in the appropriate filing office any financing
statements or other statements necessary to continue the perfection of the
interests of its immediate and mediate transferees, including the Indenture
Trustee, in the Trust Account Property. 
In connection with the transactions contemplated by the Operative
Agreements relating to the Trust Account Property, each of the Depositor and
the Issuer authorizes its immediate or mediate transferee, including the
Indenture Trustee, to file in any filing office any initial financing
statements, any amendments to financing statements, any continuation
statements, or any other statements or filings described in this Section 6.04.

 

None of the Securities Intermediary or any
director, officer, employee or agent of the Securities Intermediary shall be
under any liability to the Indenture Trustee or the Noteholders for any action
taken; or not taken, in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision
shall not protect the Securities Intermediary against any liability to the
Indenture Trustee or the Noteholders which would otherwise be imposed by reason
of the Securities Intermediary’s willful misconduct, bad faith or negligence in
the performance of its obligations or duties hereunder.  The Securities Intermediary and any director,
officer, employee or agent of the Securities Intermediary may rely in good faith
on any document of any kind which, prima facie, is properly executed and
submitted by any Person respecting any matters arising hereunder.  The Securities Intermediary shall be under no
duty to inquire into or investigate the validity, accuracy or content of such
document.  The Issuer shall indemnify the
Securities Intermediary for and hold it harmless against any loss, liability or
expense arising out of or in connection with this Agreement and carrying out
its duties hereunder, including the costs and expenses of defending itself
against any claim of liability, except in those cases where the Securities
Intermediary has been guilty of bad faith, negligence or willful
misconduct.  The foregoing
indemnification shall survive any termination of this Agreement or the
resignation or removal of the Securities Intermediary.

 

122

 

Section 6.05.                             Advances by Master Servicer and
Servicer.

 

(a)                                  Subject to Section 4.03(c),
Advances shall be made in respect of each Servicer Remittance Date as provided
herein.  If, on any Determination Date,
the Servicer determines that any Scheduled Payments due during the related Due
Period have not been received, such Servicer shall advance such amount to the
extent provided in Section 4.03(c) hereof.  If any Servicer fails to remit Advances
required to be made under Section 4.03(c) hereof, the Master Servicer
shall itself make, or shall cause the successor Servicer to make, such Advance
on the Servicer Remittance Date immediately following such Determination
Date.  If the Master Servicer determines
that an Advance is required, it shall on the Business Day immediately prior to
the related Payment Date remit to the Trust Administrator from its own funds
(or funds advanced by the applicable Servicer) for deposit in the Collection
Account immediately available funds in an amount equal to such Advance.  The Master Servicer and the Servicer shall be
entitled to be reimbursed from the Collection Account, and the Servicer shall
be entitled to be reimbursed from its respective Custodial Account, for all
Advances made by it as provided in Section 4.02(e).  Notwithstanding anything to the contrary
herein, in the event the Master Servicer determines in its reasonable judgment
that an Advance is a Nonrecoverable Advance, the Master Servicer shall be under
no obligation to make such Advance.

 

(b)                                 In the event that the Master
Servicer or Servicer fails for any reason to make an Advance required to be
made pursuant to this Section 6.05,
the Indenture Trustee, as successor Master Servicer, shall, on or before
the related Payment Date, deposit in the Collection Account an amount equal to
the excess of (a) Advances required to be made by the Master Servicer or
the Servicer that would have been deposited in such Collection Account over (b) the
amount of any Advance made by the Master Servicer or the Servicer with respect
to such Payment Date; provided, however, that
the Indenture Trustee shall be required to make such Advance only if it is not
prohibited by law from doing so and it has determined that such Advance would
be recoverable from amounts to be received with respect to such Mortgage Loan,
including late payments, Liquidation Proceeds, Insurance Proceeds, or
otherwise.  The Indenture Trustee shall
be entitled to be reimbursed from the Collection Account for Advances made by
it pursuant to this Section 6.05 as if it were the Master Servicer.

 

Section 6.06.                             Pre-Funding Account.

 

(a)                                  The Trust Administrator has
heretofore established or caused to be established and shall hereafter maintain
or cause to be maintained a separate account denominated the Pre-Funding
Account, which is and shall continue to be an Eligible Account in the name of
the Trust Administrator and shall be designated “[                      ], as Trust Administrator
of the Fieldstone Mortgage Investment Trust, Series 2005-[ ] Pre-Funding
Account.” Any investment earnings from Pre-Funding Account will be paid to the
Seller on the first Business Day of the month following each Payment Date during
the Pre-Funding Period; provided, however, that if the final Subsequent
Transfer Date occurs after the Payment Date in a month, on such Subsequent
Transfer Date, the Trust Administrator shall (i) transfer the Excess
Funding Amount from the Pre-Funding Account to the Collection Account, (ii) transfer
any investment earnings to the Seller as soon as practicable and (iii) close
the Pre-Funding Account.  The amount on
deposit in the Pre-Funding Account shall be invested in Eligible Investments at
the direction of the Seller in accordance with the provisions of Section 4.02(j).  All investment earnings on funds on deposit
in the Pre-Funding Account will be treated as owned by, and will be taxable to,
the Seller.

 

123

 

(b)                                 On the Closing Date, the Seller
will cause to be deposited $[                      ] in the Pre-Funding
Account from the sale of the Notes.

 

(c)                                  On each Subsequent Transfer
Date, (i) the Seller shall instruct the Trust Administrator to withdraw from
the Pre-Funding Account an amount equal to 100% of the aggregate Scheduled
Principal Balances of the Subsequent Mortgage Loans sold to the Trust on such
Subsequent Transfer Date and (ii) the Trust Administrator shall pay such
amounts to or upon the order of the Seller with respect to such transfer.

 

(d)                                 If at the end of the Pre-Funding
Period amounts still remain in the Pre-Funding Account, the Trust Administrator
shall withdraw such amounts, exclusive of investment income, from the
Pre-Funding Account on the immediately following Payment Date and deposit such
amounts in the Collection Account.

 

(e)                                  Unless sooner closed as provided
above, the Pre-Funding Account shall be closed at the close of business on the
Payment Date immediately following the end of the Pre-Funding Period.

 

ARTICLE VII

ADMINISTRATION OF THE AGREEMENTS

 

Section 7.01.                             Duties of the Trust
Administrator.

 

(a)                                  The Trust Administrator agrees
to perform all of the duties of the Issuer under the Depository Agreement.  In addition to its duties performed under the
Depository Agreement, the Trust Administrator shall take all appropriate action
that is the duty of the Issuer to take with respect to the following matters
under the Trust Agreement, this Agreement and the Indenture:

 

(i)                                     the duty to cause
the Note Register to be kept if the Issuer assumes the duties of Note
Registrar, and to give the Indenture Trustee notice of any appointment of a new
Note Registrar and the location, or change in location, of the Note Register (Section 2.04
of the Indenture);

 

(ii)                                  the duty to cause the
Certificate Register to be kept if the Issuer assumes the duties of Certificate
Registrar, and to give the Owner Trustee notice of any appointment of a new
Certificate Registrar and the location, or change in location, of the
Certificate Register (Section 3.03 of the Trust Agreement);

 

(iii)                               causing the preparation
of the Notes for execution by the Owner Trustee upon the registration of any
transfer or exchange of the Notes (Sections 2.04 and 2.05 of the Indenture);

 

(iv)                              causing the preparation
of Definitive Notes in accordance with the instructions of any Clearing Agency,
the duty to attempt to locate a qualified successor to the Clearing Agency, if
necessary, and the preparation of written notice to the Indenture Trustee of
termination of the book-entry system through the Clearing Agency (Section 2.12
of the Indenture);

 

124

 

(v)                                 the maintenance of an
office for registration of transfer or exchange of Notes (Section 3.02 of
the Indenture);

 

(vi)                              the maintenance of an
office for registration of transfer or exchange of the Ownership Certificate (Section 3.03
of the Trust Agreement);

 

(vii)                           the calculation of accrual
of original issue discount and the amortization of premium on the Notes (Section 3.03(v) of
the Indenture);

 

(viii)                        upon written notice or actual
knowledge thereof, the notification to the Indenture Trustee and each Rating
Agency of a Servicer Event of Default or a Master Servicer Event of Default
under this Agreement (Section 3.07(d) of the Indenture);

 

(ix)                                upon written notice or
actual knowledge thereof, the delivery of notice to the Indenture Trustee and
each Rating Agency of each Indenture Event of Default under the Indenture (Section 3.19
of the Indenture);

 

(x)                                   the furnishing of
the Indenture Trustee with the names and addresses of Holders of Notes during
any period when the Indenture Trustee is not the Note Registrar (Section 7.01
of the Indenture);

 

(xi)                                causing the preparation
of any financing statements and continuation statements necessary to protect
the Collateral (Section 3.05 of the Indenture);

 

(xii)                             the preparation (but not
the execution) of the annual Officer’s Certificate regarding the Issuer’s
compliance with the terms of the Indenture (Section 3.09 of the
Indenture);

 

(xiii)                          the delivery of notice to the
Indenture Trustee and each Rating Agency of each Indenture Event of Default
under the Indenture (Section 3.19);

 

(xiv)                         causing the preparation of an
Officer’s Certificate and the obtaining of the Opinion of Counsel (which shall
not be at the expense of the Trust Administrator) with respect to any request
by the Issuer to the Indenture Trustee to take any action under the Indenture
(Sections 4.01 and 11.01 of the Indenture);

 

(xv)                            the compliance with any
directive of the Indenture Trustee with respect to the sale of the Collateral
in a commercially reasonable manner if an Indenture Event of Default shall have
occurred and be continuing under the Indenture (Section 5.04 of the
Indenture);

 

(xvi)                         causing the preparation of an
Issuer Request and Officer’s Certificate (and executing the same on behalf of
the Issuer) and the obtaining of an Opinion of Counsel (which shall not be at
the expense of the Trust Administrator), if necessary, for the release of the
Collateral, as defined in the Indenture (Section 8.03 of the Indenture);

 

(xvii)                      the mailing to the Noteholders of
notices with respect to their consent to any supplemental indentures (Sections
9.01, 9.02, 9.03 and 9.06 of the Indenture); and

 

125

 

(xviii)                   any other duties expressly required
to be performed by the Trust Administrator under the Indenture or the Trust
Agreement.

 

Notwithstanding the foregoing, the Seller
shall undertake the duties of the Issuer under the Indenture to cause the
preparation of Issuer Orders (and execute the same on behalf of the Issuer),
and to obtain Opinions of Counsel with respect to the execution of supplemental
indentures and, if necessary, to mail to the Noteholders notices with respect
to their consent to such supplemental indentures (Sections 9.01, 9.02, 9.03 and
9.06 of the Indenture).

 

(b)                                 The Issuer will indemnify the
Owner Trustee and the Trust Administrator, and their respective agents for, and
hold them harmless against, any losses, liability or expense incurred without
gross negligence or bad faith on their part, arising out of or in connection
with the acceptance or administration of the transactions contemplated by the
Trust Agreement or this Agreement, including the reasonable costs and expenses
of defending themselves against any claim or liability in connection with the
exercise or performance of any of their powers or duties under the Trust
Agreement, the Indenture or this Agreement.

 

(c)                                  Subject to the penultimate
paragraph of this Section 7.01, and in accordance with the directions of
the Owner Trustee, the Trust Administrator shall perform or supervise the
performance of such other activities in connection with the Collateral
(including the Operative Agreements) as are not covered by any of the foregoing
provisions and as are expressly requested in writing by the Owner Trustee and
are reasonably within the capability of the Trust Administrator.

 

(d)                                 In carrying out the foregoing
duties or any of its other obligations under this Agreement, the Trust
Administrator 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 Issuer and shall be, in the Trust Administrator’s opinion, no
less favorable to the Issuer than would be available from unaffiliated parties.

 

In carrying out the foregoing duties or any
of its other obligations under this Agreement, the Trust Administrator shall be
subject to the same standard of care and have the same rights, indemnifications
and immunities as the Indenture Trustee under the Indenture, including, without
limitation, the right to reimbursement and indemnification on behalf of the
Issuer from funds in the Collection Account for all losses, costs and expenses
of any kind or nature (including without limitation attorneys’ fees and
disbursements) incurred by the Trust Administrator (including without
limitation in its various capacities as Paying Agent, Certificate Paying Agent,
Certificate Registrar and Note Registrar) in connection with the performance of
its duties hereunder or under any other Operative Agreement.

 

The Trust Administrator in its capacity as
the Certificate Registrar, and upon a request received from the Owner Trustee,
shall promptly notify the Certificateholders of (i) any change in the
Corporate Trust Office of the Owner Trustee, (ii) any amendment to the
Trust Agreement requiring notice be given to the Certificateholders and (iii) any
other notice required to be given to the Certificateholders by the Owner
Trustee under the Trust Agreement.

 

126

 

Section 7.02.                             Duties of the Trust
Administrator With Respect to the Indenture, the Trust Agreement and this
Agreement.

 

(a)                                  The Trust Administrator shall
take all appropriate action that is the duty of the Indenture Trustee to take
with respect to the following matters under the Indenture, the Trust Agreement
and this Agreement:

 

(i)                                     the duties of an
authenticating agent for authentication of the Notes (Sections 2.01, 2.02 and
2.11 of the Indenture);

 

(ii)                                  the duties of Note
Registrar to be kept (Sections 2.03, 2.04, 2.05 and 2.07 of the Indenture);

 

(iii)                               to provide notices and
instructions to the Clearing Agency (Section 2.10 of the Indenture);

 

(iv)                              the duties of Paying
Agent (Sections 3.03, 4.01, 4.02 and 5.02 of the Indenture); and

 

(v)                                 the duties of agent or
attorney-in-fact for the purposes of filing financing and continuation
statements for the Issuer (Section 3.05 of the Indenture).

 

(b)                                 The Issuer will indemnify the
Owner Trustee and the Trust Administrator, and their respective agents for, and
hold them harmless against, any losses, liability or expense incurred without
gross negligence or bad faith on their part, arising out of or in connection
with the acceptance or administration of the transactions contemplated by the
Trust Agreement or this Agreement, including the reasonable costs and expenses
of defending themselves against any claim or liability in connection with the
exercise or performance of any of their powers or duties under the Trust
Agreement, the Indenture or this Agreement.

 

Section 7.03.                             Records.  The Trust Administrator shall maintain
appropriate books of account and records relating to services performed
hereunder, which books of account and records shall be accessible for
inspection by the Issuer and the Depositor at any time during normal business
hours.

 

Section 7.04.                             Compensation.  The Trust Administrator will perform the
duties and provide the services called for under Section 7.01 and 7.02
above for such compensation as shall be agreed upon between the Trust
Administrator and the Master Servicer.

 

Section 7.05.                             Additional Information to be
Furnished to the Issuer.  The Depositor shall furnish to the Issuer
from time to time such additional information regarding the Collateral as the
Issuer shall reasonably request.

 

Section 7.06.                             Independence of the Trust
Administrator.  For all purposes of this Agreement, the Trust
Administrator shall be an independent contractor and shall not be subject to
the supervision of the Issuer or the Owner Trustee with respect to the manner
in which it accomplishes the performance of its obligations hereunder.  Unless expressly authorized by the Issuer,
the Trust Administrator shall have no authority to act for or represent the
Issuer or the

 

127

 

Owner Trustee in any way and shall not
otherwise be deemed an agent of the Issuer or the Owner Trustee.

 

Section 7.07.                             No Joint Venture.  Nothing contained in this Agreement (i) shall
constitute the Trust Administrator or the Depositor, respectively, and either
of the Issuer or the Owner Trustee, as members of any partnership, joint venture,
association, syndicate, unincorporated business or other separate entity, (ii) shall
be construed to impose any liability as such on any of them or (iii) shall
be deemed to confer on any of them any express, implied or apparent authority
to incur any obligation or liability on behalf of the others.

 

Section 7.08.                             Other Activities of Trust
Administrator and the Depositor.  Nothing herein
shall prevent the Trust Administrator, the Depositor or their respective
Affiliates from engaging in other businesses or, in its sole discretion, from
acting in a similar capacity as an Trust Administrator for any other person or
entity even though such person or entity may engage in business activities
similar to those of the Issuer or the Owner Trustee.

 

Section 7.09.                             Resignation and Removal of Trust
Administrator.

 

(a)                                  Subject to Section 7.09(d) hereof,
the Trust Administrator may resign its duties hereunder by providing the Issuer
with at least 60 days’ prior written notice.

 

(b)                                 Subject to Section 7.09(d) hereof,
the Issuer may remove the Trust Administrator without cause by providing the
Trust Administrator with at least 60 days’ prior written notice.

 

(c)                                  Subject to Section 7.09(d) hereof,
the Issuer may remove the Trust Administrator immediately upon written notice
of termination from the Issuer to the Trust Administrator if any of the
following events shall occur:

 

(i)                                     the Trust
Administrator shall default in the performance of any of its duties under this
Agreement and, after notice of such default, shall not cure such default within
ten days (or, if such default cannot be cured in such time, shall not give
within ten days such assurance of cure as shall be reasonably satisfactory to
the Issuer); or

 

(ii)                                  a court having
jurisdiction in the premises shall (x) enter a decree or order for relief,
which decree or order shall not have been vacated within 60 days, in respect of
the Trust Administrator in any involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or (y)
appoint a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official for the Trust Administrator or any substantial part of its
property, or (z) order the winding-up or liquidation of the Trust Administrator’s
affairs; or

 

(iii)                               the Trust Administrator
shall commence a voluntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, shall consent to the entry of an
order for relief in an involuntary case under any such law, or shall consent to
the appointment of a receiver, liquidator, assignee, trustee, custodian,
sequestrator or similar official for the Trust Administrator or any substantial
part of its property, shall consent to the taking of possession by any such
official of any substantial

 

128

 

part of its property, shall make any general
assignment for the benefit of creditors or shall fail generally to pay its
debts as they become due.

 

The Trust Administrator agrees that if any of
the events specified in clauses (ii) or (iii) of this Section 7.09(c) shall
occur, it shall give written notice thereof to the Issuer and the Indenture
Trustee within seven days after the occurrence of such event.

 

(d)                                 No resignation or removal of the
Trust Administrator pursuant to this Section shall be effective until (i) a
successor Trust Administrator shall have been appointed by the Issuer in
accordance with the Trust Agreement and (ii) such successor Trust
Administrator shall have agreed in writing to be bound by the terms of this
Agreement in the same manner as the Trust Administrator is bound
hereunder.  If a successor Trust
Administrator does not take office within 60 days after the retiring Trust
Administrator resigns or is removed, the resigning or removed Trust
Administrator or the Issuer may petition any court of competent jurisdiction
for the appointment of a successor Trust Administrator.

 

(e)                                  The appointment of any successor
Trust Administrator shall be effective only after receipt of a letter from each
Rating Agency to the effect that such proposed appointment will not cause a
reduction or withdrawal of the then current ratings of the Notes.

 

(f)                                    Subject to Sections 7.09(d) and
7.09(e) above, the Trust Administrator acknowledges that upon the
appointment of a successor Master Servicer pursuant to Section 8.01, the
Trust Administrator shall immediately resign and such successor Master Servicer
shall automatically become the Trust Administrator under this Agreement.  Any such successor Master Servicer shall be
required to agree to assume the duties of the Trust Administrator under the
terms and conditions of this Agreement and the other Operative Agreements in
its acceptance of appointment as successor Master Servicer.

 

Section 7.10.                             Action upon Termination,
Resignation or Removal of the Trust Administrator.  Promptly upon the effective date of
termination of this Agreement or the resignation or removal of the Trust
Administrator pursuant to Section 7.09 hereof, the Trust Administrator
shall be entitled to be paid all reimbursable expenses, including any
reasonable out-of-pocket attorneys’ fees, accruing to it to the date of such
termination, resignation or removal.  The
Trust Administrator shall forthwith upon such termination pursuant to Section 7.09
deliver to the successor Trust Administrator all property and documents of or
relating to the Collateral then in the custody of the Trust Administrator, or
if this Agreement has been terminated, to the Depositor.  In the event of the resignation or removal of
the Trust Administrator pursuant to Section 7.09, the Trust Administrator
shall cooperate with the Issuer and take all reasonable steps requested to
assist the Issuer in making an orderly transfer of the duties of the Trust
Administrator.

 

129

 

ARTICLE VIII

MASTER SERVICER EVENTS OF DEFAULT

 

Section 8.01.                             Master Servicer Events of
Default; Indenture Trustee To Act; Appointment of Successor.

 

(a)                                  The occurrence of any one or
more of the following events shall constitute a “Master Servicer Event of
Default”:

 

(i)                                     Any failure by the
Master Servicer to furnish to the Trust Administrator the Mortgage Loan data
sufficient to prepare the reports described in Section 5.09(a) which
continues unremedied for a period of one (1) Business Day after the date
upon which written notice of such failure shall have been given to such Master
Servicer by the Indenture Trustee or the Trust Administrator or to such Master
Servicer and the Indenture Trustee by the Holders of not less than 25% of
the Class Principal Amount (or Class Notional Amount) of each Class of
Notes affected thereby; or

 

(ii)                                  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 which continues unremedied for a period of 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 the Trust Administrator or to the Master Servicer and the Indenture
Trustee by the Majority Noteholders; or

 

(iii)                               A decree or order of a
court or agency or supervisory authority having jurisdiction for the
appointment of a conservator or receiver or liquidator 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 60 days or any
Rating Agency reduces or withdraws or threatens to reduce or withdraw the
rating of the Notes because of the financial condition or loan servicing capability
of such Master Servicer; or

 

(iv)                              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,
voluntary liquidation or similar proceedings of or relating to the Master
Servicer or of or relating to all or substantially all of its property; or

 

(v)                                 The Master Servicer
shall admit in writing its inability to pay its debts generally as they become
due, file a petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of its creditors or
voluntarily suspend payment of its obligations; or

 

(vi)                              The Master Servicer shall
be dissolved, or shall dispose of all or substantially all of its assets, or
consolidate with or merge into another entity or shall permit another entity to
consolidate or merge into it, such that the resulting entity does not meet the
criteria for a successor servicer as specified in Section 5.26 hereof; or

 

(vii)                           If a representation or
warranty set forth in Section 5.01 hereof shall prove to be incorrect as
of the time made in any respect that materially and adversely affects the
interests of the Noteholders, and the circumstance or condition in respect of
which such representation or warranty was incorrect shall not have been
eliminated or cured within

 

130

 

30 days after the date on which written
notice of such incorrect representation or warranty shall have been given to the
Master Servicer by the Indenture Trustee or the Trust Administrator, or to the
Master Servicer and the Indenture Trustee by the Majority Noteholders; or

 

(viii)                        A sale or pledge of any of the
rights of the Master Servicer hereunder or an assignment of this Agreement by
the Master Servicer or a delegation of the rights or duties of the Master
Servicer hereunder shall have occurred in any manner not otherwise permitted
hereunder and without the prior written consent of the Indenture Trustee and
the Majority Noteholders; or

 

(ix)                                The Master Servicer has
notice or actual knowledge that the Servicer at any time is not either an FNMA-
or FHLMC- approved Seller/Servicer, and the Master Servicer has not terminated
the rights and obligations of such Servicer under this Agreement and replaced
the Servicer with an FNMA- or FHLMC-approved servicer within 60 days of the
date the Master Servicer receives such notice or acquires such actual
knowledge; or

 

(x)                                   Any failure of the
Master Servicer to remit to the Trust Administrator any Advance required to be
made to the Trust Administrator for the benefit of Noteholders under the terms
of this Agreement, which failure continues unremedied as of the close of
business on the Business Day prior to a Payment Date.

 

If a Master Servicer Event of Default
described in clauses (i) through (ix) of this Section 8.01 shall
occur, then, in each and every case, subject to applicable law, so long as any
such Master Servicer Event of Default shall not have been remedied within any
period of time prescribed by this Section 8.01, the Indenture Trustee, by
notice in writing to the Master Servicer may, and shall, if so directed by the
Majority Noteholders, terminate all of the rights and obligations of the Master
Servicer hereunder and in and to the Mortgage Loans and the proceeds
thereof.  If a Master Servicer Event of
Default described in clause (x) of this Section 8.01 shall occur, then, in
each and every case, subject to applicable law, so long as such Master Servicer
Event of Default shall not have been remedied within the time period prescribed
by clause (x) of this Section 8.01, the Indenture Trustee, by notice in
writing to the Master Servicer, shall promptly terminate all of the rights and
obligations of the Master Servicer hereunder and in and to the Mortgage Loans
and the proceeds thereof.  On or after
the receipt by the Master Servicer of such written notice, all authority and
power of the Master Servicer, and only in its capacity as Master Servicer under
this Agreement, whether with respect to the Mortgage Loans or otherwise, shall
pass to and be vested in the Indenture Trustee pursuant to and under the terms
of this Agreement; and the Indenture Trustee is hereby authorized and empowered
to execute and deliver, on behalf of the defaulting Master Servicer as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer
and endorsement or assignment of the Mortgage Loans and related documents or
otherwise.  The defaulting Master
Servicer agrees to cooperate with the Indenture Trustee in effecting the
termination of the defaulting Master Servicer’s responsibilities and rights
hereunder as Master Servicer including, without limitation, notifying the
Servicers of the assignment of the master servicing function and providing the
Indenture Trustee or its designee all documents and records

 

131

 

in electronic or other form
reasonably requested by it to enable the Indenture Trustee or its designee to
assume the defaulting Master Servicer’s functions hereunder and the transfer to
the Indenture Trustee for administration by it of all amounts which shall at
the time be or should have been deposited by the defaulting Master Servicer in
the Collection Account maintained by such defaulting Master Servicer and any
other account or fund maintained with respect to the Notes or thereafter received
with respect to the Mortgage Loans.  The
Master Servicer being terminated shall bear all reasonable out-of-pocket costs
of a master servicing transfer, including but not limited to those of the
Indenture Trustee, legal fees and expenses, accounting and financial consulting
fees and expenses, and costs of amending the Agreement, if necessary.

 

The Indenture Trustee shall be entitled to be
reimbursed from the Master Servicer (or by the Trust Estate, if the Master
Servicer is unable to fulfill its obligations hereunder) for all costs
associated with the transfer of servicing from the predecessor Master Servicer,
including, without limitation, any costs or expenses associated with the
complete transfer of all servicing data and the completion, correction or
manipulation of such servicing data as may be required by the Indenture Trustee
to correct any errors or insufficiencies in the servicing data or otherwise to
enable the Indenture Trustee to master service the Mortgage Loans properly and
effectively.  If the terminated Master
Servicer does not pay such reimbursement within thirty (30) days of its receipt
of an invoice therefore, such reimbursement shall be an expense of the Trust
Estate and the Indenture Trustee shall be entitled to withdraw such reimbursement
from amounts on deposit in the Collection Account pursuant to Section 5.07(c); provided that the
terminated Master Servicer shall reimburse the Trust Estate for any such
expense incurred by the Trust Estate; and provided, further, that
the Indenture Trustee shall decide whether and to what extent it is in the best
interest of the Noteholders to pursue any remedy against any party obligated to
make such reimbursement.

 

Notwithstanding the termination of its
activities as Master Servicer, each terminated Master Servicer shall continue
to be entitled to reimbursement to the extent provided in Section 5.08 to
the extent such reimbursement relates to the period prior to such Master
Servicer’s termination.

 

If any Master Servicer Event of Default shall
occur, of which a Responsible Officer of the Indenture Trustee has actual
knowledge, the Indenture Trustee shall promptly notify each Rating Agency of
the nature and extent of such Master Servicer Event of Default.  The Trust Administrator or the Master Servicer
shall immediately give written notice to the Indenture Trustee upon the Master
Servicer’s failure to remit Advances on the date specified herein.

 

(b)                                 On and after the time the Master
Servicer receives a notice of termination from the Indenture Trustee pursuant
to Section 8.01(a) or the Indenture Trustee receives the resignation
of the Master Servicer evidenced by an Opinion of Counsel pursuant to Section 5.27,
the Indenture Trustee, unless another master servicer shall have been
appointed, shall be the successor in all respects to the Master Servicer in its
capacity as such under this Agreement and the transactions set forth or
provided for herein and shall have all the rights and powers and be subject to
all the responsibilities, duties and liabilities relating thereto and arising
thereafter placed on the Master Servicer hereunder, including the obligation to
make Advances; provided, however, that any
failure to perform such duties or responsibilities caused by the Master

 

132

 

Servicer’s failure to provide information
required by this Agreement shall not be considered a default by the Indenture
Trustee hereunder.  In addition, the
Indenture Trustee shall have no responsibility for any act or omission of the Master
Servicer prior to the issuance of any notice of termination and shall have no
liability relating to the representations and warranties of the Master Servicer
set forth in Section 5.01.  In the
Indenture Trustee’s capacity as such successor, the Indenture Trustee shall
have the same limitations on liability herein granted to the Master
Servicer.  As compensation therefor, the
Indenture Trustee shall be entitled to receive all compensation payable to the
Master Servicer under this Agreement.

 

(c)                                  Notwithstanding the above, the
Indenture Trustee may, if it shall be unwilling to continue to so act, or
shall, if it is unable to so act, appoint, or petition a court of competent
jurisdiction to appoint, any established housing and home finance institution servicer,
master servicer, servicing or mortgage servicing institution having a net worth
of not less than $15,000,000 and meeting such other standards for a successor
master servicer as are set forth in this Agreement, as the successor to such
Master Servicer in the assumption of all of the responsibilities, duties or
liabilities of a master servicer, like the Master Servicer.  Such successor Master Servicer may be an
Affiliate of the Indenture Trustee; provided, however, that, unless such Affiliate meets the net
worth requirements and other standards set forth herein for a successor master
servicer, the Indenture Trustee, in its individual capacity shall agree, at the
time of such designation, to be and remain liable to the Issuer and the
Indenture Trustee for such Affiliate’s actions and omissions in performing its
duties hereunder.  In connection with
such appointment and assumption, the Indenture Trustee may make such
arrangements for the compensation of such successor out of payments on the
Mortgage Loans as it and such successor shall agree; provided,
however, that no such compensation shall be in excess of that
permitted to the Master Servicer hereunder. 
The Indenture Trustee and such successor shall take such actions,
consistent with this Agreement, as shall be necessary to effectuate any such
succession and may make other arrangements with respect to the servicing to be
conducted hereunder which are not inconsistent herewith.  The Master Servicer shall cooperate with the
Indenture Trustee and any successor master servicer in effecting the
termination of the Master Servicer’s responsibilities and rights hereunder
including, without limitation, notifying Servicers of the assignment of the
master servicing functions and providing the Indenture Trustee and successor
master servicer, as applicable, all documents and records in electronic or
other form reasonably requested by it to enable it to assume the Master
Servicer’s functions hereunder and the transfer to the Indenture Trustee or
such successor master servicer, as applicable, all amounts or investment
property which shall at the time be or should have been deposited by the Master
Servicer in the Collection Account and any other account or fund maintained
with respect to the Notes or thereafter be received with respect to the
Mortgage Loans.  Neither the Indenture
Trustee nor any other successor master servicer shall be deemed to be in
default hereunder 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, (ii) the failure of the Master Servicer to cooperate as
required by this Agreement, (iii) the failure of the Master Servicer to
deliver the Mortgage Loan data to the Indenture Trustee as required by this
Agreement or (iv) restrictions imposed by any regulatory authority having
jurisdiction over the Master Servicer.

 

Section 8.02.                             Additional Remedies of Indenture
Trustee Upon Event of Default.  During the continuance of any Master Servicer
Event of Default, so long as such Master Servicer Event

 

133

 

of Default shall not have been remedied, the
Indenture Trustee, in addition to the rights specified in Section 8.01,
shall have the right, in its own name and as trustee of an express trust, to
take all actions now or hereafter existing at law, in equity or by statute to
enforce its rights and remedies and to protect the interests, and enforce the
rights and remedies, of the Noteholders (including the institution and
prosecution of all judicial, administrative and other proceedings and the
filings of proofs of claim and debt in connection therewith).  Except as otherwise expressly provided in
this Agreement, no remedy provided for by this Agreement shall be exclusive of
any other remedy, and each and every remedy shall be cumulative and in addition
to any other remedy, and no delay or omission to exercise any right or remedy
shall impair any such right or remedy or shall be deemed to be a waiver of any
Event of Default.

 

Section 8.03.                             Waiver of Defaults.  The Majority Noteholders may, on behalf of
all Noteholders, waive any default or Master Servicer Event of Default by the
Master Servicer in the performance of its obligations hereunder, except that a
default in the making of any required deposit to the Collection Account that
would result in a failure of the Indenture Trustee to make any required payment
of principal of or interest on the Notes may only be waived with the consent of
100% of the affected Noteholders.  Upon
any such waiver of a past default, such default shall cease to exist, and any
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 thereon except to the extent expressly so waived.

 

Section 8.04.                             Notification to Holders.  Upon termination of the Master Servicer or
appointment of a successor to the Master Servicer, in each case as provided
herein, the Indenture Trustee shall promptly mail notice thereof by first class
mail to the Noteholders at their respective addresses appearing on the
applicable Register.  The Indenture
Trustee shall also, within 45 days after the occurrence of any Master Servicer
Event of Default known to the Indenture Trustee, give written notice thereof to
Noteholders, unless such Event of Default shall have been cured or waived prior
to the issuance of such notice and within such 45-day period.

 

Section 8.05.                             Directions by Noteholders and
Duties of Indenture Trustee During Master Servicer Event of Default.  During the continuance of any Master Servicer
Event of Default, the Majority Noteholders may direct the time, method and
place of conducting any proceeding for any remedy available to the Indenture
Trustee, or exercising any trust or power conferred upon the Indenture Trustee,
under this Agreement; provided, however, that
the Indenture Trustee shall be under no obligation to pursue any such remedy,
or to exercise any of the trusts or powers vested in it by this Agreement
(including, without limitation, (i) the conducting or defending of any
administrative action or litigation hereunder or in relation hereto and (ii) the
terminating of the Master Servicer or any successor master servicer from its
rights and duties as master servicer hereunder) at the request, order or
direction of any of the Noteholders, unless such Noteholders shall have offered
to the Indenture Trustee reasonable security or indemnity against the cost,
expenses and liabilities which may be incurred therein or thereby; and, provided further, that, the Indenture
Trustee shall have the right to decline to follow any such direction if the
Indenture Trustee, in accordance with an Opinion of Counsel, determines that
the action or proceeding so directed may not lawfully be taken or if the
Indenture Trustee in good faith determines that the action or proceeding so
directed would involve it in personal liability for which it is not indemnified
to its satisfaction or be unjustly prejudicial to the non-assenting
Noteholders.

 

134

 

Section 8.06.                             Action Upon Certain Failures of
the Master Servicer and Upon Master Servicer Event of Default.  In the event that a Responsible Officer of
the Indenture Trustee or the Trust Administrator shall have actual knowledge of
any action or inaction of the Master Servicer that would become a Master
Servicer Event of Default upon the Master Servicer’s failure to remedy the same
after notice, the Indenture Trustee or Trust Administrator, as applicable,
shall give notice thereof to the Master Servicer.

 

Section 8.07.                             Preparation of Reports.

 

(a)                                  The Depositor shall prepare or
cause to be prepared the initial current report on Form 8-K.  Thereafter, within 15 days after each Payment
Date, the Trust Administrator shall, in accordance with industry standards
customary for securities similar to the Notes as required by the Exchange Act
and the rules and regulations of the Securities and Exchange Commission
(the “Commission”), file with the Commission via the Electronic Data Gathering
and Retrieval System (EDGAR), a Form 8-K with a copy of the statement to
the Noteholders for such Payment Date as an exhibit thereto.  Prior to January 30, 2006, the Trust
Administrator shall, in accordance with industry standards applicable to the
Notes, file a Form 15 Suspension Notification with respect to the Issuer,
if applicable.  Prior to March 31,
2006, and prior to March 31 in each succeeding year so long as a Form 15
Suspension Notification has not been filed for the prior calendar year, the
Trust Administrator shall file (and the Master Servicer will execute) a Form 10-K,
in substance conforming to industry standards applicable to the Notes, with
respect to the Issuer.  The Form 10-K
shall include the certification required pursuant to Rule 13a-14 under the
Exchange Act, as amended (the “Form 10-K Certification,” which Form 10-K
Certification shall be signed by the Master Servicer).  The Indenture Trustee and the Trust
Administrator shall have no liability for any delay in filing the Form 10-K
due to the failure of such party to timely sign the Form 10-K or Form 10-K
Certification.  The Depositor hereby grants
to the Indenture Trustee, the Master Servicer and the Trust Administrator a
limited power of attorney to execute and file each such document on behalf of
the Depositor.  Such power of attorney
shall continue until either the earlier of (i) receipt by the Master
Servicer and the Trust Administrator from the Depositor of written termination
of such power of attorney and (ii) the termination of the Issuer.  The Depositor agrees to promptly furnish to
the Trust Administrator, from time to time upon request, such further
information, reports, and financial statements within its control related to
this Agreement and the Mortgage Loans as the Depositor reasonably deems
appropriate to prepare and file all necessary reports with the Commission.  The Trust Administrator shall have no
responsibility to file any items other than those specified in this section.

 

(b)                                 Each person (including their
officers or directors) that signs any Form 10-K Certification shall be
entitled to indemnification from the Trust Estate for any liability or expense
incurred by it in connection with such certification, other than any liability
or expense attributable to such Person’s own bad faith, negligence or willful
misconduct.  The provisions of this subsection shall
survive any termination of this Agreement and the resignation or removal of
such Person.

 

(c)                                  To the extent that, following
the Closing Date, the contents of Forms 8-K, 10-K or other Forms required by
the Exchange Act and the Rules and Regulations of the Commission and the
time by which such Forms are required to be filed, differs from the provisions
of this

 

135

 

Agreement, the
parties hereto hereby agree that each shall reasonably cooperate to amend the
provisions of this Agreement (in accordance with Section 10.03) in order
to comply with such amended reporting requirements and such amendment of this
Agreement.  Any such amendment may result
in the reduction of the reports filed by the Servicer under the Exchange Act.  Notwithstanding the foregoing, neither the
Master Servicer nor the Trust Administrator shall be obligated to enter into
any amendment pursuant to this Section that adversely affects its
obligations and immunities under this Agreement.

 

ARTICLE IX

TERMINATION

 

Section 9.01.                             Termination.  The respective obligations and
responsibilities of the Master Servicer, the Trust Administrator, the
Depositor, the Issuer, the Servicer, the Subservicer and the Indenture Trustee
created hereby (other than obligations expressly stated to survive the
termination of the Trust) shall terminate on the day after the day on which the
Notes are paid in full (including payment pursuant to Section 9.02 below)
(the “Termination Date”).

 

Section 9.02.                             Termination Prior to Maturity
Date; and Optional Redemption.  On any Payment Date on which the Aggregate
Loan Balance at the beginning of the Due Period related to that Payment Date is
less than 20% of the sum of the Aggregate Loan Balance as of the Initial
Cut-off Date and the amount on deposit in the Pre-Funding Account as of the
Closing Date, the Servicer acting directly or through one or more Affiliates,
shall have the option to purchase the Mortgage Loans, any REO Property and any
other property remaining in the Trust for a price equal to the Redemption
Price.  The Master Servicer, the Servicer
and the Subservicer will be reimbursed from the Redemption Price for any
outstanding Advances, Servicing Advances and unpaid Servicing Administration
Fees and other amounts not previously reimbursed pursuant to the provisions of
this Agreement, as applicable, and the Trust Administrator, the Owner Trustee
and the Indenture Trustee shall be reimbursed for any previously unreimbursed
amounts for which they are entitled to be reimbursed pursuant to this Agreement,
the Indenture or the Trust Agreement, as applicable.  If such option is exercised, the Trust will
be terminated resulting in a mandatory redemption of the Notes.  The Servicer shall deliver written notice of
its intention to exercise such option to the Issuer, the Trust Administrator,
the Indenture Trustee and the Master Servicer not less than 15 days prior to
the applicable Payment Date.  If the
Servicer fails to exercise such option prior to the Stepup Date, the Interest
Rate for each class of Notes will be increased as set forth in the table in the
Preliminary Statement herein beginning on the Stepup Date and for each Payment
Date thereafter.  The Servicer shall
deliver written notice of its intention to exercise such option to the Issuer,
the Indenture Trustee and the Master Servicer not less than ten days prior to
the applicable Payment Date.

 

In connection with such purchase, the
Servicer shall remit to the Trust Administrator all amounts then on deposit in
the Custodial Account in respect of the related Total Remittance Amount for
deposit to the Note Account, which deposit shall be deemed to have occurred
immediately preceding such purchase.

 

136

 

(a)                                  Promptly following any such
purchase pursuant to paragraph (a) of this Section, the Indenture Trustee
or the applicable Custodian shall release the Mortgage Files to the purchaser
of such Mortgage Loans pursuant to this Section 10.02, or otherwise upon
its order.

 

Section 9.03.                             Certain Notices upon Final
Payment.  The Master Servicer or the Trust
Administrator, as applicable, shall give the Issuer, the Indenture Trustee, the
Owner Trustee, each Rating Agency, each Noteholder and the Depositor at least
30 days’ prior written notice of the date on which the Trust is expected to
terminate in accordance with Section 9.01, or the date on which the Notes
will be redeemed in accordance with Section 9.02.  Not later than the fifth Business Day in the
Due Period in which the final payment in respect to the Notes is payable to the
Noteholders, the Indenture Trustee shall mail to the Noteholders a notice
specifying the procedures with respect to such final payment.  The Trust Administrator on behalf of the
Indenture Trustee shall give a copy of such notice to each Rating Agency at the
time such notice is given to Noteholders. 
Following the final payment thereon, such Notes shall become void, no
longer outstanding and no longer evidence any right or interest in the Mortgage
Loans, the Mortgage Files or any proceeds of the foregoing.

 

Section 9.04.                             Beneficiaries.  This Agreement will inure to the benefit of
and be binding upon the parties hereto, the Noteholders, and their respective
successors and permitted assigns.  No
other Person will have any right or obligation hereunder.

 

ARTICLE X

MISCELLANEOUS PROVISIONS

 

Section 10.01.                       Binding Nature of Agreement;
Assignment.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.

 

Section 10.02.                       Entire Agreement.  This Agreement contains the entire agreement
and understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or
written, of any nature whatsoever with respect to the subject matter
hereof.  The express terms hereof control
and supersede any course of performance and/or usage of the trade inconsistent
with any of the terms hereof.

 

Section 10.03.                       Amendment.

 

(a)                                  This Agreement may be amended
from time to time by the parties hereto and the Holder of the Ownership
Certificate and with the prior written consent of the Swap Counterparty (but
only to the extent such amendment materially adversely affects the amounts,
priority or timing of payments under the Swap Agreement and all outstanding
payments under the Swap Agreement have been made), without notice to or the
consent of any of the Holders of the Notes, (i) to cure any ambiguity, (ii) to
cause the provisions herein to conform to or be consistent with or in
furtherance of the statements made with respect to the Notes, the Trust or this
Agreement in any Offering Document, or to correct or supplement any provision
herein which may be inconsistent with any other provisions herein or in any
other Operative Agreement, to make any

 

137

 

other provisions with respect to matters or
questions arising under this Agreement, (iii) to make any other provision with
respect to matters or questions arising under this Agreement or (iv) to
add, delete, or amend any provisions to the extent necessary or desirable to
comply with any requirements imposed by the Code or ERISA and applicable
regulations.  No such amendment effected
pursuant to the preceding sentence shall, as evidenced by an Opinion of Counsel
(which shall be an expense of the party requesting such amendment and shall not
be an expense of the Trust), the
status of the Notes as debt for federal income tax purposes, nor shall such
amendment effected pursuant to clause (iii) of such sentence adversely
affect in any material respect the interests of any Holder, nor shall such
amendment be with respect to Section 6.02 or the definitions of “Interest
Funds,” “Principal Funds” or “Monthly Excess Cashflow” without the prior
written consent of the Swap Counterparty; provided, however, that
all outstanding payments under the Swap Agreement have been made.  Prior to entering into any amendment without
the consent of Holders pursuant to this paragraph, the Indenture Trustee may
require an Opinion of Counsel (at the expense of the party requesting such
amendment) to the effect that such amendment is permitted under this
paragraph.  Any such amendment shall be
deemed not to adversely affect in any material respect any Holder, if the
Indenture Trustee receives written confirmation from each Rating Agency that
such amendment will not cause such Rating Agency to reduce the then current
rating assigned to the Notes.

 

(b)                                 This Agreement may also be
amended from time to time by the parties hereto and with the prior written
consent of the Swap Counterparty (but only to the extent such amendment
materially adversely affects the amounts, priority or timing of payments under
the Swap Agreement and all outstanding payments under the Swap Agreement have
been made), with the consent of the Noteholders representing 662/3%
Voting Interests for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying
in any manner the rights of the Holders; provided,
however, that no such amendment may (i) reduce
in any manner the amount of, or delay the timing of, payments which are
required to be paid on any Class of Notes, without the consent of the
Noteholders of such Class or (ii) reduce the aforesaid percentages of
Class Principal Amount of Notes, the Holders of which are required to
consent to any such amendment without the consent of the Holders of 100% of the
Class Principal Amount of the Notes. 
For purposes of this paragraph, references to “Holder” or “Holders”
shall be deemed to include, in the case of Book-Entry Notes, the related Note
Owners; provided further, however, that no such
amendment may be made with respect to Section 6.01(b) or (c) or
the definition of “Interest Funds” without the prior written consent of the
Swap Counterparty, unless all outstanding payments under the Swap Agreement
have been made.

 

(c)                                  Promptly after the execution of
any such amendment, the Indenture Trustee shall furnish written notification of
the substance of such amendment to each Holder, the Depositor and to each
Rating Agency.

 

(d)                                 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.  The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Holders shall be subject to such reasonable regulations as
the Indenture Trustee may prescribe.

 

138

 

Section 10.04.                       Acts of Noteholders.  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 agree to take such action or give such consent or
approval.

 

Section 10.05.                       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 Depositor on direction and at the expense of Holders of not
less than 66-2/3% of the Note Principal Balance of the Notes and of the Holder
of the Ownership Certificate 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 10.06.                       Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES
APPLIED IN NEW YORK (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW WHICH SHALL APPLY HERETO).

 

Section 10.07.                       Notices.  All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed by overnight courier, addressed as follows or delivered by facsimile (or
such other address as may hereafter be furnished to the other party by like
notice):

 

(i)                                     if to the Seller:

 

Fieldstone
Investment Corporation

11000 Broken
Land Parkway, Suite 600

Columbia,
Maryland 21044

Attention:  Chief Financial Officer

Telephone:  (410) 772-5179

Facsimile:  (410) 772-7299

 

(ii)                                  if to the Servicer:

 

Fieldstone
Servicing Corp.

11000 Broken
Land Parkway, Suite 600

Columbia,
Maryland 21044

Attention:  Chief Financial Officer

Telephone:  (410) 772-5179

Facsimile:  (410) 772-7299

 

139

 

(iii)                               if to the Subservicer:

 

[                                                                                                                                                                                         ]

Telephone:  [                      ]

Facsimile:  [                      ]

 

with a copy
to:

 

[                                                                                                                                                                                         ]

Attention:  General Counsel

Telephone:  [                      ]

Facsimile:  [                      ]

 

(iv)                              if to the Master
Servicer:

 

[                                                                                                                                                                                         ]

Telephone:  [                      ]

Facsimile:  [                      ]

 

(v)                                 if to the Trust
Administrator:

 

[                                                                                                                                                                                         ]

Telephone:  [                      ]

Facsimile:  [                      ]

 

(vi)                              if to the Indenture
Trustee:

 

[                                                                                                                                                                                         ]

 

(vii)                           if to the Depositor:

 

Fieldstone
Mortgage Investment Corporation

11000 Broken
Land Parkway, Suite 600

Columbia,
Maryland 21045

Attention:  [                      ]

Telephone:  [                      ]

Facsimile:  [                      ]

 

(viii)                        if to the Issuer:

c/o [                                                                                                                                                                     ]

Attention:  [                      ]

 

All demands, notices and communications to a
party hereunder shall be in writing and shall be deemed to have been duly given
when delivered to such party at the relevant address, facsimile number or
electronic mail address set forth above or at such other address, facsimile
number or electronic mail address as such party may designate from time to time
by written notice in accordance with this Section 10.07.

 

140

 

Section 10.08.                       Severability of Provisions.  If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Notes or the
rights of the Holders thereof.

 

Section 10.09.                       Indulgences; No Waivers.  Neither the failure nor any delay on the part
of a party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence.  No
waiver shall be effective unless it is in writing and is signed by the party
asserted to have granted such waiver.

 

Section 10.10.                       Headings Not To Affect
Interpretation.  The headings contained in this Agreement are
for convenience of reference only, and they shall not be used in the
interpretation hereof.

 

Section 10.11.                       Benefits of Agreement.  Nothing in this Agreement or in the Notes,
express or implied, shall give to any Person, other than the parties to this
Agreement and their successors hereunder and the Holders of the Notes, any
benefit or any legal or equitable right, power, remedy or claim under this
Agreement.  Notwithstanding the
foregoing, the Owner Trustee shall be an express third-party beneficiary of
this Agreement.

 

Section 10.12.                       Special Notices to the Rating
Agencies.

 

(a)                                  The Seller shall give prompt
notice to each Rating Agency of the occurrence of any of the following events
of which it has notice:

 

(i)                                     any amendment to
this Agreement pursuant to Section 10.03; and

 

(ii)                                  the making of a final
payment hereunder.

 

(b)                                 All notices to the Rating
Agencies provided for by this Section shall be in writing and sent by first
class mail, telecopy or overnight courier, as follows:

 

if to Moody’s:

 

Moody’s Investors Service, Inc.

99 Church
Street

New York, New York 10004

Fax no.: 
(212) 553-4392

 

141

 

if to S&P:

 

Standard & Poor’s Ratings Services,
a division

of The McGraw-Hill Companies, Inc.

55 Water Street

New York, New York 10041

Fax no.: 
(212) 438-2661

 

(c)                                  The Trust Administrator shall
make available to the Rating Agencies each report prepared pursuant to Section 5.09.

 

Section 10.13.                       Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute one and the same instrument.

 

Section 10.14.                       Execution
by the Issuer.  It is expressly
understood and agreed by the parties hereto that (a) this Agreement is
executed and delivered by [                     
], not individually or personally but solely as Owner Trustee of the
Issuer, in the exercise of the powers and authority conferred and vested in it
as trustee, (b) each of the representations, undertakings and agreements
herein made on the part of the Issuer is made and intended not as personal
representations, undertakings and agreements by [                      ] but is made and
intended for the purpose of binding only the Issuer, (c) nothing herein
contained shall be construed as creating any liability on [                      ], individually or
personally, to perform any covenant either expressed or implied contained
herein, 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 (d) under
no circumstances shall [                     
] be personally liable for the payment of any indebtedness or expenses
of the Issuer or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Issuer under
this Agreement or any other document.

 

142

 

IN WITNESS WHEREOF, the parties hereto have
caused their names to be signed hereto by their respective officers hereunto
duly authorized as of the day and year first above written.

 

	
   

  	
  FIELDSTONE MORTGAGE INVESTMENT

  
	
   

  	
  TRUST, SERIES 2005-[   ], as Issuer

  
	
   

  	
   

  
	
   

  	
  By:

  	
  [                   ],
  not in its individual

  
	
   

  	
   

  	
  capacity but solely as Owner Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FIELDSTONE MORTGAGE INVESTMENT CORPORATION,

  
	
   

  	
  as Depositor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [                                                                                
  ],

  
	
   

  	
   

  	
  not in its individual capacity but solely
  as

  
	
   

  	
   

  	
  Indenture Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [                                                                                
  ],

  
	
   

  	
  as Trust Administrator and Master Servicer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
					

 

 

	
   

  	
  FIELDSTONE SERVICING CORP.,

  
	
   

  	
  as Servicer

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [

  	
                                                                                 

  	
  ],

  
	
   

  	
  as Subservicer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FIELDSTONE INVESTMENT CORPORATION,

  
	
   

  	
  as Seller

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
  Solely for purposes of 6.02 and

  	
   

  
	
  Section 10.03, accepted and agreed to
  by:

  	
   

  
	
   

  	
   

  
	
  [                                                                                
  ],

  	
   

  
	
  as Swap Counterparty

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
								

 

 

	
  STATE OF

  	
  )

  
	
   

  	
  : ss.:

  
	
  COUNTY OF

  	
  )

  

 

On this [  
] day of [       ], 2005, before
me, personally appeared [                               ], known to me
to be a Vice President of
[                          ],
one of the corporations that executed the within instrument, and also known to
me to be the person who executed it on behalf of said corporation, and
acknowledged to me that such corporation executed the within instrument.

 

IN WITNESS WHEREOF, I have hereunto set my
hand and affixed my official seal the day and year in this certificate first
above written.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  

 

 

[NOTARIAL SEAL]

 

 

	
  STATE OF

  	
  )

  
	
   

  	
  : ss.:

  
	
  COUNTY OF

  	
  )

  

 

On the [  
] day of [         ], 2005, before
me, personally appeared [                          ],
known to me to be a [   ] of Fieldstone
Mortgage Investment Corporation, a corporation that executed the within
instrument and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.

 

IN WITNESS WHEREOF, I have hereunto set my
hand and affixed my official seal the day and year in this certificate first
above written.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  

 

 

[NOTARIAL SEAL]

 

 

	
  STATE OF

  	
  )

  
	
   

  	
  : ss.:

  
	
  COUNTY OF

  	
  )

  

 

On the [ 
] of [     ], 2005 before me, a
Notary Public in and for said State, personally appeared [                      ]
known to me to be a [                           
] of a [               ] that
executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

 

IN WITNESS WHEREOF, I have hereunto set my
hand and affixed my official seal the day and year in this certificate first
above written.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  

 

 

[NOTARIAL SEAL]

 

 

	
  STATE OF

  	
  )

  
	
   

  	
  : ss.:

  
	
  COUNTY OF

  	
  )

  

 

On the [   
] day of [          ], 2005 ,
before me, a notary public in and for said State, personally appeared [                     ],
known to me to be a [            ] of
[            ], one of the corporations
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

 

IN WITNESS WHEREOF, I have hereunto set my
hand and affixed my official seal the day and year in this certificate first
above written.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  

 

 

	
  STATE OF

  	
  )

  
	
   

  	
  : ss.:

  
	
  COUNTY OF

  	
  )

  

 

On the [   
] of [          ], 2005 before me,
a Notary Public in and for said State, personally appeared [                      ] known to me to be a
[                      ] of Fieldstone Servicing
Corp., a corporation that executed the within instrument and also known to me
to be the person who executed it on behalf of said corporation, and
acknowledged to me that such corporation executed the within instrument.

 

IN WITNESS WHEREOF, I have hereunto set my
hand and affixed my official seal the day and year in this certificate first
above written.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  
	
   

  	
   

  
	
   

  	
   

  
	
  [NOTARIAL SEAL]

  	
  SUSAN H. RICE

  

 

 

	
  STATE OF [          ]

  	
  )

  
	
   

  	
  : ss.:

  
	
  COUNTY OF [          ]

  	
  )

  

 

On the [ 
] of [          ], 2005 before me, a Notary Public in and
for said State, personally appeared [         
] known to me to be an [         
] of [Subservicer], a corporation that executed the within instrument
and also known to me to be the person who executed it on behalf of said
corporation, and acknowledged to me that such corporation executed the within
instrument.

 

IN WITNESS WHEREOF, I have hereunto set my
hand and affixed my official seal the day and year in this certificate first
above written.

 

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  
	
   

  	
   

  
	
   

  	
   

  
	
  [NOTARIAL SEAL]

  	
   

  

 

 

	
  STATE OF MARYLAND

  	
  )

  
	
   

  	
  : ss.:

  
	
  COUNTY OF HOWARD

  	
  )

  

 

On the [  
] of December, 2005 before me, a Notary Public in and for said State,
personally appeared [                 ]
known to me to be a [                   
] of Fieldstone Investment Corporation, a corporation that executed the
within instrument and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.

 

IN WITNESS WHEREOF, I have hereunto set my
hand and affixed my official seal the day and year in this certificate first
above written.

 

 

	
   

  	
  /s/

  	
   

  
	
   

  	
   

  
	
   

  	
  Notary Public

  
	
   

  	
   

  
	
  [NOTARIAL SEAL]

  	
   

  

 

 

EXHIBIT A-1

FORM OF INITIAL CERTIFICATION

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date

  	
   

  	
   

  

 

 

[Name and address of Indenture Trustee]

 

FIELDSTONE MORTGAGE INVESTMENT CORPORATION

11000 Broken Land Parkway, Suite 600

Columbia, Maryland 21044

 

Attention:

 

	
   

  	
  Re:

  	
  Transfer and Servicing Agreement (the “Transfer
  and Servicing Agreement”) dated as of [            ], 2005 by and among Fieldstone
  Mortgage Investment Corporation, as Depositor, [                                                     
  ], as Indenture Trustee, [                                ], as Trust
  Administrator and Master Servicer, Fieldstone Mortgage Investment Trust, Series 2005-[
  ], as Issuer, Fieldstone Servicing Corp., as Servicer, [                                                     
  ], as Subservicer, and Fieldstone Investment Corporation, as Seller

  

 

Ladies and Gentlemen:

 

In accordance with Section 2.02(a) of
the Transfer and Servicing Agreement, subject to review of the contents
thereof, the undersigned, as Custodian, hereby certifies that it has received
the documents listed in Section 2.0 1(b) of the Transfer and
Servicing Agreement for each Mortgage File pertaining to each Mortgage Loan
listed on Schedule A, to the Transfer and Servicing Agreement, subject to
any exceptions noted on Schedule I hereto.

 

Capitalized words and phrases used herein and
not otherwise defined herein shall have the respective meanings assigned to
them in the Transfer and Servicing Agreement. 
This certificate is subject in all respects to the terms of Section 2.02
of the Transfer and Servicing Agreement and the sections cross-referenced
therein.

 

	
   

  	
  [Custodian]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

A-1

 

EXHIBIT A-2

FORM OF INTERIM CERTIFICATION

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date

  	
   

  	
   

  

 

[Name and address of Indenture Trustee]

 

FIELDSTONE MORTGAGE INVESTMENT CORPORATION

11000 Broken Land Parkway, Suite 600

Columbia, Maryland 21044

 

Attention:

 

	
   

  	
  Re:

  	
  Transfer and Servicing Agreement (the “Transfer
  and Servicing Agreement”) dated as of [            ], 2005 by and among Fieldstone
  Mortgage Investment Corporation, as Depositor, [                                                      ], as Indenture Trustee,
  [                                ], as
  Trust Administrator and Master Servicer, Fieldstone Mortgage Investment
  Trust, Series 2005-[ ], as Issuer, Fieldstone Servicing Corp., as
  Servicer, [                                                      ], as Subservicer,
  and Fieldstone Investment Corporation, as Seller Ladies and Gentlemen:

  

 

In accordance with Section 2.02(b) of
the Transfer and Servicing Agreement, the undersigned, as Custodian, hereby
certifies that as to each Mortgage Loan listed in the Mortgage Loan Schedule (other
than any Mortgage Loan paid in full or listed on Schedule I hereto) it (or
its custodian) has received the applicable documents listed in Section 2.01(b) of
the Transfer and Servicing Agreement.

 

The undersigned hereby certifies that as to
each Mortgage Loan identified on the Mortgage Loan Schedule, other than any
Mortgage Loan listed on Schedule I hereto, it has reviewed the documents
identified above and has determined that each such document appears regular on
its face and appears to relate to the Mortgage Loan identified in such
document.

 

Capitalized words and phrases used herein
shall have the respective meanings assigned to them in the Transfer and
Servicing Agreement.  This certificate is
qualified in all respects by the terms of said Transfer and Servicing Agreement
including, but not limited to, Section 2.02(b).

 

	
   

  	
  [Custodian]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

A-2-1

 

EXHIBIT A-3

FORM OF FINAL
CERTIFICATION

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date

  	
   

  	
   

  

 

[Name and address of Indenture Trustee]

 

FIELDSTONE MORTGAGE INVESTMENT CORPORATION

11000 Broken Land Parkway, Suite 600

Columbia, Maryland 21044

 

Attention:

 

	
   

  	
  Re:

  	
  Transfer and Servicing Agreement (the “Transfer
  and Servicing Agreement”) dated as of [            ], 2005 by and among Fieldstone
  Mortgage Investment Corporation, as Depositor, [                                                     
  ], as Indenture Trustee, [                                ], as Trust
  Administrator and Master Servicer, Fieldstone Mortgage Investment Trust, Series 2005-[
  ], as Issuer, Fieldstone Servicing Corp., as Servicer, [                                                     
  ], as Subservicer, and Fieldstone Investment Corporation, as Seller

  

 

Ladies and Gentlemen:

 

In accordance with Section 2.02(d) of
the Transfer and Servicing Agreement, the undersigned, as Custodian on behalf
of the 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 listed on Schedule I hereto) it (or its custodian) has received the
applicable documents listed in Section 2.01(b) of the Transfer and
Servicing Agreement.

 

The undersigned hereby certifies that as to
each Mortgage Loan identified on the Mortgage Loan Schedule, other than any
Mortgage Loan listed on Schedule I hereto, it has reviewed the documents
listed above and has determined that each such document appears to be complete
and, based on an examination of such documents, the information set forth in
the Mortgage Loan Schedule is correct.

 

Capitalized words and phrases used herein
shall have the respective meanings assigned to them in the Transfer and
Servicing Agreement.  This certificate is
qualified in all respects by the terms of said Transfer and Servicing
Agreement.

 

	
   

  	
  [Custodian]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

A-3-1

 

EXHIBIT A-4

FORM OF
ENDORSEMENT

 

Pay to the order of [                       ], as indenture trustee (the
“Indenture Trustee”) under the Transfer and Servicing Agreement dated as of
[                  ], 2005 by and among
Fieldstone Mortgage Investment Corporation, as Depositor, the Indenture
Trustee, [                       ], as
Trust Administrator and Master Servicer, Fieldstone Mortgage Investment Trust, Series 2005-[
], as Issuer, Fieldstone Servicing Corp., as Servicer, [                       ], as Subservicer, and
Fieldstone Investment Corporation, as Seller, relating to Fieldstone Mortgage
Investment Trust, Series 2005-[ ] Mortgage-Backed Notes, without recourse.

 

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
  [current signatory on note]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

A-4-1

 

EXHIBIT B

FORM OF SWAP AGREEMENT

 

B-1

 

EXHIBIT C

FORM OF LOST NOTE AFFIDAVIT

 

I,                                                           ,
being duly sworn, do hereby state under oath that:

 

1.                                       I,
as                                     
of                                                      
(the “Company”), am authorized to make this Affidavit on behalf of the Company.

 

2.                                       The
Company received the following described mortgage note (the “Note”):

 

Loan No.:

Borrower(s):

Original Principal Amount:

 

from the Borrower(s) to secure a Deed of
Trust/Mortgage (the “Deed of Trust/Mortgage”) dated                             
from the Borrower(s) to the Company.

 

3.                                       The
Company represents and warrants that it has not canceled, altered, assigned, or
hypothecated the Note.

 

4.                                       The
original Note, a true and correct copy of which is attached hereto, was not
located after a thorough and diligent search, and based thereon, the Company
declares the Note lost.

 

5.                                      This
Affidavit is intended to be relied on by the Indenture Trustee and its
successors and assigns.

 

6.                                       The
Company has assigned all of its right, title and interest in the Note and the
Deed of Trust/Mortgage to the Indenture Trustee and agrees immediately and
without further consideration to surrender the original Note to the Indenture
Trustee or its successor and assigns if such original Note ever comes into the
Company’s possession, custody, or power.

 

7.                                       The
Company further agrees to indemnify and hold harmless the Indenture Trustee and
its successors and assigns from any and all loss, liability, costs, damages,
reasonable attorneys’ fees and expenses without limitation in connection with
or arising out of the representations, warranties, and agreements made in this
Affidavit and any claim of any nature made by any entity with respect to the
Note.

 

8.                                       The
Company agrees and acknowledges that this Affidavit may be presented as
evidence of the Note, whether in any proceeding or action with respect thereto
or otherwise, and hereby authorizes such use of this Affidavit.

 

C-1

 

9.                                       The
representations, warranties, and agreements herein shall bind the undersigned
and its successors and assigns, and shall inure to the benefit of the Indenture
Trustee and its successors and assigns.

 

EXECUTED THIS               day of                         ,
200   on behalf of                              

 

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
					

 

 

	
  STATE OF

  	
  )

  
	
   

  	
  ) ss:

  
	
  COUNTY OF

  	
  )

  

 

On the           
day of                             ,
200  , before me,                                           ,
a notary public in and for said State, personally appeared                                                       
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument, the person, or the
entity upon behalf of which the person acted, executed the instrument.

 

WITNESS my hand and official seal.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  

 

 

My Commission Expires:

 

C-2

 

EXHIBIT D

 

CUSTODIAL AGREEMENT

 

(Exhibit 4.1)

 

Exhibit D
to the Form of Transfer and Servicing Agreement

 

 

 

 

[                                         ]

 

as Custodian

 

FIELDSTONE MORTGAGE INVESTMENT
TRUST, SERIES 2005-[    ]

 

as Issuer

 

and

 

 

[                                         ]

 

as Indenture Trustee

 

 

 

CUSTODIAL AGREEMENT

 

Dated as of
[                               ], 2005

 

 

Fieldstone Mortgage Investment Trust, Series 2005-[   ]

 

Mortgage-Backed Notes

 

 

 

 

TABLE OF CONTENTS

 

	
  Section 1.

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.

  	
  Delivery of this Agreement; Delivery of the
  Custodial Files

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.

  	
  Acceptance of Mortgage Loans by Custodian;
  Review of Documentation.

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.

  	
  Obligations of the Custodian; Ownership of
  Mortgage Loan Documents.

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.

  	
  Release of Custodial Files.

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.

  	
  Fees of Custodian

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.

  	
  Removal of Custodian With Respect to Some
  or All of the Mortgage Loans

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.

  	
  Transfer of Custodial Files Upon
  Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.

  	
  Examination of Custodial Files

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 10.

  	
  Insurance of Custodian

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 11.

  	
  Counterparts

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 12.

  	
  Periodic Statements

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 13.

  	
  Governing Law

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 14.

  	
  Copies of Mortgage Documents

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 15.

  	
  No Adverse Interest of Custodian

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 16.

  	
  Resignation by Custodian

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 17.

  	
  Term of Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 18.

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 19.

  	
  Successors and Assigns

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 20.

  	
  Limitation on Liability.

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 21.

  	
  Custodian Obligations Regarding Genuineness
  of Documents

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 22.

  	
  Shipment of Documents

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 23.

  	
  Authorized Representatives

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 24.

  	
  Amendments

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 25.

  	
  Limited Role of Owner Trustee; Successor Owner Trustee.

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 26.

  	
  Eligibility Requirements for the Custodian

  	
   

  

 

ii

 

EXHIBITS

 

	
  EXHIBIT A

  	
  MORTGAGE LOAN SCHEDULE

  
	
   

  	
   

  
	
  EXHIBIT B-1

  	
  FORM OF INITIAL CERTIFICATION

  
	
   

  	
   

  
	
  EXHIBIT B-2

  	
  FORM OF INTERIM CERTIFICATION

  
	
   

  	
   

  
	
  EXHIBIT B-3

  	
  FORM OF FINAL CERTIFICATION

  
	
   

  	
   

  
	
  EXHIBIT B-4

  	
  FORM OF REQUEST FOR RELEASE OF
  DOCUMENTS AND RECEIPT

  
	
   

  	
   

  
	
  EXHIBIT B-5

  	
  FORM OF LOST NOTE AFFIDAVIT

  
	
   

  	
   

  
	
  EXHIBIT B-6

  	
  FORM OF ENDORSEMENT

  
	
   

  	
   

  
	
  EXHIBIT C

  	
  AUTHORIZED REPRESENTATIVES OF THE CUSTODIAN

  
	
   

  	
   

  
	
  EXHIBIT D-1

  	
  AUTHORIZED REPRESENTATIVES OF THE INDENTURE
  TRUSTEE

  
	
   

  	
   

  
	
  EXHIBIT D-2

  	
  AUTHORIZED REPRESENTATIVES OF THE TRUST
  ADMINISTRATOR

  
	
   

  	
   

  
	
  EXHIBIT E

  	
  AUTHORIZED REPRESENTATIVES OF THE MASTER
  SERVICER

  
	
   

  	
   

  
	
  EXHIBIT F-1

  	
  AUTHORIZED REPRESENTATIVES OF THE SERVICER

  
	
   

  	
   

  
	
  EXHIBIT F-2

  	
  AUTHORIZED
  REPRESENTATIVES OF THE SUBSERVICER

  

 

iii

 

This is a Custodial Agreement (the “Agreement”),
dated and effective as of
[                   ], 2005, by and among
[                                         ],
as custodian (the “Custodian”), Fieldstone Mortgage Investment Trust, Series 2005-[    ], as issuer (the “Issuer”), and
[                                         ],
as indenture trustee (the “Indenture Trustee”).

 

W
I  T  N  E  S  S  E  T  H:

 

WHEREAS, the Indenture Trustee has entered
into a transfer and servicing agreement, dated as of
[               ], 2005 (the “Transfer and Servicing Agreement”),
by and among the Issuer, the Indenture Trustee, Fieldstone Mortgage Investment
Corporation, as depositor (the “Depositor”),
[                                         ],
as trust administrator (in such capacity, the “Trust Administrator”) and as
master servicer (in such capacity, the “Master Servicer”), Fieldstone Servicing
Corp., as servicer (the “Servicer”),
[                                         ],
as Subservicer (the “Subservicer”) and Fieldstone Investment Corporation, as
seller (the “Seller”), pursuant to which the Depositor has conveyed certain
Mortgage Loans identified on Exhibit A hereto (the “Mortgage Loan Schedule”)
to the Issuer;

 

WHEREAS, the Issuer has entered into an
Indenture, dated as of
[                   ],
2005 (the “Indenture”), among the Indenture Trustee, the Trust Administrator
and the Issuer, pursuant to which the Issuer has pledged such Mortgage Loans to
the Indenture Trustee to secure the Issuer’s Mortgage-Backed Notes, Series 2005-[    ] (the “Notes”); and

 

WHEREAS, the Indenture Trustee and the
Custodian desire that the Custodian shall hold the Mortgage Loan Documents (as
defined herein) on behalf of the Indenture Trustee in accordance with the terms
hereof, and that the Custodian shall cooperate with the Master Servicer in the
performance of the Master Servicer’s duties under the Transfer and Servicing
Agreement;

 

NOW, THEREFORE, in consideration of the
mutual agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
Indenture Trustee and the Custodian agree as follows:

 

ARTICLE IDEFINITIONS.  ALL
CAPITALIZED TERMS USED BUT NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANINGS
ASSIGNED TO SUCH TERMS IN THE TRANSFER AND SERVICING AGREEMENT OR THE
INDENTURE, AS APPLICABLE.  THE
INDENTURE TRUSTEE SHALL NOTIFY THE CUSTODIAN OF ANY MATERIAL CHANGES TO SUCH
TRANSFER AND SERVICING AGREEMENT THAT MAY AFFECT THE RIGHTS AND
OBLIGATIONS OF THE CUSTODIAN SET FORTH HEREIN. 
WHENEVER USED HEREIN, THE FOLLOWING WORDS AND PHRASES, UNLESS THE
CONTEXT OTHERWISE REQUIRES, SHALL HAVE THE FOLLOWING MEANINGS:

 

Agreement:  This Custodial Agreement and all amendments
and attachments hereto and supplements hereof.

 

Closing Date: 
[                                         ],
2005

 

Custodian: 
[                                         ]
and any successor in interest or assigns, or any successor to the Custodian
under this Agreement as herein provided.

 

 

Custodial File:  As to each Mortgage Loan, any Mortgage Loan
Documents that are delivered to the Custodian or which at any time come into
the possession of the Custodian pursuant to this Agreement.

 

Final Certification:  A final certification as to each Mortgage
Loan, which Final Certification is delivered to the Depositor, the Master
Servicer, the Servicer, the Subservicer, the Indenture Trustee by the Custodian
in accordance with Section 3(d) hereof and in the form annexed hereto
as Exhibit B-3.

 

Force Majeure:  Acts which shall include, without limitation,
acts of God, strikes, lockouts, riots, acts of war or terrorism, epidemics,
nationalization, expropriation, currency restrictions, government regulations
adopted after the date of this Agreement, fire, communication line failures,
computer viruses, power failures, earthquakes or other disasters of a similar
nature.

 

Indenture:  The Indenture dated as of
[                                         ],
2005, among the Issuer, the Trust Administrator and the Indenture Trustee, as
such may be amended or supplemented from time to time.

 

Indenture Trustee: 
[                                         ],
a
[                                         ],
and any successor in interest, not in its individual capacity, but solely as
indenture trustee under the Indenture.

 

Initial Certification:  An initial certification as to each Mortgage
Loan, which Initial Certification is delivered to the Depositor, the Master
Servicer, the Servicer, the Subservicer, the Indenture Trustee by the Custodian
in accordance with Section 3(a) hereof and in the form annexed hereto
as Exhibit B-1.

 

Initial Mortgage Loans:  The mortgage loans included in the Trust as
of the Closing Date.

 

Interim Certification:  An interim certification as to each Mortgage
Loan, which Interim Certification is delivered to the Depositor, the Master
Servicer, the Servicer, the Subservicer, the Indenture Trustee by the Custodian
in accordance with Section 3(b) hereof and in the form annexed hereto
as Exhibit B-2.

 

Master Servicer: 
[                                         ]
and any successor in interest or assigns.

 

Mortgage Loan:  Each Initial Mortgage Loan or Subsequent
Mortgage Loan.  A Mortgage Loan includes,
without limitation, the Custodial File, which shall include the Mortgage Loan
Documents.

 

Mortgage Loan Documents:  The original documents as to each Mortgage
Loan, as set forth or described in Section 2 hereof.

 

Mortgage Loan Schedule:  The schedule attached hereto as Schedule A,
which shall initially identify each initial Mortgage Loan, as such schedule may
be amended from time to time to reflect the addition of subsequent Mortgage
Loans to, or the deletion of Mortgage Loans

 

2

 

from, the Trust Estate.  Such schedule shall set forth, among
other things, the following information with respect to each Mortgage Loan: (i) the
Mortgage Loan identifying number; (ii) the Mortgagor’s name; (iii) the
street address of the Mortgaged Property including the city, state and zip
code; (iv) the original principal amount of the Mortgage Loan; (v) the
Mortgage Rate at origination; (vi) the Mortgage Index; (vii) the
first Mortgage Rate adjustment date; (viii) the monthly payment of
principal and interest at origination; (ix) the applicable Servicing
Administration Fee Rate; (x) the Master Servicing Fee Rate; and (xi) whether
such Mortgage Loan is subject to a Prepayment Premium for voluntary prepayments
by the Mortgagor, the term during which such Prepayment Premiums are imposed
and the method of calculating the Prepayment Premium.  The Servicer shall be responsible for
providing the Indenture Trustee and the Master Servicer with all amendments to
the Mortgage Loan Schedule.

 

Owner Trustee: 
[                                         ],
a
[                                         ],
and any successor in interest, not in its individual capacity, but solely as
owner trustee under the Trust Agreement.

 

Pre-Funding Period:  The period from the Closing Date to [                  ] during which the Seller is
expected to transfer Subsequent Mortgage Loans to the Trust.

 

Seller:  Fieldstone Investment Corporation under the
Mortgage Loan Purchase Agreement dated as of
[                                         ],
2005, by and between Fieldstone Investment Corporation, as Seller, and
Fieldstone Mortgage Investment Corporation, as Purchaser.

 

Servicer:  Fieldstone Servicing Corp. and any successor
in interest or assigns.

 

Servicing Officer:  Any officer of the Servicer or the
Subservicer involved in, or responsible for, the administration and servicing of
Mortgage Loans, whose name and specimen signature appear on the list of
Authorized Representatives in the form annexed hereto as Exhibits F-1 and F-2,
as applicable, furnished by the Servicer and the Subservicer to the Indenture
Trustee, the Master Servicer, the Trust Administrator, the Custodian and the
Depositor on the Closing Date, as such list may from time to time be amended.

 

Subsequent Mortgage Loans:  The mortgage loans transferred to the trust
during the Pre-Funding period.

 

Subservicer:  [                                         ]
and any successor in interest or assigns.

 

Tax Reports:  Any reports or returns relating to federal,
state or local income taxes with respect to this Custodial Agreement, other
than in respect to the Custodian’s compensation or for reimbursement of
expenses.

 

Transfer and Servicing Agreement:  As defined in the first RECITAL of this
Agreement.

 

Trust:  The Issuer, as defined in the preamble to
this Agreement.

 

Trust Administrator:  As defined in the first RECITAL of this
Agreement.

 

3

 

Trust Agreement:  The amended and restated trust agreement,
dated as of
[                 ],
2005, among the Depositor, [                                         ],
as owner trustee, and the Trust Administrator, as such may be amended or
supplemented from time to time.

 

ARTICLE IIDELIVERY
OF THIS AGREEMENT; DELIVERY OF THE CUSTODIAL FILES.  ON OR PRIOR TO THE CLOSING DATE, THE
DEPOSITOR SHALL DELIVER THE INITIAL MORTGAGE LOAN SCHEDULE TO THE CUSTODIAN
AND ON EACH SUBSEQUENT TRANSFER DATE, THE SUBSEQUENT MORTGAGE LOANS.  ON THE CLOSING DATE AND ON EACH SUBSEQUENT
TRANSFER DATE, THE INDENTURE TRUSTEE, THE SERVICER AND THE CUSTODIAN WILL, IF
NECESSARY, AMEND THE MORTGAGE LOAN SCHEDULE. 
SUBSEQUENT TO THE CLOSING DATE, IN THE EVENT OF ANY REPURCHASE OR
SUBSTITUTION OF ANY MORTGAGE LOAN, THE INDENTURE TRUSTEE SHALL INSTRUCT THE
CUSTODIAN IN WRITING TO AMEND THE MORTGAGE LOAN SCHEDULE TO REFLECT SUCH
WITHDRAWALS OR SUBSTITUTIONS OF A DELETED MORTGAGE LOAN FROM THIS AGREEMENT AND
PROVIDE A COPY OF THE APPLICABLE CERTIFICATE FROM THE SELLER OR MASTER SERVICER
REGARDING SUCH WITHDRAWAL OF A DELETED MORTGAGE LOAN FROM THIS AGREEMENT; AND
IN THE CASE OF ANY SUBSTITUTION OF A MORTGAGE LOAN, TO REFLECT THE ADDITION OF
ANY QUALIFYING SUBSTITUTE MORTGAGE LOAN TO THIS AGREEMENT.  THE MORTGAGE LOANS SET FORTH IN THE MORTGAGE
LOAN SCHEDULE FROM TIME TO TIME SHALL BE SUBJECT TO THIS AGREEMENT.

 

On or prior to the Closing Date and on each
Subsequent Transfer Date, the Depositor will deliver or cause to be delivered
to and deposited with the Custodian the following documents (as to each
Mortgage Loan, the “Mortgage Loan Documents”) pertaining to each of the
Mortgage Loans identified in the Mortgage Loan Schedule annexed hereto:

 

Section 2.01.  the original Mortgage Note, endorsed either (A) in
blank or (B) in the form of the Form of Endorsement set forth in Exhibit B-6
hereto, or with respect to any lost Mortgage Note, an original Lost Note
Affidavit, in the form set forth in Exhibit B-5 hereto, stating that the
original Mortgage Note was lost, misplaced or destroyed, together with a copy
of the related Mortgage Note;

 

Section 2.02.  the original of any guarantee executed in
connection with the Mortgage Note assigned to the Indenture Trustee;

 

Section 2.03.  the original Mortgage with evidence of
recording thereon, and the original recorded power of attorney, if the Mortgage
was executed pursuant to a power of attorney, with evidence of recording
thereon or, if such Mortgage or power of attorney has been submitted for
recording but has not been returned from the applicable public recording
office, has been lost or is not otherwise available, a copy of such Mortgage or
power of attorney, as the case may be, certified by an Officer’s Certificate of
the Seller to be a true and complete copy of the original submitted for
recording, together with a written Opinion of Counsel acceptable to the
Indenture Trustee and the Depositor that an original recorded Mortgage is not
required to enforce the Indenture Trustee’s interest in the Mortgage Loan;

 

4

 

Section 2.04.  with respect to each Non-MERS Mortgage Loan,
an original Assignment of Mortgage, in form and substance acceptable for recording.  The Mortgage shall be assigned either (A) in
blank, without recourse, or (B) to “[                                         ]
as Indenture Trustee of the Fieldstone Mortgage Investment Trust, Series 2005-[   ],” without recourse or (C) to the
order of the Indenture Trustee;

 

Section 2.05.  an original copy of any intervening
assignment of Mortgage showing a complete chain of assignments or, in the case
of an intervening assignment that has been lost, a written Opinion of Counsel
for the Seller acceptable to the Indenture Trustee that such original
intervening assignment is not required to enforce the Indenture Trustee’s
interest in the Mortgage Loans;

 

Section 2.06.  the original or a certified copy of lender’s
title insurance policy (or, in lieu thereof, a commitment to issue such title
insurance policy, with an original or a certified copy of such title insurance
policy to follow as soon after the Closing Date as reasonably practicable);

 

Section 2.07.  the original or copies of each assumption,
modification, written assurance or substitution agreement, if any, or as to any
such agreement which cannot be delivered prior to the Closing Date because of a
delay caused by the public recording office where such assumption, modification
or substitution agreement has been delivered for recordation, a photocopy of
such assumption, modification or substitution agreement, pending delivery of
the original thereof, together with an Officer’s Certificate of the Seller
certifying that the copy of such assumption, modification or substitution
agreement delivered to the Custodian is a true copy and that the original of
such agreement has been forwarded to the public recording office; and

 

Section 2.08.  the original of any security agreement or
equivalent instrument executed in connection with the Mortgage or as to any
security agreement or equivalent instrument that cannot be delivered on or
prior to the Closing Date because of a delay caused by the public recording
office where such document has been delivered for recordation, a photocopy of
such document, pending delivery of the original thereof, together with an
Officer’s Certificate of the Depositor certifying that the copy of such
security agreement, chattel mortgage or their equivalent delivered to the
Custodian is a true copy and that the original of such document has been
forwarded to the public recording office.

 

Any Opinion of Counsel delivered by the
Seller pursuant to this Section shall be accompanied by an Officer’s
Certificate of the Seller, upon which the Custodian shall be entitled to
conclusively rely, to the effect that the Depositor has delivered such Opinion
of Counsel to the Indenture Trustee and such Opinion of Counsel is acceptable
to both.  From time to time, the
Indenture Trustee, the Master Servicer, the Trust Administrator, the Servicer
or the Subservicer will forward to the Custodian additional documents pursuant
to the Transfer and Servicing Agreement or additional documents evidencing an
assumption, modification or extension of a Mortgage Loan approved by the Master
Servicer or the Servicer in accordance with the Transfer and Servicing
Agreement.

 

5

 

All such Mortgage Loan Documents held by the
Custodian as to each Mortgage Loan shall constitute the related Custodial File.

 

For Mortgage Loans (if any) that have been
prepaid in full after the related Cut-off Date and prior to the Closing Date,
the Depositor, in lieu of delivering the above documents, herewith delivers to
the Custodian an Officer’s Certificate of the Seller which shall include a
statement to the effect that all amounts received in connection with such
prepayment that are required to be deposited in the Collection Account pursuant
to Section 5.07 of the Transfer and Servicing Agreement have been so
deposited.

 

ARTICLE IIIACCEPTANCE OF
MORTGAGE LOANS BY CUSTODIAN; REVIEW OF DOCUMENTATION.

 

Section 3.01.  The Custodian, by execution and delivery
hereof, acknowledges receipt of the Custodial Files pertaining to the Mortgage
Loans listed on the Mortgage Loan Schedule, subject to review thereof by the
Custodian, on behalf of the Indenture Trustee, under this Section 3.  The Custodian, on behalf of the Indenture
Trustee, will execute and deliver to the Depositor, the Master Servicer, the
Servicer, the Subservicer and the Indenture Trustee on the Closing Date or any
Subsequent Transfer Date, as applicable, an Initial Certification in the form
annexed hereto as Exhibit B-1.

 

Section 3.02.  Within 45 days after the Closing Date or any
Subsequent Transfer Date, as applicable, the Custodian will, on behalf of the
Indenture Trustee and for the benefit of Holders of the Notes, review each
Custodial File to ascertain that all required documents set forth in Section 2
hereof have been received and appear on their face to contain the requisite
signatures by or on behalf of the respective parties thereto, and shall deliver
to the Depositor, the Master Servicer, the Servicer, the Subservicer and the
Indenture Trustee an Interim Certification in the form annexed hereto as Exhibit B-2
to the effect that, as to each Mortgage Loan listed in the related Mortgage
Loan Schedule (other than any Mortgage Loan prepaid in full or any
Mortgage Loan specifically identified in such certification as not covered by
such certification), (i) all of the applicable documents specified in Section 2
of this Agreement are in its possession and (ii) such documents have been
reviewed by it and appear to relate to such Mortgage Loan.  The Custodian shall review the documents to
see that they are executed and are endorsed as in Section 2 hereof, but
shall be under no duty or obligation to inspect, review or examine any such
documents, instruments, certificates or other papers to determine that the same
are valid, binding, legally effective, properly endorsed, genuine, enforceable
or appropriate for the represented purpose or that they have actually been
recorded or are in recordable form or that they are other than what they
purport to be on their face.  The
Custodian shall have no responsibility for verifying the genuineness or the
legal effectiveness of or authority for any signatures of or on behalf of any
party or endorser.  Such Interim
Certification shall supersede all Initial Certifications relating to the same
Custodial File.

 

Section 3.03.  If in the course of the review described in
paragraph (b) above the Custodian discovers one or more documents
constituting a part of a Custodial File that are missing, do not appear regular
on their respective faces (i.e.,
are mutilated, damaged, defaced, torn or otherwise physically altered except as
to alterations to which the related borrower has

 

6

 

given its written consent) or appear to be
unrelated to the Mortgage Loans identified in the Mortgage Loan Schedule (each,
a “Material Defect”), the Custodian shall promptly identify the Mortgage Loan
to which such Material Defect relates in the Interim Certificate delivered to
the Depositor, the Master Servicer, the Servicer, the Subservicer and the
Indenture Trustee.

 

Section 3.04.  Within 180 days following the Closing Date or
a Subsequent Transfer Date, as applicable, the Custodian shall deliver to the
Depositor, the Master Servicer, the Servicer, the Subservicer and the Indenture
Trustee a Final Certification substantially in the form annexed hereto as Exhibit B-3
evidencing the completeness of the Custodial Files in its possession or
control.  Such Final Certification shall
supersede all Initial and Interim Certificates relating to the same Custodial
File.

 

Section 3.05.  If, during the term of this Agreement, the
Custodian discovers any defect with respect to any Custodial File, the
Custodian shall give written specifications of such defect to the Indenture
Trustee.

 

ARTICLE IVOBLIGATIONS OF
THE CUSTODIAN; OWNERSHIP OF MORTGAGE LOAN DOCUMENTS.

 

Section 4.01.  With respect to each Custodial File that is
delivered to the Custodian or that comes into the possession of the Custodian
pursuant to this Agreement, the Custodian acknowledges and agrees that the
Custodian is the custodian for the Indenture Trustee exclusively and that the
Indenture Trustee of the Mortgage Loans has the legal right to, at any time and
in its absolute discretion, direct, in writing, the Custodian to release any
Custodial File or all Custodial Files to the Indenture Trustee or the Indenture
Trustee’s designee, as the case may be, at such place or places as such party
may designate.  The Custodian shall hold
each Custodial File received by it for the exclusive use and benefit of the
Indenture Trustee, and shall make disposition thereof only in accordance with
this Agreement and upon the written instructions furnished by the Indenture Trustee
or its designee.  The Custodian shall
segregate and maintain continuous custody of all Mortgage Loan Documents
constituting the Custodial File in secure and fire resistant facilities in
accordance with customary standards (e.g., two-hour fire rated) for such custody.  The Custodian shall conduct, or cause to be
conducted, periodic audits of the Custodial Files held by it under this
Agreement in accordance with this Agreement and of the related accounts,
records and computer systems, in such a manner as shall allow the Indenture
Trustee to verify the accuracy of the Custodian’s record keeping.  The Custodian shall not be responsible to
verify (i) the validity, legality, enforceability, recordability,
sufficiency, due authorization or genuineness of any document in the Custodial
File or of any Mortgage Loans or (ii) the collectability, insurability,
effectiveness including the authority or capacity of any Person to execute or
issue any document in the Custodial File, or suitability of any Mortgage Loan unless
specified otherwise in this Agreement. 
The Custodian shall promptly report to the Indenture Trustee any failure
on its part to hold the Custodial Files and maintain its accounts, records and
computer systems as herein provided and promptly take appropriate action to
remedy such failure.

 

Section 4.02.  The Custodian shall not be responsible for
preparation or filing of any Tax Reports.

 

7

 

Section 4.03.  The Custodian shall not be responsible for
delays or failures in performance resulting from Force Majeure, provided however, the Custodian shall take
reasonably appropriate measures to prevent any such acts from causing delays or
failures in performance under this Agreement.

 

ARTICLE VRELEASE
OF CUSTODIAL FILES.

 

Section 5.01.  Upon (i) becoming aware of the payment
in full of any Mortgage Loan, (ii) the receipt by the Servicer or the
Subservicer of a notification that payment in full has been escrowed in a
manner customary for such purposes for payment to Certificateholders on the
next applicable Distribution Date, or (iii) in the case of a Mortgage Loan
as to which the related Mortgaged Property is located in California, if the
Servicer or the Subservicer reasonably expects that payment in full will be
received promptly, the Servicer or the Subservicer will promptly notify the
Custodian by a certification (which certification will include (except in the
case of a request for release pursuant to clause (iii) above) a statement
to the effect that all amounts received in connection with such payment that
are required to be deposited in the Custodial Account maintained by the
Servicer or the Subservicer pursuant to the Transfer and Servicing Agreement
have been or will be deposited) of a Servicing Officer and shall request the
Custodian, on the request for release and receipt substantially in the form of Exhibit B-4
(or in a mutually agreeable electronic format acceptable to the Custodian), to
deliver to the Servicer or the Subservicer, as the case may be, the related
Custodial File.  Upon receipt of such
certification and request, the Custodian shall promptly release and send via
overnight mail the related Custodial File within three (3) Business Days
to the Servicer or the Subservicer and the Custodian shall have no further
responsibility with regard to such Custodial File.  If the Servicer or Subservicer does not
request release of a Custodial File with respect to any Mortgage Loan that has
been paid in full, the Master Servicer may submit a request for release to the
Custodian and the Custodian shall deliver the Custodial File to the Master
Servicer.

 

Section 5.02.  The Custodian shall, upon request of the
Master Servicer, the Servicer or the Subservicer and delivery to the Custodian
of a request for release and receipt signed by a Servicing Officer
substantially in the form of Exhibit B-4 (or in a mutually agreeable
electronic format acceptable to the Custodian), release within three (3) Business
Days the related Custodial File held in its possession or control to the Master
Servicer, the Servicer or the Subservicer. 
Such trust receipt shall obligate the Master Servicer or the applicable
Servicer to return the Custodial File to the Custodian when the need therefor
by the Servicer or the Subservicer no longer exists unless the Mortgage Loan
shall be liquidated, in which case, upon receipt of a certificate of a
Servicing Officer similar to that hereinabove specified, the Custodial File
shall be released by the Custodian to the Master Servicer, the Servicer or the
Subservicer.

 

ARTICLE VIFEES OF CUSTODIAN.  ALL FEES OF THE CUSTODIAN FOR ITS SERVICES
UNDER THIS AGREEMENT, AND ANY EXPENSES INCURRED BUT NOT PAID BY THE CUSTODIAN
(INCLUDING BUT NOT LIMITED TO COUNSEL FEES), WILL BE PAID BY THE SELLER ON
BEHALF OF THE DEPOSITOR.  IN THE EVENT
THAT THE SELLER FAILS TO MAKE ANY SUCH PAYMENT, THE CUSTODIAN AGREES THAT IT
WILL CONTINUE TO ACT AS CUSTODIAN HEREUNDER AND PERFORM ITS DUTIES
HEREUNDER, AND IF AFTER A 60-DAY PERIOD THE SELLER

 

8

 

HAS
FAILED TO PAY THE CUSTODIAN’S FEES, THE CUSTODIAN MAY SEEK REPAYMENT OF
SUCH FEES FROM THE TRUST ADMINISTRATOR WHO WILL PAY SUCH FEES FROM AMOUNTS ON
DEPOSIT IN THE COLLECTION ACCOUNT PRIOR TO ANY DISTRIBUTIONS TO NOTEHOLDERS
PURSUANT TO SECTION 5.08 OF THE TRANSFER AND SERVICING AGREEMENT.

 

ARTICLE VIIREMOVAL OF
CUSTODIAN WITH RESPECT TO SOME OR ALL OF THE
MORTGAGE LOANS.  WITH OR WITHOUT
CAUSE, THE INDENTURE TRUSTEE MAY, WITH 60 DAYS’ NOTICE, REMOVE AND DISCHARGE
THE CUSTODIAN FROM THE PERFORMANCE OF ITS DUTIES UNDER THIS AGREEMENT WITH
RESPECT TO ALL OF THE MORTGAGE LOANS BY WRITTEN NOTICE FROM THE INDENTURE
TRUSTEE TO THE CUSTODIAN, WITH A COPY TO THE DEPOSITOR, THE MASTER SERVICER,
THE SERVICER AND THE SUBSERVICER AND DELIVERY OF ALL OUTSTANDING FINAL
CERTIFICATIONS.  HAVING GIVEN NOTICE OF
SUCH REMOVAL, THE INDENTURE TRUSTEE PROMPTLY SHALL, BY WRITTEN INSTRUMENT, WITH
A COPY TO THE DEPOSITOR AND AN ORIGINAL TO THE SUCCESSOR CUSTODIAN OR DOCUMENT
CUSTODIAN, (I) APPOINT A SUCCESSOR CUSTODIAN TO ACT ON BEHALF OF THE INDENTURE
TRUSTEE TO REPLACE THE CUSTODIAN UNDER THIS AGREEMENT, (II) DESIGNATE A
DOCUMENT CUSTODIAN TO RECEIVE THE CUSTODIAL FILES WITH RESPECT TO THE MORTGAGE
LOANS REMOVED FROM THIS AGREEMENT, OR (III) TAKE DELIVERY OF THE CUSTODIAL
FILES.  THE INDENTURE TRUSTEE’S
APPOINTMENT OF A SUCCESSOR CUSTODIAN OR DOCUMENT CUSTODIAN SHALL BE SUBJECT TO
THE CONSENT OF THE DEPOSITOR, WHICH CONSENT SHALL NOT BE UNREASONABLY
WITHHELD.  IN THE EVENT OF ANY SUCH
REMOVAL, THE CUSTODIAN SHALL PROMPTLY TRANSFER TO THE SUCCESSOR CUSTODIAN, AS
DIRECTED, ALL AFFECTED CUSTODIAL FILES. 
IN THE EVENT OF REMOVAL OF THE CUSTODIAN FOR CAUSE AND THE APPOINTMENT
OF A SUCCESSOR CUSTODIAN UNDER THIS AGREEMENT, THE EXPENSES OF TRANSFERRING THE
CUSTODIAL FILES TO THE SUCCESSOR CUSTODIAN SHALL BE AT THE EXPENSE OF THE
CUSTODIAN.  IN THE EVENT OF REMOVAL OF
THE CUSTODIAN WITHOUT CAUSE BY THE INDENTURE TRUSTEE AND THE APPOINTMENT OF A
SUCCESSOR CUSTODIAN UNDER THIS AGREEMENT, THE INDENTURE TRUSTEE SHALL BE RESPONSIBLE
FOR TRANSFERRING THE CUSTODIAL FILES TO THE SUCCESSOR CUSTODIAN.  IN ALL CASES, THE FEES OF THE SUCCESSOR
CUSTODIAN HEREUNDER SHALL BE PAID BY THE SELLER ON BEHALF OF THE DEPOSITOR OR,
IF THE SELLER FAILS TO PAY SUCH FEES, THEN AS PROVIDED IN SECTION 6
HEREOF.  NOTWITHSTANDING THE FOREGOING,
THIS AGREEMENT SHALL REMAIN IN FULL FORCE AND EFFECT WITH RESPECT TO ANY
MORTGAGE LOANS FOR WHICH THIS AGREEMENT IS NOT TERMINATED HEREUNDER.

 

ARTICLE VIIITRANSFER OF
CUSTODIAL FILES UPON TERMINATION.  IF THE CUSTODIAN IS NOTIFIED BY THE INDENTURE
TRUSTEE OR THE TRUST ADMINISTRATOR THAT THE TRANSFER AND SERVICING AGREEMENT
HAS BEEN TERMINATED, UPON WRITTEN REQUEST OF THE INDENTURE TRUSTEE OR THE TRUST
ADMINISTRATOR, AS APPLICABLE, THE CUSTODIAN SHALL RELEASE TO

 

9

 

SUCH
PERSONS AS THE INDENTURE TRUSTEE OR THE TRUST ADMINISTRATOR, AS APPLICABLE,
SHALL DESIGNATE THE CUSTODIAL FILES RELATING TO SUCH MORTGAGE LOANS AS SHALL
HAVE BEEN REQUESTED.

 

ARTICLE IXEXAMINATION
OF CUSTODIAL FILES. 
UPON REASONABLE (BUT IN NO EVENT LESS THAN TWO BUSINESS DAYS) PRIOR
WRITTEN NOTICE TO THE CUSTODIAN, THE SERVICER, THE SUBSERVICER, THE MASTER
SERVICER, THE INDENTURE TRUSTEE AND THE TRUST ADMINISTRATOR AND THEIR AGENTS,
ACCOUNTANTS, ATTORNEYS, AUDITORS AND PROSPECTIVE PURCHASERS WILL BE PERMITTED
DURING THE CUSTODIAN’S NORMAL BUSINESS HOURS TO EXAMINE THE CUSTODIAL FILES,
DOCUMENTS, RECORDS AND OTHER PAPERS IN THE POSSESSION OF OR UNDER THE CONTROL
OF THE CUSTODIAN RELATING TO ANY OR ALL OF THE MORTGAGE LOANS AT THE EXPENSE OF
THE REQUESTING PARTY.

 

ARTICLE XINSURANCE OF
CUSTODIAN.  AT ITS OWN
EXPENSE, THE CUSTODIAN SHALL MAINTAIN AT ALL TIMES DURING THE EXISTENCE OF THIS
AGREEMENT AND KEEP IN FULL FORCE AND EFFECT FIDELITY INSURANCE, THEFT OF
DOCUMENTS INSURANCE, AND ERRORS AND OMISSIONS INSURANCE (WHICH INCLUDES FORGERY
INSURANCE).  ALL SUCH INSURANCE SHALL BE
IN AMOUNTS, WITH STANDARD COVERAGE AND SUBJECT TO DEDUCTIBLES, AS IS CUSTOMARY
FOR INSURANCE TYPICALLY MAINTAINED BY BANKS WHICH ACT AS CUSTODIAN AND IN
AMOUNTS AND WITH INSURANCE COMPANIES REASONABLY ACCEPTABLE TO THE INDENTURE
TRUSTEE OR THE TRUST ADMINISTRATOR.  A
CERTIFICATE OF THE RESPECTIVE INSURER AS TO EACH SUCH POLICY, WITH A COPY OF SUCH
POLICY ATTACHED, SHALL BE FURNISHED TO THE INDENTURE TRUSTEE AND THE TRUST
ADMINISTRATOR, UPON REQUEST, CONTAINING THE STATEMENT OF THE INSURER OR
ENDORSEMENT EVIDENCING THAT SUCH INSURANCE SHALL NOT TERMINATE PRIOR TO RECEIPT
BY THE INDENTURE TRUSTEE AND/OR THE TRUST ADMINISTRATOR, BY REGISTERED MAIL, OF
30 DAYS’ PRIOR WRITTEN NOTICE THEREOF.

 

ARTICLE XICOUNTERPARTS.  FOR THE PURPOSE OF FACILITATING THE EXECUTION
OF THIS AGREEMENT AS HEREIN PROVIDED AND FOR OTHER PURPOSES, THIS AGREEMENT MAY BE
EXECUTED SIMULTANEOUSLY IN ANY NUMBER OF COUNTERPARTS, EACH OF WHICH
COUNTERPARTS SHALL BE DEEMED TO BE AN ORIGINAL, AND SUCH COUNTERPARTS SHALL
CONSTITUTE ONE AND THE SAME INSTRUMENT.

 

ARTICLE XIIPERIODIC STATEMENTS.  ON OR BEFORE DECEMBER 31 OF EACH YEAR,
OR UPON THE REQUEST OF THE INDENTURE TRUSTEE OR THE TRUST ADMINISTRATOR AT ANY
OTHER TIME, THE CUSTODIAN SHALL PROVIDE TO THE INDENTURE TRUSTEE AND THE TRUST
ADMINISTRATOR A LIST OF ALL THE MORTGAGE LOANS FOR WHICH THE CUSTODIAN HOLDS A
CUSTODIAL FILE PURSUANT TO THIS AGREEMENT. 
SUCH LIST MAY BE IN THE FORM OF A COPY OF THE MORTGAGE LOAN SCHEDULE WITH
MANUAL ADDITIONS AND

 

10

 

DELETIONS
TO SPECIFICALLY DENOTE ANY MORTGAGE LOANS SUBSTITUTED, PAID OFF OR REPURCHASED
SINCE THE DATE OF THIS AGREEMENT.

 

ARTICLE XIIIGOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 OF
THE GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

ARTICLE XIVCOPIES
OF MORTGAGE DOCUMENTS. 
UPON THE WRITTEN REQUEST OF THE MASTER SERVICER, THE SERVICER, THE
SUBSERVICER, THE INDENTURE TRUSTEE OR THE TRUST ADMINISTRATOR AND AT THE
EXPENSE OF THE SELLER, THE CUSTODIAN SHALL PROVIDE THE REQUESTOR WITH COPIES OF
ANY CUSTODIAL FILE.

 

ARTICLE XVNO
ADVERSE INTEREST OF CUSTODIAN.  BY EXECUTION OF THIS AGREEMENT, THE CUSTODIAN
REPRESENTS AND WARRANTS THAT IT CURRENTLY HOLDS, AND DURING THE EXISTENCE OF
THIS AGREEMENT SHALL HOLD, NO ADVERSE INTEREST, BY WAY OF SECURITY OR
OTHERWISE, IN ANY MORTGAGE LOAN, AND HEREBY WAIVES AND RELEASES ANY SUCH
INTEREST WHICH IT MAY HAVE IN ANY MORTGAGE LOAN AS OF THE DATE HEREOF.

 

ARTICLE XVIRESIGNATION
BY CUSTODIAN. 
THE CUSTODIAN MAY RESIGN AS CUSTODIAN UNDER THIS AGREEMENT UPON AT
LEAST 60 DAYS’ NOTICE TO THE DEPOSITOR, THE MASTER SERVICER, THE SERVICER, THE
SUBSERVICER, THE TRUST ADMINISTRATOR AND THE INDENTURE TRUSTEE.  THE COSTS ASSOCIATED WITH THE RESIGNATION OF
THE CUSTODIAN, INCLUDING ALL COSTS ASSOCIATED WITH THE TRANSFER OF THE
CUSTODIAL FILES, SHALL BE BORNE BY THE CUSTODIAN.  IN THE EVENT OF SUCH RESIGNATION, THE
INDENTURE TRUSTEE SHALL PROMPTLY APPOINT A SUCCESSOR CUSTODIAN TO SERVE AS
CUSTODIAN HEREUNDER.  UPON SUCH
APPOINTMENT THE CUSTODIAN SHALL PROMPTLY TRANSFER TO THE SUCCESSOR CUSTODIAN,
AS DIRECTED, ALL CUSTODIAL FILES BEING ADMINISTERED UNDER THIS AGREEMENT.  IF NO SUCCESSOR IS SO APPOINTED AND APPROVED
BY THE END OF SUCH 60-DAY PERIOD, THE CUSTODIAN SHALL DELIVER ALL CUSTODIAL
FILES TO THE INDENTURE TRUSTEE OR ITS DESIGNEE, AS DIRECTED.  THE SELLER SHALL BE RESPONSIBLE FOR THE
PAYMENT OR REIMBURSEMENT OF SUCH SUCCESSOR CUSTODIAN’S REASONABLE FEES AND
EXPENSES IN CONNECTION WITH THE PERFORMANCE OF SUCH SUCCESSOR CUSTODIAN’S
OBLIGATIONS UNDER THIS AGREEMENT.

 

ARTICLE XVIITERM OF
AGREEMENT.  UNLESS TERMINATED
PURSUANT TO SECTION 7, SECTION 8 OR SECTION 16 HEREOF, THIS
AGREEMENT SHALL TERMINATE UPON THE FINAL PAYMENT OR OTHER LIQUIDATION (OR
ADVANCE WITH RESPECT THERETO) OF THE LAST MORTGAGE LOAN OR THE DISPOSITION

 

11

 

OF
ALL PROPERTY ACQUIRED UPON FORECLOSURE OR DEED IN LIEU OF FORECLOSURE OF ANY
MORTGAGE LOAN, AND THE FINAL REMITTANCE OF ALL FUNDS DUE THE INDENTURE TRUSTEE
UNDER THE TRANSFER AND SERVICING AGREEMENT. 
IN SUCH EVENT, ALL REMAINING CUSTODIAL FILES SHALL BE RELEASED IN
ACCORDANCE WITH THE WRITTEN INSTRUCTIONS OF THE INDENTURE TRUSTEE.

 

ARTICLE XVIIINOTICES.  ANY DEMAND, NOTICE, CONSENT, REPORT,
STATEMENT OR ANY OTHER COMMUNICATION HEREUNDER SHALL BE DEEMED TO HAVE BEEN
RECEIVED ON THE DATE DELIVERED TO OR RECEIVED AT THE PREMISES OF THE ADDRESSEE
(AS EVIDENCED, IN THE CASE OF REGISTERED OR CERTIFIED MAIL, BY THE DATE NOTED
ON THE RETURN RECEIPT).  ALL DEMANDS,
NOTICES, CONSENTS, REPORTS, STATEMENTS AND ANY OTHER COMMUNICATIONS HEREUNDER
SHALL BE IN WRITING AND SHALL BE DEEMED TO HAVE BEEN DULY GIVEN IF MAILED, BY
REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR, IF BY OTHER MEANS,
WHEN RECEIVED BY THE RECIPIENT PARTY AT THE ADDRESS SHOWN BELOW, OR AT SUCH
OTHER ADDRESSES AS MAY HEREAFTER BE FURNISHED TO THE OTHER PARTIES BY LIKE
NOTICE:

 

(a)  if to the
Custodian:

 

[                                         ]

 

[                                         ]

 

[                                         ]

 

Attention: 
[                                         ]

 

or such other address as may hereafter be
furnished to the Indenture Trustee in writing by the Custodian;

 

(b)  if to the
Master Servicer:

 

[                                         ]

 

[                                         ]

 

[                                         ]

 

Attention: 
[                                         ]

 

Telephone: 
[                                         ]

 

Facsimile:  
[                                         ]

 

12

 

(c)  if to the
Trust Administrator:

 

[                                         ]

 

[                                         ]

 

[                                         ]

 

Attention: 
[                                         ]

 

Telephone: 
[                                         ]

 

Facsimile:  
[                                         ]

 

(d)  if to the
Indenture Trustee:

 

[                                         ]

 

[                                         ]

 

[                                         ]

 

Attention: 
[                                         ]

 

with a copy to the Depositor and the Seller:

 

Fieldstone Mortgage Investment Corporation

 

11000 Broken Land Parkway, Suite 600

 

Columbia, Maryland 21044

 

Telephone: 
[                                         ]

 

Facsimile:  
[                                         ]

 

13

 

Fieldstone Investment Corporation

 

1100 Broken Land Parkway

 

Columbia, Maryland 21044

 

Telephone: 
(410) 772-7200

 

Facsimile:   (410) 772-7299

 

(e)  if to the
Servicer:

 

Fieldstone Servicing Corp.

 

11000 Broken Land Parkway, Suite 600

 

Columbia, Maryland 21044

 

Telephone: (410) 772-7200

 

Facsimile: 
(410) 772-7299

 

(f)  if to the
Subservicer:

 

[                                         ]

 

[                                         ]

 

[                                         ]

 

Attention: 
[                                         ]

 

Telephone: 
[                                         ]

 

Facsimile:  
[                                         ]

 

ARTICLE XIXSUCCESSORS AND ASSIGNS.  THIS AGREEMENT SHALL INURE TO THE BENEFIT OF
THE SUCCESSORS AND ASSIGNS OF THE PARTIES HERETO, SUBJECT TO THE LIMITATIONS
HEREIN PROVIDED.  THE INDENTURE TRUSTEE
SHALL HAVE THE RIGHT, SUBJECT TO THE TERMS OF THE TRANSFER AND SERVICING
AGREEMENT, WITHOUT THE CONSENT OF THE CUSTODIAN OR THE DEPOSITOR (BUT WITH
NOTICE IN WRITING TO THE CUSTODIAN), TO ASSIGN, IN WHOLE OR IN PART, ITS
INTEREST UNDER THIS AGREEMENT WITH RESPECT TO THE MORTGAGE LOANS TO ONE OR MORE
PARTIES INCLUDING THE DEPOSITOR

 

14

 

AND
AFFILIATES THEREOF, EACH OF WHICH IN TURN MAY ASSIGN ITS INTEREST UNDER
THIS AGREEMENT WITH RESPECT TO THE MORTGAGE LOANS TO ONE OR MORE PARTIES, AND
SUCH PARTIES SHALL SUCCEED TO THE RIGHTS OF THE INDENTURE TRUSTEE UNDER THIS
AGREEMENT WITH RESPECT TO THE APPLICABLE MORTGAGE LOANS.  ALL REFERENCES TO THE INDENTURE TRUSTEE IN
THIS AGREEMENT SHALL BE DEEMED TO INCLUDE ITS ASSIGNEE OR DESIGNEE AND ANY
SUBSEQUENT ASSIGNEE, SPECIFICALLY INCLUDING THE DEPOSITOR AND THE INDENTURE
TRUSTEE.  THE CUSTODIAN SHALL HAVE THE
RIGHT TO ASSIGN, IN WHOLE OR IN PART, ITS INTEREST UNDER THIS AGREEMENT ONLY
WITH THE PRIOR WRITTEN CONSENT OF THE INDENTURE TRUSTEE AND THE DEPOSITOR OR IN
ACCORDANCE WITH SECTION 16 HEREOF.

 

ARTICLE XXLIMITATION ON
LIABILITY.

 

Section 20.01.  None of the Custodian or any of its
directors, officers, agents or employees, shall be liable for any action taken
or omitted to be taken by it or them hereunder or in connection herewith in
good faith and believed (which belief may be based upon the opinion or advice
of counsel selected in the exercise of reasonable care) by it or them to be
within the purview of this Agreement, except for its or their own negligence,
lack of good faith or willful misconduct. 
The Custodian and any director, officer, employee or agent of the
Custodian may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder.  In no event shall the
Custodian or its directors, officers, agents and employees be held liable for
any special, indirect, incidental, punitive or consequential damages resulting
from any action taken or omitted to be taken by it or them hereunder or in
connection herewith even if advised of the possibility of such damages.

 

Section 20.02.  Notwithstanding anything herein to the
contrary, the Custodian agrees to indemnify the Trust, the Master Servicer, the
Servicer, the Subservicer, the Indenture Trustee and each of their respective
officers, directors and agents for any and all liabilities, obligations, losses,
damages, payments, costs or expenses of any kind whatsoever that may be imposed
on, incurred by or asserted against the Trust, the Indenture Trustee, the
Master Servicer, the Servicer or the Subservicer, due to any act or omission by
the Custodian with respect to the Custodial Files which constitutes negligence,
lack of good faith or willful misconduct on the part of the Custodian;
provided, however, that the Custodian shall not be liable to any of the
foregoing Persons for any amount and any portion of any such amount resulting
from the willful misconduct, lack of good faith or negligence of such
Person.  The provisions of this Subsection 20(b) shall
survive the termination of this Custodial Agreement.

 

Section 20.03.  The Custodian and its directors, officers,
employees and agents shall be entitled to indemnification and defense from and
by the Trust for any loss, liability or expense incurred without negligence,
willful misconduct, or bad faith on their part, arising out of, or in
connection with, the acceptance or administration of the custodial arrangement
created hereunder, including the costs and expenses of defending themselves
against any claim or liability in connection with the exercise or performance
of any of their powers or duties hereunder.

 

15

 

ARTICLE XXICUSTODIAN
OBLIGATIONS REGARDING GENUINENESS OF DOCUMENTS.  IN THE ABSENCE OF BAD FAITH ON THE PART OF
THE CUSTODIAN, THE CUSTODIAN MAY CONCLUSIVELY RELY, AS TO THE TRUTH OF THE
STATEMENTS AND THE CORRECTNESS OF THE OPINIONS EXPRESSED THEREIN, UPON ANY
REQUEST, INSTRUCTIONS, CERTIFICATE, OPINION OR OTHER DOCUMENT FURNISHED TO THE
CUSTODIAN, REASONABLY BELIEVED BY THE CUSTODIAN TO BE GENUINE AND TO HAVE BEEN
SIGNED OR PRESENTED BY THE PROPER PARTY OR PARTIES AND CONFORMING TO THE
REQUIREMENTS OF THIS AGREEMENT; PROVIDED THAT
THE PROVISIONS OF THIS SECTION SHALL NOT IN ANY MANNER LIMIT OR REDUCE THE
RESPONSIBILITIES OF THE CUSTODIAN UNDER SECTION 3 HEREOF.

 

ARTICLE XXIISHIPMENT OF
DOCUMENTS.  WRITTEN
INSTRUCTIONS AS TO THE METHOD OF SHIPMENT AND THE SHIPPER(S) THAT THE CUSTODIAN
IS DIRECTED TO UTILIZE IN CONNECTION WITH TRANSMISSION OF MORTGAGE LOAN
DOCUMENTS IN THE PERFORMANCE OF THE CUSTODIAN’S DUTIES HEREUNDER SHALL BE
DELIVERED BY THE DEPOSITOR TO THE CUSTODIAN PRIOR TO ANY SHIPMENT OF ANY
MORTGAGE LOAN DOCUMENTS HEREUNDER.  THE
SELLER WILL ARRANGE FOR THE PROVISION OF SUCH SERVICES AT ITS SOLE COST AND
EXPENSE (OR, AT THE CUSTODIAN’S OPTION, REIMBURSE THE CUSTODIAN FOR ALL COSTS
AND EXPENSES INCURRED BY THE CUSTODIAN CONSISTENT WITH SUCH INSTRUCTIONS) AND
WILL MAINTAIN SUCH INSURANCE AGAINST LOSS OR DAMAGE TO CUSTODIAL FILES AS THE
DEPOSITOR DEEMS APPROPRIATE.  WITHOUT
LIMITING THE GENERALITY OF THE PROVISIONS OF SECTION 20 HEREOF, IT IS
EXPRESSLY AGREED THAT IN NO EVENT SHALL THE CUSTODIAN HAVE ANY LIABILITY FOR
ANY LOSSES OR DAMAGES TO ANY PERSON OR PROPERTY, ARISING OUT OF ACTIONS OF THE
CUSTODIAN PROPERLY TAKEN PURSUANT TO INSTRUCTIONS OF THE INDENTURE TRUSTEE.

 

ARTICLE XXIIIAUTHORIZED
REPRESENTATIVES. 
EACH INDIVIDUAL DESIGNATED AS AN AUTHORIZED REPRESENTATIVE OF THE
CUSTODIAN, THE INDENTURE TRUSTEE, THE TRUST ADMINISTRATOR, THE MASTER SERVICER,
THE SERVICER OR THE SUBSERVICER (AN “AUTHORIZED REPRESENTATIVE”) IS AUTHORIZED
TO GIVE AND RECEIVE NOTICES, REQUESTS AND INSTRUCTIONS AND TO DELIVER NOTES AND
DOCUMENTS IN CONNECTION WITH THIS CUSTODIAL AGREEMENT ON BEHALF OF THE
CUSTODIAN, THE INDENTURE TRUSTEE, THE TRUST ADMINISTRATOR, THE MASTER SERVICER,
THE SERVICER, AND THE SUBSERVICER, RESPECTIVELY, AND THE SPECIMEN SIGNATURE FOR
EACH SUCH AUTHORIZED REPRESENTATIVE OF THE CUSTODIAN, THE INDENTURE TRUSTEE,
THE TRUST ADMINISTRATOR, THE MASTER SERVICER, THE SERVICER AND THE SUBSERVICER
INITIALLY AUTHORIZED HEREUNDER IS SET FORTH ON EXHIBITS C, D-1, D-2, E, F-1 AND
F-2, RESPECTIVELY.  FROM TIME TO TIME,
THE CUSTODIAN, THE INDENTURE TRUSTEE, THE TRUST ADMINISTRATOR, THE MASTER
SERVICER, THE SERVICER OR THE SUBSERVICER MAY, BY DELIVERING TO THE OTHERS A
REVISED EXHIBIT, CHANGE THE INFORMATION PREVIOUSLY GIVEN PURSUANT TO THIS
SECTION, BUT EACH OF

 

16

 

THE
PARTIES HERETO SHALL BE ENTITLED TO RELY CONCLUSIVELY ON THE THEN CURRENT EXHIBIT UNTIL
RECEIPT OF A SUPERSEDING EXHIBIT.

 

ARTICLE XXIVAMENDMENTS.  THIS AGREEMENT MAY BE AMENDED OR
MODIFIED FROM TIME TO TIME BY THE INDENTURE TRUSTEE AND THE CUSTODIAN IN
WRITING, WITH PRIOR NOTICE TO THE MASTER SERVICER, THE SERVICER AND THE
DEPOSITOR.  IN THE EVENT OF AN AMENDMENT
TO THE TRANSFER AND SERVICING AGREEMENT, THE SERVICER SHALL PROVIDE A COPY OF
SUCH AMENDMENT TO THE CUSTODIAN.  NO
AMENDMENTS OR MODIFICATIONS TO THE TRANSFER AND SERVICING AGREEMENT THAT HAVE
AN IMPACT ON THIS AGREEMENT SHALL BE EFFECTIVE UNLESS AGREED TO IN WRITING BY
THE CUSTODIAN.

 

ARTICLE XXVLIMITED ROLE OF OWNER
TRUSTEE; SUCCESSOR OWNER TRUSTEE.

 

Section 25.01.  The execution and delivery of this Agreement
by the undersigned Owner Trustee on behalf of the Issuer is solely and strictly
in its capacity as Owner Trustee under the Trust Agreement and not
individually, and has been undertaken at the direction of the Depositor.  It is hereby expressly acknowledged that any
obligations, liabilities, covenants, duties, representations and warranties
hereunder are those of the Issuer only, and not those of the Owner Trustee and
[                                               ]
in its individual capacity.  There shall
be no individual or corporate liability against or on the part of the Owner
Trustee (or any of its officers, directors or employees) under this Agreement,
and there shall be no recourse against the Owner Trustee in its individual or
corporate capacity (or any of its directors, officers or employees), or against
any of its properties or assets, for recovery of or as a result of any claim,
debt, liability or obligation (whether of payment or performance) of or against
the Issuer or the Owner Trustee under or pursuant to this Agreement (whether
arising out of or relating to any covenant, agreement, representation or
warranty, or otherwise).  Recourse
against the Owner Trustee for any claims, liabilities, debts or obligations
under this Agreement is limited to the assets and properties of the trust
established by the Trust Agreement.

 

Section 25.02.  It is hereby acknowledged that the rights and
remedies of the Owner Trustee under or pursuant to this Agreement shall
automatically be transferred to and vest in any successor trustee under the
Trust Agreement, in the event of the resignation or removal of the Owner
Trustee as owner trustee thereunder.

 

17

 

ARTICLE XXVIELIGIBILITY
REQUIREMENTS FOR THE CUSTODIAN. 
THE CUSTODIAN AND ANY SUCCESSOR CUSTODIAN SHALL AT ALL TIMES (I) BE A
DEPOSITORY INSTITUTION SUBJECT TO SUPERVISION OR EXAMINATION BY A FEDERAL OR STATE
AUTHORITY, (II) HAVE A COMBINED CAPITAL AND SURPLUS OF AT LEAST $15,000,000 AND
(III) BE QUALIFIED TO DO BUSINESS IN ALL APPLICABLE JURISDICTIONS IN WHICH IT
ENGAGES IN BUSINESS.  IN CASE AT ANY TIME
THE CUSTODIAN SHALL CEASE TO BE ELIGIBLE IN ACCORDANCE WITH THE PROVISIONS OF
THIS SECTION, THE CUSTODIAN SHALL RESIGN IMMEDIATELY IN THE MANNER AND WITH THE
EFFECT SPECIFIED IN SECTION 16.

 

[SIGNATURE PAGE IMMEDIATELY FOLLOWS]

 

18

 

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

 

 

	
   

  	
  [                                               ],

  
	
   

  	
   

  
	
   

  	
  as Custodian

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
   

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [                                               ],
  not in its individual capacity but solely as Indenture Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
   

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FIELDSTONE MORTGAGE INVESTMENT TRUST,
  SERIES 2005-[    ],

  
	
   

  	
   

  
	
   

  	
  as Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 
  [                                               ],
  not in its individual capacity but solely as Owner Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
   

  
	
   

  	
  Title:

  

 

 

Acknowledged:

 

	
  FIELDSTONE INVESTMENT CORPORATION

  
	
  as Seller

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  
	
  Name:

  
	
   

  
	
  Title:

  
	
   

  
	
   

  
	
  FIELDSTONE MORTGAGE INVESTMENT CORPORATION

  
	
  as Depositor

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  
	
  Name:

  
	
   

  
	
  Title:

  
	
   

  
	
   

  
	
  FIELDSTONE SERVICING CORP.,

  
	
  as Servicer

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  
	
  Name:

  
	
   

  
	
  Title:

  
	
   

  
	
   

  
	
  [                                                         ],

  
	
  as Subservicer

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  
	
  Name:

  
	
   

  
	
  Title:

  

 

 

	
  [                                                         ]

  
	
  as Master Servicer

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  
	
  Name:

  
	
   

  
	
  Title:

  
	
   

  
	
   

  
	
  [                                                         ]

  
	
  as Trust Administrator

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  
	
  Name:

  
	
   

  
	
  Title:

  

 

 

EXHIBIT A

 

MORTGAGE LOAN SCHEDULE

 

A-1

 

EXHIBIT B-1

 

FORM OF INITIAL
CERTIFICATION

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [Date]

  	
   

  

 

[Name and address of Indenture Trustee]

 

 

 

[Name and address of Master Servicer and Trust Administrator]

 

 

 

 

 

Fieldstone Mortgage Investment Corporation

 

11000 Broken Land Parkway, Suite 600

 

Columbia, Maryland  21044

 

 

[Name and address of Subservicer]

 

B-1-1

 

Fieldstone Servicing Corp.

 

11000 Broken Land Parkway, Suite 600

 

Columbia, Maryland 21044

 

 

	
  Re:

  	
  Custodial Agreement, dated as of
  [               ], 2005 (the “Custodial Agreement”),
  among
  [                                               ],
  as Indenture Trustee, Fieldstone Mortgage Investment Trust, Series 2005-[   ], as Issuer, and
  [                             ],
  as Custodian, with respect to Fieldstone Mortgage Investment Trust, Series 2005-[     ] Mortgage-Backed Notes 

  

 

Ladies and Gentlemen:

 

In accordance with Section 3(a) of
the Custodial Agreement, subject to review of the contents thereof, the
undersigned, as Custodian, hereby certifies that it has received the applicable
documents listed in Section 2 of the Custodial Agreement for each
Custodial File pertaining to each Mortgage Loan listed on Exhibit A to the
Custodial Agreement, subject to any exceptions noted on Schedule I hereto.

 

Capitalized words and phrases used herein and
not otherwise defined herein shall have the respective meanings assigned to
them in the Custodial Agreement.  This
Certification is subject in all respects to the terms of Section 3 of the
Custodial Agreement and the Custodial Agreement sections cross-referenced
therein.

 

B-1-2

 

	
   

  	
  [                                                                  ],
  as Custodian

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
   

  
	
   

  	
  Title:

  

 

B-1-3

 

EXHIBIT B-2

 

FORM OF INTERIM
CERTIFICATION

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [Date]

  	
   

  

 

[Name and address of Indenture Trustee]

 

 

 

[Name and address of Master Servicer and Trust Administrator]

 

 

 

 

 

Fieldstone Mortgage Investment Corporation

 

11000 Broken Land Parkway, Suite 600

 

Columbia, Maryland  21044

 

B-2-1

 

[Name and address of Subservicer]

 

 

 

Fieldstone Servicing Corp.

 

11000 Broken Land Parkway, Suite 600

 

Columbia, Maryland 21044

 

	
  Re:

  	
  Custodial Agreement, dated as of
  [               ], 2005 (the “Custodial Agreement”),
  among
  [                                               ],
  as Indenture Trustee, Fieldstone Mortgage Investment Trust, Series 2005-[     ],
  as Issuer, and
  [                             ],
  as Custodian, with respect to Fieldstone Mortgage Investment Trust, Series 2005-[     ]
  Mortgage-Backed Notes

  

 

Ladies and Gentlemen:

 

In accordance with Section 3(b) of
the Custodial Agreement, the undersigned, as Custodian, hereby certifies that
as to each Mortgage Loan listed in the Mortgage Loan Schedule (other than
any Mortgage Loan paid in full or listed on Schedule I hereto) it has
received the applicable documents listed in Section 2 of the Custodial
Agreement.

 

The undersigned hereby certifies that as to
each Mortgage Loan identified on the Mortgage Loan Schedule, other than any
Mortgage Loan listed on Schedule I hereto, it has reviewed the documents
listed in Section 2 of the Custodial Agreement and has determined that
each such document appears regular on its face and to contain the required
signatures by or on behalf of the mortgagor and the mortgagee and appears to
relate to the Mortgage Loan identified in such document.  Such Interim Certification shall supersede
the Initial Certification relating to the same Custodial File.

 

Capitalized words and phrases used herein
shall have the respective meanings assigned to them in the Custodial
Agreement.  This Certificate is qualified
in all respects by the terms of the Custodial Agreement including, but not
limited to, Section 3.

 

B-2-2

 

	
   

  	
  [                                                                  ],
  as Custodian

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
   

  
	
   

  	
  Title:

  

 

B-2-3

 

EXHIBIT B-3

 

FORM OF FINAL
CERTIFICATION

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [Date]

  	
   

  

 

[Name and address of Indenture Trustee]

 

 

 

[Name and address of Master Servicer and Trust Administrator]

 

 

 

 

 

Fieldstone Mortgage Investment Corporation

 

11000 Broken Land Parkway, Suite 600

 

Columbia, Maryland  21044

 

[Name and address of Subservicer]

 

B-3-1

 

Fieldstone Servicing Corp.

 

11000 Broken Land Parkway, Suite 600

 

Columbia, Maryland 21044

 

	
  Re:

  	
  Custodial Agreement, dated as of
  [               ], 2005 (the “Custodial Agreement”),
  among
  [                                               ],
  as Indenture Trustee, Fieldstone Mortgage Investment Trust, Series 2005-[     ],
  as Issuer, and
  [                             ],
  as Custodian, with respect to Fieldstone Mortgage Investment Trust, Series 2005-[     ]
  Mortgage-Backed Notes

  

 

Ladies and Gentlemen:

 

In accordance with Section 3(d) of
the Custodial Agreement, the undersigned, as Custodian, hereby certifies that
as to each Mortgage Loan listed in the Mortgage Loan Schedule (other than
any Mortgage Loan paid in full or listed on Schedule I hereto) it has
received the applicable documents listed in Section 2 of the Custodial
Agreement.

 

The undersigned hereby certifies that as to
each Mortgage Loan identified in the Mortgage Loan Schedule, other than any
Mortgage Loan listed on Schedule I hereto, it has reviewed the documents
listed in Section 2 of the Custodial Agreement and has determined that
each such document appears to be complete and, based on an examination of such
documents, the information set forth in items (i) through (v) of the
definition of Mortgage Loan Schedule is correct.  This Final Certification shall supersede all
Initial and Interim Certifications relating to the same Custodial File.

 

Capitalized words and phrases used herein
shall have the respective meanings assigned to them in the Custodial
Agreement.  This Certificate is qualified
in all respects by the terms of the Custodial Agreement.

 

B-3-2

 

	
   

  	
  [                                                                  ],
  as Custodian

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
   

  
	
   

  	
  Title:

  

 

B-3-3

 

EXHIBIT B-4

 

FORM OF REQUEST FOR
RELEASE OF DOCUMENTS AND RECEIPT

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [Date]

  	
   

  

 

 

[Name and address of Custodian]

 

 

 

Attention:  Operations Manager
(Fieldstone 2005-[   ])

 

 

In connection with the administration of the
mortgages held by you as Custodian under that certain Custodial Agreement dated
as of
[                       ], 2005 (the “Custodial Agreement”), among
[                       ],
as Indenture Trustee, Fieldstone Mortgage Investment Trust, Series 2005-[   ], as Issuer, and you, as Custodian, the
undersigned Master Servicer, Servicer or Subservicer hereby requests a release
of the Mortgage File held by you as Custodian with respect to the following
described Mortgage Loan for the reason indicated below.

 

Mortgagor’s Name:

 

 

 

Address:

 

 

 

Loan No.:

 

 

 

Reason for requesting file:

 

B-4-1

 

1.                                       Mortgage Loan
paid in full.  The Master Servicer
[or Servicer or Subservicer] hereby certifies that all amounts received in
connection with the loan have been or will be credited to the Custodial Account
and remitted to the Trust Administrator for deposit into the Collection Account
pursuant to the Transfer and Servicing Agreement.

 

2.                                       The Mortgage
Loan is being foreclosed.

 

3.                                       Mortgage Loan
substituted.  The Master Servicer [or
Servicer or Subservicer] hereby certifies that a Qualifying Substitute Mortgage
Loan has been assigned and delivered to you along with the related Mortgage
File pursuant to the Transfer and Servicing Agreement.

 

4.                                       Mortgage Loan
repurchased.  The Master Servicer [or
Servicer or Subservicer] hereby certifies that the Purchase Price has been
credited to the Collection Account (or the Custodial Account) and remitted to
the Indenture Trustee and/or the Owner Trustee for deposit into the Collection
Account and/or the Certificate Account (whichever is applicable) pursuant to
the Transfer and Servicing Agreement.

 

5.                                       Other.  (Describe)

 

The undersigned acknowledges that the above
Custodial File will be held by the undersigned in accordance with the
provisions of the Transfer and Servicing Agreement and will be returned to you
within ten (10) days of our receipt of such Custodial File, except if the
Mortgage Loan has been paid in full, repurchased or substituted for a
Qualifying Substitute Mortgage Loan (in which case the Custodial File will be
retained by us permanently) and except if the Mortgage Loan is being foreclosed
(in which case the Custodial File will be returned when no longer required by
us for such purpose).

 

Capitalized terms used herein shall have the
meanings ascribed to them in the Custodial Agreement.

 

	
   

  	
   

  	
   

  
	
   

  	
  Name of Master Servicer [or Servicer or

  
	
   

  	
  Subservicer]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
   

  
	
   

  	
  Title: Servicing Officer

  
				

 

B-4-2

 

EXHIBIT B-5

 

FORM OF LOST NOTE
AFFIDAVIT AND AGREEMENT

 

I,                                                                                   ,
being duly sworn, do hereby state under oath that:

 

1.                                       I am a duly
elected                                             
of Fieldstone Mortgage Investment Corporation (the “Company”) and am duly
authorized to make this affidavit.

 

2.                                       This affidavit
is being delivered in connection with the transfer of the Mortgage Loan
described in Paragraph 3 hereof by the Company pursuant to the Transfer and
Servicing Agreement, dated as of
[                        ], 2005, among Fieldstone Mortgage
Investment Corporation, as Depositor,
[                        ],
as Trust Administrator and Master Servicer,
[                        ],
as Indenture Trustee, Fieldstone Servicing Corp., as Servicer,
[                        ],
as Subservicer, and Fieldstone Investment Corporation, as Seller, relating to
the Fieldstone Mortgage Investment Trust, Series 2005-[    ] Mortgage-Backed Notes (the “Agreement”).

 

3.                                       The                             
is the payee under the following described Mortgage Note (“Mortgage Note”)
which evidences the obligation of the borrower(s) to repay the Mortgage Loan:

 

Loan Number:                                                                     

 

Mortgage Note Date:                                                          

 

Borrower(s):                                                                       

 

Original Payee (if not the Company):                       

 

Original Amount:                                                                

 

Mortgage Rate:                                                                   

 

Address of Mortgaged Property:                                   

 

                                                                                                

 

4.                                       The Company is
the lawful owner of the Mortgage Note and has not cancelled, altered, assigned
or hypothecated the Mortgage Note.

 

B-5-1

 

5.                                       A thorough and
diligent search for the executed original Mortgage Note was undertaken and was
unsuccessful.

 

6.                                       Attached hereto
is a true and correct copy of the Mortgage Note.

 

7.                                       The Mortgage
Note has not been endorsed by the Company in any manner inconsistent with its
transfer of the Mortgage Loan under the Mortgage Loan Purchase Agreement.

 

8.                                       Without limiting
the generality of the rights and remedies of the Indenture Trustee contained in
the Agreement, the Company hereby confirms and agrees that in the event the
inability to produce the executed original Mortgage Note results in a breach of
the representations, warranties and covenants appearing in Section 3.2 of
the Mortgage Loan Purchase Agreement and Section 3.01 of the Agreement,
the Company shall repurchase the Mortgage Loan at the Purchase Price and
otherwise in accordance with Section 3.03 of the Agreement.  In addition, the Company covenants and agrees
to indemnify the Indenture Trustee and the Trust from and hold them harmless
against any and all losses, liabilities, damages, claims or expenses (other
than those resulting from negligence or bad faith of the Indenture Trustee)
arising from the Company’s failure to have delivered the Mortgage Note to the
Indenture Trustee, including without limitation any such losses, liabilities,
damages, claims or expenses arising from any action to enforce the indebtedness
evidenced by the Mortgage Note or any claim by any third party who is the
holder of such indebtedness by virtue of possession of the Mortgage Note.

 

9.                                       In the event
that the Company locates the executed original Mortgage Note, it shall promptly
provide the Mortgage Note to the Indenture Trustee.

 

10.                                 Capitalized terms not
otherwise defined herein shall have the meanings given them in the Agreement.

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (signature)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (print name)

  

 

B-5-2

 

	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (print title)

  

 

 

B-5-3

 

EXHIBIT B-6

 

FORM OF ENDORSEMENT

 

Pay to the order of
[                        ],
as indenture trustee (the “Indenture Trustee”) under the Indenture dated as of
[                        ], 2005, relating to Fieldstone
Mortgage Investment Trust, Series 2005-[   
] Mortgage-Backed Notes, without recourse.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  [current signatory on note]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
   

  
	
   

  	
  Title:

  
				

 

 

B-6-1

 

EXHIBIT C

 

AUTHORIZED REPRESENTATIVES OF
THE CUSTODIAN

	
  Name

  	
   

  	
  Signature

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

C-1

 

EXHIBIT D-1

 

AUTHORIZED REPRESENTATIVES OF
THE INDENTURE TRUSTEE

	
  Name

  	
   

  	
  Signature

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

D-1-1

 

EXHIBIT D-2

 

AUTHORIZED REPRESENTATIVES OF
THE TRUST ADMINISTRATOR

	
  Name

  	
   

  	
  Signature

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

D-2-1

 

EXHIBIT E

 

AUTHORIZED REPRESENTATIVES OF
THE MASTER SERVICER

 

	
  Name

  	
   

  	
  Signature

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

E-1

 

EXHIBIT F-1

 

AUTHORIZED
REPRESENTATIVES OF THE SERVICER

 

	
  Name

  	
   

  	
  Signature

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

D-1

 

EXHIBIT F-2

 

AUTHORIZED
REPRESENTATIVES OF THE SUBSERVICER

 

	
  Name

  	
   

  	
  Signature

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

E-2

 

EXHIBIT E

 

CUSTODIAL ACCOUNT LETTER AGREEMENT

 

	
   

  	
   

  	
   

  

 

 

	
  To:

  	
   

  	
   

  
	
   

  	
  

  	
   

  
	
   

  	
  

  	
   

  
	
   

  	
  (the “Depository”)

  	
   

  

 

As Subservicer under the Transfer and
Servicing Agreement dated as of [                 ], 2005 by and among
Fieldstone Mortgage Investment Corporation, as Depositor, you, as Indenture
Trustee, [                       ], as Trust Administrator and
Master Servicer, Fieldstone Mortgage Investment Trust, Series 2005-[ ], as
Issuer, Fieldstone Servicing Corp., as Servicer,              [              ], as Subservicer and Fieldstone
Investment Corporation, as Seller (the “Transfer and Servicing Agreement”), we
hereby authorize and request you to establish an account as a Custodial Account
pursuant to Section 3.03 of the Transfer and Servicing Agreement,
designated as “ [Subservicer] in trust for [                        ], as Indenture Trustee for the
Fieldstone Mortgage Investment Trust, Series 2005-[ ].” All deposits
in the account shall be subject to withdrawal therefrom by order signed by the
Subservicer.  This letter is submitted to
you in duplicate.  Please execute and
return one original to us.

 

	
   

  	
  [                                                                       ]

  
	
   

  	
  Subservicer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  
						

 

E-1

 

The undersigned, as Depository, hereby
certifies that the above described account has been established under Account
Number                               ,
at the office of the Depository indicated above, and agrees to honor
withdrawals on such account as provided above.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Depository

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  
							

 

E-2

 

EXHIBIT F

 

ESCROW ACCOUNT LETTER AGREEMENT

 

                                
      ,           

 

	
  To:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (the
  “Depository”)

  	
   

  

 

As Subservicer under the Transfer and
Servicing Agreement dated as of [         
], 2005 by and among Fieldstone Mortgage Investment Corporation, as
Depositor, you, as Indenture Trustee, [                        ], as Trust
Administrator and Master Servicer, Fieldstone Mortgage Investment Trust, Series 2005-[
], as Issuer, Fieldstone Servicing Corp., as Servicer, [              ], as Subservicer and Fieldstone
Investment Corporation, as Seller (the “Transfer and Servicing Agreement”), we
hereby authorize and request you to establish an account, as an Escrow Account
pursuant to Section 3.05 of the Transfer and Servicing Agreement, to be designated
as “[                  ]
in trust for [                        ],
as Indenture Trustee for the Fieldstone Mortgage Investment Trust, Series 2005-[ ].” All
deposits in the account shall be subject to withdrawal therefrom by order
signed by the Subservicer.  This letter
is submitted to you in duplicate.  Please
execute and return one original to us.

 

 

	
   

  	
  [                                                      ,]

  
	
   

  	
  Subservicer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  
						

 

F-1

 

The undersigned, as Depository, hereby
certifies that the above described account has been established under Account
Number             ,
at the office of the Depository indicated above, and agrees to honor
withdrawals on such account as provided above.

 

	
   

  	
   

  	
   

  
	
   

  	
  Depository

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
						

 

F-2

 

EXHIBIT G-1

 

FORM OF MONTHLY REMITTANCE ADVICE

 

	
  FIELD NAME

  	
   

  	
  DESCRIPTION

  	
   

  	
  FORMAT

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  INVNUM

  	
   

  	
  INVESTOR LOAN NUMBER

  	
   

  	
  Number no decimals

  
	
  SERVNUM

  	
   

  	
  SERVICER LOAN NUMBER, REQUIRED

  	
   

  	
  Number no decimals

  
	
  BEGSCHEDBAL

  	
   

  	
  BEGINNING SCHEDULED BALANCE FOR SCHED/SCHED
  BEGINNING TRAIL BALANCE FOR ACTUAL/ACTUAL, REQUIRED

  	
   

  	
  Number two decimals

  
	
  SCHEDPRIN

  	
   

  	
  SCHEDULED PRINCIPAL AMOUNT FOR
  SCHEDULED/SCHEDULED ACTUAL PRINCIPAL COLLECTED FOR ACTUAL/ACTUAL, REQUIRED,
  .00 IF NO COLLECTIONS

  	
   

  	
  Number two decimals

  
	
  CURT1

  	
   

  	
  CURTAILMENT 1 AMOUNT, .00 IF NOT APPLICABLE

  	
   

  	
  Number two decimals

  
	
  CURT1DATE

  	
   

  	
  CURTAILMENT 1 DATE, BLANK IF NOT APPLICABLE

  	
   

  	
  DD-MM-YY

  
	
  CURTIADJ

  	
   

  	
  CURTAILMENT 1 ADJUSTMENT, .00 IF NOT
  APPLICABLE

  	
   

  	
  Number two decimals

  
	
  CURT2

  	
   

  	
  CURTAILMENT 2 AMOUNT, .00 IF NOT APPLICABLE

  	
   

  	
  Number two decimals

  
	
  CURT2DATE

  	
   

  	
  CURTAILMENT 2 DATE, BLANK IF NOT APPLICABLE

  	
   

  	
  DD-MM-YY

  
	
  CURT2ADJ

  	
   

  	
  CURTAILMENT 2 ADJUSTMENT, .00 IF NOT
  APPLICABLE

  	
   

  	
  Number two decimals

  
	
  LIQPRIN

  	
   

  	
  PAYOFF, LIQUIDATION PRINCIPAL, .00 IF NOT
  APPLICABLE

  	
   

  	
  Number two decimals

  
	
  OTHPRIN

  	
   

  	
  OTHER PRINCIPAL, .00 IF NOT APPLICABLE

  	
   

  	
  Number two decimals

  
	
  PRINREMIT

  	
   

  	
  TOTAL PRINCIPAL REMITTANCE AMOUNT, .00 IF
  NOT APPLICABLE

  	
   

  	
  Number two decimals

  
	
  INTREMIT

  	
   

  	
  NET INTEREST REMIT, INCLUDE PAYOFF
  INTEREST, .00 IF NOT APPLICABLE

  	
   

  	
  Number two decimals

  
	
  TOTREMIT

  	
   

  	
  TOTAL REMITTANCE AMOUNT, .00 IF NOT
  APPLICABLE

  	
   

  	
  Number two decimals

  
	
  ENDSCHEDBAL

  	
   

  	
  ENDING SCHEDULED BALANCE FOR
  SCHEDULED/SCHEDULED ENDING TRIAL BALANCE FOR ACTUAL/ACTUAL .00 IF PAIDOFF,
  LIQUIDATED OR FULL CHARGEOFF

  	
   

  	
  Number two decimals

  
	
  ENDACTBAL

  	
   

  	
  ENDING TRIAL BALANCE .00 IF PAIDOFF,
  LIQUIDATED OR FULL CHARGEOFF

  	
   

  	
  Number two decimals

  
	
  ENDDUEDATE

  	
   

  	
  ENDING ACTUAL DUE DATE, NOT LAST PAID
  INSTALLMENT

  	
   

  	
  DD-MM-YY

  
	
  ACTCODE

  	
   

  	
  60 IF PAIDOFF, BLANK IF NOT APPLICABLE

  	
   

  	
  Number no decimals

  

 

G-1-1

 

	
  ACTDATE

  	
   

  	
  ACTUAL PAYOFF DATE, BLANK IF NOT APPLICABLE

  	
   

  	
  DD-MM-YY

  
	
  INTRATE

  	
   

  	
  INTEREST RATE, REQUIRED

  	
   

  	
  Number seven decimals

  
	
   

  	
   

  	
   

  	
   

  	
  Example .0700000 for 7.00%

  
	
  SFRATE.

  	
   

  	
  SERVICING ADMINISTRATION FEE RATE, REQUIRED

  	
   

  	
  Number seven decimals

  
	
   

  	
   

  	
   

  	
   

  	
  Example .0025000 for .25%

  
	
  PTRATE

  	
   

  	
  PASS THRU RATE, REQUIRED

  	
   

  	
  Number seven decimals

  
	
   

  	
   

  	
   

  	
   

  	
  Example .0675000 for 6.75%

  
	
  PIPMT

  	
   

  	
  P&I CONSTANT, REQUIRED

  	
   

  	
  Number two decimals

  
	
   

  	
   

  	
  .00 IF PAIDOFF

  	
   

  	
   

  

 

G-1-2

 

EXHIBIT G-2

STANDARD LAYOUT FOR MONTHLY DEFAULTED LOAN
REPORT

 

1.                Deal Identifier by
Loan

2.                SBO Loan Number

3.                Loan Number

4.                Investor Loan
Number

5.                Street Address

6.                City

7.                State

8.                Zip Code

9.                Original Loan
Amount

10.          Origination Date

11.          First Payment Date

12.          Current Loan Amount

13.          Current Interest Rate

14.          Current P&I Payment
Amount

15.          [Reserved]

16.          [Reserved]

17.          Next Rate Adjustment
Date

18.          Next Payment Adjustment
Date

19.          Loan Term

20.          Loan Type

21.          [Reserved]

22.          Product Type

23.          Property Type

24.          Ownership Code

25.          Actual Due Date

26.          Delinquency Status

27.          [Reserved]

28.          FC Flag

29.          Date Loan Reinstated

 

G-2-1

 

30.          FC Suspended Date

31.          Reason Suspended

32.          FC Start Date (referral
date)

33.          Actual Notice of Intent
Date

34.          Actual First Legal Date

35.          [Reserved]

36.          Date F/C Sale Scheduled

37.          Foreclosure Actual Sale
Date

38.          Actual Redemption End
Date

39.           Occupancy Status

40.          Occupancy Status Date

41.          Actual Eviction Start
Date

42,        Actual
Eviction Complete Date

43.          Loss Mit Workstation
Status

44.         Loss Mit Flag

45.         Loss Mit Type

46.          Loss Mit Start Date

47.          Loss Mit Approval Date

48.          Loss Mit Removal Date

49.          REO Flag

50.          Actual REO Start Date

51.           REO List Date

52.           REO List Price

53.          Date REO Offer Received

54.          Date REO Offer Accepted

55.          REO Scheduled Close Date

56.          REO Actual Closing Date

57.          REO Net Sales proceeds

58.         REO Sales Price

59.          Paid Off Code

60.          Paid in Full Date

61.          MI Certificate Number

62.          [Reserved]

 

G-2-2

 

63.          [Reserved]

64.          [Reserved]

65.          [Reserved]

66.          [Reserved]

67.          [Reserved]

68.           [Reserved]

69.           [Reserved]

70.         [Reserved]

71.          [Reserved]

72.          Actual Claim Filed Date

73.          Actual
Claim Amount Filed

74.          Claim
Amount Paid

75.          Claim
Funds Received Date

76.          Realized
Gain or Loss

77.          BK
Flag

78.          Bankruptcy
Chapter

79.          Actual
Bankruptcy Start Date

80.          Actual
Payment Plan Start Date

81.          Actual Payment Plan End
Date

82.           Date POC Filed

83.           Date Filed Relief/Dismissal

84.          Relief/Dismissal Hearing
Date

85.           Date Relief/Dismissal
Granted

86.           Post Petition Due Date

87.          Prepayment Flag

88.          Prepayment Waived

89.          Prepayment Premium
Collected

90.          Partial Prepayment
Amount Collected

91.           Prepayment Expiration
Date

92.          Origination Value Date

93.           Origination Value
Source

94.          Original Value Amount

95.           FC Valuation Amount

 

G-2-3

 

96.          FC Valuation Source

97.           FC Valuation Date

98.          REO Value Source

99.          REO Value(As-is)

100.     REO
Repaired Value

101.     REO
Value Date

102.    Investor/Security
Billing Date Sent

 

G-2-4

 

EXHIBIT G-3

 

Form 332
Realized Loss Report
[Master
Servicer]

 

Purpose

 

To provide the Servicer with a form for the
calculation of any Realized Loss (or gain) as a result of a Mortgage Loan
having been foreclosed and Liquidated.

 

Distribution

 

The Servicer will prepare the form in
duplicate and send the original together with evidence of conveyance of title
and appropriate supporting documentation to the Master Servicer with the
Monthly Accounting Reports which supports the Mortgage Loan’s removal from the
Mortgage Loan Activity Report.  The
Servicer will retain the duplicate for its own records.

 

Due Date

 

With respect to any liquidated Mortgage Loan,
the form Will be submitted to the Master Servicer no later than the date on
which statements are due to the Master Servicer under Section 4.02 of this
Agreement (the “Statement Date”) in the month following receipt of final
liquidation proceeds and supporting documentation relating to such liquidated
Mortgage Loan; provided, that if such Statement Date is not at least 30 days
after receipt of final liquidation proceeds and supporting documentation
relating to such liquidated Mortgage Loan, then the form will be submitted on
the first Statement Date occurring after the 30th day following receipt of
final liquidation proceeds and supporting documentation.

 

Preparation Instructions

 

The numbers on the form correspond with the
numbers listed below.

 

1.                                       The
actual Unpaid Principal Balance of the Mortgage Loan.

 

2.                                       The
Total Interest Due less the aggregate amount of servicing fee that would have
been earned if all delinquent payments had been made as agreed.

 

3-7.                             Complete
as necessary.  All line entries must be
supported by copies of appropriate statements, vouchers, receipts, canceled
checks, etc., to document the expense. 
Entries not properly documented will not be reimbursed to the Servicer.

 

8.                                       Accrued
Servicing Fees based upon the Stated Principal Balance of the Mortgage Loan as
calculated on a monthly basis.

 

10.                                 The
total of lines 1 through 9.

 

G-3-1

 

Credits

 

11-17.                 Complete as
necessary.  All line entries must be
supported by copies of the appropriate claims forms, statements, payment
checks, etc. to document the credit.  If
the Mortgage Loan is subject to a Bankruptcy Deficiency, the difference between
the Unpaid Principal Balance of the Note prior to the Bankruptcy Deficiency and
the Unpaid Principal Balance as reduced by the Bankruptcy Deficiency should be
input on line 16.

 

18.                                 The total of lines 11
through 17.

 

Total Realized Loss (or Amount of Any Gain)

 

19.                                 The
total derived from subtracting line 18 from 10. 
If the amount represents a realized gain, show the amount in
parenthesis ( ).

 

G-3-2

 

[Master Servicer]

CALCULATION OF REALIZED LOSS

 

	
   

  	
  [                                           ]

  	
  Trust:

  	
   

  	
   

  
	
   

  	
  Prepared by:

  	
   

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
  Phone:

  	
   

  	
   

  	
   

  
											

 

	
  Servicer Loan No.

  	
   

  	
  Servicer Name

  	
   

  	
  Servicer Address

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  [Master
  Servicer and Trust Administrator]

  
	
  Loan No.

  	
   

  	
   

  
	
  Borrower’s
  Name:

  	
   

  	
   

  
	
  Property

  
	
  Address:

  	
   

  	
   

  
					

 

	
  Liquidation and Acquisition Expenses:

  	
   

  	
   

  	
   

  
	
  Actual Unpaid Principal Balance of Mortgage
  Loan

  	
   

  	
  $

  	
   

  	
  (1)

  
	
  Interest accrued at Net Rate

  	
   

  	
   

  	
  (2)

  
	
  Attorney’s Fees

  	
   

  	
   

  	
  (3)

  
	
  Taxes

  	
   

  	
   

  	
  (4)

  
	
  Property Maintenance

  	
   

  	
   

  	
  (5)

  
	
  MI/Hazard Insurance Premiums

  	
   

  	
   

  	
  (6)

  
	
  Hazard Loss Expenses

  	
   

  	
   

  	
  (7)

  
	
  Accrued Servicing Fees

  	
   

  	
   

  	
  (8)

  
	
  Other (itemize)

  	
   

  	
   

  	
  (9)

  
	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total Expenses

  	
   

  	
  $

  	
   

  	
  (10)

  
	
  Credits:

  	
   

  	
   

  	
   

  
	
  Escrow Balance

  	
   

  	
  $

  	
   

  	
  (11)

  
	
  HIP Refund

  	
   

  	
   

  	
  (12)

  
	
  Rental Receipts

  	
   

  	
   

  	
  (13)

  
	
  Hazard Loss Proceeds

  	
   

  	
   

  	
  (14)

  
	
  Primary Mortgage Insurance Proceeds

  	
   

  	
   

  	
  (15)

  
	
  Proceeds from Sale of Acquired Property

  	
   

  	
   

  	
  (16)

  
	
  Other (itemize)

  	
   

  	
   

  	
  (17)

  
	
  Total Credits

  	
   

  	
  $

  	
   

  	
  (18)

  
	
  Total Realized Loss (or of Gain)

  	
   

  	
  $

  	
   

  	
  (19)

  

 

Data must be submitted to [Master
Servicer and Trust Administrator] in an Excel spreadsheet format with fixed
field names and data type.  The Excel
spreadsheet should be used as a template consistently every month when submitting data for all
loans that are 60 days + delinquent and/or in bankruptcy, foreclosure or REO.

 

G-3-3

 

Table:  Delinquency

 

	
  Name

  	
   

  	
  Type

  	
   

  	
  Max Character Size

  	
   

  
	
  Servicer Loan #

  	
   

  	
  Number

  	
   

  	
  10

  	
   

  
	
  Investor Loan #

  	
   

  	
  Number

  	
   

  	
  10

  	
   

  
	
  Servicer Investor #

  	
   

  	
  Text

  	
   

  	
  3

  	
   

  
	
  Borrower Name

  	
   

  	
  Text

  	
   

  	
  20

  	
   

  
	
  Address

  	
   

  	
  Text

  	
   

  	
  30

  	
   

  
	
  State

  	
   

  	
  Text

  	
   

  	
  2

  	
   

  
	
  Zip

  	
   

  	
  Text

  	
   

  	
  5

  	
   

  
	
  Due Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Loan Type

  	
   

  	
  Text

  	
   

  	
  8

  	
   

  
	
  BK Filed Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  BK Chapter

  	
   

  	
  Text

  	
   

  	
  6

  	
   

  
	
  BK Case Number

  	
   

  	
  Text

  	
   

  	
  30 Maximum

  	
   

  
	
  Post Petition Due

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Motion for Relief

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Lift of Stay

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  BK Discharge/Dismissal Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Loss Mit Approval Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Loss Mit Type

  	
   

  	
  Text

  	
   

  	
  5

  	
   

  
	
  Loss Mit Code

  	
   

  	
  Number

  	
   

  	
  2

  	
   

  
	
  Loss Mit Estimated Completion Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Loss Mit Actual Completion Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  FC Approval Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  File Referred to Attorney

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  NOD

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Complaint Filed

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Scheduled Sale Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Actual Sale Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  F/C Sale Amount

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  Eviction Start Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Eviction Completed Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  List Price

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  List Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Accepted Offer Price

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  Accepted Offer Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Estimated REO Closing Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Actual REO Sale Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Occupant Code

  	
   

  	
  Text

  	
   

  	
  10

  	
   

  
	
  Property Condition Code

  	
   

  	
  Text

  	
   

  	
  2

  	
   

  
	
  Property Inspection Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Property Value Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Current Property Value

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  Repaired Property Value

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  Current LTV

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  FNMA Delinquent Status Code

  	
   

  	
  Text

  	
   

  	
  2

  	
   

  

 

G-3-4

 

	
  FNMA Delinquent Reason Code

  	
   

  	
  Text

  	
   

  	
  3

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  If applicable:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MI Cancellation Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  MI Claim Filed Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  MI Claim Amount

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  MI Claim Reject Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  MI Claim Resubmit Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  MI Claim Paid Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  MI Claim Amount Paid

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  Pool Claim Filed Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Pool Claim Amount

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  Pool Claim Reject Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Pool Claim Paid Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  Pool Claim Amount Paid

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  Pool Claim Resubmit Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  FHA Part A Claim Filed Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  FHA Part A Claim Amount

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  FHA Part A Claim Paid Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  FHA Part A Claim Paid Amount

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  FHA Part B Claim Filed Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  FHA Part B Claim Amount

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  FHA Part B Claim Paid Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  FHA Part B Claim Paid Amount

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  
	
  VA Claim Filed Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  VA Claim Paid Date

  	
   

  	
  Date/Time

  	
   

  	
  8

  	
   

  
	
  VA Claim Paid Amount

  	
   

  	
  Currency

  	
   

  	
  8

  	
   

  

 

The Loss Mit Type field should show the
approved Loss Mitigation arrangement. 
The following are acceptable:

 

	
  •

  	
   

  	
  ASUM-

  	
   

  	
  Approved Assumption

  
	
  •

  	
   

  	
  BAP-

  	
   

  	
  Borrower Assistance Program

  
	
  •

  	
   

  	
  CO-

  	
   

  	
  Charge Off

  
	
  •

  	
   

  	
  DIL-

  	
   

  	
  Deed-in-Lieu

  
	
  •

  	
   

  	
  FFA-

  	
   

  	
  Formal Forbearance Agreement

  
	
  •

  	
   

  	
  MOD-

  	
   

  	
  Loan Modification

  
	
  •

  	
   

  	
  PRE-

  	
   

  	
  Pre-Sale

  
	
  •

  	
   

  	
  SS-

  	
   

  	
  Short Sale

  
	
  •

  	
   

  	
  MISC-

  	
   

  	
  Anything else approved by the PMI or Pool
  Insurer

  

 

[Master Servicer and Trust Administrator]
will accept alternative Loss Mitigation Types to those above, provided that
they are consistent with industry standards. 
If Loss Mitigation Types other than those above are used, the Servicer
must supply [Master Servicer and Trust Administrator] with a description of
each of the Loss Mitigation Types prior to sending the file.

 

G-3-5

 

The Occupant Code field should show the
current status of the property.  The
acceptable codes are:

 

•                                          Mortgagor

 

•                                          Tenant

 

•                                          Unknown

 

•                                          Vacant

 

The Property Condition field should show the
last reported condition of the property. 
The acceptable codes are:

 

•                                          Damaged

 

•                                          Excellent

 

•                                          Fair

 

•                                          Gone

 

•                                          Good

 

•                                          Poor

 

•                                          Special
Hazard

 

•                                          Unknown

 

The FNMA Delinquent Reason Code field should
show the Reason for Default.  The
following FNMA Delinquency Reason Codes to be used are below.

 

	
  Delinquency Code

  	
   

  	
  Delinquency Description

  
	
  001

  	
   

  	
  FNMA-Death of principal mortgagor

  
	
  002

  	
   

  	
  FNMA-Illness of principal mortgagor

  
	
  003

  	
   

  	
  FNMA-Illness of mortgagor’s family member

  
	
  004

  	
   

  	
  FNMA-Death of mortgagor’s family member

  
	
  005

  	
   

  	
  FNMA-Marital difficulties

  
	
  006

  	
   

  	
  FNMA-Curtailment of income

  
	
  007

  	
   

  	
  FNMA-Excessive Obligation

  
	
  008

  	
   

  	
  FNMA-Abandonment of property

  
	
  009

  	
   

  	
  FNMA-Distant employee transfer

  
	
  011

  	
   

  	
  FNMA-Property problem

  
	
  012

  	
   

  	
  FNMA-Inability to sell property

  
	
  013

  	
   

  	
  FNMA-Inability to rent property

  
	
  014

  	
   

  	
  FNMA-Military Service

  
	
  015

  	
   

  	
  FNMA-Other

  

 

G-3-6

 

	
  016

  	
   

  	
  FNMA-Unemployment

  
	
  017

  	
   

  	
  FNMA-Business failure

  
	
  019

  	
   

  	
  FNMA-Casualty loss

  
	
  022

  	
   

  	
  FNMA-Energy environment costs

  
	
  023

  	
   

  	
  FNMA-Servicing problems

  
	
  026

  	
   

  	
  FNMA-Payment adjustment

  
	
  027

  	
   

  	
  FNMA-Payment dispute

  
	
  029

  	
   

  	
  FNMA-Transfer of ownership pending

  
	
  030

  	
   

  	
  FNMA-Fraud

  
	
  031

  	
   

  	
  FNMA-Unable to contact borrower

  
	
  INC

  	
   

  	
  FNMA-Incarceration

  

 

The FNMA Delinquent Status Code field should
show the Status of Default.  The
following FNMA Delinquency Status Codes to be used are below.

 

	
  Status Code

  	
   

  	
  Status Description

  
	
  09.

  	
   

  	
  Forbearance

  
	
  17

  	
   

  	
  Pre-foreclosure Sale Closing Plan Accepted

  
	
  24

  	
   

  	
  Government Seizure

  
	
  26

  	
   

  	
  Refinance

  
	
  27

  	
   

  	
  Assumption

  
	
  28

  	
   

  	
  Modification

  
	
  29

  	
   

  	
  Charge-Off

  
	
  30

  	
   

  	
  Third Party Sale

  
	
  31

  	
   

  	
  Probate

  
	
  32

  	
   

  	
  Military Indulgence

  
	
  43

  	
   

  	
  Foreclosure Started

  
	
  44

  	
   

  	
  Deed-in-Lieu Started

  
	
  49

  	
   

  	
  Assignment Completed

  
	
  61

  	
   

  	
  Second Lien Considerations

  
	
  62

  	
   

  	
  Veteran’s Affairs-No Bid

  
	
  63

  	
   

  	
  Veteran’s Affairs-Refund

  
	
  64

  	
   

  	
  Veteran’s Affairs-Buydown

  
	
  65

  	
   

  	
  Chapter 7 Bankruptcy

  
	
  66

  	
   

  	
  Chapter 11 Bankruptcy

  
	
  67

  	
   

  	
  Chapter 13 Bankruptcy

  

 

G-3-7

 

EXHIBIT H

 

[Subservicer] Form of
Back-Up Certification

 

[Name and address of

master servicer]

 

Re:                               [name of securitization]

 

[                                           ],
as Subservicer hereby certifies to the Seller, the Master Servicer, the
Indenture Trustee, the Trust Administrator and the Servicer that:

 

1.  To
our knowledge, the information in the Annual Statement of Compliance, the
Annual Independent Public Accountant’s Servicing Report and all servicing
reports, officer’s certificates and other information relating to the servicing
of the Mortgage Loans submitted to the Master Servicer 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 such reports;

 

2.  To
our knowledge, the servicing information required to be provided to the Master
Servicer by the Servicer under the Transfer and Servicing Agreement has been
provided to the Master Servicer;

 

3. 
Based upon the review required by the Transfer and Servicing Agreement,
and except as disclosed in the Annual Statement of Compliance or the Annual
Independent Public Accountant’s Servicing Report, the Subservicer has, as of
the last day of the period covered by such reports fulfilled the obligations of
the Servicer under the Transfer and Servicing Agreement; and

 

4.  The
Subservicer has disclosed to the Master Servicer all significant deficiencies
relating to the Subservicer’s compliance with the minimum servicing standards
in accordance with a review conducted in compliance with the Uniform Single
Attestation Program for Mortgage Bankers or similar standard as set forth in
the Transfer and Servicing Agreement.

 

Capitalized terms used but not defined herein
have the meanings ascribed to them in the Transfer and Servicing Agreement,
dated as of [                ], 2005 (the
“Servicing Agreement”), among Fieldstone Mortgage Investment Trust, Series 2005-[ ], as issuer (the “Issuer”),
Fieldstone Mortgage Investment Corporation, as depositor (the “Depositor”),
[              ], as indenture trustee
(the “Indenture Trustee”), Fieldstone Servicing Corp., as servicer (the “Servicer”),
Fieldstone Investment Corporation, as seller (the “Seller”), [                      ], as Subservicer (the “Subservicer”)
and [                            ], as
master servicer (the “Master Servicer”) and trust administrator (the “Trust
Administrator”).

 

H-1

 

	
   

  	
  [                                                        ],
  as Servicer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Date:

  	
   

  
					

 

H-2

 

EXHIBIT I

 

FORM OF SUBSEQUENT TRANSFER AGREEMENT

 

SUBSEQUENT TRANSFER AGREEMENT (the “Agreement”),
dated as of                                       ,
200   by and among Fieldstone Investment Corporation (the “Seller”),
Fieldstone Mortgage Investment Corporation (the “Depositor)”, Fieldstone
Mortgage Investment Trust, Series 2005-[ ] (the “Trust”), [                         ](the “Indenture Trustee”) and
[                               ] (the “Trust
Administrator”) pursuant to the Transfer and Servicing Agreement referred to
below.

 

WITNESSETH:

 

WHEREAS, pursuant to a Transfer and Servicing
Agreement (the “Transfer and Servicing Agreement”), dated as of [                ], 2005, among the Seller, the
Depositor, the Trust, the Indenture Trustee and the Trust Administrator, the
Seller wishes to convey the Subsequent Mortgage Loans (as defined below) to the
Depositor, the Depositor wishes to convey the Subsequent Mortgage Loans to the
Trust, and the Trust wishes to acquire the same for the consideration set forth
in Section IV below; and

 

WHEREAS, the Seller shall timely deliver to
the Indenture Trustee, Trust Administrator and Depositor an Addition Notice
related to such conveyance as required by Section 2.04 of the Transfer and
Servicing Agreement;

 

NOW THEREFORE, the Seller, the Depositor, the
Trust, the Indenture Trustee and the Trust Administrator hereby agree as
follows:

 

Section I.                                              Capitalized
terms used herein shall have the meanings ascribed to them in the Transfer and
Servicing Agreement unless otherwise defined.

 

“Subsequent Mortgage Loans”
shall mean, for purposes of this Agreement, the Subsequent Mortgage Loans
listed in the Subsequent Mortgage Loan Schedule attached hereto as Schedule I.

 

“Subsequent Transfer Date”
shall mean, with respect to the Subsequent Mortgage Loans transferred hereby,
the date hereof.

 

“Subsequent Cut-off Date” shall
mean, with respect to the Subsequent Mortgage Loans transferred hereby, [                                                ].

 

Section II.                                          Subsequent
Mortgage Loan Schedule.  The
Subsequent Mortgage Loan Schedule attached hereto as Schedule I is a
supplement to the Initial Mortgage Loan Schedule attached as Schedule A
to the Transfer and Servicing Agreement. 
The Mortgage Loans listed in the Subsequent Mortgage Loan Schedule constitute
the Subsequent Mortgage Loans to be transferred pursuant to this Agreement on
the Subsequent Transfer Date.

 

Section III.                                      Transfer
of Subsequent Mortgage Loans.  As of
the related Cut-off Date, subject to and upon the terms and conditions set
forth in Sections 2.01, 2.02, 2.04, 3.01, 3.02 and

 

I-1

 

3.03 of the Transfer and
Servicing Agreement and set forth in this Agreement, the Seller hereby
irrevocably sells, transfers, assigns, sets over and otherwise conveys to the
Depositor and the Depositor hereby irrevocably sells, transfers, assigns, sets
over and otherwise conveys to the Trust without recourse other than as
expressly provided herein and in the Transfer and Servicing Agreement, all the
right, title and interest of the Seller and the Depositor in and to the (i) Subsequent
Mortgage Loans including the related Scheduled Principal Balance as of the
subsequent Cut-off Date, all interest accruing thereon after the Subsequent
Cut-off Date, and all collections in respect of principal received after the
Subsequent Cut-off Date; (ii) property which secured a Subsequent Mortgage
Loan and which is acquired by foreclosure or in lieu of foreclosure; (iii) interest
of the Seller in any insurance policies in respect of the Subsequent Mortgage
Loans; and (iv) all proceeds of any of the foregoing.

 

Section IV.                                      Representations
and Warranties of the Seller and the Depositor.  (a) The Seller and the Depositor hereby
represent and warrant to the Trust for the benefit of the Certificateholders
that the representations and warranties of the Seller and the Depositor set
forth in Sections 3.01(a), (b) and (c) of the Transfer and Servicing
Agreement are true and correct with respect to the Seller and the Subsequent
Mortgage Loans as of the Subsequent Transfer Date.

 

(b)                                 The Seller hereby
represents and warrants that (i) the aggregate of the Scheduled Principal
Balances of the Subsequent Mortgage Loans listed on the Subsequent Mortgage
Loan Schedule and conveyed to the Trust pursuant to this Agreement as of
the Subsequent Cut-off Date is $                          and
(ii) the conditions precedent for the transfer of Subsequent Mortgage
Loans set forth in Section 2.04 of the Transfer and Servicing Agreement
have been satisfied as of the Subsequent Transfer Date.

 

(c)                                  The Seller and the
Depositor hereby represent and warrant that neither the Seller nor the
Depositor is (i) insolvent and will not be rendered insolvent by the
transfer of Subsequent Mortgage Loans pursuant to this Agreement or (ii) aware
of any pending insolvency.

 

Section V.                                          Counterparts.  This Agreement may be executed in two or more
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the
same instrument.

 

Section VI.                                      Governing
Law.  This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York, and
the obligations, rights and remedies of the parties hereunder shall be
determined in accordance with such laws without regard to conflict of laws
principles applied in New York (other than Section 5-1401 of the New York
General Obligations Law which shall apply hereto).

 

I-2

 

IN WITNESS WHEREOF, the parties hereto have
caused this agreement to be executed by their respective officers thereunto
authorized as of the date first written above.

 

	
   

  	
  FIELDSTONE MORTGAGE INVESTMENT TRUST,

  
	
   

  	
  SERIES 2005-[ ], as Issuer

  
	
   

  	
   

  
	
   

  	
  By:

  	
  [                                                                          ],

  
	
   

  	
   

  	
  not in its individual capacity

  
	
   

  	
   

  	
  but solely as Owner Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FIELDSTONE MORTGAGE INVESTMENT CORPORATION,

  
	
   

  	
  as Depositor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  [                                                                                       ],
  not

  
	
   

  	
   

  	
  in its individual capacity but solely as
  Indenture

  
	
   

  	
   

  	
  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [                                                                                   ]

  
	
   

  	
  as Trust Administrator and Master Servicer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
										

 

I-3

 

	
   

  	
  FIELDSTONE SERVICING CORP.,

  
	
   

  	
  as Servicer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FIELDSTONE INVESTMENT CORPORATION, as

  
	
   

  	
  Seller

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
							

 

I-4

 

	
  STATE OF

  	
  )

  
	
   

  	
  : ss.:

  
	
  COUNTY OF

  	
  )

  

 

On this       
day of                     ,
before me, personally appeared                           ,
known to me to be a               
of
[                                  ],
a Delaware banking corporation that executed the within instrument, and also
known to me to be the person who executed it on behalf of said corporation, and
acknowledged to me that such corporation executed the within instrument.

 

IN WITNESS WHEREOF, I have hereunto set my
hand and affixed my official seal the day and year in this certificate first
above written.

 

	
   

  	
   

  
	
   

  	
  Notary
  Public

  
	
   

  
	
  [NOTARIAL
  SEAL]

  

 

I-5

 

	
  STATE OF MARYLAND

  	
  )

  
	
   

  	
  : ss.:

  
	
  COUNTY OF HOWARD

  	
  )

  

 

On the      day of                         ,
before me, personally appeared                         ,
known to me to be a                         
of Fieldstone Mortgage Investment Corporation, a corporation that executed the
within instrument and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.

 

IN WITNESS WHEREOF, I have hereunto set my
hand and affixed my official seal the day and year in this certificate first
above written.

 

	
   

  	
   

  
	
   

  	
  Notary
  Public

  
	
   

  
	
  [NOTARIAL
  SEAL]

  

 

I-6

 

	
  STATE OF

  	
  )

  
	
   

  	
  : ss.:

  
	
  COUNTY OF

  	
  )

  

 

On the      day of                         ,
before me, a Notary Public in and for said State, personally appeared                         
known to me to be a                        
of [Indenture Trustee], a [                           ] that executed the
within instrument and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.

 

IN WITNESS WHEREOF, I have hereunto set my
hand and affixed my official seal the day and year in this certificate first
above written.

 

	
   

  	
   

  
	
   

  	
  Notary
  Public

  
	
   

  
	
  [NOTARIAL SEAL]

  

 

I-7

 

	
  STATE OF)

  	
  )

  
	
   

  	
  : ss.:

  
	
  COUNTY OF)

  	
  )

  

 

On the      day of                         ,
before me, a Notary Public in and for said State, personally appeared                         
known to me to be a                         
of [Master Servicer], a  [                  ] that executed the within
instrument and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.

 

IN WITNESS WHEREOF, I have hereunto set my
hand and affixed my official seal the day and year in this certificate first
above written.

 

	
   

  	
   

  
	
   

  	
  Notary
  Public

  
	
   

  
	
  [NOTARIAL
  SEAL]

  

 

I-8

 

	
  STATE OF)

  	
  )

  
	
   

  	
  : ss.:

  
	
  COUNTY OF)

  	
  )

  

 

On the      day of                         ,
before me, a Notary Public in and for said State, personally appeared                         
known to me to be a                         
of Fieldstone Servicing Corp., a corporation that executed the within
instrument and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.

 

IN WITNESS WHEREOF, I have hereunto set my
hand and affixed my official seal the day and year in this certificate first
above written.

 

	
   

  	
   

  
	
   

  	
  Notary
  Public

  
	
   

  
	
  [NOTARIAL
  SEAL]

  

 

I-9

 

EXHIBIT J

 

SUBSEQUENT MORTGAGE LOAN CRITERIA

 

The obligation of the Trust to purchase Subsequent
Mortgage Loans during the Pre-Funding Period is subject to the following
requirements:

 

•                                          such
Subsequent Mortgage Loan may not be more than one calendar month contractually
delinquent as of the related Subsequent Cut-off Date;

 

•                                          such
Subsequent Mortgage Loan may not have a final maturity date later than [                            ];

 

•                                          the
remaining term to stated maturity of such Subsequent Mortgage Loan will not
exceed 30 years;

 

•                                          such
Subsequent Mortgage Loan will have a Mortgage Rate not less than [    ]% per annum;

 

•                                          such
Subsequent Mortgage Loan will not have an original loan-to-value ratio greater
than 100%;

 

•                                          such
Subsequent Mortgage Loan will have a principal balance not greater than $[                  ]

 

•                                          such
Subsequent Mortgage Loan will be secured by a first lien on a Mortgaged
Property; and

 

•                                          such
Subsequent Mortgage Loan will be otherwise acceptable to the Rating Agencies.

 

Following the purchase of such Subsequent
Mortgage Loans by the Trust, the mortgage pool and each Mortgage Group will
have the following characteristics (based upon the characteristics of the (a) Initial
Mortgage Loans as of the Initial Cut-off Date and (b) Subsequent Mortgage
Loans as of the related Subsequent Cut-off Date):

 

Mortgage Pool

 

•                                          a
weighted average current Mortgage Rate of at least [   ]% per annum;

 

•                                          a
weighted average remaining term to stated maturity of less than 360 months;

 

•                                          a
weighted average original loan-to-value ratio of not more than [  ]%;

 

•                                          a
weighted average Credit Score of at least [   
]; and

 

•                                          no
more than [   ]% of the Mortgage Loans by
Aggregate Loan Balance at the end of the Pre-Funding Period will be used for
cash-out refinances.

 

J-1

 

Group 1

 

•                                          a
weighted average current Mortgage Rate of at least [   ]% per annum;

 

•                                          a
weighted average remaining term to stated maturity of less than 360 months;

 

•                                          a
weighted average original loan-to-value ratio of not more than [   ]%; and

 

•                                          no
more than [   ]% of the Group 1 Mortgage
Loans by Aggregate Loan Balance at the end of the Pre-Funding Period will be
used for cash-out refinances.

 

Group 2

 

•                                          a
weighted average current Mortgage Rate of at least [   ]% per annum;

 

•                                          a
weighted average remaining term to stated maturity of less than 360 months;

 

•                                          a
weighted average original loan-to-value ratio of not more than [   ]%; and

 

•                                          no
more than [   ]% of the Group 1 Mortgage
Loans by Aggregate Loan Balance at the end of the Pre-Funding Period will be
used for cash-out refinances.

 

J-2

 

EXHIBIT K

 

FANNIE MAE GUIDE NO. 95-19

 

Reference

 

	
  •

  	
   

  	
  Selling

  	
   

  	
  This announcement amends the guide(s)
  indicated.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  •

  	
   

  	
  Servicing

  	
   

  	
  Please keep it for reference until we issue
  a formal change.

  

 

Subject       “Full-File” Reporting to Credit Repositories

 

Part IV, Section 107, of the
servicing Guide currently requires servicers to report only 90-day
delinquencies to the four major credit repositories.  To ensure that the repositories have
up-to-date information for both servicing and origination activity, we have
decided to begin requiring — as of the month ending March 31, 1996 — servicers
to provide the credit repositories a “full-file” status report for the
mortgages they service for us.

 

“Full-file” reporting requires that servicers
submit a monthly report to each of the credit repositories to describe the
exact status for each mortgage they service for us.  The status reported generally should be the
one in effect as of the last business day of each month.  Servicers may, however, use a slightly later
cut-off date — for example, at the end of the first week of a month — to assure
that payment corrections, returned checks, and other adjustments related to the
previous month’s activity can be appropriately reflected in their report for
that month.  Statuses that must be
reported for any given mortgage include the following:  new origination, current, delinquent (30-, 60-,
90-days, etc.), foreclosed, and charged-off. 
(The credit repositories will provide the applicable codes for reporting
these statuses to them.) A listing of each of the major repositories to which “full-file”
status reports must be sent is attached.

 

Servicers are responsible for the complete
and accurate reporting of mortgage status information to the repositories and
for resolving any disputes that arise about the information they report.  Servicers must respond promptly to any
inquiries from borrowers regarding specific mortgage status information about
them that was reported to the credit repositories.

 

Servicers should contact their Customer
Account Team in their lead Fannie Mae regional office if they have any
questions about this expanded reporting requirement.

 

Robert J. Engeletad

Senior Vice President – Mortgage and Lender Standards

 

11/20/95

 

K-1

 

FANNIE MAE GUIDE 95-19

 

ATTACHMENT I

 

ANNOUNCEMENT

 

Major Credit Repositories

 

A “full-file” status report for each mortgage
serviced for Fannie Mae must be sent to the following repositories each month
(beginning with the month ending March 31, 1996):

 

	
  Company

  	
   

  	
  Telephone Number

  
	
  Consumer Credit Associates, Inc.

  	
   

  	
  Call (713) 595-1190, either
  extension 150, 101, or 112, for all

  
	
  950 Threadneedle
  Street, Suite 200

  	
   

  	
  inquiries.

  
	
  Houston, Texas 77079-2903

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Equifax

  	
   

  	
  Members that have an account number may
  call their local sales representative for all inquiries; lenders that need to
  set up an account should call (800) 685-5000 and select the customer
  assistance option.

  
	
   

  	
   

  	
   

  
	
  TRW Information Systems & Services

  	
   

  	
  Call (800) 831-5614 for all inquiries, current
  members should 

  
	
  601 TRW Parkway

  	
   

  	
  select option 3; lenders that need to set
  up an account should

  
	
  Allen, Texas 75002

  	
   

  	
  select Option 4.

  
	
   

  	
   

  	
   

  
	
  Trans Union Corporation

  	
   

  	
  Call (312) 258-1818 to get the name of the
  local bureau to 

  
	
  555 West Adams

  	
   

  	
  contact about setting up an account or
  obtaining other 

  
	
  Chicago, Illinois 60661

  	
   

  	
  information.

  

 

 

SCHEDULE A

 

MORTGAGE LOAN SCHEDULE

 

 

 

SCHEDULE A-1Exhibit 4.2

 

INDENTURE

 

among

 

FIELDSTONE
MORTGAGE INVESTMENT TRUST, SERIES 2005-[ ],

Issuer

 

 

[                                  ],

Trust
Administrator

 

 

and

 

 

[                                  ],

Indenture
Trustee

 

 

Dated as of [              ],
2005

 

 

TABLE OF CONTENTS

 

 

	
  ARTICLE ONE
  DEFINITIONS AND INCORPORATION BY REFERENCE

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.01.

  	
  Definitions

  	
   

  
	
  Section 1.02.

  	
  Incorporation by Reference of Trust
  Indenture Act

  	
   

  
	
  Section 1.03.

  	
  Rules of Construction

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE TWO
  THE NOTES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.01.

  	
  Form

  	
   

  
	
  Section 2.02.

  	
  Executions Authentication and Delivery

  	
   

  
	
  Section 2.03.

  	
  Limitation on Transfer of Notes

  	
   

  
	
  Section 2.04.

  	
  Registration; Registration of Transfer and
  Exchange

  	
   

  
	
  Section 2.05.

  	
  Mutilated, Destroyed, Lost or Stolen Notes

  	
   

  
	
  Section 2.06.

  	
  Persons Deemed Owners

  	
   

  
	
  Section 2.07.

  	
  Payment of Principal and Interest

  	
   

  
	
  Section 2.08.

  	
  Cancellation

  	
   

  
	
  Section 2.09.

  	
  Release of Collateral

  	
   

  
	
  Section 2.10.

  	
  Book-Entry Notes

  	
   

  
	
  Section 2.11.

  	
  Notices to Clearing Agency

  	
   

  
	
  Section 2.12.

  	
  Definitive Notes

  	
   

  
	
  Section 2.13.

  	
  Tax Treatment

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE THREE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.01.

  	
  Payment of Principal and Interest

  	
   

  
	
  Section 3.02.

  	
  Maintenance of Office or Agency

  	
   

  
	
  Section 3.03.

  	
  Money for Payments to be Held in Trust

  	
   

  
	
  Section 3.04.

  	
  Existence

  	
   

  
	
  Section 3.05.

  	
  Protection of Collateral

  	
   

  
	
  Section 3.06.

  	
  Opinions as to Collateral

  	
   

  
	
  Section 3.07.

  	
  Performance of Obligations

  	
   

  
	
  Section 3.08.

  	
  Negative Covenants

  	
   

  
	
  Section 3.09.

  	
  Annual
  Statement as to Compliance

  	
   

  
	
  Section 3.10.

  	
  Treatment
  of Notes as Debt for Tax Purposes

  	
   

  
	
  Section 3.11.

  	
  [Reserved]

  	
   

  
	
  Section 3.12.

  	
  No
  Other Business

  	
   

  
	
  Section 3.13.

  	
  No
  Borrowing

  	
   

  
	
  Section 3.14.

  	
  [Reserved]

  	
   

  
	
  Section 3.15.

  	
  Guarantees,
  Loans, Advances and Other Liabilities

  	
   

  
	
  Section 3.16.

  	
  Capital
  Expenditures

  	
   

  
	
  Section 3.17.

  	
  Removal
  of Trust Administrator

  	
   

  
	
  Section 3.18.

  	
  Restricted
  Payments

  	
   

  
	
  Section 3.19.

  	
  Notice
  of Events of Default

  	
   

  

 

i

 

	
  Section 3.20.

  	
  Further
  Instruments and Acts

  	
   

  
	
  Section 3.21.

  	
  Covenants
  of the Issuer

  	
   

  
	
  Section 3.22.

  	
  Representations
  and Warranties of the Issuer

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE FOUR SATISFACTION AND DISCHARGE

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.01.

  	
  Satisfaction
  and Discharge of Indenture

  	
   

  
	
  Section 4.02.

  	
  Application
  of Trust Money

  	
   

  
	
  Section 4.03.

  	
  Repayment
  of Moneys Held by Paying Agent

  	
   

  
	
  Section 4.04.

  	
  Trust
  Money Received by Indenture Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE FIVE REMEDIES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.01.

  	
  Events
  of Default

  	
   

  
	
  Section 5.02.

  	
  Acceleration
  of Maturity; Rescission and Annulment

  	
   

  
	
  Section 5.03.

  	
  Collection
  of Indebtedness and Suits for Enforcement by Indenture Trustee

  	
   

  
	
  Section 5.04.

  	
  Remedies;
  Priorities

  	
   

  
	
  Section 5.05.

  	
  Optional
  Preservation of the Collateral

  	
   

  
	
  Section 5.06.

  	
  Limitation
  of Suits

  	
   

  
	
  Section 5.07.

  	
  Unconditional
  Rights of Noteholders To Receive Principal and Interest

  	
   

  
	
  Section 5.08.

  	
  Restoration
  of Rights and Remedies

  	
   

  
	
  Section 5.09.

  	
  Rights
  and Remedies Cumulative

  	
   

  
	
  Section 5.10.

  	
  Delay
  or Omission Not a Waiver

  	
   

  
	
  Section 5.11.

  	
  Control
  by Noteholders

  	
   

  
	
  Section 5.12.

  	
  Waiver
  of Past Defaults

  	
   

  
	
  Section 5.13.

  	
  Undertaking
  for Costs

  	
   

  
	
  Section 5.14.

  	
  Waiver
  of Stay or Extension Laws

  	
   

  
	
  Section 5.15.

  	
  Action
  on Notes

  	
   

  
	
  Section 5.16.

  	
  Performance
  and Enforcement of Certain Obligations

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE SIX THE INDENTURE TRUSTEE

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.01.

  	
  Duties
  of Indenture Trustee

  	
   

  
	
  Section 6.02.

  	
  Rights
  of Indenture Trustee

  	
   

  
	
  Section 6.03.

  	
  Individual
  Rights of Indenture Trustee

  	
   

  
	
  Section 6.04.

  	
  Indenture
  Trustee’s Disclaimer

  	
   

  
	
  Section 6.05.

  	
  Notice
  of Defaults

  	
   

  
	
  Section 6.06.

  	
  Reports
  by Indenture Trustee to Holders

  	
   

  
	
  Section 6.07.

  	
  Compensation
  and Indemnity

  	
   

  
	
  Section 6.08.

  	
  Replacement
  of Indenture Trustee

  	
   

  
	
  Section 6.09.

  	
  Successor
  Indenture Trustee by Merger

  	
   

  
	
  Section 6.10.

  	
  Appointment
  of Co-Indenture Trustee or Separate Indenture Trustee

  	
   

  
	
  Section 6.11.

  	
  Eligibility;
  Disqualification

  	
   

  
	
  Section 6.12.

  	
  Representations
  and Warranties

  	
   

  
	
  Section 6.13.

  	
  Preferential
  Collection of Claims Against Issuer

  	
   

  

 

ii

 

	
  ARTICLE SEVEN NOTEHOLDERS’ LISTS AND REPORTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.01.

  	
  Note
  Registrar To Furnish to the Indenture Trustee the Names and Addresses of
  Noteholders

  	
   

  
	
  Section 7.02.

  	
  Preservation
  of Information: Communications to Noteholders

  	
   

  
	
  Section 7.03.

  	
  Reports
  by Issuer

  	
   

  
	
  Section 7.04.

  	
  Reports
  by Indenture Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE EIGHT ACCOUNTS, DISBURSEMENTS AND RELEASES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.01.

  	
  Collection
  of Money

  	
   

  
	
  Section 8.02.

  	
  Collection
  Account

  	
   

  
	
  Section 8.03.

  	
  Release
  of Collateral

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE NINE SUPPLEMENTAL INDENTURES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.01.

  	
  Supplemental
  Indentures Without Consent of Noteholders

  	
   

  
	
  Section 9.02.

  	
  Supplemental
  Indentures with Consent of Noteholders

  	
   

  
	
  Section 9.03.

  	
  Execution
  of Supplemental Indentures

  	
   

  
	
  Section 9.04.

  	
  Effect
  of Supplemental Indenture

  	
   

  
	
  Section 9.05.

  	
  Conformity
  with Trust Indenture Act

  	
   

  
	
  Section 9.06.

  	
  Reference
  in Notes to Supplemental Indentures

  	
   

  
	
  Section 9.07.

  	
  Opinion
  of Counsel

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE TEN REDEMPTION OF NOTES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 10.01.

  	
  Redemption

  	
   

  
	
  Section 10.02.

  	
  Form of Redemption Notice

  	
   

  
	
  Section 10.03.

  	
  Notes Payable on Redemption Date

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE ELEVEN MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 11.01.

  	
  Compliance Certificates and Opinions, etc

  	
   

  
	
  Section 11.02.

  	
  Form of Documents Delivered to Indenture Trustee

  	
   

  
	
  Section 11.03.

  	
  Acts of Noteholders

  	
   

  
	
  Section 11.04.

  	
  Notices, etc., to Indenture Trustee, Trust Administrator, Issuer and
  Rating Agencies

  	
   

  
	
  Section 11.05.

  	
  Notices to Noteholders; Waiver

  	
   

  
	
  Section 11.06.

  	
  Conflict with Trust Indenture Act

  	
   

  
	
  Section 11.07.

  	
  Effect of Headings and Table of Contents

  	
   

  
	
  Section 11.08.

  	
  Successors and Assigns

  	
   

  
	
  Section 11.09.

  	
  Severability

  	
   

  
	
  Section 11.10.

  	
  Benefits of Indenture and Consents of Noteholders

  	
   

  
	
  Section 11.11.

  	
  Legal Holidays

  	
   

  
	
  Section 11.12.

  	
  Governing Law

  	
   

  
	
  Section 11.13.

  	
  Counterparts

  	
   

  
	
  Section 11.14.

  	
  Recording of Indenture

  	
   

  
	
  Section 11.15.

  	
  Trust Obligations

  	
   

  

 

iii

 

	
  Section 11.16.

  	
  No Petition

  	
   

  
	
  Section 11.17.

  	
  Inspection

  	
   

  

 

EXHIBITS

 

	
  EXHIBIT A

  	
   

  	
  Forms
  of Notes

  
	
  EXHIBIT B

  	
   

  	
  [Reserved]

  
	
  EXHIBIT C

  	
   

  	
  Form of
  ERISA Transfer Affidavit

  

 

iv

 

This
INDENTURE, dated as of [                 ],
2005, is among FIELDSTONE MORTGAGE INVESTMENT TRUST, SERIES 2005-[   ], a Delaware statutory trust (the “Issuer”),
[                                               ],
as Trust Administrator (the “Trust Administrator”) and [                                           ],
a [                                        ],
as indenture trustee and not in its individual capacity (the “Indenture Trustee”).

 

Each party
agrees as follows for the benefit of the other party, for the equal and ratable
benefit of the Holders of the Issuer’s variable rate Notes in the Classes
specified herein (the “Notes”) and the Swap Counterparty:

 

GRANTING CLAUSE

 

The Issuer
hereby Grants to the Indenture Trustee at the Closing Date, as Indenture
Trustee for the benefit of the Holders of the Notes and the Swap Counterparty,
all of the Issuer’s right, title and interest, whether now owned or hereafter
acquired, in and to:  (i) the Trust
Estate (as defined in the Transfer and Servicing Agreement); (ii) the
Issuer’s rights and benefits but none of its obligations under the Transfer and
Servicing Agreement (including the Issuer’s right to cause the Seller to
repurchase Mortgage Loans from the Issuer under the circumstances described
therein); (iii) the Issuer’s rights and benefits but none of its
obligations under the Custodial Agreement; (iv) the Issuer’s rights and
benefits but none of its obligations under the Mortgage Loan Purchase
Agreement; (v) the Trust Account, the Pre-Funding Account and all amounts
and property in the Trust Account and the Pre-Funding Account, and the Security
Entitlements to all Financial Assets credited to such accounts from time to
time; (vi) the Swap Agreement and all payments thereunder; (vii) all
other property of the Trust from time to time; (viii) all present and
future claims, demands, causes of action and choses in action in respect of any
or all of the foregoing and all payments on or under and all proceeds of every
kind and nature whatsoever in respect of any or all of the foregoing, including
all proceeds of the conversion thereof, voluntary or involuntary, into cash or
other liquid property, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind and
other forms of obligations and receivables, instruments and other property
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing; and (ix) all rights of the Trust under the Swap
Agreement (collectively, the “Collateral”).

 

The foregoing
Grant is made in trust to secure the payment of principal of and interest on,
and any other amounts owing in respect of, the Notes, and to secure (i) the
payment of all amounts due on the Notes in accordance with their terms, (ii) the
payment of all other sums payable under the Indenture with respect to the
Notes, and (iii) compliance with the provisions of this Indenture, all as
provided in this Indenture.

 

The Indenture
Trustee, as Indenture Trustee on behalf of the Holders of the Notes and the
Swap Counterparty, acknowledges such Grant, accepts the trusts under this
Indenture in accordance with the provisions of this Indenture and agrees to
perform its duties required of it in this Indenture in accordance with its
terms.

 

1

 

ARTICLE
ONE

DEFINITIONS AND INCORPORATION BY REFERENCE

 

Section 1.01.  Definitions.  (a) Except as otherwise specified herein
or as the context may otherwise require, the following terms have the
respective meanings set forth below for all purposes of this Indenture.

 

[NOTE:  The following definitions and certain
provisions of this Indenture generally include references to the securities
structure and payment terms from a deal involving a notional class and a swap
agreement.  The securities structure is
illustrative of the securities structures that FMIC may include in takedowns
from its shelf-registration statement. 
Please note that this is a different securities structure from that
presented in the accompanying offering document.]

 

Act:                         The
meaning specified in Section 11.03(a).

 

Authorized
Officer:  With
respect to the Issuer, any officer of the Owner Trustee who is authorized to
act for the Owner Trustee in matters relating to the Issuer and who is
identified on the list of Authorized Officers delivered by the Owner Trustee to
the Indenture Trustee on the Closing Date (as such list may be modified or
supplemented from time to time thereafter) and, so long as the Transfer and
Servicing Agreement is in effect, any Vice President, Assistant Vice President,
Trust Officer or more senior officer of the Trust Administrator who is
authorized to act for the Trust Administrator in matters relating to the Issuer
and to be acted upon by the Trust Administrator pursuant to the Transfer and
Servicing Agreement and who is identified on the list of Authorized Officers
delivered by the Trust Administrator to the Indenture Trustee on the Closing
Date (as such list may be modified or supplemented from time to time
thereafter).

 

Book-Entry
Notes: 
Beneficial interests in Notes designated as “Book-Entry Notes” in this
Indenture, ownership and transfers of which shall be evidenced or made through
book entries by a Clearing Agency as described in Section 2.11; provided,
that after the occurrence of a condition whereupon Definitive Notes are to be
issued to Note Owners, such Book-Entry Notes shall no longer be “Book-Entry
Notes.”

 

Certificate of
Trust:  The
certificate of trust of the Issuer substantially in the form of Exhibit C
to the Trust Agreement.

 

Clearing
Agency:  An
organization registered as a “clearing agency” pursuant to Section 17A of
the Exchange Act, as amended.  As of the
Closing Date, the Clearing Agency shall be The Depository Trust Company.

 

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

 

Clearstream:  Clearstream Banking, société anonyme, and any
successor thereto.

 

Collateral:  The meaning specified in the Granting Clause
of this Indenture.

 

2

 

Commission:  The Securities and Exchange Commission.

 

Current
Interest:  As
defined in the Transfer and Servicing Agreement.

 

Default:  Any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.

 

Definitive
Note:  A Note of
any Class issued in definitive, fully registered, certificated form.

 

Depository
Institution: 
Any depository institution or trust company, including the Indenture
Trustee, that (a) is incorporated under the laws of the United States of
America or any State thereof, (b) is subject to supervision and
examination by federal or state banking authorities and (c) has
outstanding unsecured commercial paper or other short-term unsecured debt
obligations that are rated in the highest rating category by each Rating
Agency, or is otherwise acceptable to each Rating Agency.

 

Eligible
Corporation:  A
domestic corporation described in section 860L(a)(2) of the Code that
(i) is not the obligor on any debt instrument held as part of the Trust,
and (ii) is not related, within the meaning of section 860L(g), to
any person who is an obligor on any debt instrument held as part of the Trust.

 

Euroclear:  Euroclear SA/NV, as operator of the Euroclear
System.

 

Event of
Default:  The
meaning specified in Section 5.01.

 

Exchange Act:  The Securities Exchange Act of 1934, as amended.

 

Executive
Officer:  With
respect to any corporation or limited liability company, the Chief Executive
Officer, Chief Operating Officer, Chief Financial Officer, President, Manager,
Executive Vice President, any Vice President, the Secretary or the Treasurer of
such entity; and with respect to any partnership, any general partner thereof.

 

Global
Securities:  The
meaning specified in Section 2.01(a).

 

Grant:  Mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, create, and grant a lien
upon and a security interest in and a right of set-off against, deposit, set
over and confirm pursuant to this Indenture. 
A Grant of the Collateral or of any other agreement or instrument shall
include all rights, powers and options (but none of the obligations) of the
granting party thereunder, including the immediate and continuing right to
claim for, collect, receive and give receipt for principal and interest
payments in respect of the Collateral and all other moneys payable thereunder,
to give and receive notices and other communications, to make waivers or other
agreements, to exercise all rights and options, to bring Proceedings in the
name of the granting party or otherwise, and generally to do and receive
anything that the granting party is or may be entitled to do or receive
thereunder or with respect thereto.

 

3

 

Holder
or Noteholder:  A Person in whose
name a Note is registered on the Note Register.

 

Independent:  When used with respect to any specified
Person, that such Person (a) is in fact independent of the Issuer, any
other obligor on the Notes, the Seller and any Affiliate of any of the
foregoing Persons, (b) does not have any direct financial interest or any
material indirect financial interest in the Issuer, any such other obligor, the
Seller or any Affiliate of any of the foregoing Persons and (c) is not
connected with the Issuer, any such other obligor, the Seller or any Affiliate
of any of the foregoing Persons as an officer, employee, promoter, underwriter,
trustee, partner, director or person performing similar functions.

 

Independent
Certificate:  A
certificate or opinion to be delivered to the Indenture Trustee under the
circumstances described in, and otherwise complying with, the applicable
requirements of Section 11.01, made by an Independent appraiser or other
expert appointed by an Issuer Order and approved by the Indenture Trustee in
the exercise of reasonable care, and such opinion or certificate shall state
that the signer has read the definition of “Independent” in this Indenture and
that the signer is Independent within the meaning thereof.

 

Issuer:  Fieldstone Mortgage Investment Trust, Series 2005-[   ], a Delaware statutory trust, or any
successor and, for purposes of any provision contained herein and required by
the TIA, each other obligor on the Notes.

 

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

 

Non-Priority Class Note:  As of any date of determination, any
Outstanding Note other than the related Notes that comprise the Priority Class Notes.

 

Note:  Any of the Class 1-Al, Class 1-A2, Class 2-Al,
Class 2-A2, Class A-IO, Class Ml, Class M2, Class M3, Class M4,
Class M5, Class M6 and Class M7 Notes issued pursuant to this
Indenture, substantially in the forms attached hereto as Exhibit A.

 

Note Owner or
Owner:  With
respect to a Book-Entry Note, the Person that is the beneficial owner of such
Book-Entry Note, as reflected on the books of the Clearing Agency or on the
books of a Person maintaining an account with such Clearing Agency (directly as
a Clearing Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency), and with respect to a Definitive
Note, the Person that is the registered owner of such Note as reflected in the
Note Register.

 

Note Register:  The meaning specified in Section 2.04.

 

Note Registrar:  The meaning specified in Section 2.04.  The initial Note Registrar shall be the Trust
Administrator.

 

Officer’s
Certificate:  A
certificate signed by any Authorized Officer of the Issuer, under the
circumstances described, in, and otherwise complying with, the applicable
requirements of Section 11.01, and delivered to the Indenture
Trustee.  Unless otherwise specified, any
reference

 

4

 

in this
Indenture to an Officer’s Certificate shall be to an Officer’s Certificate of
any Authorized Officer of the Issuer.

 

Outstanding:  As of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:

 

(i)                                     Notes
theretofore cancelled by the Note Registrar or delivered to the Note Registrar
for cancellation;

 

(ii)                                  Notes
the payment for which money in the necessary amount has been theretofore
deposited with the Trust Administrator or any Paying Agent in trust for the
Holders of such Notes (provided, however,
that if such Notes are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision for such notice has been made,
satisfactory to the Trust Administrator); and

 

(iii)                               Notes
in exchange for or in lieu of which other Notes have been authenticated and
delivered pursuant to this Indenture unless proof satisfactory to the Indenture
Trustee is presented that any such Notes are held by a protected purchaser;

 

provided, that in determining whether the
Holders of the requisite Outstanding Balance of the Notes have given any
request, demand, authorization, direction, notice, consent or waiver hereunder
or under any Operative Agreement, Notes owned by the Issuer, any other obligor
upon the Notes, the Depositor, the Owner Trustee, the Indenture Trustee, the Master
Servicer, any Servicer, the Trust Administrator or any Affiliate of any of the
foregoing Persons shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Indenture Trustee shall be protected in
relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Notes that the Indenture Trustee knows to be so owned
shall be so disregarded (unless such action requires the consent, waiver,
request or demand of 100% of the Outstanding Balance represented by a
particular Class and 100% of the Outstanding Balance represented by such Class is
registered in the name of one or more of the foregoing entities).  Notes so owned that have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Indenture Trustee the pledgee’s right so to act with
respect to such Notes and that the pledgee is not the Issuer, any other obligor
upon the Notes, the Depositor, the Owner Trustee, the Indenture Trustee, the
Master Servicer, any Servicer, the Trust Administrator or any Affiliate of any
of the foregoing Persons.

 

Outstanding
Balance:  The
aggregate principal or notional amount of the Notes Outstanding as of the date
of determination.

 

Paying Agent:  Initially, the Trust Administrator or any
other Person that meets the eligibility standards for the Indenture Trustee
specified in Section 6.11 and is authorized by the Issuer, in accordance
with the provisions of Section 3.03, to make payments to and distributions
from the Trust Account, including payments of principal of or interest on the
Notes on behalf of the Issuer.

 

Predecessor
Note:  With
respect to any particular Note, every previous Note evidencing all or a portion
of the same debt as that evidenced by such particular Note; and, for the
purpose of this definition, any Note authenticated and delivered under Section 2.04
in lieu of a mutilated,

 

5

 

lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.

 

Priority Class Notes:  Until the Class Principal Amounts (or Class Notional
Amounts) of the Senior Notes are reduced to zero and all sums payable to the
Holders of the Senior Notes have been paid in full, the Senior Notes; when the Class Principal
Amounts (or Class Notional Amounts) of the Senior Notes have been reduced
to zero and all amounts payable to the Holders of the Senior Notes have been
paid in full, the Class Ml Notes; when the Class Principal Amounts
(or Class Notional Amounts) of the Senior Notes and the Class Ml
Notes have been reduced to zero and all sums payable to the Holders of such
Classes have been paid in full, the Class M2 Notes; when the Class Principal
Amounts (or Class Notional Amounts) of the Senior Notes, the Class Ml
Notes and the Class M2 Notes have been reduced to zero and all sums
payable to the Holders of such Classes have been paid in full, the Class M3
Notes; when the Class Principal Amounts (or Class Notional Amounts)
of the Senior Notes, the Class Ml Notes, the Class M2 Notes and the Class M3
Notes have been reduced to zero and all sums payable to the Holders of such
Classes have been paid in full, the Class M4 Notes; when the Class Principal
Amounts (or Class Notional Amounts) of the Senior Notes, the Class Ml
Notes, the Class M2 Notes, the Class M3 Notes and the Class M4
Notes have been reduced to zero and all sums payable to the Holders of such
Classes have been paid in full, the Class M5 Notes; when the Class Principal
Amounts (or Class Notional Amounts) of the Senior Notes and the Class Ml
Notes, the Class M2 Notes, the Class M3 Notes, the Class M4
Notes and the Class M5 Notes have been reduced to zero and all sums
payable to the Holders of such Classes have been paid in full, the Class M6
Notes; and when the Class Principal Amounts (or Class Notional
Amounts) of the Senior Notes and the Class Ml Notes, the Class M2
Notes, the Class M3 Notes, the Class M4 Notes, the Class M5
Notes and the Class M6 Notes have been reduced to zero and all sums
payable to the Holders of such Classes have been paid in full, the Class M7
Notes.

 

Proceeding:  Any suit in equity, action at law or other
judicial or administrative proceeding.

 

Prospective
Owner:  Each
prospective purchaser and any subsequent transferee of a Note.

 

Rating Agency
Condition:  With
respect to any action to which the Rating Agency Condition applies, that each
Rating Agency shall have been given 10 days (or such shorter period as is
acceptable to each Rating Agency) prior notice thereof and that each Rating
Agency shall have notified the Depositor, the Issuer and the Indenture Trustee
in writing that such action will not result in a reduction or withdrawal of the
then current rating of the rated Notes.

 

Redemption
Date:  In the
case of a redemption of the Notes pursuant to Section 10.01, the Payment
Date specified by the Indenture Trustee in the notice delivered pursuant to Section 10.02.

 

Responsible
Officer:  Any
officer of the Indenture Trustee with direct responsibility for administration
of the Indenture.

 

6

 

Retained Notes:  Those certain Classes, or portions of certain
Classes, of Notes which, at the time of their issuance, FIC or one of its
qualified REIT subsidiaries acquires beneficial ownership thereof.

 

State:  Any one of the 50 States of the United States
of America or the District of Columbia.

 

Transfer and
Servicing Agreement: 
The Transfer and Servicing Agreement dated as of [                            ],
2005, among the Issuer, Fieldstone Mortgage Investment Corporation, as
depositor, [                                                      ],
as master servicer and trust administrator, [                                                   ],
as indenture trustee, Fieldstone Investment Corporation, as seller, Fieldstone
Servicing Corp., as servicer, and [                                                        ],
as sub-servicer, as such may be amended or supplemented from time to time.

 

Trust
Indenture Act or TIA: 
The Trust Indenture Act of 1939 as in force on the date hereof, unless
otherwise specifically provided.

 

(b)                                 Except
as otherwise specified herein or as the context may otherwise require,
capitalized terms used but not otherwise defined herein shall have the meanings
assigned to them in the Transfer and Servicing Agreement.

 

Section 1.02.  Incorporation by Reference of Trust
Indenture Act.  Whenever this
Indenture refers to a provision of the TIA, the provision is incorporated by
reference in and made a part of this Indenture. 
The following TIA terms used in this Indenture have the following
meanings:

 

“Commission”
means the Securities and Exchange Commission.

 

“indenture
securities” means the Notes.

 

“indenture
security holder” means a Noteholder.

 

“indenture to
be qualified” means this Indenture.

 

“indenture
trustee” or “institutional trustee” means the Indenture Trustee.

 

“obligor” on
the indenture securities means the Issuer and any other obligor on the
indenture securities.

 

(c)                                  All
other TIA terms used in this Indenture that are defined in the TIA, defined by
TIA reference to another statute or defined by rule of the Securities and
Exchange Commission have the respective meanings assigned to them by such
definitions.

 

Section 1.03.  Rules of Construction.  Unless the context otherwise requires:

 

(i)                                     a
term has the meaning assigned to it;

 

7

 

(ii)                                  an
accounting term not otherwise defined has the meaning assigned to it in
accordance with generally accepted accounting principles as in effect from time
to time;

 

(iii)                               “or”
is not exclusive;

 

(iv)                              “including”
means including without limitation;

 

(v)                                 words
in the singular include the plural and words in the plural include the
singular;

 

(vi)                              any
agreement, instrument or statute defined or referred to herein or in any
instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to
a Person are also to its permitted successors and assigns;

 

(vii)                           terms
defined in the UCC and not otherwise defined herein shall have the meaning
assigned to them in the UCC; and

 

(viii)                        to
“U.S. dollars”, “dollars”, or the sign “$” shall be construed as references to
United States dollars which are freely transferable by residents and
non-residents of the United States of America and convertible by such persons
into any other freely convertible currency unless such transferability or
convertibility is restricted by any law or regulation of general application in
which event references to “U.S. dollars”, “dollars”, or the sign “$” shall be
construed as references to such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts in the United States of America, and “cents” shall be
construed accordingly.

 

ARTICLE TWO

THE NOTES

 

Section 2.01.  Form. 
(a) The Notes shall be designated as the “Fieldstone Mortgage
Investment Trust, Series 2005-[   ]
Mortgage-Backed Notes.”  The Notes,
together with the Trust Administrator’s certificate of authentication, shall be
in substantially the forms set forth in Exhibit A with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution of the Notes. 
Any portion of the text of any Note may be set forth on the reverse
thereof, with an appropriate reference thereto on the face of the Note.

 

The Definitive
Notes and the global certificates (“Global Securities”) representing the
Book-Entry Notes shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods (with or without steel engraved
borders), all as determined by the officers executing such Notes, as evidenced
by their execution of such Notes.

 

8

 

Each Note
shall be dated the date of its authentication. 
The terms of the Notes set forth in Exhibit A are part of the terms
of this Indenture.

 

Section 2.02.  Executions Authentication and Delivery.  The Notes shall be executed on behalf of the
Issuer by any Authorized Officer of the Owner Trustee.  The signature of any such Authorized Officer
on the Notes may be manual or facsimile.

 

Notes bearing
the manual or facsimile signature of individuals who were at any time
Authorized Officers of the Owner Trustee or the Trust Administrator shall bind
the Issuer, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Notes or did
not hold such offices at the date of such Notes.

 

The Trust
Administrator shall, upon Issuer Order, authenticate and deliver the Notes for
original issue in the aggregate principal or notional amounts with respect to
each Class as specified below:

 

	
  Class

  	
   

  	
  Class Principal Amount

  	
   

  
	
  1-Al

  	
   

  	
  $[

  	
  ]

  	
   

  
	
  l-A2

  	
   

  	
  $[

  	
  ]

  	
   

  
	
  2-Al

  	
   

  	
  $[

  	
  ]

  	
   

  
	
  2-A2

  	
   

  	
  $[

  	
  ]

  	
   

  
	
  A-IO(1)

  	
   

  	
  $[

  	
  ]

  	
   

  
	
  Ml

  	
   

  	
  $[

  	
  ]

  	
   

  
	
  M2

  	
   

  	
  $[

  	
  ]

  	
   

  
	
  M3

  	
   

  	
  $[

  	
  ]

  	
   

  
	
  M4

  	
   

  	
  $[

  	
  ]

  	
   

  
	
  M5

  	
   

  	
  $[

  	
  ]

  	
   

  
	
  M6

  	
   

  	
  $[

  	
  ]

  	
   

  
	
  M7

  	
   

  	
  $[

  	
  ]

  	
   

  

 

(1)  The Class A-IO
Notes have no Class Principal Amount. 
The Class A-IO Notes will accrue interest on its Class Notional
Amount, which as of the Closing Date will equal $[           ].

 

The aggregate
principal amounts of such Classes of Notes outstanding at any time may not
exceed such respective amounts.

 

The Class 1-Al,
Class 1-A2, Class 2-Al and Class 2-A2 Notes will be issued in
minimum principal amount denominations of $[25,000] and integral multiples of
$1 in excess thereof.  The Class Ml,
Class M2, Class M3, Class M4, Class M5, Class M6 and Class M7
Notes will be issued in minimum denominations of $100,000 and integral
multiples of $1,000 in excess thereof. 
The Class A-IO Notes will be issued in minimum denominations of
$100,000 in original notional amount and integral multiples of $1,000 in excess
thereof.

 

No Note shall
be entitled to any benefit under this Indenture or be valid or obligatory for
any purpose, unless there appears on such Note a certificate of authentication
substantially in the form provided for herein executed by the Trust
Administrator by the manual signature of one of

 

9

 

its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and delivered
hereunder.

 

Section 2.03.  Limitation on Transfer of Notes.  (a) No transfer of a Note in the form of
a Definitive Note shall be made unless the Note Registrar shall have received a
representation from the transferee of such Note, acceptable to and in form and
substance satisfactory to the Note Registrar and the Depositor (such
requirement is satisfied only by the Note Registrar’s receipt of a transfer
affidavit from the transferee substantially in the form of Exhibit C
hereto), to the effect that such transferee (i) is not acquiring such note
for, or with the assets of, an employee benefit plan or other retirement
arrangement that is subject to Section 406 of ERISA or to Section 4975
of the Code or to any substantially similar law (“Similar Law”), or any entity
deemed to hold the plan assets of the foregoing (collectively, “Benefit Plans”),
or (ii) its acquisition and holding of such Notes for, or with the assets
of, a Benefit Plan will not result in a non-exempt prohibited transaction under
Section 406 of ERISA or Section 4975 of the Code which is not covered
under Prohibited Transaction Class Exemption (“PTCE”) 84-14, PTCE 90-1,
PTCE 91-38, PTCE 95-60, PTCE 96-23 or some other applicable exemption, and will
not result in a non-exempt violation of any Similar Law.

 

In the case of
a Note that is a Book-Entry Note, for purposes of clauses (i) or (ii) of
the preceding paragraph, such representations shall be deemed to have been made
to the Note Registrar by the transferee’s acceptance of such Note that is a
Book-Entry Note (or the acceptance by a Note Holder of the beneficial interest
in such Note).

 

None of the
Indenture Trustee, the Note Registrar or the Depositor shall have any liability
to any Person for any registration of transfer of any Note that is in fact not
permitted by this Section 2.03(a) or for the Indenture Trustee or the
Paying Agent making any payments due on such Note to the Holder thereof or
taking any other action with respect to such Holder under the provisions of
this Agreement so long as the transfer was registered by the Note Registrar in
accordance with the foregoing requirements. 
In addition, none of the Indenture Trustee, the Note Registrar or the
Depositor shall be required to monitor, determine or inquire as to compliance
with the transfer restrictions with respect to any Note in the form of a
Book-Entry Note, and none of the Indenture Trustee, the Note Registrar or the Depositor
shall have any liability for transfers of Book-Entry Notes or any interests
therein made in violation of the restrictions on transfer described in the
Prospectus and this Agreement.

 

In the event
that a Note is transferred to a Person that does not meet the requirements of
this Section 2.03, such transfer shall be of no force and effect, shall be
void ab initio, and shall not
operate to transfer any rights to such Person, notwithstanding any instructions
to the contrary to the Issuer, the Indenture Trustee or any intermediary; and
the Trust Administrator shall not make any payments on such Note for as long as
such Person is the Holder of such Note.

 

Each Note
shall contain a legend substantially similar to the applicable legend provided
in Exhibit A hereto stating that transfer of such Notes is subject to
certain restrictions as set forth herein.

 

(b)                                 Any
purported transfer of a Note (or any interest therein) not in accordance with
this Section 2.03 shall be null and void and shall not be given effect for
any purpose hereunder.

 

10

 

(c)                                  The
Trust Administrator will not have the ability to monitor transfers of the Notes
while they are in book-entry form and will have no liability for transfers of
Book-Entry Notes in violation of any of the transfer restrictions described in
this Section 2.03.

 

Section 2.04.  Registration; Registration of Transfer and
Exchange.  The Issuer shall cause the
Note Registrar to keep a register (the “Note Register”) in which, subject to
such reasonable regulations as it may prescribe and the restrictions on
transfers of the Notes set forth herein, the Issuer shall provide for the
registration of Notes and the registration of transfers of Notes.  The Trust Administrator initially shall be
the “Note Registrar” for the purpose of registering Notes and transfers of
Notes as herein provided.  Upon any
resignation of any Note Registrar, the Issuer shall promptly appoint a
successor or, if it elects not to make such an appointment, assume the duties
of Note Registrar.

 

If a Person
other than the Indenture Trustee is appointed by the Issuer as Note Registrar,
the Issuer will give the Indenture Trustee prompt written notice of the
appointment of such Note Registrar and of the location, and any change in the
location, of the Note Register, and the Indenture Trustee shall have the right
to inspect the Note Register at all reasonable times and to obtain copies
thereof, and the Indenture Trustee shall have the right to rely upon a
certificate executed on behalf of the Note Registrar by an Executive Officer
thereof as to the names and addresses of the Holders of the Notes and the
principal amounts and number of such Notes.

 

Subject to Section 2.03
upon surrender for registration of transfer of any Note at the office or agency
of the Issuer to be maintained as provided in Section 3.02, the Issuer
shall execute, and the Note Registrar shall authenticate and the Noteholder
shall be entitled to obtain from the Note Registrar, in the name of the designated
transferee or transferees, one or more new Notes of the same Class in any
authorized denominations, of a like aggregate principal amount.

 

At the option
of the Holder, Notes may be exchanged for other Notes of the same Class in
any authorized denominations, of a like aggregate principal amount, upon
surrender of the Notes to be exchanged at such office or agency.  Whenever any Notes are so surrendered for
exchange, the Issuer shall execute, and the Note Registrar shall authenticate
and the Noteholder shall be entitled to obtain from the Indenture Trustee, the
Notes which the Noteholder making the exchange is entitled to receive.

 

All Notes
issued upon any registration of transfer or exchange of Notes shall be the
valid obligations of the Issuer, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Notes surrendered upon such
registration of transfer or exchange.

 

Every Note
presented or surrendered for registration of transfer or exchange shall be duly
endorsed by, or be accompanied by a written instrument of transfer in form
satisfactory to the Note Registrar duly executed by, the Holder thereof or such
Holder’s attorney duly authorized in writing, with such signature guaranteed by
an “eligible guarantor institution” meeting the requirements of the Note
Registrar, which requirements include membership or participation in the
Securities Transfer Agent’s Medallion Program (“STAMP”) or such other “signature
guarantee program” as may be determined by the Note Registrar in addition to,
or in substitution for, STAMP.

 

11

 

No service
charge shall be made to a Holder for any registration of transfer or exchange
of Notes, but the Issuer or the Note Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.05 not involving any transfer.

 

The preceding
provisions of this Section notwithstanding, the Issuer shall not be
required to make and the Note Registrar need not register transfers or
exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for any payment with respect to such Note.

 

Section 2.05.  Mutilated, Destroyed, Lost or Stolen Notes.  If (i) any mutilated Note is surrendered
to the Indenture Trustee, or the Indenture Trustee receives evidence to its
satisfaction of the destruction, loss or theft of any Note, and (ii) there
is delivered to the Indenture Trustee such security or indemnity as may be
required by it to hold the Issuer and the Indenture Trustee harmless, then, in
the absence of actual notice to the Issuer, the Note Registrar or the Indenture
Trustee that such Note has been acquired by a protected purchaser, and upon
certification provided by the Holder of such Note that the requirements of Section 8-405
of the Relevant UCC are met, the Issuer shall execute, and upon its request the
Note Registrar shall authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Note, a replacement Note; provided, however,
that if any such destroyed, lost or stolen Note, but not a mutilated Note,
shall have become or within seven days shall be due and payable, or shall have
been called for redemption, instead of issuing a replacement Note, the Issuer
may pay such destroyed, lost or stolen Note when so due or payable or upon the
Redemption Date without surrender thereof. 
If, after the delivery of such replacement Note or payment of a
destroyed, lost or stolen Note pursuant to the proviso to the preceding
sentence, a bona fide purchaser of the original Note in lieu of which such
replacement Note was issued presents for payment such original Note, the Issuer
and the Note Registrar shall be entitled to recover such replacement Note (or
such payment) from the Person to whom it was delivered or any Person taking
such replacement Note from such Person to whom such replacement Note was delivered
or any assignee of such Person, except a protected purchaser, and shall be
entitled to recover upon the security or indemnity provided therefor to the
extent of any loss, damage, cost or expense incurred by the Issuer or the
Indenture Trustee in connection therewith.

 

Upon the
issuance of any replacement Note under this Section, the Issuer, the Indenture
Trustee or the Note Registrar may require the payment by the Holder of such
Note of a sum sufficient to cover any tax or other governmental charge that may
be imposed in relation thereto and any other reasonable expenses (including the
fees and expenses of the Indenture Trustee) connected therewith.

 

Every
replacement Note issued pursuant to this Section in replacement of any
mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.

 

12

 

The provisions
of this Section are exclusive and shall preclude (to the extent lawful)
all other rights and remedies with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Notes.

 

Section 2.06.  Persons Deemed Owners.  Prior to due presentment for registration of
transfer of any Note, the Issuer, the Trust Administrator, the Indenture
Trustee and any agent of the Issuer or the Indenture Trustee may treat the
Person in whose name any Note is registered (as of the day of determination) as
the owner of such Note for the purpose of receiving payments of principal of
and interest, if any, on such Note and for all other purposes whatsoever,
whether or not such Note be overdue, and none of the Issuer, the Trust
Administrator, the Indenture Trustee or any agent of the Issuer or the
Indenture Trustee shall be affected by notice to the contrary.

 

Section 2.07.  Payment of Principal and Interest.  (a) Each Class of Notes shall
accrue interest at the Interest Rate as set forth in the Transfer and Servicing
Agreement, and such interest shall be payable on each Payment Date, subject to Section 3.01.  Interest shall be computed on each Class of
LIBOR Notes on the basis of a 360-day year and the actual number of days
elapsed in each Accrual Period.  Interest
shall be computed on each Class of Notes (other than any Class of
LIBOR Notes) on the basis of a 360-day year consisting of twelve 30-day
months.  With respect to each outstanding
Class of LIBOR Notes, the Trust Administrator shall determine LIBOR for
each applicable Accrual Period on the second London Business Day prior thereto,
in accordance with the provisions of the Transfer and Servicing Agreement.  All interest payments on each Class of
Notes shall be made in the order provided for in Section 6.02 of the
Transfer and Servicing Agreement.  Any
installment of interest or principal payable on any Note shall be paid on the
applicable Payment Date to the Person in whose name such Note (or one or more
Predecessor Notes) is registered on the Record Date by check mailed first-class
postage prepaid to such Person’s address as it appears on the Note Register on
such Record Date or, upon written request made to the Note Registrar and the
Paying Agent at least five Business Days prior to the related Record Date, by
the Holder of a Note having an initial Note Principal Amount of not less than
$2,500,000 by wire transfer in immediately available funds to an account
specified in the request and at the expense of such Noteholder, except that,
unless Definitive Notes have been issued pursuant to Section 2.12, with
respect to Notes registered on the Record Date in the name of the nominee of
the Clearing Agency (initially, such nominee to be Cede & Co.),
payment will be made by wire transfer in immediately available funds to the
account designated by such nominee, except for the final installment of
principal payable with respect to such Note on a Payment Date or on the
applicable Maturity Date for such Class of Notes (and except for the
Redemption Price for any Note called for redemption pursuant to Section 10.01),
which shall be payable as provided below. 
The funds represented by any such checks returned undelivered shall be
held in accordance with Section 3.03.

 

(b)                                 The
principal of the Notes shall be payable in installments on each Payment Date as
provided herein and in the Notes, subject to Section 3.01.  Notwithstanding the foregoing, the entire
unpaid principal amount of the Notes shall be due and payable, if not
previously paid, on the date on which an Event of Default shall have occurred
and be continuing, if the Indenture Trustee or Holders of the Notes
representing not less than a majority of the Outstanding Balance of the
Priority Class Notes, have declared the Notes to be immediately due and
payable in the manner provided in Section 5.02.  All principal payments on a Class of
Notes shall be made in accordance with Section 6.02 of the Transfer and
Servicing Agreement.  The Trust
Administrator

 

13

 

shall notify the
Person in whose name a Note is registered at the close of business on the
Record Date preceding the Payment Date on which the Issuer expects that the
final installment of principal of and interest on such Note will be paid. Such
notice shall be mailed or transmitted by facsimile no later than five Business
Days prior to such final Payment Date and shall specify that such final
installment will be payable only upon presentation and surrender of such Note
and shall specify the place where such Note may be presented and surrendered
for payment of such installment.  Notices
in connection with redemptions of Notes shall be mailed to Noteholders as
provided in Section 10.02.

 

Section 2.08.  Cancellation.  All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall be promptly cancelled by the Indenture Trustee.  The Issuer may at any time deliver to the
Note Registrar for cancellation any Notes previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner
whatsoever, and all Notes so delivered shall be promptly cancelled by the
Indenture Trustee.  No Notes shall be
authenticated in lieu of or in exchange for any Notes cancelled as provided in
this Section, except as expressly permitted by this Indenture.  All cancelled Notes may be held or disposed
of by the Note Registrar in accordance with its standard retention or disposal
policy as in effect at the time unless the Issuer shall direct by an Issuer
Order that they be destroyed or returned to it; provided, that such Issuer
Order is timely and the Notes have not been previously disposed of by the
Indenture Trustee.

 

Section 2.09.  Release of Collateral.  (a) Except as otherwise provided in
subsections (b) and (c) of this Section and the terms of the
Operative Agreements, the Indenture Trustee shall release property from the
lien of this Indenture only upon receipt by it of an Issuer Request accompanied
by (i) an Officer’s Certificate, (ii) an Opinion of Counsel, (iii) certificates
in accordance with TIA Sections 314(c) and (d)(1), and (iv)(A) Independent
Certificates in accordance with TIA Sections 314(c) and 314(d)(1) or (B) an
Opinion of Counsel in lieu of such Independent Certificates to the effect that
the TIA does not require any such Independent Certificates; provided that no
such Independent Certificates or Opinion of Counsel in lieu of such Independent
Certificates shall be necessary in respect of property released from the lien
of the Indenture in accordance with the provisions hereof if such property
consists solely of cash.

 

(b)                                 The
Servicer or any Sub-servicer (or if neither does so, the Master Servicer), on
behalf of the Issuer, shall be entitled to obtain a release from the lien of
this Indenture for any Mortgage Loan and the Mortgaged Property at any time (i) after
a payment by the Seller or the Issuer of the Purchase Price of the Mortgage
Loan, (ii) after a Qualifying Substitute Mortgage Loan is substituted for
such Mortgage Loan and payment of the Substitution Amount, if any, (iii) after
liquidation of the Mortgage Loan in accordance with the Transfer and Servicing
Agreement and the deposit of all Liquidation Proceeds and Insurance Proceeds in
the Collection Account, (iv) upon the termination of a Mortgage Loan (due
to, among other causes, a prepayment in full of the Mortgage Loan and sale or
other disposition of the related Mortgaged Property), or (v) as
contemplated by Section 9.02 of the Transfer and Servicing Agreement.

 

(c)                                  The
Indenture Trustee shall, if requested by the Servicer or the Sub-servicer,
temporarily release or cause the applicable Custodian temporarily to release to
such party the Mortgage File pursuant to the provisions of Section 5.15 of
the Transfer and Servicing

 

14

 

Agreement and Section 5
of the Custodial Agreement; provided,
however, that the Mortgage File shall have been stamped to signify
the Issuer’s pledge to the Indenture Trustee under the Indenture.

 

Section 2.10.  Book-Entry Notes.  Each Class of Notes will be issued in
the form of typewritten Notes or Global Securities representing the Book-Entry
Notes, to be delivered to, or to the Indenture Trustee as custodian for, the
initial Clearing Agency, by, or on behalf of, the Issuer.  The Book-Entry Notes shall be registered
initially on the Note Register in the name of Cede & Co., the nominee
of the initial Clearing Agency, and no Owner thereof will receive a Definitive
Note representing such Note Owner’s interest in such Note, except as provided
in Section 2.11.  Unless and until
definitive, fully registered Notes (the “Definitive Notes”) have been issued to
such Note Owners pursuant to Section 2.12:

 

(i)                                     the
provisions of this Section shall be in full force and effect;

 

(ii)                                  the
Note Registrar and the Indenture Trustee shall be entitled to deal with the
Clearing Agency for all purposes of this Indenture (including the payment of
principal of and interest on the Notes and the giving of instructions or
directions hereunder) as the sole holder of the Notes, and shall have no
obligation to the Note Owners;

 

(iii)                               to
the extent that the provisions of this Section conflict with any other
provisions of this Indenture, the provisions of this Section shall
control;

 

(iv)                              the
rights of Note Owners shall be exercised only through the Clearing Agency and
shall be limited to those established by law and agreements between such Note
Owners and the Clearing Agency and/or the Clearing Agency Participants pursuant
to the Note Depository Agreement.  Unless
and until Definitive Notes are issued pursuant to Section 2.12, the Note
Registrar shall not register any transfer of a beneficial interest in a
Book-Entry Note; and the initial Clearing Agency will make book-entry transfers
among the Clearing Agency Participants and receive and transmit payments of
principal of and interest on the Notes to such Clearing Agency Participants;
and

 

(v)                                 whenever
this Indenture requires or permits actions to be taken based upon instructions
or directions of Holders of Notes evidencing a specified percentage of the
Outstanding Balance of the Notes (or the Priority Class Notes), the
Clearing Agency shall be deemed to represent such percentage only to the extent
that it has received instructions to such effect from Note Owners and/or
Clearing Agency Participants owning or representing, respectively, such
required percentage of the beneficial interest in the Notes and has delivered
such instructions to the Indenture Trustee.

 

Section 2.11.  Notices to Clearing Agency.  Whenever a notice or other communication to
the Noteholders is required under this Indenture, unless and until Definitive
Notes shall have been issued to such Note Owners pursuant to Section 2.12,
the Trust Administrator shall give all such notices and communications
specified herein to be given to Holders of the Notes to the Clearing Agency,
and shall have no obligation to such Note Owners.

 

15

 

Section 2.12.  Definitive Notes.  If (i) the Clearing Agency is no longer
willing or able to properly discharge its responsibilities with respect to the
Book-Entry Notes and the Issuer is unable to locate a qualified successor or (ii) after
the occurrence of an Event of Default hereunder, Note Owners of the Book-Entry
Notes representing beneficial interests aggregating at least a majority of the
Outstanding Balance of the Book-Entry Notes advise the Clearing Agency in
writing that the continuation of a book-entry system through the Clearing
Agency is no longer in the best interests of such Note Owners and the Clearing
Agency consents, then the Clearing Agency shall notify all Note Owners and the
Note Registrar of the occurrence of any such event and of the availability of
Definitive Notes to Note Owners requesting the same.  Upon surrender to the Note Registrar of the typewritten
Notes representing the Book-Entry Notes by the Clearing Agency, accompanied by
registration instructions, the Issuer shall execute and the Note Registrar
shall authenticate the Definitive Notes in accordance with the instructions of
the Clearing Agency.  None of the Issuer,
the Note Registrar, Trust Administrator or the Indenture Trustee shall be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions.  Upon the issuance of Definitive Notes, the
Indenture Trustee and the Trust Administrator shall recognize the Holders of
the Definitive Notes as Noteholders.

 

Section 2.13.  Tax Treatment.  The Issuer has entered into this Indenture,
and the Notes will be issued, with the intention that, for federal, state and
local income, single business and franchise tax purposes, the Notes (other than
the Retained Notes) will qualify as indebtedness of the Issuer secured by the
Collateral.  The Issuer, by entering into
this Indenture, and each Noteholder, by its acceptance of a Note (and each Note
Owner by its acceptance of an interest in the applicable Book-Entry Note),
agree to treat the Notes for federal, state and local income, single business
and franchise tax purposes as indebtedness of the Issuer.

 

ARTICLE THREE

COVENANTS

 

Section 3.01.  Payment of Principal and Interest.  The Issuer will duly and punctually pay (or
will cause to be duly and punctually paid) the principal of and interest on the
Notes in accordance with the terms of the Notes and this Indenture.  Amounts properly withheld under the Code by
any Person from a payment to any Noteholder of interest and/or principal shall
be considered as having been paid by the Issuer to such Noteholder for all
purposes of this Indenture.

 

The Notes
shall be non-recourse obligations of the Issuer and shall be limited in right
of payment to amounts available from the Collateral as provided in this
Indenture.  The Issuer shall not
otherwise be liable for payments of the Notes, and none of the owners, agents,
officers, directors, employees, or successors or assigns of the Issuer shall be
personally liable for any amounts payable, or performance due, under the Notes
or this Indenture.  If any other
provision of this Indenture shall be deemed to conflict with the provisions of
this Section 3.01, the provisions of this Section 3.01 shall control.

 

Section 3.02.  Maintenance of Office or Agency.  The Note Registrar on behalf of the Issuer
will maintain an office or agency where Notes may be surrendered for
registration of

 

16

 

transfer or
exchange, and where notices and demands to or upon the Issuer in respect of the
Notes and this Indenture may be served.

 

Section 3.03.  Money for Payments to be Held in Trust.  As provided in Section 8.02, all
payments of amounts due and payable with respect to any Notes that are to be
made from amounts withdrawn from the Collection Account pursuant to Article VI
of the Transfer and Servicing Agreement shall be made on behalf of the Issuer
by the Indenture Trustee, the Trust Administrator or by another Paying Agent,
and no amounts so withdrawn from the such account for payments of Notes shall
be paid over to the Issuer except as provided in this Section.

 

On or before
the Business Day preceding each Payment Date, the Issuer shall deposit or cause
to be deposited in the Collection Account an aggregate sum sufficient to pay
the amounts then becoming due under the Notes, such sum to be held in trust for
the benefit of the Persons entitled thereto, and (unless the Paying Agent is
the Indenture Trustee) shall promptly notify the Indenture Trustee of its
action or failure so to act.

 

The Trust
Administrator is hereby appointed the initial Paying Agent.  Any successor Paying Agent shall be appointed
by Issuer Order with written notice thereof to the Indenture Trustee.  Any Paying Agent appointed by the Issuer
shall be a Person that would be eligible to be Indenture Trustee hereunder as
provided in Section 6.11.  The Issuer
shall not appoint any Paying Agent (other than the Indenture Trustee) which is
not, at the time of such appointment, a Depository Institution.

 

The Issuer
shall cause each Paying Agent other than the Indenture Trustee or the Trust
Administrator, as initial Paying Agent, to execute and deliver to the Indenture
Trustee an instrument in which such Paying Agent shall agree with the Indenture
Trustee (and if the Indenture Trustee or the Trust Administrator acts as Paying
Agent, it hereby so agrees), subject to the provisions of this Section, that
such Paying Agent will:

 

(i)                                     hold
all sums held by it for the payment of amounts due with respect to the Notes in
trust for the benefit of the Persons entitled thereto until such sums shall be
paid to such Persons or otherwise disposed of as herein provided and in the
Transfer and Servicing Agreement and pay such sums to such Persons as herein
provided;

 

(ii)                                  give
the Indenture Trustee notice of any default by the Issuer of which the Paying
Agent has actual knowledge in the making of any payment required to be made
with respect to the Notes;

 

(iii)                               at
any time during the continuance of any such default, upon the written request
of the Indenture Trustee, forthwith pay to the Indenture Trustee all sums so
held in trust by such Paying Agent;

 

(iv)                              immediately
resign as a Paying Agent and forthwith pay to the Indenture Trustee all sums
held by it in trust for the payment of Notes if at any time it ceases to meet
the standards required to be met by a Paying Agent at the time of its
appointment; and

 

17

 

(v)                                 comply
with all requirements of the Code with respect to the withholding from any
payments made by it on any Notes of any applicable withholding taxes imposed
thereon and with respect to any applicable reporting requirements in connection
therewith; provided, however, that with respect to reporting
requirements applicable to original issue discount, the accrual of market
discount or the amortization of premium on the Notes, the Depositor shall have
first provided the calculations pertaining thereto and the amount of any
resulting withholding taxes to the Indenture Trustee and the Paying Agent.

 

The Issuer may
at any time, for the purpose of obtaining the satisfaction and discharge of
this Indenture or for any other purpose, by Issuer Order direct any Paying
Agent to pay to the Indenture Trustee all sums held in trust by such Paying
Agent, such sums to be held by the Indenture Trustee upon the same trusts as
those upon which the sums were held by such Paying Agent; and upon such payment
by any Paying Agent to the Indenture Trustee, such Paying Agent shall be
released from all further liability with respect to such money.

 

Subject to
applicable laws with respect to escheat of funds, any money held by the
Indenture Trustee or any Paying Agent in trust for the payment of any amount
due with respect to any Note and remaining unclaimed for two years after such
amount has become due and payable shall be discharged from such trust and be paid
to the Issuer on Issuer Request; and the Holder of such Note shall thereafter,
as an unsecured general creditor, look only to the Issuer for payment thereof
(but only to the extent of the amounts so paid to the Issuer), and all
liability of the Indenture Trustee or such Paying Agent with respect to such
trust money shall thereupon cease; provided,
however, that the Indenture
Trustee or such Paying Agent, before being required to make any such repayment,
shall at the expense and direction of the Issuer cause to be published once, in
a newspaper published in the English language, customarily published on each
Business Day and of general circulation in The City of New York (including, but
not limited to, The Bond Buyer),
notice that such money remains unclaimed and that, after a date.  specified therein, which shall not be less
than 30 days from the date of such publication, any unclaimed balance of such
money then remaining will be repaid to the Issuer.  The Indenture Trustee or Paying Agent shall
also adopt and employ, at the expense and direction of the Issuer, any other
reasonable means of notification of such repayment (including, but not limited
to, mailing notice of such repayment to Holders whose Notes have been called
but have not been surrendered for redemption or whose right to or interest in
moneys due and payable but not claimed is determinable from the records of the
Indenture Trustee or of any Paying Agent, at the last address of record for
each such Holder).

 

Section 3.04.  Existence.  (a) The Issuer will keep in full effect
its existence, rights and franchises as a statutory trust under the laws of the
State of Delaware (unless it becomes, or any successor Issuer hereunder is or
becomes, organized under the laws of any other State or of the United States of
America, in which case the Issuer will keep in full effect its existence,
rights and franchises under the laws of such other jurisdiction) and will
obtain and preserve its qualification to do business in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Collateral and each other
instrument or agreement included in the Collateral.

 

18

 

(b)                                 Any
successor to the Owner Trustee appointed pursuant to Section 9.03 of the
Trust Agreement shall be the successor Owner Trustee under this Indenture
without the execution or filing of any paper, instrument or further act to be
done on the part of the parties hereto.

 

(c)                                  Upon
any consolidation or merger of or other succession to the Owner Trustee, the
Person succeeding to the Owner Trustee under the Trust Agreement may exercise
every right and power of the Owner Trustee under this Indenture with the same
effect as if such Person had been named as the Owner Trustee herein.

 

Section 3.05.  Protection of Collateral.  The Issuer will from time to time execute,
deliver and file all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further assurance
and other instruments, and will take such other action necessary or advisable
to:

 

(i)                                     maintain
or preserve the lien and security interest (and the priority thereof) of this
Indenture or carry out more effectively the purposes hereof,

 

(ii)                                  perfect,
publish notice of or protect the validity of any Grant made or to be made by
this Indenture;

 

(iii)                               enforce
any rights with respect to the Collateral; or

 

(iv)                              preserve
and defend title to the Collateral and the rights of the Indenture Trustee and
the Noteholders in such Collateral against the claims of all persons and
parties.

 

The Issuer
hereby designates each of the Indenture Trustee and the Trust Administrator as
its agent and attorneys-in-fact to execute any financing statement,
continuation statement or other instrument required to be executed pursuant to
this Section 3.05 and hereby authorizes either of them to file in any
filing office any financing statement, amendment to financing statement, or
continuation statement required to be executed pursuant to this Section 3.05.

 

Section 3.06.  Opinions as to Collateral.  On the Closing Date, the Issuer shall furnish
to the Trust Administrator and the Indenture Trustee an Opinion of Counsel to
the effect that either, in the opinion of such counsel, such action has been
taken with respect to the recording and filing of this Indenture, any
indentures supplemental hereto, and any other requisite documents, and with
respect to the execution and filing of any financing statements and
continuation statements, as are necessary to make effective the lien and
security interest of this Indenture, or stating that, in the opinion of such
counsel, no such action is necessary to make such lien and security interest
effective.

 

Section 3.07.  Performance of Obligations.  (a) The Issuer will not take any action
and will use its best efforts not to permit any action to be taken by others
that would release any Person from any of such Person’s material covenants or
obligations under any instrument or agreement included in the Collateral or
that would result in the amendment, hypothecation, subordination, termination
or discharge of, or impair the validity or effectiveness of, any such

 

19

 

instrument or
agreement, except as expressly provided in this Indenture, the Transfer and
Servicing Agreement or such other instrument or agreement.

 

(b)                                 The
Issuer may contract with other Persons to assist it in performing its duties
under this Indenture, and any performance of such duties by a Person identified
to the Indenture Trustee in an Officer’s Certificate of the Issuer shall be
deemed to be action taken by the Issuer. 
Initially, the Issuer has contracted with the Trust Administrator
pursuant to the Transfer and Servicing Agreement to assist the Issuer in
performing certain of its duties under this Indenture.

 

(c)                                  The
Issuer will punctually perform and observe all of its obligations and
agreements contained in this indenture, the Operative Agreements and in the
instruments and agreements included in the Collateral, including but not
limited to filing or causing to be filed all financing statements and
continuation statements required to be filed by the terms of this Indenture and
the Transfer and Servicing Agreement in accordance with and within the time
periods provided for herein and therein.

 

(d)                                 If
a responsible officer of the Owner Trustee shall have written notice or actual
knowledge of the occurrence of an Event of Default under the Transfer and Servicing
Agreement, the Issuer shall promptly notify the Indenture Trustee and each
Rating Agency thereof.

 

(e)                                  As
promptly as possible after the giving of notice of termination to the Master
Servicer of the Master Servicer’s rights and powers pursuant to Section 8.01(a) of
the Transfer and Servicing Agreement, the Indenture Trustee shall proceed in
accordance with Section 8.01 and 8.02 of the Transfer and Servicing
Agreement.

 

(f)                                    Without
derogating from the absolute nature of the assignment granted to the Indenture
Trustee under this Indenture or the rights of the Indenture Trustee hereunder,
the Issuer agrees (i) that it will not, without the prior written consent
of the Indenture Trustee or the Holders of at least a majority in Outstanding
Balance of the Notes affected thereby, amend, modify, waive, supplement,
terminate or surrender, or agree to any amendment, modification, supplement,
termination, waiver or surrender of, the terms of any Collateral or the
Operative Agreements (except to the extent otherwise provided in any such
Operative Agreement), or waive timely performance or observance by the Trust
Administrator, Master Servicer or the Depositor of its respective duties under
the Transfer and Servicing Agreement; and (ii) that any such amendment
shall not (A) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, payments that are required to be made for
the benefit of the Noteholders or (B) reduce the aforesaid percentage of
the Notes that is required to consent to any such amendment, without the
consent of the Holders of all the Outstanding Notes affected thereby.  If any such amendment, modification,
supplement or waiver shall be so consented to by the Indenture Trustee or such
Holders, the Issuer agrees, promptly following a request by the Indenture
Trustee to do so, to execute and deliver, in its own name and at its own
expense, such agreements, instruments, consents and other documents as the
Indenture Trustee may deem necessary or appropriate in the circumstances.

 

Section 3.08.  Negative Covenants.  So long as any Notes are Outstanding, the
Issuer shall not:

 

20

 

(i)                                     except
as expressly permitted by this Indenture, the Mortgage Loan Purchase Agreement
or the Transfer and Servicing Agreement, sell, transfer, exchange or otherwise
dispose of any of the properties or assets of the Issuer, including those
included in the Collateral, unless directed to do so by the Indenture Trustee;

 

(ii)                                  claim
any credit on, or make any deduction from the principal or interest payable in
respect of, the Notes (other than amounts properly withheld from such payments
under the Code) or assert any claim against any present or former Noteholder by
reason of the payment of the taxes levied or assessed upon any part of the
Collateral;

 

(iii)                               (A) permit
the validity or effectiveness of this Indenture to be impaired, or permit the
lien of this Indenture to be amended, hypothecated, subordinated, terminated or
discharged, or permit any Person to be released from any covenants or
obligations with respect to the Notes under this Indenture except as may be
expressly permitted hereby, (B) permit any lien, charge, excise, claim,
security interest, mortgage or other encumbrance (other than the lien of this
Indenture) to be created on or extend to or otherwise arise upon or burden the
Collateral or any part thereof or any interest therein or the proceeds thereof
(other than tax liens, mechanics’ liens and other liens that arise by operation
of law, in each case with respect to any Collateral and arising solely as a
result of an action or omission of a Borrower or as otherwise permitted in the
Transfer and Servicing Agreement) or (C) permit the lien of this Indenture
not to constitute a valid first priority (other than with respect to any such
tax, mechanics’ or other lien) or as otherwise permitted in the Transfer and
Servicing Agreement) security interest in the Collateral;

 

(iv)                              dissolve
or liquidate in whole or in part or merge or consolidate with any other Person;

 

(v)                                 remove
the Trust Administrator without cause unless the Rating Agency Condition shall
have been satisfied in connection with such removal;

 

(vi)                              take
any other action or fail to take any action that would jeopardize the status of
the Holder of the Ownership Certificate as a REIT under the Code or result in
an imposition of tax on the Issuer; or

 

(vii)                           except
with the prior written consent of the Noteholders, take any action described in
Section 5.06 of the Trust Agreement.

 

Section 3.09.  Annual Statement as to Compliance.  The Issuer will deliver to the Indenture
Trustee, within 120 days after the end of each fiscal year of the Issuer (commencing
with the fiscal year 2004), an Officer’s Certificate stating, as to the
Authorized Officer signing such Officer’s Certificate, that:

 

(i)                                     a
review of the activities of the Issuer during such year and of its performance
under this Indenture has been made under such Authorized Officer’s supervision;
and

 

(ii)                                  to
the best of such Authorized Officer’s knowledge, based on such review, the
Issuer has complied with all conditions and covenants under this Indenture
throughout

 

21

 

such year or, if there has been a default in its
compliance with any such condition or covenant, specifying each such default
known to such Authorized Officer and the nature and status thereof.

 

Section 3.10.  Treatment of Notes as Debt for Tax
Purposes.  The Issuer shall, and
shall cause the Trust Administrator and the Master Servicer to, treat the Notes
as indebtedness for all federal, state and local income, single business, and
franchise tax purposes.

 

Section 3.11.  [Reserved]

 

Section 3.12.  No Other Business.  The Issuer shall not engage in any business
other than financing, purchasing, owning, selling and managing the Collateral
in the manner contemplated by this Indenture and the Operative Agreements and
activities incidental thereto.

 

Section 3.13.  No Borrowing.  The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness other than the Notes.

 

Section 3.14.  [Reserved].

 

Section 3.15.  Guarantees, Loans, Advances and Other
Liabilities.  Except as contemplated
by the Transfer and Servicing Agreement or this Indenture, the Issuer shall not
make any loan or advance or credit to, or guarantee (directly or indirectly or
by an instrument having the effect of assuring another’s payment or performance
on any obligation or capability of so doing or otherwise), endorse or otherwise
become contingently liable, directly or indirectly, in connection with the
obligations, stocks or dividends of, or own, purchase, repurchase or acquire
(or agree contingently to do so) any stock, obligations, assets or securities
of, or any other interest in, or make any capital contribution to, any other
Person.

 

Section 3.16.  Capital Expenditures.  The Issuer shall not make any expenditure (by
long-term or operating lease or otherwise) for capital assets (either realty or
personalty).

 

Section 3.17.  Removal of Trust Administrator.  So long as any Notes are Outstanding, the
Issuer shall not remove the Trust Administrator without cause unless the Issuer
has received a letter from each Rating Agency to the effect that such removal
will not cause the then-current ratings on the Notes to be qualified, reduced
or withdrawn.

 

Section 3.18.  Restricted Payments.  The Issuer shall not, directly or indirectly,
(i) pay any dividend or make any payment (by reduction of capital or
otherwise), whether in cash, property, securities or a combination thereof, to
the Owner Trustee or any owner of a beneficial interest in the Issuer or
otherwise with respect to any ownership or equity interest or security in or of
the Issuer, (ii) redeem, purchase, retire or otherwise acquire for value
any such ownership or equity interest or security or (iii) set aside or
otherwise segregate any amounts for any such purpose; provided, however,
the Issuer may make, or cause to be made, payments and distributions as
contemplated by, and to the extent funds are available for such purpose under,
the Transfer and Servicing Agreement, any Swap Agreement, this Indenture or the
Trust Agreement.  The Issuer will not,
directly or indirectly, make payments to or from the Collection Account except
in accordance with this Indenture and the Operative Agreements.

 

22

 

Section 3.19.  Notice of Events of Default.  The Issuer shall promptly, and in no event
more than three Business Days following such event, give the Indenture Trustee,
Trust Administrator and each Rating Agency written notice of each Event of
Default hereunder, and each default on the part of the Trust Administrator,
Master Servicer or the Depositor of its obligations under the Transfer and
Servicing Agreement, to the extent a responsible officer of the Owner Trustee
shall have written notice or actual knowledge thereof.

 

Section 3.20.  Further Instruments and Acts.  Upon request of the Indenture Trustee or the
Trust Administrator, the Issuer will execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper
to carry out more effectively the purpose of this Indenture.

 

Section 3.21.  Covenants of the Issuer.  All covenants of the Issuer in this Indenture
are covenants of the Issuer and are not covenants of the Owner Trustee in its
individual capacity.  The Owner Trustee
is, and any successor Owner Trustee under the Trust Agreement will be, entering
into this Indenture on behalf of the Issuer solely as Owner Trustee under the
Trust Agreement and not in its respective individual capacity, and in no case
whatsoever shall the Owner Trustee or any such successor Owner Trustee be
personally liable on, or for any loss in respect of, any of the statements,
representations, warranties or obligations of the Issuer hereunder, as to all
of which the parties hereto agree to look solely to the property of the Issuer.

 

Section 3.22.  Representations and Warranties of the
Issuer.  (a) With respect to the
Mortgage Notes, the Issuer represents and warrants that:

 

(i)                                     This
Indenture creates a valid and continuing security interest (as defined in the
applicable Uniform Commercial Code (the “UCC”)) in the Mortgage Notes in favor
of the Indenture Trustee, which security interest is prior to all other liens,
and is enforceable as such against creditors of and purchasers from the Issuer;

 

(ii)                                  The
Mortgage Notes constitute “instruments” within the meaning of the applicable
UCC;

 

(iii)                               The
Issuer owns and has good title to the Mortgage Notes free and clear of any
lien, claim or encumbrance of any Person;

 

(iv)                              The
Issuer has received all consents and approvals required by the terms of the
Mortgage Notes to the pledge of the Mortgage Notes hereunder to the Indenture
Trustee;

 

(v)                                 All
original executed copies of each Mortgage Note have been or will be delivered
to the Indenture Trustee (or its custodian), as set forth in the Transfer and
Servicing Agreement;

 

(vi)                              The
Issuer has received a written acknowledgement from the Indenture Trustee (or
its custodian) that it is holding the Mortgage Notes solely on behalf and for
the benefit of the Indenture Trustee;

 

23

 

(vii)                           Other
than the security interest granted to the Indenture Trustee pursuant to this
Indenture, the Issuer has not pledged, assigned, sold, granted a security
interest in, or otherwise conveyed any of the Mortgage Notes.  The Issuer has not authorized the filing of
and is not aware of any financing statements against the Issuer that include a
description of the collateral covering the Mortgage Notes other than a
financing statement relating to the security interest granted to the Indenture
Trustee hereunder or that has been terminated. 
The Issuer is not aware of any judgment or tax lien filings against the
Issuer; and

 

(viii)                        None
of the Mortgage Notes has any marks or notations indicating that they have been
pledged, assigned or otherwise conveyed to any Person other than the Indenture
Trustee.

 

(b)                                 The
representations and warranties set forth in this Section 3.22 shall
survive the Closing Date and shall not be waived.

 

ARTICLE FOUR

SATISFACTION AND DISCHARGE

 

Section 4.01.  Satisfaction and Discharge of Indenture.  This Indenture shall cease to be of further
effect with respect to the Notes, except as to (i) rights of registration
of transfer and exchange, (ii) substitution of mutilated, destroyed, lost
or stolen Notes, (iii) rights of Noteholders to receive payments of
principal thereof and interest thereon, (iv) the rights, obligations and
immunities of the Indenture Trustee hereunder (including the rights of the
Indenture Trustee under Section 6.07 and the obligations of the Indenture
Trustee under Sections 3.03 and 4.02) and (v) the rights of Noteholders as
beneficiaries hereof with respect to the property so deposited with the
Indenture Trustee payable to all or any of them, and the Indenture Trustee, on
demand of and at the expense of the Issuer, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture with respect to the
Notes, when either (I) the Transfer and Servicing Agreement has been terminated
pursuant to Section 9.01 thereof or (II)

 

(A)                              either

 

(1)                                  all
Notes theretofore authenticated and delivered (other than (i) Notes that
have been destroyed, lost or stolen and that have been replaced or paid as
provided in Section 2.05 and (ii) Notes for whose payment money has
theretofore been deposited in trust or segregated and held in trust by the
Issuer and thereafter repaid to the Issuer or discharged from such trust, as
provided in Section 3.03) have been delivered to the Indenture Trustee for
cancellation; or

 

(2)                                  all
Notes not theretofore delivered to the Trust Administrator for cancellation

 

a.                                       have
become due and payable,

 

b.                                      will
become due and payable at the applicable Maturity Date within one year, or

 

24

 

c.                                       are
to be called for redemption within one year under arrangements satisfactory to
the Indenture Trustee for the giving of notice of redemption by the Trust
Administrator in the name, and at the expense, of the Issuer,

 

and the Issuer, in the case of a., b.  or c. 
above, has irrevocably deposited or caused to be irrevocably deposited
with the Trust Administrator cash or direct obligations of or obligations
guaranteed by the United States of America (which will mature prior to the date
such amounts are payable), in trust for such purpose, in an amount sufficient
to pay and discharge the entire indebtedness on such Notes not theretofore
delivered to the Indenture Trustee for cancellation when due to the Maturity
Date or Redemption Date (if the Notes are called for redemption pursuant to Section 10.01
hereof), as the case may be;

 

(B)                                the
Issuer has paid or caused to be paid all other sums payable hereunder by the
Issuer;

 

(C)                                the
Issuer has delivered to the Indenture Trustee an Officer’s Certificate and an
Opinion of Counsel (at the Issuer’s expense) and (if required by the TIA or the
Indenture Trustee) an Independent Certificate from a firm of certified public
accountants, each meeting the applicable requirements of Section 11.01
hereof and, subject to Section 11.02 hereof, each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture with respect to the Notes have been complied with;
and

 

(D)                               the
Issuer has delivered to each Rating Agency notice of such satisfaction and
discharge.

 

Section 4.02.  Application of Trust Money.  All moneys deposited with the Trust
Administrator pursuant to Sections 3.03 and 4.01 hereof shall be held in trust
and applied by it, in accordance with the provisions of the Notes and this Indenture,
to the payment, either directly or through any Paying Agent, as the Trust
Administrator may determine, to the Holders of the particular Notes for the
payment or redemption of which such moneys have been deposited with the Trust
Administrator, of all sums due and to become due thereon for principal and
interest; but such moneys need not be segregated from other funds except to the
extent required herein or in the Transfer and Servicing Agreement or required
by law.

 

Section 4.03.  Repayment of Moneys Held by Paying Agent.  In connection with the satisfaction and
discharge of this Indenture with respect to the Notes, all moneys then held by
any Paying Agent other than the Indenture Trustee under the provisions of this
Indenture with respect to such Notes shall, upon demand of the Issuer, be paid
to the Indenture Trustee to be held and applied according to Section 3.03
and thereupon such Paying Agent shall be released from all further liability
with respect to such moneys.

 

Section 4.04.  Trust Money Received by Indenture Trustee.  If the Indenture Trustee receives any moneys
in respect of the Collateral (other than with respect to any amounts in respect
of any payments or reimbursements of fees, expenses or indemnity amounts
properly owing to the Indenture Trustee pursuant to the terms of any of the
Operative Agreements), the Indenture Trustee shall remit promptly such funds to
the Trust Administrator.

 

25

 

ARTICLE FIVE

REMEDIES

 

Section 5.01.  Events of Default.  “Event of Default”, wherever used herein,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):

 

(i)                                     Default
for thirty days or more in the payment of any Current Interest on the Notes
when the same becomes due and payable under Section 6.02 of the Transfer
and Servicing Agreement;

 

(ii)                                  failure
to pay the entire principal of any Note when the same becomes due and payable
under the Transfer and Servicing Agreement or on the applicable Maturity Date;

 

(iii)                               failure
to observe or perform any covenant or agreement of the Issuer made in this
Indenture (other than a covenant or agreement, a default in the observance or
performance of which is elsewhere in this Section specifically dealt
with), or any representation or warranty of the Issuer made in this Indenture
or in any certificate or other writing delivered pursuant hereto or in
connection herewith proving to have been incorrect in any material respect as
of the time when the same shall have been made, and such default shall continue
or not be cured, or the circumstance or condition in respect of which such
misrepresentation or warranty was incorrect shall not have been eliminated or
otherwise cured, for a period of 30 days after there shall have been given, by
registered or certified mail, to the Issuer by the Indenture Trustee or to the
Issuer and the Indenture Trustee by the Holders of at least 25% of the
Outstanding Balance of the Notes, a written notice specifying such default or
incorrect representation or warranty and requiring it to be remedied and stating
that such notice is a notice of Default hereunder;

 

(iv)                              the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of the Issuer or any substantial part of the Collateral in
an involuntary case under any applicable federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official of the Issuer or for any substantial part of the Collateral, or
ordering the winding-up or liquidation of the Issuer’s affairs, and such decree
or order shall remain unstayed and in effect for a period of 60 consecutive
days;

 

(v)                                 the
receipt of notice from the Holder of the Ownership Certificate to the Indenture
Trustee of such Holder’s failure to qualify as a REIT or a Qualified REIT
Subsidiary; or

 

(vi)                              the
commencement by the Issuer of a voluntary case under any applicable federal or
state bankruptcy, insolvency or other similar law now or hereafter in effect,
or

 

26

 

the consent by the Issuer to the entry of an order for
relief in an involuntary case under any such law, or the consent by the Issuer
to the appointment or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Issuer or for any
substantial part of the Collateral, or the making by the Issuer of any general
assignment for the benefit of creditors, or the failure by the Issuer generally
to pay its debts as such debts become due, or the taking of any action by the
Issuer in furtherance of any of the foregoing.

 

The Issuer
shall deliver to the Indenture Trustee, within five days after the occurrence
thereof, written notice in the form of an Officer’s Certificate of any event
which with the giving of notice and the lapse of time would become an Event of
Default under clause (iii), its status and what action the Issuer is taking or
proposes to take with respect thereto.

 

Section 5.02.  Acceleration of Maturity; Rescission and
Annulment.  If an Event of Default
should occur and be continuing, then and in every such case the Indenture
Trustee may, or shall, at the direction of the Holders of Notes representing
not less than a majority of the Outstanding Balance of the Priority Class Notes,
declare all the Notes to be immediately due and payable, by a notice in writing
to the Issuer (and to the Indenture Trustee if given by Noteholders), and upon
any such declaration the unpaid principal amount of such Notes, together with
accrued and unpaid interest on the Notes through the date of acceleration,
shall become immediately due and payable.

 

At any time
after such declaration of acceleration of maturity has been made and before a
judgment or decree for payment of the money due has been obtained by the
Indenture Trustee as hereinafter in this Article Five provided, the
Holders of Notes representing a majority of the Outstanding Balance of the
Priority Class Notes, by written notice to the Issuer and the Indenture
Trustee, may rescind and annul such declaration and its consequences if:

 

(i)                                     the
Issuer has paid or deposited with the Trust Administrator a sum sufficient to
pay:

 

(A)                              all
payments of principal of and interest on all affected Priority Class Notes
and all other amounts that would then be due hereunder or upon such Notes if
the Event of Default giving rise to such acceleration had not occurred; and

 

(B)                                all
sums paid or advanced by the Indenture Trustee hereunder and the reasonable
compensation, expenses, disbursements and advances of the Indenture Trustee and
its agents and counsel; and

 

(ii)                                  all
Events of Default, other than the nonpayment of the principal of the Notes that
has become due solely by such acceleration, have been cured or waived as provided
in Section 5.12.

 

No such rescission shall affect any
subsequent default or impair any right consequent thereto.

 

The Holders of
Non-Priority Class Notes shall have no right to exercise any Noteholders’
rights referred to in this Article Five, except to the extent expressly
provided herein.

 

27

 

Section 5.03.  Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee.  (a) The
Issuer covenants that if (i) default is made in the payment of any Current
Interest on any Note when the same becomes due and payable, and such default
continues for a period of five days, or (ii) default is made in the
payment of the principal of any Note when the same becomes due and payable on
the applicable Maturity Date, the Issuer will, upon demand of the Indenture
Trustee, pay to it, for the benefit of the Holders of the Notes, the whole
amount then due and payable on such Notes for principal and interest, with
interest on the overdue principal and, to the extent payment at such rate of
interest shall be legally enforceable, on overdue installments of interest at
the rate borne by the Notes and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee and its agents and counsel, and such amounts as may be due to
the Swap Counterparty.

 

(b)                                 In
case the Issuer shall fail forthwith to pay such amounts upon such demand, the
Indenture Trustee, in its own name and as trustee of an express trust, may
institute a Proceeding for the collection of the sums so due and unpaid, and
may prosecute such Proceeding to judgment or final decree, and may enforce the
same against the Issuer upon such Notes and collect in the manner provided by
law out of the property of the Issuer upon such Notes, wherever situated, the
moneys adjudged or decreed to be payable.

 

(c)                                  If
an Event of Default occurs and is continuing, the Indenture Trustee may, in its
discretion, or shall, at the direction of the Holders of Priority Class Notes
representing not less than a majority of the Outstanding Balance thereof, as
more particularly provided in Section 5.04, proceed to protect and enforce
its rights and the rights of the Noteholders, by such appropriate Proceedings
as the Indenture Trustee shall deem most effective to protect and enforce any
such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy or legal or equitable right vested in the
Indenture Trustee by this Indenture or by law.

 

(d)                                 In
case there shall be pending, relative to the Issuer or any other obligor upon
the Notes or any Person having or claiming an ownership interest in the
Collateral, Proceedings under Title 11 of the United States Code or any other
applicable federal or state bankruptcy, insolvency or other similar law, or in
case a receiver, assignee or trustee in bankruptcy or reorganization, or
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Indenture Trustee, irrespective of whether the
principal of any Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee
shall have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such Proceedings or otherwise:

 

(i)                                     to
file and prove a claim or claims for the whole amount of principal and interest
owing and unpaid in respect of the Notes and to file such other papers or
documents as may be necessary or advisable in order to have the claims of the
Indenture Trustee (including any claim for reasonable compensation to the
Indenture Trustee and

 

28

 

each predecessor Indenture Trustee, and their
respective agents, attorneys and counsel, and for reimbursement of all expenses
and liabilities incurred, and all advances made, by the Indenture Trustee and
each predecessor Indenture Trustee, except as a result of negligence or bad
faith) and of the Noteholders allowed in such Proceedings;

 

(ii)                                  unless
prohibited by applicable law and regulations, to vote on behalf of the Holders
of Notes in any election of a trustee, a standby trustee or Person performing
similar functions in any such Proceedings;

 

(iii)                               to
collect and receive any moneys or other property payable or deliverable on any
such claims and to distribute all amounts received with respect to the claims
of the Noteholders and of the Indenture Trustee on their behalf; and

 

(iv)                              to
file such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Indenture Trustee or the Holders
of Notes allowed in any Proceedings relative to the Issuer, its creditors and
its property;

 

and any trustee, receiver, liquidator,
custodian or other similar official in any such Proceeding is hereby authorized
by each of such Noteholders to make payments to the Indenture Trustee and, in
the event that the Indenture Trustee shall consent to the making of payments
directly to such Noteholders, to pay to the Indenture Trustee such amounts as
shall be sufficient to cover reasonable compensation to the Indenture Trustee,
each predecessor Indenture Trustee and their respective agents, attorneys and
counsel, and all other expenses and liabilities incurred by it or its agents,
and all advances made, by the Indenture Trustee and each predecessor Indenture
Trustee except as a result of negligence or bad faith.

 

(e)                                  Nothing
herein contained shall be deemed to authorize the Indenture Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof or to authorize the
Indenture Trustee to vote in respect of the claim of any Noteholder in any such
proceeding except, as aforesaid, to vote for the election of a trustee in
bankruptcy or similar Person.

 

(f)                                    All
rights of action and of asserting claims under this Indenture, or under any of
the Notes, may be enforced by the Indenture Trustee without the possession of
any of the Notes or the production thereof in any trial or other Proceedings
relative thereto, and any such action or Proceedings instituted by the
Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders of the Notes and the Swap Counterparty.

 

(g)                                 In
any Proceedings brought by the Indenture Trustee (and also any Proceedings
involving the interpretation of any provision of this Indenture to which the
Indenture Trustee shall be a party), the Indenture Trustee shall be held to
represent all the Holders of the Notes, and it shall not be necessary to make
any Noteholder a party to any such Proceedings.

 

29

 

Section 5.04.  Remedies; Priorities.  (a) If an Event of Default shall have
occurred and be continuing, the Indenture Trustee may, and at the direction of
Holders of Priority Class Notes representing a majority of the Outstanding
Balance thereof shall, do one or more of the following (subject to Section 5.05):

 

(i)                                     institute
Proceedings in its own name and as trustee of an express trust for the
collection of all amounts then payable on the Notes or under this Indenture
with respect thereto, whether by declaration or otherwise, enforce any judgment
obtained and collect from the Issuer and any other obligor upon such Notes
moneys adjudged due;

 

(ii)                                  institute
Proceedings from time to time for the complete or partial foreclosure of this
Indenture with respect to the Collateral;

 

(iii)                               exercise
any remedies of a secured party under the Relevant UCC and take any other appropriate
action to protect and enforce the rights and remedies of the Indenture Trustee
and the Holders of the Notes; and

 

(iv)                              sell
the Collateral or any portion thereof or rights or interest therein, at one or
more public or private sales called and conducted in any manner permitted by
law;

 

provided,
however, that the Indenture
Trustee may not sell or otherwise liquidate any Collateral following an Event
of Default, other than an Event of Default described in Section 5.01(a)(i) or
(ii), unless (A) the Holders of 100% of the Outstanding Balance of the
Notes consent thereto or (B) the proceeds of such sale or liquidation
distributable to the Noteholders are sufficient to discharge in full all
amounts then due and unpaid upon such Notes for principal and interest or (C) the
Indenture Trustee determines that the Collateral will not continue to provide
sufficient funds for the payment of principal of and interest on the Notes as
they would have become due if the Notes had not been declared due and payable,
and the Indenture Trustee obtains the consent of Holders of 66-2/3% of the
Outstanding Balance of the Notes.  In
determining such sufficiency or insufficiency with respect to clauses (B) and
(C), the Indenture Trustee may, but need not, obtain and rely upon an opinion
of an Independent investment banking or accounting firm of national reputation
as to the feasibility of such proposed action and as to the sufficiency of the
Collateral for such purpose.

 

(b)                                 If
the Indenture Trustee collects any money or property pursuant to this Article Five,
it shall pay out the money or property in the following order:

 

first:  to
the Indenture Trustee, for any costs or expenses, including any reasonable
out-of-pocket attorneys’ fees, incurred by it in connection with the enforcement
of the remedies provided for in this Article V and for any other unpaid
amounts due to the Indenture Trustee hereunder, to the Trust Administrator for
any amounts due and owing to it under the Transfer and Servicing Agreement, to
the Custodian for any amounts due and owing to them under the Custodial
Agreement, and to the Owner Trustee, to the extent of any fees and expenses due
and owing to it (including pursuant to Section 7.03 of the Trust
Agreement) and for any other unpaid amounts due to the Owner Trustee under the
Transfer and Servicing Agreement;

 

30

 

second:  to
the Master Servicer and Servicer for any Servicing Fees then due and unpaid and
any unreimbursed Advances and other servicing advances;

 

third:  to
the Swap Counterparty, any Net Swap Payments, if any, owed under the Swap
Agreement;

 

fourth:  to
the Notes, all accrued and unpaid interest thereon and amounts in respect of
principal, and to the Swap Counterparty, any swap termination payments, in each
case according to the priorities set forth in Section 6.02 of the Transfer
and Servicing Agreement; provided, however, that accrued and unpaid interest
shall be paid to Noteholders of each Class of Notes before any payments in
respect of principal; and

 

fifth:  to
the Owner Trustee or its Paying Agent for any amounts to be distributed to the
Holder of the Ownership Certificate.

 

The Indenture
Trustee may fix a record date and payment date for any payment to Noteholders
pursuant to this Section.  At least 15
days before such record date, the Issuer shall mail to each Noteholder and the
Indenture Trustee a notice that states the record date, the payment date and
the amount to be paid.

 

Section 5.05.  Optional Preservation of the Collateral.  If the Notes have been declared to be due and
payable under Section 5.02 following an Event of Default and such
declaration and its consequences have not been rescinded and annulled, the
Indenture Trustee may, but need not, elect to maintain possession of the Collateral.  It is the desire of the parties hereto and
the Noteholders that there be at all times sufficient funds for the payment of
principal of and interest on the Notes, and the Indenture Trustee shall take
such desire into account when determining whether or not to maintain possession
of the Collateral.  In determining
whether to maintain possession of the Collateral, the Indenture Trustee may,
but need not, obtain and rely upon an opinion (at the expense of the Issuer) of
an Independent investment banking or accounting firm of national reputation as
to the feasibility Of such proposed action and as to the sufficiency of the
Collateral for such purpose.

 

Section 5.06.  Limitation of Suits.  Other than as otherwise expressly provided
herein in the case of an Event of Default, no Holder of any Note shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:

 

(i)                                     such
Holder has previously given written notice to the Indenture Trustee of a
continuing Event of Default;

 

(ii)                                  the
Holders of not less than 25% of the Outstanding Balance of the Notes have made
written request to the Indenture Trustee to institute such Proceeding in
respect of such Event of Default in its own name as Indenture Trustee
hereunder;

 

(iii)                               such
Holder or Holders have offered to the Indenture Trustee reasonable indemnity
against the costs, expenses and liabilities to be incurred in complying with
such request;

 

31

 

(iv)                              the
Indenture Trustee for 60 days after its receipt of such notice, request and
offer of indemnity has failed to institute such Proceedings; and

 

(v)                                 no
direction inconsistent with such written request has been given to the
Indenture Trustee during such 60-day period by the Holders of a majority of the
Outstanding Balance of the Notes.

 

It is
understood and intended that no one or more Holders of Notes shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders
of Notes or to obtain or to seek to obtain priority or preference over any
other Holders or to enforce any right under this Indenture, except in the
manner herein provided.

 

In the event
the Indenture Trustee shall receive conflicting or inconsistent requests and
indemnity from two or more groups of Holders of Notes, each representing less
than a majority of the Outstanding Balance of the Notes, the Indenture Trustee
in its sole discretion may determine what action, if any, shall be taken,
notwithstanding any other provisions of this Indenture.

 

Section 5.07.  Unconditional Rights of Noteholders To
Receive Principal and Interest. 
Notwithstanding any other provisions in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest, if any, on such Note on or after the
respective due dates thereof expressed in such Note or in this Indenture (or,
in the case of redemption, on or after the Redemption Date) and to institute
suit.  for the enforcement of any such
payment, and such right shall not be impaired without the consent of such
Holder.

 

Section 5.08.  Restoration of Rights and Remedies.  If the Indenture Trustee or any Noteholder
has instituted any Proceeding to enforce any right or remedy under this
Indenture and such Proceeding has been discontinued or abandoned for any reason
or has been determined adversely to the Indenture Trustee or to such
Noteholder, then and in every such case the Issuer, the Indenture Trustee and
the Noteholders shall, subject to any determination in such Proceeding, be
restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Indenture Trustee and the Noteholders
shall continue as though no such Proceeding had been instituted.

 

Section 5.09.  Rights and Remedies Cumulative.  No right or remedy herein conferred upon or
reserved to the Indenture Trustee or to the Noteholders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise.  The assertion or employment
of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.

 

Section 5.10.  Delay or Omission Not a Waiver.  No delay or omission of the Indenture Trustee
or any Holder of any Note to exercise any right or remedy accruing upon any
Default or Event of Default, shall impair any such right or remedy or
constitute a waiver of any such

 

32

 

Default or Event
of Default or an acquiescence therein. 
Every right and remedy given by this Article Five or by law to the
Indenture Trustee or to the Noteholders may be exercised from time to time, and
as often as may be deemed expedient, by the Indenture Trustee or by the
Noteholders, as the case may be.

 

Section 5.11.  Control by Noteholders.  Except as otherwise provided in Section 5.02,
the Holders of a majority of the Outstanding Balance of the Notes shall have
the right to direct the time, method and place of conducting any Proceeding for
any remedy available to the Indenture Trustee with respect to the Notes or
exercising any trust or power conferred on the Indenture Trustee; provided
that:

 

(i)                                     such
direction shall not be in conflict with any rule of law or with this
Indenture;

 

(ii)                                  subject
to the express terms of Section 5.04, any direction to the Indenture
Trustee to sell or liquidate the Collateral shall be by Holders of Notes representing
not less than 100% of the Outstanding Balance of the Notes;

 

(iii)                               if
the conditions set forth in Section 5.05 have been satisfied and the
Indenture Trustee elects to retain the Collateral pursuant to such Section,
then any direction to the Indenture Trustee by Holders of Notes representing
less than 100% of the Outstanding Balance of the Notes to sell or liquidate the
Collateral shall be of no force and effect; and

 

(iv)                              the
Indenture Trustee may take any other action deemed proper by the Indenture
Trustee that is not inconsistent with such direction.

 

Notwithstanding
the rights of the Noteholders set forth in this Section, subject to Section 6.01(h),
the Indenture Trustee need not take any action that it determines might involve
it in liability or might materially adversely affect the rights of any
Noteholders not consenting to such action.

 

Section 5.12.  Waiver of Past Defaults.  Prior to the declaration of the acceleration
of the maturity of the Notes as provided in Section 5.02, the Holders of
Notes of not less than a majority of the Outstanding Balance of the Notes may
waive, in writing, any past Default or Event of Default and its consequences
except a Default (a) in payment of principal of or interest on any of the
Notes or (b) in respect of a covenant or provision hereof which cannot be
modified or amended without the consent of the Holder of each Note.  In the case of any such waiver, the Issuer,
the Indenture Trustee and the Holders of the Notes shall be restored to their
former positions and rights hereunder, respectively; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereto.

 

Upon any such
waiver, such Default shall cease to exist and be deemed to have been cured and
not to have occurred, and any Event of Default arising therefrom shall be
deemed to have been cured and not to have occurred, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default
or Event of Default or impair any right consequent thereto.

 

33

 

Section 5.13.  Undertaking for Costs.  All parties to this Indenture agree, and each
Holder of a Note by such Holder’s acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this indenture, or in any suit against
the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys’ fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted
by the Indenture Trustee, (b) any suit instituted by any Noteholder, or
group of Noteholders, in each case holding in the aggregate more than 10% of
the Outstanding Balance of the Notes or (c) any suit instituted by any
Noteholder for the enforcement of the payment of principal of or interest on
any Note on or after the respective due dates expressed in such Note and in
this Indenture (or, in the case of redemption, on or after the Redemption
Date).

 

Section 5.14.  Waiver of Stay or Extension Laws.  The Issuer covenants (to the extent that it
may lawfully do so) that it will not at any time insist upon, or plead or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and the Issuer (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Indenture Trustee, but
will suffer and permit the execution of every such power as though no such law
bad been enacted.

 

Section 5.15.  Action on Notes.  The Indenture Trustee’s right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture.  Neither the lien of
this Indenture nor any rights or remedies of the Indenture Trustee or the
Noteholders shall be impaired by the recovery of any judgment by the Indenture
Trustee against the Issuer or by the levy of any execution under such judgment
upon any portion of the Collateral or upon any of the assets of the
Issuer.  Any money or property collected
by the Indenture Trustee shall be applied in accordance with Section 5.04(b).

 

Section 5.16.  Performance and Enforcement of Certain
Obligations.  (a) Promptly
following a request from the Indenture Trustee to do so, the Issuer shall take
all such lawful action as the Indenture Trustee may request to compel or secure
the performance and observance by the Seller, the Depositor, the Trust
Administrator or the Master Servicer, as applicable, of each of their
obligations to the Issuer under or in connection with the Mortgage Loan
Purchase Agreement and Transfer and Servicing Agreement, and to exercise any
and all rights, remedies, powers and privileges lawfully available to the
Issuer under or in connection with the Transfer and Servicing Agreement to the
extent and in the manner directed by the Indenture Trustee, including the
transmission of notices of default on the part of the Seller, the Depositor,
the Trust Administrator or the Master Servicer, as applicable, under the
Mortgage Loan Purchase Agreement and Transfer and Servicing Agreement and the
institution of legal or administrative actions or proceedings to compel or
secure performance by the Seller, the Depositor, the Trust Administrator or the
Master Servicer of each of their applicable obligations under the Mortgage Loan
Purchase Agreement and Transfer and Servicing Agreement.

 

34

 

(b)                                 If
an Event of Default has occurred and is continuing, the Indenture Trustee may,
and at the direction (which direction shall be in writing or by telephone
(confirmed in writing promptly thereafter)) of the Holders of a majority of the
Outstanding Balance of the Priority Class Notes shall, exercise all
rights, remedies, powers, privileges and claims of the Issuer against the
Depositor, the Trust Administrator or the Master Servicer under or in
connection with the Transfer and Servicing Agreement or the Seller under or in
connection with the Mortgage Loan Purchase Agreement, including the right or
power to take any action to compel or secure performance or observance by the
Seller, the Depositor or the Master Servicer, of each of their applicable
obligations to the Issuer thereunder and to give any consent, request, notice,
direction, approval, extension or waiver under the Transfer and Servicing
Agreement, and any right of the Issuer to take such action shall be suspended.

 

ARTICLE SIX

THE INDENTURE TRUSTEE

 

Section 6.01.  Duties of Indenture Trustee.  (a)  If an Event of Default has occurred
and is continuing, the Indenture Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in its
exercise as a prudent person would exercise or use under the circumstances in
the conduct of such person’s own affairs.

 

(b)                                 Except
during the continuance of an Event of Default:

 

(i)                                     the
Indenture Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture and shall not be liable except for the
performance of such duties and obligations as are specifically set forth in
this Indenture and no implied covenants or obligations shall be read into this
Indenture against the Indenture Trustee; and

 

(ii)                                  in
the absence of bad faith on its part, the Indenture Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Indenture
Trustee and on their face conforming to the requirements of this Indenture;
however, the Indenture Trustee shall examine the certificates and opinions to
determine whether or not they conform on their face to the requirements of this
Indenture.

 

(c)                                  The
Indenture Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act, its own willful misconduct or its own
bad faith, except that:

 

(i)                                     this
paragraph does not limit the effect of paragraph (a) of this Section;

 

(ii)                                  the
Indenture Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer unless it is proved that the Indenture Trustee
was negligent in ascertaining the pertinent facts;

 

35

 

(iii)                               the
Indenture Trustee shall not be liable with respect to any action it takes or
omits to take in good faith in accordance with this Indenture or upon a
direction received by it from the requisite Noteholders pursuant to Article Five;
and

 

(iv)                              the
Indenture Trustee shall not be required to take notice or be deemed to have
notice or knowledge of (a) any failure by the Issuer to comply with its
obligations hereunder or in the Operative Agreements or (b) any Default or
Event of Default, unless a Responsible Officer of the Indenture Trustee
assigned to and working in its corporate trust department obtains actual
knowledge of such Default or Event of Default or shall have received written
notice thereof.  In the absence of such
actual knowledge or notice, the Indenture Trustee may conclusively assume that
there is no Default or Event of Default.

 

(d)                                 Every
provision of this Indenture that in any way relates to the Indenture Trustee is
subject to the provisions of this Section.

 

(e)                                  The
Indenture Trustee shall not be liable for indebtedness evidenced by or arising
under any of the Operative Agreements, including principal of or interest on
the Notes, or interest on any money received by it except as the Indenture Trustee
may agree in writing with the Issuer.

 

(f)                                    Money
held in trust by the Indenture Trustee need not be segregated from other funds
except to the extent required by law or the terms of this Indenture or the
Transfer and Servicing Agreement.

 

(g)                                 No
provision of this Indenture shall require the Indenture Trustee to expend,
advance or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it provided, however, that the Indenture Trustee shall
not refuse or fail to perform any of its duties hereunder solely as a result of
nonpayment of its normal fees and expenses.

 

(h)                                 Every
provision of this Indenture or any Operative Agreement relating to the conduct
or affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section, Section 6.02 and to
the provisions of the TIA.

 

(i)                                     The
Indenture Trustee shall execute and deliver the Transfer and Servicing
Agreement and perform its duties thereunder.

 

(j)                                     The
Indenture Trustee shall not have any duty or obligation to manage, make any
payment with respect to, register, record, sell, dispose of, or otherwise deal
with the Collateral, or to otherwise take or refrain from taking any action
under, or in connection with, any document contemplated hereby to which the
Indenture Trustee is a party, except as expressly provided (i) in
accordance with the powers granted to and the authority conferred upon the
Indenture Trustee pursuant to this Agreement or any other Operative Agreement,
and (ii) in accordance with any document or instruction delivered to the
Indenture Trustee pursuant to the terms of this Agreement; and no implied
duties or obligations shall be read into this Agreement or any

 

36

 

Operative
Agreement against the Indenture Trustee. 
The Indenture Trustee agrees that it will, at the cost and expense of
the Issuer, promptly take all action as maybe necessary to discharge any liens
on any part of the Collateral that result from actions by, or claims against
itself (in its individual capacity, and not in the capacity of Indenture
Trustee) that are not related to the administration of the Collateral.

 

Section 6.02.  Rights of Indenture Trustee.  (a) The Indenture Trustee may rely on
any document believed by it to be genuine and to have been signed or presented
by the proper person.  The Indenture
Trustee need not investigate any fact or matter stated in the document.

 

(b)                                 Before
the Indenture Trustee acts or refrains from acting, it may require an Officer’s
Certificate or an Opinion of Counsel, which shall not be at the expense of the
Indenture Trustee.  The Indenture Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on an Officer’s Certificate or Opinion of Counsel.  The right of the Indenture Trustee to perform
any discretionary act enumerated in this Indenture or in any Operative
Agreement shall not be construed as a duty and the Indenture Trustee shall not
be answerable for other than its negligence or willful misconduct in the
performance of such act.

 

(c)                                  The
Indenture Trustee may execute any of the trusts or powers hereunder or perform
any duties hereunder either directly or by or through agents or attorneys or a
custodian or nominee.

 

(d)                                 The
Indenture Trustee shall not be liable for any action it takes or omits to take
in good faith which it believes to be authorized or within its rights or
powers; provided, that the Indenture Trustee’s conduct does not constitute
willful misconduct, negligence or bad faith.

 

(e)                                  The
Indenture Trustee may consult with counsel, and any Opinion of Counsel with
respect to legal matters relating to this Indenture, any Operative Agreement
and the Notes shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder
in good faith and in accordance with any Opinion of Counsel of such counsel.

 

(f)                                    In
the event that the Indenture Trustee is also acting as Paying Agent, Note
Registrar, Custodian or Trust Administrator hereunder or under any Operative
Agreement, the rights and protections afforded to the Indenture Trustee
pursuant to this Article Six shall be afforded to such Paying Agent, Note
Registrar, Custodian and Trust Administrator.

 

(g)                                 The
permissive rights of the Indenture Trustee enumerated herein shall not be
construed as duties.

 

Section 6.03.  Individual Rights of Indenture Trustee.  The Indenture Trustee in its individual or
any other capacity may become the owner or pledgee of Notes and may otherwise
deal with the Issuer or its Affiliates with the same rights it would have if it
were not Indenture Trustee.  Any Paying
Agent, Note Registrar, co-registrar or co-paying agent may do the same with
like rights.  However, the Indenture
Trustee must comply with Section 6.11.

 

Section 6.04.  Indenture Trustee’s Disclaimer.  The Indenture Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
any of the

 

37

 

Operative
Agreements or the Notes or the sufficiency of the Collateral; it shall not be
accountable for the Issuer’s use of the proceeds from the Notes, and it shall
not be responsible for any statement of the Issuer or the Servicer in this
Indenture, any Operative Agreement or in any other document issued in
connection with the sale of the Notes or in the Notes other than the Indenture
Trustee’s certificate of authentication.

 

Section 6.05.  Notice of Defaults.  If a Default occurs and is continuing and if
a Responsible Officer of the Indenture Trustee has actual knowledge thereof,
the Indenture Trustee shall give prompt written notice thereof to each
Noteholder.

 

Section 6.06.  Reports by Indenture Trustee to Holders.  The Trust Administrator shall deliver to each
Noteholder such information with respect to the Notes as may be required to
enable such holder to prepare its federal and state income tax returns and
shall file such information returns with the Internal Revenue Service with
respect to payments or accruals of interest on the Notes as are required to be
filed under the Code or applicable Treasury Regulations.

 

Section 6.07.  Compensation and Indemnity.  The Indenture Trustee shall be entitled, as
compensation for its services, a fee to be paid by the Master Servicer as
provided in the Transfer and Servicing Agreement.  The Indenture Trustee’s compensation shall
not be limited by any law on compensation of a trustee of an express
trust.  The Indenture Trustee and any
co-trustee shall be reimbursed on behalf of the Issuer from funds in the
Collection Account, as provided in the Transfer and Servicing Agreement, for
all reasonable ordinary out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its services
(as provided in the Transfer and Servicing Agreement).  Reimbursable expenses under this Section shall
include the reasonable compensation and expenses, disbursements and advances of
the Indenture Trustee’s agents, counsel, accountants and experts.  The Issuer shall indemnify the Indenture
Trustee, any co-trustee and their respective employees, directors and agents,
as provided in the Transfer and Servicing Agreement and from funds in the
Collection Account, against any and all claim, loss, liability or expense (including
attorneys’ fees) incurred by it in connection with the administration of this
trust and the performance of its duties hereunder or under any Operative
Agreement, including, without limitation, the execution and filing of any
information returns.  The Indenture
Trustee or co-trustee, as applicable, shall notify the Issuer and the Trust
Administrator promptly of any claim for which it may seek indemnity.  Failure by the Indenture Trustee or the
co-trustee, as applicable, to so notify the Issuer and the Trust Administrator
shall not relieve the Issuer or the Trust Administrator of its obligations
hereunder.  The Issuer shall defend any
such claim, and the Indenture Trustee and any co-trustee may have separate counsel
and the fees and expenses of such counsel shall be payable on behalf of the
Issuer from funds in the Collection Account. 
The Issuer shall not be required to reimburse any expense or indemnify
against any loss, liability or expense incurred by the Indenture Trustee or any
co-trustee through the Indenture Trustee’s or co-trustee’s, as the case may be,
own willful misconduct, negligence or bad faith.

 

The Issuer’s
obligations to the Indenture Trustee and any co-trustee pursuant to this Section shall
survive the resignation or removal of the Indenture Trustee and the termination
of discharge of this Indenture.  When the
Indenture Trustee or any co-trustee incurs expenses after the occurrence of a
Default specified in Section 5.01(iv) or (vi) with respect to
the Issuer, the

 

38

 

expenses are
intended to constitute expenses of administration under Title 11 of the United
States Code or any other applicable federal or state bankruptcy, insolvency or
similar law.

 

Section 6.08.  Replacement of Indenture Trustee.  No resignation or removal of the Indenture
Trustee and no appointment of a successor Indenture Trustee shall become
effective until the acceptance of appointment by the successor Indenture
Trustee pursuant to this Section.  The
Indenture Trustee may resign at any time by giving 90 days’ written notice
thereof to the Depositor, the Issuer, each Noteholder and each Rating
Agency.  The Issuer shall remove the
Indenture Trustee if:

 

(i)                                     the
Indenture Trustee fails to comply with Section 6.11;

 

(ii)                                  the
Indenture Trustee is adjudged bankrupt or insolvent;

 

(iii)                               a
receiver or other public officer takes charge of the Indenture Trustee or its
property; or

 

(iv)                              the
Indenture Trustee otherwise becomes incapable of acting.

 

If the
Indenture Trustee resigns or is removed or if a vacancy exists in the office of
the Indenture Trustee for any reason (the Indenture Trustee in such event being
referred to herein as the retiring Indenture Trustee), the Issuer shall
promptly appoint a successor Indenture Trustee that satisfies the eligibility
requirements of Section 6.11.

 

The resigning
or removed Indenture Trustee agrees to cooperate with any successor Indenture
Trustee in effecting the termination of the resigning or removed Indenture
Trustee’s responsibilities and rights hereunder and shall promptly provide such
successor Indenture Trustee all documents and records reasonably requested by
it to enable it to assume the Indenture Trustee’s functions hereunder.

 

A successor
Indenture Trustee shall deliver a written acceptance of its appointment to the
retiring Indenture Trustee and to the Issuer. 
Thereupon the resignation or removal of the retiring Indenture Trustee
shall become effective, and the successor Indenture Trustee shall have all the
rights, powers and duties of the Indenture Trustee under this Indenture.  The successor Indenture Trustee shall mail a
notice of its succession to Noteholders. 
The retiring Indenture Trustee shall promptly transfer all property held
by it as Indenture Trustee to the successor Indenture Trustee.

 

If a successor
Indenture Trustee does not take office within 30 days after the retiring
Indenture Trustee resigns or is removed, the retiring Indenture Trustee, the
Issuer or the Holders of a majority in Outstanding Balance of the Notes may
petition any court of competent jurisdiction for the appointment of a successor
Indenture Trustee.

 

If the
Indenture Trustee fails to comply with Section 6.11, any Noteholder may
petition any court of competent jurisdiction for the removal of the Indenture
Trustee and the appointment of a successor Indenture Trustee.

 

Section 6.09.  Successor Indenture Trustee by Merger.  If the Indenture Trustee consolidates with,
merges or converts into, or transfers all or substantially all its corporate
trust

 

39

 

business or assets
to, another corporation or banking association, the resulting, surviving or
transferee corporation without any further act shall be the successor Indenture
Trustee; provided, that such corporation or banking association shall be
otherwise qualified and eligible under Section 6.11.  The Indenture Trustee shall provide each
Rating Agency prior written notice of any such transaction.

 

In case at the
time such successor or successors by merger, conversion or consolidation to the
Indenture Trustee shall succeed to the trusts created by this Indenture any of
the Notes shall have been authenticated but not delivered, any such successor
to the Indenture Trustee may adopt the certificate of authentication of any
predecessor trustee and deliver such Notes so authenticated; and in case at
that time any of the Notes shall not have been authenticated, any successor to
the Indenture Trustee may authenticate such Notes either in the name of any
predecessor hereunder or in the name of the successor to the Indenture Trustee;
and in all such cases such certificates shall have the full force which it is
anywhere in the Notes or in this Indenture provided that the certificate of the
Indenture Trustee shall have.

 

Section 6.10.  Appointment of Co-Indenture Trustee or
Separate Indenture Trustee.  (a) Notwithstanding
any other provisions of this Indenture, at anytime, for the purpose of meeting
any legal requirement of any jurisdiction in which any part of the Collateral
may at the time be located, the Indenture Trustee shall have the power and may
execute and deliver all instruments to appoint one or more Persons to act as a
co-trustee or co-trustees, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity
and for the benefit of the Noteholders, such title to the Collateral, or any
part hereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Indenture Trustee may consider
necessary or desirable.  No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility
as a successor trustee under Section 6.11 and no notice to Noteholders of
the appointment of any co-trustee or separate trustee shall be required under Section 6.08
hereof.

 

(b)                                 Every
separate trustee and co-trustee shall, to the extent permitted by law, be
appointed and act subject to the following provisions and conditions:

 

(i)                                     all
rights, powers, duties and obligations conferred or imposed upon the Indenture
Trustee shall be conferred or imposed upon and exercised or performed by the
Indenture Trustee and such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not authorized to act
separately without the Indenture Trustee joining in such act), except to the
extent that under any law of any jurisdiction in which any particular act or
acts are to be performed the Indenture Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Collateral or any
portion thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the direction of
the Indenture Trustee;

 

(ii)                                  no
trustee hereunder shall be personally liable by reason of any act or omission
of any other trustee hereunder; and

 

40

 

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

 

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

 

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

 

Section 6.11.  Eligibility; Disqualification.  The Indenture Trustee shall at all times (i) satisfy
the requirements of TIA Section 310(a), (ii) have a combined capital
and surplus of at least $100,000,000 as set forth in its most recently
published annual report of condition, (iii) have a long-term debt rating
equivalent to “A” or better by the Rating Agencies or be otherwise acceptable
to the Rating Agencies and (iv) not be an Affiliate of the Issuer or the
Owner Trustee.  The Indenture Trustee
shall comply with TIA Section 310(b), including the optional provision
permitted by the second sentence of TIA Section 310(b)(9); provided,
however, that there shall be excluded from the operation of TIA Section 310(b)(l)
any indenture or indentures under which other securities of the Issuer are
outstanding if the requirements for such exclusion set forth in TIA Section 310(b)(1) are
met.

 

Section 6.12.  Representations and Warranties.  The Indenture Trustee hereby represents that:

 

(a)                                  the
Indenture Trustee is duly organized and validly existing as a [                                ]
in good standing under the laws of [                   
            ] with
power and authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted;

 

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

 

(c)                                  the
consummation of the transactions contemplated by this Indenture and the
fulfillment of the terms hereof do not conflict with, result in any breach of
any of the terms and

 

41

 

provisions of, or
constitute (with or without notice or lapse of time) a default under the
articles of organization or bylaws of the Indenture Trustee or, to the
knowledge of the Indenture Trustee, any agreement or other instrument to which
the Indenture Trustee is a party or by which it is bound; and

 

(d)                                 to
the Indenture Trustee’s best knowledge, there are no proceedings or
investigations pending or threatened before any court, regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Indenture Trustee or its properties: 
(i) asserting the invalidity of this Indenture, (ii) seeking
to prevent the consummation of any of the transactions contemplated by this
Indenture or (iii) seeking any determination or ruling that might
materially and adversely affect the performance by the Indenture Trustee of its
obligations under, or the validity or enforceability of, this Indenture.

 

Section 6.13.  Preferential Collection of Claims Against
Issuer.  The Indenture Trustee shall
comply with TIA Section 311(a), excluding any creditor relationship listed
in TIA Section 311(b).  An Indenture
Trustee which has resigned or been removed shall be subject to TIA Section 311(a) to
the extent indicated.

 

ARTICLE SEVEN

NOTEHOLDERS’ LISTS AND REPORTS

 

Section 7.01.  Note Registrar To Furnish to the Indenture
Trustee the Names and Addresses of Noteholders.  The Note Registrar will furnish or cause to
be furnished to the Indenture Trustee at such times as the Indenture Trustee
may request in writing, within 30 days after receipt by the Note Registrar of
any such request, a list in such form as the Indenture Trustee may reasonably
require, of the names and addresses of the Holders of Notes as of a date not
more than 10 days prior to the time such list is furnished.

 

Section 7.02.  Preservation of Information:  Communications to Noteholders.  (a) The Trust Administrator shall
preserve, in as current a form as is reasonably practicable, the names and
addresses of the Holders of Notes contained in the most recent list furnished
to the Trust Administrator as provided in Section 7.01 and the names and
addresses of Holders of Notes received by the Trust Administrator in its capacity
as Note Registrar.  The Trust
Administrator may destroy any list furnished to it as provided in such Section 7.01
upon receipt of a new list so furnished. 
If three or more Noteholders, or one or more Holders of a Class of
Notes evidencing not less than 25% of the Outstanding Balance thereof
(hereinafter referred to as “Applicants”), apply in writing to the Trust
Administrator or the Indenture Trustee, and such application states that the
Applicants desire to communicate with other holders with respect to their
rights under this Indenture or under the Notes, then the Trust Administrator
shall, within five Business Days after the receipt of such application, afford
such Applicants access, during normal business hours, to the current list of
Holders.  Every Holder, by receiving and
holding a Note, agrees with the Issuer, the Indenture Trustee and the Trust
Administrator that neither the Issuer, the Indenture Trustee nor the Trust
Administrator shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Holders under this Indenture,
regardless of the source from which such information was derived.

 

42

 

(b)                                 Noteholders
may communicate pursuant to TIA Section 312(b) with other Noteholders
with respect to their rights under this Indenture or under the Notes.

 

(c)                                  The
Issuer, the Indenture Trustee and the Trust Administrator shall have the
protection of TIA Section 312(e).

 

Section 7.03.  Reports by Issuer.  (a) The Issuer shall:

 

(i)                                     file
with the Indenture Trustee and the Commission in accordance with the rules and
regulations prescribed from time to time by the Commission such additional
information, documents and reports with respect to compliance by the Issuer
with the conditions and covenants of this Indenture as may be required from
time to time by such rules and regulations.  Delivery of such information, documents and
reports to the Indenture Trustee is for informational purposes only and the
Indenture Trustee’s receipt of such reports shall not constitute constructive
notice of any information contained therein or determinable from information
contained therein, including the Issuer’s compliance with any of its covenants
hereunder (as to which the Indenture Trustee is entitled to rely exclusively on
Officers’ Certificates); and

 

(ii)                                  supply
to the Trust Administrator (and the Trust Administrator shall transmit by mail
to all Noteholders described in TIA Section 313(c)) such summaries of any
information, documents and reports required to be filed by the Issuer pursuant
to clause (i) of this Section 7.03(a) and by rules and
regulations prescribed from time to time by the Commission.

 

(b)                                 Unless
the Issuer otherwise determines, the fiscal year of the Issuer shall end on December 31
of each year.

 

Section 7.04.  Reports by Indenture Trustee.  If required by TIA Section 313(a),
within 60 days after each March 1, beginning with March 1, 2005, the
Indenture Trustee shall mail to each Noteholder as required by TIA Section 313(c) a
brief report dated as of such date that complies with TIA Section 313(a).  The Indenture Trustee also shall comply with
TIA Section 313(b).

 

A copy of each
report at the time of its mailing to Noteholders shall be filed by the
Indenture Trustee with the Commission and each securities exchange, if any, on
which the Notes are listed.  The Issuer
shall notify the Indenture Trustee if and when the Notes are listed on any
securities exchange.

 

ARTICLE EIGHT

ACCOUNTS, DISBURSEMENTS AND RELEASES

 

Section 8.01.  Collection of Money.  Except as otherwise expressly provided
herein, the Indenture Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Indenture Trustee pursuant to this Indenture.  The Indenture Trustee shall apply all such
money received by it as provided in this Indenture.  Except

 

43

 

as otherwise
expressly provided in this Indenture, if any default occurs in the making of
any payment or performance under any agreement or instrument that is part of
the Collateral, the Indenture Trustee may take such action as may be appropriate
to enforce such payment or performance, including the institution and
prosecution of appropriate Proceedings. 
Any such action shall be without prejudice to any right to claim a
Default or Event of Default under this Indenture and any right to proceed
thereafter as provided in Article Five.

 

Section 8.02.  Collection Account.  On each Payment Date and Redemption Date, the
Paying Agent (or, if the Indenture Trustee acts as Paying Agent, the Indenture
Trustee) shall distribute all amounts on deposit in the Collection Account as
provided in Sections 5.08 and 6.02 of the Transfer and Servicing Agreement.

 

Section 8.03.  Release of Collateral.  (a) Subject to the payment of its fees
and expenses pursuant to Section 6.07, the Indenture Trustee may, and when
required by the provisions of this Indenture and the Transfer and Servicing
Agreement shall, execute instruments to release property from the lien of this
Indenture, or convey the Indenture Trustee’s interest in the same, in a manner
and under circumstances that are not inconsistent with the provisions of this
Indenture.  No party relying upon an
instrument executed by the Indenture Trustee as provided in this Article Eight
shall be bound to ascertain the Indenture Trustee’s authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
monies.

 

(b)                                 The
Indenture Trustee shall, at such time as there are no Notes outstanding and all
sums due to the Noteholders pursuant to the Transfer and Servicing Agreement
and all fees and expenses of the Indenture Trustee, the Master Servicer, the
Trust Administrator and the Custodian pursuant to this Indenture or any other
Operative Agreement have been paid, release any remaining portion of the
Collateral that secured the Notes from the lien of this Indenture and release
to the Issuer or any other Person entitled thereto any funds then on deposit in
the Trust Account and assign or transfer any outstanding Swap Agreement.  The Indenture Trustee shall release property
from the lien of this Indenture pursuant to this subsection (b) only
upon receipt of an Issuer Request accompanied by an Officer’s Certificate, an
Opinion of Counsel and (if required by the TIA) Independent Certificates in
accordance with TIA Sections 314(c) and 314(d)( 1) meeting the applicable
requirements of Section 11.01 hereof.

 

ARTICLE NINE

SUPPLEMENTAL INDENTURES

 

Section 9.01.  Supplemental Indentures Without Consent of
Noteholders.  (a) Without the
consent of the Holders of any Notes but with prior notice to each Rating
Agency, the Issuer and the Indenture Trustee and with the prior written consent
of the Swap Counterparty (but only to the extent such supplemental indenture
materially adversely affects the amounts, priority or timing of payments under
the Swap Agreement), when authorized by an Issuer Order, at any time and from
time to time, may enter into one or more indentures supplemental hereto (which
shall conform to the provisions of the Trust Indenture Act as in force at the
date of the execution thereof), in form satisfactory to the Indenture Trustee,
for any of the following purposes:

 

44

 

(i)                                     to
correct or amplify the description of any property at any time subject to the
lien of this Indenture, or better to assure, convey and confirm unto the
Indenture Trustee any property subject or required to be subjected to the lien
of this Indenture, or to subject to the lien of this Indenture additional
property;

 

(ii)                                  to
evidence the succession, in compliance with the applicable provisions hereof,
of another person to the Issuer, and the assumption by any such successor of
the covenants of the Issuer herein and in the Notes contained;

 

(iii)                               to
add to the covenants of the Issuer, for the benefit of the Holders of the Notes,
or to surrender any right or power herein conferred upon the Issuer;

 

(iv)                              to
convey, transfer, assign, mortgage or pledge any property to or with the
Indenture Trustee;

 

(v)                                 (A) to
cure any ambiguity, (B) to correct or supplement any provision herein or
in any supplemental indenture that may be inconsistent with any other
provisions herein or in any supplemental indenture or to conform the provisions
hereof to those of the Offering Document, (C) to obtain or maintain a
rating for a Class of Notes from a nationally recognized statistical
rating organization, (D) to make any other provisions with respect to
matters or questions arising under this Indenture; provided, however, that no such supplemental indenture
entered into pursuant to clause (D) of this subparagraph (v) shall
adversely affect in any material respect the interests of any Holder not
consenting thereto;

 

(vi)                              to
evidence and provide for the acceptance of the appointment hereunder by a
successor trustee with respect to the Notes and to add to or change any of the
provisions of this Indenture as shall be necessary to facilitate the
administration of the trusts hereunder by more than one trustee, pursuant to
the requirements of Article Six; or

 

(vii)                           to
modify, eliminate or add to the provisions of this Indenture to such extent as
shall be necessary to effect the qualification of this Indenture under the TIA
or under any similar federal statute hereafter enacted and to add to this
Indenture such other provisions as may be expressly required by the TIA.

 

provided,
however, that no such
supplemental indenture shall be entered into unless the Indenture Trustee shall
have received an Opinion of Counsel stating that as a result of such
supplemental indenture, the Trust will not be subject to federal income tax as
long as an entity that qualifies as a REIT under the Code holds directly, or
indirectly through one or more Qualified REIT Subsidiaries, a 100% ownership
interest in the Ownership Certificate, and the Indenture Trustee receives an
Officer’s Certificate from the Holder of the Ownership Certificate that the
Holder of the Ownership Certificate either qualifies as a REIT or a Qualified
REIT Subsidiary under the Code and the Holder of the Ownership Certificate
holds a 100% ownership Interest in the Ownership Certificate.

 

The Indenture
Trustee is hereby authorized to join in the execution of any such supplemental
indenture and to make any further appropriate agreements and stipulations that
may be therein contained.

 

45

 

(b)                                 A
letter from each Rating Agency to the effect that any supplemental indenture
entered into pursuant to this Section 9.01 will not cause the then-current
ratings on the Notes to be qualified, reduced or withdrawn shall constitute
conclusive evidence that such amendment does not adversely affect in any
material respect the interests of the Noteholders.

 

Section 9.02.  Supplemental Indentures with Consent of
Noteholders.  The Issuer and the
Indenture Trustee, when authorized by an Issuer Order, also may, with prior
notice to each Rating Agency and with the consent of the Holders of not less
than 66-2/3% of the Outstanding Balance of the Notes and with the prior written
consent of the Swap Counterparty (but only to the extent such supplemental
indenture materially adversely affects the amounts, priority or timing of
payments under the Swap Agreement), by Act of such Holders delivered to the
Issuer and the Indenture Trustee, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that no such supplemental
indenture shall, adversely affect the interests of the Noteholders without the
consent of the Holder of each Outstanding Note affected thereby (i) reduce
in any manner the amount of, or delay the timing of, payments in respect of any
Note, (ii) alter the obligations of the Servicer or the Indenture Trustee
to make an Advance or alter the servicing standards set forth in the Transfer
and Servicing Agreement or the Servicing Agreement, (iii) reduce the
aforesaid percentages of Notes the Holders of which.  are required to consent to any such
supplemental indenture, without the consent of the Holders of all Notes
affected thereby, or (iv) permit the creation of any lien ranking prior to
or on a parity with the lien of this Indenture with respect to any part of the
Collateral or, except as otherwise permitted or contemplated herein, terminate
the lien of this Indenture on any property at any time subject hereto or
deprive the Holder of any Note of the security provided by the lien of this
Indenture and provided, further,
that such action shall not, as evidenced by an Opinion of Counsel, subject the
Trust to federal income tax as long as an entity that qualifies as a REIT under
the Code holds directly, or indirectly through one or more Qualified REIT
Subsidiaries, a 100% ownership interest in the Ownership Certificate, and provided further, that the Indenture
Trustee receives an Officer’s Certificate from the Holder of the Ownership
Certificate that the Holder of the Ownership Certificate either qualifies as a
REIT or a Qualified REIT Subsidiary under the Code and the Holder of the
Ownership Certificate holds a 100% ownership Interest in the Ownership
Certificate.

 

The Indenture
Trustee may rely on an Opinion of Counsel to determine whether or not any Notes
would be affected by any supplemental indenture and any such determination
shall be conclusive upon the Holders of all Notes, whether theretofore or
thereafter authenticated and delivered hereunder.

 

It shall not
be necessary for any Act of Noteholders under this Section to approve the particular
form of any proposed supplemental indenture, but it shall be sufficient if such
Act shall approve the substance thereof.

 

Promptly after
the execution by the Issuer and the Indenture Trustee of any supplemental
indenture pursuant to this Section, the Issuer shall mail to the Holders of the
Notes to which such amendment or supplemental indenture relates and each Rating
Agency a notice setting forth in general terms the substance of such
supplemental indenture.  Any failure of
the Indenture

 

46

 

Trustee to
mail such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such supplemental indenture.

 

Section 9.03.  Execution of Supplemental Indentures.  In executing, or permitting the additional
trusts created by, any supplemental indenture permitted by this Article Nine
or the modification thereby of the trusts created by this Indenture, the
Indenture Trustee shall be entitled to receive, and subject to Section 6.02,
shall be fully protected in relying upon, in addition to the documents required
under Section 11.01, an Opinion of Counsel to the effect provided in Section 9.07.  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, liabilities or immunities under this
Indenture or otherwise.

 

Section 9.04.  Effect of Supplemental Indenture.  Upon the execution of any supplemental
indenture pursuant to the provisions hereof, this Indenture shall be and shall
be deemed to be modified and amended in accordance therewith with respect to
the Notes affected thereby, and the respective rights, limitations of rights,
obligations, duties, liabilities and immunities under this Indenture of the
Indenture Trustee, the Issuer and the Holders of the Notes shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.

 

Section 9.05.  Conformity with Trust Indenture Act.  Every amendment of this Indenture and every
supplemental indenture executed pursuant to this Article IX shall conform
to the requirements of the Trust Indenture Act as then in effect so long as
this Indenture shall then be qualified under the Trust Indenture Act.

 

Section 9.06.  Reference in Notes to Supplemental
Indentures.  Notes authenticated and
delivered after the execution of any supplemental indenture pursuant to this Article Nine
may, and if required by the Indenture Trustee shall, bear a notation in a form
approved by the Indenture Trustee as to any matter provided for in such
supplemental indenture.  If the Issuer or
the Indenture Trustee shall so determine, new Notes so modified as to conform,
in the opinion of the Indenture Trustee and the Issuer, to any such
supplemental indenture may be prepared and executed by the Issuer and
authenticated and delivered by the Indenture Trustee in exchange for
Outstanding Notes.

 

Section 9.07.  Opinion of Counsel.  In connection with any supplemental indenture
pursuant to this Article Nine, the Indenture Trustee shall be entitled to
receive an Opinion of Counsel to the effect that such supplemental indenture is
authorized or permitted by this Indenture and that all conditions precedent to
the execution of such supplemental indenture in accordance with the relevant
provisions of this Article Nine have been met.

 

Nothing in
this Section shall be construed to require that any Person obtain the
consent of the Indenture Trustee to any amendment or waiver or any provision of
any document where the making of such amendment or the giving of such waiver
without obtaining the consent of the Indenture Trustee is not prohibited by
this Indenture or by the terms of the document that is the subject of the
proposed amendment or waiver.

 

47

 

ARTICLE TEN

REDEMPTION OF NOTES

 

Section 10.01.  Redemption.  The Notes are subject to redemption pursuant
to Section 9.02 of the Transfer and Servicing Agreement.  The Issuer shall furnish each Rating Agency
notice of such redemption.  If the Notes
are to be redeemed pursuant to Section 9.02 of the Transfer and Servicing
Agreement, FSC shall furnish notice of its exercise of its option to redeem the
Notes to the Indenture Trustee and the Trust Administrator not later than 15
days prior to the Redemption Date and FSC shall deposit by 10:00 A.M.  New York City time on the Redemption Date
with the Trust Administrator in the Collection Account the Redemption Price of
the Notes to be redeemed, whereupon all such Notes shall be due and payable on
the Redemption Date upon the furnishing of a notice complying with Section 10.02
hereof to each Holder of the Notes.

 

Section 10.02.  Form of Redemption Notice.  Notice of redemption under Section 10.01
shall be given by the Indenture Trustee by first-class mail, postage prepaid, or
by facsimile mailed or transmitted not later than 10 days prior to the
applicable Redemption Date to each Holder of Notes, as of the close of business
on the Record Date preceding the applicable Redemption Date, at such Holder’s
address or facsimile number appearing in the Note Register.

 

All notices of
redemption shall state:

 

(i)                                     the
Redemption Date;

 

(ii)                                  the
Redemption Price; and

 

(iii)                               the
place where such Notes are to be surrendered for payment of the Redemption
Price (which shall be the office or agency of the Issuer to be maintained as
provided in Section 3.02).

 

Notice of
redemption of the Notes shall be given by the Indenture Trustee in the name and
at the expense of the Issuer.  Failure to
give notice of redemption, or any defect therein, to any Holder of any Note
shall not impair or affect the validity of the redemption of any other Note.

 

Section 10.03.  Notes Payable on Redemption Date.  The Notes or portions thereof to be redeemed
shall, following notice of redemption as required under Section 10.02 (in
the case of redemption pursuant to Section 10.01) and remittance to the
Indenture Trustee of the Redemption Price as required under Section 10.01,
on the Redemption Date become due and payable at the Redemption Price and
(unless the Issuer shall default in the payment of the Redemption Price) no
interest shall accrue on the Redemption Price for any period after the date to
which accrued interest is calculated for purposes of calculating the Redemption
Price.

 

48

 

ARTICLE ELEVEN

MISCELLANEOUS

 

Section 11.01.  Compliance Certificates and Opinions, etc.  Upon any application or request by the Issuer
to the Indenture Trustee to take any action under any provision of this
Indenture, the Issuer shall furnish to the Indenture Trustee:  (i) an Officer’s Certificate stating
that all conditions precedent; if any, provided for in this Indenture relating
to the proposed action have been complied with, (ii) an Opinion of Counsel
stating that in the opinion of such counsel all such conditions precedent, if
any, have been complied with, and (iii) (if required by the TIA) an
Independent Certificate from a firm of certified public accountants meeting the
applicable requirements of this Section, except that, in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished.

 

Every
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture shall include:

 

(i)                                     a
statement that each signatory of such certificate or opinion has read or has
caused to be read such covenant or condition and the definitions herein
relating thereto;

 

(ii)                                  a
brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion
are based;

 

(iii)                               a
statement that, in the opinion of each such signatory, such signatory has made
such examination or investigation as is necessary to enable such signatory to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and

 

(iv)                              a
statement as to whether, in the opinion of each such signatory, such condition
or covenant has been complied with.

 

Section 11.02.  Form of Documents Delivered to
Indenture Trustee.  In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.

 

Any
certificate or opinion of an Authorized Officer of the Issuer may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such officer’s certificate or opinion is
based are erroneous.  Any such
certificate of an Authorized Officer or Opinion of Counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or

 

49

 

representations
by, an officer or officers of the Servicer, Sub-Servicer, the Depositor, the
Issuer or the Trust Administrator, stating that the information with respect to
such factual matters is in the possession of the Servicer, the Sub-Servicer,
the Depositor, the Issuer or the Trust Administrator, unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.

 

Where any
Person is required to make, give or execute two or more applications, requests,
consents, certificates, statements, opinions or other instruments under this
Indenture, they may, but need not, be consolidated and form one instrument.

 

Whenever in
this Indenture, in connection with any application or certificate or report to
the Indenture Trustee, it is provided that the Issuer shall deliver any
document as a condition of the granting of such application, or as evidence of
the Issuer’s compliance with any term hereof, it is intended that the truth and
accuracy, at the time of the granting of such application or at the effective
date of such certificate or report (as the case may be), of the facts and
opinions stated in such document shall in such case be conditions precedent to
the right of the Issuer to have such application granted or to the sufficiency
of such certificate or report.  The
foregoing shall not, however, be construed to affect the Indenture Trustee’s
right to rely upon the truth and accuracy of any statement or opinion contained
in any such document as provided in Article Six.

 

Section 11.03.  Acts of Noteholders.  (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture
to be given or taken by Noteholders may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such Noteholders in
person or by agents duly appointed in writing; and except as herein otherwise
expressly provided such action shall become effective when such instrument or
instruments are delivered to the Indenture Trustee and, where it is hereby
expressly required, to the Issuer.  Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the “Act” of the Noteholders
signing such instrument or instruments. 
Proof of execution of any such instrument or of a writing appointing any
such agent shall be sufficient for any purpose of this Indenture and (subject
to Section 6.01) conclusive in favor of the Indenture Trustee and the
Issuer, if made in the manner provided in this Section.

 

(b)                                 The
fact and date of the execution by any person of any such instrument or writing
may be proved in any manner that the Indenture Trustee deems sufficient.

 

(c)                                  The
ownership of Notes shall be proved by the Note Register.

 

(d)                                 Any
request, demand, authorization, direction, notice, consent, waiver or other
action by the Holder of any Notes shall bind the Holder of every Note issued
upon the registration thereof or in exchange therefor or in lieu thereof, in
respect of anything done, omitted or suffered to be done by the Indenture
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.

 

Section 11.04.  Notices, etc., to Indenture Trustee, Trust
Administrator, Issuer and Rating Agencies. 
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Noteholders or other documents provided or permitted by this
Indenture shall be in writing and if

 

50

 

such request,
demand, authorization, direction, notice, consent, waiver or act of Noteholders
is to be made upon, given or furnished to or filed with:

 

(i)                                     the
Indenture Trustee by any Noteholder or by the Issuer shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing to or
with the Indenture Trustee at its Corporate Trust Office, or

 

(ii)                                  the
Trust Administrator by the Indenture Trustee, any Noteholder or by the Issuer
shall be sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trust Administrator at its Corporate Trust
Office, or

 

(iii)                               the
Issuer by the Indenture Trustee, the Trust Administrator or any Noteholder
shall be sufficient for every purpose hereunder if in writing and mailed
first-class, postage prepaid to the Issuer addressed to the address provided in
the Transfer and Servicing Agreement, or at any other address previously
furnished in writing to the Indenture Trustee by the Issuer.  The Issuer shall promptly transmit any notice
received by it from the Noteholders to the Indenture Trustee.

 

Notices
required to be given to the Rating Agencies by the Issuer, the Indenture
Trustee, the Trust Administrator or the Owner Trustee shall be in writing,
personally delivered or mailed by certified mail, return receipt requested, to
the address provided in the Transfer and Servicing Agreement or such other
address as shall be designated by written notice to the other parties.

 

Section 11.05.  Notices to Noteholders; Waiver.  Where this Indenture provides for notice to
Noteholders of any event, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first-class,
postage prepaid to each Noteholder affected by such event, at such Holder’s
address as it appears on the Note Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such
notice.  In any case where notice to
Noteholders is given by mail, neither the failure to mail such notice nor any
defect in any notice so mailed to any particular Noteholder shall affect the
sufficiency of such notice with respect to other Noteholders, and any notice
that is mailed in the manner herein provided shall conclusively be presumed to
have been duly given.

 

Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by any Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice.  Waivers of notice by Noteholders shall be
filed with the Indenture Trustee but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such a waiver.

 

In case, by
reason of the suspension of regular mail service as a result of a strike, work
stoppage or similar activity, it shall be impractical to mail notice of
any event to Noteholders when such notice is required to be given pursuant to
any provision of this Indenture, then any manner of giving such notice as shall
be satisfactory to the Indenture Trustee shall be deemed to be a sufficient
giving of such notice.

 

Where this
Indenture provides for notice to the Rating Agencies, failure to give such
notice shall not affect any other rights or obligations created hereunder, and
shall not under any circumstance constitute a Default or Event of Default.

 

51

 

Section 11.06.  Conflict with Trust Indenture Act.  If any provision hereof limits, qualifies or
conflicts with another provision hereof that is required to be included in this
Indenture by any of the provisions of the Trust Indenture Act, such required
provision shall control.

 

The provisions
of TIA Sections 310 through 317 that impose duties on any person (including the
provisions automatically deemed included herein unless expressly excluded by
this Indenture) are a part of and govern this Indenture, whether or not
physically contained herein.

 

Section 11.07.  Effect of Headings and Table of Contents.  The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.

 

Section 11.08.  Successors and Assigns.  All covenants and agreements in this
Indenture and the Notes by the Issuer shall bind its successors and assigns,
whether so expressed or not.  All
agreements of the Indenture Trustee in this Indenture shall bind its
successors, co-trustees and agents.

 

Section 11.09.  Severability.  In case any provision in this Indenture or in
the Notes shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.

 

Section 11.10.  Benefits of Indenture and Consents of
Noteholders.  Nothing in this
Indenture or in the Notes, express or implied, shall give to any Person, other
than the parties hereto and their successors hereunder, the Owner Trustee and
the Noteholders, any benefit or any legal or equitable right, remedy or claim
under this Indenture.  Each Noteholder
and Note Owner, by acceptance of a Note or, in the case of a Note Owner, a
beneficial interest in a Note, consents to and agrees to be bound by the terms
and conditions of this Indenture.

 

Section 11.11.  Legal Holidays.  In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.

 

Section 11.12.  Governing Law.  THIS INDENTURE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 OF
THE GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

Section 11.13.  Counterparts.  This Indenture may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same instrument.

 

52

 

Section 11.14.  Recording of Indenture.  If this Indenture is subject to recording in
any appropriate public recording offices, such recording is to be effected by
the Issuer and at its expense accompanied by an Opinion of Counsel (which may
be counsel to the Indenture Trustee or any other counsel reasonably acceptable
to the Indenture Trustee) to the effect that such recording is necessary either
for the protection of the Noteholders or any other Person secured hereunder or
for the enforcement of any right or remedy granted to the Indenture Trustee
under this Indenture.

 

Section 11.15.  Trust Obligations.  (a) No recourse may be taken, directly
or indirectly, with respect to the obligations of the Issuer, the Owner Trustee
or the Indenture Trustee on the Notes or under this Indenture or any
certificate or other writing delivered in connection herewith or therewith,
against (i) the Indenture Trustee or the Owner Trustee in their respective
individual capacities, (ii) any owner of a beneficial interest in the
Issuer or (iii) any partner, owner, beneficiary, agent, officer, director,
employee or agent of the Indenture Trustee or the Owner Trustee in its
respective individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee in its individual
capacity, except as any such Person may have expressly agreed (it being
understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their respective individual capacities) and except that any such
partner, owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such
entity.  For all purposes of this
Indenture, in the performance of any duties or obligations of the Issuer hereunder,
the Owner Trustee shall be subject to, and entitled to the benefits of, the
terms and provisions of Articles Six, Seven and Eight of the Trust Agreement.

 

(b)                                 In
addition, (i) this Indenture is executed and delivered by [                                ],
not individually or personally but solely as Owner Trustee, in the exercise of
the powers and authority conferred and vested in it, (ii) each of the
representations, undertakings and agreements herein made on the part of the
Issuer or the Owner Trustee is made and intended not as personal representations,
undertakings and agreements by [                                    ]
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 [                                     ],
individually or personally, to perform any covenant either expressed or implied
contained herein, all such liability, if any, being expressly waived by the
Indenture Trustee and by.  any Person
claiming by, through or under the Indenture Trustee, and (iv) under no
circumstances shall [                                                    ]
be personally liable for the payment of any indebtedness or expenses of the
Issuer or be liable for the breach or failure of any obligation, representation,
warranty or covenant made or undertaken by the Issuer under this Indenture or
the Operative Agreements.

 

Section 11.16.  No Petition.  The Indenture Trustee, by entering into this
Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree
that they will not at any time institute against the Depositor or the Issuer,
or join in any institution against the Depositor or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, this
Indenture or any of the Operative Agreements.

 

53

 

Section 11.17.  Inspection.  The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee, during the
Issuer’s normal business hours, to examine all the books of account, records,
reports and other papers of the Issuer, to make copies and extracts therefrom,
to cause such books to be audited by Independent Public Accountants, and to
discuss the Issuer’s affairs, finances and accounts with the Issuer’s officers,
employees and Independent certified public accountants, all at such reasonable
times and as often as may be reasonably requested.  The Indenture Trustee shall, and shall cause
its representatives to, hold in confidence all such information except to the
extent disclosure may be required by law (and all reasonable applications for
confidential treatment are unavailing) and except to the extent that the
Indenture Trustee may reasonably determine that such disclosure is consistent
with its obligations hereunder.

 

54

 

IN WITNESS
WHEREOF, the Issuer, the Trust Administrator and the Indenture Trustee have
caused this Indenture to be duly executed by their respective officers,
thereunto duly authorized and duly attested, all as of the day and year first
above written.

 

	
   

  	
  FIELDSTONE
  MORTGAGE INVESTMENT

  TRUST, SERIES 2005-[     ], as Issuer

  
	
   

  	
   

  
	
   

  	
  By:

  	
  [                                                            

  	
  ],

  
	
   

  	
   

  	
  not in its individual capacity but solely
  as

  Owner Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [                                                 

  	
  ],

  
	
   

  	
  as Trust Administrator

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [                                                  

  	
  ],

  
	
   

  	
  not in its individual capacity but solely
  as Indenture Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Solely for
  purposes of Section 5.04, Section 9.01

  and Section 9.02, accepted and agreed to by:

  	
   

  
	
   

  	
   

  
	
  [                                                              

  	
  ],

  	
   

  
	
  as Swap
  Counterparty

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
									

 

 

EXHIBIT A

 

FORMS OF NOTES

 

UNLESS THIS NOTE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO.  OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO.  OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.

 

THIS NOTE DOES NOT EVIDENCE AN OBLIGATION OF
OR AN INTEREST IN, AND IS NOT GUARANTEED BY, THE ISSUER, THE DEPOSITOR, THE
MASTER SERVICER, THE INDENTURE TRUSTEE, THE OWNER TRUSTEE, THE TRUST
ADMINISTRATOR, OR ANY AFFILIATE OF ANY OF THEM AND IS NOT INSURED OR GUARANTEED
BY ANY GOVERNMENTAL AGENCY OR PRIVATE INSURER.

 

[FOR LIBOR
NOTES:  THE PRINCIPAL OF THIS
NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.  ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT
OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE
HEREOF.] [FOR CLASS A-IO NOTES:  PRINCIPAL WILL NOT BE PAYABLE IN
RESPECT OF THIS NOTE.  INTEREST
CALCULATED ON THIS NOTE IS BASED ON A NOTIONAL AMOUNT DETERMINED AS DESCRIBED
IN THE TRANSFER AND SERVICING AGREEMENT. 
THE NOTIONAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
INITIAL NOTIONAL AMOUNT OF THIS NOTE AS SET FORTH HEREON.]

 

[FOR
SUBORDINATE NOTES:  THIS NOTE
IS SUBORDINATE IN RIGHT OF PAYMENT AS PROVIDED IN THE INDENTURE REFERRED TO
HEREIN.]

 

EACH PURCHASER OF THIS NOTE WILL BE DEEMED TO
HAVE MADE THE REPRESENTATIONS AND AGREEMENTS SET FORTH IN SECTION 2.03 OF
THE INDENTURE.  ANY TRANSFER IN VIOLATION
OF THE FOREGOING WILL BE OF NO FORCE AND EFFECT, WILL BE VOID AB INITIO, AND WILL NOT OPERATE TO
TRANSFER ANY RIGHTS TO THE TRANSFEREE, NOTWITHSTANDING ANY INSTRUCTIONS TO THE
CONTRARY TO THE ISSUER, THE INDENTURE TRUSTEE OR ANY INTERMEDIARY.

 

THIS NOTE MAY NOT BE ACQUIRED BY A
TRANSFEREE FOR, OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED (“ERISA”) OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE “CODE”) OR TO ANY SUBSTANTIALLY SIMILAR LAW (“SIMILAR LAW”)
OR ANY ENTITY DEEMED TO HOLD THE PLAN ASSETS OF THE

 

A-1

 

FOREGOING (“BENEFIT PLAN”), UNLESS THE
TRANSFEREE REPRESENTS AND WARRANTS THAT THE ACQUISITION AND HOLDING OF THIS
NOTE:  (X) WILL NOT RESULT IN A
NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975
OF THE CODE WHICH IS NOT COVERED BY PROHIBITED TRANSACTION CLASS EXEMPTION
(“PTCE”) 84-14, PTCE 90-1, PTCE 91-38, PTCE 95- 60, PTCE 96-23 OR SOME OTHER
APPLICABLE EXEMPTION AND (Y) WILL NOT RESULT IN A NON-EXEMPT VIOLATION OF ANY
SIMILAR LAW SUBSTANTIALLY SIMILAR APPLICABLE LAW.  EACH INVESTOR IN THIS NOTE WILL BE DEEMED TO
MAKE THE FOREGOING REPRESENTATIONS AND WILL FURTHER BE DEEMED TO REPRESENT,
WARRANT AND COVENANT THAT IT WILL NOT SELL, PLEDGE OR OTHERWISE TRANSFER THIS
NOTE IN VIOLATION OF THE FOREGOING.

 

A-2

 

FIELDSTONE MORTGAGE INVESTMENT TRUST, SERIES 2005-[  ]

 

CLASS  NOTES

 

	
  [Aggregate Class Principal Amount of the Class Notes: $]

  	
   

  	
  [Class Principal Amount of this Note:
  $]

  
	
   

  	
   

  	
   

  
	
  [Initial Class Notional Amount of the
  Class A-IO Notes: $]

  	
   

  	
  [Class Notional Amount of this Note:
  $]

  
	
   

  	
   

  	
   

  
	
  Interest Rate:

  	
   

  	
  Cut-off Date: 

  	
  [                   ]

  	
  , 2005

  
	
   

  	
   

  	
   

  
	
  Number:

  	
   

  	
  CUSIP No.:

  

 

A-3

 

FIELDSTONE
MORTGAGE INVESTMENT TRUST, SERIES 2005-[ 
], a statutory trust organized and existing under the laws of the State
of Delaware (herein referred to as the “Issuer”), for value received, hereby
promises to pay to CEDE & CO., or registered assigns, [For LIBOR Notes:  the principal sum of
                                                       
(S                )
payable on each Payment Date in an amount equal to the result obtained by
multiplying (A) the Percentage Interest evidenced by this Note (obtained
by dividing the initial Class Principal Amount of this Note by the initial
Class Principal Amount of all Class Notes, both as specified above)
and (B) the amount payable on such Payment Date in respect of principal of
the Class Notes] [For Class A-IO
Notes:  on each Payment Date,
certain payments in respect of interest in an amount equal to the result
obtained by multiplying (A) the Percentage Interest represented by this
Note(obtained by dividing the initial Class Notional Amount of this Note
by the initial Class Notional Amount of all Class A-IO Notes, both as
specified above) and (B) the aggregate amount, if any, payable on such
Payment Date in respect of interest of the Class A-IO Notes] pursuant to
the Indenture dated as of [                        ],
2005 (as amended and supplemented from time to time, the “Indenture”), between
the Issuer, [                                ],
as Trust Administrator (the “Trust Administrator”) and [                                                        ],
a [                                ],
as Indenture Trustee (the “Indenture Trustee”); provided, however, that the entire unpaid principal amount
of this Note shall be due and payable on the Payment Date occurring in [                                     ]
(the “Maturity Date”) or as otherwise specified in the Indenture.  Capitalized terms used but not defined herein
have the meanings assigned to such terms in the Indenture or the Transfer and
Servicing Agreement dated as of [                                              ]
(as amended and supplemented from time to time, the “Transfer and Servicing
Agreement”), by and among the Trust, Fieldstone Mortgage Investment
Corporation, as depositor (the “Depositor”), [                                     ],
as trust administrator (in such capacity, the “Trust Administrator”) and master
servicer (in such capacity, the “Master Servicer”), Fieldstone Servicing Corp.,
as servicer, [                                    ],
as sub-servicer, Fieldstone Investment Corporation, as seller, and the
Indenture Trustee, which agreements also contain rules as to construction
that shall be applicable herein.

 

[For LIBOR Notes:  The Issuer will pay interest on this Note at
a per annum rate equal to the applicable Interest Rate, on the principal amount
of this Note outstanding on the immediately preceding Payment Date (after
giving effect to all payments of principal made on such preceding Payment Date)
on each Payment Date until the principal of this Note is paid or made available
for payment in full.] [For Class A-IO
Notes:  The Issuer will pay
interest on this Note at a per annum rate equal to the applicable Interest Rate
on each Payment Date on the Note Notional Amount of this Class A-IO Note.]

 

Payments on
this Note will be made on the 25th day of each month or, if such a day is not a
Business Day, then on the next succeeding Business Day, commencing in [                      ],
2005 (each, a “Payment Date”), to the Person in whose name this Note is
registered [For LIBOR Notes:  at the close of business on the Business Day
immediately preceding such Payment Date] [For
Class A-IO Notes:  at the
close of business on the last Business Day of the month immediately preceding
the month of such Payment Date] (the “Record Date”), in an amount equal to the
product of the Percentage Interest evidenced by this Note and the amount, if
any, required to be distributed to all the Notes of the Class represented
by this Note.  All sums distributable on
this Note are payable in the coin or currency of the United States of America

 

A-4

 

which at the
time of payment is legal tender for the payment of public and private
debts.  Such principal of and interest on
this Note shall be paid in the manner specified on the reverse hereof.

 

[For LIBOR Notes:  All payments made by the Issuer with respect
to this Note shall be applied first to interest due and payable on this Note as
provided above and then to the unpaid principal of this Note.]

 

Reference is
made to the further provisions of this Note set forth on the reverse hereof,
which shall have the same effect as though fully set forth on the face of this
Note.

 

Unless the
certificate of authentication hereon has been executed by the Trust
Administrator whose name appears below by manual signature, this Note shall not
be entitled to any benefit under the Indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.

 

A-5

 

IN WITNESS
WHEREOF, the Issuer has caused this instrument to be signed, manually or in
facsimile, by its Authorized Officer, as of the date set forth below.

 

	
   

  	
  FIELDSTONE MORTGAGE INVESTMENT

  TRUST, SERIES 2005-[     ]

  
	
   

  	
   

  
	
   

  	
  By:

  	
  [                                                  

  	
  ],

  
	
   

  	
   

  	
  not in its individual capacity but solely
  as

  Owner Trustee under the Trust Agreement

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  	
   

  
	
   

  	
   

  
	
   

  	
  Dated:

  	
   

  	
  , 2005

  
								

 

TRUST
ADMINISTRATOR’S CERTIFICATE OF AUTHENTICATION

 

This is one of
the Notes designated above and referred to in the within-mentioned Indenture.

 

	
   

  	
  [                                                          

  	
  ],

  
	
   

  	
  not in its individual capacity but solely
  as Trust

  Administrator,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  	
   

  
	
   

  	
   

  
	
   

  	
  Dated:

  	
   

  	
  , 2005

  
							

 

A-6

 

FIELDSTONE MORTGAGE INVESTMENT TRUST, SERIES 2005-[   ]

 

This Note is
one of a duly authorized issue of Notes of the Issuer, all issued under the
Indenture, to which Indenture and all indentures supplemental thereto reference
is hereby made for, a statement of the respective rights and obligations
thereunder of the Issuer, the Indenture Trustee and the Holders of the
Notes.  To the extent that any provision
of this Note contradicts or is inconsistent with the provisions of the
Indenture, the provisions of the Indenture shall control and supersede such
contradictory or inconsistent provision herein. 
This Note is subject to all terms of the Indenture.

 

The Class I-Al,
Class 1-A2, Class 2-Al, Class 2-A2 and Class A-IO Notes
(the “Senior Notes”) are, and will be, equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.  The rights of the Holders of the Class Ml,
Class M2, Class M3, Class M4, Class M5, Class M6 and Class M7
Notes (the “Subordinate Notes”) to receive payments or distribution of interest
and principal are, and will be, subordinate to the rights of the Holders of the
Senior Notes to receive payments of interest and principal, respectively, as
provided in the Indenture.

 

Payments to
each Noteholder shall be made (i) by check mailed to the Person whose name
appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the books of the Note Registrar and Paying Agent as of the close of
business on each Record Date or (ii) upon written request made to the Note
Registrar and Paying Agent at least five Business Days prior to the related
Record Date by the Holder of a Note having an initial Note Principal Amount of
not less than $2,500,000, by wire transfer in immediately available funds to an
account specified in writing by such Noteholder.  The final payment in retirement of this Note
shall be made only upon surrender of this Note to the Note Registrar and Paying
Agent at the office thereof specified in the notice to Noteholders of such
final payment mailed prior to the Payment Date on which the final payment is
expected to be made to the Holder thereof.

 

As provided in
the Indenture and subject to certain limitations set forth therein, the
transfer of this Note may be registered by the Note Registrar upon surrender of
this Note for registration of transfer at the office or agency designated by the
Issuer pursuant to the Indenture, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Note Registrar duly executed
by, the Holder hereof or such Holder’s attorney duly authorized in writing,
with such signature guaranteed by an “eligible guarantor institution” meeting
the requirements of the Note Registrar, which requirements include membership
or participation in the Securities Transfer Agent’s Medallion Program (“STAMP”)
or such other “signature guarantee program” as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended, and thereupon one or more new
Notes of authorized denominations and in the same aggregate principal amount
will be issued to the designated transferee or transferees.  No service charge will be charged for any
registration of transfer or exchange of this Note, but the transferor may be
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.

 

The Class 1-Al,
Class l-A2, Class 2-Al and Class 2-A2 Notes will be issued in
minimum denominations of $[25,000] in original principal amount and in integral
multiples of $1 in excess

 

A-7

 

thereof.  The Class A-IO Notes will be issued in
minimum denominations of $[100,000] in original notional amount and in integral
multiples of $1,000 in excess thereof. 
The Class Ml, Class M2, Class M3, Class M4, Class M5,
Class M6 and Class M7 Notes will be issued in minimum denominations
of $[100,000] in original principal amount and integral multiples of $1,000 in
excess thereof.

 

The Notes are
subject to optional redemption in accordance with the Indenture and the
Transfer and Servicing Agreement.

 

Each
Noteholder and Note Owner, by acceptance of a Note or, in the case of a Note
Owner, a beneficial interest in a Note, covenants and agrees that no recourse
may be taken, directly or indirectly, with respect to the obligations of the
Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee, or the Owner Trustee in
their respective individual capacities, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent,
officer, director or employee of the Indenture Trustee or the Owner Trustee in
its individual capacity, any holder of a beneficial interest in the Issuer, the
Owner Trustee or the Indenture Trustee or of any successor or assign of the
Indenture Trustee or the Owner Trustee in its individual capacity, except as
any such Person may have expressly agreed and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.

 

Each
Noteholder and Note Owner, by acceptance of a Note or, in the case of a Note
Owner, a beneficial interest in a Note, covenants and agrees by accepting the
benefits of the Indenture that such Noteholder or Note Owner will not at any
time institute against the Depositor or the Issuer, or join in any institution
against the Depositor or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under any United States
federal or state bankruptcy or similar law in connection with any obligations
relating to the Notes, the Indenture or the other Operative Agreements.

 

Each
Noteholder and Note Owner, by acceptance of a Note or, in the case of a Note
Owner, a beneficial interest in a Note, consents to and agrees to be bound by
the terms and conditions of the Indenture.

 

The Issuer has
entered into the Indenture and this Note is issued with the intention that, for
federal, state and local income, single business and franchise tax purposes,
the Notes will qualify as indebtedness of the Issuer secured by the
Collateral.  Each Noteholder, by
acceptance of a Note (and each Note Owner by acceptance of a beneficial
interest in a Note), agrees to treat the Notes for all federal, state and local
income tax purposes as indebtedness (except that any Note held by a person
that, for federal income tax purposes, owns or is treated as owning a 100%
Percentage Interest of the Ownership Certificate shall not be treated as
outstanding indebtedness).

 

Prior to the
due presentment for registration of transfer of this Note, the Issuer, the
Indenture Trustee, the Note Registrar, the Paying Agent and any agent of the
Issuer or the Indenture Trustee may treat the Person in whose name this Note
(as of the day of determination

 

A-8

 

or as of such
other date as may be specified in the Indenture) is registered as the owner
hereof for all purposes, whether or not this Note be overdue, and none of the
Issuer, the Indenture Trustee, the Note Registrar, the Paying Agent or any such
agent shall be affected by notice to the contrary.

 

The Indenture
permits, with certain exceptions as therein provided, the amendment thereof by
supplemental indenture and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Depositor, the Issuer arid the Indenture Trustee with the consent
of the Holders of not less than 66-2/3% of the Outstanding Balance of the Notes
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of modifying in any
manner the rights of the Noteholders. 
Any such consent or waiver by the Holder of this Note (or any one or
more Predecessor Notes) shall be conclusive and binding upon such Holder and
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note.  The Indenture also permits the amendment
thereof, in certain limited circumstances, or the waiver of certain terms and
conditions set forth in the Indenture, without the consent of Holders of the Notes
issued thereunder.

 

The term “Issuer”
as used in this Note includes any successor to the Issuer under the Indenture.

 

The Notes are
issuable only in registered form in denominations as provided in the Indenture,
subject to certain limitations therein set forth.

 

THIS NOTE AND
THE INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS
(OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW), AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.

 

No reference
herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair the obligation of the Issuer, which is absolute and
unconditional, to pay the principal of and interest on this Note at the times,
place and rate, and in the coin or currency herein prescribed.

 

Anything
herein to the contrary notwithstanding, except as expressly provided in the
Operative Agreements, none of the Issuer in its individual capacity, the Owner
Trustee in its individual capacity, the Indenture Trustee in its individual
capacity, any owner of a beneficial interest in the Issuer, or any of their
respective partners, beneficiaries, agents, officers, directors, employees or
successors or assigns shall be personally liable for, nor shall recourse be had
to any of them for, the payment of principal of or interest on this Note or
performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in the Indenture. 
The Holder of this Note by its acceptance hereof agrees that, except as
expressly provided in the Operative Agreements, in the case of an Event of
Default under the Indenture, the Holder shall have no claim against any of the
foregoing for any deficiency, loss or claim therefrom; provided,

 

A-9

 

however, that nothing contained herein shall
be taken to prevent recourse to, and enforcement against, the assets of the
issuer for any and all liabilities, obligations and undertakings contained in
the Indenture or in this Note.

 

A-10

 

ASSIGNMENT

 

	
  Social
  Security or taxpayer I.D. or other identifying number of assignee:

  	
   

  
	
   

  
	
  FOR VALUE
  RECEIVED, the undersigned hereby sells, assigns and transfers unto:

  
	
   

  
	
   

  
	
  (name and address of assignee)

  
	
   

  
	
  the within
  Note and all rights thereunder, and hereby irrevocably constitutes and
  appoints

  	
   

  	
  , attorney,
  to

  
	
  transfer
  said Note on the books kept for registration thereof, with full power of
  substitution in the premises.

  
	
   

  
				

 

	
  Dated:

  	
   

  	
  */

  
	
   

  	
   

  
	
  Signature
  Guaranteed:

  	
   

  
	
   

  	
   

  
	
   

  	
  */

  

 

*/ NOTICE:  The
signature to this assignment must correspond with the name of the registered
owner as it appears on the face of the within Note in every particular, without
alteration, enlargement or any change whatever. 
Such signature must be guaranteed by an “eligible guarantor institution”
meeting the requirements of the Note Registrar, which requirements include
membership or participation in STAMP or such other “signature guarantee program”
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended

 

A-11

 

EXHIBIT B

 

[RESERVED]

 

B-1

 

EXHIBIT C

FORM OF
ERISA TRANSFER AFFIDAVIT

 

	
   

  	
   

  
	
   

  	
  date

  

 

 

	
  STATE OF NEW
  YORK

  	
  )

  
	
   

  	
  ) ss.:

  
	
  COUNTY OF
  NEW YORK

  	
  )

  

 

Re:                               Fieldstone
Mortgage Investment Trust, Series 2005-[    ] Mortgage-Backed
Notes, Series 2005  [       ]

 

1.                                       The
undersigned is the                                   
of (the “Investor”), a [corporation duly organized] and existing under the laws
of
                                                   ,
on behalf of which he makes this affidavit.

 

2.                                       The
Investor either (i) is not, and on                       
[date of transfer] will not be, acquiring the Notes for, or on behalf of, an
employee benefit plan or other retirement arrangement that is subject to Section 406
of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
or to Section 4975 of the Internal Revenue Code of 1986, as amended (or to
any substantially similar law (“Similar Law”)) or any entity deemed to hold the
plan assets of the foregoing (a “Benefit Plan”) or (ii) our acquisition
and holding of the Notes for, or on behalf of, a Benefit Plan will not result
in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975
of the Code which is not covered under Prohibited Transaction Class Exemption
(“PTCE”) 84-14, PTCE 90-1, PTCE 91-38, PTCE 95-60, PTCE 96-23 or some other
applicable exemption, and will not result in a non-exempt violation of any
Similar Law.

 

3.                                       The
Investor hereby acknowledges that under the terms of the Indenture among
Fieldstone Mortgage Investment Trust, Series 2005-[   ], as Issuer, [                                          ],
as Trust Administrator and [                                                ],
as Indenture Trustee, dated as of [                                        ],
2005, no transfer of any Note shall be permitted to be made to any person
unless the Indenture Trustee has received a certificate from such transferee in
the form hereof.

 

C-1

 

IN WITNESS
WHEREOF, the Investor has caused this instrument to be executed on its behalf,
pursuant to proper authority, by its duly authorized officer, duly attested,
this              
day of
                      ,
20   .

 

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [Investor]

  	
   

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
							

 

	
  ATTEST:

  
	
   

  
	
   

  
	
   

  	
   

  
	
   

  
	
   

  
	
  STATE OF

  	
  )

  
	
   

  	
  ) ss.:

  
	
  COUNTY OF

  	
  )

  
			

 

Personally
appeared before me the above-named                                       ,
known or proved to me to be the same person who executed the foregoing
instrument and to be the                                        
of the Investor, and acknowledged that he executed the same as his free act and
deed and the free act and deed of the Investor.

 

Subscribed and
sworn before me this              
day of
                    
20  .

 

 

	
   

  	
   

  	
   

  
	
   

  	
  NOTARY PUBLIC

  	
   

  
	
   

  	
   

  
	
   

  	
  My commission expires the

  
	
   

  	
   

  	
  day of

  	
   

  	
  ,20

  	
   

  	
  .

  
								

 

C-2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00086-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00086-of-00352.parquet"}]]