Document:

a5472767-ex101.htm

    Exhibit
      10.1

     

    Execution
      Version

     

     

     

     

     

    ASSET
      PURCHASE AGREEMENT

    

     

    

     

    By
      and Among

     

    

     

    PARTY
      CITY OF WARWICK, INC.

    

    &

    

    PARTY
      CITY OF LINCOLN, LLC,

     

    as
      Sellers,

     

     

    and

     

     

    iPARTY
      CORP.

     

    &

     

    iPARTY
      RETAIL STORES CORP.,

     

    as
      Buyers

     

    

     

    Dated
      as of August 15, 2007

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TABLE
      OF CONTENTS

     

    
      
        	1.	DEFINITIONS;
                CERTAIN RULES OF
                CONSTRUCTION.	
                1

              
	2.	
                ACQUISITION
                  OF ASSETS BY BUYER.

              	
                8

              
	 	
                2.1.

              	
                Purchase
                  and Sale of Assets.

              	
                8

              
	 	
                2.2.

              	
                Excluded
                  Assets.

              	
                9

              
	 	
                2.3.

              	
                Assumption
                  of Liabilities.

              	
                10

              
	 	
                2.4.

              	
                Liabilities
                  Not Assumed.

              	
                10

              
	 	
                2.5.

              	
                Purchase
                  Price.

              	
                11

              
	 	
                2.6.

              	
                The
                  Closing.

              	
                11

              
	 	
                2.7.

              	
                Deliveries
                  by Sellers and Buyer.

              	
                11

              
	 	
                2.8.

              	
                Allocation
                  of Purchase Price.

              	
                12

              
	 	
                2.9.

              	
                Deposit.

              	
                13

              
	 	
                2.10.

              	
                Prorations.

              	
                13

              
	 	
                2.11.

              	
                Cash.

              	
                14

              
	 	
                2.12.

              	
                Acquired
                  Inventory.

              	
                14

              
	
                3.

              	
                REPRESENTATIONS
                  AND WARRANTIES OF THE
                  SELLERS.

              	
                16

              
	 	
                3.1

              	
                Organization
                  and Qualification of the
                  Sellers.

              	
                16

              
	 	
                3.2

              	
                Authorization
                  of Transaction.

              	
                17

              
	 	
                3.3

              	
                Noncontravention.

              	
                17

              
	 	
                3.4

              	
                Brokers’
Fees.

              	
                17

              
	 	
                3.5

              	
                Assets.

              	
                17

              
	 	
                3.6

              	
                Legal
                  and Other Compliance.

              	
                17

              
	 	
                3.7

              	
                Consents.

              	
                17

              
	 	
                3.8

              	
                Property,
                  Plant and Equipment.

              	
                18

              
	 	
                3.9

              	
                Litigation.

              	
                18

              
	 	
                3.10

              	
                Environmental
                  Matters.

              	
                18

              
	 	
                3.11

              	
                Affiliated
                  Transactions.

              	
                19

              
	 	
                3.12

              	
                Absence
                  of Certain Developments.

              	
                19

              
	 	
                3.13

              	
                Employment.

              	
                19

              
	 	
                3.14

              	
                Certain
                  Financial Information.

              	
                19

              
	 	
                3.15

              	
                Undisclosed
                  Liabilities.

              	
                19

              
	 	
                3.16

              	
                Tax
                  Matters.

              	
                20

              
	 	
                3.17

              	
                Contracts.

              	
                21

              
	 	
                3.18

              	
                Insurance.

              	
                21

              
	 	
                3.19

              	
                No
                  Material Adverse Change.

              	
                21

              
	 	
                3.20

              	
                No
                  Competing Superstore.

              	
                21

              
	4.	
                REPRESENTATIONS
                  AND WARRANTIES OF THE BUYER AND BUYER
                  PARENT.

              	
                22

              
	 	
                4.1

              	
                Organization
                  and Qualification of the Buyer and Buyer
                  Parent.

              	
                22

              
	 	
                4.2

              	
                Authorization
                  of Transaction.

              	
                22

              
	 	
                4.3

              	
                Noncontravention.

              	
                22

              
	 	
                4.4

              	
                Brokers’
Fees.

              	
                22

              
	 	
                4.5

              	
                Consents.

              	
                23

              
	 	
                4.6

              	
                Litigation.

              	
                23

              
	5.	
                PRE-CLOSING
                  COVENANTS.

              	
                23

              
	 	
                5.1

              	
                General.

              	
                23

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      
        	 	
                5.2

              	
                Notices
                  and Consents.

              	
                23

              
	 	
                5.3

              	
                Operation
                  of Businesses.

              	
                23

              
	 	
                5.4

              	
                Full
                  Access.

              	
                24

              
	 	
                5.5

              	
                Notice
                  of Developments.

              	
                24

              
	 	
                5.6

              	
                Exclusivity.

              	
                24

              
	 	
                5.7

              	
                Monthly
                  Financial Reports.

              	
                25

              
	 	
                5.8

              	
                Lease
                  Assignments

              	
                25

              
	 	
                5.9

              	
                Rhode
                  Island Tax Good Standing

              	
                25

              
	6	
                CONDITIONS
                  TO OBLIGATION TO CLOSE.

              	
                25

              
	 	
                6.1

              	
                Conditions
                  to Obligation of the Buyer and Buyer
                  Parent.

              	
                25

              
	 	
                6.2

              	
                Conditions
                  to Obligations of the Sellers.

              	
                27

              
	7	
                POST
                  CLOSING COVENANTS.

              	
                28

              
	 	
                7.1

              	
                Non-Competition.

              	
                28

              
	 	
                7.2

              	
                Payment
                  Received.

              	
                28

              
	 	
                7.3

              	
                Employees.

              	
                29

              
	 	
                7.4

              	
                Reimbursement
                  for Returns and Gift
                  Certificates.

              	
                29

              
	 	
                7.5

              	
                Utilities
                  and Telephone Service.

              	
                30

              
	 	
                7.6

              	
                Future
                  Assurances.

              	
                30

              
	8	
                INDEMNIFICATION.

              	
                30

              
	 	
                8.1

              	
                Buyer’s
                  Indemnification.

              	
                30

              
	 	
                8.2

              	
                Seller’s
                  Indemnification.

              	
                31

              
	 	
                8.3

              	
                Time
                  Limitations.

              	
                31

              
	 	
                8.4

              	
                Certain
                  Other Indemnity Matters.

              	
                32

              
	 	
                8.5

              	
                Third
                  Party Claims.

              	
                33

              
	 	
                8.6

              	
                Information.

              	
                33

              
	9	
                TERMINATION.

              	
                33

              
	 	
                9.1

              	
                Termination
                  of Agreement.

              	
                33

              
	 	
                9.2

              	
                Effect
                  of Termination.

              	
                34

              
	10	
                MISCELLANEOUS.

              	
                34

              
	 	
                10.1

              	
                Press
                  Releases

              	
                34

              
	 	
                10.2

              	
                Entire
                  Agreement.

              	
                35

              
	 	
                10.3

              	
                Succession
                  and Assignment; No Third-Party
                  Beneficiary.

              	
                35

              
	 	
                10.4

              	
                Counterparts.

              	
                35

              
	 	
                10.5

              	
                Headings.

              	
                35

              
	 	
                10.6

              	
                Notices.

              	
                36

              
	 	
                10.7

              	
                Governing
                  Law.

              	
                37

              
	 	
                10.8

              	
                Amendments
                  and Waivers.

              	
                37

              
	 	
                10.9

              	
                Severability.

              	
                37

              
	 	
                10.10

              	
                Expenses.

              	
                37

              
	 	
                10.11

              	
                Construction.

              	
                38

              
	 	
                10.12

              	
                Incorporation
                  of Schedules.

              	
                38

              
	 	
                10.13

              	
                Jurisdiction.

              	
                38

              
	 	
                10.14

              	
                Venue.

              	
                38

              
	 	
                10.15

              	
                Service
                  of Process.

              	
                38

              
	 	
                10.16

              	
                Waiver
                  of Jury Trial.

              	
                39

              

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      

      
        	
                Schedules

              	 	 
	
                Schedule
                  2.1(a)(i)

              	
                -

              	
                Fixed
                  Asset Register

              
	
                Schedule
                  2.1(b)

              	
                -

              	
                Leases

              
	
                Schedule
                  2.1(c)

              	
                -

              	
                Telephone
                  Numbers

              
	
                Schedule
                  2.1(e)

              	
                -

              	
                Other
                  Assumed Contract Rights/Obligations

              
	
                Schedule
                  2.8

              	
                -

              	
                Allocation
                  of Purchase Price

              
	
                Schedule
                  2.12

              	
                -

              	
                Acquired
                  Inventory

              
	 	 	 
	
                Disclosure
                  Schedules

              	 	 
	
                Schedule
                  3.7

              	
                -

              	
                Material
                  Consents (Sellers)

              
	
                Schedule
                  3.10

              	
                -

              	
                Environmental
                  Matters

              
	
                Schedule
                  3.14

              	
                -

              	
                Monthly
                  Sales and Profit and Loss Statements

              
	
                Schedule
                  3.17

              	 	
                Contracts

              
	
                Schedule
                  4.5

              	
                -

              	
                Material
                  Consents (Buyer and Buyer Parent)

              
	 	 	 
	
                Exhibits

              	 	 
	
                Exhibit
                  A

              	
                -

              	
                Bill
                  of Sale

              
	
                Exhibit
                  B

              	
                -

              	
                Instrument
                  of Assumption

              
	
                Exhibit
                  C

              	
                -

              	
                Lease
                  Assignment and Assumption

              

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit
      10.1

     

    ASSET
      PURCHASE AGREEMENT

     

    This
      Asset Purchase Agreement (the
“Agreement”) is entered into on August 15, 2007, by and among iParty Retail
      Stores Corp., a Delaware corporation (the “Buyer”), iParty Corp., a Delaware
      corporation (the “Buyer Parent”), Party City of Warwick, Inc., a Rhode Island
      corporation (“Party City Warwick”), and Party City of Lincoln, LLC, a Rhode
      Island limited liability company (“Party City Lincoln” and with Party City
      Warwick, the “Sellers” and each a “Seller”), and, with respect to certain
      sections hereof, certain other parties set forth on the signature pages
      hereto.  The Buyer, Buyer Parent, and the Sellers, and, where
      applicable, the other parties set forth on the signature pages hereto, are
      collectively referred to herein as the “Parties.”

    

    Whereas,
      Sellers have determined that they desire to sell and transfer their retail
      stores located in Warwick, Rhode Island and Lincoln, Rhode Island
      respectively;

     

    Whereas,
      Buyer and Buyer Parent desire to purchase and acquire such retail stores from
      Sellers;

     

    Whereas,
      subject to the terms and conditions contained in this Agreement, Sellers hereby
      shall sell and transfer and Buyer hereby shall purchase and acquire certain
      of
      the assets (and assume certain of the liabilities associated with those assets)
      of the Sellers’ retail stores located at Cowesett Corners in Warwick, Rhode
      Island and the Lincoln Mall in Lincoln, Rhode Island (the “Acquired Locations”),
      all as more fully specified below;

     

    Whereas,
      to facilitate and further the transactions contemplated by this Agreement,
      the
      Parties have agreed that, except as provided for herein, Sellers and their
      Affiliates may continue to engage in their  businesses after the
      consummation of the transactions contemplated hereby.

     

    Now,
      therefore, in consideration of the premises and the mutual promises herein
      made,
      and in consideration of the representations, warranties, and covenants herein
      contained, the Parties agree as follows.

     

    1.    
DEFINITIONS;
      CERTAIN RULES OF CONSTRUCTION.

     

    As
      used
      herein, the following terms will have the following meanings:

     

    “Acquired
      Assets” has the meaning set forth in §2.1.

     

    “Acquired
      Inventory” has the meaning set forth in §2.12.

     

    “Acquired
      Locations” has the meaning set forth in the recitals.

     

    “Action”
      means any claim, action, cause of action or suit (whether in contract or tort
      or
      otherwise), litigation (whether at law or in equity and whether civil or
      criminal), controversy, assessment, arbitration, investigation, hearing, charge,
      complaint, demand, notice or proceeding to, from, by or before any Governmental
      Authority.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    “Affiliate”
      means, as to any specified Person at any time, each Person directly or
      indirectly controlling, controlled by or under direct or indirect common control
      with such specified Person at such time, and, as to natural persons, shall
      also
      include any immediate family member of such person, including, such person’s
      spouse, parents, children, siblings, mother-in-law, father-in-law,
      brother-in-law, sister-in-law, son-in-law, daughter-in-law, and any other
      relative (by blood or adoption) who has a place of residence in such person’s
      home .

     

    “Agreement”
      has the meaning set forth in the preamble.

     

    “Assumed
      Liabilities” has the meaning set forth in §2.3.

     

    “Bill
      of
      Sale” has the meaning set forth in §2.7.

     

    “Businesses”
      means the operations of the Sellers related to the retail sale and merchandising
      of party goods and related items that are conducted in the retail stores
      operated by the Sellers at the Acquired Locations.

     

    “Business
      Day” means any weekday other than a weekday on which banks in The Commonwealth
      of Massachusetts or the State of Rhode Island are authorized or required to
      be
      closed.

     

    “Buyer”
      has the meaning set forth in the preamble.

     

    “Buyer
      Indemnitees” has the meaning set forth in §8.2.

     

    “Buyer
      Parent” has the meaning set forth in the preamble.

     

    “Buyer’s
      Knowledge” means the actual (and not constructive or imputed) knowledge of Sal
      Perisano and Dave Robertson.

     

    “Cash
      Purchase Price” has the meaning set forth in §2.5.

     

    “CERCLA”
      shall mean the federal Comprehensive Environmental Response Compensation and
      Liability Act of 1980, as amended.

     

    “Clearance
      Merchandise” has the meaning set forth in §2.12.

     

    “Closing”
      has the meaning set forth in §2.6.

     

    “Closing
      Date” has the meaning set forth in §2.6.

     

    “Closing
      Documents” has the meaning set forth in §2.7.

     

    “COBRA”
      shall mean Consolidated Omnibus Budget Reconciliation Act.

     

    “Code”
      shall mean the Internal Revenue Code of 1986, as amended.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

     

    “Contractual
      Obligation” means, with respect to any Person, any written contract, agreement,
      deed, mortgage, lease, license, commitment, undertaking, arrangement or
      understanding, or other document or written instrument, including without
      limitation any document or written instrument evidencing or otherwise relating
      to any Debt (but excluding the charter and by-laws of such Person), to which
      or
      by which such Person is a party or otherwise subject or bound or to which or
      by
      which any property or right of such Person is subject or bound.

     

     "Debt”
      of any Person means all obligations of such Person (i) for borrowed money,
      (ii)
      evidenced by notes, bonds, debentures or similar instruments, (iii) under
      capital leases or (iv) in the nature of Guarantees of the obligations described
      in clauses (i) through (iii) above of any other Person.

     

    “Defective
      Merchandise” has the meaning set forth in §2.12.

     

    “Deposit”
      has the meaning set forth in §2.9.

     

    “Disclosure
      Schedule” has the meaning set forth in §3.

     

    “Employees”
      has the meaning set forth in §7.3(a).

     

    “Employee
      Plans” mean all compensation and benefit plans, programs, arrangements,
      contracts, agreements, understandings, commitments and policies sponsored,
      administered, maintained, or contributed to, by or on behalf of the Sellers
      relating to the Acquired Locations for the benefit of any former or current
      employees of the Sellers who perform services for the Sellers in connection
      with
      the Acquired Locations or their respective dependents.

     

    “Enforceable”
      means, with respect to any Contractual Obligation stated to be Enforceable
      by or
      against any Person, that such Contractual Obligation is a legal, valid and
      binding obligation of such Person enforceable by or against such Person in
      accordance with its terms, except to the extent that enforcement of the rights
      and remedies created thereby is subject to bankruptcy, insolvency,
      reorganization, moratorium and other similar laws of general application
      affecting the rights and remedies of creditors and to general principles of
      equity (regardless of whether enforceability is considered in a proceeding
      in
      equity or at law).

     

    “Environmental
      Laws” shall mean all federal, state, local and foreign statutes, rules, orders,
      directives, judgments, permits, regulations, and ordinances or the common law
      concerning or relating to the environment, occupational health and safety,
      pollution, or protection of public health  including without
      limitation all those relating to the generation, manufacture, processing,
      import, export, labeling, recycling, registration, investigation, documentation,
      use, handling, transportation, treatment, storage, remediation, disposal,
      release, or threatened release of any Materials of Environmental Concern, as
      such requirements are enacted and in effect on or prior to the Closing Date,
      including, without limitation, any statute, regulation, administrative decision,
      order, or release pertaining to: (i) air, water, and noise pollution, (ii)
      groundwater and soil contamination, (iii) the release, threatened release,
      or
      accidental release into the environment, the workplace or other areas of
      Materials of Environmental Concern, including emissions, discharges, injections,
      spills, escapes or dumping of Materials of Environmental Concern, (iv) transfer
      of interests in or control of real property which may be contaminated, (v)
      community or worker right-to-know disclosures with respect to Materials of
      Environmental Concern, (vi) the protection of wild life, marine life and
      wetlands, and endangered and threatened species, (vii) storage tanks, vessels,
      containers, abandoned and discarded barrels and other closed or breached
      receptacles, and (viii) health and safety of employees and other
      persons.  As used above, the term “release” shall have the meaning set
      forth in CERCLA.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

     

    “Excess
      Seasonal Merchandise” has the meaning set forth in §2.12.

     

    “Excluded
      Assets” has the meaning set forth in §2.2.

     

    *Excluded
      Contracts” has the meaning set forth in §2.1(e).

     

    “Financial
      Statements” shall mean as to each Seller:

     

    (a)           the
      compiled balance sheets and statements of income, changes in stockholders’
equity and cash flows as of the end of and for each of the last two fiscal
      years
      through and including the Most Recent FYE Balance Sheet Date, and

     

    (b)           the
      unaudited statements of income (or profit and loss statements), sales, and
      cash
      flows for each monthly period since the Most Recent FYE Balance Sheet Date
      and
      the unaudited balance sheet as of June 30, 2007,

     

    copies
      of
      which are attached hereto as Schedule 1.

     

    “GAAP”
      means United States generally accepted accounting principles.

     

    “Governmental
      Authority” means any United States federal, state or local or any foreign
      government, or political subdivision thereof, or any multinational organization
      or authority or any authority, agency or commission entitled to exercise any
      administrative, executive, judicial, legislative, police, regulatory or taxing
      authority or power, any court or tribunal (or any department, bureau or division
      thereof), or any arbitrator or arbitral body.

     

    “Greeting
      Card Merchandise” has the meaning set forth in §2.12.

     

    “Guarantee”
      means (i) any guarantee, other than in the Ordinary Course of Business, of
      the
      payment or performance of, or any contingent obligation in respect of, any
      Debt
      or other obligation of any other Person, (ii) any other arrangement, other
      than
      in the Ordinary Course of Business, whereby credit is extended to one obligor
      on
      the basis of any promise or undertaking of another Person (A) to pay the Debt
      or
      other obligation of such obligor, (B) to purchase any obligation owed by such
      obligor, (C) to purchase or lease assets (other than inventory in the Ordinary
      Course of Business) under circumstances that would enable such obligor to
      discharge one or more of its obligations or (D) to maintain the capital, working
      capital, solvency or general financial condition of such obligor or (iii) any
      liability as a general partner of a partnership or as a venturer in a joint
      venture in respect of indebtedness or other obligations of such partnership
      or
      venture.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

     

    “Hired
      Employees” has the meaning set forth in §7.3(c).

     

    “Instrument
      of Assignment and Assumption” has the meaning set forth in §2.7.

     

    “Intellectual
      Property” means the following types of proprietary rights: patents, copyrights,
      Trademarks, mask works, software, trade secrets and proprietary information
      (including without limitation proprietary ideas, research and development,
      know-how, processes and techniques, technical data, specifications, customer
      and
      supplier lists (other than the customer mailing list used by the Acquired
      Locations in connection with the conduct of the Businesses), pricing and cost
      information, and business and marketing plans and proposals), all applications
      for any of the foregoing, all copies and tangible embodiments of any of the
      foregoing in Sellers’ possession or control, and any Contractual Obligations
      granting rights related to the foregoing (i) subsisting in, covering, reading
      on, directly applicable to, used in the production of or existing in the
      Technology used in the Acquired Locations or (ii) that are owned, licensed
      or
      controlled in whole or in part by the Sellers and relate to the Acquired
      Locations.

     

    “Inventory
      Taking” has the meaning set forth in §2.12.

     

    “Inventory
      Taking Instructions” has the meaning set forth in §2.12.

     

    “Layaway,
      Repair, and Special Orders Merchandise” has the meaning set forth in
§2.12.

     

    “Leases”
      has the meaning set forth in §2.1(b).

     

    “Lease
      Assignment and Assumption” has the meaning set forth in §2.7.

     

    “Legal
      Requirement” means any United States federal, state, or local or any foreign
      law, statute, standard, ordinance, code, rule, regulation, resolution or
      promulgation, or any order, judgment or decree of any Governmental Authority,
      or
      any similar provision having the force and effect of law.

     

    “Liability”
      means any liability or obligation (whether known or unknown, whether asserted
      or
      unasserted, whether absolute or contingent, whether accrued or unaccrued,
      whether liquidated or unliquidated and whether due or to become
      due).

     

    “Lien”
      means any mortgage, pledge, lien, security interest, charge, adverse or prior
      claim, encumbrance, restriction on transfer, conditional sale or other title
      retention device or arrangement (including without limitation a capital lease),
      transfer for the purpose of subjection to the payment of any Debt or other
      obligation, or restriction on the creation of any of the foregoing, whether
      relating to any property or right or the income or profits therefrom;
provided, however, that the term “Lien” shall not include (i)
      statutory liens for Taxes, special assessments, or other governmental charges
      to
      the extent that the payment thereof is not in arrears or otherwise due, (ii)
      imperfections in title or encumbrances in the nature of zoning restrictions,
      easements, rights or restrictions of record on the use of real property if
      the
      same do not impair its use in the operations of the Acquired Location as
      currently conducted, (iii) statutory or common law liens in favor of carriers,
      warehousemen, mechanics and materialmen, statutory or common law liens to secure
      claims for labor, materials or supplies and other like liens, which secure
      obligations to the extent that payment thereof is not in arrears or otherwise
      due, and (iv) as to any leased assets or properties (including pursuant to
      financial or capital leases), rights of the lessors thereof.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

     

    “Loss”
      means any loss, Liability, claim, damage, expense (including costs of
      investigation and defense, reasonable attorneys’ fees, and any interest and
      penalties imposed or assessed by any Governmental Authority), whether or not
      involving a third party claim, and reduced by the amount of any insurance
      proceeds and any Tax Benefit applicable to the then current fiscal year in
      respect of (i) such Loss or (ii) a correlative adjustment which makes allowable
      to the Buyer, Buyer Parent, Sellers, or any of their Affiliates any deduction,
      amortization, exclusion from income, or other allowance.

     

    “Material
      Adverse Effect” means any change in or effect on the Businesses at the Acquired
      Locations, the Acquired Assets or the Assumed Liabilities that, when considered
      either singly or in the aggregate, would result in a material adverse effect
      on
      the condition (financial or otherwise), prospects, or operations (including
      under any Lease) of the Businesses, Acquired Assets and Assumed Liabilities
      at
      the Acquired Locations, other than any such changes or effects resulting from
      (i) this Agreement, the transactions contemplated hereby or the announcement
      thereof, (ii) changes in general economic or political conditions or the
      securities markets in general to the extent that they do not have a
      substantially disproportionate effect on the Businesses at the Acquired
      Locations, and (iii) changes in GAAP or its application.

     

    “Materials
      of Environmental Concern” means (i) any pollutants, contaminants, or hazardous
      substances (as such terms are defined under CERCLA), pesticides, (as such term
      is defined under the Federal Insecticide, Fungicide and Rodenticide Act),
      hazardous wastes (as such term is defined under the Resource Conservation and
      Recovery Act), other hazardous, radioactive or toxic materials, oil, petroleum
      and petroleum products (and fractions thereof), or any other material listed
      or
      subject to regulation under any law, statute, rule, regulation, permit, or
      directive due to its potential, directly or indirectly, to harm the environment
      or the health of humans or other living beings, including, without limitation,
      those substances defined or regulated as hazardous or toxic under Environmental
      Laws.

     

    “Most
      Recent FYE Balance Sheet” shall mean for each Seller the balance sheet of such
      Seller as of the Most Recent FYE Balance Sheet Date provided to the
      Buyer.

     

    “Most
      Recent FYE Balance Sheet Date” shall mean December 31, 2006 in the case of each
      Seller.

     

    “Non-Competition
      Period” has the meaning set forth in §7.1.

     

    “Non-Disclosure
      Agreement” means the Mutual Non-Disclosure Agreement, dated April 2, 2007,
      by and between the Buyer Parent and Sellers.

     

    “Ordinary
      Course of Business” means, with respect to the Acquired Locations, the ordinary
      course of business consistent with past custom and practice of the Acquired
      Locations (including with respect to the quantity and frequency of and
      expenditure on advertising for the Acquired Locations) and shall expressly
      exclude, without limitation, any going out of business or similar sales (however
      denominated) or any sell off of any merchandise at sale prices that are
      inconsistent with Sellers’ past practices at the Acquired
      Locations.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

     

    “Other
      Assumed Contract Rights/Obligations” has the meaning set forth in
§2.1(f).

     

    “Out-of-Season
      Merchandise” has the meaning set forth in §2.12.

     

    “Parties”
      has the meaning set forth in the preamble above.

     

    "Party"
      means any of the Parties individually.

     

    “Person”
      means an individual, a partnership, a corporation, an association, a joint
      stock
      company, a limited liability company, a trust, a joint stock or venture, an
      unincorporated organization, a Governmental Authority, an estate or other entity
      or organization.

     

    “Personal
      Property” has the meaning set forth in §2.1(a).

     

    “Purchase
      Price” has the meaning set forth in §2.5.

     

    "Restricted
      Parties" means, collectively, the Sellers, their subsidiaries, assigns,
      successors and Affiliates.

     

    "Restricted
      Party" means any of the Restricted Parties individually.

     

    “Restricted
      Region” has the meaning set forth in §7.1.

     

    “Retained
      Liabilities” has the meaning set forth in §2.4.

     

    “Sellers”
      has the meaning set forth in the preamble.

     

    “Seller
      Indemnitees” has the meaning set forth in §8.1.

     

    “Sellers’
      Knowledge” means the knowledge of Luis Art Linares and Jose L.
      Linares after due inquiry of Walter Fitzsimmons and the
      store managers for the Acquired Locations employed by the Sellers immediately
      prior to the Closing

     

    “Tax”
or
      “Taxes” means any United States federal, state, or local or any foreign income,
      gross receipts, license, payroll, employment, excise, severance, stamp,
      occupation, premium, windfall profits, customs duties, capital stock, franchise,
      profits, withholding, social security (or similar, including FICA),
      unemployment, disability, real property, personal property, sales, use,
      transfer, registration, value added, alternative or add-on minimum, estimated,
      or other tax, including any interest, penalty, or addition thereto.

     

    “Tax
      Benefit” shall mean any refund or reduction in Tax realized by any Person (or
      any Affiliate of a Person) attributable, as the context may require, to any
      specified matter or event, which Tax Benefit shall be determined after first
      taking into account all other items of income, gain, loss, deduction or credit
      of such Person or Affiliate.

     

    
      
        
        

      

      
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    “Tax
      Return” means any return, declaration, report, claim for refund, or information
      return or statement relating to Taxes, including any schedule or attachment
      thereto, and including any amendment thereof.

     

    “Technology”
      means all inventions, copyrightable works, discoveries, innovations, know-how,
      information (including ideas, research and development, know-how, formulas,
      compositions, processes and techniques, technical data, designs, drawings,
      specifications), and all other forms of technology, including improvements,
      modifications, derivatives or changes, whether or not protectible or protected
      by patent, copyright, mask work right, trade secret law or
      otherwise.

     

    “Trademarks”
      means any trademarks, service marks, trade dress, and logos, together with
      all
      translations, adaptations, derivations, and combinations thereof and including
      all goodwill associated therewith.

     

    “Transaction
      Proposal” has the meaning set forth in §5.6.

     

    “Transfer
      Taxes” has the meaning set forth in §9.10.

     

    "Transitional
      Assets" has the meaning set forth in §7.6.

     

    2.    
ACQUISITION
      OF ASSETS BY BUYER.

     

    2.1.  Purchase
      and Sale of Assets.

     

    The
      Sellers agree to sell and transfer to the Buyer, and the Buyer agrees to
      purchase and acquire from the Sellers at the Closing, subject to the exclusions
      contained in §2.2 and subject to and upon the other terms and conditions
      contained herein, all of Sellers’ right, title and interest in and to the assets
      of the Sellers which are used or required in the conduct of the Businesses
      as
      set forth below (collectively, the “Acquired Assets”), and no other properties,
      assets, or rights of the Sellers:

    

    (a)  (i)  the
      tangible personal property and leasehold improvements, including machinery,
      equipment (but excluding, specifically, POS equipment and computers), alarm
      systems, tools, furniture, fixtures, furnishings, shelving, owned by the Sellers
      and used or required in the conduct of the Business, each as set forth on the
      fixed asset register attached hereto as Schedule 2.1(a)(i) (as supplemented
      by
      Sellers at Closing for any additional items acquired after the date hereof),
      and
      (ii) the Acquired Inventory (such Acquired Inventory, collectively with the
      items specified in §2.1(a)(i), the “Personal Property”);

     

    (b)  all
      rights
      of the Sellers (i) as tenants under the leases relating to the real property
      at
      the Acquired Locations (including to security deposits, but only if and to
      the
      extent any existing deposits are not released by the landlords on or prior
      to
      Closing) and (ii) under the leases relating to such personal property as is
      used
      in the Businesses, each as set forth on Schedule 2.1(b) (collectively, the
      “Leases”) ;

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

     

    (c)  all
      rights
      of the Sellers to the telephone numbers of the Acquired Locations, each as
      set
      forth on Schedule 2.1(c);

     

    (d)  all
      customer mailing lists and other records relating to the customers of the
      Businesses or used at or by the Acquired Locations in connection with the
      conduct of the Businesses that are not owned by Party City
      Corporation;

     

    (e)  such
      other
      contracts, contract rights, agreements and leases (in addition to the Leases)
      of
      Sellers required for the conduct of the Businesses at the Acquired Locations
      as
      may be set forth on Schedule 2.1(e),  as updated by Sellers as of the
      Closing Date, and in each case accepted by Buyer (“Other Assumed Contract
      Rights/Obligations”); but specifically excluding any contractual obligations
      with Party City Corporation and Gibson Greeting Cards and all other contracts,
      agreements or leases of Sellers (collectively the “Excluded Contracts”);
      and

     

            (f)       the
      goodwill of the Businesses at the Acquired Locations.

     

    2.2.  Excluded
      Assets.

     

    There
      shall be excluded from the Acquired Assets to be sold and transferred to Buyer
      hereunder, and, to the extent in existence on the Closing Date, the Sellers
      shall retain all of the Sellers’ right, title and interest in and to the
      following assets, properties and rights of the Sellers (collectively, the
“Excluded Assets”):

    

    (a)  the
      consideration delivered to Sellers by Buyer or Buyer Parent pursuant to this
      Agreement and all checks received by the Sellers as of the Closing which have
      not yet cleared or been deposited or cashed;

     

    (b)  any
      assets
      of the Sellers not used in the conduct of the Businesses as well as any POS
      equipment and computers, even if used in the conduct of the
      Businesses;

     

    (c)  all
      rights
      of the Sellers under the Excluded Contracts;

     

    (d)  all
      claims, prepayments, refunds, entitlements, causes of action, choses in action,
      rights of recovery, rights of set off and rights of recoupment, including
      without limitation with respect to Taxes, which Sellers may hereafter receive
      or
      be responsible for by reason of their ownership of the Acquired Assets prior
      to
      the Closing or which have arisen in connection with the operation of the
      Acquired Locations by the Sellers prior to the Closing (including security
      deposits, but only if and to the extent such deposits are released by the
      landlords of the leased real property at the Acquired Locations on or prior
      to
      Closing) unless otherwise allocated pursuant to §2.10;

     

             (e)   all
      rights
      in and with respect to the assets associated with (whether in trust, reserve,
      or
      otherwise) employee benefit plans of the Sellers, if any, including, without
      limitation, any Employee Plan;

     

    (f)  all
      rights
      in and with respect to insurance policies of the Sellers;

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

     

    (g)  all
      corporate, financial (including, without limitation, Tax),
      computer,  and human resource books, records and systems of the
      Sellers, including without limitation those used in connection with the Acquired
      Locations;

     

    (h)  all
      Intellectual Property used in connection with the operations of the Acquired
      Locations, goodwill associated therewith, licenses and sublicenses granted
      in
      respect thereto and rights thereunder, remedies against infringements thereof
      and rights to protection of interest therein; and

     

    (i)        all
      inventories, merchandise and supplies of the Sellers that do not constitute
      Acquired Inventory under this Agreement.

     

    2.3.  Assumption
      of Liabilities.

     

    At
      the
      Closing, Buyer will deliver to Sellers an instrument of assumption whereby
      on
      the terms and subject to the conditions set forth herein and except as excluded
      by §2.4 hereof, Buyer will undertake, assume, agree to satisfy or perform when
      due and hold Sellers harmless from and indemnify Sellers against the following
      Liabilities of the Sellers (the “Assumed Liabilities”):

    

    (a)  all
      Liabilities of the Sellers under the Leases included in the Acquired Assets
      (other than those Liabilities that arose or accrued solely based on any act,
      event, or omission that occurred prior to the Closing, which shall in all cases
      be retained by Sellers irrespective of whether they are known at Closing or
      become known only after the Closing, except to the extent adjusted pursuant
      to
§2.10 hereof);

     

    (b)  all
      Liabilities for Taxes relating to the Acquired Locations that are incurred
      subsequent to the Closing (unless otherwise allocated pursuant to
§2.10);

     

    (c)  all
      other
      Liabilities relating to the operations of the Acquired Locations or the
      ownership of the Acquired Assets, but in each such case only to the extent
      they
      arise or accrue after the Closing; and

     

    (d)  all
      Liabilities relating to or arising from the Buyer’s use of the utilities and
      telephone accounts of the Sellers pursuant to §7.5.

     

    2.4.  Liabilities
      Not Assumed.

     

    Except
      as
      expressly set forth in this Agreement, the Buyer will not assume or perform
      any
      Liabilities not specifically covered in §2.3 hereof including, but not limited
      to, the following Liabilities (the “Retained Liabilities”), which shall be
      retained by the Sellers:

    

    (a)  any
      Liability of the Sellers for Taxes (i) not relating to the Acquired Locations
      or
      (ii) incurred or arising on or prior to the Closing (unless otherwise allocated
      pursuant to §2.10);

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

     

    (b)  any
      Liability of the Sellers for costs and expenses incurred in connection with
      this
      Agreement, the making or performance of this Agreement and the transactions
      contemplated hereby;

     

    (c)  any
      Liability of the Sellers to indemnify any Person, except to the extent arising
      under the Leases for acts, events, or omissions that may take place or transpire
      after the Closing (unless otherwise allocated pursuant to §2.10);

     

    (d)  any
      Liability associated with any Employee Plan;

     

    (e)  any
      Liability of the Sellers arising under this Agreement except as set forth in
      the
      indemnification provisions of §8 hereof, to the extent set forth
      therein;

     

    (f)  any
      Liability arising out of or relating to the Excluded Assets;

     

    (g)  any
      Liability to Affiliates of Sellers;

     

    (h)  any
      Liability relating to former employees of Sellers no longer employed by Sellers
      as of the close of business on the Closing Date, except to the extent, if any,
      that Buyer has specifically assumed or agreed to assume responsibility for
      such
      obligations in this Agreement; and

     

    (i)  any
      Liability under any Leases that accrued or arose based solely on any act, event,
      or omission that occurred prior to or through and including the Closing Date
      (unless otherwise allocated pursuant to §2.10).

     

    2.5.  Purchase
      Price.

     

    The
      Buyer
      agrees to purchase the Acquired Assets (other than the Acquired Inventory)
      and
      the covenant not to compete provided for in §7.1 hereunder for One Million Three
      Hundred Fifty Thousand Dollars ($1,350,000) and additionally agrees to purchase
      the Acquired Inventory  at the purchase price determined in accordance
      with §2.12 below (together, the “Purchase Price”), subject to any adjustment
      pursuant to §§ 2.9, 2.10 or 2.11 below, payable at Closing by release of the
      Deposit to Seller and the balance by wire transfer of immediately available
      funds in accordance with written instructions of the Sellers given to the Buyer
      not less than two Business Days prior to the Closing Date.

    

    2.6.  The
      Closing.

     

    The
      effective time of the closing of the transactions contemplated by this Agreement
      (the “Closing”) shall be the commencement of business at the Acquired Locations
      on January 3, 2008 (the “Closing Date”). 

    

    2.7.  Deliveries
      by Sellers and Buyer.

     

    At
      the
      Closing:

    

    
      
        
        

      

      
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    (i)           the
      Sellers shall deliver to the Buyer the various certificates, instruments and
      documents referred to in §6.1;

    

    (ii)           the
      Buyer and Buyer Parent shall deliver to the Sellers the various certificates,
      instruments and documents referred to in §6.2;

    

    (iii)          the
      Sellers shall execute and deliver to the Buyer and Buyer Parent a bill of sale
      in substantially the form attached hereto as Exhibit A (the “Bill of
      Sale”) and such other instruments of conveyance as the Buyer and Buyer Parent
      and their counsel may reasonably request in order to effect the sale, transfer,
      conveyance and assignment to the Buyer and Buyer Parent of valid ownership
      of
      the Acquired Assets;

    

    (iv)          the
      Buyer and Buyer Parent shall execute and deliver to the Sellers an instrument
      of
      assumption in substantially the form attached hereto as Exhibit B (the
“Instrument of Assignment and Assumption”) and such other instruments as the
      Sellers and their counsel may reasonably request in order to effect the
      assumption by the Buyer and Buyer Parent of the Assumed
      Liabilities;

    

    (v)           the
      Sellers and Buyer shall each execute and deliver to the other an Assignment
      and
      Assumption of Lease substantially in the form attached hereto as Exhibit
      C (the "Lease Assignment and Assumption") with respect to each lease
      relating to the real property at the Acquired Locations, with each such Lease
      Assignment and Assumption governed by and construed in accordance with the
      terms
      of this Agreement and, in the event that any provision of either such Lease
      Assignment and Assumption is construed to conflict with a provision in this
      Agreement, the provision in this Agreement shall be deemed to be
      controlling;

    

    (vi)          the
      Buyer shall pay to the Sellers the Purchase Price set forth in §2.5, subject to
      any adjustment thereunder or elsewhere hereunder;

    

    (vii)         the
      Sellers shall deliver to the Buyer, or otherwise put the Buyer in possession
      and
      control of, all of the Acquired Assets of a tangible nature; and

    

    (viii)        the
      Buyer and the Sellers shall execute and deliver to each other a cross-receipt
      evidencing the transactions referred to above.

    

    As
      used in
      this Agreement, the term “Closing Documents” shall mean each Bill of Sale, the
      Instrument of Assignment and Assumption, each Lease Assignment and Assumption,
      and any other instruments of sale, transfer, conveyance, assignment, and
      assumption of liabilities executed and delivered by the Parties pursuant to
      this
§2.7 or §7.8 (Further Assurances).

    

    2.8.     
Allocation
      of Purchase
      Price.

     

    The
      Buyer
      and the Sellers agree that the Purchase Price shall be allocated in accordance
      with Schedule 2.8, which will be prepared by the Parties within one hundred
      twenty (120) calendar days following the Closing Date, or as soon as practicable
      thereafter, in accordance with Section 1060 of the United States Internal
      Revenue Code of 1986, as amended, and will be revised to reflect any adjustments
      necessary as a result of any Purchase Price adjustment pursuant to §§ 2.9, 2.10,
      2.11 and 2.12 below.  The Buyer, Buyer Parent, and the Sellers shall
      use such allocation in all relevant Tax Returns.

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

     

    2.9.  Deposit.  

     

    Within
      five Business Days after Sellers obtain consents from the lessors under each
      of
      the Leases for the real property at the Acquired Locations pursuant to the
      provisions of §5.8 hereunder, Buyer shall deposit in escrow with a mutually
      agreed upon escrow agent the sum of One Hundred Thirty Five Thousand Dollars
      ($135,000) (such amount, plus all interest earned thereon, the “Deposit”), which
      Deposit shall be applied against the Purchase Price due and payable at the
      Closing, or refunded in full to Buyer if the Closing does not occur through
      no
      fault of Buyer.

    

    2.10.    Prorations.

     

    (a)  the
      following items shall be prorated between Buyer and Sellers as of and through
      the Closing Date and shall constitute an adjustment to the Purchase
      Price:

     

    (i)  
All
      ad
      valorem, real and personal property Taxes (including without limitation any
      such
      Taxes paid indirectly through the lessors under or relating to the Leases),
      general and special assessments (solely with respect to installments due in
      the
      current Tax year), and any other property Taxes relating to the Acquired Assets
      for the current tax year; however, if the amount of such Tax for the
      current Tax year is not determinable, it shall be initially be prorated on
      the
      basis of the Tax for the immediately preceding Tax year or, if greater, the
      amounts billed by the landlords for the current period and finally adjusted
      after the amount of Tax for the current Tax year becomes
      determinable,

     

    (ii)   All
      payments to the lessors under or relating to the Leases, including unpaid or
      prepaid rent, security deposits (which shall be returned to the Sellers to
      the
      extent released by the lessors), and common area maintenance charges;
      and

     

    (iii)           Any
      prepaid expenses associated with the operation of the Acquired Locations which
      were paid by Sellers in the Ordinary Course of Business, including without
      limitation telephone expenses and utility charges, but excluding advertising
      expenses.

     

    (b)  
Sellers
      shall bear the cost and expense of all prorated items set forth in this §2.10
      applicable to periods prior to and including the Closing Date and shall receive
      the benefits thereof, Buyer shall bear the cost and expense of payment of all
      prorated items set forth in this §2.10 applicable to periods from and after the
      Closing Date and shall receive the benefits thereof, and the Purchase Price
      shall be adjusted, if necessary, to account for such division of the costs
      and
      expenses of prorated items.

     

    
      
        
        

      

      
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    (c)  At
      the
      Closing, all such amounts shall be estimated by the Parties in the manner set
      forth above or otherwise in good faith, with final adjusting payments due once
      the actual amounts are determined. After Closing, either Party, at its option,
      may give the other Party written notice of the correct amount of any payment
      any
      necessary adjustment to the prorations due under this §2.10 (accompanied by
      documentation substantiating such amount) and (B) the Party from whom additional
      payment is required will pay the applicable amount within ten Business Days
      after such notice.

     

    2.11.  Purchase
      Price Adjustment for Lease Security Deposits.

     

    In
      the
      event that one or more of the Sellers’ security deposits relating to the real
      property at the Acquired Locations are not released by the landlords on or
      prior
      to Closing, then the Purchase Price payable under §2.5 hereunder shall be
      increased by an amount (not to exceed Fifty Thousand Dollars ($50,000)) equal
      to
      the security deposits of the Sellers that are not being released by the
      landlords, with said adjustment to the Purchase Price, if any, serving as full
      consideration for the transfer and assignment by the Sellers to the Buyer of
      their interest in said unreleased security deposits.

     

    2.12.  Acquired
      Inventory.

     

    (a)           Sellers
      agree to sell and Buyer agrees to purchase an amount not to exceed Four Hundred
      Thousand Dollars ($400,000) worth of mutually agreed upon inventory at the
      Acquired Locations on the Closing Date (valued at Sellers’ cost as determined
      from Sellers’ books and records maintained in accordance with GAAP) subject to
      the conditions of this §2.12 and as set forth on Schedule 2.12 (such inventory,
      the “Acquired Inventory”).

    

    (b)           In
      determining what shall constitute Acquired Inventory for purposes of this
      Agreement, the Parties agree that it shall consist only of such inventories
      and
      items of merchandise at the Acquired Locations that are saleable in the Ordinary
      Course of Business as mutually determined by Buyer and Buyer Parent and Sellers
      and conform to the provisions of Section 2.12(d) below.  In the event
      that such inventories and items of merchandise are valued at greater than
      $400,000 (measured by Sellers’ cost and as verified with and accepted by Buyer
      and Buyer Parent under this §2.12) (“Excess Inventory”), then Buyer may elect to
      purchase any or all of such Excess Inventory or exclude any thereof from the
      purchase hereunder.

    

    (c)           In
      connection with the provisions of this §2.12, the Sellers and Buyer shall cause
      to be taken a physical inventory (units and costs) of all items of merchandise
      located at the Acquired Locations (the “Inventory Taking”), which Inventory
      Taking shall take place and be completed following the close of business at
      the
      Acquired Locations on January 2, 2008 and before the commencement of business
      on
      the Closing Date.  In the event that the Parties mutually agree that
      inclement winter weather would impede or prevent the Inventory Taking to take
      place on such date, the Inventory Taking shall place on January 3,
      2008.  The Sellers and Buyer shall jointly employ WIS or another
      mutually acceptable independent inventory taking service (the “Inventory Taking
      Service”) to conduct the Inventory Taking.  The Inventory Taking shall
      be conducted in accordance with procedures and instructions as shall be mutually
      agreed upon by the parties, which will include producing electronic data files
      in a format capable of being readily inputted into Buyer’s electronic inventory
      and merchandising system (the “Inventory Taking Instructions”)).  The
      Sellers and Buyer shall each be responsible for one-half (1/2) of the fees
      and
      expenses of the Inventory Taking Service.  Except as provided in the
      immediately preceding sentence, the Sellers and Buyer shall each bear their
      respective costs and expenses relative to the Inventory Taking.  The
      Sellers and Buyer shall each have the right to have such number of
      representatives present during the Inventory Taking as they reasonably deem
      necessary, and shall each have the right to review and verify the listing and
      tabulation of the Inventory Taking Service.  The Sellers agree that
      during the conduct of the Inventory Taking, the retail stores at the Acquired
      Locations shall be closed to the public and no sales or other transactions
      shall
      be conducted.

    

    
      
        
        

      

      
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    (d)           In
      mutually agreeing to the items of merchandise that shall constitute Acquired
      Inventory, the Parties agree that Acquired Inventory shall not include any
      (i)
      Defective Merchandise, (ii) Out-Of-Season Merchandise, (iii) Clearance
      Merchandise, (iv) Greeting Card Merchandise, (v) items or merchandise not
      located at the Acquired Locations, (vi) Obsolete Merchandise, (vii) Excess
      Seasonal Merchandise, and (viii) Special Order Merchandise which is not received
      at the Acquired Locations or picked up by customers prior to the Closing
      Date.  Notwithstanding anything to the contrary in the foregoing,
      Acquired Inventory also shall not include: (1) goods which belong to sublessees,
      licensees or concessionaires of the Sellers; (2) goods held by the Sellers
      on
      memo, on consignment, or as bailee; and (3) furnishings, trade fixtures,
      furniture and equipment and improvements to real property which are located
      at
      the Acquired Locations.

    

    (e)           As
      used in this §2.12 and elsewhere herein, the following terms shall have the
      respective meanings set forth below:

    

    “Clearance
      Merchandise” as to a Seller means merchandise that has been offered for sale at
      a point-of-sale discount equal to fifty percent (50%) or greater off such
      Seller’s normal selling price.

    

    “Defective
      Merchandise” means any item of merchandise identified and agreed upon by Sellers
      and Buyer during the Inventory Taking as defective or otherwise not saleable
      in
      the Ordinary Course of Business because it is dented, worn, scratched, broken,
      faded, torn, mismatched, mistailored, is an outdated food item, or is affected
      by other similar defects rendering it not first quality, or has been segregated
      by Sellers as “discontinued” merchandise.

    

    “Excess
      Seasonal Merchandise” as to each Seller means items in inventory of seasonal,
      holiday, or packaway merchandise (other than Out-of-Season Merchandise) in
      quantities or amounts that exceed what was sold by such Seller in the
      immediately previous selling season during calendar 2007.

    

    
      
        
        

      

      
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    “Greeting
      Card Merchandise” means all items of merchandise constituting greeting
      cards.

    

    “Layaway,
      Repair, and Special Order Merchandise” means all items of merchandise held at
      the Acquired Locations on layaway or for repair, or customer-specific special
      orders for goods, in each case pursuant to binding agreements, invoices or
      other
      legal documentation, where (A) the documentation is clear as to the name,
      address, telephone number, date of last payment and balance due from the
      customer, and (B) the goods subject to layaway, repair or special order are
      properly identified, segregated, and in a condition as described in the
      documentation.

    

    “Obsolete
      Merchandise” means all items that are not saleable or useable due to age or
      similar factors, including merchandise such as film, batteries and similar
      items
      with use expiration dates that are within 60 days of product expiration
      date.

    

    “Out-Of-Season
      Merchandise” means all items of seasonal, holiday, or packaway merchandise that
      relate to seasons or holidays that fall in any one calendar year between
      Halloween and New Year’s Day, inclusive, and shall expressly be deemed to
      include, without limitation, Halloween, Thanksgiving, Christmas, Hanukah,
      Kwanzaa, New Year’s Eve and New Year’s Day merchandise.

    

    (f)           The
      Sellers shall retain all responsibility for any goods not included as “Acquired
      Inventory” hereunder.  All items not included in the Acquired
      Inventory, (and that are not otherwise an Acquired Asset hereunder) including
      any Excess Inventory will be removed by the Sellers from the Acquired Locations
      at a practicable time but in no event later than two days after the Closing
      Date.  The Buyer and Buyer Parent shall have no cost, expense or
      responsibility in connection with any goods not included in Acquired
      Inventory.

     

    3.    
REPRESENTATIONS
      AND WARRANTIES OF THE SELLERS.

     

    The
      Sellers jointly and severally
      represent and warrant to the Buyer and Buyer Parent that, except as set forth
      in
      the disclosure schedule attached to this Agreement (the “Disclosure
      Schedule”):

     

    3.1       
Organization
      and Qualification of the Sellers.

     

    Party
      City
      Warwick is a corporation that is duly organized, validly existing, and in good
      standing under the laws of the State of Rhode Island, Party City Lincoln is
      a
      limited liability company that is duly organized, validly existing, and in
      good
      standing under the laws of the State of Rhode Island,  and each of the
      Sellers are qualified to do business in the State of Rhode
      Island.  Neither Seller has any subsidiary.

    

    
      
        
        

      

      
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    3.2       
Authorization
      of Transaction.

     

    Prior
      to
      the date hereof, the Board of Directors of Party City Warwick and the Members
      of
      Party City Lincoln, by written consent in lieu of a special meeting of the
      Board
      of Directors (in the case of Party City Warwick) and of the Members (in the
      case
      of Party City Lincoln), adopted and approved this Agreement and the transactions
      contemplated hereby.  No vote of the holders of any class of capital
      stock of the Sellers is necessary to adopt and approve this Agreement or the
      transactions contemplated hereby.  The Sellers have the power and
      authority (including full corporate power and authority) to execute and deliver
      this Agreement and have taken all actions necessary to authorize the
      consummation of the transactions contemplated hereby and the performance of
      its
      obligations hereunder.  This Agreement has been duly executed and
      delivered by the Sellers and is Enforceable against the Sellers.

    

    3.3       
Noncontravention.

     

    Neither
      the execution and the delivery of this Agreement, nor the consummation of the
      transactions contemplated hereby (including the assignments and assumptions
      referred to in §2 above), will (i) violate any Legal Requirement to which the
      Sellers are subject, (ii) result in a breach or violation of, or default under,
      any Contractual Obligation of the Sellers, (iii) require any action by
      (including any authorization, consent or approval), or in respect of (including
      notice to), any Person under any Contractual Obligation of the Sellers (other
      than the Leases relating to the real property at the Acquired Locations), or
      (iv) result in a breach or violation of, or default under, the Sellers’ charter,
      bylaws or other organizational documents.

    

    3.4        Brokers’
      Fees.

     

    The
      Sellers do not have any Liability or obligation to pay any fees or commissions
      to any broker, finder, or agent with respect to the transactions contemplated
      by
      this Agreement for which the Buyer could become liable or
      obligated.

    

    3.5       
Assets.

     

    The
      Sellers have good title to (or, in the case of the Leases, a valid and
      subsisting leasehold interest in or right to use), and the power to sell or
      transfer to the Buyer, all of the Acquired Assets free and clear of any
      Liens.

    

    3.6        Legal
      and
      Other Compliance.

     

    The
      Sellers are in material compliance with all applicable Legal Requirements
      relating to the conduct of the Businesses, and no Action has been filed or
      commenced or, to the Sellers' Knowledge, threatened against either of them
      alleging any failure so to comply. Without limiting the
      generality of the foregoing, the Sellers acknowledge that the bulk transfer
      laws
      in The State of Rhode Island are no longer in effect.

    

    3.7       
Consents.

     

    The
      Sellers have given all of the material third party notices and will have
      procured on or before September 14, 2007 the material third party consents,
      approvals, waivers, and, in the case of holders of Liens, pay off or partial
      release letters, necessary to permit the consummation by the Sellers of the
      transactions contemplated hereby, as set forth on §3.7 of the Disclosure
      Schedule.

    

    
      
        
        

      

      
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    3.8       
Property,
      Plant and Equipment.

     

    The
      Personal Property and other tangible assets included in the Acquired Assets
      that
      are material to the operation of the Acquired Locations as conducted on the
      Closing Date are in good operating condition and repair (subject to normal
      wear
      and tear, scheduled maintenance, and retirement).  The Sellers have
      obtained an estoppel from the lessors under the Leases in respect of real
      property relating to the Acquired Locations.

    

    3.9       
Litigation.

     

    There
      are
      no Actions to which either Seller is a party (either as plaintiff or defendant)
      or to which the Acquired Assets are subject pending or, to the Sellers’
Knowledge, threatened that, individually or collectively, would be reasonably
      likely to result in a Material Adverse Effect, or that question the validity
      of
      this Agreement or of any action taken or to be taken pursuant to or in
      connection with the provisions of this Agreement.  There are no
      outstanding judgments, orders, decrees, citations, fines or penalties or written
      notices of violation against the Seller affecting the Acquired Assets or the
      Assumed Liabilities under any Legal Requirement.

    

    3.10  Environmental
      Matters.

     

    Sellers
      have complied with all applicable Environmental Laws relating to the Acquired
      Locations, except for violation of Environmental Laws that have not had and
      would not reasonably be expected to have a Material Adverse
      Effect.  There is no pending or, to Sellers’ Knowledge, threatened in
      writing civil or criminal litigation, notice of violation, formal administrative
      proceeding, or investigation, inquiry or information request by any governmental
      or administrative entity relating to any Environmental Law relating to the
      Acquired Locations.  To the Sellers’ Knowledge, with respect to the
      Acquired Locations, no individual or entity has any material liabilities or
      material obligations arising from the release or threatened release of Materials
      of Environmental Concern into the environment. Neither
      Seller nor to Sellers’ Knowledge any other individual or entity is a party or
      bound by any court order, administrative order, consent order, or other written
      agreement or release with any governmental entity entered into in connection
      with any legal obligation or liability arising under any Environmental Law
      with
      respect to the Acquired Locations.  To the Sellers’ Knowledge, the
      Sellers do not possess any documents (whether in hard copy or electronic form)
      that contain any material environmental reports, investigations, or audits
      relating to the Acquired Locations.  Except as may be described in
§3.10 of the Disclosure Schedule or as has not had or would not reasonably be
      expected to have a Material Adverse Effect: (i) the Seller has all material
      permits, licenses and other authorizations required to operate the Acquired
      Locations under any applicable Environmental Laws and (ii) neither the execution
      of this Agreement nor the consummation of the transactions contemplated hereby
      will require any investigation, remediation or other action with respect to
      Materials of Environmental Concern, or any notice to or consent of any
      Governmental Authority, pursuant to any applicable Environmental
      Laws.

    

    
      
        
        

      

      
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    3.11  Affiliated
      Transactions.

     

    No
      Affiliate of the Sellers owns or otherwise has any rights to or interests in
      any
      Acquired Assets, or has engaged in business dealings with the Sellers related
      to
      the Acquired Locations other than on arms-length terms which are no less
      favorable to the Sellers than those which could be obtained with a third party
      which is not an Affiliate of the Sellers.

    

    3.12  Absence
      of
      Certain Developments.

     

    Since
      the
      Most Recent FYE Balance Sheet Date, (a) there has not been any material adverse
      change in or material adverse effect on the Acquired Assets and no event has
      occurred or circumstance exists that would be reasonably likely to result in
      such a change or effect and (b) the Acquired Locations have only been operated
      in the Ordinary Course of Business.

    

    3.13  Employment.

     

    The
      Sellers are not a party to (a) any labor, collective bargaining union or similar
      agreement, (b) the employment by Sellers of each Hired Employee is terminable
      at
      will, (c) the Sellers are and have been in compliance in all material respects
      with any obligations arising under a collective bargaining agreement or any
      obligations arising under employee benefit plans in each case with respect
      to
      the Acquired Locations, and (d) the Sellers have paid or will pay in full to
      all
      Hired Employees all amounts currently due and payable for wages, salaries,
      commissions, bonuses, benefits and other compensation accrued as of the Closing
      Date.  There are no pending or threatened workers’ compensation
      claims, nor, to the Sellers’ Knowledge, any basis for any such
      claims.

    

    3.14  Certain
      Financial Information.

     

    The
      Sellers have provided to the Buyer the Financial Statements.  The
      Financial Statements have been prepared in accordance with GAAP applied on
      a
      consistent basis throughout the periods covered thereby, fairly present the
      financial condition, results of operations and cash flows of the Sellers as
      of
      the respective dates thereof and for the periods referred to therein and are
      consistent with the books and records of the Sellers; provided,
however, that the Financial Statements referred to in clause (b) of
      the
      definition of such term are subject to normal recurring year-end adjustments
      (which will not be material) and do not include
      footnotes.  Notwithstanding the foregoing, the monthly sales and
      profit and loss statements attached to §3.14 of the Disclosure Schedule, as
      updated from time to time from the date of this Agreement until the Closing
      pursuant to §5.7 hereof were (or will be) prepared in accordance with the past
      custom and practice of the Sellers and fairly present (or will fairly present)
      the results of operations of the Acquired Locations set forth therein as of
      the
      respective dates thereof and for the periods referred to therein.

    

    3.15  Undisclosed
      Liabilities.

     

    To
      the
      Sellers' Knowledge, except for Liabilities (i) arising in the Ordinary Course
      of
      Business since the Most Recent FYE Balance Sheet Date, (ii) under the Leases
      included in the Acquired Assets, (iii) for accounts payable of the Acquired
      Location, the Acquired Locations have no material Liabilities that would be
      required to be disclosed in financial statements prepared in accordance with
      GAAP.

    

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

     

    3.16  Tax
      Matters.

     

    (a)           Each
      of the Sellers has filed on a timely basis all Tax Returns that it was required
      to file, and all such Tax Returns were complete and accurate in all material
      respects.   Each of the Sellers has paid on a timely basis all
      Taxes that were due and payable on or prior to the date hereof and as of
      Closing, shall have paid all such Taxes due and payable on or prior to the
      Closing Date.  The unpaid Taxes of the Sellers for tax periods through
      the Most Recent FYE Balance Sheet Date do not exceed the accruals and reserves
      for Taxes (excluding accruals and reserves for deferred Taxes established to
      reflect timing differences between book and Tax income) set forth on the Most
      Recent FYE Balance Sheet, and will not exceed the accruals and reserves thereof
      as of the Closing Date.  Neither Seller has any actual or potential
      liability for any Tax obligation of any taxpayer (including any affiliated
      group
      of corporations or other entities that included the Sellers during a prior
      period) other than the Sellers.  All Taxes that the Sellers are or
      were required by law to withhold or collect have been duly withheld or collected
      and, to the extent required, have been paid to the proper Governmental
      Authority.

     

    (b)           The
      Sellers have delivered to the Buyer complete and accurate copies of all federal
      and state income Tax Returns of the Sellers for their three most recent fiscal
      years ending prior to the date hereof. No examination or audit of any Tax Return
      of the Sellers by any Governmental Authority is currently in progress or, to
      the
      Sellers’ Knowledge, threatened or contemplated.

     

    (c)           Neither
      Seller:

     

    (i)           has
      made any payments, is obligated to make any payments, or is a party to any
      agreement that could obligate it to make any payments that may be treated as
      an
“excess parachute payment” under Section 280G of the Code;

     

    (ii)           has
      any actual or potential liability for any Taxes of any person (other than the
      Sellers) under Treasury Regulation Section 1.1502-6 (or any similar provision
      of
      federal, state, local, or foreign law), or as a transferee or successor, by
      contract, or otherwise; or

     

    (iii)           is
      or has been required to make a basis reduction pursuant to Treasury Regulation
      Section 1.1502-20(b) or Treasury Regulation Section 1.337(d)-2(b).

     

    (d)           Neither
      Seller has undergone a change in its method of accounting resulting in an
      adjustment to its taxable income pursuant to Section 481 of the
      Code.

     

    (e)           At
      all times since January 1, 2001, for federal income tax purposes, Party City
      Warwick (and any predecessor of Party City Warwick) has been a validly electing
      “S corporation” within the meaning of Sections 1361 and 1362 of the Code and has
      validly elected (if necessary) and been treated in a similar manner for purposes
      of the income tax laws of all states in which it has been subject to income
      taxation.  At all times since January 20, 2004, for federal income tax
      purposes, Party City Lincoln (and any predecessor of Party City Lincoln) has
      validly been classified as a partnership under Section 7701 of the Code and
      the
      Treasury Regulations thereunder and has been subject to taxation under
      Subchapter K of Chapter 1 of the Code and has validly been treated in a similar
      manner for purposes of the income tax laws of all states in which it has been
      subject to income taxation.

     

    
      
        
        

      

      
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    3.17  Contracts.

     

    (a)           Schedule
      3.17 of the Disclosure Schedule lists all contracts, contract rights, agreements
      and leases used in or acquired for the conduct of its business at the Acquired
      Locations (written or oral) to which either Seller is a party.

     

    (b)           Except
      with respect to the Excluded Contracts identified on Schedule 3.17, each Seller
      has delivered to the Buyer and Buyer Parent a complete and accurate copy of
      each
      agreement listed in Schedule 3.17 of the Disclosure Schedule.  With
      respect to each agreement so listed:  (i) the agreement is legal,
      valid, binding and enforceable and in full force and effect; (ii) for those
      agreements to which a Seller is a party, the agreement is assignable by such
      Seller to the Buyer without the consent or approval of any party (except as
      set
      forth in Schedule 3.17 of the Disclosure Schedule) and will continue to be
      legal, valid, binding and enforceable and in full force and effect immediately
      prior to the Closing; and (iii) neither Sellers nor, to the Sellers’ Knowledge,
      any other party, is in breach or violation of, or default under, any such
      agreement, and no event has occurred, is pending or, to Sellers’ Knowledge, is
      threatened, which, after the giving of notice, with lapse of time, or otherwise,
      would constitute a breach or default by a Seller or, to Sellers’ Knowledge, any
      other party under such agreement.

     

    3.18  Insurance.

     

    The
      Sellers have and maintain adequate insurance policy coverage (including, without
      limitation, fire, theft, casualty, comprehensive general liability, workers
      compensation, and business interruption) under policies which are in full force
      and effect.  Such insurance policies are of the type and in amounts
      customarily carried by organizations conducting businesses or owning assets
      similar to those of the Sellers.  Such insurance coverage is and will
      be adequate to cover all claims made or arising prior to the Closing hereunder
      in respect of the conduct and operation of the Businesses at the Acquired
      Locations.  The Sellers have no knowledge of any threatened
      termination of, or premium increase with respect to, any such
      policy.

     

    3.19  No
      Material Adverse Change.

     

    There
      is
      and has been no Material Adverse Effect on Sellers’ Businesses at the Acquired
      Locations since the Most Recent FYE Balance Sheet Date or from that represented
      and disclosed in previous discussions with Buyer.

     

    3.20  No
      Competing Superstore.

     

    There
      has
      been no opening or announced opening on or before August 15, 2007 of any
      permanent party goods “superstore” (i.e., of more than approximately 9,000
      square feet) within a ten mile radius of either of the Acquired Locations,
      and,
      to Sellers’ Knowledge, at no time prior to Closing was such a permanent party
      goods “superstore” scheduled, planned, or announced to be opened within a ten
      mile radius of either of the Acquired Locations.

     

    
      
        
        

      

      
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              4.  

            	
              REPRESENTATIONS
                AND WARRANTIES OF THE BUYER AND BUYER
                PARENT.

            

    

     

      
The
      Buyer and Buyer Parent
      jointly and severally represent and warrant to the Seller that:

    

    4.1  Organization
      and Qualification of the Buyer and Buyer Parent.

     

    The
      Buyer
      and Buyer Parent are each a corporation that is duly organized, validly
      existing, and in good standing under the laws of the State of Delaware and
      are
      each qualified to do business in The Commonwealth of Massachusetts.

    

    4.2  Authorization
      of Transaction.

     

    Prior
      to
      the date hereof, the Board of Directors of the Buyer and Buyer Parent,
      respectively, at a meeting duly called and held, or by written consent in lieu
      of a special meeting of the Board of Directors, adopted and approved this
      Agreement and the transactions contemplated hereby.  No vote of the
      holders of any class of capital stock of the Buyer or Buyer Parent is necessary
      to adopt and approve this Agreement or the transactions contemplated
      hereby.  The Buyer and Buyer Parent each have the power and authority
      (including full corporate power and authority) to execute and deliver this
      Agreement and have taken all actions necessary to authorize the consummation
      of
      the transactions contemplated hereby and thereby and the performance of its
      obligations hereunder and thereunder.  This Agreement has been duly
      executed and delivered by each of the Buyer and Buyer Parent and is or will
      be,
      as applicable, Enforceable against each of the Buyer and Buyer
      Parent.

    

    4.3  Noncontravention.

     

    Neither
      the execution and the delivery of this Agreement, nor the consummation of the
      transactions contemplated hereby (including, without limitation, the assignments
      and assumptions referred to in §2 above, will (i) violate any material Legal
      Requirement to which the Buyer or Buyer Parent is subject, (ii) result in a
      material breach or violation of, or default under, any material Contractual
      Obligation of the Buyer or Buyer Parent, (iii), except as set forth on Schedule
      4.5, require any action by (including any authorization, consent or approval),
      or in respect of (including notice to), any Person under any material
      Contractual Obligation of the Buyer or Buyer Parent or (iv) result in a breach
      or violation of, or default under, the Buyer’s or Buyer Parent's charter or
      bylaws.

    

    4.4  Brokers’
      Fees.

     

    The
      Buyer
      and Buyer Parent do not have any Liability or obligation to pay any fees or
      commissions to any broker, finder, or agent with respect to the transactions
      contemplated by this Agreement for which the Seller could become liable or
      obligated.

    

    
      
        
        

      

      
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    4.5  Consents.

     

    The
      Buyer
      and Buyer Parent have given all of the material third party notices and
      procured, or will procure by Closing, the material third party consents,
      approvals, and waivers necessary to permit the consummation by the Buyer and
      Buyer Parent of the transactions contemplated hereby, as set forth on Schedule
      4.5.

    

       
      4.6  Litigation.

     

    There
      are
      no Actions to which either the Buyer or Buyer Parent is a party (either as
      plaintiff or defendant) or to which either of its assets are subject pending
      or,
      to the Buyer’s Knowledge, threatened that question the validity of this
      Agreement or of any action taken or to be taken pursuant to or in connection
      with the provisions of this Agreement.

    

    5.            
      PRE-CLOSING
      COVENANTS.

     

       
The
      Parties agree as
      follows:

    

    5.1  General.

     

    From
      the
      date of this Agreement until the Closing, each of the Buyer, Buyer Parent and
      Sellers will use their commercially reasonable best efforts to take all action
      and to do all things necessary, proper, or advisable in order to consummate
      and
      make effective the transactions contemplated by this Agreement (including
      satisfaction, but not waiver, of the other Parties’ closing conditions set forth
      in §6.2 and §6.1, respectively).

    

    5.2  Notices
      and Consents.

     

    From
      the
      date of this Agreement until the Closing, each of the Buyer, Buyer Parent and
      Sellers will give any notices to third parties and will obtain the third party
      consents, approvals or waivers that are set forth on Schedules 3.7 and 4.5
      respectively. 

    

    5.3  Operation
      of Businesses.

     

    From
      the
      date of this Agreement until the Closing, the Sellers will not engage in any
      practice, take any action, or enter into any transaction with respect to the
      conduct of the Businesses outside the Ordinary Course of Business and shall
      not,
      without limitation, engage in any going out of business or similar sales
      (however denominated), nor sell off any merchandise at sale prices that are
      inconsistent with Sellers’ past practices.  Without limiting the
      generality of the foregoing, from the date of this Agreement until the Closing,
      the Seller will use commercially reasonably efforts to keep the Businesses
      and
      Acquired Assets substantially intact, including their present operations,
      physical facilities, working conditions, and relationships with lessors,
      licensors, suppliers, customers, and employees relating to the
      Businesses.  Notwithstanding the foregoing, Sellers will not, without
      Buyer’s prior written consent, enter into any new contracts, agreements, or
      obligations with respect to the Acquired Locations or the Businesses thereat,
      whether written or oral, unless the same shall be terminable by their terms
      on
      not more than thirty (30) days notice, nor enter into any new employment
      contracts with any employees of Sellers, nor grant any increase to employees’
pay in excess of the Sellers’ standard pay practices, but in no event more than
      three percent (3%) per annum.  Prior to the Closing, Sellers and their
      Affiliates shall not operate, manage, or invest in, directly or indirectly,
      any
      temporary Halloween or any party goods store within a three-and-one-half (3-1/2)
      mile radius of the Acquired Locations or at any other location within a
      three-and-one-half (3-1/2) mile radius of any currently existing store of
      Buyer.

    

    
      
        
        

      

      
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    5.4  Full
      Access.

     

    From
      the
      date of this Agreement until the Closing, the Sellers will permit the Buyer,
      Buyer Parent, and their representatives to have full access at all reasonable
      times, upon reasonable notice, and in a manner not to interfere with the
      Sellers’ business operations or normal employee relations, to all premises,
      properties, books, records, and documents exclusively of or pertaining
      exclusively to the Businesses.  

    

    5.5  Notice
      of
      Developments.

     

    From
      the
      date of this Agreement until the Closing, each Party will give prompt written
      notice to the other Party of any material development causing a breach of any
      of
      its own representations and warranties in §3 and §4 above; provided, however,
      that compliance with the disclosure requirements of this §5.5 shall not relieve
      a Party of any obligation with respect to any of its representations, warranties
      or covenants in this Agreement or waive any condition to any other Party’s
      obligations under this Agreement.  

    

    5.6  Exclusivity.

     

    From
      the date hereof and until Closing,
      neither the Sellers, nor any of their respective officers, directors,
      representatives, shareholders, members, managers, agents or Affiliates shall
      (a)
      directly or indirectly solicit, initiate or encourage the submission of any
      Transaction Proposal (as defined below) with; (b) negotiate, furnish, or cause
      to be furnished any information to, or otherwise cooperate with; or (c) enter
      into any contract, agreement in principle, or other commitment (whether or
      not
      legally binding) with, any person, partnership, corporation, or liability
      company or other entity (other than Buyer Parent, Buyer or their
      representatives) with respect to or for any Transaction
      Proposal.  Sellers shall promptly disclose to Buyer and Buyer Parent
      any Transaction Proposal received by them during such period (and in no event
      later than the next Business Day after they shall have received such Transaction
      Proposal).  As used herein, “Transaction Proposal” means a proposal
      for the acquisition of the entire or any portion of the capital stock of any
      of
      the Sellers, or any material portion of the assets or the Businesses of the
      Sellers at the Acquired Locations outside the Ordinary Course of Business,
      or
      any merger, consolidation, reorganization or business combination involving
      the
      Sellers.

    

    
      
        
        

      

      
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    5.7  Monthly
      Financial Reports.

     

    From
      the
      date of this Agreement until the Closing, the Sellers shall periodically,
      regularly and promptly update the monthly sales and profit and loss statements
      set forth on §3.14 of the Disclosure Schedule for each successive monthly period
      by providing to Buyer and Buyer Parent copies of the same no later than the
      next
      Business Day after they become available.

    

    5.8  Lease
      Assignments.

     

    Sellers
      will obtain not later than September 14, 2007 the written consents and approvals
      of their respective landlords (and any mortgagees) to the assignment of the
      Leases for their leased real property at the Acquired Locations to Buyer,
      including, as applicable, consent to such changes that may be necessary to
      the
      use and/or the signage clauses under such Leases to permit Buyer’s use of the
      Acquired Locations for the conduct by Buyer of a typical “iParty”
store.   Within five business days after Sellers obtain all such
      necessary landlord consents in the form satisfactory to Buyer, Buyer shall
      make
      payment of the Deposit pursuant to §2.9 of this Agreement.  Sellers
      shall use commercially reasonable efforts to cause the landlords to release
      their security deposits relating to the leased real property at the Acquired
      Locations without requiring replacement security deposits from
      Buyer.  The Parties hereto agree that if such security deposits are
      released by the landlords at any time between the date of this Agreement and
      the
      Closing Date the same shall be paid over to the Sellers, but that if such
      security deposits are not released by the landlords on or prior to the Closing
      Date, then the Purchase Price otherwise payable under §2.5 hereunder shall be
      adjusted in accordance with the provisions of §2.11 above.

     

    5.9  Rhode
      Island Tax Good Standing

     

    The
      Sellers shall obtain before or at Closing tax releases for all state
      unemployment, sales, use, and other taxes under all applicable Rhode Island
      state laws (as in effect on the Closing Date), including, without limitation,
      §28-40-15, §28-43-21, §44-19-22 and §44-11-29 of the General Laws of Rhode
      Island (and any successor statutes or provisions) and shall obtain and provide
      the Buyer with Letters of Tax Good Standing (or similar documentation) as to
      each Seller from the Rhode Island Division of Taxation (or other applicable
      Rhode Island governmental agency or body).

     

    
      	
              6  

            	
              CONDITIONS
                TO OBLIGATION TO CLOSE.

            

    

     

    6.1  Conditions
      to Obligation of the Buyer and Buyer Parent.

     

    The
      obligation of the Buyer and Buyer Parent to consummate the transactions to
      be
      performed by them in connection with the Closing is subject to satisfaction
      of
      the following conditions; provided, however, that the Buyer and Buyer Parent
      may
      waive any condition specified in this §6.1 by written notice to the
      Sellers:

     

    
      
        (a)   
          Representations and Warranties.   The representations and
          warranties set forth in §3 above shall be true and correct in all material
          respects as of the date hereof and at and as of the Closing Date, other
          than
          representations and warranties that expressly speak only as of a specific
          date
          or time, which will be true and correct as of such specified date or
          time;

      

    

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    
      
         

        (b)   
          Performance by Sellers.  The Sellers shall have performed and complied
          in all material respects with all of their covenants, agreements and obligations
          contained in this Agreement that are required to be performed or complied
          with
          by the Sellers at or prior to the Closing;

      

    

    

      
        (c)   
          Consents.  The Sellers shall have given all of the material third
          party notices and procured all of the material third party consents, approvals,
          and waivers necessary to permit the consummation by the Sellers of the
          transactions contemplated hereby as set forth on Schedule 3.7, including
          consents of the lessors under the Leases and a release of any and all
          Liens.   The Buyer and Buyer Parent shall have procured all of
          the consents listed on Schedule 4.5.

      

    

     

    
      (d)   
        Absence of Litigation.  No Action shall be pending or threatened in
        writing wherein an unfavorable injunction would (i) prevent consummation
        of any
        of the transactions contemplated by this Agreement, (ii) cause any of the
        transactions contemplated by this Agreement to be rescinded following
        consummation, or (iii) be reasonably likely to have a Material Adverse Effect
        or
        materially affect adversely the right of the Buyer or Buyer Parent to own
        the
        Acquired Assets (and no such injunction shall be in effect);
        and

    

     

    
      
        (e)   
          Financial Statements and Records.  Receipt and review to Buyer’s
          satisfaction of Sellers’ Financial Statements for each monthly period from
          April, 2007 through and inclusive of November 2007;

      

    

     

    
      
        (f)   
          No Material Adverse Effect.  There is and has been no Material Adverse
          Effect on Sellers’ Businesses at the Acquired Locations since the Most Recent
          FYE Balance Sheet Date or from that represented and disclosed in previous
          discussions with Buyer;

      

    

     

    
      (g)   
        No Competing Superstore.  There has been no opening or announcement on
        or before October 1, 2007 of a scheduled or planned opening of any permanent
        party goods “superstore” (i.e., of more than approximately 9,000 square feet)
        within a three (3) mile radius of either of the Acquired
        Locations;

    

     

    
      
        (h)  
          Sellers shall have conducted their Businesses at the Acquired Locations
          in the
          Ordinary Course of Business in a manner consistent with past
          practices.  Sellers shall not have engaged in any going out of
          business or similar sales (however denominated), nor any sell off of merchandise
          at sale prices or discounts that are inconsistent with Sellers’ past practices,
          nor have made any other material adverse change in the Businesses conducted
          by
          Sellers at the Acquired Locations.   Sellers have not entered
          into any new contracts for the Acquired Locations without Buyer’s consent unless
          they are terminable on not more than 30 days notice, nor have entered into
          any
          employment contracts with any employees, nor granted any increase to employees’
pay in excess of the Sellers’ standard pay increases, not to exceed 3% per
          annum.   Prior to Closing, Sellers and their Affiliates shall not
          have operated, managed, or invested in, directly or indirectly, any temporary
          Halloween or any party good stores within a three-and-one-half (3-1/2)
          mile
          radius of the Acquired Locations or at any other location within a
          three-and-one-half (3-1/2) mile radius of any currently existing store
          of Buyer;
          and

      

    

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    
      
         

         

        (i)   
          Party City Consents.  Sellers have obtained no later than September
          14, 2007 any and all consents required of Party City Corporation for the
          transactions contemplated hereby, it being expressly agreed that Buyer
          is not
          seeking to obtain rights to continue to operate the Acquired Locations
          as Party
          City franchised stores.

      

      
        (j)   
          Certificate.  The Sellers shall have delivered to the Buyer and Buyer
          Parent a certificate to the effect that each of the conditions specified
          above
          in §6.1 (a)-(i) are satisfied in all respects.

         

      

    

    6.2  Conditions
      to Obligations of the Sellers.

     

    The
      obligation of the Sellers to
      consummate the transactions to be performed by them in connection with the
      Closing is subject to satisfaction of the following conditions; provided,
      however, that the Sellers may waive any condition specified in this § 6.2 by
      written notice to the Buyer and Buyer Parent.

     

    
      
        (a)   
          Representations and Warranties.  The representations and warranties
          set forth in §4 above shall be true and correct in all material respects as of
          the date hereof and at and as of the Closing Date, other
          than representations and warranties that expressly speak only as of a specific
          date or time, which will be true and correct as of such specified date
          or
          time;

      

    

     

    
      (b)   
        Performance by Buyer and Buyer Parent.  The Buyer and Buyer Parent
        shall have performed and complied in all material respects with all of their
        covenants, agreements and obligations contained in this Agreement that are
        required to be performed or complied with by the Buyer and Buyer Parent at
        or
        prior to the Closing;

    

     

    
      
        (c)   
          Consents.  The Buyer and Buyer Parent shall have given all of the
          material third party notices and procured all of the material third party
          consents, approvals, and waivers necessary to permit the consummation by
          the
          Buyer and Buyer Parent of the transactions contemplated hereby as set forth
          on
          Schedule 4.5;

      

    

     

    
      (d)   
        Absence of Litigation.  No Action shall be pending or threatened
        wherein an unfavorable injunction would (i) prevent consummation of any of
        the
        transactions contemplated by this Agreement, (ii) cause any of the transactions
        contemplated by this Agreement to be rescinded following consummation, or
        (iii)
        be reasonably likely to have a material adverse effect on or materially affect
        adversely the right of the Sellers to have an Enforceable
        interest in and right under this Agreement (and no such injunction shall
        be in
        effect); and

       

    

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    
 

    
      
        (e)   
          Certificate.  The Buyer and Buyer Parent shall have delivered to the
          Seller a certificate to the effect that each of the conditions specified
          above
          in §6.2(a) through (d) is satisfied in all respects.

      

    

     

    
      	
              7  

            	
              POST-CLOSING
                COVENANTS.

            

    

     

    7.1  Non-Competition.

     

    The
      Seller
      agrees that, in consideration of the transactions contemplated by this
      Agreement, the Sellers and the other Restricted Parties shall not, on or prior
      to the fifth anniversary of the Closing Date, directly or indirectly, open,
      operate, control or invest in, in each case, any new retail party goods store
      engaged in any way or manner with the sale and marketing for sale or rental
      of
      any party, birthday, seasonal or holiday goods, paper goods, costumes, masks,
      supplies, gift items, balloons, candy, stationery, greeting cards, or services
      (including, without limitation, any retail party goods stores that are opened
      and operated temporarily or Halloween or any other holiday or season) anywhere
      in the State of Rhode Island, and shall not on or prior to the third anniversary
      of the Closing Date directly or indirectly, open, operate, control, or invest
      in, in each case, any new retail party goods store (including, without
      limitation, any retail party goods stores that are opened and operated
      temporarily for Halloween or any other holiday or season) that is located within
      a three-and-one-half (3-1/2) mile radius of any retail store owned, operated,
      controlled, managed or invested in by the Buyer or Buyer Parent anywhere in
      Massachusetts, Rhode Island, New Hampshire, Vermont, Maine, or Connecticut
      (such
      respective five- and three-year periods, the “Non-Competition Period” and, both
      of such geographical areas, the “Restricted Region”).  Notwithstanding
      the foregoing, the Restricted Parties shall not during the Non-Competition
      Period and in the Restricted Region directly or indirectly, open, operate,
      control or invest in, any retail stores that are not retail party goods stores
      that sell, market for sale, or rent anything other than a de minimis
amount of any party, birthday, seasonal or holiday goods, paper goods,
      costumes, masks, supplies, gift items, balloons, candy, stationery, greeting
      cards, or services (measured as less than five percent (5%) of annual store
      revenues and less than five percent (5%) of retail square footage).

    

    Sellers
      acknowledge and agree that (i) the provisions of this §7.1 will not impose an
      undue hardship on them and (ii) breach of the provisions of this §7.1 will cause
      irreparable injury and damage to Buyer and Buyer Parent, the exact amount of
      which will be difficult to ascertain and that remedies at law for any such
      breach would be inadequate and that therefore, in the event of such a breach,
      Buyer and Buyer Parent shall be entitled, in addition to all remedies available
      at law, to equitable relief without posting any bond or other
      undertaking.

     

    7.2  Payment
      Received.

     

    In
      the
      event that a Party receives any payment or other amount owing to such Party
      but
      allocated to another Party pursuant to this Agreement, the receiving Party
      agrees to forward such payments in good faith as promptly as practicable to
      the
      applicable Party.

    

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

     

    7.3  Employees.

     

    
      
        (a)   
          Contemporaneously with the Closing, Sellers intend to terminate all employees
          who work at the Acquired Location (the "Employees").  Sellers shall be
          solely responsible for all termination payments and obligations to such
          Employees, including, without limitation, any severance and other costs
          and
          expenses incurred in connection with such termination. Through the Closing
          Date,
          Sellers shall comply with their COBRA obligations, if
          any.

      

    

     

    
      (b)   
        Upon the occurrence of the Closing, Buyer and/or Buyer Parent may, but are
        not
        obligated to, offer to those Employees it selects employment by Buyer and/or
        Buyer Parent.  Subject to the other provisions of this §7.3, with
        respect to any “employee benefit plan”, as defined in Section 3(3) of ERISA,
        maintained by Buyer and/or Buyer Parent (including any severance plan), for
        all
        purposes, including determining eligibility to participate and vesting, service
        with the Sellers or any subsidiary or predecessor of the Seller shall be
        treated
        as service with Buyer, Buyer Parent, or any of their subsidiaries;
provided, however, that such service need not be recognized to
        the extent that such recognition would result in any duplication of
        benefits.

    

     

    (c)   
      Employees who accept offers of employment made by Buyer and/or Buyer Parent
      pursuant to §7.3(b) shall be referred to hereinafter as “Hired
      Employees.”  For all periods following the Closing Date the Buyer
      and/or Buyer Parent hereby (i) acknowledge and agree that the Sellers shall
      not
      be responsible for paying any salary, wages, pension, retirement, savings,
      health, welfare and other benefits (whether arising by contract, plan, statute
      or otherwise) with respect to such Hired Employees in connection with their
      employment by the Buyer and/or Buyer Parent and (ii) agree to comply with their
      COBRA obligations, if any, in the event that, subsequent to their hire by the
      Buyer and/or Buyer Parent, the employment of such Hired Employees is terminated
      by the Buyer and/or Buyer Parent.

    
7.4  Reimbursement
      for Returns, Merchandise Credits and Gift Certificates.

     

    Following
      the Closing Date, Buyer may, in the ordinary course of business, accept any
      of
      the following:

    

    (a)   
      the return of a retail product sold by the Sellers in connection with the
      Acquired Locations prior to the Closing Date and refund no more than the retail
      purchase price of such product and any associated sales tax to the purchaser
      of
      such product; or

    

    (b)   
      a merchandise credit or gift certificate for a retail product sold by the Buyer
      that was issued by the Sellers in connection with the Acquired Locations prior
      to the Closing Date and such acceptance is for no more than the original face
      amount of such merchandise credit or gift certificate.

    

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

     

    The
      Sellers agree to a hold back of the Purchase Price in the amount of Fifteen
      Thousand ($15,000) to be used to reimburse the Buyer for the amount of such
      refund or the face amount of such merchandise credit or gift certificate that
      is
      paid or accepted, as applicable, by the Buyer.  At its option, the
      Buyer shall retain (and credit for reimbursement from the hold back) or return
      to Seller (and forward but not credit for reimbursement from the hold back)
      all
      of such returned items. Within ninety (90) days of the Closing Date, the Buyer
      shall provide written notice to the Sellers of all such returns, merchandise
      credits and gift certificates accepted, including which of such items the Buyer
      has elected to retain and which to return and forward to the Sellers and the
      aggregate amount due to the Buyer pursuant to this §7.4 along with any
      supporting documentation reasonably requested by the Seller.  Any such
      reimbursement to the Buyer shall occur by wire transfer of immediately available
      funds within five (5) Business Days after the receipt by the Seller of the
      Buyer's written notice and accompanying documentation pursuant to the preceding
      sentence.  Any balance remaining of the hold back after the expiration
      of such ninety (90) day period shall be released to the Sellers.  For
      the avoidance of doubt, the Sellers shall receive a credit for such returned
      merchandise (in an amount equal to the Sellers’ cost) if it shall be deemed
      Acquired Inventory in accordance with §2.12 hereof and the Buyer elects to
      retain and buy such returned merchandise, but not if the Buyer elects to return
      such returned merchandise to the Sellers.

    

    7.5  Utilities
      and Telephone Service.

     

    Subject
      to
      the provisions of §§ 2.1(d) and 2.10(c) above, Seller shall cancel its utilities
      and telephone accounts at the Acquired Location on the date that is five (5)
      Business Days after the Closing Date and Buyer will be responsible for opening
      and arranging its own utility and telephone accounts thereafter.

    

    7.6  Future
      Assurances.

     

    At
      any
      time and from time to time after the Closing, at the request of a Party and
      without further consideration, each other Party will execute and deliver such
      other instruments of sale, transfer, conveyance, assignment and confirmation
      and
      take such action as the requesting Party may reasonably determine is necessary
      to effectuate the provisions and purposes of this Agreement.

    

    
      	
              8  

            	
              INDEMNIFICATION.

            

    

     

    8.1  Buyer’s
      Indemnification.

     

    Subject
      to
      the limitations set forth in this §6, the Buyer and Buyer Parent shall jointly
      and severally indemnify and hold harmless, to the fullest extent permitted
      by
      law, Sellers, and their direct and indirect partners, stockholders, members,
      managers, officers, directors, employees, agents and Affiliates (collectively,
      the “Seller Indemnitees”) from, against and in respect of Losses arising from or
      related to any of the following:

    

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

     

    (a)   
      any breach or default in performance by the Buyer or Buyer Parent of any
      covenant or agreement of the Buyer or Buyer Parent contained in this Agreement
      or any Closing Document;

    

    (b)   
      any breach of, or inaccuracy in, any representation or warranty made by the
      Buyer or Buyer Parent in (i) §4.1, §4.2, §4.3, or §4.4 of this Agreement, (ii)
      any Closing Document, or (iii) any certificate or other document delivered
      by
      the Buyer or Buyer Parent pursuant hereto or thereto (in each case, as such
      representation or warranty would read if all qualifications as to materiality
      were deleted therefrom); or

    

    (c)   
      any use of (i) the Transitional Assets by the Buyer or Buyer Parent pursuant
      to
§7.6 or (ii) the Sellers' utilities and telephone accounts by the Buyer or Buyer
      Parent pursuant to §7.5; or

    
       

      (d)   
        any Assumed Liabilities.

       

    

    8.2  Seller’s
      Indemnification.

     

    Subject
      to
      the limitations set forth in this §8, the Seller shall indemnify and hold
      harmless, to the fullest extent permitted by law, the Buyer, Buyer Parent,
      and
      their direct and indirect partners, stockholders, members, managers, officers,
      directors, employees, agents and Affiliates (collectively, the “Buyer
      Indemnitees”) from, against and in respect of Losses arising from or related to
      any of the following:

    

    (a)   
      any breach or default in performance by the Seller of any covenant or agreement
      of the Seller contained in this Agreement or any Closing Document;

    

    (b)   
      any breach of, or inaccuracy in, any representation or warranty made by the
      Seller in (i) §3.1, §3.2, §3.3, §3.4, or §3.5 of this Agreement, (ii) any
      Closing Document, or (iii) any certificate or other document delivered by the
      Seller pursuant hereto or thereto (in each case, as such representation or
      warranty would read if all qualifications as to materiality, including each
      reference to the defined term “Material Adverse Effect” were deleted therefrom);
      or

     

    
      (c)   
        any Retained Liabilities.

       

    

    8.3  Time
      Limitations.

     

    (a)   
      Regardless of any investigation made at any time by or on behalf of any Party
      hereto or of any information any Party may have in respect thereof, except
      as
      set forth in paragraphs (b) and (c) of this §8.3, all of the representations and
      warranties made by the Buyer, Buyer Parent, and Sellers herein and all known,
      unknown or unasserted claims and causes of action with respect thereto will
      terminate upon the Closing Date and no claim may be made or suit instituted
      with
      respect to such representations and warranties pursuant to this §6
      thereafter.

    

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

     

    (b)   
      No claim may be made or suit instituted under §8.1(b) or §8.2(b) after the close
      of business on the date that is twelve (12) months after the Closing
      Date.

    

    (c)   
      Claims may be made or suits instituted at any time if such claims or suits
      are
      based upon fraud or intentional misrepresentation or are
      under §8.1(a), §8.1(c), §8.1(d), §8.2(a), or §8.2(c) (subject to any applicable
      statutes of limitation).

    

    (d)   
      For purposes of this §8, any claim for indemnification shall be duly made by
      delivering written notice of such claim describing with reasonable specificity
      (in light of the facts then known) the amount and basis of such claim to the
      Buyer, Buyer Parent, or the Seller, as applicable, prior to the applicable
      limitation date specified in this §8.3.

    

    (e)   
      Notwithstanding the limitation dates set forth in this §8.4 above, obligations
      to indemnify shall not terminate with respect to any claim as to which the
      Indemnified Party shall have, before the expiration of the applicable time
      limitation, made a bona fide claim by delivering notice in accordance with
      §8.4(d) above.

    

    8.4  Certain
      Other Indemnity Matters.

     

    Except
      with respect to §7.1, and except with respect to claims relating to fraud or
      intentional misrepresentation, the sole and exclusive remedies of each Seller
      Indemnitee and each Buyer Indemnitee as against any Person from and after the
      Closing with respect to any and all claims of any kind whatsoever relating
      to
      the subject matter of this Agreement shall be pursuant to the indemnification
      provisions set forth in this §8.  In furtherance of and subject to the
      foregoing, the Seller, Buyer, and Buyer Parent hereby waive, to the fullest
      extent permitted under applicable law, and agree not to assert and to cause
      each
      of the other Seller Indemnitees and Buyer Indemnitees not to assert in any
      Action or proceeding of any kind, any and all rights, claims and causes of
      action it may now or hereafter have against any Party and any of their
      respective Affiliates and their respective members, partners, stockholders,
      officers, directors, employees, agents and representatives and their respective
      Affiliates relating to the subject matter of this Agreement, other than claims
      for indemnification asserted as permitted by and in accordance with the
      provisions set forth in this §8 (including any such rights, claims or causes of
      action arising under or based upon common law or other Legal
      Requirements).  Upon making any payment to an Indemnified Party for
      any indemnification claim pursuant to this §8, the Indemnifying Party shall be
      subrogated, to the extent of such payment, to any rights which the Indemnified
      Party may have against other Persons with respect to the subject matter
      underlying such indemnification claim.  The Parties shall take all
      reasonable steps to mitigate all such Losses upon and after becoming aware
      of
      any event which could reasonably be expected to give rise to any Losses with
      respect to which indemnification may be requested hereunder.  Any
      insurance proceeds and Tax Benefits actually received or realized by an
      Indemnified Party (or an Affiliate of an Indemnified Party) after
      indemnification shall have been made to such Indemnified Party hereunder that
      were not given effect, pursuant to the definition of “Loss”, in determining the
      amount of such Loss, up to the amount of such Loss, shall be refunded to the
      Indemnifying Party by the Indemnified Party.  To the extent permitted
      under applicable Legal Requirements, any and all payments or offsets pursuant
      to
      this §8 shall be deemed for Tax purposes to be adjustments to the Purchase
      Price.

    

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

     

    8.5  Third
      Party Claims.

     

    Promptly
      after the receipt by any Person entitled to indemnification pursuant to this
§8
      (the “Indemnified Party”) of notice of the commencement of any Action against
      such Indemnified Party by a third party, such Indemnified Party shall, if a
      claim with respect thereto is to be made against any party obligated to provide
      indemnification pursuant to this §8 (the “Indemnifying Party”), give such
      Indemnifying Party written notice thereof in reasonable detail in light of
      the
      circumstances then known to such Indemnified Party.  The failure to
      give such notice shall not relieve any Indemnifying Party from any obligation
      hereunder except where, and then solely to the extent that, such failure
      actually and materially prejudices the rights of such Indemnifying
      Party.  Such Indemnifying Party shall have the right to defend such
      claim, at such Indemnifying Party’s expense and with counsel of its choice
      reasonably satisfactory to the Indemnified Party, provided that the Indemnifying
      Party conducts the defense of such claim actively and diligently.  If
      the Indemnifying Party assumes the defense of such claim, the Indemnified Party
      agrees to reasonably cooperate in such defense so long as the Indemnified Party
      is not materially prejudiced thereby.  So long as the Indemnifying
      Party is conducting the defense of such claim actively and diligently, the
      Indemnified Party may retain separate co-counsel at its sole cost and expense
      and may participate in the defense of such claim, and neither any Indemnifying
      Party nor any Indemnified Party will consent to the entry of any judgment or
      enter into any settlement with respect to such claim without the prior written
      consent of the other, which consent will not be unreasonably withheld (provided
      that such consent shall be granted in connection with any settlement (i)
      containing a full release of the party from whom such consent is so requested
      and (ii) in the case of a consent from an Indemnified Party, involving only
      monetary damages).  In the event the Indemnifying Party does not or
      ceases to conduct the defense of such claim actively and diligently, (x) the
      Indemnified Party may defend against, and, with the prior written consent of
      the
      Indemnifying Party (which consent shall not be unreasonably withheld), consent
      to the entry of any judgment or enter into any settlement with respect to,
      such
      claim, (y) the Indemnifying Party will reimburse the Indemnified Party promptly
      and periodically for the costs of defending against such claim, including
      reasonable attorneys’ fees and expenses and (z) the Indemnifying Party will
      remain responsible for any Losses the Indemnified Party may suffer as a result
      of such claim to the full extent provided in this §8.

    

    8.6  Information.

     

    Each
      Party
      hereby agrees to provide to the other Parties on request all information and
      documentation reasonably necessary to support and verify any Losses which give
      rise to a claim for indemnification pursuant to this §8 and to provide
      reasonable access to all books, records and personnel in their possession or
      under their control which would have a bearing on such claim.

    

    
      	
              9  

            	
              TERMINATION.

            

    

     

    9.1  Termination
      of Agreement.

     

    The
      Parties may terminate this Agreement prior to the Closing, as provided
      below:

    

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

     

    (a)           the
      Parties may terminate this Agreement by mutual written consent;

    

    (b)           the
      Buyer and Buyer Parent may terminate this Agreement by giving written notice
      to
      the Sellers in the event a Seller is in breach of any representation, warranty
      or covenant contained in this Agreement, and such breach, individually or in
      combination with any other such breach, (i) would cause the conditions set
      forth
      in §6.1 not to be satisfied and (ii) is not cured within 20 days following
      delivery by the Buyer and Buyer Parent to the Sellers of written notice of
      such
      breach;

    

    (c)           the
      Sellers may terminate this Agreement by giving written notice to the Buyer
      and
      Buyer Parent in the event the Buyer or Buyer Parent is in breach of any
      representation, warranty or covenant contained in this Agreement, and such
      breach, individually or in combination with any other such breach, (i) would
      cause the conditions set forth in §6.2 not to be satisfied and (ii) is not cured
      within 20 days following delivery by the Sellers to the Buyer and Buyer Parent
      of written notice of such breach;

    

    (d)           the
      Buyer and Buyer Parent may terminate this Agreement by giving written notice
      to
      the Sellers if the Closing shall not have occurred on or before January 3,
      2008
      by reason of the failure of any condition precedent under §6.1 (unless the
      failure results primarily from a breach by the Buyer or Buyer Parent of any
      representation, warranty or covenant contained in this Agreement);
      or

    

    (e)           the
      Sellers may terminate this Agreement by giving written notice to the Buyer
      and
      Buyer Parent if the Closing shall not have occurred on or before January 3,
      2008
      by reason of the failure any condition precedent under §6.2 (unless the failure
      results primarily from a breach by the Sellers of any representation, warranty
      or covenant contained in this Agreement).

    

    9.2  Effect
      of
      Termination.

     

    If
      this Agreement is terminated
      pursuant to §8.1, all obligations of the Parties hereunder shall terminate
      without any liability of any Party to any other Party (except for any liability
      of a Party resulting from such Party’s breach or default of this Agreement) and
      the provisions of §2.9 hereunder shall govern, if applicable, the refund of the
      Deposit, if previously made, and its return to the
      Buyer.  

    

    
      	
              10  

            	
              MISCELLANEOUS.

            

    

     

    10.1  Press
      Releases

     

    No
      public announcement, press release,
      or other publicity regarding this Agreement or the transactions contemplated
      hereby shall be made prior to or after the date of this Agreement without the
      prior written approval of the other Parties following an opportunity to review
      such proposed announcement or release.  Notwithstanding the foregoing,
      (i) nothing in this Agreement shall preclude or prevent any Party from making
      any public announcement or filing that the disclosing Party believes in good
      faith is required for it to comply with by applicable law (in which case the
      disclosing Party will provide the other Parties with the opportunity to review
      in advance the disclosure), including applicable federal or state securities
      laws or any rules of a stock exchange upon which any shares of such Party are
      listed for trading and (ii) the Parties hereby approve the press releases and
      other documents attached hereto as Schedule 10.1.

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

       

       

    

    10.2  Entire
      Agreement.

     

    This
      Agreement, together with the Non-Disclosure Agreement and any side letters
      or
      instruments related thereto, and Closing Documents, constitutes the entire
      agreement among the parties hereto with respect to the subject matter hereof
      and
      supersedes any and all prior discussions, negotiations, proposals, undertakings,
      understandings and agreements, whether written or oral, with respect
      thereto.

     

    10.3  Succession
      and Assignment; No Third-Party Beneficiary.

     

    Subject
      to
      the immediately following sentence, this Agreement will be binding upon and
      inure to the benefit of the parties hereto and their respective successors
      and
      permitted assigns, each of which such successors and permitted assigns will
      be
      deemed to be a party hereto for all purposes hereof.  No Party may
      assign, delegate or otherwise transfer either this Agreement or any of its
      rights, interests, or obligations hereunder without the prior written approval
      of the other Parties (except with respect to any successor to all or
      substantially all of a Party’s business that becomes a party to this Agreement
      and subject to the terms and conditions of this Agreement to the same extent,
      and in the same capacity, as the Party which is so succeeded, in which case
      no
      prior written consent shall be necessary hereunder).  Except as
      expressly provided herein, this Agreement is for the sole benefit of the Parties
      and their permitted successors and assignees and nothing herein expressed or
      implied will give or be construed to give any Person, other than the Parties
      and
      such successors and assignees, any legal or equitable rights
      hereunder.

    

    10.4  Counterparts.

     

    This
      Agreement may be executed in any number of counterparts, each of which will
      be
      deemed an original, but all of which together will constitute but one and the
      same instrument.  This Agreement will become effective when duly
      executed by each Party hereto.

    

    10.5  Headings.

     

    The
      headings contained in this Agreement are for convenience purposes only and
      will
      not in any way affect the meaning or interpretation hereof.

    

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

       

       

    

    10.6  Notices.

     

    All
      notices, requests, demands, claims and other communications required or
      permitted to be delivered, given or otherwise provided under this Agreement
      must
      be in writing and must be delivered, given or otherwise provided:

    

    (a)           by
      hand (in which case, it will be effective upon delivery);

    

    (b)           by
      facsimile (in which case, it will be effective upon receipt of confirmation
      of
      good transmission); or

     

    (c)          
      by
      overnight delivery by a nationally recognized courier service (in which case,
      it
      will be effective on the Business Day after being deposited with such courier
      service);

    

    in
      each
      case, to the address (or facsimile number) listed below:

     

    If
      to the
      Sellers:

     

    242
      Toby
      Hill Road

    Westbrook,
      CT 06498

    

    Phone:
      (203) 627-0560

    Fax:
      (860)
      399-4344

    Attention:  Luis
      Art Linares

     

    With
      a
      copy to:

     

    McElroy
      Deutsch Mulvaney &
Carpenter, LLP

    1300
      Mount Kemble Avenue

    Morristown,
      New Jersey
      07962

    

    Phone:
      (973) 993-8100

    Fax:
      (973)
      425-0161

    Attention:  Joseph
      P. LaSala, Esq.

     

    If
      to the
      Buyer or Buyer Parent:

     

    iParty
      Corp.

    270
      Bridge
      Street

    Dedham,
      MA
      02026

    Phone:
      (781) 329-3952

    Fax:
      (781)
      326-7143

    Attention:   Sal
      Perisano, Chairman & Chief Executive Officer

     

    With
      a
      copy to:

     

    Posternak
      Blankstein & Lund LLP

    Prudential
      Tower

    800
      Boylston Street

    Boston,
      MA
      02199

    Phone:
      (617) 973-6147

    Fax:
      (617)
      722-4954

    Attention:   Donald
      H. Siegel, P.C.

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

       

       

    

    Any
      Party
      may change the address to which notices, requests, demands, claims, and other
      communications hereunder are to be delivered by giving the other Parties notice
      in the manner herein set forth.

     

    10.7  Governing
      Law.

     

    This
      Agreement, the rights of the parties and all Actions arising in whole or in
      part
      under or in connection herewith, will be governed by and construed in accordance
      with the domestic substantive laws of The Commonwealth of Massachusetts, without
      giving effect to any choice or conflict of law provision or rule that would
      cause the application of the laws of any other jurisdiction.

    

    10.8  Amendments
      and Waivers.

     

    No
      amendment or waiver of any provision of this Agreement will be valid and binding
      unless it is in writing and signed, in the case of an amendment, by Buyer,
      Buyer
      Parent, and Sellers, or in the case of a waiver, by the Party against whom
      the
      waiver is to be effective, and if the amendment or waiver is applicable to
      any
      other party set forth on the signatures pages hereto, such party.  No
      waiver by any Party of any breach or violation of, default under or inaccuracy
      in any representation, warranty or covenant hereunder, whether intentional
      or
      not, will be deemed to extend to any prior or subsequent breach, violation,
      default of, or inaccuracy in, any such representation, warranty or covenant
      hereunder or affect in any way any rights arising by virtue of any prior or
      subsequent such occurrence.  No delay or omission on the part of any
      Party in exercising any right, power or remedy under this Agreement will operate
      as a waiver thereof.

    

    10.9  Severability.

     

    Any
      term
      or provision of this Agreement or of any Section hereof that is invalid or
      unenforceable in any situation in any jurisdiction, including without limitation
      §7.1 hereof, will not affect the validity or enforceability of the remaining
      terms and provisions hereof or the validity or enforceability of the offending
      term or provision in any other situation or in any other
      jurisdiction.  In the event that any provision hereof would, under
      applicable law, be invalid or unenforceable in any respect, each Party hereto
      intends that such provision will be construed by modifying or limiting it so
      as
      to be valid and enforceable to the maximum extent compatible with, and possible
      under, applicable law.

    

    10.10  Expenses.

     

    Each
      of
      the Buyer, Buyer Parent, and the Sellers will bear its own costs and expenses
      (including legal and accounting fees and expenses) incurred in connection with
      this Agreement and the transactions contemplated hereby.  Buyer shall
      pay any sales, use, excise, transfer or other similar Tax (collectively,
“Transfer Taxes”) imposed with respect to the transactions contemplated by this
      Agreement.

    

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

       

       

    

    10.11  Construction.

     

    The
      Parties have participated jointly in the negotiation and drafting of this
      Agreement.  In the event an ambiguity or question of intent or
      interpretation arises, this Agreement will be construed as if drafted jointly
      by
      the Parties and no presumption or burden of proof will arise favoring or
      disfavoring any Party by virtue of the authorship of any of the provisions
      of
      this Agreement.  The Parties intend that each representation, warranty
      and covenant contained herein will have independent significance.

    

    10.12  Incorporation
      of Schedules.

     

    The
      Schedules identified in this Agreement are incorporated herein by reference
      and
      made a part hereof.

    

    10.13  Jurisdiction.

     

    Each
      Party
      to this Agreement, by its execution hereof, (a) hereby irrevocably submits
      to
      the exclusive jurisdiction of the federal or state courts within The
      Commonwealth of Massachusetts for the purpose of any Action between the Parties
      arising in whole or in part under or in connection with this Agreement, (b)
      hereby waives to the extent not prohibited by applicable law, and agrees not
      to
      assert, by way of motion, as a defense or otherwise, in any such Action, any
      claim that it is not subject personally to the jurisdiction of the above-named
      courts, that its property is exempt or immune from attachment or execution,
      that
      any such Action brought in one of the above-named courts should be dismissed
      on
      grounds of forum non conveniens, should be transferred or removed to any court
      other than one of the above- named courts, or should be stayed by reason of
      the
      pendency of some other proceeding in any other court other than one of the
      above-named courts, or that this Agreement or the subject matter hereof may
      not
      be enforced in or by such court and (c) hereby agrees not to commence any such
      Action other than before one of the above-named
      courts.  Notwithstanding the previous sentence a Party may commence
      any Action in a court other than the above-named courts solely for the purpose
      of enforcing an order or judgment issued by one of the above-named
      courts.

    

    10.14  Venue.

     

    Each
      Party
      agrees that for any Action between the Parties arising in whole or in part
      under
      or in connection with this Agreement, such Party bring Actions only in The
      Commonwealth of Massachusetts.  Each Party further waives any claim
      and will not assert that venue should properly lie in any other location within
      the selected jurisdiction.

    

    10.15  Service
      of
      Process.

     

    Each
      Party
      hereby (a) consents to service of process in any Action between the Parties
      arising in whole or in part under or in connection with this Agreement in any
      manner permitted by Massachusetts law, (b) agrees that service of process made
      in accordance with clause (a) or made by registered or certified mail, return
      receipt requested, at its address specified pursuant to §9.6, will constitute
      good and valid service of process in any such Action and (c) waives and agrees
      not to assert (by way of motion, as a defense, or otherwise) in any such Action
      any claim that service of process made in accordance with clause (a) or (b)
      does
      not constitute good and valid service of process.

    

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

       

       

    

    10.16  Waiver
      of
      Jury Trial.

     

    TO
      THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, THE PARTIES
      HEREBY WAIVE, AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS PLAINTIFF,
      DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN
      WHOLE OR IN PART UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE
      CONTEMPLATED TRANSACTIONS, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
      WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.  THE PARTIES AGREE
      THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN
      EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES
      IRREVOCABLY TO WAIVE ITS RIGHT TO TRIAL BY JURY IN ANY PROCEEDING WHATSOEVER
      BETWEEN THEM RELATING TO THIS AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS
      WILL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING
      WITHOUT A JURY.

    

    

     

    [The
      remainder of this page is intentionally left blank.]

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    Asset
      Purchase Agreement

     

    IN
      WITNESS
      WHEREOF, each of the undersigned has executed this Agreement as an agreement
      under seal as of the date first above written.

     

    
      
        	
                The
                  Buyer:

              	
                iPARTY
                  RETAIL STORES CORP.

              
	 	 
	 	
                By:
                  s/SAL PERISANO____________

              
	 	
                Name: 
                  Sal Perisano

              
	 	
                Title:  
                  Chief Executive Officer

              
	 	 
	
                The
                  Buyer Parent:

              	
                iPARTY
                  CORP.

              
	 	 
	 	
                By:
                  s/SAL PERISANO____________

              
	 	
                Name: 
                  Sal Perisano

              
	 	
                Title:  
                  Chief Executive Officer

              

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    
      
        	
                The
                  Sellers:

              	
                PARTY
                  CITY OF WARWICK, INC.

              
	 	 
	 	
                By:
                  s/LUIS ART LINARES__________

              
	 	
                Name: 
                  Luis Art Linares

              
	 	
                Title:  
                  President

              
	 	 
	 	
                PARTY
                  CITY OF LINCOLN, LLC

              
	 	 
	 	
                By:
                  s/LUIS ART LINARES__________

              
	 	
                Name: 
                  Luis Art Linares

              
	 	
                Title:  
                  Managing Member

              
	
                Solely
                  with respect to §7.1 hereof:

              	 
	 	
                s/LUIS
                  ART LINARES_____________

              
	 	
                Luis
                  Art Linares

              
	 	 
	 	
                s/JOSE
                  L. LINARES_______________

              
	 	
                Jose
                  L. LinaresExhibit 4.1

EXECUTION COPY

DEUTSCHE ALT-A SECURITIES, INC.

Depositor,

WELLS FARGO BANK, N.A.

Master Servicer and Securities Administrator.

CLAYTON FIXED INCOME SERVICES INC.,

as Credit Risk Manager, 

and

HSBC BANK USA, NATIONAL ASSOCIATION

Trustee

_____________________

POOLING AND SERVICING AGREEMENT

Dated as of March 1, 2007

_____________________

Mortgage Pass-Through Certificates

Series 2007-AB1

TABLE OF CONTENTS

ARTICLE I DEFINITIONS

10

Section 1.1

Definitions.

10

Section 1.2

Allocation of Certain Interest Shortfalls.

44

ARTICLE II CONVEYANCE OF TRUST FUND; ORIGINAL ISSUANCE OF 

CERTIFICATES

45

Section 2.1

Conveyance of Trust Fund.

45

Section 2.2

Acceptance by Trustee.

46

Section 2.3

Repurchase or Substitution of Loans.

46

Section 2.4

Authentication and Delivery of Certificates; Designation of 

Certificates as REMIC Regular and Residual Interests.

49

Section 2.5

Representations and Warranties of the Master Servicer.

49

Section 2.6

Conveyance of Subsequent Loans.

51

Section 2.7

Establishment of the Trust.

53

Section 2.8

Purpose and Powers of the Trust.

53

ARTICLE III ADMINISTRATION AND SERVICING OF THE LOANS; ACCOUNTS

55

Section 3.1

Master Servicer.

55

Section 3.2

REMIC-Related Covenants.

56

Section 3.3

Monitoring of Servicers.

56

Section 3.4

Fidelity Bond.

57

Section 3.5

Power to Act; Procedures.

58

Section 3.6

Due-on-Sale Clauses; Assumption Agreements.

59

Section 3.7

Release of Mortgage Files.

59

Section 3.8

Documents, Records and Funds in Possession of Master Servicer To 

Be Held for Trustee.

60

Section 3.9

Standard Hazard Insurance and Flood Insurance Policies.

60

Section 3.10

Presentment of Claims and Collection of Proceeds.

61

Section 3.11

Maintenance of the Primary Mortgage Insurance Policies.

61

Section 3.12

Trustee to Retain Possession of Certain Insurance Policies and 

Documents.

62

Section 3.13

Realization Upon Defaulted Loans.

62

Section 3.14

Compensation for the Master Servicer.

62

Section 3.15

REO Property.

63

Section 3.16

Annual Statement as to Compliance.

64

Section 3.17

Assessments of Compliance.

64

Section 3.18

Master Servicer and Securities Administrator Attestation Reports.

65

Section 3.19

Annual Certification.

66

Section 3.20

Intention of the Parties and Interpretation and Additional 

Information;  Notice.

67

Section 3.21

Obligation of the Master Servicer in Respect of Compensating 

Interest.

68

Section 3.22

Protected Accounts.

68

Section 3.23

Distribution Account.

69

Section 3.24

Permitted Withdrawals and Transfers from the Distribution 

Account.

70

Section 3.25

[Reserved].

72

Section 3.26

Pre-Funding Account.

72

Section 3.27

Capitalized Interest Account.

73

Section 3.28

Prepayment Penalty Verification.

74

Section 3.29

Reports Filed with Securities and Exchange Commission.

75

Section 3.30

Termination of the Mortgage Insurance Policy.

81

ARTICLE IV PAYMENTS TO CERTIFICATEHOLDERS;  ADVANCES; STATEMENTS 

AND REPORTS

81

Section 4.1

Distributions to Certificateholders.

81

Section 4.2

Allocation of Realized Losses.

84

Section 4.3

Reduction of Certificate Principal Balances on the Certificates.

85

Section 4.4

REMIC Distributions.

86

Section 4.5

Compliance with Withholding Requirements.

86

Section 4.6

Statements to Certificateholders.

86

Section 4.7

Advances.

88

ARTICLE V THE CERTIFICATES

89

Section 5.1

The Certificates.

89

Section 5.2

Certificates Issuable in Classes; Distributions of Principal and 

Interest; Authorized Denominations.

90

Section 5.3

Registration of Transfer and Exchange of Certificates.

90

Section 5.4

Mutilated, Destroyed, Lost or Stolen Certificates.

94

Section 5.5

Persons Deemed Owners.

95

ARTICLE VI THE DEPOSITOR, MASTER SERVICER AND THE CREDIT RISK 

MANAGER

96

Section 6.1

Liability of the Depositor and the Master Servicer.

96

Section 6.2

Merger or Consolidation of the Depositor or the Master Servicer.

96

Section 6.3

Limitation on Liability of the Depositor, the Master Servicer, the 

Servicers, the Securities Administrator and Others.

96

Section 6.4

Limitation on Resignation of the Master Servicer.

97

Section 6.5

Assignment of Master Servicing.

97

Section 6.6

Rights of the Depositor in Respect of the Master Servicer.

98

Section 6.7

Duties of the Credit Risk Manager

98

Section 6.8

Limitation Upon Liability of the Credit Risk Manager.

99

Section 6.9

Removal of the Credit Risk Manager.

99

Section 6.10

Transfer of Servicing by the Seller of Certain Loans Serviced by 

GMAC; Special Servicer.

99

ARTICLE VII DEFAULT

102

Section 7.1

Master Servicer Events of Default.

102

Section 7.2

Trustee to Act; Appointment of Successor.

104

Section 7.3

Notification to Certificateholders.

105

Section 7.4

Waiver of Master Servicer Events of Default.

105

ARTICLE VIII CONCERNING THE TRUSTEE AND THE SECURITIES 

ADMINISTRATOR

106

Section 8.1

Duties of Trustee and Securities Administrator.

106

Section 8.2

Certain Matters Affecting Trustee and Securities Administrator.

107

Section 8.3

Trustee and Securities Administrator not Liable for Certificates or 

Loans.

109

Section 8.4

Trustee, Master Servicer and Securities Administrator May Own 

Certificates.

109

Section 8.5

Fees and Expenses of Trustee and Securities Administrator.

110

Section 8.6

Eligibility Requirements for Trustee and Securities Administrator.

110

Section 8.7

Resignation and Removal of Trustee and Securities Administrator.

111

Section 8.8

Successor Trustee or Securities Administrator.

112

Section 8.9

Merger or Consolidation of Trustee or Securities Administrator.

113

Section 8.10

Appointment of Co-Trustee or Separate Trustee.

113

Section 8.11

Appointment of Office or Agency.

114

Section 8.12

Representations and Warranties of the Trustee.

114

ARTICLE IX TERMINATION

116

Section 9.1

Termination of REMICS Upon Purchase or Liquidation of All 

Group V Loans.

116

Section 9.2

Additional Termination Requirements.

118

ARTICLE X REMIC PROVISIONS

120

Section 10.1

REMIC Administration.

120

Section 10.2

Prohibited Transactions and Activities.

123

Section 10.3

Indemnification.

123

ARTICLE XI MISCELLANEOUS PROVISIONS

124

Section 11.1

Amendment.

124

Section 11.2

Recordation of Agreement; Counterparts.

125

Section 11.3

Limitation on Rights of Certificateholders.

125

Section 11.4

Governing Law.

126

Section 11.5

Notices.

126

Section 11.6

Severability of Provisions.

127

Section 11.7

Notice to Rating Agencies.

127

Section 11.8

Article and Section References.

128

Section 11.9

Grant of Security Interest.

128

EXHIBITS

			
	Exhibit A-1

	-

	Form of Class [A-1][A-2][AI-1] [AI-2] Certificates

	Exhibit A-2

	-

	Form of Class X Certificates

	Exhibit A-3

	-

	Form of Class PO Certificates

	Exhibit A-4

	-

	Form of Class AR Certificates

	Exhibit A-5

	-

	Form of Class [B-1][B-2][B-3][B-4][B-5][B-6][B-7][B-8][B-9][B-10][B-11][B-12] Certificates

	Exhibit A-6

	-

	Form of Class P Certificates

	Exhibit B

	-

	[Reserved]

	Exhibit C

	-

	Form of Transfer Affidavit

	Exhibit D

	-

	Form of Transferor Certificate

	Exhibit E

	-

	Form of Investment Letter (Non-Rule 144A)

	Exhibit F

	-

	Form of Rule 144A Investment Letter

	Exhibit G

	-

	[Reserved]

	Exhibit H

	-

	Form of Addition Notice

	Exhibit I

	-

	Form of  Subsequent Transfer Instrument

	Exhibit J

	-

	Mortgage Loan Purchase Agreement between the Depositor and the Seller 

	Exhibit K-1

	-

	Additional Form 10-D Disclosure 

	Exhibit K-2

	-

	Additional Form 10-K Disclosure 

	Exhibit K-3

	-

	Form 8-K Disclosure Information

	Exhibit L

	-

	Form of Servicer Certification

	Exhibit M

	-

	Servicing Criteria

	Exhibit N

	-

	Additional Disclosure Notification

	Exhibit O

	-

	ERISA Representation Letter

			
	Schedule One

	-

	Loan Schedule

	Schedule Two

	-

	Prepayment Charge Schedule

	Schedule Three

	-

	[Reserved]

	Schedule Four

	-

	[Reserved]

	Schedule Five 

	-

	Trust Prepayment Charge Schedule

This Pooling and Servicing Agreement, dated and effective as of March 1, 2007 (this “Agreement”), is executed by and among Deutsche Alt-A Securities, Inc., as depositor (the “Depositor”), Wells Fargo Bank, N.A., as master servicer (the “Master Servicer”) and as securities administrator (the “Securities Administrator”), Clayton Fixed Income Services Inc., as credit risk manager (the “Credit Risk Manager”), and HSBC Bank USA, National Association, as trustee (the “Trustee”).  Capitalized terms used in this Agreement and not otherwise defined have the meanings ascribed to such terms in Article I hereof.

PRELIMINARY STATEMENT 

The Depositor at the Closing Date is the owner of the Loans and the other property being conveyed by it to the Trustee for inclusion in the Trust Fund.  The Trust Fund will consist of a segregated pool of assets comprised of the Loans and certain other assets. On the Closing Date, the Depositor will acquire the Certificates from the Trust Fund as consideration for its transfer to the Trust Fund of the Loans and certain other assets and will be the owner of the Certificates.  The Depositor has duly authorized the execution and delivery of this Agreement to provide for the conveyance to the Trustee of the Loans and the issuance to the Depositor of the Certificates representing in the aggregate the entire beneficial ownership of the Trust Fund.  All covenants and agreements made by the Depositor, the Master Servicer, the Securities Administrator and the Trustee herein with respect to the Loans and the other property constituting the Trust Fund are for the benefit of the Holders from time to time of the Certificates.  The Depositor, the Master Servicer, the Securities Administrator and the Trustee are entering into this Agreement, and the Trustee is accepting the trust created hereby, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged.

The Certificates issued hereunder, other than the Class P, Class B-10, Class B-11 and Class B-12 Certificates, have been offered for sale pursuant to a Prospectus Supplement dated April 13, 2007 to a Prospectus dated May 19, 2006 (together, the “Prospectus”).  The Class B-10, Class B-11 and Class B-12 Certificates have been offered for sale pursuant to a Private Placement Memorandum dated April 13, 2007.  The Trust Fund created hereunder is intended to be the “Trust” as described in the Prospectus and the Certificates are intended to be the “Certificates” described therein.

The Securities Administrator shall elect that each of REMIC I and REMIC II be treated as a REMIC under Section 860D of the Code.  Any inconsistencies or ambiguities in this Agreement or in the administration of this Agreement shall be resolved in a manner that preserves the validity of such REMIC elections.  The assets of REMIC I shall include the Trust Fund (other than the Pre-Funding Account and the Capitalized Interest Account).  The REMIC I Regular Interests shall constitute the assets of REMIC II (the “Master REMIC”).  The Certificates (other than the Class AR Certificates and exclusive of the right to receive interest payments to the extent such payments reflect an interest rate greater than the REMIC Maximum Rate) shall constitute regular interests in the Master REMIC.  The Class AR Certificate shall represent ownership of the sole class of residual interest in each REMIC formed hereby. For purposes of satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the “latest possible maturity date” for each regular interest created hereby shall be the 36th month following the latest maturity date of any Loan held in the Trust on the Closing Date.

REMIC I:

The following table sets forth the designations, principal balances, and interest rates for each interest in REMIC I, each of which (other than the R-I interest) is hereby designated as a regular interest in REMIC I (the “REMIC I Regular Interests”): 

						
	REMIC Interest

	 
	Initial 

Principal Balance of REMIC Interest 

	 
	Interest Rate

	 

	T1-Prefunding PO

	 
	(1)

	 
	(2)

	 

	T1-Prefunding IO

	 
	(3)

	 
	(3)

	 

	T1-X

	 
	(4)

	 
	(4)

	 

	T1-Initial (8)

	 
	(5)

	 
	6.00%

	 

	T1-Initial PO

	 
	(6)

	 
	0.00%

	 

	R-I

	 
	(7)

	 
	(7)

	 

___________________________

(1)

This interest shall have an initial principal balance equal to the Original Pre-Funded Amount.

(2)

The interest rate for this Lower Tier Interest for each Distribution Date before the Distribution Date in June 2007 (and the related Interest Accrual Period), is a per annum rate of 0%; and for each Distribution Date thereafter is a per annum rate equal to the weighted average of the Net Mortgage Rates of the Subsequent Loans, weighted on the basis of their respective principal balances and determined by subjecting the Net Mortgage Rate of each such Subsequent Loan to a cap equal to 6.00%.

(3)

This interest shall be an interest-only regular interest and shall be entitled to receive on each Distribution Date before the Distribution Date in June 2007 the amount of interest accrued on each Subsequent Loan during the related Interest Accrual Period except for any interest to the extent it reflects interest payable at a Net Mortgage Rate exceeding 6.00%.

(4)

This interest shall be an interest-only regular interest and shall be entitled to receive on each Distribution Date the amount distributable on the Class X Certificates on such Distribution Date.

(5)

This interest shall have an initial principal balance equal to the aggregate of the Scheduled Principal Balances of the Loans (other than the Subsequent Loans) as of the Cut-off Date.

(6)

This interest shall have an initial principal balance equal to the Initial Certificate Principal Balance of the Class PO Certificates.

(7)

The R-I interest shall not have a principal balance and shall not bear interest.  The R-I interest is hereby designated as the sole class of residual interest in REMIC I.

(8)

This interest shall also be entitled to receive all Prepayment Charges payable to the Class P Certificates.  

On each Distribution Date, interest shall be allocated with respect to the interests in REMIC I based on the above-described interest rates.

On each Distribution Date, all Realized Losses and all payments of principal with respect to the Loans shall be allocated in the following order of priority:

(a)

First, with respect to such amounts in respect of the Subsequent Loans to the T1-Prefunding PO interest until the outstanding principal balance of such interest is reduced to zero,  

(b)

Second, to the T1-Initial PO interest an amount equal to that allocable to the Class PO Interest on such Distribution Date, and 

(c)

Third, to the T1-Initial interest until the principal balance of such interest is reduced to zero.

The Certificates:

The following table irrevocably sets forth the designations, initial Certificate Principal Balance or Notional Amount and Pass-Through Rate for each Class of Certificates:  

				
	Class Designation

	Initial Certificate Principal Balance 

	Pass-Through Rate

	Assumed Final Maturity Date(1)

	A-1

	$367,770,857

	(2)(7)

	April 2037

	A-2

	$40,863,428

	(2)(7)

	April 2037

	AI-1

	$61,295,144

	(2)(8)

	April 2037

	AI-2

	$6,810,571

	(2)(8)

	April 2037

	X

	(3)

	(4)

	April 2037

	PO

	$5,735,570

	N/A(4)

	April 2037

	AR

	$100

	6.00%(6)

	April 2037

	B-1

	$10,489,000

	6.00%(6)

	April 2037

	B-2

	$8,391,000

	6.00%(6)

	April 2037

	B-3

	$3,146,000

	6.00%(6)

	April 2037

	B-4

	$3,147,000

	6.00%(6)

	April 2037

	B-5

	$2,622,000

	6.00%(6)

	April 2037

	B-6

	$1,573,000

	6.00%(6)

	April 2037

	B-7

	$1,574,000

	6.00%(6)

	April 2037

	B-8

	$1,573,000

	6.00%(6)

	April 2037

	B-9

	$1,049,000

	6.00%(6)

	April 2037

	B-10

	$2,884,000

	6.00%(6)

	April 2037

	B-11

	$3,147,000

	6.00%(6)

	April 2037

	B-12

	$2,359,593

	6.00%(6)

	April 2037

	P

	$100

	 (5)

	N/A

___________________

(1)

Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations, the Distribution Date in the 36th month following the maturity date for the Loan held in the Trust on the Closing Date with the latest maturity date has been designated as the “latest possible maturity date” for each Class of Certificates.

(2)

The Pass-Through Rate for the Class A-1, Class A-2, Class AI-1, Class AI-2 and Class X Certificates are as set forth in the definition of “Pass-Through Rate in this Agreement.

(3)

The Class PO Certificates are Interest Only Certificates and are not entitled to any distributions of principal.

(4)

The Class PO Certificates are Principal Only Certificates and are not entitled to any distributions of interest.

(5)

The Class P Certificate will not accrue interest.

(6)

For purposes of the REMIC Provisions, the Pass-Through Rate for the REMIC regular interest evidenced by this Class of Certificates shall not exceed the weighted average of the interest rates of the T1-Prefunding PO and T1-Initial interests in REMIC I (the “REMIC Maximum Rate”).

(7)

For purposes of the REMIC Provisions, the Pass-Through Rate for the REMIC regular interest evidenced by this Class of Certificates shall not exceed the product of the REMIC Maximum Rate and 7/6.

(8)

For purposes of the REMIC Provisions, the Pass-Through Rate for the REMIC regular interest evidenced by this Class of Certificates shall not exceed the product of the REMIC Maximum Rate and 6.7.

W I T N E S S E T H

In consideration of the mutual agreements herein contained, the Depositor, the Master Servicer, the Securities Administrator, the Credit Risk Manager and the Trustee agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1

Definitions.  

Whenever used herein, the following words and phrases, unless the context otherwise requires, shall have the meanings specified in this Article:

Accepted Master Servicing Practices:  With respect to any Loan, as applicable, those customary mortgage servicing practices of prudent mortgage servicing institutions that master service mortgage loans of the same type and quality as such Loan in the jurisdiction where the related Mortgaged Property is located, to the extent applicable to the Master Servicer (except in its capacity as successor to a Servicer).  

Account:  The Distribution Account, the Pre-Funding Account, the Capitalized Interest Account and any Protected Account as the context may require.

Additional Disclosure Notification:  Has the meaning set forth in Section 3.29(a)(ii) of this Agreement.

Additional Form 10-D Disclosure:  Has the meaning set forth in Section 3.29(a)(i) of this Agreement.

Additional Form 10-K Disclosure:  Has the meaning set forth in Section 3.29(d)(i) of this Agreement.  

Administration Fee:  With respect to each Loan and any Distribution Date, will be equal to the product of one-twelfth of (x) the Administration Fee Rate for such Loan multiplied by (y) the principal balance of that Loan as of the last day of the immediately preceding Due Period (or as of the Cut-Off Date with respect to the first Distribution Date), after giving effect to principal prepayments received during the related Prepayment Period.

Administration Fee Rate:  With respect to each Loan will be equal to the sum of (i) the Servicing Fee Rate, (ii) the Master Servicing Fee Rate, (iii) the Credit Risk Management Fee Rate, (iv) the rate at which the premium payable in connection with any lender paid primary mortgage insurance policy is calculated, if applicable and (v) with respect to any Covered Loan, the Mortgage Insurance Premium Rate.

Advance:  Either (i) a Monthly Advance made by a Servicer as such term is defined in and pursuant to the related Servicing Agreement or (ii) a Monthly Advance made by the Master Servicer or the Trustee pursuant to Section 4.7.

Adverse REMIC Event:  As defined in Section 10.1(f).

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. The Trustee may obtain and rely on an Officer’s Certificate of a Servicer or the Depositor to determine whether any Person is an Affiliate of such party.

Agreement:  This Pooling and Servicing Agreement and all amendments and supplements hereto.

American Home:  American Home Mortgage Servicing, Inc.

American Home Servicing Agreement:  Master Mortgage Loan Purchase and Servicing Agreement, dated as of May 1, 2006, between the Seller, American Home Mortgage Corp. and American Home.

Appraised Value:  The amount set forth in an appraisal made by or for the mortgage originator in connection with its origination of each Loan.

Assignment:  An assignment of the Mortgage, notice of transfer or equivalent instrument, in recordable form, sufficient under the laws of the jurisdiction where the related Mortgaged Property is located to reflect of record the sale and assignment of the Loan to the Trustee, which assignment, notice of transfer or equivalent instrument may, if permitted by law, be in the form of one or more blanket assignments covering Mortgages secured by Mortgaged Properties located in the same county.

Assignment Agreements:  Shall mean (i) the Assignment, Assumption and Recognition Agreement, dated as of April 13, 2007, among the Seller, the Depositor and American Home, pursuant to which the American Home Servicing Agreement was assigned to the Depositor, (ii) the Assignment, Assumption and Recognition Agreement, dated as of April 13, 2007, among the Seller, the Depositor, Countrywide Home Loans Servicing LP and Countrywide, pursuant to which the Countrywide Servicing Agreement was assigned to the Depositor, (iii) the Assignment, Assumption and Recognition Agreement, dated as of April 13, 2007 among the Seller, the Depositor and GMACM pursuant to which the GMACM Servicing Agreement was assigned to the Depositor, (iv) the Assignment, Assumption and Recognition Agreement, dated as of April 13, 2007, among the Seller, the Depositor and GreenPoint, pursuant to which the GreenPoint Servicing Agreement was assigned to the Depositor, (v) the Assignment, Assumption and Recognition Agreement, dated as of April 13, 2007, among the Seller, the Depositor and IndyMac, pursuant to which the IndyMac Servicing Agreement was assigned to the Depositor, (vi) the Assignment, Assumption and Recognition Agreement, dated as of April 13, 2007, among the Seller, the Depositor and IndyMac, pursuant to which the IndyMac Amended Servicing Agreement was assigned to the Depositor, (vii) the Assignment, Assumption and Recognition Agreement, dated as of April 13, 2007, among the Seller, the Depositor and National City, pursuant to which the National City Servicing Agreement was assigned to the Depositor, (viii) the Assignment, Assumption and Recognition Agreement, dated as of April 13, 2007, among the Seller, the Depositor, Bishop’s Gate Residential Mortgage Trust and PHH, pursuant to which the PHH Servicing Agreement was assigned to the Depositor, (ix) the Assignment, Assumption and Recognition Agreement, dated as of April 13, 2007, among the Seller, the Depositor and JPMorgan, pursuant to the JPMorgan Servicing Agreement was assigned to the Depositor, (x) the Assignment, Assumption and Recognition Agreement, dated as of April 13, 2007, among the Seller, the Depositor and Wells Fargo, pursuant to which the Wells Fargo Servicing Agreement was assigned to the Depositor, and (xi) the Assignment, Assumption and Recognition Agreement, dated as of April 13, 2007, among the Seller, the Depositor and Wells Fargo, pursuant to which the Wells Fargo Warranties and Servicing Agreement was assigned to the Depositor,. 

Authorized Denomination:  With respect to the Class A-1, Class A-2, Class AI-1, Class AI-2 and Class PO Certificates, minimum initial Certificate Principal Balances of $25,000 and integral multiples of $1.00 in excess thereof.  With respect to the Class X Certificates, minimum initial Certificate Principal Balances of $100,000 and integral multiples of $1.00 in excess thereof.  With respect to the Class P Certificates, minimum initial Certificate Principal Balances of $20 and integral multiples thereof.  With respect to the Class AR Certificates, a single denomination of 100% Percentage Interest in such Certificate.

Available Distribution Amount: With respect to any Distribution Date, the sum of the following amounts:

(1)

the total amount of all cash received by or on behalf of each Servicer with respect to the Loans by the Determination Date for such Distribution Date and not previously distributed (including Liquidation Proceeds, Insurance Proceeds and Subsequent Recoveries and, with respect to any Distribution Date during the Pre-Funding Period, any amounts required to be deposited into the Distribution Account from the Capitalized Interest Account pursuant to this Agreement, and with respect to the Distribution Date immediately following the termination of the Pre-Funding Period, any Remaining Pre-Funded Amount), except:

(a)

all scheduled payments of principal and interest collected on the Loans but due on a date after the related Due Date;

(b)

all Curtailments received with respect to the Loans after the related Prepayment Period, together with all interest paid by the Mortgagors in connection with such Curtailments;

(c)

all Payoffs received with respect to the Loans after the related Prepayment Period, together with all interest paid by the Mortgagors in connection with such Payoffs;

(d)

Liquidation Proceeds, Insurance Proceeds, condemnation proceeds and Subsequent Recoveries received on the Loans after the related Prepayment Period;

(e)

all amounts reimbursable to the related Servicer with respect to the Loans pursuant to the terms of the related Servicing Agreement or to the Master Servicer, the Securities Administrator, the Trustee or the Custodians pursuant to the terms of this Agreement or the Custodial Agreements;

(f)

reinvestment income with respect to the Loans on the balance of funds, if any, in the Protected Accounts or the Distribution Account;

(g)

any fees payable to the Master Servicer (including any Master Servicing Fees), the Servicers, and the Credit Risk Manager with respect to the Loans, and any premiums payable in connection with the Mortgage Insurance Provider or any lender paid primary mortgage insurance policies maintained on the Loans; and

(h)

all Prepayment Charges received in connection with the Loans;

(2)

all Advances made by a Servicer and/or the Master Servicer with respect to the Loans for that Distribution Date; 

(3)

any amounts paid as Compensating Interest on the Loans by a Servicer and/or the Master Servicer for that Distribution Date; 

(4)

the total amount of any cash related to the Loans deposited in the Distribution Account in connection with the repurchase of any Loan by the Seller;

(5)

the total amount of any cash related to the Loans deposited in the Distribution Account in connection with an optional termination of REMIC I pursuant to Section 10.2; and

(6)

only with respect to the Distribution Date in April 2007, an amount equal to $100 to be remitted by the Depositor.

Beneficial Holder:  A Person holding a beneficial interest in any Book-Entry Certificate as or through a Depository Participant or an Indirect Depository Participant or a Person holding a beneficial interest in any Definitive Certificate.

Book-Entry Certificates:  The Certificates (other than the Class AR Certificates), beneficial ownership and transfers of which shall be made through book entries as described in Section 5.1 and Section 5.3.

Capitalized Interest Account: A segregated trust account established and maintained by the Securities Administrator pursuant to Section 3.27.

Capitalized Interest Requirement: On the Closing Date, $0.00, and on any date thereafter, 30-days interest accrued on the amount in the Pre-Funding Account at the weighted average of the Net Mortgage Rates of the Loans.

Certificate:  Any one of the Certificates issued pursuant to this Agreement, executed and authenticated by or on behalf of the Securities Administrator hereunder in substantially one of the forms set forth in Exhibits A-1, A-2, A-3, A-4, A-5 and A-6 hereto.

Certificate Owner:  With respect to a Book-Entry Certificate, the Person who is the beneficial owner of such Certificate as reflected on the books of the Depository or on the books of a Depository Participant or on the books of an Indirect Depository Participant.

Certificate Principal Balance:  The Certificate Principal Balance with respect to any Senior Certificate (other than the Class X Certificates, which have no Certificate Principal Balance) and any Subordinate Certificate outstanding at any time, represents the then maximum amount that the holder of such Certificate is entitled to receive as distributions allocable to principal from the cash flow on the Loans and the other assets in the Trust Fund.  The Certificate Principal Balance of a Senior Certificate (other than the Class X Certificates, which have no Certificate Principal Balance) and any Subordinate Certificate, as of any date of determination is equal to the initial Certificate Principal Balance of such Certificate reduced by the aggregate of (i) all amounts allocable to principal previously distributed with respect to that Certificate and (ii) any reductions in the Certificate Principal Balance of such Certificate deemed to have occurred in connection with allocations of Realized Losses, if any, plus any Subsequent Recoveries added to the Certificate Principal Balance of such Certificate pursuant to Section 4.2.  The initial Certificate Principal Balance of each Class of Certificates is set forth in the Preliminary Statement hereto. When used in reference to a Class of Certificates, the term Certificate Principal Balance means the aggregate of the Certificate Principal Balances of all Certificates of such Class, and when used in reference to a group of Classes (such as the Senior Certificates and Subordinate Certificates) shall mean the aggregate Certificate Principal Balances of all Classes of Certificates included in such group.

Certificate Register:  The register maintained pursuant to Section 5.3.

Certificateholder or Holder:  The person in whose name a Certificate is registered in the Certificate Register, except that solely for the purposes of giving any consent pursuant to this Agreement, any Certificate registered in the name of the Depositor, the Master Servicer, the Securities Administrator, the Trustee or any Affiliate thereof shall be deemed not to be outstanding and the Percentage Interest evidenced thereby shall not be taken into account in determining whether the requisite percentage of Percentage Interests necessary to effect any such consent has been obtained.  The Trustee or the Securities Administrator may conclusively rely upon a certificate of the Depositor, the Seller or the Master Servicer in determining whether a Certificate is held by an Affiliate thereof. All references herein to “Holders” or “Certificateholders” shall reflect the rights of Certificate Owners as they may indirectly exercise such rights through the Depository and participating members thereof, except as otherwise specified herein; provided, however, that the Trustee or the Securities Administrator shall be required to recognize as a “Holder” or “Certificateholder” only the Person in whose name a Certificate is registered in the Certificate Register.  

Class:  All Certificates having the same priority and rights to payments from the Available Distribution Amount designated as a separate Class under the heading Certificates in the preliminary statement, as set forth in the forms of Certificates attached hereto as Exhibits A-1, A-2, A-3, A-4, A-5 and A-6 as applicable.

Class AR Certificates:  The Class AR Certificates and designated as such on the face thereof in substantially the form attached hereto as Exhibit A-4.

Class P Certificates:  The Class P Certificates and designated as such on the face thereof in substantially the form attached hereto as Exhibit A-6.

Class X Notional Amount: With respect to any Distribution Date will be the aggregate Principal Balance of the Mortgage Loans as of the last day of the related Due Period, or for the initial Distribution Date, as of the Cut-off Date (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period).  

Clearing Agency:  An organization registered as a “clearing agency” pursuant to Section 17A of the Securities and Exchange Act of 1934, as amended, which initially shall be the Depository.

Closing Date:  April 13, 2007.

Code:  The Internal Revenue Code of 1986, as amended.

Collateral Deficiency Amount: With respect to any Distribution Date prior to the Credit Support Depletion Date, the amount by which (i) the aggregate Certificate Principal Balance of the Senior Certificates (other than the  Interest Only Certificates), after giving effect to payments of principal (other than the related Collateral Deficiency Amount) on that Distribution Date exceeds (ii) the Scheduled Principal Balance of the Loans and the Pre-Funded Amount, if any as of the last day of the related Due Period.

Commission:  Means the United States Securities and Exchange Commission.

Compensating Interest:  For any Distribution Date and (i) each Servicer, as set forth in the related Servicing Agreement and (ii) the Master Servicer, the amount described in Section 3.21.

Controlling Person:  Means, with respect to any Person, any other Person who “controls” such Person within the meaning of the Securities Act.

Corporate Trust Office:  The principal corporate trust office of the Trustee or the Securities Administrator, as the case may be, at which at any particular time its corporate trust business in connection with this Agreement shall be administered, which office at the date of the execution of this instrument is located at (i) with respect to the Trustee, HSBC Bank USA, National Association, 452 Fifth Avenue, New York, New York 10018, or at such other address as the Trustee may designate from time to time by notice to the Certificateholders, the Depositor, the Master Servicer and the Securities Administrator, or (ii) with respect to the Securities Administrator, (A) for Certificate transfer and surrender purposes, Wells Fargo Bank, N.A., Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479, Attention:  DBALT 2007-AB1 and (B) for all other purposes, Wells Fargo Bank, N.A., 9062 Old Annapolis Road, Columbia, Maryland 21045, Attention:  DBALT 2007-AB1, or at such other address as the Securities Administrator may designate from time to time by notice to the Certificateholders, the Depositor, the Master Servicer and the Trustee.

Corresponding Class of Certificate:  With respect to each REMIC Regular Interest, the Class of Certificate with the corresponding designation.

Countrywide:  Countrywide Home Loans, Inc., or any successor thereto. 

Countrywide Servicing: Countrywide Home Loans Servicing LP, or any successor thereto.

Countywide Servicing Agreement:  The Mortgage Loan Servicing Rights Purchase and Servicing Agreement, dated as of September 1, 2005, as amended by Amendment One dated as of August 31, 2006, among the Seller, Countrywide Servicing and Countrywide.

Covered Loan

:  A Mortgage Loan covered by the Mortgage Insurance Policy as of the Cut-off Date.

Credit Risk Management Agreement or Credit Risk Management Agreements: Each agreement between the Credit Risk Manager and a Servicer or the Master Servicer, regarding the loss mitigation and advisory services to be provided by the Credit Risk Manager.

Credit Risk Management Fee:  The amount payable to the Credit Risk Manager on each Distribution Date as compensation for all services rendered by it in the exercise and performance of any and all powers and duties of the Credit Risk Manager under any Credit Risk Management Agreement, which amount shall equal one twelfth of the product of (i) the Credit Risk Management Fee Rate multiplied by (ii) the aggregate of the Scheduled Principal Balance of each Loan and any related REO Properties as of the first day of the related Due Period.

Credit Risk Management Fee Rate:  0.009% per annum.

Credit Risk Manager:  Clayton Fixed Income Services Inc., a Colorado corporation, and its successors and assigns.

Credit Support Depletion Date:  The Distribution Date on which the aggregate Certificate Principal Balance of the Subordinate Certificates has been reduced to zero, prior to giving effect to principal distributions thereon and the allocation of Realized Losses on such Distribution Date.

Curtailment:  Any voluntary payment of principal on a Loan, made by or on behalf of the related Mortgagor, other than a Monthly Payment, a Prepaid Monthly Payment or a Payoff, which is applied to reduce the outstanding Principal Balance of the Loan.

Curtailment Shortfall:  With respect to any Distribution Date and any Curtailment received during the related Prepayment Period, an amount equal to one month’s interest on such Curtailment at the applicable Mortgage Interest Rate on such Loan, net of the related Servicing Fee Rate.

Custodial Agreement:  Either (i) the DBNTC Custodial Agreement or (ii) the Wells Fargo Custodial Agreement.

Custodian:  DBNTC or Wells Fargo or any other custodian appointed under any custodial agreement entered into after the date of this Agreement.

Cut-Off Date:  March 1, 2007.

DBNTC:  Deutsche Bank National Trust Company, a national banking association, or its successor in interest.

DBNTC Custodial Agreement:  The Custodial Agreement, dated as of April 1, 2007, among DBNTC, American Home, Countrywide Servicing, GMAC, IndyMac and Wells Fargo as may be amended from time to time.

Definitive Certificates:  As defined in Section 5.3.

Deleted Loan:  A Loan replaced or to be replaced by a Substitute Loan.

Depositor:  Deutsche Alt-A Securities, Inc., a Delaware corporation, or its successor-in-interest.

Depository:  The Depository Trust Company, or any successor Depository hereafter named. The nominee of the initial Depository, for purposes of registering those Certificates that are to be Book-Entry Certificates, is CEDE & Co. The Depository shall at all times be a “clearing corporation” as defined in Section 8-102(3) of the Uniform Commercial Code of the State of New York and a Clearing Agency.

Depository Agreement:  The Letter of Representations, dated April 13, 2007 by and among the Depository, the Depositor and the Trustee.

Depository Participant:  A broker, dealer, bank, other financial institution or other Person for whom the Depository effects book-entry transfers and pledges of securities deposited with the Depository.

Determination Date:  With respect to each Servicer, the day of the month set forth as the Determination Date in the related Servicing Agreement. With respect to Article X hereto, the fifteenth (15th) day of the month or if such day is not a Business Day, the Business Day immediately following such fifteenth (15th) day.

Discount Fraction: With respect to any Distribution Date and a Discount Loan, a fraction, the numerator of which is 6.00% minus the Net Mortgage Rate as of the Cut-Off Date on such Discount Loan, and the denominator of which is 6.00%.

Discount Fractional Principal Amount: For any Distribution Date, the aggregate of the following with respect to each Discount Loan: the Discount Fraction of the amounts described in the definition of Principal Distribution Amount, Principal Prepayment Amount and Liquidation Principal.

Discount Fractional Principal Shortfall: For any Distribution Date (i) prior to the Credit Support Depletion Date, an amount generally equal to the sum of:

(1)

the aggregate of the following with respect to each Discount Loan: the Discount Fraction of any loss (meaning the amount by which the outstanding Principal Balance thereof exceeded the Liquidation Principal and Insurance Proceeds received in respect thereof) on such Discount Loan; and

(2)

the amounts described in clause (1) above for all prior Distribution Dates to the extent not previously distributed, and

(ii)

for any Distribution Date on or after the Credit Support Depletion Date, zero.

Discount Loan:  Any Loan with a Net Mortgage Rate as of the Cut-Off Date of less than 6.00% per annum.

Disqualified Organization:  A “disqualified organization” as defined in Section 860E(e)(5) of the Code, and, for purposes of Article V herein, any Person which is not a Permitted Transferee.

Distribution Account:  The trust account or accounts created and maintained by the Securities Administrator pursuant to Section 3.23 for the benefit of the Certificateholders and designated “Wells Fargo Bank, N.A., as Securities Administrator, in trust for registered holders of Deutsche Alt-B Securities Mortgage Loan Trust, Series 2007-AB1”.  Funds in the Distribution Account shall be held in trust for the Certificateholders for the uses and purposes set forth in this Agreement. The Distribution Account must be an Eligible Account.

Distribution Account Deposit Date:  With respect to any Distribution Date, the Business Day prior to such Distribution Date.

Distribution Date:  The 25th day (or, if such 25th day is not a Business Day, the Business Day immediately succeeding such 25th day) of each month, beginning in April 2007.

Due Date:  The first day of each calendar month, which is the day on which the Monthly Payment for each Loan is due, exclusive of any days of grace.  The “related Due Date” for any Distribution Date is the Due Date immediately preceding such Distribution Date.

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

Eligible Account:  Any account or accounts (1) maintained by the Securities Administrator with a federal or state chartered depository institution or trust company that complies with the definition of “Eligible Institution,” or (2) maintained with the corporate trust department of a federal depository institution or state-chartered depository 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 Institution:  An institution having both (a) (i) the highest short-term debt rating, and one of the two highest long-term debt ratings of Fitch and Moody’s, (ii) with respect to the Distribution Account, an unsecured long-term debt rating of at least one of the two highest unsecured long-term debt ratings of Fitch and Moody’s, or (iii) the approval of Fitch and S&P and (b) (i) commercial paper, short-term debt obligations, or other short-term deposits rated at least ‘A-1+’ or long-term unsecured debt obligations rated at least ‘AA-’ by S&P, if the amounts on deposit are to be held in the account for no more than 365 days; or (ii) commercial paper, short-term debt obligations, or other short-term deposits rated at least ‘A-1’ by S&P, if the amounts on deposit represent less than 20% of the initial par value of the securities, are not intended to be used as credit enhancement, and are to be held in the account for less than 30 days.

Eligible Investments:  Any one or more of the following obligations or securities payable on demand or having a scheduled maturity on or before the Business Day preceding the following Distribution Date (or, with respect to the Distribution Account maintained with the Securities Administrator, having a scheduled maturity on or before the following Distribution Date; provided that, such Eligible Investments shall be managed by, or an obligation of, the institution that maintains the Distribution Account if such Eligible Investments mature on the Distribution Date), regardless of whether any such obligation is issued by the Depositor, the applicable Servicer, the Trustee, the Master Servicer, the Securities Administrator or any of their respective Affiliates and having at the time of purchase, or at such other time as may be specified, the required ratings, if any, provided for in this definition:

(b)

direct obligations of, or guaranteed as to full and timely payment of principal and interest by, the United States or any agency or instrumentality thereof, provided, that such obligations are backed by the full faith and credit of the United States of America;

(c)

direct obligations of, or guaranteed as to timely payment of principal and interest by, Freddie Mac, Fannie Mae or the Federal Farm Credit System, provided, that any such obligation, at the time of purchase or contractual commitment providing for the purchase thereof, is qualified by each Rating Agency as an investment of funds backing securities rated “AAA” in the case of S&P and “Aaa” in the case of Moody’s (the initial rating of the Senior Certificates);

(d)

demand and time deposits in or certificates of deposit of, or bankers’ acceptances issued by, any bank or trust company, savings and loan association or savings bank, provided, that the short-term deposit ratings and/or long-term unsecured debt obligations of such depository institution or trust company (or in the case of the principal depository institutions in a holding company system, the commercial paper or long-term unsecured debt obligations of such holding company) have, in the case of commercial paper, the highest rating available for such securities by each Rating Agency and, in the case of long-term unsecured debt obligations, one of the two highest ratings available for such securities by each Rating Agency, or in each case such lower rating as will not result in the downgrading or withdrawal of the rating or ratings then assigned to any Class of Certificates by any Rating Agency but in no event less than the initial rating of the Senior Certificates;

(e)

commercial or finance company paper (including both non-interest-bearing discount obligations and interest-bearing obligations payable on demand or on a specified date not more than one year after the date of issuance thereof) that is rated by each Rating Agency in its highest short-term unsecured rating category at the time of such investment or contractual commitment providing for such investment, and is issued by a corporation the outstanding senior long-term debt obligations of which are then rated by each Rating Agency in one of its two highest long-term unsecured rating categories, or such lower rating as will not result in the downgrading or withdrawal of the rating or ratings then assigned to any Class of Certificates by any Rating Agency but in no event less than the initial rating of the Senior Certificates;

(f)

guaranteed reinvestment agreements issued by any bank, insurance company or other corporation rated in one of the two highest rating levels available to such issuers by each Rating Agency at the time of such investment, provided, that any such agreement must by its terms provide that it is terminable by the purchaser without penalty in the event any such rating is at any time lower than such level;

(g)

repurchase obligations with respect to any security described in clause (a) or (b) above entered into with a depository institution or trust company (acting as principal) meeting the rating standards described in (c) above;

(h)

securities bearing interest or sold at a discount that are issued by any corporation incorporated under the laws of the United States of America or any State thereof and rated by each Rating Agency in one of its two highest long-term unsecured rating categories at the time of such investment or contractual commitment providing for such investment; provided, however, that securities issued by any such corporation will not be Eligible Investments to the extent that investment therein would cause the outstanding principal amount of securities issued by such corporation that are then held as part of the Distribution Account to exceed 20% of the aggregate principal amount of all Eligible Investments then held in the Distribution Account;

(i)

units of taxable money market funds (including those for which the Trustee, the Securities Administrator, the Master Servicer or any affiliate thereof receives compensation with respect to such investment) which funds have been rated by each Rating Agency rating such fund in its highest rating category or which have been designated in writing by each Rating Agency as Eligible Investments with respect to this definition;

(j)

if previously confirmed in writing to the Trustee and the Securities Administrator, any other demand, money market or time deposit, or any other obligation, security or investment, as may be acceptable to each Rating Agency as a permitted investment of funds backing securities having ratings equivalent to the initial rating of the Senior Certificates; and

(k)

such other obligations as are acceptable as Eligible Investments to each Rating Agency;

provided, however, that such instrument continues to qualify as a “cash flow investment” pursuant to Code Section 860G(a)(6) and that no instrument or security shall be an Eligible Investment if (i) such instrument or security evidences a right to receive only interest payments or (ii) the right to receive principal and interest payments derived from the underlying investment provides a yield to maturity in excess of 120% of the yield to maturity at par of such underlying investment.

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

ERISA-Qualifying Underwriting:  With respect to any ERISA-Restricted Certificate, a best efforts or firm commitment underwriting or private placement that meets the requirements of the Underwriters’ Exemption.

ERISA-Restricted Certificate:  The Class P, Class B-10, the Class B-11 and the Class B-12 Certificates and Certificates of any Class that no longer satisfy the applicable rating requirements of the Underwriters’ Exemption as specified in the Preliminary Statement.

Exchange Act:  The Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

Fannie Mae:  Fannie Mae, formerly known as the Federal National Mortgage Association, or any successor thereto.

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

Fitch:  Fitch Ratings or any successor thereto.

Form 8-K Disclosure Information:  Has the meaning set forth in Section 3.29(b) of this Agreement.

Freddie Mac:  The Federal Home Loan Mortgage Corporation, or any successor thereto.

GMACM:  GMAC Mortgage, LLC, or any successor thereto.

GMACM Servicing Agreement:  The Amended and Restated Servicing Agreement, dated as of January 2, 2007, between the Seller and GMACM and as modified pursuant to the related Assignment Agreement.

GreenPoint:  GreenPoint Mortgage Funding, Inc. or any successor thereto.

GreenPoint Servicing Agreement:  The Amended and Restated Master Mortgage Loan Purchase and Servicing Agreement, dated as of January 1, 2005, between the Seller and GreenPoint, as amended by Amendment One, dated as of April 8, 2005, Amendment Two, dated as of June 30, 2005, Amendment Three, dated as of October 7, 2005, Amendment Four, dated as of March 7, 2006, and Amendment Five, dated as of June 9, 2006, each between the Seller and GreenPoint (as modified pursuant to the related Assignment Agreement).

Independent:  When used with respect to any specified Person, any such Person who (i) is in fact independent of the Depositor, each Servicer, the Master Servicer and the Securities Administrator, (ii) does not have any direct financial interest or any material indirect financial interest in the Depositor, any Servicer, the Master Servicer, the Securities Administrator or any Affiliate of any such party and (iii) is not connected with the Depositor, any Servicer, the Master Servicer or the Securities Administrator as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions.  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.  Independent means, 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 or indirect financial interest in such other Person or any affiliate of such other Person, (C) is not connected with such other Person or any affiliate of such other Person as an officer, employee, promoter, underwriter, Securities Administrator, partner, director or Person performing similar functions and (D) is not a member of the immediate family of a Person defined in clause (B) or (C) above.

Indirect Depository Participants:  Entities such as banks, brokers, dealers or trust companies that clear through or maintain a custodial relationship with a Depository Participant, either directly or indirectly.

IndyMac:  IndyMac Bank, F.S.B., or any successor thereto. 

IndyMac Amended Servicing Agreement:  The First Amended and Restated Master Mortgage Loan Purchase and Servicing Agreement, dated as of June 1, 2005, as amended and rested to and including December 1, 2005, between the Seller and IndyMac (as modified pursuant to the related Assignment Agreement).

IndyMac Servicing Agreement:  The Master Mortgage Loan Purchase and Interim Servicing Agreement, dated as of June 1, 2005, between the Seller and IndyMac (as modified pursuant to the related Assignment Agreement).

Insurance Proceeds:  Proceeds of any title policy, hazard policy, mortgage guaranty policy or other insurance policy covering a Loan, to the extent such proceeds are not to be applied to the restoration of the related Mortgaged Property or released to the Mortgagor in accordance with the applicable Servicing Agreement.

Interest Accrual Period:  With respect to any Distribution Date and the Certificates (other than the Class A-1, Class A-2, Class AI-1 and Class AI-2 Certificates) and each REMIC Regular Interest, the one-month period ending on the last day of the calendar month immediately preceding the month in which such Distribution Date occurs.   With respect to any Distribution Date and the Class A-1, Class A-2, Class AI-1 and Class AI-2 Certificates will be (i) with respect to the first Distribution Date, the period commencing on March 25, 2007 and ending on April 24, 2007 and (ii) with respect to any Distribution Date thereafter, the period commencing on the Distribution Date in the month immediately preceding the month in which that Distribution Date occurs and ending on the day preceding that Distribution Date.  Interest on each such Class of Certificates will be calculated based on a 360-day year consisting of twelve 30-day months regardless of the actual number of days elapsed in the related Interest Accrual Period.

Interest Distribution Amount:  On any Distribution Date, the sum of (i) interest accrued on the Certificates (other than the Class PO and Class P Certificates) which shall be equal to the product of (1) 1/12th of the Pass-Through Rate for such Class and (2) the aggregate Certificate Principal Balance or Notional Amount, as applicable, for such Class before giving effect to allocations of Realized Losses in connection with such Distribution Date or distributions to be made on such Distribution Date, reduced by Net Interest Shortfalls allocated to such Class pursuant to Section 1.3 and the interest portion of Realized Losses allocated to such Class pursuant to Section 4.2 and (ii) the amount of interest accrued but unpaid to such Class from prior Distribution Dates.

Interest Only Certificates:  The Class X Certificates.

Investment Withdrawal Distribution Date:  As defined in Section 3.23(c).

Issuing Entity:  Deutsche Alt-B Securities Mortgage Loan Trust, Series 2007-AB1.

JPMorgan:  JPMorgan Chase Bank, National Association, or any successor thereto.

JPMorgan Servicing Agreement: The Servicing Agreement, dated as of May 1, 2006, by and between JPMorgan and DB Structured Products, Inc. (as modified pursuant to the related Assignment Agreement).

Junior Subordinate Certificates: The Class B-10, Class B-11 and Class B-12 Certificates, collectively.

Last Scheduled Distribution Date: The Distribution Date in April 2037, which is the Distribution Date immediately following the maturity date for the Loan with the latest maturity date.

LIBOR Business Day:  Any day on which dealings in United States dollars are transacted in the London interbank market.

LIBOR Certificates:  The Class A-1, Class A-2, Class AI-1 and Class AI-2 Certificates, as applicable.

LIBOR Determination Date:  With respect to each Interest Accrual Period (other than the initial Interest Accrual Period) and the Adjustable Rate Certificates, the second LIBOR Business Day preceding such Interest Accrual Period on which the Securities Administrator will determine One-Month LIBOR for such Interest Accrual Period.

Liquidated Loan:  A Loan as to which the related Servicer has determined in accordance with its customary servicing practices that all amounts which it expects to recover from or on account of such Loan, whether from Insurance Proceeds, Liquidation Proceeds or otherwise, have been recovered. For purposes of this definition, acquisition of a Mortgaged Property by the Trust Fund shall not constitute final liquidation of the related Loan.

Liquidation Principal:  With respect to any Distribution Date and any Loan, the principal portion of net Liquidation Proceeds received with respect to each such Loan which became a Liquidated Loan (but not in excess of the Principal Balance thereof) during the related Prepayment Period.

Liquidation Proceeds:  The amount (other than Insurance Proceeds or amounts received in respect of the rental of any REO Property prior to REO Disposition) received by the applicable Servicer pursuant to the related Servicing Agreement or the Master Servicer in connection with (i) the taking of all or a part of a Mortgaged Property by exercise of the power of eminent domain or condemnation, (ii) the liquidation of a defaulted Loan through a trustee’s sale, foreclosure sale or otherwise, or (iii) the repurchase, substitution or sale of a Loan or an REO Property pursuant to or as contemplated by Section 2.3, Section 9.1 or Section 9.2.

Loan Documents:  The documents evidencing or relating to each Loan delivered to the Custodian under the Custodial Agreement on behalf of the Trustee.

Loan Schedule:  The schedule, as amended from time to time, of Loans, attached hereto as Schedule Three, which shall set forth as to each Loan the following, among other things:

(i)

the loan number of the Loan and name of the related Mortgagor;

(ii)

the street address of the Mortgaged Property including city, state and zip code;

(iii)

the Mortgage Interest Rate as of the Cut-Off Date;

(iv)

the original term and maturity date of the related Mortgage Note;

(v)

the original Principal Balance;

(vi)

the first payment date;

(vii)

the Monthly Payment in effect as of the Cut-Off Date;

(viii)

the date of the last paid installment of interest;

(ix)

the unpaid Principal Balance as of the close of business on the Cut-Off Date;

(x)

the Loan-to-Value ratio at origination;

(xi)

the type of property and the Original Value of the Mortgaged Property;

(xii)

whether a primary mortgage insurance policy is in effect as of the Cut-Off Date; 

(xiii)

the nature of occupancy at origination; 

(xiv)

a code indicating whether the Loan is subject to Prepayment Charge, the term of such Prepayment Charge and the amount of such Prepayment Charge;

(xv)

the Servicer;

(xvi)

the Servicing Fee Rate; 

(xvii)

the Custodian;

(xviii) 

a code indicating if such Loan is a Covered Loan and the related Mortgage Insurance Premium Rate.

Loan-to-Value Ratio:  The original principal amount of a Loan divided by the Original Value; however, references to “current Loan-to-Value Ratio” shall mean the then current Principal Balance of a Loan divided by the Original Value.

Loans:  The Mortgages and the related Mortgage Notes, each transferred and assigned to the Trustee pursuant to the provisions hereof as from time to time are held as part of the Trust Fund, as so identified in the Loan Schedule. Each of the Loans is referred to individually in this Agreement as a “Loan”.

Master Servicer:  As of the Closing Date, Wells Fargo Bank, N.A., and thereafter, its respective successors in interest who meet the qualifications of this Agreement. The Master Servicer and the Securities Administrator shall at all times be the same Person.

Master Servicer Event of Default:  One or more of the events described in Section 7.1 hereof.

Master Servicing Compensation:  As defined in Section 3.14(a).

Master Servicing Fee:  As to each Loan and any Distribution Date, an amount equal to one twelfth of the product of the Master Servicing Fee Rate multiplied by the Scheduled Principal Balance of such Loan as of the Due Date in the month preceding the month of such Distribution Date.

Master Servicing Fee Rate:  0.00% per annum.

Monthly Advance:  As to any Loan or REO Property, any advance made by a Servicer in respect of any Determination Date or in respect of any Distribution Date by a successor Servicer (including the Master Servicer) or by the Master Servicer or Trustee pursuant to Section 4.4 of this Agreement (which advances shall not include principal or interest shortfalls due to bankruptcy proceedings or application of the Relief Act or similar state or local laws).

Monthly Payment:  The scheduled payment of principal and interest on a Loan which is due on any Due Date for such Loan after giving effect to any reduction in the amount of interest collectible from any Mortgagor pursuant to the Relief Act.

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

Mortgage:  The mortgage, deed of trust or other instrument creating a first lien on, or first priority security interest in, a Mortgaged Property securing a Mortgage Note.

Mortgage File:  The Loan Documents pertaining to a particular Loan.

Mortgage Insurance Policy:  The Mortgage Insurance Policy issued by the Mortgage Insurer with respect to certain Mortgage Loans identified in the Mortgage Loan Schedule.

Mortgage Insurance Premium:  For any Distribution Date, the aggregate fee payable to the Mortgage Insurer equal to the product of (x) the Mortgage Insurance Premium Rate and (y) the unpaid principal balance of each Covered Loan as of the first day of the related calendar month, computed on the basis of a 360-day year consisting of twelve 30-day months.

Mortgage Insurance Premium Rate:  The rate at which the Mortgage Insurance Premium accrues on each Mortgage Loan, as set forth on the Mortgage Loan Schedule.

Mortgage Insurer:  Radian Guaranty Inc., or any replacement Mortgage Insurer, as applicable.

Mortgage Interest Rate:  For any Loan, the per annum rate at which interest accrues on such Loan pursuant to the terms of the related Mortgage Note without regard to any reduction thereof as a result of the Relief Act.

Mortgage Loan Purchase Agreement:  The Mortgage Loan Purchase Agreement dated as of April 13, 2007, between the Depositor and the Seller, a copy of which is attached hereto as Exhibit J hereto.

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

Mortgage Pool:  All of the Loans.

Mortgaged Property:  With respect to any Loan, the real property, together with improvements thereto, securing the indebtedness of the Mortgagor under the related Loan.

Mortgagor:  The obligor on a Mortgage Note.

National City:  National City Mortgage Co., or any successor thereto.

National City Servicing Agreement:  The Master Seller’s Warranties and Servicing Agreement, dated as of January 1, 2005 between the Seller and National City, as amended by Amendment Number One, dated as of  January 24, 2006 and as modified pursuant to the related Assignment Agreement.

Net Interest Shortfall:  For any Distribution Date and the Certificates, the sum of (i) any Prepayment Interest Shortfall for such Distribution Date with respect to the Certificates and (ii) any Relief Act Interest Shortfall for such Distribution Date with respect to the Certificates.

Net Mortgage Rate:  For each Loan and for any date of determination, a per annum rate equal to the Mortgage Interest Rate for such Loan less the Administration Fee Rate.

Non-Discount Loan:  Any Loan with a Net Mortgage Rate as of the Cut-Off Date greater than or equal to 6.00% per annum.

Nonrecoverable Advance:  With respect to any Loan, any Advance or Servicing Advance which the related Servicer shall have determined to be a Nonrecoverable Advance as defined in and pursuant to the related Servicing Agreement, or which the Master Servicer (including the Trustee as successor Master Servicer) shall have determined to be nonrecoverable pursuant to Section 4.4, respectively, and which was or is proposed to be made by such Servicer or the Master Servicer (including the Trustee as successor Master Servicer) .

Non-U.S. Person:  A Person that is not a U.S. Person.

Notional Amount:  The Class X Notional Amount.

Officer’s Certificate:  With respect to any Person, a certificate signed by the Chairman of the Board, the President or a Vice-President, however denominated, of such Person (or, in the case of a Person which is not a corporation, signed by the person or persons having like responsibilities), and delivered to the Trustee.

One-Month LIBOR:  For the initial Interest Accrual Period, the Securities Administrator will determine One-Month LIBOR for such Interest Accrual Period based on information available on the second LIBOR Business Day preceding the Closing Date with respect to the LIBOR Certificates, and for any Interest Accrual Period thereafter, on the second LIBOR Business Day preceding the related Interest Accrual Period, the one month rate which appears on the Dow Jones Telerate System, page 3750, as of 11:00 a.m., London time on the LIBOR Determination Date. If such rate is not provided, One-Month LIBOR shall mean the rate determined by the Securities Administrator (or a calculation agent on its behalf) in accordance with the following procedure:

(i)

The Securities Administrator on the LIBOR Determination Date will request the principal London offices of each of four major Reference Banks in the London interbank market, as selected by the Securities Administrator, to provide the Securities Administrator with its offered quotation for deposits in United States dollars for the upcoming one-month period, commencing on the second LIBOR Business Day immediately following such LIBOR Determination Date, to prime banks in the London interbank market at approximately 11:00 a.m. London time on such LIBOR Determination Date and in a principal amount that is representative for a single transaction in United States dollars in such market at such time. If at least two such quotations are provided, One-Month LIBOR determined on such LIBOR Determination Date will be the arithmetic mean of such quotations.

(ii)

If fewer than two quotations are provided, One-Month LIBOR determined on such LIBOR Determination Date will be the arithmetic mean of the rates quoted at approximately 11:00 a.m. in New York City on such LIBOR Determination Date by three major banks in New York City selected by the Securities Administrator for one-month United States dollar loans to lending European banks, in a principal amount that is representative for a single transaction in United States dollars in such market at such time; provided, however, that if the banks so selected by the Securities Administrator are not quoting as mentioned in this sentence, One-Month LIBOR determined on such LIBOR Determination Date will continue to be One-Month LIBOR as then currently in effect on such LIBOR Determination Date.

(iii)

The establishment of One-Month LIBOR and each Pass-Through Rate for the LIBOR Certificates by the Securities Administrator shall (in the absence of manifest error) be final, conclusive and binding upon each Holder of an Adjustable Rate Certificate and the Securities Administrator.

Original Capitalized Interest Amount: The amount deposited by the Depositor in the Capitalized Interest Account on the Closing Date, which amount is $475,000.

Original Pre-Funded Amount: The amount deposited by the Depositor in the Pre-Funding Account on the Closing Date, which amount is $88,135,247.

Opinion of Counsel:  A written opinion of counsel, who may, without limitation, be salaried counsel for the Depositor, a Servicer, the Securities Administrator or the Master Servicer acceptable to the Trustee, except that any opinion of counsel relating to (a) the qualification of any REMIC as a REMIC or (b) compliance with the REMIC Provisions must be an opinion of Independent counsel.

Optional Termination Date:  The Distribution Date on which the aggregate Scheduled Principal Balance of the Loans (and REO Properties acquired in respect thereof)  remaining in the Trust Fund as of the last day of the related Due Period is reduced to less than or equal to 10% of the sum of (a) the aggregate Scheduled Principal Balance of the Loans as of the Cut-Off Date and (b) the amount on deposit into the Pre-Funding Account on the Closing Date.

Original Value:  With respect to any Loan other than a Loan originated for the purpose of refinancing an existing mortgage debt, the lesser of (a) the Appraised Value (if any) of the Mortgaged Property at the time the Loan was originated or (b) the purchase price paid for the Mortgaged Property by the Mortgagor. With respect to a Loan originated for the purpose of refinancing existing mortgage debt, the Original Value shall be equal to the lesser of (a) the Appraised Value of the Mortgaged Property at the time the Loan was originated or (b) the appraised value at the time the refinanced mortgage debt was incurred.

OTS:  The Office of Thrift Supervision, or any successor thereto.

Ownership Interest:  With respect to any Residual Certificate, any ownership or security interest in such Residual Certificate, including any interest in a Residual Certificate as the Holder thereof and any other interest therein whether direct or indirect, legal or beneficial, as owner or as pledge.

Pass-Through Entity:  Any regulated investment company, real estate investment trust, common trust fund, partnership, trust or estate, and any organization to which Section 1381 of the Code applies.

Pass-Through Rate:  The Pass-Through Rate with respect to the Class AR Certificates and Subordinate Certificates and any Distribution Date will be 6.000% per annum.

The Pass-Through Rate with respect to the Class A-1 and Class A-2 Certificates and any Distribution Date will be a per annum rate equal to (i) One-Month LIBOR plus (ii) 0.300%, subject to a maximum Pass-Through Rate of 7.000% per annum and a minimum Pass-Through Rate of 0.300% per annum.  

The Pass-Through Rate with respect to the Class AI-1 and Class AI-2 Certificates and any Distribution Date will be a per annum rate equal to (i) 40.200% minus (ii) the product of (a) One-Month LIBOR and (b) 6, subject to a maximum Pass-Through Rate of  40.200% per annum and a minimum Pass-Through Rate of 0.000% per annum.  

The Pass-Through Rate with respect to the Class X Certificates and any Distribution Date will be (A) the product of (i) the aggregate Principal Balance of the Non-Discount Loans as of the last day of the related Due Period, or for the initial Distribution Date, as of the Cut-off Date (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (ii)  the weighted average of the related Stripped Interest Rates for the Non-Discount Loans divided by (B) the aggregate Principal Balance of the Mortgage Loans as of the last day of the related Due Period, or for the initial Distribution Date, as of the Cut-off Date (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period).

The Class P and Class PO Certificates do not have a Pass-Through Rate.

Payoff:  Any voluntary payment of principal on a Loan by a Mortgagor equal to the entire outstanding Principal Balance of such Loan, if received in advance of the last scheduled Due Date for such Loan and is not accompanied by scheduled interest due on any date or dates in any month or months subsequent to the month of such payment-in-full.

PCAOB:  Means the Public Company Accounting Oversight Board.

Percentage Interest:  With respect to any Class of Certificates (other than the Residual Certificates) and any date of determination, the undivided percentage ownership in such Class evidenced by such Certificate, expressed as a percentage, the numerator of which is the initial Certificate Principal Balance represented by such Certificate and the denominator of which is the aggregate initial Certificate Principal Balance of all of the Certificates of such Class. Each Certificate is issuable only in minimum Percentage Interests corresponding to the Authorized Denomination of the related Class of Certificates; provided, however, that a single Certificate of each such Class of Certificates may be issued having a Percentage Interest corresponding to the remainder of the aggregate initial Certificate Principal Balance of such Class or to an otherwise Authorized Denomination for such Class plus such remainder. With respect to any Residual Certificate, the undivided percentage ownership in such Class evidenced by such Certificate, is as set forth on the face of such Certificate. 

Permitted Transferee:  With respect to the holding or ownership of any Residual Certificate, any Person other than (i) the United States, a State or any political subdivision thereof, or any agency or instrumentality of any of the foregoing, (ii) a foreign government or International Organization, or any agency or instrumentality of either of the foregoing, (iii) an organization (except certain farmers’ cooperatives described in Code Section 521) which is exempt from the taxes imposed by Chapter 1 of the Code (unless such organization is subject to the tax imposed by Section 511 of the Code on unrelated business taxable income), (iv) rural electric and telephone cooperatives described in Code Section 1381(a)(2)(C), (v) any electing large partnership under Section 775 of the Code, (vi) any Person from whom the Securities Administrator has not received an affidavit to the effect that it is not a “disqualified organization” within the meaning of Section 860E(e)(5) of the Code, and (vii) any other Person so designated by the Depositor based upon an Opinion of Counsel that the transfer of an Ownership Interest in a Residual Certificate to such Person may cause any REMIC created hereunder to fail to qualify as a REMIC at any time that the Certificates are outstanding. The terms “United States,” “State” and “International Organization” shall have the meanings set forth in Code Section 7701 or successor provisions. A corporation shall not be treated as an instrumentality of the United States or of any State or political subdivision thereof if all of its activities are subject to tax, and, with the exception of Freddie Mac, a majority of its board of directors is not selected by such governmental unit.

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

PHH:  PHH Mortgage Corporation, or any successor thereto.

PHH Servicing Agreement:  Mortgage Loan Flow Purchase, Sale & Servicing Agreement, dated as of December 1, 2005 among PHH, Bishop’s Gate Residential Mortgage Trust and the Seller.

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

Pre-Funding Account: The account established and maintained pursuant to Section 3.26.

Pre-Funding Period: The period from the Closing Date until the earlier of (i) the date on which the amount on deposit in the Pre-Funding Account (exclusive of investment income) is reduced to zero or (ii) May 21, 2007.

Prepaid Monthly Payment:  Any Monthly Payment received prior to its scheduled Due Date, which is intended to be applied to a Loan on its scheduled Due Date and held in the related Protected Account until the related Servicer Remittance Date following its scheduled Due Date.

Prepayment Charge:  With respect to any Principal Prepayment, any prepayment premium, penalty or charge payable by a Mortgagor in connection with any Principal Prepayment on a Loan pursuant to the terms of the related Mortgage Note, as set forth on the Prepayment Charge Schedule.

Prepayment Charge Schedule:  As of any date, the list of Loans providing for a Prepayment Charge included in the Trust Fund on such date, attached hereto as Schedule Two (including the prepayment charge summary attached thereto).  The Depositor shall deliver or cause the delivery of the Prepayment Charge Schedule to the Master Servicer, the Trustee and the Credit Risk Manager on the Closing Date. The Prepayment Charge Schedule shall set forth the following information with respect to each Prepayment Charge:

(i)

the Loan identifying number;

(ii)

a code indicating the type of Prepayment Charge;

(iii)

the date on which the first Monthly Payment was due on the related Mortgaged Loan;

(iv)

the term of the related Prepayment Charge;

(v)

the original Principal Balance of the related Loan; and

(vi)

the Principal Balance of the related Loan as of the Cut-Off Date.

Prepayment Interest Shortfall:  For any Distribution Date and any Loan on which a Payoff was made by a Mortgagor during the related Prepayment Period, an amount equal to one month’s interest at the applicable Net Mortgage Rate on such Loan less the amount of interest actually paid by the Mortgagor with respect to such Payoff.

Prepayment Period:  With respect to each Servicer, as set forth in the related Servicing Agreement.

Principal Balance:  For any Loan and at the time of any determination, the principal balance of such Loan remaining to be paid at the close of business on the Cut-Off Date, after deduction of all principal payments due on or before the Cut-Off Date, whether or not received, reduced by the principal portion of all amounts received with respect to such Loan after the Cut-Off Date, and distributed or to be distributed to Certificateholders through the Distribution Date in the month of such determination. In the case of a Substitute Loan, “Principal Balance” shall mean, at the time of any determination, the principal balance of such Substitute Loan on the related Cut-Off Date, reduced by the principal portion of all amounts received with respect to such Loan after the Cut-Off Date, and distributed or to be distributed to Certificateholders through the Distribution Date in the month of determination.  The Principal Balance of a Liquidated Loan shall be zero. 

Principal Distribution Amount: With respect to any Distribution Date, the sum of:

(1)

scheduled principal payments on the Loans due during the related Due Period;

(2)

the principal portion of repurchase proceeds received with respect to the Loans which were repurchased as permitted or required by this Agreement during the related Prepayment Period; and

(3)

any other unscheduled payments of principal which were received on the Loans during the related Prepayment Period, other than Payoffs, Curtailments or Liquidation Principal.

Principal Prepayment:  Any payment of principal on a Loan which constitutes a Payoff or a Curtailment.

Principal Prepayment Amount:  On any Distribution Date, the sum of (i) Curtailments with respect to Loans received during the related Prepayment Period, (ii) Payoffs with respect to Loans received during the related Prepayment Period and (iii) Liquidation Proceeds, Insurance Proceeds and Subsequent Recoveries with respect to Loans received during the related Prepayment Period and any distributions of amounts remaining in the Pre-Funding Account after expiration of the Pre-Funding. 

Pro Rata Allocation:  On any Distribution Date with respect to (a) the allocation of the principal portion of certain losses relating to a Loan to the related Senior Certificates (other than the Interest Only Certificates and Class PO Certificates) and/or to the Subordinate Certificates, as applicable, pro rata according to their respective aggregate Certificate Principal Balances on such date of allocation (except that if the loss is incurred with respect to a Discount Loan, the related Discount Fraction of such loss will be allocated to the Class PO Certificates, and the remainder of such loss will be allocated as described above in this definition without regard to this parenthetical), and (b) the allocation of interest portion of certain losses relating to a Loan to the related Senior Certificates (other than the Class PO Certificates) and/or to the Subordinate Certificates, as applicable, pro rata, first according to the Interest Distribution Amounts due to such Classes on such date of allocation, in reduction thereof until the amount of interest accrued but unpaid on such Distribution Date has been reduced to zero and then pro rata, according to their outstanding Certificate Principal Balances in reduction thereof until the Certificate Principal Balances thereof have been reduced to zero.

Protected Account:  An account or accounts established and maintained for the benefit of the Certificateholders by each Servicer with respect to the related Loans and with respect to REO Property pursuant to the applicable Servicing Agreement and which are Eligible Accounts.

Purchase Obligation:  An obligation of the Depositor or the Seller to repurchase Loans under the circumstances and in the manner provided in Section 2.3.

Purchase Price:  With respect to any Loan to be purchased pursuant to a Purchase Obligation, any Loan to be purchased pursuant to Section 3.31, or any Loan to be purchased or repurchased relating to an REO Property, and as confirmed by an Officers’ Certificate from the Master Servicer to the Trustee and the Securities Administrator, an amount equal to the sum of (i) 100% of the Principal Balance thereof as of the date of purchase (or in the case of an REO Property being purchased as provided in Section 9.1 or Section 9.2, 100% of the fair market value of such REO Property, such valuation to be conducted by an appraiser mutually agreed upon between the Terminator, as applicable, and the Securities Administrator, in their reasonable discretion), (ii) in the case of (x) a Loan, accrued interest on such Principal Balance at the applicable Net Mortgage Rate from the date interest was last paid by the related Mortgagor or the date an Advance was last made by the applicable Servicer or the Master Servicer, which payment or Advance had as of the date of purchase been distributed pursuant to Section 4.1, through the end of the calendar month in which the purchase is to be effected and (y) an REO Property, the sum of (1) accrued interest on such Principal Balance at the applicable Net Mortgage Rate from the date interest was last paid by the related Mortgagor or the date an Advance was last made by the applicable Servicer or the Master Servicer through the end of the calendar month immediately preceding the calendar month in which such REO Property was acquired, plus (2) REO Imputed Interest for such REO Property for each calendar month commencing with the calendar month in which such REO Property was acquired and ending with the calendar month in which such purchase is to be effected, net of the total of all net rental income, Insurance Proceeds, Liquidation Proceeds and Advances that as of the date of purchase had been distributed as or to cover REO Imputed Interest in accordance with the applicable Servicing Agreement, (iii) any unreimbursed Servicing Advances and Advances (including Nonrecoverable Advances) and any unpaid Servicing Fees or Master Servicing Fees allocable to such Loan or REO Property and any amounts due and owing to the Trustee, the Custodians, the Servicers, the Master Servicer and the Securities Administrator as of the related Optional Termination Date and (iv) in the case of a Loan required to be purchased pursuant to Section 2.3, expenses reasonably incurred or to be incurred by the Master Servicer, the Servicers, the Trustee or the Securities Administrator in respect of the breach or defect giving rise to a Purchase Obligation and any costs and damages incurred by the Trust Fund in connection with any violation by any such Loan of any predatory or abusive lending law.  

Rating Agency:  Initially, each of S&P and Moody’s; thereafter, each nationally recognized statistical rating organization that has rated the Certificates at the request of the Depositor, or their respective successors in interest.

Ratings:  As of any date of determination, the ratings, if any, of the Certificates as assigned by each Rating Agency.

Realized Loss: With respect to any Distribution Date and any Loan which became a Liquidated Loan during the related Prepayment Period, the sum of (i) the Principal Balance of such Loan remaining outstanding (after all recoveries of principal, including net Liquidation Proceeds, have been applied thereto) and the principal portion of Nonrecoverable Advances with respect to such Loan which have been reimbursed from amounts received in respect of the Loans other than the related Loan, and (ii) the accrued interest on such Loan remaining unpaid and the interest portion of Nonrecoverable Advances with respect to such Loan which have been reimbursed from amounts received in respect of the Loans other than the related Loan. The amounts described in clause (i) shall be the principal portion of Realized Losses and the amounts described in clause (ii) shall be the interest portion of Realized Losses. In addition, to the extent a Servicer receives Subsequent Recoveries with respect to any defaulted Loan, the amount of the Realized Loss with respect to that defaulted Loan will be reduced to the extent such recoveries are applied to reduce the Certificate Principal Balance of any Class of Certificates on any Distribution Date.

Record Date:  With respect to the Certificates (other than the Class A-1, Class A-2, Class AI-1 and Class AI-2 Certificates), the last Business Day of the month immediately preceding the month in which the related Distribution Date occurs (or with respect to the first Distribution Date, the Closing Date).  With respect to the Class A-1, Class A-2, Class AI-1 and Class AI-2 Certificates, the Business Day immediately preceding the related Distribution Date (or with respect to the first Distribution Date, the Closing Date).

Reference Banks:  Barclays Bank PLC, The Tokyo Mitsubishi Bank and National Westminster Bank PLC and their successors in interest; provided, however, that if any of the foregoing banks are not suitable to serve as a Reference Bank, then any leading banks selected by the Securities Administrator which are engaged in transactions in Eurodollar deposits in the International Eurocurrency market (i) with an established place of business in London, (ii) not controlling, under the control of or under common control with the Depositor or any Affiliate thereof and (iii) which have been designated as such by the Securities Administrator.

Regular Interest Certificates:  The Certificates (other than the Residual Certificates).

Regulation AB:  Means Subpart 229.1100 - Asset Backed Securities (Regulation AB), 17 C.F.R. §§229.1100-229.1123, as such may be amended from time to time, and subject to such clarification and interpretation as have been provided by the Commission in the adopting release (Asset-Backed Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff of the Commission, or as may be provided by the Commission or its staff from time to time.

Relevant Servicing Criteria:  Means the Servicing Criteria applicable to the various parties, as set forth on Exhibit M attached hereto.  For clarification purposes, multiple parties can have responsibility for the same Relevant Servicing Criteria.  With respect to a Servicing Function Participant engaged by the Master Servicer, the Securities Administrator, the Custodian or the Servicer, the term “Relevant Servicing Criteria” may refer to a portion of the Relevant Servicing Criteria applicable to such parties.

Relief Act:  The Servicemembers Civil Relief Act, or similar state or local laws.

Relief Act Interest Shortfall:  With respect to any Distribution Date and a Loan, the reduction in the amount of interest collectible on such Loan for the most recently ended calendar month immediately preceding such Distribution Date as a result of the application of the Relief Act.

Remaining Pre-Funded Amount: With respect to any Distribution Date, an amount equal to the Original Pre-Funded Amount minus the amount equal to 100% of the aggregate Scheduled Principal Balance (as of the Subsequent Cut-Off Date) of the Subsequent Loans transferred to the Trust Fund during the Pre-Funding Period.

REMIC:  A “real estate mortgage investment conduit” within the meaning of Section 860D of the Code. 

REMIC Provisions:  Provisions of the United States federal income tax law relating to real estate mortgage investment conduits, which appear at Section 860A through 860G of the Code, and related provisions, and proposed, temporary and final regulations and published rulings, notices and announcements promulgated thereunder, as the foregoing may be in effect from time to time.

REMIC Regular Interest:  A REMIC I Regular Interest.

Remittance Report:  With respect to the Certificates, a report by the Securities Administrator pursuant to Section 4.6.

REO Disposition:  The sale or other disposition of an REO Property on behalf of REMIC I.

REO Imputed Interest:  As to any REO Property, for any calendar month during which such REO Property was at any time part of REMIC I, one month’s interest at the applicable Net Mortgage Rate on the Scheduled Principal Balance of such REO Property (or, in the case of the first such calendar month, of the related Loan, if appropriate) as of the close of business on the Distribution Date in such calendar month.

REO Property:  A Mortgaged Property, title to which has been acquired by a Servicer on behalf of the Trust Fund through foreclosure, deed in lieu of foreclosure or otherwise.

Reportable Event:  Has the meaning set forth in Section 3.29(b) of this Agreement.

Residual Certificate:  The Class AR Certificates, each of which is being issued in a single Class. The R-I and R-II interests are hereby each designated the sole Class of “residual interests” in REMIC I and REMIC II, respectively, for purposes of Section 860G(a)(2) of the Code.

Reserve Interest Rate:  The rate per annum that the Securities Administrator determines to be either (i) the arithmetic mean of the one-month U.S. dollar lending rates which New York City banks selected by the Securities Administrator are quoting on the relevant LIBOR Determination Date to the principal London offices of leading banks in the London interbank market or (ii) in the event that the Securities Administrator can determine no such arithmetic mean, the lowest one-month U.S. dollar lending rate which New York City banks selected by the Securities Administrator are quoting on such Interest Determination Date to leading European banks.

Responsible Officer:  When used with respect to the Trustee, any officer in the corporate trust department or similar group of the Trustee with direct responsibility for the administration of this Agreement and also, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his or her knowledge of and familiarity with the particular subject. When used with respect to the Master Servicer or the Securities Administrator, the Chairman or Vice-Chairman of the Board of Directors or Trustees, the Chairman or Vice-Chairman of the Executive or Standing Committee of the Board of Directors or Trustees, the President, the Chairman of the Committee on Trust Matters, any Vice-President, any Assistant Vice-President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, the Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer, the Controller, any Assistant Controller or any other officer 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 this Agreement, and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject.  When used with respect to the Depositor or any other Person, the Chairman or Vice-Chairman of the Board of Directors, the Chairman or Vice-Chairman of any executive committee of the Board of Directors, the President, any Vice-President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, or any other officer of the Depositor customarily performing functions similar to those performed by any of the above-designated officers 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.

S&P:  Standard & Poor’s Ratings Services, a division of The McGraw Hill Companies, Inc. provided, that at any time it is a Rating Agency.

Sarbanes-Oxley Act:  Means the Sarbanes-Oxley Act of 2002 and the rules and regulations of the Commission promulgated thereunder (including any interpretations thereof by the Commission’s staff).

Sarbanes-Oxley Certification:  A written certification signed by an officer of the Master Servicer that complies with (i) the Sarbanes-Oxley Act of 2002, as amended from time to time, and (ii) Exchange Act Rules 13a-14(d) and 15d-14(d), as in effect from time to time; provided that if, after the Closing Date (a) the Sarbanes-Oxley Act of 2002 is amended, (b)  the Rules referred to in clause (ii) are modified or superseded by any subsequent statement, rule or regulation of the Commission or any statement of a division thereof, or (c) any future releases, rules and regulations are published by the Commission from time to time pursuant to the Sarbanes-Oxley Act of 2002, which in any such case affects the form or substance of the required certification and results in the required certification being, in the reasonable judgment of the Master Servicer, materially more onerous than the form of the required certification as of the Closing Date, the Sarbanes-Oxley Certification shall be as agreed to by the Master Servicer, the Depositor and the Seller following a negotiation in good faith to determine how to comply with any such new requirements.

Scheduled Principal Balance:  With respect to any Loan and a Due Date, the unpaid principal balance of such Loan as specified in the amortization schedule (before any adjustment to such schedule by reason of bankruptcy or similar proceeding or any moratorium or similar waiver or grace period) for such Due Date, after giving effect to any previously applied Curtailments, the payment of principal on such Due Date and any reduction of the principal balance of such Loan by a bankruptcy court, irrespective of any delinquency in payment by the related Mortgagor.

Securities Act:  The Securities Act of 1933, as amended, and the rules and regulations thereunder.

Securities Administrator:  As of the Closing Date, Wells Fargo Bank, N.A., and thereafter, its respective successors in interest who meet the qualifications of this Agreement. The Securities Administrator and the Master Servicer shall at all times be the same Person.

Seller:  DB Structured Products, Inc., or its successor in interest, in its capacity as seller under the Mortgage Loan Purchase Agreement and in its capacity as assignor under the Assignment Agreements.

Senior Certificates:  The Class A-1, Class A-2, Class AI-1, Class AI-2, Class X and Class PO Certificates.

Senior Interest Shortfall Amount:  For any Distribution Date and the Senior Certificates (other than the Class PO Certificates) will be equal to that amount by which the Interest Distribution Amount payable to the Senior Certificates (other than the Class PO Certificates) on such Distribution Date exceeds the Available Distribution Amount.

Senior Liquidation Amount:  For any Distribution Date, the aggregate with respect to each related Loan which became a Liquidated Loan during the related Prepayment Period, of the lesser of: (i) the related Senior Percentage of the Principal Balance of such Loan (exclusive of the related Discount Fraction thereof, if such Loan is a Discount Loan), and (ii) the related Senior Prepayment Percentage of the Liquidation Principal with respect to such Loan (exclusive of the Discount Fraction thereof, if such Loan is a Discount Loan).

Senior Percentage:  As of the Closing Date, 91.91%; thereafter, for any Distribution Date, the percentage equivalent of a fraction, the numerator of which is the aggregate Certificate Principal Balance of the Senior Certificates (other than the Interest Only Certificates and Class PO Certificates), immediately preceding such Distribution Date, and the denominator of which is the aggregate Scheduled Principal Balance of the Loans plus any remaining Pre-Funding Amounts, in each case as of the first day of the related Due Period (exclusive of the related Discount Fraction of any Discount Loan).

Senior Prepayment Percentage:  For any Distribution Date, the percentage indicated in the following table:

		
	Distribution Date Occurring In

	Senior Prepayment Percentage

	April 2007 through March 2012

	100%

	April 2012 through March 2013

	Senior Percentage + 70% of the Subordinate Percentage

	April 2013 through March 2014

	Senior Percentage + 60% of the Subordinate Percentage

	April 2014 through March 2015

	Senior Percentage + 40% of the Subordinate Percentage

	April 2015 through March 2016

	Senior Percentage + 20% of the Subordinate Percentage

	April 2016 and thereafter

	Senior Percentage

Notwithstanding the foregoing, the Senior Prepayment Percentage with respect to each Loan, will be equal to 100% on any Distribution Date on which (i) the Senior Percentage for that Distribution Date exceeds the Senior Percentage as of the Closing Date or (ii) the aggregate Scheduled Principal Balance of the Loans (including Loans in bankruptcy, foreclosure and related REO Property) which are 60 or more days delinquent (averaged over the preceding six-month period), as a percentage of the Subordinate Amount, is equal to or greater than 50% as of such Distribution Date, or cumulative Realized Losses on the Loans allocated to the Subordinate Certificates are greater than the following amounts:

		
	Distribution Date Occurring In

	Percentage of the Aggregate Subordinate

Amount as of the Cut-Off Date

	April 2012 through March 2013

	30%

	April 2013 through March 2014

	35%

	April 2014 through March 2015

	40%

	April 2015 through March 2016

	45%

	April 2016 and thereafter

	50%

Notwithstanding the preceding paragraphs, if (x) on or before the Distribution Date in March 2010, the Subordinate Percentage is at least 200% of the Subordinate Percentage as of the Closing Date, the delinquency test set forth above is satisfied and cumulative Realized Losses do not exceed 20% of the original subordinate principal balance, the Senior Prepayment Percentage will equal the Senior Percentage for that Distribution Date plus 50% of the amount equal to 100% minus the Senior Percentage for that Distribution Date and (y) after the Distribution Date in March 2010, the Subordinate Percentage is at least 200% of the Subordinate Percentage as of the Closing Date, the delinquency test set forth above is satisfied and cumulative Realized Losses do not exceed 30% of the original subordinate principal balance, the Senior Prepayment Percentage will equal the Senior Percentage.

If on any Distribution Date the allocation to the Senior Certificates (other than the Interest Only Certificates and Class PO Certificates) of Principal Prepayments in the percentage required would reduce the sum of the aggregate Certificate Principal Balances of the related Senior Certificates (other than the Interest Only Certificates and Class PO Certificates) below zero, the Senior Prepayment Percentage for such Distribution Date shall be limited to the percentage necessary to reduce such sum to zero.

Senior Principal Distribution Amount:  With respect to any Distribution Date, the sum of the following for that Distribution Date:

(1)

the Senior Percentage of the Principal Distribution Amount (exclusive of the portion thereof attributable to the Discount Fractional Principal Amount, as applicable);

(2)

the Senior Prepayment Percentage of the Principal Prepayment Amount (exclusive of the portion thereof attributable to the Discount Fractional Principal Amount, as applicable); and

(3)

the Senior Liquidation Amount.

Servicer:  American Home, Countrywide Servicing, GMACM, GreenPoint, IndyMac, National City, PHH, JPMorgan or Wells Fargo, as applicable, or any successor appointed under the applicable Servicing Agreement.

Servicer Remittance Date:  With respect to each Servicer, as set forth in the related Servicing Agreement.

Servicing Advances:  The customary reasonable and necessary “out-of-pocket” costs and expenses incurred by the applicable Servicer in connection with a default, delinquency or other unanticipated event by the applicable Servicer in the performance of its servicing obligations, including, but not limited to, the cost of (i) the preservation, restoration and protection of a Mortgaged Property, (ii) any enforcement or judicial proceedings, including foreclosures, in respect of a particular Loan and (iii) the management (including reasonable fees in connection therewith) and liquidation of any REO Property. No Servicer shall be required to make any Servicing Advance in respect of a Loan or REO Property that, in the good faith business judgment of such Servicer, would not be ultimately recoverable from related Insurance Proceeds or Liquidation Proceeds on such Loan or REO Property as provided herein.

Servicing Agreement:  The American Home Servicing Agreement, Countrywide Servicing Agreement, GMACM Servicing Agreement, GreenPoint Servicing Agreement, IndyMac Servicing Agreement, National City Servicing Agreement, PHH Servicing Agreement, JPMorgan Servicing Agreement, Wells Fargo Servicing Agreement and Wells Fargo Warranties and Servicing Agreement, as applicable.

Servicing Criteria:  The “servicing criteria” set forth in Item 1122(d) of Regulation AB, as such may be amended from time to time.

Servicing Fee:  With respect to each Loan and for any Distribution Date, an amount equal to one twelfth of the product of the related Servicing Fee Rate multiplied by the Scheduled Principal Balance of such Loan as of the Due Date in the month preceding the month of such Distribution Date. The Servicing Fee is payable solely from collections of interest on the Loans or as otherwise provided in the related Servicing Agreement.

Servicing Fee Rate:  With respect to each Loan, the related per annum rate for such Loan, as set forth on the Loan Schedule.

Servicing Function Participant:  Means any Sub-Servicer, Subcontractor, each Servicer, the Master Servicer, each Custodian, the Securities Administrator and any other Person that is deemed to be ‘participating in the servicing function” within the meaning of Item 1122 of Regulation AB.

Servicing Officer:  Any individual involved in, or responsible for, the administration and servicing of the Loans whose name and specimen signature appear on a list of servicing officers furnished to the Trustee, the Depositor and the Securities Administrator on the Closing Date by each Servicer and the Master Servicer, as such lists may from time to time be amended.

Startup Day:  With respect to each REMIC, the day designated as such pursuant to Section 10.1(b) hereof.

Stripped Interest Rate:  For each Loan, the excess, if any, of the Net Mortgage Rate for that Loan over 6.00%. 

Subcontractor:  Means any vendor, subcontractor or other Person that is not responsible for the overall servicing of Loans but performs one or more discrete functions identified in Item 1122(d) of Regulation AB with respect to Loans under the direction or authority of any Servicer (or a Sub-Servicer of any Servicer), the Master Servicer, the Trustee, the Custodian or the Securities Administrator.

Subordinate Amount:  With respect to any date of determination, an amount equal to the excess of the aggregate Scheduled Principal Balance of the Loans plus any Pre-Funding Amounts (exclusive of the Discount Fraction of the Scheduled Principal Balance of each Discount Loan) over the aggregate Certificate Principal Balance of the Senior Certificates (other than the Interest Only Certificates and Class PO Certificates) then outstanding.

Subordinate Certificates:  The Class B-1, Class B-2, Class B-3, Class B-4, Class B-5, Class B-6, Class B-7, Class B-8, Class B-9, Class B-10, Class B-11 and Class B-12 Certificates. 

Subordinate Liquidation Amount:  For any Distribution Date, the excess, if any, of (i) the aggregate Liquidation Principal for all Loans which became Liquidated Loans during the related Prepayment Period, over (ii) the Senior Liquidation Amount for such Distribution Date and the Discount Fraction of Liquidation Principal with respect to each Discount Loan, received during the related Prepayment Period. 

Subordinate Percentage:  For any Distribution Date, 100% minus the Senior Percentage for such date. As of the Closing Date, the Subordinate Percentage will be 8.09%.

Subordinate Prepayment Percentage:  For any Distribution Date, 100% minus the Senior Prepayment Percentage. As of the Closing Date, the Subordinate Prepayment Percentage will be 0%.

Subordinate Principal Distribution Amount:  With respect to any Distribution Date, an amount equal to the sum of the following for that Distribution Date:

(1)

the Subordinate Percentage of the Principal Distribution Amount (exclusive of the portion thereof attributable to the Discount Fractional Principal Amount, as applicable);

(2)

the Subordinate Principal Prepayment Amount (exclusive of the portion thereof attributable to the Discount Fractional Principal Amount, as applicable); and

(3)

the Subordinate Liquidation Amount.

Subordinate Principal Prepayment Amount:  For any Distribution Date, the Subordinate Prepayment Percentage of the Principal Prepayment Amount for such Distribution Date (exclusive of the portion thereof attributable to the Discount Fractional Principal Amount, as applicable, for that Distribution Date).

Subordination Level:  On any specified date with respect to any Class of Subordinate Certificates, the percentage obtained by dividing: (1) the sum of the aggregate Certificate Principal Balances of all Classes of Subordinate Certificates which are subordinate in right of payment to such Class as of such date, before giving effect to distributions of principal or allocations of related Realized Losses on such date; by (2) the sum of the aggregate Certificate Principal Balances of all Classes of Certificates (other than the Interest Only Certificates) as of such date, before giving effect to distributions of principal or allocations of related Realized Losses on such date.

Subsequent Cut-off Date: With respect to those Subsequent Loans sold to the Trust pursuant to a Subsequent Transfer Instrument and as specified on the Loan Schedule, the later of (i) the first day of the month in which the related Subsequent Transfer Date occurs or (ii) the date of origination of such Loan.

Subsequent Loan: A Loan sold by the Depositor to the Trust Fund during the Pre-Funding Period pursuant to Section 2.06, such Loan being identified on the Loan Schedule attached to a Subsequent Transfer Instrument and assigned to the Trust Fund.

Subsequent Loan Purchase Agreement: The agreement between the Depositor and the Seller, regarding the transfer of the Subsequent Loans by the Seller to the Depositor.

Subsequent Recoveries:  With respect to any Distribution Date, all amounts received during the related Prepayment Period by the related Servicer specifically related to a defaulted Loan or disposition of an REO Property prior to the related Prepayment Period that resulted in a Realized Loss, after the liquidation or disposition of such defaulted Loan.

Subsequent Transfer Date: With respect to each Subsequent Transfer Instrument, the date on which the related Subsequent Loans are transferred to the Trust Fund.

Subsequent Transfer Instrument: Each Subsequent Transfer Instrument, dated as of a Subsequent Transfer Date, executed by the Trustee and the Depositor substantially in the form attached hereto as Exhibit I, by which Subsequent Loans are transferred to the Trust Fund.

Sub-Servicer:  Means any Person that (i) services Mortgage Loans on behalf of any Servicer or any party hereto, and (ii) is responsible for the performance (whether directly or through Sub-Servicers or Subcontractors) of servicing functions required to be performed under this Agreement, any related Servicing Agreement or any sub-servicing agreement that are identified in Item 1122(d) of Regulation AB.

Substitute Loan:  A mortgage loan substituted for a Deleted Loan pursuant to the terms of this Agreement which must, on the date of such substitution, (i) have an outstanding principal balance, after application of all scheduled payments of principal and interest due during or prior to the month of substitution, not in excess of the Scheduled Principal Balance of the Deleted Loan as of the Due Date in the calendar month during which the substitution occurs, (ii) have a Mortgage Interest Rate not less than (and not more than one percentage point in excess of) the Mortgage Interest Rate of the Deleted Loan, (iii) have a remaining term to maturity not greater than (and not more than one year less than) that of the Deleted Loan, (iv) have the same Due Date as the Due Date on the Deleted Loan, (v) have a Loan-to-Value Ratio as of the date of substitution equal to or lower than the Loan-to-Value Ratio of the Deleted Loan as of such date, (vi) have a risk grading at least equal to the risk grading assigned on the Deleted Loan, (vii) is a “qualified mortgage” as defined in the REMIC Provisions and (viii) conform to each representation and warranty set forth in Section 6 of the Mortgage Loan Purchase Agreement applicable to the Deleted Loan.  In the event that one or more mortgage loans are substituted for one or more Deleted Loans, the amounts described in clause (i) hereof shall be determined on the basis of aggregate principal balances, the Mortgage Interest Rates described in clause (ii) hereof shall be determined on the basis of weighted average Mortgage Interest  Rates, the terms described in clause (iii) hereof shall be determined on the basis of weighted average remaining term to maturity, the Loan-to-Value Ratios described in clause (v) hereof shall be satisfied as to each such Substitute Loan, the risk gradings described in clause (vi) hereof shall be satisfied as to each such Substitute Loan and, except to the extent otherwise provided in this sentence, the representations and warranties described in clauses (vii) and (viii) hereof must be satisfied as to each Substitute Loan or in the aggregate, as the case may be.  

Substitution Shortfall Amount:  Has the meaning set forth in Section 2.3(b) of this Agreement.

Tax Matters Person:  The Holders of the Class AR Certificates issued hereunder or any Permitted Transferee of such Class AR Certificateholder shall be the initial “tax matters person” for each REMIC, respectively within the meaning of Section 6231(a)(7) of the Code. For tax years commencing after any transfer of such Residual  Certificate, the holder of the greatest Percentage Interest in the applicable Residual Certificate at year end shall be designated as the Tax Matters Person with respect to that year. If the Tax Matters Person becomes a Disqualified Organization, the last preceding Holder of such Authorized Denomination of the applicable Residual Certificate that is not a Disqualified Organization shall be Tax Matters Person pursuant to Section 5.3(e). If any Person is appointed as tax matters person by the Internal Revenue Service pursuant to the Code, such Person shall be Tax Matters Person.

Termination Price:  As defined in Section 9.1.

Terminator:  As defined in Section 9.1.

Transfer:  Any direct or indirect transfer, sale, pledge or other disposition of, or directly or indirectly transferring, selling or pledging, any Ownership Interest in a Class P Certificate or a Residual Certificate.

Transferee:  Any Person who is acquiring by Transfer any Ownership Interest in a Junior Subordinate Certificate or Residual Certificate.

Trust Fund:  Collectively, all of the assets of each REMIC created hereby, the Pre-Funding Account, the Capitalized Interest Account and any amounts on deposit therein and any proceeds thereof and the Prepayment Charges.  

Trust Prepayment Charge:  Any Prepayment Charge with respect to a Loan listed on the Trust Prepayment Charge Schedule. 

Trust Prepayment Charge Schedule:  As of any date, the list of Loans providing for a Prepayment Charge which are payable to the Trust Fund, as owner of such Prepayment Charge, included in the Trust Fund on such date, attached hereto as Schedule Five. 

Trustee:  HSBC Bank USA, National Association, a national banking association, or its successor in interest, or any successor trustee appointed as herein provided.

Uncollected Interest:  With respect to any Distribution Date, the sum of (i) the aggregate Prepayment Interest Shortfalls with respect to the Loans for such Distribution Date and (ii) the aggregate Curtailment Shortfalls with respect to the Loans for such Distribution Date.

Uncompensated Interest Shortfall:  For any Distribution Date, the excess, if any, of (i) the sum of (a) the related Uncollected Interest for such Distribution Date, and (b) any shortfall in interest collections for the Loans in the calendar month immediately preceding such Distribution Date resulting from a Relief Act Interest Shortfall over (ii) the aggregate Compensating Interest paid by the Servicers and the Master Servicer with respect to the Loans for such Distribution Date, which excess shall be allocated to each Class of Certificates, pro rata, according to the amount of interest accrued thereon in reduction thereof.

Underwriter:  Deutsche Bank Securities Inc.

Underwriters’ Exemption:  Prohibited Transaction Exemption 2007-5, as amended (or any successor thereto), or any substantially similar administrative exemption granted by the U.S. Department of Labor.

Uninsured Cause:  Any cause of damage to a Mortgaged Property such that the complete restoration of such property is not fully reimbursable by the hazard insurance policies required to be maintained pursuant to Section 3.9.

U.S. Person:  A citizen or resident of the United States, a corporation or partnership (including an entity treated as a corporation or partnership for United States federal income tax purposes) created or organized in, or under the laws of, the United States or any state thereof or the District of Columbia (except, in the case of a partnership, to the extent provided in regulations) or an estate whose income is subject to United States federal income tax regardless of its source, or a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more such U.S. Persons have the authority to control all substantial decisions of the trust. To the extent prescribed in regulations by the Secretary of the Treasury, which have not yet been issued, a trust which was in existence on August 20, 1996 (other than a trust treated as owned by the grantor under subpart E of part 1 of subchapter J of chapter 1 of the Code), and which was treated as a U.S. Person on August 20, 1996 may elect to continue to be treated as a U.S. Person notwithstanding the previous sentence.

Verification Agent:  As defined in Section 3.28.

Verification Report:  As defined in Section 3.28.

Voting Rights:  The portion of the voting rights of all of the Certificates which is allocated to any such Certificate.  With respect to any date of determination, 98% of all Voting Rights will be allocated among the Holders of the Senior Certificates (other than the Class AR Certificates) and the Subordinate Certificates in proportion to the then outstanding Certificate Principal Balances of their respective Certificates, 1% of all Voting Rights will be allocated among the Holders of the Class P Certificates and 1% of all Voting Rights will be allocated among the Holders of the Class AR Certificates. The Voting Rights allocated to each Class of Certificates shall be allocated among Holders of each such Class in accordance with their respective Percentage Interests as of the most recent Record Date.

Wells Fargo:  Wells Fargo Bank, N.A., or any successor thereto.

Wells Fargo Custodial Agreement:  The Custodial Agreement, dated as of April 1, 2007, among Wells Fargo as custodian and as servicer, GMACM, GreenPoint, IndyMac, National City, PHH and JPMorgan.

Wells Fargo Servicing Agreement:  The Servicing Agreement, dated as of December 1, 2005, between the Seller and Wells Fargo.

Wells Fargo Warranties and Servicing Agreement:  The Seller’s Warranties and Servicing Agreement, dated as of January 1, 2006, between the Seller and Wells Fargo.

Section 1.2

Allocation of Certain Interest Shortfalls.  

(a)

On each Distribution Date, the amount referred to in clause (i) of the definition of Interest Distribution Amount for each Class of Certificates (other than the Class PO Certificates) shall be reduced by the related Class’s pro rata share of Net Interest Shortfalls with respect to the Loans, based on such Class’s Interest Distribution Amount for such Distribution Date without taking into account such Net Interest Shortfalls.  

ARTICLE II

CONVEYANCE OF TRUST FUND;

ORIGINAL ISSUANCE OF CERTIFICATES

Section 2.1

Conveyance of Trust Fund.  

The Depositor, concurrently with the execution and delivery hereof, does hereby transfer, assign, set over and otherwise convey to the Trustee, on behalf of the Trust, without recourse, for the benefit of the Certificateholders, all the right, title and interest of the Depositor, including any security interest therein for the benefit of the Depositor, in and to the Loans identified on the Loan Schedule, the rights of the Depositor under the Mortgage Loan Purchase Agreement, the Servicing Agreements, the Assignment Agreements, the Subsequent Mortgage Loan Purchase Agreement and such assets as shall from time to time be credited or required by the terms of this Agreement to be credited to the Pre-Funding Account, the Capitalized Interest Account (including, without limitation the right to enforce the obligations of the other parties thereto thereunder), and all other assets included or to be included in the Trust Fund.  Such assignment includes all interest and principal received by the Depositor or the applicable Servicer on or with respect to the Loans (other than payments of principal and interest due on such Loans on or before the Cut-Off Date). The Depositor herewith delivers to the Trustee executed copies of the Mortgage Loan Purchase Agreement and the Assignment Agreements (with copies of the related Servicing Agreements attached thereto).

In connection with such transfer and assignment, the Depositor does hereby deliver to, and deposit with the applicable Custodian pursuant to the related Custodial Agreement the documents with respect to each Loan as described under Section 2 of the related Custodial Agreement (the “Loan Documents”). In connection with such delivery and as further described in the related Custodial Agreement, the applicable Custodian will be required to review such Loan Documents and deliver to the Trustee, the Depositor, the Master Servicer and the Seller certifications (in the forms attached to the related Custodial Agreement) with respect to such review with exceptions noted thereon.  In addition, the Depositor under the Custodial Agreements will have to cure certain defects with respect to the Loan Documents for the related Loans after the delivery thereof by the Depositor to the Custodians as more particularly set forth therein.

Notwithstanding anything to the contrary contained herein, the parties hereto acknowledge that the functions of the Trustee with respect to the custody, acceptance, inspection and release of the Mortgage Files, including, but not limited to certain insurance policies and documents contemplated by Section 3.12, and preparation and delivery of the certifications shall be performed by the related Custodian pursuant to the terms and conditions of the related Custodial Agreement.

The Depositor shall deliver or cause the related originator to deliver to the related Servicer copies of all trailing documents required to be included in the related Mortgage File at the same time the originals or certified copies thereof are delivered to the Trustee or related Custodian, such documents including the mortgagee policy of title insurance and any Loan Documents upon return from the recording office. The Servicers shall not be responsible for any custodian fees or other costs incurred in obtaining such documents and the Depositor shall cause the Servicers to be reimbursed for any such costs the Servicers may incur in connection with performing its obligations under this Agreement.

The Loans permitted by the terms of this Agreement to be included in the Trust are limited to (i) Loans (which the Depositor acquired pursuant to the Mortgage Loan Purchase Agreement, which contains, among other representations and warranties, a representation and warranty of the Seller that no Loan sold by the Seller to the Depositor is a “High-Cost Home Loan” as defined in the New Jersey Home Ownership Act effective November 27, 2003, as defined in the New Mexico Home Loan Protection Act effective March 1, 2004, as defined in the Massachusetts Predatory Home Loan Practices Act, effective November 7, 2004 (Mass. Ann. Laws Ch. 183C) or as defined in the Indiana Home Loan Practices Act, effective March 1, 2005 (Ind. Code Ann. Sections 24-9-1 through 24-9-9)) and (ii) Substitute Loans (which, by definition as set forth herein and referred to in the Mortgage Loan Purchase Agreement, are required to conform to, among other representations and warranties, the representation and warranty of the Seller that no Substitute Loan sold by the Seller to the Depositor is a “High-Cost Home Loan” as defined in the New Jersey Home Ownership Act effective November 27, 2003, as defined in the New Mexico Home Loan Protection Act effective March 1, 2004, as defined in the Massachusetts Predatory Home Loan Practices Act, effective November 7, 2004 (Mass. Ann. Laws Ch. 183C) or as defined in the Indiana Home Loan Practices Act, effective March 1, 2005 (Ind. Code Ann. Sections 24-9-1 through 24-9-9)). The Depositor and the Trustee on behalf of the Trust agree and understand that it is not intended that any Loan be included in the Trust Fund that is (i) a “High Cost Home Loan” as defined in the New Jersey Home Ownership Act effective November 27, 2003, (ii) a “High Cost Home Loan” as defined in the New Mexico Home Loan Protection Act effective January 1, 2004, (iii) a “High Cost Home Mortgage Loan” as defined in the Massachusetts Predatory Home Loan Practices Act effective November 7, 2004, (iv) a “high risk home loan” under the Illinois High Risk Home Loan Act, effective as of January 1, 2004, or (v) a “high cost home loan” under the Indiana High Cost Home Loan Law, effective January 1, 2005.  The Trustee shall be entitled to indemnification from the Depositor and the Trust Fund for any loss, liability or expense arising out of, or in connection with, the provisions of the preceding sentence, including, without limitation, all costs, liabilities and expenses (including reasonable legal fees and expenses) of investigating and defending itself against any claim, action or proceeding, pending or threatened, relating to such provisions.

Section 2.2

Acceptance by Trustee.

The Trustee acknowledges receipt, subject to the provisions of Section 2.1 hereof and Section 2 of the Custodial Agreements, of the Loan Documents and all other assets included in the definition of “Trust Fund” and declares that it holds (or the applicable Custodian on its behalf holds) and will hold such documents and the other documents delivered to it constituting a Loan Document, and that it holds (or the applicable Custodian on its behalf holds) or will hold all such assets and such other assets included in the definition of  “Trust Fund” in trust for the exclusive use and benefit of all present and future Certificateholders.

Section 2.3

Repurchase or Substitution of Loans.  

(a)

Upon discovery or receipt of notice of any materially defective document in, or that a document is missing from, a Mortgage File or of a breach by the Seller of any representation, warranty or covenant under the Mortgage Loan Purchase Agreement in respect of any Loan that materially and adversely affects the value of such Loan or the interest therein of the Certificateholders, the Trustee shall promptly notify the Seller of such defect, missing document or breach and request that the Seller deliver such missing document, cure such defect or breach within 60 days from the date the Seller was notified of such missing document, defect or breach, and if the Seller does not deliver such missing document or cure such defect or breach in all material respects during such period, the Trustee shall enforce the obligations of the Seller under the Mortgage Loan Purchase Agreement to repurchase such Loan from the Trust Fund at the Purchase Price within 90 days after the date on which the Seller was notified of such missing document, defect or breach, if and to the extent that the Seller is obligated to do so under the Mortgage Loan Purchase Agreement. The Purchase Price for the repurchased Loan shall be deposited in the Distribution Account and the Trustee, upon receipt of written certification from the Securities Administrator of such deposit and receipt by the Custodian of a properly completed request for release for such Loan in the form of Exhibit 3 to the related Custodial Agreement, shall release or cause the applicable Custodian to release to the Seller the related Mortgage File and the Trustee shall execute and deliver such instruments of transfer or assignment, in each case without recourse, representation or warranty, as the Seller shall furnish to it and as shall be necessary to vest in the Seller any Loan released pursuant hereto, and the Trustee shall not have any further responsibility with regard to such Mortgage File. In lieu of repurchasing any such Loan as provided above, if so provided in the Mortgage Loan Purchase Agreement, the Seller may cause such Loan to be removed from the Trust Fund (in which case it shall become a Deleted Loan) and substitute one or more Substitute Loans in the manner and subject to the limitations set forth in Section 2.3(b). It is understood and agreed that the obligation of the Seller to cure or to repurchase (or to substitute for) any Loan as to which a document is missing, a material defect in a constituent document exists or as to which such a breach has occurred and is continuing shall constitute the sole remedy respecting such omission, defect or breach available to the Trustee and the Certificateholders.  Notwithstanding the foregoing, if the representation made by the Seller in Section 6(xxiv) of the Mortgage Loan Purchase Agreement is breached, the Trustee shall enforce the obligation of the Seller to repurchase such Loan at the Purchase Price, or to provide a Substitute Loan (plus any costs and damages incurred by the Trust Fund in connection with any violation by any such Loan of any predatory or abusive lending law) within 90 days after the date on which the Seller was notified of such breach.

In addition, should the Master Servicer become aware of  or in the event of its receipt of notice by a Responsible Officer of the Master Servicer of the breach of the representation or covenant of the Seller set forth in Section 5(x) of the Mortgage Loan Purchase Agreement which materially and adversely affects the interests of the Holders of the Class P Certificates in any Prepayment Charge, the Master Servicer shall promptly notify the Seller and the Trustee of such breach. The Trustee shall enforce the obligations of the Seller under the Mortgage Loan Purchase Agreement to remedy such breach to the extent and in the manner set forth in the Mortgage Loan Purchase Agreement.

(b)

Any substitution of Substitute Loans for Deleted Loans made pursuant to Section 2.3(a) must be effected prior to the date which is two years after the Startup Day for any REMIC created hereby.

As to any Deleted Loan for which the Seller substitutes a Substitute Loan or Loans, such substitution shall be effected by the Seller delivering to the Trustee or the applicable Custodian on behalf of the Trustee, for such Substitute Loan or Loans, the Mortgage Note, the Mortgage, the Assignment to the Trustee, and such other documents and agreements, with all necessary endorsements thereon, as are required by Section 2 of the Custodial Agreements, as applicable, together with an Officers’ Certificate providing that each such Substitute Loan satisfies the definition thereof and specifying the Substitution Shortfall Amount (as described below), if any, in connection with such substitution. The applicable Custodian on behalf of the Trustee shall acknowledge receipt of such Substitute Loan or Loans and, within ten Business Days thereafter, review such documents and deliver to the Depositor, the Trustee and the Master Servicer, with respect to such Substitute Loan or Loans, an initial certification pursuant to the related Custodial Agreement, with any applicable exceptions noted thereon. Within one year of the date of substitution, the Custodian on behalf of the Trustee shall deliver to the Depositor, the Trustee and the Master Servicer a final certification pursuant to the Custodial Agreement with respect to such Substitute Loan or Loans, with any applicable exceptions noted thereon. Monthly Payments due with respect to Substitute Loans in the month of substitution are not part of any REMIC and shall be retained by the Seller.  For the month of substitution, distributions to Certificateholders shall reflect the Monthly Payment due on such Deleted Loan on or before the Due Date in the month of substitution, and the Seller shall thereafter be entitled to retain all amounts subsequently received in respect of such Deleted Loan. The Depositor shall give or cause to be given written notice to the Certificateholders that such substitution has taken place, shall amend the Loan Schedule to reflect the removal of such Deleted Loan from the terms of this Agreement and the substitution of the Substitute Loan or Loans and shall deliver a copy of such amended Loan Schedule to the Trustee and the Master Servicer. Upon such substitution, such Substitute Loan or Loans shall constitute part of the Trust Fund and shall be subject in all respects to the terms of this Agreement and the Mortgage Loan Purchase Agreement including all applicable representations and warranties thereof included herein or in the Mortgage Loan Purchase Agreement.

For any month in which the Seller substitutes one or more Substitute Loans for one or more Deleted Loans, the Master Servicer shall determine the amount (the “Substitution Shortfall Amount”), if any, by which the aggregate Purchase Price of all such Deleted Loans exceeds the aggregate of, as to each such Substitute Loan, the Scheduled Principal Balance thereof as of the Due Date in the month of substitution, together with one month’s interest on such Scheduled Principal Balance at the applicable Net Mortgage Rate, plus all outstanding Advances and Servicing Advances (including Nonrecoverable Advances) related thereto. On the date of such substitution, the Seller shall deliver or cause to be delivered to the Securities Administrator for deposit in the Distribution Account an amount equal to the Substitution Shortfall Amount, if any, and the Trustee or the applicable Custodian on behalf of the Trustee, upon receipt of the related Substitute Loan or Loans and certification by the Securities Administrator of such deposit and receipt by the applicable Custodian of a properly completed request for release for such Loan in the form of Exhibit 3 to the related Custodial Agreement, shall release to the Seller the related Mortgage File or Files and the Trustee shall execute and deliver such instruments of transfer or assignment, in each case without recourse, representation or warranty, as the Seller shall deliver to it and as shall be necessary to vest therein any Deleted Loan released pursuant hereto.

In addition, the Seller shall obtain at its own expense and deliver to the Trustee an Opinion of Counsel to the effect that such substitution will not cause (a) any federal tax to be imposed on any REMIC, including without limitation, any federal tax imposed on “prohibited transactions” under Section 860F(a)(1) of the Code or on “contributions after the startup date” under Section 860G(d)(1) of the Code, or (b) any REMIC to fail to qualify as a REMIC at any time that any Certificate is outstanding.

(c)

Upon discovery by the Depositor, the Seller, the Master Servicer or the Trustee that any Loan does not constitute a “qualified mortgage” within the meaning of Section 860G(a)(3) of the Code, the party discovering such fact shall within two Business Days give written notice thereof to the other parties. In connection therewith, the Seller shall repurchase or substitute one or more Substitute Loans for the affected Loan within 90 days of the earlier of discovery or receipt of such notice with respect to such affected Loan. Such repurchase or substitution shall be made by (i) the Seller, if the affected Loan’s status as a non-qualified mortgage is or results from a breach of any representation, warranty or covenant made by the Seller under the Mortgage Loan Purchase Agreement or (ii) the Depositor, if the affected Loan’s status as a non-qualified mortgage does not result from a breach of representation or warranty. Any such repurchase or substitution shall be made in the same manner as set forth in Section 2.3(a). The Trustee shall reconvey to the Seller or the Depositor the Loan to be released pursuant hereto in the same manner, and on the same terms and conditions, as it would a Loan repurchased for breach of a representation or warranty.

(d)

Within 90 days of the earlier of discovery by the Master Servicer or receipt of notice by the Master Servicer of the breach of any representation, warranty or covenant of the Master Servicer set forth in Section 2.5 which materially and adversely affects the interests of the Certificateholders in any Loan or Prepayment Charge, the Master Servicer shall cure such breach in all material respects.

Section 2.4

Authentication and Delivery of Certificates; Designation of Certificates as REMIC Regular and Residual Interests.  

(a)

The Trustee acknowledges the transfer to the extent provided herein and assignment to it of the Trust Fund and, concurrently with such transfer and assignment, has caused the Securities Administrator to execute and authenticate and has delivered to or upon the order of the Depositor, in exchange for the Trust Fund, Certificates evidencing the entire ownership of the Trust Fund.

(b)

This Agreement shall be construed so as to carry out the intention of the parties that each REMIC created hereby be treated as a REMIC at all times prior to the date on which the Trust Fund is terminated.

Section 2.5

Representations and Warranties of the Master Servicer.  

The Master Servicer hereby represents, warrants and covenants to the Trustee, for the benefit of each of the Trustee, the Certificateholders and the Depositor that as of the Closing Date or as of such date specifically provided herein:

(i)

The Master Servicer is a national banking association duly formed, validly existing and in good standing under the laws of the United States of America and is duly authorized and qualified to transact any and all business contemplated by this Agreement to be conducted by the Master Servicer;

(ii)

The Master Servicer has the full power and authority to conduct its business as presently conducted by it and to execute, deliver and perform, and to enter into and consummate, all transactions contemplated by this Agreement. The Master Servicer has duly authorized the execution, delivery and performance of this Agreement, has duly executed and delivered this Agreement, and this Agreement, assuming due authorization, execution and delivery by the Depositor and the Trustee, constitutes a legal, valid and binding obligation of the Master Servicer, enforceable against it in accordance with its terms except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity;

(iii)

The execution and delivery of this Agreement by the Master Servicer, the consummation by the Master Servicer of any other of the transactions herein contemplated, and the fulfillment of or compliance with the terms hereof are in the ordinary course of business of the Master Servicer and will not (A) result in a breach of any term or provision of charter and by-laws of the Master Servicer or (B) conflict with, result in a breach, violation or acceleration of, or result in a default under, the terms of any other material agreement or instrument to which the Master Servicer is a party or by which it may be bound, or any statute, order or regulation applicable to the Master Servicer of any court, regulatory body, administrative agency or governmental body having jurisdiction over the Master Servicer; and the Master Servicer is not a party to, bound by, or in breach or violation of any indenture or other agreement or instrument, or subject to or in violation of any statute, order or regulation of any court, regulatory body, administrative agency or governmental body having jurisdiction over it, which materially and adversely affects or, to the Master Servicer’s knowledge, would in the future materially and adversely affect, (x) the ability of the Master Servicer to perform its obligations under this Agreement or (y) the business, operations, financial condition, properties or assets of the Master Servicer taken as a whole;

(iv)

The Master Servicer does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant made by it and contained in this Agreement;

(v)

No litigation is pending against the Master Servicer that would materially and adversely affect the execution, delivery or enforceability of this Agreement or the ability of the Master Servicer to perform any of its other obligations hereunder in accordance with the terms hereof,

(vi)

There are no actions or proceedings against, or investigations known to it of, the Master Servicer before any court, administrative or other tribunal (A) that might prohibit its entering into this Agreement, (B) seeking to prevent the consummation of the transactions contemplated by this Agreement or (C) that might prohibit or materially and adversely affect the performance by the Master Servicer of its obligations under, or validity or enforceability of, this Agreement; and

(vii)

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 by it of the transactions contemplated by this Agreement, except for such consents, approvals, authorizations or orders, if any, that have been obtained prior to the Closing Date.

It is understood and agreed that the representations, warranties and covenants set forth in this Section 2.5 shall inure to the benefit of the Trustee, the Depositor and the Certificateholders.

Section 2.6

Conveyance of Subsequent Loans.

(a)

Subject to the conditions set forth in paragraph (b) below, in consideration of the Securities Administrator’s delivery, on behalf of the Trustee, on the Subsequent Transfer Dates to or upon the order of the Depositor of all or a portion of the balance of funds in the Pre-Funding Account, the Depositor shall on any Subsequent Transfer Date sell, transfer, assign, set over and convey without recourse to the Trust Fund but subject to the other terms and provisions of this Agreement all of the right, title and interest of the Depositor in and to (i) the Subsequent Loans identified on the Loan Schedule attached to the related Subsequent Transfer Instrument delivered by the Depositor on such Subsequent Transfer Date, (ii) all interest accruing thereon on and after the Subsequent Cut-Off Date and all collections in respect of interest and principal due after the Subsequent Cut-Off Date and (iii) all items with respect to such Subsequent Loans to be delivered pursuant to Section 2.01 and the other items in the related Mortgage Files; provided, however, that the Depositor reserves and retains all right, title and interest in and to principal received and interest accruing on the Subsequent Loans prior to the related Subsequent Cut-Off Date. The transfer to the Trustee for deposit in the Trust Fund by the Depositor of the Subsequent Loans identified on the Loan Schedule shall be absolute and is intended by the Depositor, the Trustee and the Certificateholders to constitute and to be treated as a sale of the Subsequent Loans by the Depositor to the Trust Fund. The related Mortgage File for each Subsequent Loan shall be delivered to the Trustee (or the applicable Custodian on its behalf) at least three (3) Business Days prior to the related Subsequent Transfer Date.

The purchase price paid by the Trustee on behalf of the Trust Fund from amounts released from the Pre-Funding Account shall be one-hundred percent (100%) of the aggregate Scheduled Principal Balance of the related Subsequent Loans so transferred (as identified on the Loan Schedule provided by the Depositor). This Agreement shall constitute a fixed-price purchase contract in accordance with Section 860G(a)(3)(A)(ii) of the Code.

(b)

The Depositor shall transfer to the Trustee for deposit in the Trust Fund the Subsequent Loans and the other property and rights related thereto as described in paragraph (a) above, and the Securities Administrator shall release funds from the Pre-Funding Account only upon the satisfaction of each of the following conditions on or prior to the related Subsequent Transfer Date:

(i)

the Depositor shall have provided the Trustee, the Securities Administrator and the Rating Agencies with a timely addition notice substantially in the form set forth on Exhibit H hereto (an “Addition Notice”) and shall have provided any information reasonably requested by the Trustee with respect to the Subsequent Loans;

(ii)

the Depositor shall have delivered to the Trustee and the Securities Administrator a duly executed Subsequent Transfer Instrument, substantially in the form of Exhibit I, which shall include a Loan Schedule listing the Subsequent Loans, and the Seller shall have delivered a computer file acceptable to the Trustee and the Securities Administrator containing such Loan Schedule to the Trustee and the Securities Administrator at least three (3) Business Days prior to the related Subsequent Transfer Date;

(iii)

as of each Subsequent Transfer Date, as evidenced by delivery of the Subsequent Transfer Instrument, the Depositor shall not be insolvent nor shall it have been rendered insolvent by such transfer nor shall it be aware of any pending insolvency;

(iv)

such sale and transfer shall not result in a material adverse tax consequence to the Trust Fund or the Certificateholders;

(v)

the Pre-Funding Period shall not have terminated;

(vi)

the Depositor shall not have selected the Subsequent Loans in a manner that it believed to be adverse to the interests of the Certificateholders;

(vii)

the Depositor shall have delivered to the Trustee (with a copy to the Securities Administrator) a Subsequent Transfer Instrument confirming the satisfaction of the conditions precedent specified in this Section 2.6 and, pursuant to the Subsequent Transfer Instrument, assigned to the Trustee without recourse for the benefit of the Certificateholders all the right, title and interest of the Depositor in, to and under the Subsequent Mortgage Loan Purchase Agreement, to the extent of the Subsequent Loans;

(viii)

the Depositor shall have delivered to the Trustee an Opinion of Counsel addressed to the Trustee and the Rating Agencies with respect to the transfer of the Subsequent Loans substantially in the form of the Opinion of Counsel delivered to the Trustee  on the Closing Date regarding the true sale of the Subsequent Loans; and

(ix)

Countrywide or Wells Fargo, or a successor to Countrywide or Wells Fargo, appointed in accordance with the terms of this Agreement, is the servicer of the Subsequent Loans.

(c)

Each Subsequent Loan that has been identified and is expected to be sold to the trust on the related Subsequent Transfer Date will have the characteristics set forth below as of the Cut-Off Date. In addition, the obligation of the Trust Fund to purchase any Subsequent Loan that has not been identified on the Cut-Off Date, but is sold to the Trust during the Pre-Funding Period, is subject to the satisfaction of the conditions set forth in the immediately preceding paragraph and the accuracy of the following representations and warranties with respect to each such Subsequent Loan determined as of the applicable Subsequent Transfer Date:  (i) such Subsequent Loan may not be thirty (30) or more days delinquent as of the last day of the month preceding the Subsequent Cut-Off Date; (ii) the servicer of each Subsequent Loan will be GMACM (or a successor); (iii) such Subsequent Loan will be secured by a first lien; (iv) the original term to stated maturity of such Subsequent Loan will be no less than 180 months; (v) the latest maturity date of any Subsequent Loan will be no later than March 1, 2037; (vi) no Subsequent Loan will have a first payment date occurring after April 1, 2007; (vii) such Subsequent Loan will have a credit score of not less than 602; and (viii) such Subsequent Loan will not have a loan-to-value ratio greater than 100%.

(d)

As of each Subsequent Cut-Off Date, the aggregate of the Initial Loans and the Subsequent Loans identified and expected to be sold to the trust on the related Subsequent Transfer Date, including any Subsequent Loans that have not been identified on the Cut-Off Date and are sold to the trust during the Pre-Funding Period, will satisfy the following criteria:  (i) have a weighted average credit score greater than approximately 679; (ii) have no less than approximately 78% of the Mortgaged Properties be owner occupied; (iii) have no less than approximately 78% of the Mortgaged Properties be single family detached or planned unit developments; (iv) have no more than approximately 35% of the Subsequent Loan be cash out refinance; (v) have a weighted average remaining term to stated maturity of less than approximately 352 months; (vi) have a weighted average loan-to-value ratio of not more than approximately 77%; (vii) no more than approximately 21% of the Subsequent Loans by aggregate Principal Balance will be concentrated in one state; and (viii) be acceptable to the Rating Agencies.

(e)

Notwithstanding the foregoing, any Subsequent Loan may be rejected by any Rating Agency if the inclusion of any such Subsequent Loan would adversely affect the ratings of any Class of Certificates (without regard to the Policy). At least one (1) Business Day prior to the Subsequent Transfer Date, each Rating Agency shall notify Seller (and the Seller shall notify the Trustee and the Securities Administrator as to which Subsequent Loans, if any, shall not be included in the transfer on the Subsequent Transfer Date; provided, however, that the Seller shall have delivered to each Rating Agency at least three (3) Business Days prior to such Subsequent Transfer Date a computer file acceptable to each Rating Agency describing the characteristics specified in paragraphs (c) and (d) above.

Section 2.7

Establishment of the Trust.  

The Depositor does hereby establish, pursuant to the further provisions of this Agreement and the laws of the State of New York, an express trust to be known, for convenience, as “Deutsche Alt-B Securities Mortgage Loan Trust, Series 2007-AB1” and does hereby appoint HSBC Bank USA, National Association as Trustee in accordance with the provisions of this Agreement.

Section 2.8

Purpose and Powers of the Trust.

(a)

The purpose of the common law trust, as created hereunder, is to engage in the following activities:

(b)

acquire and hold the Loans and the other assets of the Trust Fund and the proceeds therefrom;

(c)

to issue the Certificates sold to the Depositor in exchange for the Loans;

(d)

to make payments on the Certificates;

(e)

to engage in those activities that are necessary, suitable or convenient to accomplish the foregoing or are incidental thereto or connected therewith; and

(f)

subject to compliance with this Agreement, to engage in such other activities as may be required in connection with conservation of the Trust Fund and the making of distributions to the Certificateholders.

The trust is hereby authorized to engage in the foregoing activities.  The Trustee shall not cause the trust to engage in any activity other than in connection with the foregoing or other than as required or authorized by the terms of this Agreement while any Certificate is outstanding, and this Section 2.8 may not be amended without the consent of the Certificateholders evidencing 51% or more of the aggregate Voting Rights of the Certificates. 

ARTICLE III

ADMINISTRATION AND SERVICING OF THE LOANS; ACCOUNTS

Section 3.1

Master Servicer.

The Master Servicer shall supervise, monitor and oversee the obligation of the Servicers to service and administer their respective Loans in accordance with the terms of the applicable Servicing Agreement and shall have full power and authority to do any and all things which it may deem necessary or desirable in connection with such master servicing and administration. In performing its obligations hereunder, the Master Servicer shall act in a manner consistent with Accepted Master Servicing Practices. Furthermore, the Master Servicer shall oversee and consult with each Servicer as necessary from time-to-time to carry out the Master Servicer’s obligations hereunder, shall receive, review and evaluate all reports, information and other data provided to the Master Servicer by each Servicer and shall cause each Servicer to perform and observe the covenants, obligations and conditions to be performed or observed by such Servicer under the applicable Servicing Agreement. The Master Servicer shall independently and separately monitor each Servicer’s servicing activities with respect to each related Loan, reconcile the results of such monitoring with such information provided in the previous sentence on a monthly basis and coordinate corrective adjustments to the Servicers’ and Master Servicer’s records, and based on such reconciled and corrected information, prepare the statements specified in Section 4.3 and any other information and statements required to be provided by the Master Servicer hereunder. The Master Servicer shall reconcile the results of its Loan monitoring with the actual remittances of the Servicers to the Distribution Account pursuant to the applicable Servicing Agreements.

Notwithstanding anything in this Agreement or any Servicing Agreement to the contrary, the Master Servicer shall not have any duty or obligation to enforce any Credit Risk Management Agreement that a Servicer is a party to (a “Servicer Credit Risk Management Agreement”) or to supervise, monitor or oversee the activities of the Credit Risk Manager under any such Servicer Credit Risk Management Agreement with respect to any action taken or not taken by the applicable Servicer pursuant to a recommendation of the Credit Risk Manager.

The Trustee shall furnish the Servicers and the Master Servicer with any limited powers of attorney and other documents in form reasonably acceptable to it necessary or appropriate to enable the Servicers and the Master Servicer to service or master service and administer the related Loans and REO Property. The Trustee shall have no responsibility for any action of the Master Servicer or any Servicer pursuant to any such limited power of attorney and shall be indemnified by the Master Servicer or such Servicer for any cost, liability or expense arising from the misuse thereof by the Master Servicer or such Servicer.

The Trustee, the Custodians and the Securities Administrator shall provide access to the records and documentation in possession of the Trustee, the Custodians or the Securities Administrator regarding the related Loans and REO Property and the servicing thereof to the Certificateholders, the FDIC, and the supervisory agents and examiners of the FDIC, such access being afforded only upon reasonable prior written request and during normal business hours at the office of the Trustee, the Custodians or the Securities Administrator; provided, however, that, unless otherwise required by law, none of the Trustee, the Custodians or the Securities Administrator shall be required to provide access to such records and documentation if the provision thereof would violate the legal right to privacy of any Mortgagor. The Trustee, the Custodians and the Securities Administrator shall allow representatives of the above entities to photocopy any of the records and documentation and shall provide equipment for that purpose at a charge that covers the Trustee’s, a Custodian’s or the Securities Administrator’s actual costs.

The Trustee shall execute and deliver to the related Servicer or the Master Servicer upon request any court pleadings, requests for trustee’s sale or other documents necessary or desirable and, in each case, provided to the Trustee by such Servicer or Master Servicer to (i) the foreclosure or trustee’s sale with respect to a Mortgaged Property; (ii) any legal action brought to obtain judgment against any Mortgagor on the Mortgage Note or any other Loan Document; (iii) obtain a deficiency judgment against the Mortgagor; or (iv) enforce any other rights or remedies provided by the Mortgage Note or any other Loan Document or otherwise available at law or equity. The Trustee shall have no responsibility for the willful malfeasance or any wrongful or negligent actions taken by the Master Servicer or any Servicer in respect of any document delivered by the Trustee under this paragraph, and the Trustee shall be indemnified by the Master Servicer or such Servicer, as applicable, for any cost, liability or expense arising from the misuse thereof by the Master Servicer or such Servicer.

Section 3.2

REMIC-Related Covenants.

For as long as each REMIC shall exist, the Trustee and the Securities Administrator shall treat such REMIC as a REMIC, and the Trustee and the Securities Administrator shall comply with any directions of the Seller, the related Servicer or the Master Servicer to assure such continuing treatment. In particular, the Trustee shall not (a) sell or permit the sale of all or any portion of the Loans or of any investment of deposits in an Account unless such sale is as a result of a repurchase of the Loans pursuant to this Agreement or the Trustee has received an Opinion of Counsel stating that such sale will not result in an Adverse REMIC Event as defined in Section 10.1(f) hereof prepared at the expense of the Trust Fund, and (b) other than with respect to a substitution pursuant to the Mortgage Loan Purchase Agreement, the Assignment Agreements or Section 2.3 of this Agreement, as applicable, accept any contribution to any REMIC after the Startup Day without receipt of an Opinion of Counsel stating that such contribution will not result in an Adverse REMIC Event as defined in Section 10.1(f) hereof.

Section 3.3

Monitoring of Servicers.  

(a)

The Master Servicer shall be responsible for monitoring the compliance by each Servicer with its duties under the related Servicing Agreement.  In the review of each Servicer’s activities, the Master Servicer may rely upon an officer’s certificate of any Servicer with regard to such Servicer’s compliance with the terms of its Servicing Agreement.  In the event that the Master Servicer, in its judgment, determines that a Servicer should be terminated in accordance with its Servicing Agreement, or that a notice should be sent pursuant to such Servicing Agreement with respect to the occurrence of an event that, unless cured, would constitute grounds for such termination, the Master Servicer shall notify the Seller and the Trustee thereof and the Master Servicer shall issue such notice or take such other action as it deems appropriate; provided, however that if the defaulting Servicer is Wells Fargo, the Trustee shall issue such notice or take such other action as it deems appropriate.

(b)

The Master Servicer, for the benefit of the Trustee and the Certificateholders, shall enforce the obligations of each Servicer under the related Servicing Agreement, and shall, in the event that a Servicer (other than Wells Fargo) fails to perform its obligations in accordance with the related Servicing Agreement, subject to the preceding paragraph, terminate the rights and obligations of such Servicer thereunder and act as servicer of the related Loans or to cause the Trustee to enter in to a new Servicing Agreement with a successor servicer selected by the Master Servicer; provided however that if the defaulting servicer is Wells Fargo, the Trustee shall terminate the rights and obligations of such Servicer and enter into a new Servicing Agreement with a successor servicer selected by it provided, further that, it is understood and acknowledged by the parties hereto that there will be a period of transition (not to exceed ninety (90) days) before the actual servicing functions can be fully transferred to such successor servicer. Such enforcement, including, without limitation, the legal prosecution of claims, termination of Servicing Agreements and the pursuit of other appropriate remedies, shall be in such form and carried out to such an extent and at such time as the Master Servicer or the Trustee, as applicable, in its good faith business judgment, would require were it the owner of the related Loans.  The Master Servicer or the Trustee, as applicable shall pay the costs of such enforcement at its own expense, provided that the Master Servicer or the Trustee, as applicable shall not be required to prosecute or defend any legal action except to the extent that the Master Servicer or Trustee, as applicable, shall have received indemnity reasonably acceptable to it for its costs and expenses in pursuing such action.

(c)

To the extent that the costs and expenses of the Master Servicer or the Trustee, if applicable, related to any termination of a Servicer, enforcement of a servicer’s obligations, appointment of a successor servicer or the transfer and assumption of servicing by the Master Servicer or the Trustee, if applicable with respect to any Servicing Agreement (including, without limitation, (i) all legal costs and expenses and all due diligence costs and expenses associated with an evaluation of the potential termination of the related Servicer as a result of an event of default by such Servicer and (ii) all costs and expenses associated with the complete transfer of servicing, including all servicing files and all servicing data and the completion, correction or manipulation of such servicing data as may be required by the successor servicer to correct any errors or insufficiencies in the servicing data or otherwise to enable the successor servicer to service the Loans in accordance with the related Servicing Agreement) are not fully and timely reimbursed by the terminated Servicer, the Master Servicer or the Trustee, if applicable, shall be entitled to reimbursement of such costs and expenses from the Distribution Account.

(d)

The Master Servicer shall require each Servicer to comply with the remittance requirements and other obligations set forth in the related Servicing Agreement.

(e)

If the Master Servicer or the Trustee, as applicable, acts as successor Servicer, it shall not assume liability for the representations and warranties of the Servicer, if any, that it replaces.

Section 3.4

Fidelity Bond.

The Master Servicer, at its expense, shall maintain in effect a blanket fidelity bond and an errors and omissions insurance policy that would meet the requirements of Fannie Mae or Freddie Mac, 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 errors and omissions insurance policy and the fidelity bond shall be in such form and amount generally acceptable for entities serving as master servicers or trustees.  Any such errors and omissions policy and fidelity bond may not be cancelable without thirty (30) days’ prior written notice to the Trustee.

Section 3.5

Power to Act; Procedures.

The Master Servicer shall master service the Loans and shall have full power and authority, subject to the REMIC Provisions and the provisions of Article X hereof, to do any and all things that it may deem necessary or desirable in connection with the master servicing and administration of the Loans, including but not limited to the power and authority (i) to execute and deliver, on behalf of the Certificateholders and the Trustee, customary consents or waivers and other instruments and documents, (ii) to consent to transfers of any Mortgaged Property and assumptions of the Mortgage Notes and related Mortgages, (iii) to collect any Insurance Proceeds and Liquidation Proceeds, and (iv) to effectuate foreclosure or other conversion of the ownership of the Mortgaged Property securing any Loan, in each case, in accordance with the provisions of this Agreement and the related Servicing Agreement, as applicable; provided, however, that the Master Servicer shall not (and, consistent with its responsibilities under Section 3.3, shall not permit any Servicer to) knowingly or intentionally take any action, or fail to take (or fail to cause to be taken) any action reasonably within its control and the scope of duties more specifically set forth herein, that, under the REMIC Provisions, if taken or not taken, as the case may be, would cause any REMIC to fail to qualify as a REMIC or result in the imposition of a tax upon the Trust Fund (including but not limited to the tax on prohibited transactions as defined in Section 860F(a)(2) of the Code and the tax on contributions to a REMIC set forth in Section 860G(d) of the Code) unless the Master Servicer has received an Opinion of Counsel (but not at the expense of the Master Servicer) to the effect that the contemplated action will not cause any REMIC to fail to qualify as a REMIC or result in the imposition of a tax upon any REMIC.  The Trustee shall furnish the Master Servicer, upon written request from a Servicing Officer, with any powers of attorney, in form acceptable to the Trustee, empowering the Master Servicer or the related 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 Loans or the Mortgaged Property, in accordance with the applicable Servicing Agreement and this Agreement, and the Trustee shall execute and deliver such other documents, as the Master Servicer or the related Servicer may request, to enable the Master Servicer to master service and administer the Loans and carry out its duties hereunder, in each case in accordance with Accepted Master Servicing Practices (and the Trustee shall have no liability for the misuse of any such powers of attorney or any other executed documents delivered by the Trustee pursuant to this paragraph by the Master Servicer or any Servicer and shall be indemnified by the Master Servicer or such Servicer for any costs, liabilities or expenses incurred by the Trustee in connection with such misuse).  If the Master Servicer or the 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 Trustee or that the Trustee would be adversely affected under the “doing business” or tax laws of such state if such action is taken in its name, the Master Servicer shall join with the Trustee in the appointment of a co-trustee pursuant to Section 8.10 hereof.  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 authorized pursuant to this Agreement to be taken by it in the name of the Trustee, be deemed to be the agent of the Trustee.

Section 3.6

Due-on-Sale Clauses; Assumption Agreements.

To the extent provided in the applicable Servicing Agreement and to the extent Loans contain enforceable due-on-sale clauses, the Master Servicer shall cause the Servicers to enforce such clauses in accordance with the applicable Servicing Agreement. If applicable law prohibits the enforcement of a due-on-sale clause or such clause is otherwise not enforced in accordance with the applicable Servicing Agreement, and, as a consequence, a Loan is assumed, the original Mortgagor may be released from liability in accordance with the applicable Servicing Agreement.

Section 3.7

Release of Mortgage Files.  

(a)

Upon becoming aware of  a Payoff with respect to any Loan, or the receipt by any Servicer of a notification that a Payoff has been escrowed in a manner customary for such purposes for payment to Certificateholders on the next Distribution Date, the applicable Servicer will (or if the applicable Servicer does not, the Master Servicer may), if required under the applicable Servicing Agreement, promptly furnish to the applicable Custodian, on behalf of the Trustee, two copies of a request for release substantially in the form attached to the related Custodial Agreement, and signed by a Servicing Officer or in a mutually agreeable electronic format which will, in lieu of a signature on its face, originate from a Servicing Officer (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 Protected Account maintained by the applicable Servicer pursuant to its Servicing Agreement have been or will be so deposited) and shall request that the applicable Custodian, on behalf of the Trustee, deliver to the applicable Servicer the related Mortgage File.  Upon receipt of such certification and request, the applicable Custodian, on behalf of the Trustee, shall promptly release the related Mortgage File to the applicable Servicer and the Trustee and applicable Custodian shall have no further responsibility with regard to such Mortgage File.  Upon any such Payoff, each Servicer is authorized to give, as agent for the Trustee, as the mortgagee under the Mortgage that secured the 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 Distribution Account.

(b)

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

Section 3.8

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

(a)

The Master Servicer and each Servicer (to the extent required by the related Servicing Agreement) shall transmit to the Trustee or the applicable Custodian such documents and instruments coming into the possession of the Master Servicer or such Servicer from time to time as are required by the terms hereof, or in the case of the Servicers, the applicable Servicing Agreement, to be delivered to the Trustee or the applicable Custodian.  Any funds received by the Master Servicer or a Servicer in respect of any Loan or which otherwise are collected by the Master Servicer or a Servicer as Liquidation Proceeds, Insurance Proceeds or Subsequent Recoveries in respect of any Loan shall be held for the benefit of the Trustee and the Certificateholders subject to the Master Servicer’s right to retain or withdraw from the Distribution Account the Master Servicing Compensation and other amounts provided in this Agreement, and to the right of each Servicer to retain its Servicing Fee and other amounts as provided in the applicable Servicing Agreement.  The Master Servicer shall, and (to the extent provided in the applicable Servicing Agreement) shall cause each Servicer to, provide access to information and documentation regarding the Loans to the Trustee, its agents and accountants at any time upon reasonable request and during normal business hours, and to Certificateholders that are savings and loan associations, banks or insurance companies, the OTS, 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 OTS 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 any Servicer, in respect of any Loans, whether from the collection of principal and interest payments or from Liquidation Proceeds, Insurance Proceeds or Subsequent Recoveries shall be held by the Master Servicer or such Servicer, as applicable, for and on behalf of the Trustee and the Certificateholders and shall be and remain the sole and exclusive property of the Trustee; provided, however, that the Master Servicer and each 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 such Servicer under this Agreement or the applicable Servicing Agreement.

Section 3.9

Standard Hazard Insurance and Flood Insurance Policies.  

(a)

For each Loan, the Master Servicer shall enforce any obligation of the Servicers under the related Servicing Agreements to maintain or cause to be maintained standard fire and casualty insurance and, where applicable, flood insurance, all in accordance with the provisions of the related Servicing Agreements. It is understood and agreed that such insurance shall be with insurers meeting the eligibility requirements set forth in the applicable Servicing Agreement and that no earthquake or other additional insurance is to be required of any Mortgagor or to be maintained on property acquired in respect of a defaulted loan, other than pursuant to such applicable laws and regulations as shall at any time be in force and as shall require such additional insurance.

(b)

Pursuant to Section 3.23, any amounts collected by the Master Servicer, or by any Servicer, under any insurance policies (other than amounts to be applied to the restoration or repair of the property subject to the related Mortgage or released to the Mortgagor in accordance with the applicable Servicing Agreement) shall be deposited into the Distribution Account, subject to withdrawal pursuant to Section 3.24. Any cost incurred by the Master Servicer or any Servicer in maintaining any such insurance if the Mortgagor defaults in its obligation to do so shall be added to the amount owing under the Loan where the terms of the Loan so permit; provided, however, that the addition of any such cost shall not be taken into account for purposes of calculating the distributions to be made to Certificateholders and shall be recoverable by the Master Servicer or such Servicer pursuant to Section 3.24.

Section 3.10

Presentment of Claims and Collection of Proceeds.

The Master Servicer shall (to the extent provided in the applicable Servicing Agreement) cause the related Servicer to, prepare and present on behalf of the Trustee and the Certificateholders all claims under any insurance policies 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 Master Servicer (or disbursed to a Servicer and remitted to the Master Servicer) in respect of such policies, bonds or contracts shall be promptly deposited in the Distribution 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 precedent to the presentation of claims on the related Loan to the insurer under any applicable insurance policy need not be so deposited (or remitted).

Section 3.11

Maintenance of the Primary Mortgage Insurance Policies.  

(a)

The Master Servicer shall not take, or permit any Servicer (to the extent such action is prohibited under the applicable Servicing Agreement) to take, any action that would result in noncoverage under any primary mortgage insurance policy or any loss which, but for the actions of such Master Servicer or Servicer, would have been covered thereunder. The Master Servicer shall use its best reasonable efforts to cause each Servicer (to the extent required under the related Servicing Agreement) to keep in force and effect (to the extent that the Loan requires the Mortgagor to maintain such insurance) primary mortgage insurance applicable to each Loan in accordance with the provisions of this Agreement and the related Servicing Agreement, as applicable. The Master Servicer shall not, and shall not permit any Servicer (to the extent required under the related Servicing Agreement) to, cancel or refuse to renew any primary mortgage insurance policy that is in effect at the date of the initial issuance of the Mortgage Note and is required to be kept in force hereunder except in accordance with the provisions of this Agreement and the related Servicing Agreement, as applicable.

(b)

The Master Servicer agrees to cause each Servicer (to the extent required under the related Servicing Agreement) to present, on behalf of the Trustee and the Certificateholders, claims to the insurer under any primary mortgage insurance policies and, in this regard, to take such reasonable action as shall be necessary to permit recovery under any primary mortgage insurance policies respecting defaulted Loans. Pursuant to Section 3.22 and 3.23, any amounts collected by the Master Servicer or any Servicer under any primary mortgage insurance policies shall be deposited by the related Servicer in its Protected Account or by the Master Servicer in the Distribution Account, subject to withdrawal pursuant to Sections 3.22 or 3.24, as applicable.

Section 3.12

Trustee to Retain Possession of Certain Insurance Policies and Documents.  

The Trustee or the applicable Custodian, shall retain possession and custody of the originals (to the extent available) of any 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 distributable in respect of the Certificates have been distributed in full and the Master Servicer otherwise has fulfilled its obligations under this Agreement, the Trustee or the applicable Custodian shall also retain possession and custody of each Mortgage File in accordance with and subject to the terms and conditions of this Agreement and the applicable Custodial Agreement. The Master Servicer shall promptly deliver or cause to be delivered to the Trustee or the applicable Custodian, upon the execution or receipt thereof the originals of any primary mortgage insurance policies, any certificates of renewal, and such other documents or instruments that constitute Loan Documents that come into the possession of the Master Servicer from time to time.

Section 3.13

Realization Upon Defaulted Loans.

The Master Servicer shall cause each Servicer (to the extent required under the related Servicing Agreement) to foreclose upon, repossess or otherwise comparably convert the ownership of Mortgaged Properties securing such of the Loans as come into and continue in default and as to which no satisfactory arrangements can be made for collection of delinquent payments, all in accordance with the applicable Servicing Agreement.

Section 3.14

Compensation for the Master Servicer.  

(a)

The Master Servicer shall have the right to receive all income and gain realized from any investment of funds in the Distribution Account as well as the Master Servicing Fee as compensation (collectively, the “Master Servicing Compensation”).  Servicing compensation in the form of assumption fees, if any, late payment charges, as collected, if any, or otherwise (but not including any Prepayment Charges) shall be retained by the applicable Servicer and shall not be deposited in the related Protected Account.  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.

(b)

The amount of the Master Servicing Compensation payable to the Master Servicer in respect of any Distribution Date shall be reduced in accordance with Section 3.22.

Section 3.15

REO Property.  

(a)

In the event the Trust Fund acquires ownership of any REO Property in respect of any related Loan, the deed or certificate of sale shall be issued to the Trustee, or to its nominee, on behalf of the Certificateholders. The Master Servicer shall, to the extent provided in the applicable Servicing Agreement, cause the applicable Servicer to sell any REO Property as expeditiously as possible and in accordance with the provisions of this Agreement and the related Servicing Agreement, as applicable. Further, the Master Servicer shall, to the extent provided in the related Servicing Agreement, cause the applicable Servicer to sell any REO Property prior to three years after the end of the calendar year of its acquisition by the Trust Fund unless (i) the Trustee and the Securities Administrator shall have been supplied with an Opinion of Counsel to the effect that the holding by the Trust Fund of such REO Property subsequent to such three-year period will not result in the imposition of taxes on “prohibited transactions” of any REMIC hereunder as defined in Section 860F of the Code or cause any REMIC hereunder to fail to qualify as a REMIC at any time that any Certificates are outstanding, in which case the Trust Fund may continue to hold such Mortgaged Property (subject to any conditions contained in such Opinion of Counsel) or (ii) the applicable Servicer shall have applied for, prior to the expiration of such three-year period, an extension of such three-year period in the manner contemplated by Section 856(e)(3) of the Code, in which case the three-year period shall be extended by the applicable extension period. The Master Servicer shall cause the applicable Servicer (to the extent provided in the related Servicing Agreement) to protect and conserve, such REO Property in the manner and to the extent required by the applicable Servicing Agreement, in accordance with the REMIC Provisions and in a manner that does not result in a tax on “net income from foreclosure property” or cause such REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code.

(b)

The Master Servicer shall, to the extent required by the related Servicing Agreement, cause the applicable Servicer to deposit all funds collected and received in connection with the operation of any REO Property in the Protected Account.

(c)

The Master Servicer and the related Servicer, as applicable, upon the final disposition of any REO Property, shall be entitled to reimbursement for any related unreimbursed Advances and other unreimbursed advances as well as any unpaid Servicing Fees from Liquidation Proceeds received in connection with the final disposition of such REO Property; provided, that any such unreimbursed Advances as well as any unpaid Servicing Fees may be reimbursed or paid, as the case may be, prior to final disposition, out of any net rental income or other net amounts derived from such REO Property.

(d)

To the extent provided in the related Servicing Agreement, the Liquidation Proceeds from the final disposition of the REO Property, net of any payment to the Master Servicer and the applicable Servicer as provided above shall be deposited in the Protected Account on or prior to the Determination Date in the month following receipt thereof and be remitted by wire transfer in immediately available funds to the Master Servicer for deposit into the Distribution Account on the next succeeding Remittance Date.

Section 3.16

Annual Statement as to Compliance.

(a)

The Master Servicer and the Securities Administrator shall deliver (and the Master Servicer and Securities Administrator shall cause any Servicing Function Participant engaged by it to deliver) to the Depositor and the Securities Administrator on or before March 15 of each year, commencing in March 2008, an Officer’s Certificate stating, as to the signer thereof, that (A) a review of such party’s activities during the preceding calendar year or portion thereof and of such party’s performance under this Agreement, or such other applicable agreement in the case of a Servicing Function Participant, has been made under such officer’s supervision and (B) to the best of such officer’s knowledge, based on such review, such party has fulfilled all its obligations under this Agreement, or such other applicable agreement in the case of any such Servicing Function Participant, in all material respects throughout such year or portion thereof, or, if there has been a failure to fulfill any such obligation in any material respect, specifying each such failure known to such officer and the nature and status thereof.  Promptly after receipt of each such Officer’s Certificate, the Depositor shall review such Officer’s Certificate and, if applicable, consult with each such party, as applicable, as to the nature of any failures by such party, in the fulfillment of any of such party’s obligations hereunder.

(b)

The Master Servicer shall enforce the obligation of each Servicer as set forth in the related Servicing Agreement to deliver to the Master Servicer an annual statement of compliance within the time frame set forth in, and in such form and substance as may be required pursuant to, the related Servicing Agreement  The Master Servicer shall include such annual statements of compliance with its own annual statement of compliance to be submitted to the Securities Administrator pursuant to this Section.

(c)

Failure of the Master Servicer to comply timely with this Section 3.16 shall be deemed a Master Servicer Event of Default, automatically, without notice and without any cure period, and the Trustee may, in addition to whatever rights the Trustee may have under this Agreement and at law or in equity or to damages, including injunctive relief and specific performance, terminate all the rights and obligations of the Master Servicer under this Agreement and in and to the Loans and the proceeds thereof without compensating the Master Servicer for the same.  This paragraph shall supersede any other provision in this Agreement or any other agreement to the contrary.

(d)

Unless available on the Securities Administrator’s website, copies of such Master Servicer annual statements of compliance shall be provided to any Certificateholder upon request, by the Master Servicer or by the 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 Trustee with such statement or (ii) the Trustee shall be unaware of the Master Servicer’s failure to provide such statement).

Section 3.17

Assessments of Compliance.  

(a)

By March 15 of each year, commencing in March 2008, the Master Servicer and the Securities Administrator, each at its own expense, shall furnish, and each such party shall cause any Servicing Function Participant engaged by it to furnish, each at its own expense, to the Securities Administrator and the Depositor, a report on an assessment of compliance with the Relevant Servicing Criteria that contains (A) a statement by such party of its responsibility for assessing compliance with the Relevant Servicing Criteria, (B) a statement that such party used the Relevant Servicing Criteria to assess compliance with the Relevant Servicing Criteria, (C) such party’s assessment of compliance with the Relevant Servicing Criteria as of and for the fiscal year covered by the Form 10-K required to be filed pursuant to Section 3.29(d), including, if there has been any material instance of noncompliance with the Relevant Servicing Criteria, a discussion of each such failure and the nature and status thereof, and (D) a statement that a registered public accounting firm has issued an attestation report on such party’s assessment of compliance with the Relevant Servicing Criteria as of and for such period.  

(b)

No later than the end of each fiscal year for the Trust for which a Form 10-K is required to be filed, the Master Servicer shall forward to the Securities Administrator the name of each Servicing Function Participant engaged by it and what Relevant Servicing Criteria will be addressed in the report on assessment of compliance prepared by such Servicing Function Participant.  When the Master Servicer and the Securities Administrator (or any Servicing Function Participant engaged by them) submit their assessments to the Securities Administrator, such parties will also at such time include the assessment (and attestation pursuant to Section 3.18) of each Servicing Function Participant engaged by it.

(c)

Promptly after receipt of each such report on assessment of compliance, (i) the Depositor shall review each such report and, if applicable, consult with the Master Servicer, the Securities Administrator and any Servicing Function Participant engaged by such parties as to the nature of any material instance of noncompliance with the Relevant Servicing Criteria by each such party, and (ii) the Securities Administrator shall confirm that the assessments, taken as a whole, address all of the Servicing Criteria and taken individually address the Relevant Servicing Criteria for each party as set forth on Exhibit M and notify the Depositor of any exceptions.

(d)

The Master Servicer shall enforce the obligation of each Servicer as set forth in the related Servicing Agreement to deliver to the Master Servicer an annual report on assessment of compliance within the time frame set forth in, and in such form and substance as may be required pursuant to, the related Servicing Agreement.  The Master Servicer shall include such annual reports on assessment of compliance with its own assessment of compliance to be submitted to the Securities Administrator pursuant to this Section.

(e)

Failure of the Master Servicer to comply timely with this Section 3.17(a) shall be deemed a Master Servicer Event of Default, automatically, without notice and without any cure period, and the Trustee may, in addition to whatever rights the Trustee may have under this Agreement and at law or in equity or to damages, including injunctive relief and specific performance, terminate all the rights and obligations of the Master Servicer under this Agreement and in and to the Loans and the proceeds thereof without compensating the Master Servicer for the same. This paragraph shall supersede any other provision in this Agreement or any other agreement to the contrary.

Section 3.18

Master Servicer and Securities Administrator Attestation Reports.

(a)

By March 15 of each year, commencing in March 2008, the Master Servicer and the Securities Administrator, each at its own expense, shall cause, and each such party shall cause any Servicing Function Participant engaged by it to cause, each at its own expense, a registered public accounting firm (which may also render other services to the Master Servicer, the Securities Administrator, or such other Servicing Function Participants, as the case may be) and that is a member of the American Institute of Certified Public Accountants to furnish a report to the Securities Administrator and the Depositor, to the effect that (i) it has obtained a representation regarding certain matters from the management of such party, which includes an assertion that such party has complied with the Relevant Servicing Criteria, and (ii) on the basis of an examination conducted by such firm in accordance with standards for attestation engagements issued or adopted by the PCAOB, it is expressing an opinion as to whether such party’s compliance with the Relevant Servicing Criteria was fairly stated in all material respects, or it cannot express an overall opinion regarding such party’s assessment of compliance with the Relevant Servicing Criteria.  In the event that an overall opinion cannot be expressed, such registered public accounting firm shall state in such report why it was unable to express such an opinion.  Such report must be available for general use and not contain restricted use language.  

(b)

Promptly after receipt of such report from the Master Servicer, the Securities Administrator or any Servicing Function Participant engaged by such parties, (i) the Depositor shall review the report and, if applicable, consult with such parties as to the nature of any defaults by such parties, in the fulfillment of any of each such party’s obligations hereunder or under any other applicable agreement, and (ii) the Securities Administrator shall confirm that each assessment submitted pursuant to Section 3.17 is coupled with an attestation meeting the requirements of this Section and notify the Depositor of any exceptions.

(c)

The Master Servicer shall enforce the obligation of each Servicer as set forth in the related Servicing Agreement to deliver to the Master Servicer an attestation within the time frame set forth in, and in such form and substance as may be required pursuant to, the related Servicing Agreement.  The Master Servicer shall include each such attestation with its own attestation to be submitted to the Securities Administrator pursuant to this Section.

(d)

Failure of the Master Servicer to comply timely with this Section 3.18(a) shall be deemed a Master Servicer Event of Default, automatically, without notice and without any cure period, and the Trustee may, in addition to whatever rights the Trustee may have under this Agreement and at law or in equity or to damages, including injunctive relief and specific performance, terminate all the rights and obligations of the Master Servicer under this Agreement and in and to the Loans and the proceeds thereof without compensating the Master Servicer for the same.  This paragraph shall supersede any other provision in this Agreement or any other agreement to the contrary.

Section 3.19

Annual Certification.

(a)

Each Form 10-K required to be filed for the Trust pursuant to Section 3.29 shall include a certification (the “Sarbanes-Oxley Certification”) required to be included therewith pursuant to the Sarbanes-Oxley Act.  Each of the Master Servicer and the Securities Administrator shall, and shall cause any Servicing Function Participant engaged by it to provide, to the Person who signs the Sarbanes-Oxley Certification (the “Certifying Person”), by March 15 of each year in which the Trust is subject to the reporting requirements of the Exchange Act and otherwise within a reasonable period of time upon request, a certification (each, a “Back-Up Certification”), in the form attached hereto as Exhibit L, upon which the Certifying Person, the entity for which the Certifying Person acts as an officer, and such entity’s officers, directors and Affiliates (collectively with the Certifying Person, “Certification Parties”) can reasonably rely.  The senior officer of the Master Servicer in charge of the master servicing function shall serve as the Certifying Person on behalf of the Trust.  Such officer of the Certifying Person can be contacted by e-mail at www.cts.sec.notifications@wellsfargo.com or by facsimile at 410-715-2380.  In the event the Master Servicer, the Securities Administrator or any Servicing Function Participant engaged by parties is terminated or resigns pursuant to the terms of this Agreement, or any applicable subservicing agreement, as the case may be, such party shall provide a Back-Up Certification to the Certifying Person pursuant to this Section 3.19 with respect to the period of time it was subject to this Agreement or any applicable subservicing agreement, as the case may be, and a compliance statement, an assessment of compliance and attestation pursuant to Sections 3.16, 3.17 and 3.18, notwithstanding such termination or resignation.  Notwithstanding the foregoing, (i) the Master Servicer and the Securities Administrator shall not be required to deliver a Back-Up Certification to each other if both are the same Person and the Master Servicer is the Certifying Person and (ii) the Master Servicer shall not be obligated to sign the Sarbanes-Oxley Certification in the event that it does not receive any Back-Up Certification required to be furnished pursuant to this Section or any Servicing Agreement or  Custodial Agreement.

(b)

The Master Servicer shall enforce the obligation of each Servicer as set forth in the related Servicing Agreement to deliver to the Master Servicer a certification similar to the Back-Up Certification within the time frame set forth in, and in such form and substance as may be required pursuant to, the related Servicing Agreement.

Section 3.20

Intention of the Parties and Interpretation and Additional Information;  Notice.  

Each of the parties acknowledges and agrees that the purpose of Sections 3.16, 3.17, and 3.18 of this Agreement is to facilitate compliance by the Master Servicer and the Securities Administrator with the provisions of Regulation AB promulgated by the SEC under the Exchange Act (17 C.F.R. §§ 2210.1100 - 2210.1123), as such may be amended from time to time and subject to clarification and interpretive advice as may be issued by the staff of the SEC from time to time.  Therefore, each of the parties agrees that (a) the obligations of the parties hereunder shall be interpreted in such a manner as to accomplish that purpose, (b) the parties’ obligations hereunder will be supplemented and modified as necessary to be consistent with any such amendments, interpretive advice or guidance, convention or consensus among active participants in the asset-backed securities markets, advice of counsel, or otherwise in respect of the requirements of Regulation AB, (c) the parties shall comply with requests made by the Seller or the Depositor for delivery of additional or different information as the Seller or the Depositor may determine in good faith is necessary to comply with the provisions of Regulation AB, and (d) no amendment of this Agreement shall be required to effect any such changes in the parties’ obligations as are necessary to accommodate evolving interpretations of the provisions of Regulation AB.

Each of the parties agrees to provide to the Securities Administrator such additional information related to such party as the Securities Administrator may reasonably request, with respect to evidence of the authorization of the person signing any certificate or statement, financial information and reports, and such other information related to such party or its performance hereunder.

Any notice or notification required to be delivered by the Securities Administrator to the Depositor pursuant to this Article III may be delivered via facsimile to (212) 797-5152, via email to susan.valenti@db.com or telephonically by calling Susan Valenti at (212) 250-3456.

Section 3.21

Obligation of the Master Servicer in Respect of Compensating Interest.  

The Master Servicer shall deposit in the Distribution Account not later than each Distribution Account Deposit Date an amount equal to the lesser of (i) the aggregate amounts required to be paid by the Servicers under the Servicing Agreements with respect to Compensating Interest on the related Loans for the related Distribution Date, and not so paid by the related Servicers and (ii) the Master Servicing Compensation for such Distribution Date without reimbursement therefor.

Section 3.22

Protected Accounts.  

(a)

The Master Servicer shall enforce the obligation of each Servicer to establish and maintain a Protected Account in accordance with the applicable Servicing Agreement, with records to be kept with respect thereto on a Loan by Loan basis, into which accounts shall be deposited within 48 hours (or as of such other time specified in the related Servicing Agreement) of receipt all collections of principal and interest on any Loan and with respect to any REO Property received by a Servicer, including Principal Prepayments, Insurance Proceeds, Liquidation Proceeds, Subsequent Recoveries and advances made from the Servicer’s own funds (less servicing compensation as permitted by the applicable Servicing Agreement in the case of any Servicer) and all other amounts to be deposited in the Protected Account. Each Servicer is hereby authorized to make withdrawals from and deposits to the related Protected Account for purposes required or permitted by the related Servicing Agreement. To the extent provided in the related Servicing Agreement, the Protected Account shall be held in a depository institution and segregated on the books of such institution in the name of the Trustee for the benefit of Certificateholders.

(b)

To the extent provided in the related Servicing Agreement, amounts on deposit in a Protected Account may be invested in Eligible Investments in the name of the Trustee for the benefit of Certificateholders and, except as provided in the preceding paragraph, not commingled with any other funds, such Eligible Investments to mature, or to be subject to redemption or withdrawal, no later than the date on which such funds are required to be withdrawn for deposit in the Distribution Account, and shall be held until required for such deposit. The income earned from Eligible Investments made pursuant to this Section 3.22 shall be paid to the related Servicer under the applicable Servicing Agreement, and the amounts required to be distributed to the Certificateholders resulting from the loss of monies on such investments shall be borne by and be the risk of the related Servicer. The related Servicer (to the extent provided in the Servicing Agreement) shall deposit the amount of any such loss in the Protected Account within two Business Days of receipt of notification of such loss but not later than the second Business Day prior to the Distribution Date on which the moneys so invested are required to be remitted to the Master Servicer or the Securities Administrator.

(c)

To the extent provided in the related Servicing Agreement and subject to this Article III, on or before each Servicer Remittance Date, the related Servicer shall withdraw or shall cause to be withdrawn from the Protected Accounts and shall immediately deposit or cause to be deposited in the Distribution Account amounts representing the following collections and payments (other than with respect to principal of or interest on the Loans due on or before the Cut-Off Date):

(i)

Monthly Payments on the Loans received or any related portion thereof advanced by the Servicers pursuant to the Servicing Agreements which were due on or before the related Due Date, net of the amount thereof comprising the Servicing Fees;

(ii)

Principal Prepayments, Liquidation Proceeds, Insurance Proceeds and Subsequent Recoveries received by the Servicers with respect to such Loans in the related Prepayment Period, Compensating Interest and the amount of any related Prepayment Charges; and

(iii)

Any amount to be used as an Advance.

(d)

Withdrawals may be made from a Protected Account or the Distribution Account only to make remittances as provided in Sections 3.23(c) and 3.24 or as otherwise provided in the Servicing Agreements, to reimburse the Master Servicer or a Servicer for Advances which have been recovered by subsequent collection from the related Mortgagor, to remove amounts deposited in error; to remove fees, charges or other such amounts deposited on a temporary basis, or to clear and terminate the account at the termination of this Agreement in accordance with Section 9.1 or Section 9.2.  As provided in Sections 3.23(c) and 3.24(b) or as otherwise provided in the Servicing Agreements certain amounts otherwise due to the Servicers may be retained by them and need not be deposited in the Distribution Account.

Section 3.23

Distribution Account.  

(a)

The Securities Administrator shall establish and maintain, for the benefit of the Certificateholders, the Distribution Account as a segregated trust account or accounts. The Master Servicer shall deposit in the Distribution Account as identified by the Master Servicer and as received by the Master Servicer, the following amounts:

(i)

Any amounts withdrawn from a Protected Account;

(ii)

Any Advance and any amounts in respect of Prepayment Interest Shortfalls or Curtailment Shortfalls;

(iii)

Any Insurance Proceeds, Liquidation Proceeds or Subsequent Recoveries received by or on behalf of the Master Servicer;

(iv)

The Purchase Price with respect to any Loans purchased by the Seller pursuant to Section 2.3 and all proceeds of any Loans or property acquired with respect thereto purchased by the Terminator pursuant to Section 9.1;

(v)

Any amounts required to be deposited by the Master Servicer or any Servicer with respect to losses on investments of deposits in an Account; and

(vi)

Any other amounts received by or on behalf of the Master Servicer and required to be deposited in the Distribution Account pursuant to this Agreement.

(b)

All amounts deposited to the Distribution Account shall be held by the Securities Administrator in trust for the benefit of the Certificateholders in accordance with the terms and provisions of this Agreement. The requirements for crediting the Distribution Account shall be exclusive, it being understood and agreed that, without limiting the generality of the foregoing, payments in the nature of late payment charges or assumption, tax service, statement account or payoff, substitution, satisfaction, release and other like fees and charges, need not be credited by the Master Servicer or the related Servicer to the Distribution Account. In the event that the Master Servicer shall deposit or cause to be deposited to the Distribution Account any amount not required to be credited thereto, the Securities Administrator, upon receipt of a written request therefor signed by a Servicing Officer of the Master Servicer, shall promptly transfer such amount to the Master Servicer, any provision herein to the contrary notwithstanding.

(c)

The Distribution Account shall constitute a trust account of the Trust Fund segregated on the books of the Securities Administrator and held by the Securities Administrator in trust in its Corporate Trust Office, and the Distribution Account and the funds deposited therein shall not be subject to, and shall be protected from, all claims, liens, and encumbrances of any creditors or depositors of the Securities Administrator (whether made directly, or indirectly through a liquidator or receiver of the Securities Administrator).  The amount at any time credited to the Distribution Account shall be invested in the name of the Master Servicer, in such Eligible Investments selected by the Master Servicer or deposited in demand deposits with such depository institutions as selected by the Master Servicer, provided that time deposits of such depository institutions would be an Eligible Investment. All Eligible Investments shall mature or be subject to redemption or withdrawal on or before, and shall be held until, the Distribution Date following the date of the investment of such funds (the “Investment Withdrawal Distribution Date”) if the obligor for such Eligible Investment is the Securities Administrator or, if such obligor is any other Person, the Business Day preceding such Investment Withdrawal Distribution Date. All investment earnings on amounts on deposit in the Distribution Account from time to time shall be for the account of the Master Servicer. The Master Servicer shall be permitted to receive distribution of any and all investment earnings from the Distribution Account on each Distribution Date. If there is any loss on an Eligible Investment or demand deposit, the Master Servicer shall deposit such amount from its own funds in the Distribution Account. With respect to the Distribution Account and the funds deposited therein, the Securities Administrator shall take such action as may be necessary to ensure that the Certificateholders shall be entitled to the priorities afforded to such a trust account (in addition to a claim against the estate of the Securities Administrator) as provided by 12 U.S.C. § 92a(e), and applicable regulations pursuant thereto, if applicable, or any applicable comparable state statute applicable to state chartered banking corporations.

Section 3.24

Permitted Withdrawals and Transfers from the Distribution Account.  

(a)

The Securities Administrator shall, from time to time on demand of the Master Servicer make or cause to be made such withdrawals or transfers from the Distribution Account as the Master Servicer has designated for such transfer or withdrawal pursuant to the Servicing Agreements for the following purposes, not in any order of priority:

(i)

to reimburse the Master Servicer or any Servicer for any Advance of its own funds, the right of the Master Servicer or a Servicer to reimbursement pursuant to this subclause (i) being limited to amounts received on a particular Loan (including, for this purpose, the Purchase Price therefor, Insurance Proceeds and Liquidation Proceeds) which represent late payments or recoveries of the principal of or interest on such Loan respecting which such Advance was made;

(ii)

to reimburse the Master Servicer or any Servicer from Insurance Proceeds or Liquidation Proceeds relating to a particular Loan for amounts expended by the Master Servicer or such Servicer in good faith in connection with the restoration of the related Mortgaged Property which was damaged by an Uninsured Cause or in connection with the liquidation of such Loan;

(iii)

to reimburse the Master Servicer or any Servicer from Insurance Proceeds relating to a particular Loan for insured expenses incurred with respect to such Loan and to reimburse the Master Servicer or such Servicer from Liquidation Proceeds from a particular Loan for Liquidation Expenses incurred with respect to such Loan;

(iv)

to pay the Master Servicer or any Servicer, as appropriate, from Liquidation Proceeds or Insurance Proceeds received in connection with the liquidation of any Loan, the amount which it or such Servicer would have been entitled to receive under subclause (vii) of this Subsection (a) as servicing compensation on account of each defaulted scheduled payment on such Loan if paid in a timely manner by the related Mortgagor;

(v)

to pay the Master Servicer or any Servicer from the Purchase Price for any Loan, the amount which it or such Servicer would have been entitled to receive under subclause (vii) of this Subsection (a) as servicing compensation;

(vi)

to reimburse the Master Servicer or any Servicer for any Nonrecoverable Advance, after a Realized Loss has been allocated with respect to the related Loan if the Advance or Servicing Advance has not been reimbursed pursuant to clause (i);

(vii)

to pay the Master Servicing Compensation to the Master Servicer, the Servicing Fee to the Servicers (to the extent such Servicing Fee was not retained by a Servicer pursuant to the related Servicing Agreement), the Credit Risk Management Fee to the Credit Risk Manager for such Distribution Date and to reimburse the Master Servicer for premiums payable in connection with any lender paid mortgage insurance and for expenses, costs and liabilities incurred by and reimbursable to it pursuant to Sections 3.3, 6.3, 8.5 and 10.1.

(viii)

to reimburse or pay any Servicer any such amounts as are due thereto under the applicable Servicing Agreement and have not been retained by or paid to the Servicer, to the extent provided in the related Servicing Agreement;

(ix)

to reimburse the Trustee, the Custodians and the Securities Administrator for expenses, costs and liabilities, if any, incurred by or reimbursable to such parties pursuant to this Agreement and the Custodial Agreements;

(x)

to remove amounts deposited in error; and

(xi)

to clear and terminate the Distribution Account pursuant to Section 9.1 or Section 9.2.

(b)

The Master Servicer shall keep and maintain separate accounting, on a Loan by Loan basis, for the purpose of accounting for any reimbursement from the Distribution Account pursuant to subclauses (i) through (v), inclusive, or with respect to any such amounts which would have been covered by such subclauses had the amounts not been retained by the Master Servicer without being deposited in the Distribution Account under Section 3.23(b).

(c)

On each Distribution Date, the Securities Administrator shall pay (or cause to be paid) the applicable Mortgage Insurance Premium to the Mortgage Insurer from funds on deposit in the Distribution Account.  To the extent the Securities Administrator receives any payments under the Mortgage Insurance Policy, it shall notify the Master Servicer and promptly deposit such amounts into the Certificate Account.  Payments to the Mortgage Insurer shall be made by the Securities Administrator by wire transfer of immediately available funds to the following account, unless the Mortgage Insurer notifies the Securities Administrator in writing:  Bank Name: Wells Fargo Bank, ABA#121-000-248, Account# 4121226609: Radian Guaranty Premium Account, Reference# 07-993045.

(d)

On each Distribution Date, the Securities Administrator shall distribute the Available Distribution Amount to the Holders of the Certificates in accordance with Section 4.1.

Section 3.25

[Reserved].

Section 3.26

Pre-Funding Account.

(a)

No later than the Closing Date, the Securities Administrator shall establish and maintain a trust account which at all times shall be an Eligible Account and shall be titled “Pre-Funding Account, Wells Fargo Bank, N. A., in trust for the registered holders of Deutsche Alt-B Securities, Mortgage Loan Trust, Series 2007-AB1, Mortgage Pass-Through Certificates” (the “Pre-Funding Account”).  The Securities Administrator shall, promptly upon receipt, deposit in the Pre-Funding Account and retain therein the Original Pre-Funded Amount remitted on the Closing Date by the Depositor.  Funds deposited in the Pre-Funding Account shall be held in trust for the Certificateholders for the uses and purposes set forth herein.

(b)

The Securities Administrator shall invest funds deposited in the Pre-Funding Account only as directed in writing by the Depositor (and such amounts shall not be invested if no direction is received by Securities Administrator) in Permitted Investments with a maturity date (i) no later than the Business Day immediately preceding the date on which such funds are required to be withdrawn from such account pursuant to this Agreement if a Person other than the Securities Administrator or an Affiliate manages or advises such investment, (ii) no later than the date on which such funds are required to be withdrawn from such account pursuant to this Agreement if the Securities Administrator or an Affiliate manages or advises such investment or (iii) within one (1) Business Day of the Securities Administrator’s receipt thereof.  For federal income tax purposes, the Depositor shall be the owner of the Pre-Funding Account and shall report all items of income, deduction, gain or loss arising therefrom.  All income and gain realized from investment of funds deposited in the Pre-Funding Account shall be transferred to the Depositor.  The Depositor shall deposit in the Pre-Funding Account the amount of any net loss incurred in respect of any such Permitted Investment immediately upon realization of such loss without any right of reimbursement therefor.  At no time will the Pre-Funding Account be an asset of any REMIC created hereunder.

(c)

Amounts on deposit in the Pre-Funding Account shall be withdrawn by the Securities Administrator as follows:

On any Subsequent Transfer Date, the Securities Administrator shall withdraw from the Pre-Funding Account an amount equal to 100% of the Principal Balances of the related Subsequent Loans as of the Subsequent Cut-Off Date transferred and assigned to the Trustee for deposit in the Trust Fund on such Subsequent Transfer Date and pay such amount to or upon the order of the Depositor upon satisfaction of the conditions set forth in Section 2.6 with respect to such transfer and assignment;

(i)

If the amount on deposit in the Pre-Funding Account (exclusive of any investment income therein) has not been reduced to zero during the Pre-Funding Period, on the Distribution Date immediately following the termination of the Pre-Funding Period, the Securities Administrator shall deposit into the Distribution Account any amounts remaining in the Pre-Funding Account (exclusive of any investment income therein) for distribution in accordance with the terms hereof;

(ii)

To withdraw any amount not required to be deposited in the Pre-Funding Account or deposited therein in error; and

(iii)

To clear and terminate the Pre-Funding Account upon the earlier to occur of (A) the Distribution Date immediately following the end of the Pre-Funding Period and (B) the termination of this Agreement, with any amounts remaining on deposit therein being paid to the Holders of the Certificates then entitled to distributions in respect of principal.

Withdrawals pursuant to clauses (i), (ii) and (iii) shall be treated as contributions of cash to REMIC I on the date of withdrawal.

Section 3.27

Capitalized Interest Account.

(a)

No later than the Closing Date, the Securities Administrator shall establish and maintain a trust account which shall at all times be an Eligible Account and shall be titled “Capitalized Interest Account, Wells Fargo Bank, N.A., in trust for the registered holders of Deutsche Alt-B Securities Mortgage Loan Trust, Series 2007-AB1, Mortgage Pass-Through Certificates” (the “Capitalized Interest Account”).  The Securities Administrator shall, promptly upon receipt, deposit in the Capitalized Interest Account and retain therein the Original Capitalized Interest Amount remitted on the Closing Date by the Depositor. Funds deposited in the Capitalized Interest Account shall be held in trust for the Certificateholders for the uses and purposes set forth herein.

(b)

The Securities Administrator shall invest funds deposited in the Capitalized Interest Account only as directed in writing by the Depositor (and such amounts shall not be invested if no direction is received by the Securities Administrator) in writing in Permitted Investments with a maturity date (i) no later than the Business Day immediately preceding the date on which such funds are required to be withdrawn from such account pursuant to this Agreement if a Person other than the Securities Administrator or an Affiliate manages or advises such investment, (ii) no later than the date on which such funds are required to be withdrawn from such account pursuant to this Agreement if the Securities Administrator or an Affiliate manages or advises such investment or (iii) within one (1) Business Day of the Securities Administrator’s receipt thereof.  The amount of any losses in the Capitalized Interest Account incurred in respect of any such investments shall promptly be deposited by the Depositor in the Capitalized Interest Account.  All income or gain realized from any such investment of funds on deposit in the Capitalized Interest Account shall be credited to the Capitalized Interest Account.  At no time will the Capitalized Interest Account be an asset of any REMIC created hereunder.

(c)

On each Distribution Account Deposit Date during the Pre-Funding Period, upon satisfaction of the conditions for the conveyance of Subsequent Loans set forth in Section 2. 6, the Securities Administrator shall transfer from the Capitalized Interest Account to the Distribution Account an amount equal to the lesser of the Capitalized Interest Requirement (which, to the extent required, may include investment earnings on amounts on deposit therein) and the amount remaining in the Capitalized Interest Account for the related Distribution Date.  If any funds remain in the Capitalized Interest Account at the end of the Pre-Funding Period, the Securities Administrator shall make the transfer described in the preceding sentence if necessary for the Distribution Date following the expiration of the Pre-Funding Period and the Securities Administrator shall distribute any remaining funds in the Capitalized Interest Account to the order of the Depositor.

Section 3.28

Prepayment Penalty Verification.  

On or prior to each Servicer Remittance Date, each Servicer shall, to the extent provided in the respective Servicing Agreement, provide in an electronic format acceptable to the Master Servicer the data necessary for the Master Servicer to perform its verification duties agreed to by the Master Servicer and the Depositor.  The Master Servicer or a third party reasonably acceptable to the Master Servicer and the Depositor (the “Verification Agent”) will perform such verification duties and will use its best efforts to issue its findings in a report (the “Verification Report”) delivered to the Master Servicer and the Depositor within ten (10) Business Days following the related Distribution Date; provided, however, that if the Verification Agent is unable to issue the Verification Report within ten (10) Business Days following the Distribution Date, the Verification Agent may issue and deliver to the Master Servicer and the Depositor the Verification Report upon the completion of its verification duties.  The Master Servicer shall forward the Verification Report to the respective Servicer and shall notify such Servicer if the Master Servicer has determined that such Servicer did not deliver the appropriate Prepayment Charges to the Master Servicer in accordance with the respective Servicing Agreement.  Such written notification from the Master Servicer shall include the loan number, prepayment penalty code and prepayment penalty amount as calculated by the Master Servicer or the Verification Agent, as applicable, of each Loan for which there is a discrepancy.  If the respective Servicer agrees with the verified amounts, such Servicer shall adjust the immediately succeeding Remittance Report and the amount remitted to the Master Servicer with respect to prepayments accordingly.  If the respective Servicer disagrees with the determination of the Master Servicer, such Servicer shall, within five (5) Business Days of its receipt of the Verification Report, notify the Master Servicer of such disagreement and provide the Master Servicer with detailed information to support such Servicer’s position.  The respective Servicer and the Master Servicer shall cooperate to resolve any discrepancy on or prior to the immediately succeeding Servicer Remittance Date, and such Servicer will indicate the effect of such resolution on the related Remittance Report and shall adjust the amount remitted with respect to prepayments on such Servicer Remittance Date accordingly.

During such time as the respective Servicer and the Master Servicer are resolving discrepancies with respect to the Prepayment Charges, no payments in respect of any disputed Prepayment Charges will be remitted to the Distribution Account and the Master Servicer shall not be obligated to remit such payments, unless otherwise required pursuant to Section 7.1 hereof.  In connection with such duties, the Master Servicer shall be able to rely solely on the information provided to it by the respective Servicer in accordance with this Section.  The Master Servicer shall not be responsible for verifying the accuracy of any of the information provided to it by the respective Servicer or for performing the Master Servicer’s duties under this Section 3.28 with respect to a Servicer if such Servicer is unable or unwilling to provide the required data to the Master Servicer or is not required to provide such information to the Master Servicer.

Section 3.29

Reports Filed with Securities and Exchange Commission.

(a)

(i)

Within 15 days after each Distribution Date (subject to permitted extensions under the Exchange Act), the Securities Administrator shall prepare and file on behalf of the Trust any Form 10-D required by the Exchange Act, in form and substance as required by the Exchange Act.  The Securities Administrator shall file each Form 10-D with a copy of the related Remittance Report attached thereto. Any disclosure in addition to the Monthly Statement that is required to be included on Form 10-D (“Additional Form 10-D Disclosure”) shall be reported by the parties set forth on Exhibit K-1 to the Depositor and the Securities Administrator and directed and approved by and at the direction of the Depositor pursuant to the following paragraph, and the Securities Administrator will have no duty or liability for any failure hereunder to determine or prepare any Additional Form 10-D Disclosure, except as set forth in the next paragraph.

(ii)

As set forth on Exhibit K-1 hereto, within 5 calendar days after the related Distribution Date, (A) the parties to the Deutsche Alt-B Securities Mortgage Loan Trust, Series 2007-AB1 transaction shall be required to provide to the Securities Administrator and the Depositor, to the extent known by a responsible officer thereof, in EDGAR-compatible form, or in such other form as otherwise agreed upon by the Securities Administrator and such party, the form and substance of any Additional Form 10-D Disclosure, if applicable, together with an Additional Disclosure Notification in the form of Exhibit N hereto (an “Additional Disclosure Notification”) and (B) the Depositor will approve, as to form and substance, or disapprove, as the case may be, the inclusion of the Additional Form 10-D Disclosure on Form 10-D.  The Depositor will be responsible for any reasonable fees and expenses assessed or incurred by the Securities Administrator in connection with including any Additional Form 10-D Disclosure on Form 10-D pursuant to this paragraph.  

(iii)

After preparing the Form 10-D, the Securities Administrator shall forward electronically a copy of the Form 10-D to the Depositor (provided that such Form 10-D includes any Additional Form 10-D Disclosure).  Within two Business Days after receipt of such copy, but no later than the 12th calendar day after the Distribution Date, the Depositor shall notify the Securities Administrator in writing (which may be furnished electronically) of any changes to or approval of such Form 10-D.  In the absence of receipt of any written changes or approval, the Securities Administrator shall be entitled to assume that such Form 10-D is in final form and the Securities Administrator may proceed with the execution and filing of the Form 10-D.  An authorized representative of the Master Servicer shall sign the Form 10-D.  If a Form 10-D cannot be filed on time or if a previously filed Form 10-D needs to be amended, the Securities Administrator will follow the procedures set forth in Section 3.29(c)(ii).  Promptly (but no later than 1 Business Day) after filing with the Commission, the Securities Administrator will make available on its internet website a final executed copy of each Form 10-D that has been prepared and filed by the Securities Administrator.  Each party to this Agreement acknowledges that the performance by the Securities Administrator of its duties under this Section 3.29(a) related to the timely preparation, execution and filing of Form 10-D is contingent upon such parties strictly observing all applicable deadlines in the performance of their duties as set forth in this Agreement.  Neither the Securities Administrator nor the Master Servicer shall have any liability for any loss, expense, damage, claim arising out of or with respect to any failure to properly prepare, execute and/or timely file such Form 10-D, where such failure results from the Securities Administrator’s inability or failure to obtain or receive, on a timely basis, any information from any other party hereto needed to prepare, arrange for execution or file such Form 10-D, not resulting from its own negligence, bad faith or willful misconduct.

(iv)

Form 10-D requires the registrant to indicate (by checking "yes" or "no") that it (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  The Depositor hereby instructs the Securities Administrator, with respect to each Form 10-D, to check "yes" for each item unless the Securities Administrator has received timely prior written notice from the Depositor that the answer should be "no" for an item.  The Depositor hereby represents to the Securities Administrator that the Depositor has filed all such required reports during the preceding 12 months and that it has been subject to such filing requirement for the past 90 days.  The Depositor shall notify the Securities Administrator in writing, no later than the fifth calendar day after the related Distribution Date with respect to the filing of a report on Form 10-D, if the answer to the questions should be “no” as a result of filings that relate to other securitization transactions of the Depositor for which the Securities Administrator does not have the obligation to prepare and file Exchange Act reports.  The Securities Administrator shall be entitled to rely on such representations in preparing, executing and/or filing any such report.

(b)

(i)

Within four (4) Business Days after the occurrence of an event requiring disclosure on Form 8-K (each such event, a “Reportable Event”), and if requested by the Depositor, the Securities Administrator shall prepare and file on behalf of the Trust any Form 8-K, as required by the Exchange Act, provided that the Depositor shall file the initial Form 8-K in connection with the issuance of the Certificates.  Any disclosure or information related to a Reportable Event or that is otherwise required to be included on Form 8-K (“Form 8-K Disclosure Information”) shall be reported by the parties set forth on Exhibit K-3 to the Depositor and the Securities Administrator and directed and approved by the Depositor pursuant to the following paragraph and the Securities Administrator will have no duty or liability for any failure hereunder to determine or prepare any Form 8-K Disclosure Information or any Form 8-K, except as set forth in the next paragraph.  

(ii)

As set forth on Exhibit K-3 hereto, for so long as the Trust is subject to the Exchange Act reporting requirements, no later than the close of business New York time on the 2nd Business Day after the occurrence of a Reportable Event (i) the parties to the Deutsche Alt-B Securities Mortgage Loan Trust, Series 2007-AB1 transaction  shall be required to provide to the Securities Administrator and the Depositor, to the extent known by a responsible officer thereof, in EDGAR-compatible form, or in such other form as otherwise agreed upon by the Securities Administrator and such party, the form and substance of any Form 8-K Disclosure Information, if applicable, together with an Additional Disclosure Notification and (ii) the Depositor will approve, as to form and substance, or disapprove, as the case may be, the inclusion of the Form 8-K Disclosure Information.  The Depositor will be responsible for any reasonable fees and expenses assessed or incurred by the Securities Administrator in connection with including any Form 8-K Disclosure Information on Form 8-K pursuant to this paragraph.

(iii)

After preparing the Form 8-K, the Securities Administrator shall forward electronically a copy of the Form 8-K to the Depositor.  Promptly, but no later than the close of business on the third Business Day after the Reportable Event, the Depositor shall notify the Securities Administrator in writing (which may be furnished electronically) of any changes to or approval of such Form 8-K.  In the absence of receipt of any written changes or approval, the Securities Administrator shall be entitled to assume that such Form 8-K is in final form and the Securities Administrator may proceed with the execution and filing of the Form 8-K.  A duly authorized representative of the Master Servicer shall sign the Form 8-K.  If a Form 8-K cannot be filed on time or if a previously filed Form 8-K needs to be amended, the Securities Administrator will follow the procedures set forth in Section 3.29(c)(ii).  Promptly (but no later than 1 Business Day) after filing with the Commission, the Securities Administrator will, make available on its internet website a final executed copy of each Form 8-K that has been prepared and filed by the Securities Administrator.  The parties to this Agreement acknowledge that the performance by the Master Servicer and the Securities Administrator of their respective duties under this Section 3.29(b) related to the timely preparation, execution and filing of Form 8-K is contingent upon such parties strictly observing all applicable deadlines in the performance of their duties under this Agreement.  Neither the Master Servicer nor the Securities Administrator shall have any liability for any loss, expense, damage, claim arising out of or with respect to any failure to properly prepare, execute and/or timely file such Form 8-K, where such failure results from the Securities Administrator’s inability or failure to obtain or receive, on a timely basis, any information from any other party hereto needed to prepare, arrange for execution or file such Form 8-K, not resulting from its own negligence, bad faith or willful misconduct.

(c)

(i)

On or prior to January 30 of the first year in which the Securities Administrator is able to do so under applicable law, the Securities Administrator shall prepare and file a Form 15 relating to the automatic suspension of reporting in respect of the Trust under the Exchange Act.  

(ii)

In the event that the Securities Administrator is unable to timely file with the Commission all or any required portion of any Form 8-K, 10-D or 10-K required to be filed by this Agreement because required disclosure information was either not delivered to it or delivered to it after the delivery deadlines set forth in this Agreement or for any other reason, the Securities Administrator will promptly electronically notify the Depositor.  In the case of Form 10-D and 10-K, the parties to this Agreement will cooperate to prepare and file a Form 12b-25 and a 10-DA and 10-KA as applicable, pursuant to Rule 12b-25 of the Exchange Act.  In the case of Form 8-K, the Securities Administrator will, upon receipt of all required Form 8-K Disclosure Information and upon the approval and direction of the Depositor, include such disclosure information on the next Form 10-D.  In the event that any previously filed Form 8-K, 10-D or 10-K needs to be amended in connection with any Additional Form 10-D Disclosure (other than for the purpose of restating any Remittance Report), any Additional Form 10-K Disclosure or any Form 8-K Disclosure Information or any amendment to such disclosure, the Securities Administrator will electronically notify the Depositor and such other parties to this transaction as are affected by such amendment, and such parties will cooperate with the Securities Administrator to prepare any necessary 8-KA, 10-DA or 10-KA.  Any Form 15, Form 12b-25 or any amendment to Form 8-K, 10-D or 10-K shall be signed by a duly authorized representative of the Master Servicer or an officer of the Master Servicer in charge of the master servicing function, as applicable.  The parties to this Agreement acknowledge that the performance by the Securities Administrator of its duties under this Section 3.29(c) related to the timely preparation, execution and filing of Form 15, a Form 12b-25 or any amendment to Form 8-K, 10-D or 10-K is contingent upon each such party performing its duties under this Agreement.  Neither the Master Servicer nor the Securities Administrator shall have any liability for any loss, expense, damage, claim arising out of or with respect to any failure to properly prepare, execute and/or timely file any such Form 15, Form 12b-25 or any amendments to Forms 8-K, 10-D or 10-K, where such failure results from the Securities Administrator’s inability or failure to obtain or receive, on a timely basis, any information from any other party hereto needed to prepare, arrange for execution or file such Form 15, Form 12b-25 or any amendments to Forms 8-K, 10-D or 10-K, not resulting from its own negligence, bad faith or willful misconduct.

(d)

(i)

On or prior to the 90th day after the end of each fiscal year of the Trust or such earlier date as may be required by the Exchange Act (the “10-K Filing Deadline”) (it being understood that the fiscal year for the Trust ends on December 31st of each year), commencing in March 2008, the Securities Administrator shall prepare and file on behalf of the Trust a Form 10-K, in form and substance as required by the Exchange Act.  Each such Form 10-K shall include the following items, in each case to the extent they have been delivered to the Securities Administrator within the applicable time frames set forth in this Agreement and the Servicing Agreements, (i) an annual compliance statement for each Servicer, the Master Servicer, the Securities Administrator and any Servicing Function Participant engaged by such parties (together with the Custodians, each, a “Reporting Servicer”) as described under the related Servicing Agreement and Section 3.16, (ii)(A) the annual reports on assessment of compliance with servicing criteria for each Reporting Servicer, as described in the related Servicing Agreement or Custodial Agreement and Section 3.17, and (B) if each Reporting Servicer’s report on assessment of compliance with servicing criteria described under the related Servicing Agreement or Custodial Agreement and Section 3.17 identifies any material instance of noncompliance, disclosure identifying such instance of noncompliance, or if any Reporting Servicer’s report on assessment of compliance with servicing criteria described thereunder is not included as an exhibit to such Form 10-K, disclosure that such report is not included and an explanation why such report is not included, (iii)(A) the registered public accounting firm attestation report for each Reporting Servicer, as described in the related Servicing Agreement or Custodial Agreement or under Section 3.18, and (B) if any registered public accounting firm attestation report described in the related Servicing Agreement identifies any material instance of noncompliance, disclosure identifying such instance of noncompliance, or if any such registered public accounting firm attestation report is not included as an exhibit to such Form 10-K,  disclosure that such report is not included and an explanation why such report is not included, and (iv) the Sarbanes-Oxley Certification as described in Section 3.19 (provided, however, that the Securities Administrator, at its discretion, may omit from the Form 10-K any annual compliance statement, assessment of compliance or attestation report that is not required to be filed with such Form 10-K pursuant to Regulation AB).  Any disclosure or information in addition to (i) through (iv) above that is required to be included on Form 10-K (“Additional Form 10-K Disclosure”) shall be determined and prepared by and at the direction of the Depositor pursuant to the following paragraph and the Securities Administrator will have no duty or liability for any failure hereunder to determine or prepare any Additional Form 10-K Disclosure, except as set forth in the next paragraph.

(ii)

As set forth on Exhibit K-2 hereto, no later than March 15 of each year (including all applicable grace periods) that the Trust is subject to the Exchange Act reporting requirements, commencing in 2008, (i) certain parties to the Deutsche Alt-B Securities Mortgage Loan Trust, Series 2007-AB1 transaction  shall be required to provide to the Securities Administrator and the Depositor, to the extent known to a responsible officer thereof, in EDGAR-compatible form, or in such other form as otherwise agreed upon by the Securities Administrator and such party, the form and substance of any Additional Form 10-K Disclosure, if applicable, together with an Additional Disclosure Notification and (ii) the Depositor will approve, as to form and substance, or disapprove, as the case may be, the inclusion of the Additional Form 10-K Disclosure on Form 10-K.  The Depositor will be responsible for any reasonable fees and expenses assessed or incurred by the Securities Administrator in connection with including any Additional Form 10-K Disclosure on Form 10-K pursuant to this paragraph.

(iii)

After preparing the Form 10-K, the Securities Administrator shall forward electronically a copy of the Form 10-K to the Depositor.  Within three Business Days after receipt of such copy, but no later than March 25th, the Depositor shall notify the Securities Administrator in writing (which may be furnished electronically) of any changes to or approval of such Form 10-K.  In the absence of receipt of any written changes or approval, the Securities Administrator shall be entitled to assume that such Form 10-K is in final form and the Securities Administrator may proceed with the execution and filing of the Form 10-K.  An officer of the Master Servicer in charge of the master servicing function shall sign the Form 10-K. If a Form 10-K cannot be filed on time or if a previously filed Form 10-K needs to be amended, the Securities Administrator will follow the procedures set forth in Section 3.29(c)(ii).  Promptly (but no later than 1 Business Day) after filing with the Commission, the Securities Administrator will make available on its internet website a final executed copy of each Form 10-K that has been prepared and filed by the Securities Administrator.  The parties to this Agreement acknowledge that the performance by the Master Servicer and the Securities Administrator of their respective duties under this Section 3.29(d) related to the timely preparation, execution and filing of Form 10-K is contingent upon such parties (and any Servicing Function Participant) strictly observing all applicable deadlines in the performance of their duties under this Section 3.29(d), the related Servicing Agreement, Section 3.17, Section 3.18 and Section 3.19.  Neither the Master Servicer nor the Securities Administrator shall have any liability for any loss, expense, damage or claim arising out of or with respect to any failure to properly prepare , execute  and/or timely file such Form 10-K, where such failure results from the Securities Administrator’s inability or failure to obtain or receive, on a timely basis, any information from any other party hereto needed to prepare, arrange for execution or file such Form 10-K, not resulting from its own negligence, bad faith or willful misconduct.

(iv)

Form 10-K requires the registrant to indicate (by checking "yes" or "no") that it (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  The Depositor hereby instructs the Securities Administrator, with respect to each Form 10-K, to check "yes" for each item unless the Securities Administrator has received timely prior written notice from the Depositor that the answer should be "no" for an item.  The Depositor hereby represents to the Securities Administrator that the Depositor has filed all such required reports during the preceding 12 months and that it has been subject to such filing requirement for the past 90 days.  The Depositor shall notify the Securities Administrator in writing, no later than March 15th with respect to the filing of a report on Form 10-K, if the answer to the questions should be “no” as a result of filings that relate to other securitization transactions of the Depositor for which the Securities Administrator does not have the obligation to prepare and file Exchange Act reports.  The Securities Administrator shall be entitled to rely on such representations in preparing, executing and/or filing any such report.

Each of the Depositor, Master Servicer, Securities Administrator and any Servicing Function Participant engaged by such party, respectively, shall indemnify and hold harmless the Master Servicer, the Securities Administrator and the Depositor, respectively, and each of their directors, officers, employees, agents, and affiliates from and against any and all claims, loses, damages, penalties, fines, forfeitures, reasonable legal fees and related costs, judgments and other costs and expenses arising out of or based upon (a) any breach by such party of any if its obligations hereunder, including particularly its obligations to provide any Assessment of Compliance, Attestation Report, Compliance Statement or any information, data or materials required to be included in any 1934 Act report, (b) any material misstatement or omission in any information, data or materials provided by such party (or, in the case of the Securities Administrator or Master Servicer, any material misstatement or material omission in (i) any Compliance Statement, Assessment of Compliance or Attestation Report delivered by it, or by any Servicing Function Participant engaged by it, pursuant to this Agreement, or (ii) any Additional Form 10-D Disclosure, Additional Form 10-K Disclosure or Form 8-K Disclosure), (c) any claim arising out of or with respect to any failure to properly prepare, execute and/or timely file such Form 10-D, where such failure results from the Securities Administrator's inability or failure to obtain or receive, on a timely basis, any information from any other party hereto needed to prepare, arrange for execution or file such Form 10-D, not resulting from its own negligence, bad faith or willful misconduct or (d) the negligence, bad faith or willful misconduct of such indemnifying party in connection with its performance hereunder.  If the indemnification provided for herein is unavailable or insufficient to hold harmless the Master Servicer, the Securities Administrator or the Depositor, as the case may be, then each such party agrees that it shall contribute to the amount paid or payable by the Master Servicer, the Securities Administrator or the Depositor, as applicable, as a result of any claims, losses, damages or liabilities incurred by such party in such proportion as is appropriate to reflect the relative fault of the indemnified party on the one hand and the indemnifying  party on the other.  This indemnification shall survive the termination of this Agreement or the termination of any party to this Agreement.

Notwithstanding the provisions of Section 10.1, this Section 3.29 may be amended without the consent of the Certificateholders.

Section 3.30

Termination of the Mortgage Insurance Policy.

If during the period which the Depositor is required to file Exchange Act Reports with respect to the Trust Fund, the Mortgage Insurer shall fail to provide to the Depositor with any information required to comply with the Depositor’s reporting obligations under the related Exchange Act Reports, within 5 days of the Depositor’s request therefor, then the Master Servicer and the applicable Servicer shall act at the written direction of the Depositor as to whether to terminate the Mortgage Insurance Policy (either by the Master Servicer not paying the renewal premium or by the applicable Servicer terminating the Mortgage Insurance Policy in accordance with its terms); provided, however, that the Depositor shall not direct the Master Servicer or such Servicer to terminate the Mortgage Insurance Policy until the Depositor has procured one or more replacement mortgage insurance policies covering the then-outstanding Covered Loans from an insurer under a policy or policies acceptable to the Rating Agencies and such mortgage insurance policy must cover the Covered Loans outstanding as of such date, if available.

ARTICLE IV

PAYMENTS TO CERTIFICATEHOLDERS;  ADVANCES;

STATEMENTS AND REPORTS

Section 4.1

Distributions to Certificateholders.

On each Distribution Date, the Securities Administrator, to the extent on deposit therein and based solely upon the Remittance Report for such Distribution Date, shall withdraw from the Distribution Account, the Available Distribution Amount for such Distribution Date and distribute to each related Certificateholder, by wire transfer in immediately available funds for the account of the Certificateholder or by any other means of payment acceptable to each Certificateholder of record on the immediately preceding Record Date (other than as provided in Section 9.2 respecting the final distribution) as specified by each such Certificateholder and at the address of such Holder appearing in the Certificate Register, from the amount so withdrawn and to the extent of the Available Distribution Amount such Certificateholder’s Percentage Interest of the following amounts and in following order and priority:

(a)

On each Distribution Date prior to the Credit Support Depletion Date, the Securities Administrator will distribute the Available Distribution Amount in the following order and priority:

(1)

first, to each class of Senior Certificates (other than the Class PO Certificates) and the Class AR Certificates, the related Interest Distribution Amount on a pro rata basis based on the related Interest Distribution Amount with respect to each such Class;  

(2)

second, to the Class PO Certificates, the Discount Fractional Principal Amount until the Certificate Principal Balance of the Class PO Certificates has been reduced to zero;

(3)

third, to the Class AR Certificates, the Senior Principal Distribution Amount until the Certificate Principal Balance of the Class AR Certificates has been reduced to zero;

(4)

fourth, to the Class A-1, Class A-2, Class AI-1 and Class AI-2 Certificates, pro rata based on Certificate Principal Balance, the Senior Principal Distribution Amount remaining after payments pursuant to clause (3) above, until their Certificate Principal Balances have been reduced to zero; and

(5)

fifth, the Discount Fractional Principal Shortfall to the Class PO Certificates, but not more than an amount equal to the Subordinate Principal Distribution Amount for such Distribution Date (without regard to the proviso of such definition).

(6)

From the Available Distribution Amount remaining after payments pursuant to clauses (1) through (5) above, (a) first, the Senior Interest Shortfall Amount for each Class of Senior Certificates (other than the Class PO Certificates) for such Distribution Date, if any, pro rata according to the amount of interest to which each such Class would otherwise be entitled and (b) second, an amount equal to the Collateral Deficiency Amount, if any, to the Senior Certificates (other than the Interest Only Certificates), pro rata among the Senior Certificates (other than the Interest Only Certificates) based on the Certificate Principal Balance of each such Class, as a payment of principal.

(7)

From the remaining Available Distribution Amount, after payments pursuant to clauses (1) through (6) above, to the Class B-1, Class B-2, Class B-3, Class B-4, Class B-5, Class B-6, Class B-7, Class B-8, Class B-9, Class B-10, Class B-11 and Class B-12 Certificates, sequentially, in that order, an amount equal to their respective Interest Distribution Amounts for such Distribution Date and their pro rata share, based on the outstanding Certificate Principal Balance of each such Class, of the Subordinate Principal Distribution Amount; provided, however, that on any Distribution Date on which the Subordination Level for any Class of Subordinate Certificates is less than the Subordination Level as of the Closing Date, the portion of the Subordinate Principal Prepayment Amount otherwise payable to the Class or Classes of the Subordinate Certificates junior to such Class will be distributed to the most senior Class of Subordinate Certificates for which the Subordination Level is less than such percentage as of the Closing Date, and to the Class or Classes of Subordinate Certificates senior thereto, pro rata based on the certificate principal balance of each such Class.

(8)

To the Class A-1 and Class AI-1 Certificates, from the Available Distribution Amount remaining after distributions pursuant to clauses (1) through (7) above, by Pro Rata Allocation, the amount of any unreimbursed losses previously allocated to such classes of certificates.

(9)

To the Class A-2 and Class AI-2 Certificates, from the Available Distribution Amount remaining after distributions pursuant to clauses (1) through (8) above, by Pro Rata Allocation, the amount of any unreimbursed losses previously allocated to such classes of certificates, and then to the Subordinate Certificates, in the order of their seniority, the amount of any unreimbursed losses previously allocated to such classes of certificates.

(10)

To the Class AR Certificates, the remainder (which is expected to be zero), if any of the Available Distribution Amount remaining after distributions pursuant to clauses (1) through (9) above.

(b)

On each Distribution Date on or after the Credit Support Depletion Date, to the extent of the Available Distribution Amount on such Distribution Date, distributions will be made to the Senior Certificates in the following order of priority:

(1)

first, to each class of the Senior Certificates (other than the Class PO Certificates) and the Class AR Certificates, from the Available Distribution Amount, the related Interest Distribution Amount on a pro rata basis based on the amount payable to each such Class;

(2)

second, from the Available Distribution Amount remaining after payments in clause (1) above, the Discount Fractional Principal Amount to the Class PO Certificates;

(3)

third, to the Class A-1, Class A-2, Class AI-1 and Class AI-2 Certificates, pro rata based on Certificate Principal Balance, the Available Distribution Amount remaining after payments pursuant to clauses (1) and (2) above, until their Certificate Principal Balances have been reduced to zero;

(4)

fourth, from the Available Distribution Amount remaining after payments pursuant to clauses (1) through (3) above, to each Class of certificates for which a Senior Interest Shortfall Amount exists, the Senior Interest Shortfall Amount for such Distribution Date, pro rata, based on such Senior Interest Shortfall Amount;

(5)

fifth, from the Available Distribution Amount remaining after payments pursuant to clauses (1) through (4) above, to the Class A-1 and Class AI-1 Certificates, by Pro Rata Allocation, the amount of any unreimbursed losses previously allocated to each such Class; 

(6)

sixth, from the Available Distribution Amount remaining after payments pursuant to clauses (1) through (5) above, to the Class A-2 and Class AI-2 Certificates, by Pro Rata Allocation, the amount of any unreimbursed losses previously allocated to each such Class; and

(7)

seventh, to the Class AR Certificates, the remainder, if any (which is expected to be zero), of the Available Distribution Amount remaining after distributions pursuant to clauses (1) through (6) above. 

(c)

On each Distribution Date, the Securities Administrator will distribute to the Class P Certificates any Trust Prepayment Charges received in respect of the Loans.  On the Distribution Date in December 2011, prior to making any distributions to the Class AR Certificates, the Securities Administrator shall make a payment of principal to the Class P Certificates in reduction of the certificate principal balance of such class.

Section 4.2

Allocation of Realized Losses.

(a)

Prior to each Distribution Date, the Master Servicer, based solely on the information provided by the related Servicer, shall determine the amount of Realized Losses, if any, with respect to each Loan.

(b)

Realized Losses on Loans shall be allocated as follows: (i) for losses allocable to principal, (A) first, sequentially, to the Class B-12, Class B-11, Class B-10, Class B-9, Class B-8, Class B-7, Class B-6, Class B-5, Class B-4, Class B-3, Class B-2 and Class B-1 Certificates, in that order, until the Certificate Principal Balance of each such Class been reduced to zero, (B) second, to the Class A-2 and Class AI-2 Certificates until their Certificate Principal Balances have been reduced to zero; and (C) third, to the Class A-1 and Class AI-1 Certificates until their Certificate Principal Balances have been reduced to zero; provided, however, that following the Credit Support Depletion Date, if any loss is incurred (x) with respect to a Discount Loan, the Discount Fraction of such loss will first be allocated to the Class PO Certificates and the remainder of such loss will be allocated as described above in clauses (i)(B) and (i)(C); and (ii) for losses allocable to interest, (a) first, sequentially, to the Class B-12, Class B-11, Class B-10, Class B-9, Class B-8, Class B-7, Class B-6, Class B-5, Class B-4, Class B-3, Class B-2 and Class B-1 Certificates, in that order, in reduction of accrued but unpaid interest thereon until the amount of interest accrued on such Certificate on such Distribution Date has been reduced to zero, and then in reduction of the Certificate Principal Balance of such Certificate until the Certificate Principal Balance thereof has been reduced to zero, (b) second, to the Class A-2 and Class AI-2 Certificates for which such Realized Losses were incurred, by Pro Rata Allocation, in reduction of accrued but unpaid interest thereon until the amount of interest accrued on such Certificate has been reduced to zero and then with respect to the Class A-2 and Class AI-2 Certificates, in reduction of the Certificate Principal Balance of each such Certificate until the aggregate of the Certificate Principal Balances thereof have been reduced to zero; and (c) third, to the Class A-1 and Class AI-1 Certificates for which such Realized Losses were incurred, by Pro Rata Allocation, in reduction of accrued but unpaid interest thereon until the amount of interest accrued on such Certificate has been reduced to zero and then with respect to the Class A-1 and Class AI-1 Certificates, in reduction of the Certificate Principal Balance of each such Certificate until the aggregate of the Certificate Principal Balances thereof have been reduced to zero.  In addition, to the extent the related Servicer receives Subsequent Recoveries with respect to any defaulted Loan, the amount of the Realized Loss with respect to that defaulted Loan will be reduced to the extent such Subsequent Recoveries are applied to reduce the Certificate Principal Balance of any Class of Certificates on any Distribution Date. In the event that a Servicer receives any Subsequent Recoveries, such Subsequent Recoveries shall be distributed as part of the Available Distribution Amount in accordance with the priorities in Section 4.1, and the Certificate Principal Balance of each Class of Subordinate Certificates that has been reduced by the allocation of a Realized Loss to such Certificate shall be increased, in order of seniority, by the amount of such Subsequent Recoveries. Holders of such Certificates are not entitled to any payment in respect of current interest on the amount of such increases for any Interest Accrual Period preceding the Distribution Date on which such increase occurs.

(c)

On each Distribution Date, if the aggregate Certificate Principal Balance of the Senior Certificates (other than the Interest Only Certificates) and Subordinate Certificates exceeds the aggregate Principal Balance of the Loans and any remaining Pre-Funded Amount (after giving effect to distributions of principal and the allocation and reimbursement of all losses on the related Certificates on such Distribution Date), such excess will be deemed a principal loss and will be allocated to the Subordinate Certificates in reverse order of seniority until the Certificate Principal Balance of each such Class has been reduced to zero. If the Certificate Principal Balance of each Class of Subordinate Certificates has been reduced to zero and the aggregate Certificate Principal Balance of the Senior Certificates (other than the Interest Only Certificates) exceeds the aggregate Principal Balance of the Loans (after giving effect to distributions of principal and the allocation and reimbursement of all losses on the Certificates on such Distribution Date), such excess will be deemed a principal loss and will be allocated, (i) first, to the Class A-2 and Class AI-2 Certificates, by Pro Rata Allocation, until their respective Certificate Principal Balances have been reduced to zero and (ii) second, to the Class A-1 and Class AI-1 Certificates, by Pro Rata Allocation, until their respective Certificate Principal Balances have been reduced to zero.

Section 4.3

Reduction of Certificate Principal Balances on the Certificates.

(a)

All reductions in the Certificate Principal Balance of a Certificate effected by distributions of principal or allocations of Realized Losses with respect to the related Loans made on any Distribution Date shall be binding upon all Holders of such Certificate and of any Certificate issued upon the registration of transfer or exchange therefor or in lieu thereof, whether or not such distribution is noted on such Certificate. Holders of such Certificates will not be entitled to any payment in respect of current interest on the amount of such increases for any Interest Accrual Period preceding the Distribution Date on which such increase occurs.

(b)

The final distribution of principal of each Certificate (and the final distribution with respect to the Residual Certificates upon termination of the Trust Fund) shall be payable in the manner provided above only upon presentation and surrender thereof on or after the Distribution Date therefor at the office or agency of the Securities Administrator specified in the notice delivered pursuant to Section 4.6 or Section 10.2.

(c)

Whenever, on the basis of Curtailments, Payoffs and Monthly Payments on the Loans and related Insurance Proceeds and Liquidation Proceeds received and expected to be received during the applicable Prepayment Period, the Securities Administrator believes that the entire remaining unpaid aggregate Certificate Principal Balance of any Class of Certificates shall become distributable on the next Distribution Date, the Securities Administrator shall, no later than the Determination Date of the month of such Distribution Date, mail or cause to be mailed to each Person in whose name a Certificate to be so retired is registered at the close of business on the Record Date, to the Underwriter and to each Rating Agency a notice to the effect that:

(i)

it is expected that funds sufficient to make such final distribution shall be available in the Distribution Account on such Distribution Date, and

(ii)

if such funds are available, (A) such final distribution shall be payable on such Distribution Date, but only upon presentation and surrender of such Certificate at the office or agency of the Securities Administrator maintained for such purpose (the address of which shall be set forth in such notice), and (B) no interest shall accrue on such Certificate after such Distribution Date.

Section 4.4

REMIC Distributions.

(a)

On each Distribution Date, amounts shall be allocated to the interests in each of the REMICs as set forth in the Preliminary Statement hereto.

(b)

Notwithstanding the distributions described in this Section 4.4, distributions of funds shall be made to Certificateholders only in accordance with Section 4.1.

Section 4.5

Compliance with Withholding Requirements.  

Notwithstanding any other provision of this Agreement and the Securities Administrator shall comply with all federal withholding requirements respecting payments to Certificateholders of interest or original issue discount that the Securities Administrator reasonably believe are applicable under the Code. The consent of Certificateholders shall not be required for such withholding. In the event the Securities Administrator does withhold any amount from interest or original issue discount payments or advances thereof to any Certificateholder pursuant to federal withholding requirements, the Securities Administrator shall indicate the amount withheld to such Certificateholders.

Section 4.6

Statements to Certificateholders.

On each Distribution Date, the Securities Administrator shall provide or make available, upon request to each Holder of a Certificate and the Credit Risk Manager, a statement (each, a “Remittance Report”) as to the distributions made to such Certificateholders on such Distribution Date setting forth:

(i)

the amount of the distribution made on such Distribution Date to the Holders of the Certificates allocable to principal;

(ii)

the amount of the distribution made on such Distribution Date to the Holders of the Certificates allocable to interest;

(iii)

the aggregate Servicing Fee received by each Servicer and the Master Servicing Compensation received by the Master Servicer during the related Due Period;

(iv)

the number and aggregate Principal Balance of the Loans delinquent one, two and three months or more;

(v)

the (A) number and aggregate Principal Balance of Loans with respect to which foreclosure proceedings have been initiated, and (B) the number and aggregate Principal Balance of Mortgaged Properties acquired through foreclosure, deed in lieu of foreclosure or other exercise of rights respecting the Trustee’s security interest in the Loans;

(vi)

the aggregate Principal Balance of the Loans as of the close of business on the last day of the related Prepayment Period;

(vii)

the amount of Realized Losses with respect to the Loans allocable to the Certificates on the related Distribution Date and the cumulative amount of Realized Losses incurred and allocated to the Certificates since the Cut-Off Date;

(viii)

the amount of interest accrued but not paid to each Class of Certificates entitled to interest since (a) the prior Distribution Date and (b) the Closing Date;

(ix)

the amount of funds advanced by each Servicer and the Master Servicer for such Distribution Date with respect to the Loans;

(x)

the total amount of Payoffs and Curtailments received during the related Prepayment Period with respect to Loans and the aggregate amount of any Prepayment Charges received in respect thereof;

(xi)

with respect to any Loan that became an REO Property during the preceding calendar month, the loan number of such Loan, the Principal Balance and the Scheduled Principal Balance of such Loan;

(xii)

to the extent provided by the related Servicer, the book value of any REO Property as of the close of business on the last Business Day of the calendar month preceding the Distribution Date with respect to the Loans;

(xiii)

[reserved];

(xiv)

the aggregate Certificate Principal Balance of each Class of Certificates, after giving effect to the distributions and allocations of Realized Losses made on such Distribution Date, separately identifying any reduction thereof due to allocations of Realized Losses;

(xv)

the aggregate amount of any Prepayment Interest Shortfalls for such Distribution Date on the Loans to the extent not covered by payments by the Master Servicer pursuant to Section 3.20;

(xvi)

the aggregate amount of Relief Act Interest Shortfalls for such Distribution Date with respect to the Loans; and

(xvii)

the respective Pass-Through Rates applicable to each Class of Certificates as of such Distribution Date.

The Securities Administrator shall make such statement (and, at its option, any additional files containing the same information in an alternative format) available each month to the Certificateholders, the Trustee and the Rating Agencies via the Securities Administrator’s internet website. The Securities Administrator’s internet website shall initially be located at http:\\www.ctslink.com and assistance in using the website can be obtained by calling the Securities Administrator’s customer service desk at 1-301-815-6600. Parties that are unable to use the above distribution option are entitled to have a paper copy mailed to them via first class mail by calling the customer service desk and indicating such. The Securities 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 Securities Administrator shall provide timely and adequate notification to all above parties regarding any such changes.

In the case of information furnished pursuant to subclause (i) above, the amounts shall be expressed as a dollar amount per single Certificate of the relevant Class.

Within a reasonable period of time after the end of each calendar year, the Securities Administrator shall furnish to each Person who at any time during the calendar year was a Holder of a Certificate that is a Regular Interest Certificate a statement containing the information set forth in subclause (i) above, aggregated for such calendar year or applicable portion thereof during which such person was a Certificateholder. Such obligation of the Securities Administrator shall be deemed to have been satisfied to the extent that substantially comparable information shall be provided by the Securities Administrator pursuant to any requirements of the Code as from time to time are in force.

Within a reasonable period of time after the end of each calendar year, the Securities Administrator shall furnish to each Person who at any time during the calendar year was a Holder of a Class AR Certificate a statement setting forth the amount, if any, actually distributed with respect to the Class AR Certificates aggregated for such calendar year or applicable portion thereof during which such Person was a Certificateholder.

The Securities Administrator shall, upon request, furnish to each Certificateholder, during the term of this Agreement, such periodic, special, or other reports or information, whether or not provided for herein, as shall be reasonable with respect to the Certificateholder, as applicable, or otherwise with respect to the purposes of this Agreement, all such reports or information to be provided at the expense of the Certificateholder, in accordance with such reasonable and explicit instructions and directions as the Certificateholder may provide.

On each Distribution Date, the Securities Administrator shall provide Bloomberg Financial Markets, L.P. (“Bloomberg”) CUSIP level factors for each Class of Certificates as of such Distribution Date, using a format and media mutually acceptable to the Securities Administrator and Bloomberg.

Section 4.7

Advances.

If the Monthly Payment on a Loan or a portion thereof is delinquent as of its Due Date, other than as a result of interest shortfalls due to bankruptcy proceedings or application of the Relief Act, and the related Servicer fails to make an advance of the delinquent amount pursuant to the related Servicing Agreement, the Master Servicer shall deposit in the Distribution Account, from its own funds or from amounts on deposit in the Distribution Account that are held for future distribution, not later than the Distribution Account Deposit Date immediately preceding the related Distribution Date an amount equal to such delinquency, net of the Servicing Fee and Master Servicing Fee for such Loan except to the extent the Master Servicer determines any such advance to be nonrecoverable from Liquidation Proceeds, Insurance Proceeds, or future payments on the Loan for which such Advance was made. Any amounts held for future distribution and so used shall be appropriately reflected in the Master Servicer’s records and replaced by the Master Servicer by deposit in the Distribution Account on or before any future Distribution Account Deposit Date to the extent that related Available Distribution Amount (determined without regard to Advances to be made on the related Distribution Account Deposit Date) shall be less than the total amount that would be distributed to the related Classes of Certificateholders pursuant to Section 4.1 on such Distribution Date if such amounts held for future distributions had not been so used to make Advances. Subject to the foregoing, the Master Servicer shall continue to make such Advances through the date that the related Servicer is required to do so under its Servicing Agreement. In the event the Master Servicer elects not to make an Advance because the Master Servicer deems such Advance nonrecoverable pursuant to this Section 4.7, on the related Distribution Account Deposit Date, the Master Servicer shall present an Officer’s Certificate to the Trustee (i) stating that the Master Servicer elects not to make an Advance in a stated amount and (ii) detailing the reason it deems the advance to be nonrecoverable.

ARTICLE V

THE CERTIFICATES

Section 5.1

The Certificates.  

(a)

Each of the Certificates shall be substantially in the forms annexed hereto as exhibits, and shall, on original issue, be executed and authenticated by the Securities Administrator and delivered by the Trustee to or upon the receipt of a written order to authenticate from the Depositor concurrently with the sale and assignment to the Trustee of the Trust Fund.  

(b)

The Certificates shall be executed by manual or facsimile signature on behalf of the Trust Fund by a Responsible Officer of the Securities Administrator.  Certificates bearing the manual or facsimile signatures of individuals who were, at the time such signatures were affixed, authorized to sign on behalf of the Securities Administrator shall bind the Trust Fund, notwithstanding that such individuals or any of them have ceased to be so authorized prior to the authentication and delivery of such Certificates or did not hold such offices at the date of such Certificate.  No Certificate shall be entitled to any benefit under this Agreement or be valid for any purpose, unless such Certificate shall have been manually authenticated by the Securities Administrator substantially in the form provided for herein, and such authentication upon any Certificate shall be conclusive evidence, and the only evidence, that such Certificate has been duly authenticated and delivered hereunder.  All Certificates shall be dated the date of their authentication.  Subject to Section 5.3, the Senior Certificates and Subordinate Certificates shall be Book-Entry Certificates.  On the Closing Date, the Class AR and Class P Certificates shall not be Book-Entry Certificates but shall be issued in fully registered certificate form.

(c)

Neither the Trustee nor the Securities Administrator shall have any liability to the Trust Fund and shall be indemnified by the Trust Fund for, any cost, liability or expense incurred by them arising from a registration of a Certificate or transfer, pledge sale or other disposition of a Certificate in reliance upon a certification, Officer’s Certificate, affidavit, ruling or Opinion of Counsel described in this Article V.

Section 5.2

Certificates Issuable in Classes; Distributions of Principal and Interest; Authorized Denominations.

The aggregate principal amount of Certificates that may be authenticated and delivered under this Agreement is limited to the aggregate Principal Balance of the Loans as of the Cut-Off Date, as specified in the Preliminary Statement to this Agreement, except for Certificates authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Certificates pursuant to Section 5.3. Such aggregate principal amount shall be allocated among one or more Classes having designations, types of interests, initial per annum Pass-Through Rates, initial Certificate Principal Balances and Last Scheduled Distribution Dates, as specified in the Preliminary Statement to this Agreement. The aggregate Percentage Interest of each Class of Certificates of which the Certificate Principal Balance equals zero as of the Cut-Off Date that may be authenticated and delivered under this Agreement is limited to 100%. Certificates shall be issued in Authorized Denominations.

Section 5.3

Registration of Transfer and Exchange of Certificates.

(a)

The Securities Administrator shall cause to be kept at its Corporate Trust Office a Certificate Register in which, subject to such reasonable regulations as it may prescribe, the Securities Administrator shall provide for the registration of Certificates and of transfers and exchanges of Certificates as herein provided.

Upon surrender for registration of transfer of any Certificate at the Corporate Trust Office of the Securities Administrator maintained for such purpose pursuant to the foregoing paragraph for certificate transfer and surrender purposes, and, in the case of the Junior Subordinate Certificates, Class P Certificates or the Residual Certificates, upon satisfaction of the conditions set forth in Sections 5.3(d), (e) and (f) below, as applicable, the Securities Administrator on behalf of the Trust shall execute, authenticate and deliver, in the name of the designated transferee or transferees, one or more new Certificates of the same aggregate Percentage Interest.

At the option of the Certificateholders, Certificates may be exchanged for other Certificates in Authorized Denominations and the same aggregate Percentage Interests, upon surrender of the Certificates to be exchanged at any such office or agency. Whenever any Certificates are so surrendered for exchange, the Securities Administrator shall execute, authenticate and deliver the Certificates which the Certificateholder making the exchange is entitled to receive. Every Certificate presented or surrendered for registration of transfer or exchange shall (if so required by the Securities Administrator) be duly endorsed by, or be accompanied by a written instrument of transfer satisfactory to the Securities Administrator duly executed by, the Holder thereof or his attorney duly authorized in writing.

(b)

Except as provided herein, the Book-Entry Certificates shall at all times remain registered in the name of the Depository or its nominee and at all times:  (i) registration of such Certificates may not be transferred by the Securities Administrator except to another Depository; (ii) the Depository shall maintain book-entry records with respect to the Certificate Owners and with respect to ownership and transfers of such Certificates; (iii) ownership and transfers of registration of such Certificates on the books of the Depository shall be governed by applicable rules established by the Depository; (iv) the Depository may collect its usual and customary fees, charges and expenses from its Depository Participants; (v) the Trustee and the Securities Administrator shall for all purposes deal with the Depository as representative of the Certificate Owners of the Certificates for purposes of exercising the rights of Holders under this Agreement, and requests and directions for and votes of such representative shall not be deemed to be inconsistent if they are made with respect to different Certificate Owners; (vi) the Trustee and the Securities Administrator may rely and shall be fully protected in relying upon information furnished by the Depository with respect to its Depository Participants and furnished by the Depository Participants with respect to indirect participating firms and Persons shown on the books of such indirect participating firms as direct or indirect Certificate Owners; and (vii) the direct participants of the Depository shall have no rights under this Agreement under or with respect to any of the Certificates held on their behalf by the Depository, and the Depository may be treated by the Trustee, the Securities Administrator and either the Trustee’s or the Securities Administrator’s agents, employees, officers and directors as the absolute owner of the Certificates for all purposes whatsoever.

All transfers by Certificate Owners of Book-Entry Certificates shall be made in accordance with the procedures established by the Depository Participant or brokerage firm representing such Certificate Owners. Each Depository Participant shall only transfer Book-Entry Certificates of Certificate Owners that it represents or of brokerage firms for which it acts as agent in accordance with the Depository’s normal procedures. The parties hereto are hereby authorized to execute a Letter of Representations with the Depository or take such other action as may be necessary or desirable to register a Book-Entry Certificate to the Depository. In the event of any conflict between the terms of any such Letter of Representation and this Agreement, the terms of this Agreement shall control.

(c)

If (i)(x) the Depository or the Depositor advises the Securities Administrator in writing that the Depository is no longer willing or able to discharge properly its responsibilities as Depository and (y) the Securities Administrator or the Depositor is unable to locate a qualified successor, (ii) the Depositor, at its sole option, with the consent of the Securities Administrator, elects to terminate the book-entry system through the Depository or (iii) after the occurrence of a Master Servicer Event of Default, the Certificate Owners of the Book-Entry Certificates representing Percentage Interests of such Classes aggregating not less than 66% advise the Securities Administrator and Depository through the Depository Participants in writing that the continuation of a book-entry system through the Depository is no longer in the best interests of the Certificate Owners, the Securities Administrator shall notify all Holders of Book-Entry Certificates of the occurrence of any such event and of the availability of definitive, fully registered Certificates (“Definitive Certificates”) to Certificate Owners requesting the same. Upon surrender to the Securities Administrator of the Book-Entry Certificates by the Depository, accompanied by registration instructions from the Depository for registration, the Securities Administrator shall, at the Depositor’s expense, in the case of (i) and (ii) above, or the Master Servicer’s expense, in the case of (iii) above, execute on behalf of the Trust and authenticate the Definitive Certificates. None of the Depositor, the Master Servicer, the Trustee or the Securities Administrator shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions. Upon the issuance of Definitive Certificates, the Trustee, the Securities Administrator, the Master Servicer and the Depositor shall recognize the Holders of the Definitive Certificates as Certificateholders hereunder.

(d)

No Transfer of a Junior Subordinate Certificate, Class P Certificate or Residual Certificate shall be made unless such Transfer is made pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “1933 Act”) and any applicable state securities laws or is exempt from the registration requirements under the 1933 Act and such state securities laws. In the event of any such transfer in reliance upon an exemption from the 1933 Act and such state securities laws, in order to assure compliance with the 1933 Act and such state securities laws, the Certificateholder desiring to effect such Transfer and such Certificateholder’s prospective Transferee shall each certify to the Securities Administrator in writing the facts surrounding the Transfer in substantially the forms set forth in Exhibit D (the “Transferor Certificate”) and (x) deliver a letter in substantially the form of either Exhibit E (the “Investment Letter”) or Exhibit F (the “Rule 144A Letter”) or (y) there shall be delivered to the Depositor and the Securities Administrator an Opinion of Counsel acceptable to and in form reasonably satisfactory to the Depositor and the Securities Administrator that such Transfer may be made pursuant to an exemption from the Securities Act, which Opinion of Counsel shall not be an expense of the Depositor, the Seller, the Master Servicer, the Securities Administrator or the Trustee.  Each Holder of a Junior Subordinate Certificate, Class P Certificate or Residual Certificate desiring to effect such Transfer shall, and does hereby agree to, indemnify the Trustee, the Depositor, the Seller, the Securities Administrator and the Master Servicer against any liability that may result if the Transfer is not so exempt or is not made in accordance with such federal and state laws.

(e)

No transfer of an ERISA-Restricted Certificate shall be made unless the Securities Administrator shall have received in accordance with Exhibit C or Exhibit O as applicable, either (i) a representation letter from the transferee of such Certificate, acceptable to and in form and substance satisfactory to the Securities Administrator, to the effect that such transferee is not a Plan or a Person acquiring such ERISA-Restricted Certificate for, on behalf of or with the assets of, any such Plan, (a “Benefit Plan Investor”), which representation letter shall not be an expense of the Trustee or the Trust Fund, (ii) in the case of an ERISA-Restricted Certificate, if the purchaser is an insurance company and the Certificate has been the subject of an ERISA-Qualifying Underwriting, a representation that the purchaser is an insurance company which is purchasing such Certificates with funds contained in an “insurance company general account” (as such term is defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 (“PTCE 95-60”)) and that the purchase and holding of such Certificates are covered under Sections I and III of PTCE 95-60 or (iii) in the case of any ERISA-Restricted Certificate presented for registration in the name of a Benefit Plan Investor without a representation as required above, an Opinion of Counsel satisfactory to the Securities Administrator to the effect that the purchase or holding of such Certificate will not result in prohibited transactions under Section 406 of ERISA and/or Section 4975 of the Code and will not subject the Depositor, the Seller, the Trustee, the Master Servicer or the Securities Administrator to any obligation in addition to those undertaken in this Agreement, which Opinion of Counsel shall not be an expense of such parties.  In the event the representations referred to in the preceding sentence are not furnished, such representations shall be deemed to have been made to the Trustee and the Securities Administrator by the transferee’s acceptance of an ERISA-Restricted Certificate by any beneficial owner who purchases an interest in such Certificate in book-entry form.  In the event that a representation is violated, or any attempt to transfer an ERISA-Restricted Certificate to a Benefit Plan Investor is attempted without the delivery to the Securities Administrator of the Opinion of Counsel described above, the attempted transfer or acquisition of such Certificate shall be void and of no effect.

Neither the Trustee nor the Securities Administrator shall have any  liability to any Person for any registration of transfer of any ERISA-Restricted Certificate that is in fact not permitted by this Section 5.3(e) or for making any payments due on such Certificate to the Holder thereof or taking any other action with respect to such Holder under the provisions of this Agreement so long as the transfer was registered by the Securities Administrator in accordance with the foregoing requirements.

(f)

Each Transferee of a Residual Certificate shall be deemed by the acceptance or acquisition of the related Ownership Interest to have agreed to be bound by the following provisions and to have irrevocably appointed the Depositor or its designee as its attorney-in-fact to negotiate the terms of any mandatory sale under clause (v) below and to execute all instruments of transfer and to do all other things necessary in connection with any such sale, and the rights of each Transferee of a Residual Certificate are expressly subject to the following provisions:

(i)

Each such Transferee shall be a Permitted Transferee and shall promptly notify the Securities Administrator of any change or impending change in its status as a Permitted Transferee.

(ii)

No Person shall acquire an Ownership Interest in a Residual Certificate unless such Ownership Interest is a pro rata undivided interest.

(iii)

Any attempted or purported transfer of any Ownership Interest in a Residual Certificate in violation of the provisions of this Section shall be absolutely null and void and shall vest no rights in the purported Transferee. If any purported Transferee shall, in violation of the provisions of this Section, become a Holder of a Residual Certificate, then the prior Holder of such Residual Certificate that is a Permitted Transferee shall, upon discovery that the registration of transfer of such Residual Certificate was not in fact permitted by this Section, be restored to all rights as Holder thereof retroactive to the date of registration of transfer of such Residual Certificate.  The Securities Administrator shall be under no liability to any Person for any registration of transfer of a Residual Certificate that is in fact not permitted by this Section or for making any distributions due on such Residual Certificate to the Holder thereof or taking any other action with respect to such Holder under the provisions of this Agreement so long as the Securities Administrator received the documents specified in clause (ii).  The Securities Administrator shall be entitled to recover from any Holder of a Residual Certificate that was in fact not a Permitted Transferee at the time such distributions were made all distributions made on such Residual Certificate. Any such distributions so recovered by the Securities Administrator shall be distributed and delivered by the Securities Administrator to the prior Holder of such Residual Certificate that is a Permitted Transferee.

(iv)

If any Person other than a Permitted Transferee acquires any Ownership Interest in a Residual Certificate in violation of the restrictions in this Section, then the Securities Administrator shall have the right but not the obligation, without notice to the Holder of such Residual Certificate or any other Person having an Ownership Interest therein, to notify the Depositor to arrange for the sale of such Residual Certificate. The proceeds of such sale, net of commissions (which may include commissions payable to the Depositor or its affiliates in connection with such sale), expenses and taxes due, if any, will be remitted by the Securities Administrator to the previous Holder of such Residual Certificate that is a Permitted Transferee, except that in the event that the Securities Administrator determines that the Holder of such Residual Certificate may be liable for any amount due under this Section or any other provisions of this Agreement, the Securities Administrator may withhold a corresponding amount from such remittance as security for such claim. The terms and conditions of any sale under this clause (iv) shall be determined in the sole discretion of the Securities Administrator and it shall not be liable to any Person having an Ownership Interest in a Residual Certificate as a result of its exercise of such discretion.

(v)

If any Person other than a Permitted Transferee acquires any Ownership Interest in a Residual Certificate in violation of the restrictions in this Section, then the Securities Administrator upon receipt of reasonable compensation will provide to the Internal Revenue Service, and to the persons specified in Sections 860E(e)(3) and (6) of the Code, information needed to compute the tax imposed under Section 860E(e)(5) of the Code on transfers of Residual interests to Disqualified Organizations.

The foregoing provisions of this Section shall cease to apply to transfers occurring on or after the date on which there shall have been delivered to the Securities Administrator, in form and substance satisfactory to the Securities Administrator, (i) written notification from each Rating Agency that the removal of the restrictions on transfer set forth in this Section will not cause such Rating Agency to downgrade its rating of the Certificates and (ii) an Opinion of Counsel to the effect that such removal will not cause any REMIC created hereunder to fail to qualify as a REMIC.  The Holder of a Class of Residual Certificate issued hereunder, while not a Disqualified Organization, is the Tax Matters Person with respect to the related REMICs.

(g)

No service charge shall be made for any registration of transfer or exchange of Certificates of any Class, but the Securities Administrator may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Certificates.

All Certificates surrendered for registration of transfer or exchange shall be canceled by the Securities Administrator and disposed of pursuant to its standard procedures.

Section 5.4

Mutilated, Destroyed, Lost or Stolen Certificates.

If (i) any mutilated Certificate is surrendered to the Securities Administrator, or (ii) the Securities Administrator receives evidence to its satisfaction of the destruction, loss or theft of any Certificate, and there is delivered to the Securities Administrator such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Securities Administrator that such Certificate has been acquired by a protected purchaser, the Securities Administrator shall execute, authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like Percentage Interest. Upon the issuance of any new Certificate under this Section 5.4, the Trustee or the Securities Administrator may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses connected therewith. Any replacement Certificate issued pursuant to this Section 5.4 shall constitute complete and indefeasible evidence of ownership in the Trust Fund, as if originally issued, whether or not the lost or stolen Certificate shall be found at any time.

Section 5.5

Persons Deemed Owners.

The Depositor, the Securities Administrator, the Master Servicer, the Trustee and any agent of any of them may treat the Person in whose name any Certificate is registered as the owner of such Certificate for the purpose of receiving distributions pursuant to Section 4.1 and for all other purposes whatsoever, and none of the Depositor, the Securities Administrator, the Master Servicer, the Trustee, or any agent of the Depositor, the Securities Administrator, the Master Servicer or the Trustee shall be affected by notice to the contrary.

ARTICLE VI

THE DEPOSITOR, MASTER SERVICER AND THE CREDIT RISK MANAGER

Section 6.1

Liability of the Depositor and the Master Servicer.  

The Depositor and the Master Servicer each shall be liable in accordance herewith only to the extent of the obligations specifically imposed by this Agreement upon them in their respective capacities as Depositor and Master Servicer and undertaken hereunder by the Depositor and the Master Servicer herein.

Section 6.2

Merger or Consolidation of the Depositor or the Master Servicer.  

Subject to the following paragraph, the Depositor shall keep in full effect its existence, rights and franchises as a corporation under the laws of the jurisdiction of its incorporation. Subject to the following paragraph, the Master Servicer shall keep in full effect its existence, rights and franchises as a corporation under the laws of the jurisdiction of its formation. The Depositor and the Master Servicer each 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, the Certificates or any of the Loans and to perform its respective duties under this Agreement.

The Depositor or the Master Servicer may be merged or consolidated with or into any Person, or transfer all or substantially all of its assets to any Person, in which case any Person resulting from any merger or consolidation to which the Depositor or the Master Servicer shall be a party, or any Person succeeding to the business of the Depositor or the Master Servicer, shall be the successor of the Depositor or the Master Servicer, as the case may be, hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding; provided, that the Rating Agencies’ ratings of the Certificates in effect immediately prior to such merger or consolidation will not be qualified, reduced or withdrawn as a result thereof (as evidenced by a letter to such effect from the Rating Agencies).

Section 6.3

Limitation on Liability of the Depositor, the Master Servicer, the Servicers, the Securities Administrator and Others.  

None of the Depositor, the Master Servicer, the Securities Administrator, the Servicers or any of the directors, officers, employees or agents of the Depositor, the Master Servicer, the Securities Administrator or the Servicers shall be under any liability to the Trust Fund or the Certificateholders for any action taken or for refraining from the taking of any action in good faith pursuant to this Agreement or the Servicing Agreements, or for errors in judgment; provided, however, that this provision shall not protect the Depositor, the Master Servicer, the Securities Administrator, the Servicers or any such person against any breach of warranties, representations or covenants made herein or in the Servicing Agreements, or against any specific liability imposed on the Master Servicer, the Securities Administrator or the Servicers pursuant hereto or pursuant to the Servicing Agreements, or against any liability which would otherwise be imposed by reason of willful misfeasance, bad faith or gross negligence in the performance of duties or by reason of reckless disregard of obligations and duties hereunder or under the Servicing Agreements. The Depositor, the Master Servicer, the Securities Administrator, the Servicers and any director, officer, employee or agent of the Depositor, the Master Servicer, the Securities Administrator or the Servicers 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 or under the Servicing Agreements. The Depositor, the Master Servicer, the Servicers, the Securities Administrator, the Custodian and any director, officer, employee or agent of the Depositor, the Master Servicer, the Servicers, the Custodians or the Securities Administrator shall be indemnified and held harmless by the Trust Fund against any loss, liability or expense incurred in connection with any legal action relating to this Agreement, the Certificates or any Servicing Agreement, or any loss, liability or expense incurred by any of such Persons other than by reason of such Person’s willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder or by reason of reckless disregard of its obligations and duties hereunder. None of the Depositor, the Master Servicer, the Securities Administrator, any Custodian or any Servicer shall be under any obligation to appear in, prosecute or defend any legal action unless such action is related to its respective duties under this Agreement, the Custodial Agreement or the applicable Servicing Agreement and, in its opinion, does not involve it in any expense or liability; provided, however, that each of the Depositor, the Master Servicer, the Custodians and the Securities Administrator may in its discretion undertake any such action which it may deem necessary or desirable with respect to this Agreement and the rights and duties of the parties hereto and the interests of the Certificateholders hereunder. In such event, the legal expenses and costs of such action and any liability resulting therefrom (except any loss, liability or expense incurred by reason of willful misfeasance, bad faith or gross negligence in the performance of duties hereunder or by reason of reckless disregard of obligations and duties hereunder) shall be expenses, costs and liabilities of the Trust Fund, and the Depositor, the Master Servicer, the Custodians, the Servicers and the Securities Administrator shall be entitled to be reimbursed therefor from the Distribution Account as and to the extent provided in Article III, any such right of reimbursement being prior to the rights of the Certificateholders to receive any amount in the Distribution Account.

Section 6.4

Limitation on Resignation of the Master Servicer.  

The Master Servicer shall not resign from the obligations and duties hereby imposed on it except upon determination that its duties hereunder are no longer permissible under applicable law. Any such determination pursuant to the preceding sentence permitting the resignation of the Master Servicer shall be evidenced by an Opinion of Counsel to such effect obtained at the expense of the Master Servicer and delivered to the Trustee and the Rating Agencies. No resignation of the Master Servicer shall become effective until the Trustee or a successor Master Servicer shall have assumed the Master Servicer’s responsibilities, duties, liabilities (other than those liabilities arising prior to the appointment of such successor) and obligations under this Agreement.

Section 6.5

Assignment of Master Servicing.  

The Master Servicer may sell and assign its rights and delegate its duties and obligations in its entirety as Master Servicer under this Agreement; provided, however, that:  (i) the purchaser or transferee accepting such assignment and delegation (a) shall be a Person which shall be qualified to service mortgage loans for Fannie Mae or Freddie Mac; (b) shall have a net worth of not less than $25,000,000 (unless otherwise approved by each Rating Agency pursuant to clause (ii) below); (c) shall be reasonably satisfactory to the Trustee (as evidenced in a writing signed by the Trustee); and (d) shall execute and deliver to the Trustee an agreement, in form and substance reasonably satisfactory to the Trustee, which contains an assumption by such Person of the due and punctual performance and observance of each covenant and condition to be performed or observed by it as master servicer under this Agreement, any custodial agreement from and after the effective date of such agreement; (ii) each Rating Agency shall be given prior written notice of the identity of the proposed successor to the Master Servicer and each Rating Agency’s rating of the Certificates in effect immediately prior to such assignment, sale and delegation will not be downgraded, qualified or withdrawn as a result of such assignment, sale and delegation, as evidenced by a letter to such effect delivered to the Master Servicer and the Trustee; and (iii) the Master Servicer assigning and selling the master servicing shall deliver to the Trustee an officer’s certificate and an Opinion of Independent counsel, each stating that all conditions precedent to such action under this Agreement have been completed and such action is permitted by and complies with the terms of this Agreement. No such assignment or delegation shall affect any liability of the Master Servicer arising prior to the effective date thereof.

Section 6.6

Rights of the Depositor in Respect of the Master Servicer.  

The Master Servicer shall afford the Depositor and the Trustee, upon reasonable notice, during normal business hours, access to all records maintained by the Master Servicer in respect of the Master Servicer’s rights and obligations hereunder and access to officers of the Master Servicer responsible for such obligations. Upon request, the Master Servicer shall furnish to the Depositor and the Trustee the most recent financial statements of its parent and such other information relating to the Master Servicer’s capacity to perform its obligations under this Agreement as it possesses. To the extent the Depositor and the Trustee are informed that such information is not otherwise available to the public, the Depositor and the Trustee shall not disseminate any information obtained pursuant to the preceding two sentences without the Master Servicer’s written consent, except as required pursuant to this Agreement or to the extent that it is appropriate to do so (i) in working with legal counsel, auditors, taxing authorities or other governmental agencies or (ii) pursuant to any law, rule, regulation, order, judgment, writ, injunction or decree of any court or governmental authority having jurisdiction over the Depositor, the Trustee or the Trust Fund, and in any case, the Depositor or the Trustee, as the case may be, shall use its best efforts to assure the confidentiality of any such disseminated non-public information. The Depositor may, but is not obligated to, enforce the obligations of the Master Servicer under this Agreement and may, but is not obligated to, perform, or cause a designee to perform, any defaulted obligation of the Master Servicer under this Agreement or exercise the rights of the Master Servicer under this Agreement; provided that the Master Servicer shall not be relieved of any of its obligations under this Agreement by virtue of such performance by the Depositor or its designee. The Depositor shall not have any responsibility or liability for any action or failure to act by the Master Servicer and is not obligated to supervise the performance of the Master Servicer under this Agreement or otherwise.

Section 6.7

Duties of the Credit Risk Manager

For and on behalf of the Depositor, pursuant to the Credit Risk Management Agreements the Credit Risk Manager will provide reports and recommendations concerning certain delinquent and defaulted Loans, and as to the collection of any Prepayment Charges with respect to the Loans.  Such reports and recommendations will be based upon information provided to the Credit Risk Manager pursuant to the related Credit Risk Management Agreement, and the Credit Risk Manager shall look solely to the related Servicer and/or Master Servicer for all information and data (including loss and delinquency information and data) relating to the servicing of the related Loans.  Upon any termination of the Credit Risk Manager or the appointment of a successor Credit Risk Manager, the Depositor shall give written notice thereof to the Servicers, the Master Servicer, the Trustee and each Rating Agency.  Notwithstanding the foregoing, the termination of the Credit Risk Manager pursuant to this Section shall not become effective until the appointment of a successor Credit Risk Manager.

Section 6.8

Limitation Upon Liability of the Credit Risk Manager.

Neither the Credit Risk Manager, nor any of its directors, officers, employees, or agents shall be under any liability to the Trustee, the Certificateholders or the Depositor for any action taken or for refraining from the taking of any action made in good faith pursuant to this Agreement, in reliance upon information provided by a Servicer under a Credit Risk Management Agreement, or for errors in judgment; provided, however, that this provision shall not protect the Credit Risk Manager or any such person against liability that would otherwise be imposed by reason of willful malfeasance or bad faith in its performance of its duties.  The Credit Risk Manager and any director, officer, employee, or agent of the Credit Risk Manager 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, and may rely in good faith upon the accuracy of information furnished by a Servicer pursuant to a Credit Risk Management Agreement in the performance of its duties thereunder and hereunder.

Section 6.9

Removal of the Credit Risk Manager.

The Credit Risk Manager may be removed as Credit Risk Manager by Certificateholders evidencing, in aggregate, not less than 66 2/3% of the aggregate Percentage Interests of all Classes of Certificates, in the exercise of its or their sole discretion.  The Certificateholders shall provide written notice of the Credit Risk Manager’s removal to the Trustee.  Upon receipt of such notice, the Trustee shall provide written notice to the Credit Risk Manager of its removal, which shall be effective upon receipt of such notice by the Credit Risk Manager.

Section 6.10

Transfer of Servicing by the Seller of Certain Loans Serviced by GMAC; Special Servicer.

(a)

The Seller may, at its option, transfer the servicing responsibilities of GMACM as a Servicer with respect to the Loans serviced pursuant to the GMACM Servicing Agreement at any time without cause. No such transfer shall become effective unless and until a successor to GMACM shall have been appointed to service and administer the related Loans pursuant to the terms and conditions of the GMACM Servicing Agreement or a servicing agreement that is reasonably acceptable to the Seller, the Master Servicer and the Rating Agencies. No appointment shall be effective unless (i) such successor to GMACM meets the eligibility criteria set forth in this Section 6.10, (ii) the Master Servicer shall have consented to such appointment, (iii) the Rating Agencies have confirmed in writing that such appointment will not result in a downgrade, qualification or withdrawal of the then current ratings assigned to the Certificates and (iv) all amounts reimbursable to GMACM under the GMACM Servicing Agreement shall have been paid to GMACM, and all servicing transfer costs incurred by the Master Servicer shall have been paid to it, by the successor appointed pursuant to the terms of this Section 6.10 or by the Seller including without limitation, all unreimbursed Monthly Advances and Servicing Advances made by GMACM and all out-of-pocket expenses of GMACM incurred in connection with the transfer of servicing to such successor. The Seller shall provide a copy of the written confirmation of the Rating Agencies and the servicing agreement executed by such successor to the Trustee, the Securities Administrator, the Credit Risk Manager and the Master Servicer.  In connection with such appointment and assumption described herein, the Seller may make such arrangements for the compensation of such successor out of payments on Loans as it and such successor shall agree; provided, however, that no such compensation shall be in excess of that permitted GMACM under the GMACM Servicing Agreement. The Seller shall take such action, consistent with this Agreement, as shall be necessary to effectuate any such succession.

Notwithstanding the foregoing, any successor to GMACM appointed under this Agreement with respect to the Loans serviced pursuant to the GMACM Servicing Agreement must (i) be an established mortgage loan servicing institution that is a Fannie Mae and Freddie Mac approved seller/servicer, (ii) be approved by each Rating Agency by a written confirmation from each Rating Agency that the appointment of such successor Servicer would not result in the reduction or withdrawal of the then current ratings of any outstanding Class of Certificates, (iii) have a net worth of not less than $25,000,000 and (iv) assume all the responsibilities, duties or liabilities of GMACM (other than liabilities of GMACM incurred prior to the transfer of servicing from GMACM) under the GMACM Servicing Agreement in connection with the servicing and administration of the related Loans or a servicing agreement that is reasonably acceptable to the Seller, the Master Servicer and the Rating Agencies.

(b)

In addition, if any Loan serviced by GMACM becomes ninety (90) days or more delinquent, the Seller shall have the option to transfer servicing with respect to such delinquent Loan to a Special Servicer. Immediately upon the transfer of servicing to the Special Servicer with respect to any Loan, the Special Servicer shall service such Loan in accordance with the GMACM Servicing Agreement and a Special Servicer Agreement.  Upon the exercise of such option and with respect to Loans that currently or subsequently become ninety (90) days or more delinquent, servicing on such Loans will transfer to the Special Servicer, upon prior written notice to the Master Servicer, without any further action by the Seller.  Any Special Servicer Agreement shall be acceptable to the Master Servicer, the Trustee and the Rating Agencies and will not modify any material terms of the GMACM Servicing Agreement, including but not limited to, increasing the Servicing Fee which was payable to GMACM with respect to such Loan. Notwithstanding anything to the contrary contained herein, upon the transfer of servicing with respect to any such Loan to the Special Servicer, GMACM (or any successor thereto other than the Special Servicer) shall have no further rights, obligations or liabilities with respect to such Loan.  If any Loan is serviced by the Special Servicer and subsequently becomes less than ninety (90) days delinquent, such Loan shall be serviced by the Special Servicer in accordance with the GMACM Servicing Agreement exclusively, without regard to any Special Servicer Agreement.  Upon the appointment of the Special Servicer all provisions of the GMACM Servicing Agreement shall be binding on and enforceable against the Special Servicer as if such Special Servicer was an original signatory and party to the GMACM Servicing Agreement. Any costs and expenses of the Master Servicer in connection with the negotiation, execution and delivery of any Special Servicer Agreement and the transfer of servicing to a Special Servicer shall be an expense of the Seller.  In the event that a Special Servicer is appointed under this Agreement, the Master Servicer and the Securities Administrator shall be entitled with respect to such Special Servicer and its related Special Servicer Agreement, to all the benefits, rights, indemnities and limitations on liability accorded to them under this Agreement and the related Servicing Agreement in respect of GMACM.

ARTICLE VII

DEFAULT

Section 7.1

Master Servicer Events of Default.  

(a)

“Master Servicer Event of Default,” wherever used herein, means any one of the following events:

(i)

[Reserved];

(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, or the breach by the Master Servicer of any representation and warranty contained in Section 2.5, which continues unremedied for a period of 30 days after the date on which written notice of such failure, or as otherwise set forth in this Agreement, requiring the same to be remedied, shall have been given to the Master Servicer by the Depositor or the Trustee or to the Master Servicer, the Depositor and the Trustee by the Holders of Certificates evidencing, in aggregate, not less than 25% of the Voting Rights; or

(iii)

a decree or order of a court or agency or supervisory authority having jurisdiction in the premises in an involuntary case under any present or future federal or state bankruptcy, insolvency or similar law or the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceeding, 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 90 days; 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 or similar proceedings of or relating to it 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)

any failure of the Master Servicer to make any Advance on any Distribution Account Deposit Date required to be made from its own funds pursuant to Section 4.4 which continues unremedied until 3:00 p.m. New York time on the Business Day immediately following the Distribution Account Deposit Date; or

(vii)

failure by the Master Servicer to duly perform, within the required time period, its obligations under Section 3.16, 3.17 or 3.18 of this Agreement.

If a Master Servicer Event of Default described in clauses (ii) through (v) of this Section shall occur, then, and in each and every such case, so long as such Master Servicer Event of Default shall not have been remedied, the Depositor or the Trustee may, and at the written direction of the Holders of Certificates evidencing, in aggregate, not less than 51% of the aggregate Certificate Principal Balance of the Certificates, the Trustee shall, by notice in writing to the Master Servicer (and to the Depositor if given by the Trustee or to the Trustee if given by the Depositor) with a copy to each Rating Agency, terminate all of the rights and obligations of the Master Servicer (and the Securities Administrator if the Master Servicer and the Securities Administrator are the same entity) in its capacity as Master Servicer (and in its capacity as Securities Administrator if the Master Servicer and the Securities Administrator are the same entity) under this Agreement, to the extent permitted by law, and in and to the Loans and the proceeds thereof.  Except as otherwise provided in Section 7.4, if a Master Servicer Event of Default described in clause (vi) hereof shall occur, the Trustee shall, by notice in writing to the Master Servicer and the Depositor, promptly terminate all of the rights and obligations of the Master Servicer (and the Securities Administrator if the Master Servicer and the Securities Administrator are the same entity) in its capacity as Master Servicer under this Agreement (and in its capacity as Securities Administrator if the Master Servicer and the Securities Administrator are the same entity) and in and to the 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, if applicable, the Securities Administrator) under this Agreement, whether with respect to the Certificates (other than as a Holder of any Certificate) or the Loans or otherwise, shall pass to and be vested in the Trustee pursuant to and under this Section, and, without limitation, the Trustee is hereby authorized and empowered, as attorney-in-fact or otherwise, to execute and deliver, on behalf of and at the expense of the Master Servicer, (and, if applicable, the Securities Administrator) 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 Loans and related documents, or otherwise. The Master Servicer (and, if applicable, the Securities Administrator) agrees promptly (and in any event no later than ten Business Days subsequent to such notice) to provide the Trustee with all documents and records requested by it to enable it to assume the Master Servicer’s (and, if applicable, the Securities Administrator’s) functions under this Agreement, and to cooperate with the Trustee in effecting the termination of the Master Servicer’s (and, if applicable, the Securities Administrator’s) responsibilities and rights under this Agreement (provided, however, that the Master Servicer shall continue to be entitled to receive all amounts accrued or owing to it under this Agreement on or prior to the date of such termination, whether in respect of Advances or otherwise, and shall continue to be entitled to the benefits of Section 6.3, notwithstanding any such termination, with respect to events occurring prior to such termination). For purposes of this Section 7.1, the Trustee shall not be deemed to have knowledge of a Master Servicer Event of Default unless a Responsible Officer of the Trustee assigned to and working in the Trustee’s Corporate Trust Office has actual knowledge thereof or unless written notice of any event which is in fact such a Master Servicer Event of Default is received by the Trustee and such notice references the Certificates, the Trust or this Agreement.  The Trustee shall immediately notify the Rating Agencies of the occurrence of a Master Servicer Event of Default of which it has knowledge as provided above.

Section 7.2

Trustee to Act; Appointment of Successor.  

On and after the time the Master Servicer receives a notice of termination, the Trustee shall be the successor in all respects to the Master Servicer (and, if applicable, the Securities Administrator) in its capacity as Master Servicer (and, if applicable, the Securities Administrator) under this Agreement and the transactions set forth or provided for herein, and all the responsibilities, duties and liabilities relating thereto and arising thereafter shall be assumed by the Trustee (except for any representations or warranties of the Master Servicer under this Agreement, the responsibilities, duties and liabilities contained in Section 2.3 and the obligation to deposit amounts in respect of losses pursuant to Section 3.23(c)), including, without limitation, the Master Servicer’s obligations to make Advances no later than each Distribution Date pursuant to Section 4.4; provided, however, that if the Trustee is prohibited by law or regulation from obligating itself to make advances regarding delinquent mortgage loans, or if the Trustee determines that such advance would constitute a Non-Recoverable Advance, then the Trustee shall not be obligated to make Advances pursuant to Section 4.4; and provided further, that any failure to perform such duties or responsibilities caused by the Master Servicer’s failure to provide information required by Section 7.1 shall not be considered a default by the Trustee as successor to the Master Servicer hereunder and neither the Trustee nor any other successor master servicer shall be liable for any acts or omissions of the terminated master servicer.  As compensation therefor, the Trustee shall be entitled to the Master Servicing Fee and all funds relating to the Loans, investment earnings on the Distribution Account and all other remuneration to which the Master Servicer would have been entitled if it had continued to act hereunder. Notwithstanding the above and subject to the immediately following paragraph, the Trustee may, if it shall be unwilling to so act, or shall, if it is unable to so act or if it is prohibited by law from making advances regarding delinquent mortgage loans or if the Holders of Certificates evidencing, in aggregate, not less than 51% of the Certificate Principal Balance of the Certificates so request in writing promptly appoint or petition a court of competent jurisdiction to appoint, an established mortgage loan servicing institution acceptable to each Rating Agency and having a net worth of not less than $15,000,000, as the successor to the Master Servicer under this Agreement in the assumption of all or any part of the responsibilities, duties or liabilities of the Master Servicer under this Agreement.

Notwithstanding anything to the contrary, the Trustee’s obligation to act as successor securities administrator pursuant to this Section 7.2 shall extend only to the responsibilities of the Securities Administrator set forth in Article 4 herein.

No appointment of a successor to the Master Servicer (and, if applicable, the Securities Administrator) under this Agreement shall be effective until the assumption by the successor of all of the Master Servicer’s (and, if applicable, the Securities Administrator’s) responsibilities, duties and liabilities hereunder. In connection with such appointment and assumption described herein, the Trustee may make such arrangements for the compensation of such successor out of payments on Loans as it and such successor shall agree; provided, however, that no such compensation shall be in excess of that permitted the Master Servicer (and, if applicable, the Securities Administrator) as such hereunder. The Depositor, the Trustee and such successor shall take such action, consistent with this Agreement, as shall be necessary to effectuate any such succession. Pending appointment of a successor to the Master Servicer (and, if applicable, the Securities Administrator) under this Agreement, the Trustee shall act in such capacity as hereinabove provided. The transition costs and expenses incurred by the Trustee in connection with the replacement of the Master Servicer (and, if applicable, the Securities Administrator) shall be reimbursed out of the Trust.

Notwithstanding anything herein to the contrary, in no event shall the Trustee, in its individual capacity, be liable for any Servicing Fee or Master Servicing Fee or for any differential in the amount of the Servicing Fee or Master Servicing Fee paid hereunder or under the applicable Servicing Agreement and the amount necessary to induce any successor servicer or successor master servicer to act as successor servicer or successor master servicer, as applicable, under this Agreement or the applicable Servicing Agreement and the transactions set forth or provided for herein or in the applicable Servicing Agreement.

Section 7.3

Notification to Certificateholders.  

(a)

Upon any termination of the Master Servicer pursuant to Section 7.1 above or any appointment of a successor to the Master Servicer pursuant to Section 7.2 above, the Trustee shall give prompt written notice thereof the Certificateholders at their respective addresses appearing in the Certificate Register.

(b)

Not later than the later of 60 days after the occurrence of any event, which constitutes or which, with notice or lapse of time or both, would constitute a Master Servicer Event of Default or five days after a Responsible Officer of the Trustee becomes aware of the occurrence of such an event, the Trustee shall transmit by mail to all Holders of Certificates notice of each such occurrence, unless such default or Master Servicer Event of Default shall have been cured or waived.

Section 7.4

Waiver of Master Servicer Events of Default.  

The Holders evidencing, in aggregate, not less than 66 2/3% of the aggregate Percentage Interests of all Classes of Certificates affected by any default or Master Servicer Event of Default hereunder may waive such default or Master Servicer Event of Default; provided, however, that a default or Master Servicer Event of Default under clause (vi) of Section 7.1 may be waived only by all of the Holders of the Regular Interest Certificates. Upon any such waiver of a default or Master Servicer Event of Default, such default or Master Servicer Event of Default shall cease to exist and shall be deemed to have been remedied for every purpose hereunder. No such waiver shall extend to any subsequent or other default or Master Servicer Event of Default or impair any right consequent thereon except to the extent expressly so waived.  

ARTICLE VIII

CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR

Section 8.1

Duties of Trustee and Securities Administrator.  

The Trustee, prior to the occurrence of a Master Servicer Event of Default and after the curing or waiver of all Master Servicer Events of Default which may have occurred, and the Securities Administrator each undertake to perform such duties and only such duties as are specifically set forth in this Agreement as duties of the Trustee and the Securities Administrator, respectively. During the continuance of a Master Servicer Event of Default, the Trustee shall exercise such of the rights and powers vested in it by this Agreement, and use the same degree of care and skill in its exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs. Any permissive right of the Trustee enumerated in this Agreement shall not be construed as a duty.

Each of the Trustee and the Securities Administrator, upon receipt of all resolutions, certificates, statements, opinions, reports, documents, orders or other instruments furnished to it, which are specifically required to be furnished pursuant to any provision of this Agreement, shall examine them to determine whether they conform on their face to the requirements of this Agreement. If any such instrument is found not to conform on its face to the requirements of this Agreement, the Trustee or the Securities Administrator, as the case may be, shall take such action as it deems appropriate to have the instrument corrected, and if the instrument is not corrected to its satisfaction, the Securities Administrator shall provide notice to the Trustee thereof and the Trustee shall provide notice to the Certificateholders.

No provision of this Agreement shall be construed to relieve the Trustee or the Securities Administrator from liability for its own negligent action, its own negligent failure to act or its own misconduct; provided, however, that:

(i)

Prior to the occurrence of a Master Servicer Event of Default, and after the curing or waiver of all such Master Servicer Events of Default which may have occurred with respect to the Trustee and at all times with respect to the Securities Administrator, the duties and obligations of the Trustee and the Securities Administrator shall be determined solely by the express provisions of this Agreement, neither the Trustee nor the Securities Administrator shall 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 Trustee or the Securities Administrator and, in the absence of bad faith on the part of the Trustee or the Securities Administrator, respectively, the Trustee or the Securities Administrator, respectively, 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 Trustee or the Securities Administrator, respectively, that conform to the requirements of this Agreement;

(ii)

Neither the Trustee nor the Securities Administrator shall be liable for an error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee or an officer or officers of the Securities Administrator, respectively, unless it shall be proved that the Trustee or the Securities Administrator, respectively, was negligent in ascertaining the pertinent facts; and

(iii)

Neither the Trustee nor the Securities Administrator shall be liable with respect to any action taken, suffered or omitted to be taken by it in good faith in accordance with the direction of the Holders of Certificates evidencing, in aggregate, not less than 25% (or such other percentage set forth in this Agreement) of the aggregate Certificate Principal Balance of the Certificates relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee or the Securities Administrator or exercising any trust or power conferred upon the Trustee or the Securities Administrator under this Agreement.

Section 8.2

Certain Matters Affecting Trustee and Securities Administrator.  

(a)

Except as otherwise provided in Section 8.1:

(i)

Before taking any action pursuant to this Agreement, the Trustee  and the Securities Administrator may request and rely upon and shall be protected in acting or refraining from acting upon any resolution, Officers’ Certificate, certificate of auditors or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, appraisal, bond or other paper or document reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties;

(ii)

The Trustee and the Securities Administrator may consult with counsel of its selection and any advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or suffered or omitted by it hereunder in good faith and in accordance with such advice or Opinion of Counsel;

(iii)

Neither the Trustee nor the Securities Administrator shall be under any obligation to exercise any of the trusts or powers vested in it by this Agreement or to institute, conduct or defend any litigation hereunder or in relation hereto at the request, order or direction of any of the Certificateholders, pursuant to the provisions of this Agreement, unless such Certificateholders shall have offered to the Trustee or the Securities Administrator, as the case may be, reasonable security or indemnity satisfactory to it against the costs, expenses and liabilities which may be incurred therein or thereby; nothing contained herein shall, however, relieve the Trustee of the obligation, upon the occurrence of a Master Servicer Event of Default (which has not been cured or waived), to exercise such of the rights and powers vested in it by this Agreement, and to use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs;

(iv)

Neither the Trustee nor the Securities Administrator shall be liable for any action taken, suffered or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Agreement;

(v)

Prior to the occurrence of a Master Servicer Event of Default hereunder and after the curing or waiver of all Master Servicer Events of Default which may have occurred with respect to the Trustee and at all times with respect to the Securities Administrator, neither the Trustee nor the Securities Administrator shall be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond or other paper or document, unless requested in writing to do so by the Holders of Certificates evidencing, in aggregate, not less than 25% of the Trust Fund; provided, however, that if the payment within a reasonable time to the Trustee or the Securities Administrator of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee or the Securities Administrator, as applicable, not reasonably assured to the Trustee or the Securities Administrator by such Certificateholders, the Trustee or the Securities Administrator, as applicable, may require reasonable indemnity satisfactory to it against such expense, or liability from such Certificateholders as a condition to taking any such action;

(vi)

The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder;

(vii)

Neither the Trustee nor the Securities Administrator shall be liable for any loss resulting from the investment of funds held in the Distribution Account at the direction of the Master Servicer pursuant to Section 3.23(c);

(viii)

Neither the Trustee nor the Securities Administrator shall be liable for any action taken, suffered, or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Agreement;

(ix)

The Trustee shall not be deemed to have notice of any default or Master Servicer Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Certificates and this Agreement;

(x)

The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, each agent, custodian and other Person employed to act hereunder.

(xi)

In no event shall the Trustee be liable, directly or indirectly, for any special, indirect or consequential damages, even if the Trustee has been advised of the possibility of such damages; and

(xii)

No provision of this Agreement shall require the Trustee (regardless of the capacity in which it is acting) to expend or risk its own funds or otherwise incur any 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 for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

(b)

The Trustee shall not have any duty to conduct any affirmative investigation as to the occurrence of any condition requiring the repurchase of any Loan by the Seller pursuant to this Agreement or the Mortgage Loan Purchase Agreement, as applicable, or the eligibility of any Loan for purposes of this Agreement.

(c)

All rights of action under this Agreement or under any of the Certificates, enforceable by the Trustee, may be enforced by it without the possession of any of the Certificates, or the production thereof at the trial or other proceeding relating thereto, and any such suit, action or proceeding instituted by the Trustee shall be brought in its name for the benefit of all the Holders of such Certificates, subject to the provisions of this Agreement.

(d)

The Trustee may request that the Depositor provide reasonable instructions to the Trustee in connection with an action to be performed by the Trustee pursuant to this Agreement but for which the Trustee is unclear, and the Depositor shall comply with any such reasonable request.

Section 8.3

Trustee and Securities Administrator not Liable for Certificates or Loans.  

The recitals contained herein and in the Certificates (other than the signature of the Securities Administrator, the authentication of the Securities Administrator on the Certificates, the acknowledgments of the Trustee contained in Article II and the representations and warranties of the Trustee in Section 8.12) shall be taken as the statements of the Depositor and neither the Trustee nor the Securities Administrator assumes any responsibility for their correctness. Neither the Trustee nor the Securities Administrator makes any representations or warranties as to, and has no liability with respect to, the validity or sufficiency of this Agreement (other than as specifically set forth in Section 8.12) or of the Certificates (other than the signature of the Securities Administrator and authentication of the Securities Administrator on the Certificates), or of any Loan or related document. The Trustee shall not be accountable for the use or application by the Depositor of any of the Certificates or of the proceeds of such Certificates, or for the use or application of any funds paid to the Depositor or the Master Servicer in respect of the Loans or deposited in or withdrawn from the Distribution Account.

Section 8.4

Trustee, Master Servicer and Securities Administrator May Own Certificates.  

Each of the Trustee, the Master Servicer and the Securities Administrator in its individual capacity or any other capacity may become the owner or pledgee of Certificates and may transact business with other interested parties and their Affiliates with the same rights it would have if it were not the Trustee, the Master Servicer or the Securities Administrator.

Section 8.5

Fees and Expenses of Trustee and Securities Administrator.  

The fees of the Trustee and the Securities Administrator hereunder and of Wells Fargo as the Custodian under the Wells Fargo Custodial Agreement or of DBNTC as the Custodian under the DBNTC Custodial Agreement shall be paid in accordance with a side letter agreement with the Master Servicer and at the sole expense of the Master Servicer. In addition, the Trustee, the Securities Administrator, the Custodians and any director, officer, employee or agent of the Trustee, the Securities Administrator and the Custodians shall be indemnified by the Trust Fund and held harmless against any loss, liability or expense (including reasonable attorney’s fees and expenses) incurred by the Trustee or the Securities Administrator in connection with any administration to be performed by the Trustee or the Securities Administrator pursuant to this Agreement or other agreements related hereto and any claim or legal action or any pending or threatened claim or legal action arising out of or in connection with the acceptance or administration of its respective obligations and duties under this Agreement, including other agreements related hereto, other than any loss, liability or expense (i) for which the Trustee is indemnified by the Master Servicer, (ii) that constitutes a specific liability of the Trustee or the Securities Administrator, respectively, pursuant to Section 10.1(g) or (iii) any loss, liability or expense incurred by reason of willful misfeasance, bad faith or gross negligence by the Trustee, or Securities Administrator, respectively, in the performance of its duties hereunder or by reason of reckless disregard of its obligations and duties hereunder. The Master Servicer agrees to indemnify the Trustee, from, and hold the Trustee harmless against, any loss, liability or expense (including reasonable attorney’s fees and expenses) incurred by the Trustee by reason of the Master Servicer’s willful misfeasance, bad faith or gross negligence in the performance of its duties under this Agreement or by reason of the Master Servicer’s reckless disregard of its obligations and duties under this Agreement. Such indemnity shall survive the termination or discharge of this Agreement and the resignation or removal of the Trustee. Any payment hereunder made by the Master Servicer to the Trustee shall be from the Master Servicer’s own funds, without reimbursement from the Trust Fund therefor.

Section 8.6

Eligibility Requirements for Trustee and Securities Administrator.  

The Trustee and the Securities Administrator shall at all times be a corporation or an association (other than the Depositor, the Seller, the Master Servicer or any Affiliate of the foregoing) organized and doing business under the laws of any state or the United States of America, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000 (or a member of a bank holding company whose capital and surplus is at least $50,000,000), subject to supervision or examination by federal or state authority and having a credit rating satisfactory to each Rating Agency.  If such corporation or association publishes reports of conditions at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section the combined capital and surplus of such corporation or association shall be deemed to be its combined capital and surplus as set forth in its most recent report of conditions so published.  In case at any time the Trustee or the Securities Administrator, as applicable, shall cease to be eligible in accordance with the provisions of this Section, the Trustee or the Securities Administrator, as applicable, shall resign immediately in the manner and with the effect specified in Section 8.7.

Additionally, the Securities Administrator (i) may not be an originator, Master Servicer, Servicer, the Depositor or an affiliate of the Depositor unless the Securities Administrator is in an institutional trust department, (ii) must be authorized to exercise corporate trust powers under the laws of its jurisdiction of organization, and (iii) must be rated at least “A/F1” by Fitch, if Fitch is a Rating Agency, or the equivalent rating by S&P or Moody’s (or such rating acceptable to Fitch pursuant to a rating confirmation).  If no successor securities administrator shall have been appointed and shall have accepted appointment within sixty (60) days after Wells Fargo Bank, N.A., as Securities Administrator, ceases to be the securities administrator pursuant to this Section 8.6, then the Trustee shall, at the expense of the Trust, petition any court of competent jurisdiction for the appointment of a successor securities administrator, and prior to such appointment, the Trustee shall act as a successor securities administrator provided, that it shall only be responsible for duties of the Securities Administrator pursuant to Article IV of this Agreement. The Trustee shall notify the Rating Agencies of any change of Securities Administrator.  

Section 8.7

Resignation and Removal of Trustee and Securities Administrator.  

The Trustee and the Securities Administrator may at any time resign (including, in the case of the Securities Administrator, in connection with the resignation or termination of the Master Servicer) and be discharged from the trust hereby created by giving written notice thereof to the Depositor, to the Master Servicer, to the Securities Administrator (or the Trustee, if the Securities Administrator resigns) and to the Certificateholders. Upon receiving such notice of resignation, the Depositor shall promptly appoint a successor trustee or successor securities administrator by written instrument, in duplicate, which instrument shall be delivered to the resigning Trustee or Securities Administrator, as applicable, and to the successor trustee or successor securities administrator, as applicable. A copy of such instrument shall be delivered to the Certificateholders, the Trustee, the Securities Administrator and the Master Servicer by the Depositor. If no successor trustee or successor securities administrator shall have been so appointed and have accepted appointment within 30 days after the giving of such notice of resignation, the resigning Trustee or Securities Administrator, as the case may be, may, at the expense of the Trust Fund, petition any court of competent jurisdiction for the appointment of a successor trustee, successor securities administrator, Trustee or Securities Administrator, as applicable.

If at any time the Trustee or the Securities Administrator shall cease to be eligible in accordance with the provisions of Section 8.6 and shall fail to resign after written request therefor by the Depositor, or if at any time the Trustee or the Securities Administrator shall become incapable of acting, or shall be adjudged bankrupt or insolvent, or a receiver of the Trustee or the Securities Administrator or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or the Securities Administrator or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then the Depositor may remove the Trustee or the Securities Administrator, as applicable and appoint a successor trustee or successor securities administrator, as applicable, by written instrument, in duplicate, which instrument shall be delivered to the Trustee or the Securities Administrator so removed and to the successor trustee or successor securities administrator.

The Holders of Certificates evidencing, in aggregate, not less than 51% of the Certificate Principal Balance of the Certificates may at any time remove the Trustee or the Securities Administrator and appoint a successor trustee or successor securities administrator by written instrument or instruments, in triplicate, signed by such Holders or their attorneys-in-fact duly authorized, one complete set of which instruments shall be delivered to the Depositor, one complete set to the Trustee or the Securities Administrator so removed and one complete set to the successor so appointed. A copy of such instrument shall be delivered to the Certificateholders, the Trustee (in the case of the removal of the Securities Administrator), the Securities Administrator (in the case of the removal of the Trustee) and the Master Servicer by the Depositor.  All costs and expenses incurred by the Trustee in connection with its removal without cause hereunder shall be reimbursed to it by the Trust Fund.

Any resignation or removal of the Trustee or the Securities Administrator and appointment of a successor trustee or successor securities administrator pursuant to any of the provisions of this Section shall not become effective until acceptance of appointment by the successor trustee or successor securities administrator, as applicable, as provided in Section 8.8.

Notwithstanding anything to the contrary contained herein, the Master Servicer and the Securities Administrator shall at all times be the same Person.

Section 8.8

Successor Trustee or Securities Administrator.  

Any successor trustee or successor securities administrator appointed as provided in Section 8.7 shall execute, acknowledge and deliver to the Depositor and its predecessor trustee or predecessor securities administrator an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee or predecessor securities administrator shall become effective and such successor trustee or successor securities administrator without any further act, deed or conveyance, shall become fully vested with all the rights, powers, duties and obligations of its predecessor hereunder, with the like effect as if originally named as trustee or securities administrator herein. The predecessor trustee or predecessor securities administrator shall deliver to the successor trustee or successor securities administrator all Loan Documents and related documents and statements to the extent held by it hereunder, as well as all moneys, held by it hereunder, and the Depositor and the predecessor trustee or predecessor securities administrator shall execute and deliver such instruments and do such other things as may reasonably be required for more fully and certainly vesting and confirming in the successor trustee or successor securities administrator all such rights, powers, duties and obligations.

No successor trustee or successor securities administrator shall accept appointment as provided in this Section unless at the time of such acceptance such successor trustee or successor securities administrator shall be eligible under the provisions of Section 8.6 and the appointment of such successor trustee or successor securities administrator shall not result in a downgrading of any Class of Certificates by any Rating Agency, as evidenced by a letter from each Rating Agency.

Upon acceptance of appointment by a successor trustee or successor securities administrator as provided in this Section, the Depositor shall mail notice of the succession of such trustee hereunder to all Holders of Certificates at their addresses as shown in the Certificate Register. If the Depositor fails to mail such notice within 10 days after acceptance of appointment by the successor trustee or successor securities administrator, the successor trustee or successor securities administrator shall cause such notice to be mailed at the expense of the Depositor.

Section 8.9

Merger or Consolidation of Trustee or Securities Administrator.  

Any corporation or association into which the Trustee or the Securities Administrator may be merged or converted or with which it may be consolidated or any corporation or association resulting from any merger, conversion or consolidation to which the Trustee or the Securities Administrator shall be a party, or any corporation or association succeeding to the business of the Trustee or the Securities Administrator shall be the successor of the Trustee or the Securities Administrator hereunder, provided such corporation or association shall be eligible under the provisions of Section 8.6, 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.

Section 8.10

Appointment of Co-Trustee or Separate Trustee.  

Notwithstanding any other provisions hereof, at any time, for the purpose of meeting any legal requirements of any jurisdiction in which any part of the Trust Fund or property securing the same may at the time be located, the Trustee shall have the power and shall execute and deliver all instruments to appoint one or more Persons approved by the Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or separate trustee or separate trustees, of all or any part of the Trust Fund, and to vest in such Person or Persons, in such capacity, and for the benefit of the Holders of the Certificates, such title to the Trust Fund, or any part thereof, and, subject to the other provisions of this Section 8.10, such powers, duties, obligations, rights and trusts as the Trustee may consider necessary or desirable. No co-trustee or separate trustee hereunder shall be required to meet the terms of eligibility as a successor trustee under Section 8.6 hereunder and no notice to Holders of Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be required under Section 8.8 hereof.

In the case of any appointment of a co-trustee or separate trustee pursuant to this Section 8.10 all rights, powers, duties and obligations conferred or imposed upon the Trustee shall be conferred or imposed upon and exercised or performed by the Trustee and such separate trustee or co-trustee jointly, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed by the Trustee (whether as Trustee hereunder or as successor to a defaulting Master Servicer hereunder), the Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Fund or any portion thereof in any such jurisdiction) shall be exercised and performed by such separate trustee or co-trustee at the direction of the Trustee.

Any notice, request or other writing given to the 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 Agreement and the conditions of this Article IX. Each separate trustee and co-trustee, upon its acceptance of the trust conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Trustee, or separately, as may be provided therein, subject to all the provisions of this Agreement, specifically including every provision of this Agreement relating to the conduct of, affecting the liability of, or affording protection to, the Trustee. Every such instrument shall be filed with the Trustee.

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

Section 8.11

Appointment of Office or Agency.  

The Securities Administrator shall appoint an office or agency in the City of Minneapolis located at Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479, where the Certificates may be surrendered for registration of transfer or exchange, and presented for final distribution and where notices and demands to or upon the Securities Administrator in respect of the Certificates and this Agreement may be served.

Section 8.12

Representations and Warranties of the Trustee.  

The Trustee hereby represents and warrants to the Master Servicer, the Securities Administrator and the Depositor as applicable, as of the Closing Date, that:

(i)

It is a national banking association duly organized, validly existing and in good standing under the laws of the United States of America.

(ii)

The execution and delivery of this Agreement by it, and the performance and compliance with the terms of this Agreement by it, will not violate its articles of incorporation or bylaws or 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 agreement or other instrument to which it is a party or which is applicable to it or any of its assets.

(iii)

It has the full power and authority to enter into and consummate all transactions contemplated by this Agreement, has duly authorized the execution, delivery and performance of this Agreement, and has duly executed and delivered this Agreement.

(iv)

This Agreement, assuming due authorization, execution and delivery by the other parties hereto, constitutes a valid, legal and binding obligation of it, enforceable against it in accordance with the terms hereof, subject to (A) applicable bankruptcy, insolvency, receivership, reorganization, moratorium and other laws affecting the enforcement of creditors’ rights generally, and (B) general principles of equity, regardless of whether such enforcement is considered in a proceeding in equity or at law.

(v)

It is not in violation of, and its execution and delivery of this Agreement and its performance and compliance with the terms of this Agreement will not constitute a violation of, any law, any order or decree of any court or arbiter, or any order, regulation or demand of any federal, state or local governmental or regulatory authority, which violation, in its good faith and reasonable judgment, is likely to affect materially and adversely either the ability of it to perform its obligations under this Agreement or its financial condition.

(vi)

No litigation is pending or, to the best of its knowledge, threatened against it, which would prohibit it from entering into this Agreement or, in its good faith reasonable judgment, is likely to materially and adversely affect either the ability of it to perform its obligations under this Agreement or its financial condition.

ARTICLE IX

TERMINATION

Section 9.1

Termination of REMICS Upon Purchase or Liquidation of All Group V Loans.  

(a)

Subject to Section 9.2, the respective obligations and responsibilities under this Agreement of the Depositor, the Master Servicer, the Securities Administrator and the Trustee with respect to each REMIC formed hereby, the Loans and Certificates (other than the obligations of the Master Servicer to the Securities Administrator pursuant to Section 8.5 and of the Master Servicer to pay Compensating Interest to the Securities Administrator and the Securities Administrator to make payments in respect of each REMIC formed hereby or the Classes of Certificates as hereinafter set forth) shall terminate upon payment to the Certificateholders and the deposit of all amounts held by or on behalf of the Trustee and required hereunder to be so paid or deposited on the Distribution Date coinciding with or following the earlier to occur of (i) the purchase by the Master Servicer (the “Terminator”) of all Loans and each REO Property remaining in REMIC I and (ii) the final payment or other liquidation (or any advance with respect thereto) of the last Loan or REO Property remaining in REMIC I; provided, however, that in no event shall the trust created hereby continue beyond the earlier of (a) the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James, living on the date hereof and (b) April 2040.  The purchase by the Terminator of all Loans and each REO Property remaining in REMIC I shall be at a price (the “Termination Price”) equal to the sum of (i) the greater of (A) the aggregate Purchase Price of all the Loans included in REMIC I, plus the appraised value of each REO Property, if any, included in REMIC I, such appraisal to be conducted by an appraiser mutually agreed upon by the Terminator and the Securities Administrator in their reasonable discretion and (B) the aggregate fair market value of all of the assets of REMIC I (as determined by the Terminator and the Securities Administrator, as of the close of business on the third Business Day next preceding the date upon which notice of any such termination is furnished to Certificateholders pursuant to the third paragraph of this Section 9.1) and (ii) any amounts related to Loans due the Servicers and the Master Servicer in respect of unpaid Servicing Fees and outstanding Monthly Advances and Servicing Advances and all amounts related to Loans due and owing to the Master Servicer, the Securities Administrator, the Trustee, the Credit Risk Manager and the Custodians pursuant to this Agreement and the Custodial Agreements.  

(b)

The Master Servicer shall have the right to purchase all of the Loans and each REO Property remaining in REMIC I pursuant to clause (i) of the preceding paragraph no later than the Determination Date in the month immediately preceding the Distribution Date on which the Certificates will be retired; provided, however, that the Master Servicer may elect to purchase all of the Loans and each REO Property remaining in REMIC I pursuant to clause (i) above only if the aggregate Scheduled Principal Balance of the Loans and the fair market value of each REO Property remaining in the Trust Fund at the time of such election is less than or equal to 10% of the sum of (a) the aggregate Scheduled Principal Balance of the Loans as of the Cut-Off Date plus (b) the Original Pre-Funded Amount.

(c)

Notice of the liquidation of the Certificates shall be given promptly by the Securities Administrator by letter to the Certificateholders mailed (a) in the event such notice is given in connection with the purchase of the Loans and each REO Property by the Terminator, not earlier than the 15th day and not later than the 25th day of the month next preceding the month of the final distribution on the Certificates or (b) otherwise during the month of such final distribution on or before the Determination Date in such month, in each case specifying (i) the Distribution Date upon which the Trust Fund will terminate and the final payment in respect of REMIC I Regular Interests and the Certificates will be made upon presentation and surrender of the related Certificates at the office of the Securities Administrator therein designated, (ii) the amount of any such final payment, (iii) that no interest shall accrue in respect of REMIC I Regular Interests or Certificates from and after the Interest Accrual Period relating to the final Distribution Date therefor and (iv) that the Record Date otherwise applicable to such Distribution Date is not applicable, payments being made only upon presentation and surrender of the Certificates at the office of the Securities Administrator. In the event such notice is given in connection with the purchase of all of the Loans and each REO Property remaining in the REMIC I by the Terminator, the Terminator shall deliver to the Securities Administrator for deposit in the Distribution Account not later than the last Business Day of the month next preceding the month of the final distribution on the Certificates an amount in immediately available funds equal to the above-described Termination Price. The Securities Administrator shall remit (a) to the Master Servicer from such funds deposited in the Distribution Account (i) any amounts which the Master Servicer notifies it in writing that the Master Servicer would be permitted to withdraw and retain from the Distribution Account pursuant to Section 3.24 and (ii) any other amounts otherwise payable by the Securities Administrator to the Master Servicer from amounts on deposit in the Distribution Account pursuant to the terms of this Agreement and notified by the Master Servicer in writing and (b) to the Servicers, any amounts reimbursable to the Servicers pursuant to the Servicing Agreements, in each case prior to making any final distributions pursuant to Section 9.1(d) below. Upon certification to the Trustee and the Securities Administrator by a Servicing Officer of the making of such final deposit, the Trustee shall promptly release to the Terminator the Mortgage Files for the remaining Loans, and the Trustee shall execute all assignments, endorsements and other instruments necessary to effectuate such transfer in each case without recourse, representation or warranty.

(d)

Upon presentation of the Certificates by the Certificateholders on the final Distribution Date, the Securities Administrator shall distribute to each Certificateholder so presenting and surrendering its Certificates the amount otherwise distributable on such Distribution Date in accordance with Section 4.1 in respect of the Certificates so presented and surrendered. Any funds not distributed to any Holder or Holders of Certificates being retired on such Distribution Date because of the failure of such Holder or Holders to tender their Certificates shall, on such date, be set aside and held in trust and credited to the account of the appropriate non-tendering Holder or Holders. If any Certificates as to which notice has been given pursuant to this Section 9.1 shall not have been surrendered for cancellation within six months after the time specified in such notice, the Securities Administrator shall mail a second notice to the remaining non-tendering Certificateholders to surrender their Certificates for cancellation in order to receive the final distribution with respect thereto. If within one year after the second notice all such Certificates shall not have been surrendered for cancellation, the Securities Administrator shall, directly or through an agent, mail a final notice to the remaining non-tendering Certificateholders concerning surrender of their Certificates. The costs and expenses of maintaining the funds in trust and of contacting such Certificateholders shall be paid out of the assets remaining in the trust funds. If within one year after the final notice any such Certificates shall not have been surrendered for cancellation, the Securities Administrator shall pay to the Depositor all such amounts, and all rights of non-tendering Certificateholders in or to such amounts shall thereupon cease. No interest shall accrue or be payable to any Certificateholder on any amount held in trust by the Securities Administrator as a result of such Certificateholder’s failure to surrender its Certificate(s) for final payment thereof in accordance with this Section 9.1. Any such amounts held in trust by the Securities Administrator shall be held in an Eligible Account and the Securities Administrator may direct any depository institution maintaining such account to invest the funds in one or more Eligible Investments. All income and gain realized from the investment of funds deposited in such accounts held in trust by the Securities Administrator shall be for the benefit of the Securities Administrator; provided, however, that the Securities Administrator shall deposit in such account the amount of any loss of principal incurred in respect of any such Eligible Investment made with funds in such accounts immediately upon the realization of such loss.

Immediately following the deposit of funds in trust hereunder in respect of the Certificates, each REMIC formed hereby shall terminate.

Section 9.2

Additional Termination Requirements.  

(a)

In the event that the Terminator purchases all the Loans and each REO Property or the final payment on or other liquidation of the last Loan or REO Property remaining in REMIC I pursuant to Section 9.1, the portion of the Trust Fund in respect of such Group shall be terminated in accordance with the following additional requirements:

(i)

The Securities Administrator shall specify the first day in the 90-day liquidation period in a statement attached to each related REMIC’s final Tax Return pursuant to Treasury regulation Section 1.860F-1 and shall satisfy all requirements of a qualified liquidation under Section 860F of the Code and any regulations thereunder, as evidenced by an Opinion of Counsel obtained by and at the expense of the Terminator;

(ii)

During such 90-day liquidation period and, at or prior to the time of making of the final payment on the Certificates, the Securities Administrator shall sell all of the assets of REMIC I to the Terminator for cash; and

(iii)

At the time of the making of the final payment on the Certificates, the Securities Administrator shall distribute or credit, or cause to be distributed or credited, to the Holders of the Class AR Certificates all cash on hand in the Trust Fund (other than cash retained to meet claims) with respect to each REMIC formed hereby and the Trust Fund shall terminate at that time.

(b)

At the expense of the requesting Terminator, (or, if the Trust Fund is being terminated as a result of the occurrence of the event described in clause (ii) of the first paragraph of Section 9.1, at the expense of the Trust Fund), the Terminator shall prepare or cause to be prepared the documentation required in connection with the adoption of a plan of liquidation of each REMIC pursuant to this Section 9.2.

(c)

By their acceptance of Certificates, the Holders thereof hereby agree to authorize the Securities Administrator to specify the 90-day liquidation period for each REMIC, which authorization shall be binding upon all successor Certificateholders.

ARTICLE X

REMIC PROVISIONS

Section 10.1

REMIC Administration.  

(a)

The Securities Administrator shall elect to treat each REMIC created hereunder as a REMIC under the Code and, if necessary, under applicable state law and as instructed by the Securities Administrator. Each such election shall be made by the Securities Administrator on Form 1066 or other appropriate federal tax or information return or any appropriate state return for the taxable year ending on the last day of the calendar year in which the Certificates are issued. The designations for purposes of the REMIC election for each REMIC created hereby are set forth in the Preliminary Statement.

(b)

The Closing Date is hereby designated as the “Startup Day” of each REMIC created hereunder within the meaning of Section 860G(a)(9) of the Code.

(c)

The Securities Administrator shall be reimbursed for any and all expenses relating to any tax audit of the Trust Fund (including, but not limited to, any professional fees or any administrative or judicial proceedings with respect to each REMIC that involve the Internal Revenue Service or state tax authorities), including the expense of obtaining any tax related Opinion of Counsel except as specified herein. The Securities Administrator, as agent for each REMIC’s tax matters person shall (i) act on behalf of the Trust Fund in relation to any tax matter or controversy involving any REMIC and (ii) represent the Trust Fund in any administrative or judicial proceeding relating to an examination or audit by any governmental taxing authority with respect thereto. The holder of the largest Percentage Interest of each Class of Residual Certificates shall be designated, in the manner provided under Treasury regulations section 1.860F-4(d) and Treasury regulations section 301.6231(a)(7)-1, as the tax matters person of the related REMIC created hereunder. By their acceptance thereof, the holder of the largest Percentage Interest of the Residual Certificates hereby agrees to irrevocably appoint the Securities Administrator or an Affiliate as its agent to perform all of the duties of the tax matters person for the Trust Fund.

(d)

The Securities Administrator shall prepare and file and the Trustee shall sign all of the Tax Returns in respect of each REMIC created hereunder. The expenses of preparing and filing such returns shall be borne by the Securities Administrator without any right of reimbursement therefor.

(e)

The Securities Administrator shall perform on behalf of each REMIC all reporting and other tax compliance duties that are the responsibility of such REMIC under the Code, the REMIC Provisions or other compliance guidance issued by the Internal Revenue Service or any state or local taxing authority. Among its other duties, as required by the Code, the REMIC Provisions or other such compliance guidance, the Securities Administrator shall provide (i) to any Transferor of a Residual Certificate such information as is necessary for the application of any tax relating to the transfer of a Residual Certificate to any Person who is not a Permitted Transferee upon receipt of additional reasonable compensation, (ii) to the Certificateholders such information or reports as are required by the Code or the REMIC Provisions including reports relating to interest, original issue discount and market discount or premium (using the prepayment assumption, as set forth in the Prospectus, as required) and (iii) to the Internal Revenue Service the name, title, address and telephone number of the person who shall serve as the representative of each REMIC. The Depositor shall provide or cause to be provided to the Securities Administrator, within ten (10) days after the Closing Date, all information or data that the Securities Administrator reasonably determines to be relevant for tax purposes as to the valuations and issue prices of the Certificates, including, without limitation, the price, yield, prepayment assumption and projected cash flow of the Certificates.

(f)

To the extent in the control of the Trustee or the Securities Administrator, each such Person (i) shall take such action and shall cause each REMIC created hereunder to take such action as shall be necessary to create or maintain the status thereof as a REMIC under the REMIC Provisions, (ii) shall not take any action, cause the Trust Fund to take any action or fail to take (or fail to cause to be taken) any action that, under the REMIC Provisions, if taken or not taken, as the case may be, could (A) endanger the status of each REMIC as a REMIC or (B) result in the imposition of a tax upon the Trust Fund (including but not limited to the tax on prohibited transactions as defined in Section 860F(a)(2) of the Code and the tax on contributions to a REMIC set forth in Section 860G(d) of the Code) (either such event, an “Adverse REMIC Event”) unless such action or inaction is permitted under this Agreement or the Trustee and the Securities Administrator have received an Opinion of Counsel, addressed to them (at the expense of the party seeking to take such action but in no event at the expense of the Trustee or the Securities Administrator) to the effect that the contemplated action will not, with respect to any REMIC, endanger such status or result in the imposition of such a tax, nor (iii) shall the Securities Administrator take or fail to take any action (whether or not authorized hereunder) as to which the Trustee has advised it in writing that it has received an Opinion of Counsel to the effect that an Adverse REMIC Event could occur with respect to such action; provided that the Securities Administrator may conclusively rely on such Opinion of Counsel and shall incur no liability for its action or failure to act in accordance with such Opinion of Counsel. In addition, prior to taking any action with respect to any REMIC or the respective assets of each, or causing any REMIC to take any action, which is not contemplated under the terms of this Agreement, the Securities Administrator shall consult with the Trustee or its designee, in writing, with respect to whether such action could cause an Adverse REMIC Event to occur with respect to any REMIC, and the Securities Administrator shall not take any such action or cause any REMIC to take any such action as to which the Trustee has advised it in writing that an Adverse REMIC Event could occur. The Trustee may consult with counsel (and conclusively rely upon the advice of such counsel) to make such written advice, and the cost of same shall be borne by the party seeking to take the action not permitted by this Agreement, but in no event shall such cost be an expense of the Trustee.

(g)

In the event that any tax is imposed on “prohibited transactions” of any REMIC created hereunder as defined in Section 860F(a)(2) of the Code, on the “net income from foreclosure property” of such REMIC as defined in Section 860G(c) of the Code, on any contributions to any such REMIC after the Startup Day therefor pursuant to Section 860G(d) of the Code, or any other tax is imposed by the Code or any applicable provisions of state or local tax laws, such tax shall be charged (i) to the Trustee pursuant to Section 10.3 hereof, if such tax arises out of or results from a breach by the Trustee of any of its obligations under this Article X, (ii) to the Securities Administrator pursuant to Section 10.3 hereof, if such tax arises out of or results from a breach by the Securities Administrator of any of its obligations under this Article X, (iii) to the Master Servicer pursuant to Section 10.3 hereof, if such tax arises out of or results from a breach by the Master Servicer of any of its obligations under Article III or under this Article X, or (iv) against amounts on deposit in the Distribution Account and shall be paid by withdrawal therefrom.

(h)

The Securities Administrator shall, for federal income tax purposes, maintain books and records with respect to each REMIC on a calendar year and on an accrual basis.

(i)

Following the Startup Day, the Trustee shall not accept any contributions of assets to any REMIC other than in connection with any Substitute Loan delivered in accordance with Section 2.3 unless it shall have received an Opinion of Counsel addressed to it to the effect that the inclusion of such assets in the Trust Fund will not cause the related REMIC to fail to qualify as a REMIC at any time that any Certificates are outstanding or subject such REMIC to any tax under the REMIC Provisions or other applicable provisions of federal, state and local law or ordinances.

(j)

Neither the Trustee nor the Securities Administrator shall knowingly enter into any arrangement by which any REMIC will receive a fee or other compensation for services nor permit any REMIC to receive any income from assets other than “qualified mortgages” as defined in Section 860G(a)(3) of the Code or “permitted investments” as defined in Section 860G(a)(5) of the Code.

(k)

The Securities Administrator shall apply for an employer identification number with the Internal Revenue Service via a Form SS-4 or other comparable method for each REMIC. In connection with the foregoing, the Securities Administrator shall provide the name and address of the person who can be contacted to obtain information required to be reported to the holders of Regular Interests in each REMIC as required by IRS Form 8811.

(l)

For purpose of compliance with the REMIC Provisions, the REMIC regular interests evidenced by the Certificates other than the Class P, Class AR, Class X and Class PO Certificates (the “Carryover Certificates”) shall bear interest at the maximum interest rates set forth in the Preliminary Statement.  In addition, for purposes of compliance with the REMIC Provisions, the Master REMIC shall be treated as having issued an additional regular interest that shall be entitled to receive all amounts payable on the T1-Prefunding IO, which interest shall be treated as beneficially owned by the Depositor.  The Securities Administrator shall treat the holders of the Carryover Certificates as having entered into a notional principal contract with respect to the Depositor.  Pursuant to each such notional principal contract, all beneficial owners of the Carryover Certificates shall be treated as having agreed to pay, on each Distribution Date, to the Depositor an aggregate amount equal to the excess, if any, of (i) the amount payable on such Distribution Date on the interest in the Master REMIC corresponding to such Class of Certificates over (ii) the amount payable on such Class of Certificates on such Distribution Date.  Further, pursuant to each such notional principal contract, the Depositor shall be treated as having agreed to pay any interest on a Carryover Certificate to the extent such interest reflects an interest rate greater than the REMIC Maximum Rate. Any payments to the Certificates from amounts deemed received in respect of this notional principal contract shall not be payments with respect to a regular interest in a REMIC within the meaning of Code Section 860G(a)(1).  Thus, each Carryover Certificate shall be treated as representing not only ownership of regular interests in the Master REMIC, but also ownership of an interest in a notional principal contract.  For federal income tax purposes, the Securities Administrator shall treat such notional principal contract as having a value of $10,000 as of the Closing Date.

Section 10.2

Prohibited Transactions and Activities.

None of the Depositor, the Securities Administrator, the Master Servicer  or the Trustee shall sell, dispose of or substitute for any of the Loans (except in connection with (i) the foreclosure of a Loan, including but not limited to, the acquisition or sale of a Mortgaged Property acquired by deed in lieu of foreclosure, (ii) the bankruptcy of REMIC I, (iii) the termination of REMIC I pursuant to Article IX of this Agreement, (iv) a substitution pursuant to Article II of this Agreement or (v) a purchase of Loans pursuant to Article II of this Agreement), nor acquire any assets for any REMIC (other than REO Property acquired in respect of a defaulted Loan), nor sell or dispose of any investments in the Distribution Account for gain, nor accept any contributions to any REMIC after the Closing Date (other than a Substitute Loan delivered in accordance with Section 2.3), unless it has received an Opinion of Counsel, addressed to the Trustee (at the expense of the party seeking to cause such sale, disposition, substitution, acquisition or contribution but in no event at the expense of the Trustee) that such sale, disposition, substitution, acquisition or contribution will not (a) affect adversely the status of any REMIC as a REMIC or (b) cause any REMIC to be subject to a tax on “prohibited transactions” or “contributions” pursuant to the REMIC Provisions.

Section 10.3

Indemnification.  

(a)

The Trustee agrees to be liable for any taxes and costs incurred by the Trust Fund, the Depositor, the Securities Administrator or the Master Servicer including, without limitation, any reasonable attorneys fees imposed on or incurred by the Trust Fund, the Depositor, the Securities Administrator or the Master Servicer as a result of the Trustee’s failure to perform its covenants set forth in this Article X in accordance with the standard of care of the Trustee set forth in this Agreement.

(b)

The Master Servicer agrees to indemnify the Trust Fund, the Depositor and the Trustee for any taxes and costs including, without limitation, any reasonable attorneys’ fees imposed on or incurred by the Trust Fund, the Depositor or the Trustee, as a result of the Master Servicer’s failure to perform its covenants set forth in Article III in accordance with the standard of care of the Master Servicer set forth in this Agreement.

(c)

The Securities Administrator agrees to be liable for any taxes and costs incurred by the Trust Fund, the Depositor or the Trustee including, without limitation, any reasonable attorneys fees imposed on or incurred by the Trust Fund, the Depositor or the Trustee as a result of the Securities Administrator’s failure to perform its covenants set forth in this Article X in accordance with the standard of care of the Securities Administrator set forth in this Agreement.

ARTICLE XI

MISCELLANEOUS PROVISIONS

Section 11.1

Amendment.  

This Agreement may be amended from time to time, by the Depositor, the Master Servicer, the Securities Administrator and the Trustee, without the consent of any of the Certificateholders, (a) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Agreement, (b) to modify, eliminate or add to any provisions to such extent as shall be necessary to maintain the qualification of the Trust Fund as four REMICs at all times that any Certificates are outstanding, (c) to ensure compliance with Regulation AB, (d) to add any other provisions with respect to matters or questions arising hereunder, or (e) to modify, alter, amend, add to or rescind any of the terms or provisions contained in this Agreement; provided, that such action shall not, as evidenced by an Opinion of Counsel addressed to the Trustee and delivered to the Trustee, adversely affect in any material respect the interests of any Certificateholder; provided, however, that the amendment shall not be deemed to adversely affect in any material respect the interests of the Certificateholders if the Person requesting the amendment obtains a letter from each Rating Agency stating that the amendment would not result in the downgrading or withdrawal of the respective ratings then assigned to the Certificates; it being understood and agreed that any such letter in and of itself will not represent a determination as to the materiality of any such amendment and will represent a determination only as to the credit issues affecting any such rating.  No amendment shall be deemed to adversely affect in any material respect the interests of any Certificateholder who shall have consented thereto, and no Opinion of Counsel shall be required to address the effect of any such amendment on any such consenting Certificateholder.

This Agreement may also be amended from time to time by the Depositor, the Master Servicer, the Securities Administrator and the Trustee with the consent of the Holders of Certificates evidencing, in the aggregate, not less than 66-2/3% of the Voting Rights for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of the Holders of Certificates; provided, however, that no such amendment shall (i) reduce in any manner the amount of, or delay the timing of, payments received on Loans which are required to be distributed on any Certificate without the consent of the Holder of such Certificate, (ii) adversely affect in any material respect the interests of the Holders of any Class of Certificates in a manner, other than as described in (i), without the consent of the Holders of Certificates of such Class evidencing at least 66-2/3% of the Voting Rights allocated to such Class, or (iii) modify the consents required by the immediately preceding clauses (i) and (ii) without the consent of the Holders of all Certificates then outstanding. Notwithstanding any other provision of this Agreement, for purposes of the giving or withholding of consents pursuant to this Section 11.1, Certificates registered in the name of the Depositor or the Servicer or any Affiliate thereof shall be entitled to Voting Rights with respect to matters affecting such Certificates. Without limiting the generality of the foregoing, any amendment to this Agreement required in connection with the compliance with or the clarification of any reporting obligations described in Section 3.29 hereof shall not require the consent of any Certificateholder and without the need for any Opinion of Counsel or Rating Agency confirmation.

Notwithstanding any contrary provision of this Agreement, the Trustee shall not consent to any amendment to this Agreement unless it shall have first received an Opinion of Counsel addressed to it to the effect that such amendment will not cause any REMIC formed hereby to fail to qualify as a REMIC at any time that any Certificates are outstanding.

As soon as practicable after the execution of any such amendment, the Trustee shall furnish written notification of the substance of such amendment to each Certificateholder and Rating Agency.

It shall not be necessary for the consent of the Certificateholders under this Section 11.1 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 Certificateholders shall be subject to such reasonable regulations as the Trustee may prescribe.

Prior to the execution of any amendment to this Agreement, the Trustee shall be entitled to receive and rely upon an Opinion of Counsel addressed to it stating that the execution of such amendment is authorized or permitted by this Agreement.  The Trustee may, but shall not be obligated to, enter into any such amendment which affects the Trustee’s own rights, duties or immunities under this Agreement.

Section 11.2

Recordation of Agreement; Counterparts.  

To the extent permitted by applicable law, this Agreement (or an abstract hereof, if acceptable by the applicable recording office) is subject to recordation in all appropriate public offices for real property records in all the counties or other comparable jurisdictions in which any or all of the properties subject to the Mortgages are situated, and in any other appropriate public recording office or elsewhere, such recordation to be effected by the Depositor at the expense of the Certificateholders, but only after the Depositor has delivered to the Trustee an Opinion of Counsel to the effect that such recordation materially and beneficially affects the interests of the Certificateholders.

For the purpose of facilitating the recordation of this Agreement as herein provided and for other purposes, this Agreement may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original, and such counterparts shall constitute but one and the same instrument.

Section 11.3

Limitation on Rights of Certificateholders.  

The death or incapacity of any Certificateholder shall not operate to terminate this Agreement or the Trust Fund, nor entitle such Certificateholder’s legal representatives or heirs to claim an accounting or take any action or proceeding in any court for a partition or winding up of the Trust Fund, nor otherwise affect the rights, obligations and liabilities of the parties hereto or any of them.

Except as otherwise expressly provided herein no Certificateholder, solely by virtue of its status as Certificateholder, shall have any right to vote or in any manner otherwise control the operation and management of the Trust Fund, or the obligations of the parties hereto, nor shall anything herein set forth, or contained in the terms of the Certificates, be construed so as to constitute the Certificateholders from time to time as partners or members of an association, nor shall any Certificateholder be under any liability to any third person by reason of any action taken by the parties to this Agreement pursuant to any provision hereof.

No Certificateholder, solely by virtue of its status as Certificateholder, shall have any right by virtue or by availing of any provision of this Agreement to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Agreement, unless such holder previously shall have given to the Trustee a written notice of default and of the continuance thereof, as hereinbefore provided, and unless all of the Holders of Certificates evidencing, in aggregate, not less than 25% of the Trust Fund shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as Trustee hereunder and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby, and the Trustee, for 60 days after its receipt of such notice, request and offer of indemnity, shall have neglected or refused to institute any such action, suit or proceeding; it being understood and intended, and being expressly covenanted by each Certificateholder with every other Certificateholder and the Trustee, that no one or more holders of Certificates shall have any right in any manner whatever by virtue or by availing of any provision of this Agreement to affect, disturb or prejudice the rights of the Holders of any other of such Certificates, or to obtain or seek to obtain priority over or preference to any other such Holder, or to enforce any right under this Agreement, except in the manner herein provided and for the benefit of all Certificateholders. For the protection and enforcement of the provisions of this Section 11.3, each and every Certificateholder and the Trustee shall be entitled to such relief as can be given either at law or in equity.

Section 11.4

Governing Law.  

THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES 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 11.5

Notices.  

All demands, notices and communications hereunder shall be in writing and shall be deemed to have been duly given if personally delivered at or mailed by certified or registered mail, return receipt requested (a) in the case of the Depositor, to 60 Wall Street, New York, New York 10005, Attention:  Deutsche Alt-B Securities Mortgage Loan Trust, Series 2007-AB1, telecopy number:  (212) 250-2500, or such other address or telecopy number as may hereafter be furnished to the Master Servicer and the Trustee in writing by the Depositor, (b) in the case of the Master Servicer and the Securities Administrator, P.O. Box 98, Columbia, Maryland 21046 and for overnight delivery to 9062 Old Annapolis Road, Columbia, Maryland 21045, Attention:  Deutsche Alt-B Securities Mortgage Loan Trust, Series 2007-AB1 (telecopy number:  (410) 715-2380), or such other address or telecopy number as may hereafter be furnished to the Trustee and the Depositor in writing by the Master Servicer or the Securities Administrator, (c) in the case of the Trustee, at the Corporate Trust Office or such other address or telecopy number as the Trustee may hereafter furnish to the Master Servicer and the Depositor in writing by the Trustee.   Any notice required or permitted to be given to a Certificateholder shall be given by first class mail, postage prepaid, at the address of such Holder as shown in the Certificate Register. Any notice so mailed within the time prescribed in this Agreement shall be conclusively presumed to have been duly given when mailed, whether or not the Certificateholder receives such notice. A copy of any notice required to be telecopied hereunder also shall be mailed to the appropriate party in the manner set forth above.

Section 11.6

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 Certificates or the rights of the Holders thereof.

Section 11.7

Notice to Rating Agencies.  

The Trustee shall use its best efforts promptly to provide notice to the Rating Agencies with respect to each of the following of which it has actual knowledge:

1.

Any material change or amendment to this Agreement;

2.

The occurrence of any Master Servicer Event of Default that has not been cured or waived;

3.

The resignation or termination of the Master Servicer or the Trustee;

4.

The repurchase or substitution of Loans pursuant to or as contemplated by Section 2.3;

6.

The final payment to the Holders of any Class of Certificates;

7.

Any change in the location of the Distribution Account; and

8.

Any event that would result in the inability of the Trustee to make advances regarding delinquent Loans pursuant to Section 7.2.

The Master Servicer shall make available to each Rating Agency on the Securities Administrator’s website copies of the following:

1.

Each Annual Statement as to Compliance described in Section 3.16; and

2. 

Each Assessment of Compliance and Attestation Report described in Section 3.17 and Section 3.19.

Any such notice pursuant to this Section 11.7 shall be in writing and shall be deemed to have been duly given if personally delivered at or mailed by first class mail, postage prepaid, or by express delivery service to Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., 55 Water Street, New York, New York 10041 and to Moody’s Investors Service, Inc., 99 Church Street, New York, New York 10007 or such other addresses as the Rating Agencies may designate in writing to the parties hereto.

Section 11.8

Article and Section References.  

All article and section references used in this Agreement, unless otherwise provided, are to articles and sections in this Agreement.

Section 11.9

Grant of Security Interest.  

It is the express intent of the parties hereto that the conveyance of the Loans by the Depositor to the Trustee, on behalf of the Trust Fund and for the benefit of the Certificateholders, be, and be construed as, a sale of the Loans by the Depositor and not a pledge of the Loans to secure a debt or other obligation of the Depositor. However, in the event that, notwithstanding the aforementioned intent of the parties, the Loans are held to be property of the Depositor, then, (a) it is the express intent of the parties that such conveyance be deemed a pledge of the Loans by the Depositor to the Trustee, on behalf of the Trust Fund and for the benefit of the Certificateholders, to secure a debt or other obligation of the Depositor and (b)(1) this Agreement shall also be deemed to be a security agreement within the meaning of Articles 8 and 9 of the Uniform Commercial Code as in effect from time to time in the State of New York; (2) the conveyance provided for in Section 2.1 hereof shall be deemed to be a grant by the Depositor to the Trustee, on behalf of the Trust Fund and for the benefit of the Certificateholders, of a security interest in all of the Depositor’s right, title and interest in and to the Loans and all amounts payable to the holders of the Loans in accordance with the terms thereof and all proceeds of the conversion, voluntary or involuntary, of the foregoing into cash, instruments, securities or other property, and all amounts, other than investment earnings, from time to time held or invested in the Distribution Account, Pre-Funding Account or Capitalized Interest Account, whether in the form of cash, instruments, securities or other property; (3) the obligations secured by such security agreement shall be deemed to be all of the Depositor’s obligations under this Agreement, including the obligation to provide to the Certificateholders the benefits of this Agreement relating to the Loans and the Trust Fund; and (4) 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 Trustee for the purpose of perfecting such security interest under applicable law. Accordingly, the Depositor hereby grants to the Trustee, on behalf of the Trust Fund and for the benefit of the Certificateholders, a security interest in the Loans and all other property described in clause (2) of the preceding sentence, for the purpose of securing to the Trustee the performance by the Depositor of the obligations described in clause (3) of the preceding sentence. Notwithstanding the foregoing, the parties hereto intend the conveyance pursuant to Section 2.1 to be a true, absolute and unconditional sale of the Loans and assets constituting the Trust Fund by the Depositor to the Trustee, on behalf of the Trust Fund and for the benefit of the Certificateholders.

[R IN WITNESS WHEREOF, the Depositor, the Master Servicer, the Credit Risk Manager, the Securities Administrator and the Trustee have caused their names to be signed hereto by their respective officers thereunto duly authorized, all as of the day and year first above written.

DEUTSCHE ALT-A SECURITIES, INC.,

as Depositor

By: /s/ Ernie Calabrese

Name:

Ernie Calabrese

Its: Director

By: /s/ Susan Valenti

Name:

Susan Valenti

Its: Director

WELLS FARGO BANK, N.A.,

as Master Servicer and Securities Administrator

By: /s/ Stacey M. Taylor

Name:

Stacey M. Taylor

Its: Vice President

HSBC BANK USA, NATIONAL ASSOCIATION not in its individual capacity but solely as Trustee

By: /s/ Fernando Acebedo

Name:

Fernando Acebedo

Its: Vice President

With Respect to Sections 7.7, 7.8 and 7.9:

CLAYTON FIXED INCOME SERVICES INC. 

By:__/s/ John Andriola_____________________

Name: John Andriola

Title: Authorized Representative

STATE OF NEW YORK

)

) ss.:

COUNTY OF

 NEW YORK

)

On the 12th day of April 2007, before me, a notary public in and for said State, personally appeared Susan Valenti known to me to be a Director of Deutsche Alt-A Securities, Inc., 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

/s/ Robert Lopena

[Notarial Seal]

STATE OF NEW YORK 

)

  ) ss.:

COUNTY OF

NEW YORK

)

On the 13th day of April 2007, before me, a notary public in and for said State, personally appeared Ernest Calabrese known to me to be a Director of Deutsche Alt-A Securities, Inc ., 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

/s/ Robert Lopena

[Notarial Seal]

STATE OF MARYLAND

)

) ss.:

COUNTY OF

HOWARD

)

On the13th day of April 2007, before me, a notary public in and for said State, personally appeared Stacey M. Taylor known to me to be a Vice President of Wells Fargo Bank, N.A., 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

/s/ Jennifer Richardson

[Notarial Seal]

STATE OF

NEW YORK

)

) ss.:

COUNTY OF

NEW YORK

)

On the 13th day of April 2007, before me, a notary public in and for said State, personally appeared Fernando Acebedo known to me to be a Vice President of HSBC Bank USA, National Association, 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

/s/ Audrey H. Zabriskie

[Notarial Seal]

STATE OF COLORADO

)

) ss.:

COUNTY OF

DENVER

)

On the 14th day of April 2007, before me, a notary public in and for said State, personally appeared John Andriola known to me to be a Authorized Representative of Clayton Fixed Income Services Inc., 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

/s/ Jennifer L. Wilson

[Notarial Seal]

EXHIBIT A-1

FORM OF CLASS A-[_] CERTIFICATE

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A “REGULAR INTEREST” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT,” AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”).

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DECREASED BY THE PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CERTIFICATE PRINCIPAL BALANCE BY INQUIRY OF THE SECURITIES ADMINISTRATOR NAMED HEREIN.

NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE CODE WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED IN SECTION 6.3(e) OF THE AGREEMENT REFERRED TO HEREIN.

			
	DBALT Series 2007-AB1, Class A-[_]

	 
	Aggregate Certificate Principal Balance of the Class A-[_]

 Certificates as of the Issue Date:  $___________

	Pass-Through Rate: Floating

	 
	Denomination:  $__________

	Date of Pooling and Servicing Agreement and Cut-Off Date: March 1, 2007

	 
	Master Servicer: Wells Fargo Bank, N.A.

	First Distribution Date: April 25, 2007

	 
	Trustee: HSBC Bank USA, National Association

	No. __

	 
	Issue Date: April 13, 2007

	 
	 
	CUSIP: ________________

DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS CERTIFICATE.

DEUTSCHE ALT-B SECURITIES MORTGAGE LOAN TRUST , SERIES 2007-AB1

MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a fractional undivided interest in the distributions allocable to the Class A-[_] Certificates with respect to a trust fund generally consisting of a pool of conventional fixed-rate first lien residential mortgage loans (the “Mortgage Loans”) secured by one- to four- family residences, units in planned unit developments and individual condominium units (the “Trust Fund”) sold by DEUTSCHE ALT-A SECURITIES, INC.  The Certificates are limited in right of payment to certain collections and recoveries respecting the related Mortgage Loans, all as more specifically set forth herein and in the Agreement. 

THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN DEUTSCHE ALT-A SECURITIES, INC., THE MASTER SERVICER, THE SECURITIES ADMINISTRATOR, THE TRUSTEE, ANY SERVICER OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

This certifies that Cede & Co. is the registered owner of the Percentage Interest evidenced hereby in the beneficial ownership interest of Certificates of the same Class as this Certificate in certain assets of the Trust Fund sold by Deutsche Alt-A Securities, Inc. (the “Depositor”).  This Certificate is primarily backed by the Mortgage Loans sold by DB Structured Products, Inc. to the Depositor.  Wells Fargo Bank, N.A. will act as master servicer of the Mortgage Loans (the “Master Servicer”, which term includes any successors thereto under the Agreement referred to below). The Trust Fund was created pursuant to the Pooling and Servicing Agreement dated as of the Cut-Off Date specified above (the “Agreement”), among the Depositor, Wells Fargo Bank, N.A., as Master Servicer and securities administrator (the “Securities Administrator”), HSBC Bank USA, National Association as trustee (the “Trustee”) and Clayton Fixed Income Services Inc. as credit risk manager, a summary of certain of the pertinent provisions of which is set forth hereafter. To the extent not defined herein, capitalized terms used herein shall have the meaning ascribed to them in the Agreement. This Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement, to which Agreement the Holder of this Certificate by virtue of its acceptance hereof assents and by which such Holder is bound.

Pursuant to the terms of the Agreement, distributions will be made on the 25th day of each month or, if such 25th day is not a Business Day, the Business Day immediately following such 25th day (a “Distribution Date”), commencing on the First Distribution Date specified above, to the Person in whose name this Certificate is registered at the close of business on the Business Day immediately preceding the related Distribution Date (or with respect to the first Distribution Date, the Closing Date) (the “Record Date”), in an amount equal to the product of the Percentage Interest evidenced by this Certificate and the amount required to be distributed to the Holders of Class A-[_] Certificates on such Distribution Date pursuant to the Agreement.

All distributions to the Holder of this Certificate under the Agreement will be made or caused to be made by the Securities Administrator by wire transfer in immediately available funds to the account of the Person entitled thereto if such Person shall have so notified the Securities Administrator in writing at least five Business Days prior to the Record Date immediately prior to such Distribution Date and is the registered owner of Class A-[_] Certificates or otherwise by check mailed by first class mail to the address of the Person entitled thereto, as such name and address shall appear on the Certificate Register. Notwithstanding the above, the final distribution on this Certificate will be made after due notice by the Securities Administrator of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency appointed by the Securities Administrator for that purpose as provided in the Agreement.

The Pass-Through Rate with respect to Class A-[_] Certificates for each Distribution Date will be a per annum rate equal to (i) One-Month LIBOR plus (ii) 0.300%, subject to a maximum rate of 7.000% per annum and a minimum rate of 0.300% per annum.

This Certificate is one of a duly authorized issue of Certificates designated as Mortgage Pass-Through Certificate of the Series specified on the face hereof (herein called the “Certificates”) and representing a Percentage Interest in the Class of Certificates specified on the face hereof equal to the denomination specified on the face hereof divided by the aggregate Certificate Principal Balance of the Class of Certificates specified on the face hereof.  The Certificates, in the aggregate, evidence the entire beneficial ownership in the Trust Fund formed pursuant to the Agreement.

The Certificates are limited in right of payment to certain collections and recoveries respecting the related Mortgage Loans, all as more specifically set forth herein and in the Agreement. As provided in the Agreement, withdrawals from the Protected Accounts and the Distribution Account may be made from time to time for purposes other than distributions to Certificateholders, such purposes including reimbursement of advances made, or certain expenses incurred, with respect to the Mortgage Loans.  

The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Depositor, the Master Servicer, the Trustee, the Securities Administrator and the rights of the Certificateholders under the Agreement at any time by the Depositor, the Master Servicer, the Trustee and the Securities Administrator with the consent of the Holders of Certificates evidencing, in the aggregate, not less than 66-2/3% Percentage Interests of all Certificates.  Any such consent by the Holder of this Certificate shall be conclusive and binding on such Holder and upon all future Holders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange herefor or in lieu hereof whether or not notation of such consent is made upon this Certificate.  The Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Holders of any of the Certificates.

As provided in the Agreement and subject to certain limitations therein set forth, the transfer of this Certificate is registrable in the Certificate Register upon surrender of this Certificate for registration of transfer at the offices or agencies appointed by the Securities Administrator as provided in the Agreement, duly endorsed by, or accompanied by an assignment in the form below or other written instrument of transfer in form satisfactory to the Securities Administrator duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, and thereupon one or more new Certificates of the same Class in authorized denominations evidencing the same aggregate Percentage Interest will be issued to the designated transferee or transferees.

The Certificates are issuable in fully registered form only without coupons in Classes and denominations representing Percentage Interests specified in the Agreement. As provided in the Agreement and subject to certain limitations therein set forth, the Certificates are exchangeable for new Certificates of the same Class in authorized denominations evidencing the same aggregate Percentage Interest, as requested by the Holder surrendering the same.

No service charge will be made for any such registration of transfer or exchange of Certificates, but the Securities Administrator may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Certificates.

The Depositor, the Master Servicer, the Trustee, the Securities Administrator and any agent of the Depositor, the Master Servicer, the Trustee or the Securities Administrator may treat the Person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the Depositor, the Master Servicer, the Trustee or the Securities Administrator nor any such agent shall be affected by notice to the contrary.

The obligations created by the Agreement and the Trust Fund created thereby shall terminate upon payment to the Certificateholders of all amounts held by the Securities Administrator and required to be paid to them pursuant to the Agreement following the earlier of (i) the final payment or other liquidation (or any advance with respect thereto) of the last Mortgage Loan remaining in the Trust Fund and (ii) the purchase by the party designated in the Agreement at a price determined as provided in the Agreement of all of the Mortgage Loans and all property acquired in respect of such Mortgage Loans. The Agreement permits, but does not require, the party designated in the Agreement to purchase all the Mortgage Loans and all property acquired in respect of any Mortgage Loan at a price determined as provided in the Agreement. The exercise of such right will effect early retirement of the Certificates relating to the applicable Mortgage Loan; however, such right to purchase is subject to the aggregate Scheduled Principal Balance of the Mortgage Loans and the fair market value of each related REO Property remaining in the Trust Fund with respect to the Mortgage Loans at the time of purchase, being less than or equal to 10% of the aggregate Scheduled Principal Balance of the Mortgage Loans as of the Cut-Off Date.

The recitals contained herein shall be taken as statements of the Depositor and neither the Trustee nor the Securities Administrator assumes any responsibility for their correctness.

Unless the certificate of authentication hereon has been executed by the Securities Administrator, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose.

IN WITNESS WHEREOF, the Securities Administrator has caused this Certificate to be duly executed.

Dated:

WELLS FARGO BANK, N.A.

as Securities Administrator

By:                                                                   

Authorized Officer

CERTIFICATE OF AUTHENTICATION

This is one of the Certificates referred to in the within-mentioned Agreement.

WELLS FARGO BANK, N.A.

as Securities Administrator

By:                                                                   

Authorized Signatory

ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

				
	TEN COM

-

	as tenants in common

	UNIF GIFT MIN ACT -

	     Custodian      

(Cust)        (Minor)

under Uniform Gifts 

to Minors Act

	TEN ENT

-

	as tenants by the entireties

	 
	________________

(State)

	JT TEN

-

	as joint tenants with right 

if survivorship and not as 

tenants in common

	 
	 

	 
	 
	 
	 

	Additional abbreviations may also be used though not in the above list.

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto  ________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

(Please print or typewrite name, address including postal zip code, and Taxpayer Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within Mortgage Pass-Through Certificate and hereby authorize(s) the registration of transfer of such interest to assignee on the Certificate Register of the Trust Fund.

I (we) further direct the Trustee or the Securities Administrator to issue a new Certificate of a like Percentage Interest and Class to the above named assignee and deliver such Certificate to the following address: ________________________________________________

_____________________________________________________________________________.

Dated:

_________________________________________

Signature by or on behalf of assignor

______________________________________

Signature Guaranteed

DISTRIBUTION INSTRUCTIONS

The assignee should include the following for purposes of distribution:

Distributions shall be made, by wire transfer or otherwise, in immediately available funds to _______________________________________________________________ for the account of ______________________________________________________________, account number ____________________, or, if mailed by check, to _______________________ _____________________________________________________________________________. Applicable statements should be mailed to _______________________________________ _____________________________________________________________________________. This information is provided by __________________________________________________, the assignee named above, or _______________________________________, as its agent.

EXHIBIT A-2

FORM OF CLASS AI-[_] CERTIFICATE

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A “REGULAR INTEREST” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT,” AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”).

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DECREASED BY THE PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CERTIFICATE PRINCIPAL BALANCE BY INQUIRY OF THE SECURITIES ADMINISTRATOR NAMED HEREIN.

NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE CODE WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED IN SECTION 6.3(e) OF THE AGREEMENT REFERRED TO HEREIN.

			
	DBALT Series 2007-AB1, Class AI-[_]

	 
	Aggregate Certificate Principal Balance of the Class AI-[_]

 Certificates as of the Issue Date:  $___________

	Pass-Through Rate: Floating

	 
	Denomination:  $__________

	Date of Pooling and Servicing Agreement and Cut-Off Date: March 1, 2007

	 
	Master Servicer: Wells Fargo Bank, N.A.

	First Distribution Date: April 25, 2007

	 
	Trustee: HSBC Bank USA, National Association

	No. __

	 
	Issue Date: April 13, 2007

	 
	 
	CUSIP: ________________

DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS CERTIFICATE.

DEUTSCHE ALT-B SECURITIES MORTGAGE LOAN TRUST , SERIES 2007-AB1

MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a fractional undivided interest in the distributions allocable to the Class AI-[_] Certificates with respect to a trust fund generally consisting of a pool of conventional fixed-rate first lien residential mortgage loans (the “Mortgage Loans”) secured by one- to four- family residences, units in planned unit developments and individual condominium units (the “Trust Fund”) sold by DEUTSCHE ALT-A SECURITIES, INC.  The Certificates are limited in right of payment to certain collections and recoveries respecting the related Mortgage Loans, all as more specifically set forth herein and in the Agreement. 

THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN DEUTSCHE ALT-A SECURITIES, INC., THE MASTER SERVICER, THE SECURITIES ADMINISTRATOR, THE TRUSTEE, ANY SERVICER OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

This certifies that Cede & Co. is the registered owner of the Percentage Interest evidenced hereby in the beneficial ownership interest of Certificates of the same Class as this Certificate in certain assets of the Trust Fund sold by Deutsche Alt-A Securities, Inc. (the “Depositor”).  This Certificate is primarily backed by the Mortgage Loans sold by DB Structured Products, Inc. to the Depositor.  Wells Fargo Bank, N.A. will act as master servicer of the Mortgage Loans (the “Master Servicer”, which term includes any successors thereto under the Agreement referred to below). The Trust Fund was created pursuant to the Pooling and Servicing Agreement dated as of the Cut-Off Date specified above (the “Agreement”), among the Depositor, Wells Fargo Bank, N.A., as Master Servicer and securities administrator (the “Securities Administrator”), HSBC Bank USA, National Association as trustee (the “Trustee”) and Clayton Fixed Income Services Inc. as credit risk manager, a summary of certain of the pertinent provisions of which is set forth hereafter. To the extent not defined herein, capitalized terms used herein shall have the meaning ascribed to them in the Agreement. This Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement, to which Agreement the Holder of this Certificate by virtue of its acceptance hereof assents and by which such Holder is bound.

Pursuant to the terms of the Agreement, distributions will be made on the 25th day of each month or, if such 25th day is not a Business Day, the Business Day immediately following such 25th day (a “Distribution Date”), commencing on the First Distribution Date specified above, to the Person in whose name this Certificate is registered at the close of business on the Business Day immediately preceding the related Distribution Date (or with respect to the first Distribution Date, the Closing Date) (the “Record Date”), in an amount equal to the product of the Percentage Interest evidenced by this Certificate and the amount required to be distributed to the Holders of Class AI-[_] Certificates on such Distribution Date pursuant to the Agreement.

All distributions to the Holder of this Certificate under the Agreement will be made or caused to be made by the Securities Administrator by wire transfer in immediately available funds to the account of the Person entitled thereto if such Person shall have so notified the Securities Administrator in writing at least five Business Days prior to the Record Date immediately prior to such Distribution Date and is the registered owner of Class AI-[_] Certificates or otherwise by check mailed by first class mail to the address of the Person entitled thereto, as such name and address shall appear on the Certificate Register. Notwithstanding the above, the final distribution on this Certificate will be made after due notice by the Securities Administrator of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency appointed by the Securities Administrator for that purpose as provided in the Agreement.

The Pass-Through Rate with respect to Class AI-[_] Certificates for each Distribution Date will be a per annum rate equal to (i) 40.200% minus (ii) the product of (a) One-Month LIBOR and (b) 6, subject to a maximum rate of 40.200% per annum and a minimum rate of 0.000% per annum.

This Certificate is one of a duly authorized issue of Certificates designated as Mortgage Pass-Through Certificate of the Series specified on the face hereof (herein called the “Certificates”) and representing a Percentage Interest in the Class of Certificates specified on the face hereof equal to the denomination specified on the face hereof divided by the aggregate Certificate Principal Balance of the Class of Certificates specified on the face hereof.  The Certificates, in the aggregate, evidence the entire beneficial ownership in the Trust Fund formed pursuant to the Agreement.

The Certificates are limited in right of payment to certain collections and recoveries respecting the related Mortgage Loans, all as more specifically set forth herein and in the Agreement. As provided in the Agreement, withdrawals from the Protected Accounts and the Distribution Account may be made from time to time for purposes other than distributions to Certificateholders, such purposes including reimbursement of advances made, or certain expenses incurred, with respect to the Mortgage Loans.  

The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Depositor, the Master Servicer, the Trustee, the Securities Administrator and the rights of the Certificateholders under the Agreement at any time by the Depositor, the Master Servicer, the Trustee and the Securities Administrator with the consent of the Holders of Certificates evidencing, in the aggregate, not less than 66-2/3% Percentage Interests of all Certificates.  Any such consent by the Holder of this Certificate shall be conclusive and binding on such Holder and upon all future Holders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange herefor or in lieu hereof whether or not notation of such consent is made upon this Certificate.  The Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Holders of any of the Certificates.

As provided in the Agreement and subject to certain limitations therein set forth, the transfer of this Certificate is registrable in the Certificate Register upon surrender of this Certificate for registration of transfer at the offices or agencies appointed by the Securities Administrator as provided in the Agreement, duly endorsed by, or accompanied by an assignment in the form below or other written instrument of transfer in form satisfactory to the Securities Administrator duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, and thereupon one or more new Certificates of the same Class in authorized denominations evidencing the same aggregate Percentage Interest will be issued to the designated transferee or transferees.

The Certificates are issuable in fully registered form only without coupons in Classes and denominations representing Percentage Interests specified in the Agreement. As provided in the Agreement and subject to certain limitations therein set forth, the Certificates are exchangeable for new Certificates of the same Class in authorized denominations evidencing the same aggregate Percentage Interest, as requested by the Holder surrendering the same.

No service charge will be made for any such registration of transfer or exchange of Certificates, but the Securities Administrator may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Certificates.

The Depositor, the Master Servicer, the Trustee, the Securities Administrator and any agent of the Depositor, the Master Servicer, the Trustee or the Securities Administrator may treat the Person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the Depositor, the Master Servicer, the Trustee or the Securities Administrator nor any such agent shall be affected by notice to the contrary.

The obligations created by the Agreement and the Trust Fund created thereby shall terminate upon payment to the Certificateholders of all amounts held by the Securities Administrator and required to be paid to them pursuant to the Agreement following the earlier of (i) the final payment or other liquidation (or any advance with respect thereto) of the last Mortgage Loan remaining in the Trust Fund and (ii) the purchase by the party designated in the Agreement at a price determined as provided in the Agreement of all of the Mortgage Loans and all property acquired in respect of such Mortgage Loans. The Agreement permits, but does not require, the party designated in the Agreement to purchase all the Mortgage Loans and all property acquired in respect of any Mortgage Loan at a price determined as provided in the Agreement. The exercise of such right will effect early retirement of the Certificates relating to the applicable Mortgage Loan; however, such right to purchase is subject to the aggregate Scheduled Principal Balance of the Mortgage Loans and the fair market value of each related REO Property remaining in the Trust Fund with respect to the Mortgage Loans at the time of purchase, being less than or equal to 10% of the aggregate Scheduled Principal Balance of the Mortgage Loans as of the Cut-Off Date.

The recitals contained herein shall be taken as statements of the Depositor and neither the Trustee nor the Securities Administrator assumes any responsibility for their correctness.

Unless the certificate of authentication hereon has been executed by the Securities Administrator, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose.

IN WITNESS WHEREOF, the Securities Administrator has caused this Certificate to be duly executed.

Dated:

WELLS FARGO BANK, N.A.

as Securities Administrator

By:                                                                   

Authorized Officer

CERTIFICATE OF AUTHENTICATION

This is one of the Certificates referred to in the within-mentioned Agreement.

WELLS FARGO BANK, N.A.

as Securities Administrator

By:                                                                   

Authorized Signatory

ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

				
	TEN COM

-

	as tenants in common

	UNIF GIFT MIN ACT -

	     Custodian      

(Cust)        (Minor)

under Uniform Gifts 

to Minors Act

	TEN ENT

-

	as tenants by the entireties

	 
	________________

(State)

	JT TEN

-

	as joint tenants with right 

if survivorship and not as 

tenants in common

	 
	 

	 
	 
	 
	 

	Additional abbreviations may also be used though not in the above list.

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto  ________________________________________________________________

_____________________________________________________________________________

_____________________________________________________________________________

(Please print or typewrite name, address including postal zip code, and Taxpayer Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within Mortgage Pass-Through Certificate and hereby authorize(s) the registration of transfer of such interest to assignee on the Certificate Register of the Trust Fund.

I (we) further direct the Trustee or the Securities Administrator to issue a new Certificate of a like Percentage Interest and Class to the above named assignee and deliver such Certificate to the following address: ________________________________________________

_____________________________________________________________________________.

Dated:

_________________________________________

Signature by or on behalf of assignor

______________________________________

Signature Guaranteed

DISTRIBUTION INSTRUCTIONS

The assignee should include the following for purposes of distribution:

Distributions shall be made, by wire transfer or otherwise, in immediately available funds to _______________________________________________________________

for the account of ______________________________________________________________,

account number ____________________, or, if mailed by check, to _______________________

_____________________________________________________________________________.

Applicable statements should be mailed to ___________________________________________

_____________________________________________________________________________.

This information is provided by __________________________________________________,

the assignee named above, or _______________________________________, as its agent.

EXHIBIT A-3

FORM OF CLASS X CERTIFICATES

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A “REGULAR INTEREST” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT,” AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”).

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE CODE WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED IN SECTION 6.3(e) OF THE AGREEMENT REFERRED TO HEREIN.

THIS CERTIFICATE HAS NO PRINCIPAL BALANCE AND IS NOT ENTITLED TO ANY DISTRIBUTIONS IN RESPECT OF PRINCIPAL.

			
	DBALT Series 2007-AB1, Class X

	 
	Initial Notional Amount of the Class X Certificates as of the Issue Date:   $______________

	Pass-Through Rate: Fixed

	 
	Denomination:  $__________

	Date of Pooling and Servicing Agreement and Cut-Off Date: March 1, 2007

	 
	Master Servicer: Wells Fargo Bank, N.A.

	First Distribution Date: April 25, 2007

	 
	Trustee: HSBC Bank USA, National Association

	No. __

	 
	Issue Date: April 13, 2007

	 
	 
	CUSIP: ________________

DEUTSCHE ALT-B SECURITIES, INC. MORTGAGE LOAN TRUST, SERIES 2007-AB1

MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a fractional undivided interest in the distributions allocable to the Class X Certificates with respect to a trust fund generally consisting of a pool of conventional fixed-rate first lien residential mortgage loans (the “Mortgage Loans”), in each case, secured by one- to four- family residences, units in planned unit developments and individual condominium units (the “Trust Fund”) sold by DEUTSCHE ALT-A SECURITIES, INC. The Certificates are limited in right of payment to certain collections and recoveries respecting the related Mortgage Loans.

THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN DEUTSCHE ALT-A SECURITIES, INC., THE MASTER SERVICER, THE SECURITIES ADMINISTRATOR, THE TRUSTEE, ANY SERVICER OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

This certifies that Cede & Co. is the registered owner of the Percentage Interest evidenced hereby in the beneficial ownership interest of Certificates of the same Class as this Certificate in certain assets of the Trust Fund sold by Deutsche Alt-A Securities, Inc. (the “Depositor”).  This Certificate is primarily backed by the Mortgage Loans sold by DB Structured Products, Inc. to the Depositor.  Wells Fargo Bank, N.A. will act as master servicer of the Mortgage Loan (the “Master Servicer”, which term includes any successors thereto under the Agreement referred to below). The Trust Fund was created pursuant to the Pooling and Servicing Agreement dated as of the Cut-Off Date specified above (the “Agreement”), among the Depositor, Wells Fargo Bank, N.A., as Master Servicer and securities administrator (the “Securities Administrator”), HSBC Bank USA, National Association as trustee (the “Trustee”) and Clayton Fixed Income Services Inc. as credit risk manager, a summary of certain of the pertinent provisions of which is set forth hereafter. To the extent not defined herein, capitalized terms used herein shall have the meaning ascribed to them in the Agreement. This Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement, to which Agreement the Holder of this Certificate by virtue of its acceptance hereof assents and by which such Holder is bound.

Pursuant to the terms of the Agreement, distributions will be made on the 25th day of each month or, if such 25th day is not a Business Day, the Business Day immediately following such 25th day (a “Distribution Date”), commencing on the First Distribution Date specified above, to the Person in whose name this Certificate is registered at the close of business on the last Business Day of the month immediately preceding the month in which the related Distribution Date occurs (the “Record Date”), in an amount equal to the product of the Percentage Interest evidenced by this Certificate and the amount required to be distributed to the Holders of Class X Certificates on such Distribution Date pursuant to the Agreement.

All distributions to the Holder of this Certificate under the Agreement will be made or caused to be made by the Securities Administrator by wire transfer in immediately available funds to the account of the Person entitled thereto if such Person shall have so notified the Securities Administrator in writing at least five Business Days prior to the Record Date immediately prior to such Distribution Date and is the registered owner of Class X Certificates or otherwise by check mailed by first class mail to the address of the Person entitled thereto, as such name and address shall appear on the Certificate Register. Notwithstanding the above, the final distribution on this Certificate will be made after due notice by the Securities Administrator of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency appointed by the Securities Administrator for that purpose as provided in the Agreement.

The Pass-Through Rate with respect to the Class X Certificates on any Distribution Date shall be equal to [6.000]% per annum.

This Certificate is one of a duly authorized issue of Certificates designated as a Mortgage Pass-Through Certificate of the Series specified on the face hereof (herein called the “Certificates”) and represents a Percentage Interest in the Class of Certificates specified on the face hereof equal to the denomination specified on the face hereof divided by the initial Notional Amount of the Class of Certificates specified on the face hereof.  The Certificates, in the aggregate, evidence the entire beneficial ownership interest in the Trust Fund formed pursuant to the Agreement.

The Certificates are limited in right of payment to certain collections and recoveries respecting the Mortgage Loans and certain other assets of the Trust Fund, all as more specifically set forth herein and in the Agreement. As provided in the Agreement, withdrawals from the Protected Accounts and the Distribution Account may be made from time to time for purposes other than distributions to Certificateholders, such purposes including reimbursement of advances made, or certain expenses incurred, with respect to the Mortgage Loans.

The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Depositor, the Master Servicer, the Trustee, the Securities Administrator and the rights of the Certificateholders under the Agreement at any time by the Depositor, the Master Servicer, the Trustee and the Securities Administrator with the consent of the Holders of Certificates evidencing, in the aggregate, not less than 66-2/3% Percentage Interests of all Certificates.  Any such consent by the Holder of this Certificate shall be conclusive and binding on such Holder and upon all future Holders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange herefor or in lieu hereof whether or not notation of such consent is made upon this Certificate.  The Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Holders of any of the Certificates.

As provided in the Agreement and subject to certain limitations therein set forth, the transfer of this Certificate is registrable in the Certificate Register upon surrender of this Certificate for registration of transfer at the offices or agencies appointed by the Securities Administrator as provided in the Agreement, duly endorsed by, or accompanied by an assignment in the form below or other written instrument of transfer in form satisfactory to the Securities Administrator duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, and thereupon one or more new Certificates of the same Class in authorized denominations evidencing the same aggregate Percentage Interest will be issued to the designated transferee or transferees.

The Certificates are issuable in fully registered form only without coupons in Classes and denominations representing Percentage Interests specified in the Agreement. As provided in the Agreement and subject to certain limitations therein set forth, the Certificates are exchangeable for new Certificates of the same Class in authorized denominations evidencing the same aggregate Percentage Interest, as requested by the Holder surrendering the same.

No service charge will be made for any such registration of transfer or exchange of Certificates, but the Securities Administrator may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Certificates.

The Depositor, the Master Servicer, the Trustee, the Securities Administrator and any agent of the Depositor, the Master Servicer, the Trustee or the Securities Administrator may treat the Person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the Depositor, the Master Servicer, the Trustee or the Securities Administrator nor any such agent shall be affected by notice to the contrary.

The obligations created by the Agreement and the Trust Fund created thereby shall terminate upon payment to the Certificateholders of all amounts held by the Securities Administrator and required to be paid to them pursuant to the Agreement following the earlier of (i) the final payment or other liquidation (or any advance with respect thereto) of the last Mortgage Loan remaining in the Trust Fund and (ii) the purchase by the party designated in the Agreement at a price determined as provided in the Agreement of all the Mortgage Loans and all property acquired in respect of such Mortgage Loans. The Agreement permits, but does not require, the party designated in the Agreement to purchase all the Mortgage Loans and all property acquired in respect of any Mortgage Loan at a price determined as provided in the Agreement. The exercise of such right will effect early retirement of the Certificates; however, such right to purchase is subject to the aggregate Scheduled Principal Balance of the Mortgage Loans and the fair market value of each REO Property remaining in the Trust Fund with respect to the Mortgage Loans at the time of purchase being less than or equal to 10% of the aggregate Scheduled Principal Balance of the Mortgage Loans as of the Cut-Off Date.

The recitals contained herein shall be taken as statements of the Depositor and neither the Trustee nor the Securities Administrator assumes any responsibility for their correctness.

Unless the certificate of authentication hereon has been executed by the Securities Administrator, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose.

IN WITNESS WHEREOF, the Securities Administrator has caused this Certificate to be duly executed.

Dated:

WELLS FARGO BANK, N.A.

as Securities Administrator

By:                                                                   

Authorized Officer

CERTIFICATE OF AUTHENTICATION

This is one of the Certificates referred to in the within-mentioned Agreement.

WELLS FARGO BANK, N.A.

as Securities Administrator

By:                                                                   

Authorized Officer

ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

				
	TEN COM

-

	as tenants in common

	UNIF GIFT MIN ACT -

	     Custodian      

(Cust)        (Minor)

under Uniform Gifts 

to Minors Act

	TEN ENT

-

	as tenants by the entireties

	 
	________________

(State)

	JT TEN

-

	as joint tenants with right 

if survivorship and not as 

tenants in common

	 
	 

	 
	 
	 
	 

	Additional abbreviations may also be used though not in the above list.

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto  ________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

(Please print or typewrite name, address including postal zip code, and Taxpayer Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within Mortgage Pass-Through Certificate and hereby authorize(s) the registration of transfer of such interest to assignee on the Certificate Register of the Trust Fund.

I (we) further direct the Trustee or the Securities Administrator to issue a new Certificate of a like Percentage Interest and Class to the above named assignee and deliver such Certificate to the following address: ________________________________________________

_____________________________________________________________________________.

Dated:

_________________________________________

Signature by or on behalf of assignor

______________________________________

Signature Guaranteed

DISTRIBUTION INSTRUCTIONS

The assignee should include the following for purposes of distribution:

Distributions shall be made, by wire transfer or otherwise, in immediately available funds to _______________________________________________________________

for the account of ______________________________________________________________,

account number ____________________, or, if mailed by check, to _______________________

_____________________________________________________________________________.

Applicable statements should be mailed to ___________________________________________

_____________________________________________________________________________.

This information is provided by ___________________________________________________,

the assignee named above, or _______________________________________, as its agent.

EXHIBIT A-4

FORM OF CLASS PO CERTIFICATES

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A “REGULAR INTEREST” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT,” AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”).

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DECREASED BY THE PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CERTIFICATE PRINCIPAL BALANCE BY INQUIRY OF THE SECURITIES ADMINISTRATOR NAMED HEREIN.

THIS CERTIFICATE IS A PRINCIPAL ONLY CERTIFICATE AND IS NOT ENTITLED TO ANY DISTRIBUTIONS IN RESPECT OF INTEREST.

NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE CODE WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED IN SECTION 6.3(e) OF THE AGREEMENT REFERRED TO HEREIN.

			
	DBALT Series 2007-AB1, Class PO

	 
	Aggregate Certificate Principal Balance of the Class PO Certificates as of the Issue Date:  

$_______________

	Date of Pooling and Servicing Agreement and Cut-Off Date: March 1, 2007

	 
	Denomination:  $__________

	 
	 
	Master Servicer: Wells Fargo Bank, N.A.

	First Distribution Date: April 25, 2007

	 
	Trustee: HSBC Bank USA, National Association

	No.__

	 
	Issue Date: April 13, 2007

	 
	 
	CUSIP:________________

	 
	 
	 

DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE AS THE DENOMINATION OF THIS CERTIFICATE.

DEUTSCHE ALT-B SECURITIES, INC. MORTGAGE LOAN TRUST, SERIES 2007-AB1

MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a fractional undivided interest in the distributions allocable to the Class PO Certificates with respect to a trust fund generally consisting of a pool of conventional fixed-rate first lien residential mortgage loans (the “Mortgage Loans”), in each case, secured by one- to four- family residences, units in planned unit developments and individual condominium units (the “Trust Fund”) sold by DEUTSCHE ALT-A SECURITIES, INC.

THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN DEUTSCHE ALT-A SECURITIES, INC., THE MASTER SERVICER, THE SECURITIES ADMINISTRATOR, THE TRUSTEE, ANY SERVICER OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

This certifies that Cede & Co. is the registered owner of the Percentage Interest evidenced hereby in the beneficial ownership interest of Certificates of the same Class as this Certificate in certain assets of the Trust Fund sold by Deutsche Alt-A Securities, Inc. (the “Depositor”). This Certificate is primarily backed by the Mortgage Loans sold by DB Structured Products, Inc. to the Depositor.  Wells Fargo Bank, N.A. will act as master servicer of the Mortgage Loans (the “Master Servicer”, which term includes any successors thereto under the Agreement referred to below). The Trust Fund was created pursuant to the Pooling and Servicing Agreement dated as of the Cut-Off Date specified above (the “Agreement”), among the Depositor, Wells Fargo Bank, N.A., as Master Servicer and securities administrator (the “Securities Administrator”), HSBC Bank USA, National Association as trustee (the “Trustee”) and Clayton Fixed Income Services Inc. as credit risk manager, a summary of certain of the pertinent provisions of which is set forth hereafter. To the extent not defined herein, capitalized terms used herein shall have the meaning ascribed to them in the Agreement. This Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement, to which Agreement the Holder of this Certificate by virtue of its acceptance hereof assents and by which such Holder is bound.

Pursuant to the terms of the Agreement, distributions will be made on the 25th day of each month or, if such 25th day is not a Business Day, the Business Day immediately following such 25th day (a “Distribution Date”), commencing on the First Distribution Date specified above, to the Person in whose name this Certificate is registered at the close of business on the last Business Day of the month immediately preceding the month in which the related Distribution Date occurs (the “Record Date”), in an amount equal to the product of the Percentage Interest evidenced by this Certificate and the amount required to be distributed to the Holders of Class PO Certificates on such Distribution Date pursuant to the Agreement.

All distributions to the Holder of this Certificate under the Agreement will be made or caused to be made by the Securities Administrator by check mailed by first class mail to the address of the Person entitled thereto, as such name and address shall appear on the Certificate Register. Notwithstanding the above, the final distribution on this Certificate will be made after due notice by the Securities Administrator of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency appointed by the Securities Administrator for that purpose as provided in the Agreement.

This Certificate is one of a duly authorized issue of Certificates designated as a Mortgage Pass-Through Certificate of the Series specified on the face hereof (herein called the “Certificates”) and represents a Percentage Interest in the Class of Certificates specified on the face hereof equal to the denomination specified on the face hereof divided by aggregate Certificate Principal Balance of the Class of Certificates specified on the face hereof.  The Certificates, in the aggregate, evidence the entire beneficial ownership interest in the Trust Fund formed pursuant to the Agreement.

The Certificates are limited in right of payment to certain collections and recoveries respecting the Mortgage Loans and certain other assets of the Trust Fund, all as more specifically set forth herein and in the Agreement. As provided in the Agreement, withdrawals from the Protected Accounts and the Distribution Account may be made from time to time for purposes other than distributions to Certificateholders, such purposes including reimbursement of advances made, or certain expenses incurred, with respect to the Mortgage Loans.  

The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Depositor, the Master Servicer, the Trustee, the Securities Administrator and the rights of the Certificateholders under the Agreement at any time by the Depositor, the Master Servicer, the Trustee and the Securities Administrator with the consent of the Holders of Certificates evidencing, in the aggregate, not less than 66-2/3% Percentage Interests of all Certificates.  Any such consent by the Holder of this Certificate shall be conclusive and binding on such Holder and upon all future Holders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange herefor or in lieu hereof whether or not notation of such consent is made upon this Certificate.  The Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Holders of any of the Certificates.

As provided in the Agreement and subject to certain limitations therein set forth, the transfer of this Certificate is registrable in the Certificate Register upon surrender of this Certificate for registration of transfer at the offices or agencies appointed by the Securities Administrator as provided in the Agreement, duly endorsed by, or accompanied by an assignment in the form below or other written instrument of transfer in form satisfactory to the Securities Administrator duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, and thereupon one or more new Certificates of the same Class in authorized denominations evidencing the same aggregate Percentage Interest will be issued to the designated transferee or transferees.

The Certificates are issuable in fully registered form only without coupons in Classes and denominations representing Percentage Interests specified in the Agreement. As provided in the Agreement and subject to certain limitations therein set forth, the Certificates are exchangeable for new Certificates of the same Class in authorized denominations evidencing the same aggregate Percentage Interest, as requested by the Holder surrendering the same.

No service charge will be made for any such registration of transfer or exchange of Certificates, but the Securities Administrator may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Certificates.

The Depositor, the Master Servicer, the Trustee, the Securities Administrator and any agent of the Depositor, the Master Servicer, the Trustee or the Securities Administrator may treat the Person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the Depositor, the Master Servicer, the Trustee or the Securities Administrator nor any such agent shall be affected by notice to the contrary.

The obligations created by the Agreement and the Trust Fund created thereby shall terminate upon payment to the Certificateholders of all amounts held by the Securities Administrator and required to be paid to them pursuant to the Agreement following the earlier of (i) the final payment or other liquidation (or any advance with respect thereto) of the last Mortgage Loan remaining in the Trust Fund and (ii) the purchase by the party designated in the Agreement at a price determined as provided in the Agreement of all the Mortgage Loans and all property acquired in respect of such Mortgage Loans. The Agreement permits, but does not require, the party designated in the Agreement to purchase all the Mortgage Loans and all property acquired in respect of any Mortgage Loan at a price determined as provided in the Agreement. The exercise of such right will effect early retirement of the Certificates; however, such right to purchase is subject to the aggregate Scheduled Principal Balance of the Mortgage Loans and the fair market value of each REO Property remaining in the Trust Fund with respect to the Mortgage Loans at the time of purchase being less than or equal to 10% of the aggregate Scheduled Principal Balance of the Mortgage Loans as of the Cut-Off Date.

The recitals contained herein shall be taken as statements of the Depositor and neither the Trustee nor the Securities Administrator assumes any responsibility for their correctness.

Unless the certificate of authentication hereon has been executed by the Securities Administrator, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose.

IN WITNESS WHEREOF, the Securities Administrator has caused this Certificate to be duly executed.

Dated:

WELLS FARGO BANK, N.A.

as Securities Administrator

By:                                      

Authorized Officer

ERTIFICATE OF AUTHENTICATION

This is one of the Certificates referred to in the within-mentioned Agreement.

WELLS FARGO BANK, N.A.

as Securities Administrator

By:                                                                   

Authorized Officer

ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

				
	TEN COM

-

	as tenants in common

	UNIF GIFT MIN ACT -

	     Custodian      

(Cust)        (Minor)

under Uniform Gifts 

to Minors Act

	TEN ENT

-

	as tenants by the entireties

	 
	________________

(State)

	JT TEN

-

	as joint tenants with right 

if survivorship and not as 

tenants in common

	 
	 

	 
	 
	 
	 

	Additional abbreviations may also be used though not in the above list.

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto  ________________________________________________________________

	
	 

(Please print or typewrite name, address including postal zip code, and Taxpayer Identification Number of assignee)

a Percentage Interest equal to _____% evidenced by the within Mortgage Pass-Through Certificate and hereby authorize(s) the registration of transfer of such interest to assignee on the Certificate Register of the Trust Fund.

I (we) further direct the Securities Administrator to issue a new Certificate of a like Percentage Interest and Class to the above named assignee and deliver such Certificate to the following address: ______________________________________________________________

		
	 
	.

		
	Dated:

	 

	 
	Signature by or on behalf of assignor

	 
	 

	 
	 

	 
	Signature Guaranteed

DISTRIBUTION INSTRUCTIONS

The assignee should include the following for purposes of distribution:

								
	Distributions shall be made, by wire transfer or otherwise, in immediately available 

	funds to

	 

	 

	for the account of

	 

	account number

	 
	or, if mailed by check, to

	 

	Applicable statements should be mailed to

	 

	 

	 

	This information is provided by

	 

	assignee named above, or

	 

	its agent.

	 

EXHIBIT A-5

FORM OF CLASS AR CERTIFICATES

THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED STATES PERSON.

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS THE SOLE “RESIDUAL INTEREST” IN EACH “REAL ESTATE MORTGAGE INVESTMENT CONDUIT,” AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”).

THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DECREASED BY THE PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CERTIFICATE PRINCIPAL BALANCE BY INQUIRY OF THE SECURITIES ADMINISTRATOR NAMED HEREIN.

ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 6.3(e) OF THE AGREEMENT REFERRED TO HEREIN.

NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE CODE WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED IN SECTION 6.3(e) OF THE AGREEMENT REFERRED TO HEREIN.

ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES (I) AN AFFIDAVIT TO THE SECURITIES ADMINISTRATOR THAT (A) SUCH TRANSFEREE IS NOT (1) THE UNITED STATES OR ANY POSSESSION THEREOF, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING, (2) ANY ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) THAT IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE, (3) ANY ORGANIZATION DESCRIBED IN SECTION 1381(a)(2)(C) OF THE CODE (ANY SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (1), (2) OR (3) SHALL HEREINAFTER BE REFERRED TO AS A “DISQUALIFIED ORGANIZATION”) OR (4) AN AGENT OF A DISQUALIFIED ORGANIZATION AND (B) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX, AND (II) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE REGISTER OF ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE HEREOF SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH AND THE PROVISIONS OF SECTION 6.3(e) OF THE AGREEMENT REFERRED TO HEREIN. ANY PERSON THAT IS A DISQUALIFIED ORGANIZATION IS PROHIBITED FROM ACQUIRING BENEFICIAL OWNERSHIP OF THIS CERTIFICATE.

			
	DBALT Series 2007-AB1, Class AR

	 
	Aggregate Certificate Principal Balance of the Class AR Certificates as of the Issue Date: $100

	 
	 
	Denomination: $________

	Pass-Through Rate: Fixed

	 
	Aggregate Percentage Interest of the Class AR Certificates as of the Issue Date: 100.00%

	 
	 
	 

	Date of Pooling and Servicing Agreement

and Cut-Off Date: March 1, 2007

	 
	Master Servicer: Wells Fargo Bank, N.A.

	First Distribution Date: April 25, 2007

	 
	Trustee: HSBC Bank USA, National Association

	No. __

	 
	Issue Date: April 13, 2007

	 
	 
	CUSIP: _____________

DEUTSCHE ALT-B SECURITIES, INC. MORTGAGE LOAN TRUST, SERIES 2007-AB1

MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a fractional undivided interest in the distributions allocable to the Class AR Certificates with respect to a trust fund generally consisting of a pool of conventional fixed-rate first lien residential mortgage loans (the “Mortgage Loans”), in each case, secured by one- to four- family residences, units in planned unit developments and individual condominium units (the “Trust Fund”) sold by DEUTSCHE ALT-A SECURITIES, INC.

THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN DEUTSCHE ALT-A SECURITIES, INC., THE MASTER SERVICER, THE SECURITIES ADMINISTRATOR, THE TRUSTEE, ANY SERVICER OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

This certifies that [Deutsche Bank Securities Inc.] is the registered owner of the Percentage Interest evidenced hereby in the beneficial ownership interest of Certificates of the same Class as this Certificate in certain assets of the Trust Fund sold by Deutsche Alt-A Securities, Inc. (the “Depositor”).  The Mortgage Loans were sold by DB Structured Products, Inc. to the Depositor.  Wells Fargo Bank, N.A. will act as master servicer of the Mortgage Loans (the “Master Servicer”, which term includes any successors thereto under the Agreement referred to below). The Trust Fund was created pursuant to the Pooling and Servicing Agreement dated as of the Cut-Off Date specified above (the “Agreement”), among the Depositor, Wells Fargo Bank, N.A., as Master Servicer and securities administrator (the “Securities Administrator”), HSBC Bank USA, National Association as trustee (the “Trustee”) and Clayton Fixed Income Services Inc. as credit risk manager, a summary of certain of the pertinent provisions of which is set forth hereafter. To the extent not defined herein, capitalized terms used herein shall have the meaning ascribed to them in the Agreement. This Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement, to which Agreement the Holder of this Certificate by virtue of its acceptance hereof assents and by which such Holder is bound.

Pursuant to the terms of the Agreement, distributions will be made on the 25th day of each month or, if such 25th day is not a Business Day, the Business Day immediately following such 25th day (a “Distribution Date”), commencing on the First Distribution Date specified above, to the Person in whose name this Certificate is registered at the close of business on the last Business Day of the month immediately preceding the month in which the related Distribution Date occurs (the “Record Date”), in an amount equal to the product of the Percentage Interest evidenced by this Certificate and the amount required to be distributed to the Holders of Class AR Certificates on such Distribution Date pursuant to the Agreement.

All distributions to the Holder of this Certificate under the Agreement will be made or caused to be made by the Securities Administrator by wire transfer in immediately available funds to the account of the Person entitled thereto if such Person shall have so notified the Securities Administrator in writing at least five Business Days prior to the Record Date immediately prior to such Distribution Date and is the registered owner of Class AR Certificates, or otherwise by check mailed by first class mail to the address of the Person entitled thereto, as such name and address shall appear on the Certificate Register. Notwithstanding the above, the final distribution on this Certificate will be made after due notice by the Securities Administrator of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency appointed by the Securities Administrator for that purpose as provided in the Agreement.

The Pass-Through Rate with respect to any Distribution Date shall be equal to [6.000]% per annum.

This Certificate is one of a duly authorized issue of Certificates designated as a Mortgage Pass-Through Certificate of the Series specified on the face hereof (herein called the “Certificates”) and represents a Percentage Interest in the Class of Certificates specified on the face hereof equal to the denomination specified on the face hereof divided by the aggregate Certificate Principal Balance of the Class of Certificates specified on the face hereof.  The Certificates, in the aggregate, evidence the entire beneficial ownership interest in the Trust Fund formed pursuant to the Agreement.

The Certificates are limited in right of payment to certain collections and recoveries respecting the Mortgage Loans and certain other assets of the Trust Fund, all as more specifically set forth herein and in the Agreement. As provided in the Agreement, withdrawals from the Protected Accounts and the Distribution Account may be made from time to time for purposes other than distributions to Certificateholders, such purposes including reimbursement of advances made, or certain expenses incurred, with respect to the Mortgage Loans.  

The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Depositor, the Master Servicer, the Trustee, the Securities Administrator and the rights of the Certificateholders under the Agreement at any time by the Depositor, the Master Servicer, the Trustee and the Securities Administrator with the consent of the Holders of Certificates evidencing, in the aggregate, not less than 66-2/3% Percentage Interest of all Certificates.  Any such consent by the Holder of this Certificate shall be conclusive and binding on such Holder and upon all future Holders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange herefor or in lieu hereof whether or not notation of such consent is made upon this Certificate.  The Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Holders of any of the Certificates.

As provided in the Agreement and subject to certain limitations therein set forth, the transfer of this Certificate is registrable in the Certificate Register upon surrender of this Certificate for registration of transfer at the offices or agencies appointed by the Securities Administrator as provided in the Agreement, duly endorsed by, or accompanied by an assignment in the form below or other written instrument of transfer in form satisfactory to the Securities Administrator duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, and thereupon one or more new Certificates of the same Class in authorized denominations evidencing the same aggregate Percentage Interest will be issued to the designated transferee or transferees.

The Certificates are issuable in fully registered form only without coupons in Classes and denominations representing Percentage Interests specified in the Agreement. As provided in the Agreement and subject to certain limitations therein set forth, Certificates are exchangeable for new Certificates of the same Class in authorized denominations evidencing the same aggregate Percentage Interest, as requested by the Holder surrendering the same.

Each Holder of this Certificate will be deemed to have agreed to be bound by the restrictions set forth in the Agreement to the effect that (i) each person holding or acquiring any Ownership Interest in this Certificate must be a United States Person and a Permitted Transferee, (ii) the transfer of any Ownership Interest in this Certificate will be conditioned upon the delivery to the Securities Administrator of, among other things, an affidavit to the effect that it is a United States Person and Permitted Transferee, (iii) any attempted or purported transfer of any Ownership Interest in this Certificate in violation of such restrictions will be absolutely null and void and will vest no rights in the purported transferee, and (iv) if any person other than a United States Person and a Permitted Transferee acquires any Ownership Interest in this Certificate in violation of such restrictions, then the Depositor will have the right, in its sole discretion and without notice to the Holder of this Certificate, to sell this Certificate to a purchaser selected by the Depositor, which purchaser may be the Depositor, or any affiliate of the Depositor, on such terms and conditions as the Depositor may choose.

No transfer of this Certificate to a Plan subject to ERISA or Section 4975 of the Code, any Person acting, directly or indirectly, on behalf of any such Plan or any Person using “Plan Assets” to acquire this Certificate shall be made except in accordance with Section 6.3(e) of the Agreement.

Prior to registration of any transfer, sale or other disposition of this Certificate, the proposed transferee shall provide to the Securities Administrator (i) an affidavit to the effect that such transferee is any Person other than a Disqualified Organization or the agent (including a broker, nominee or middleman) of a Disqualified Organization, and (ii) a certificate that acknowledges that (A) the Class AR Certificates have been designated as a representing the beneficial ownership of the residual interests in each REMIC, (B) it will include in its income a pro rata share of the net income of the Trust Fund and that such income may be an “excess inclusion,” as defined in the Code, that, with certain exceptions, cannot be offset by other losses or benefits from any tax exemption, and (C) it expects to have the financial means to satisfy all of its tax obligations including those relating to holding the Class AR Certificates. Notwithstanding the registration in the Certificate Register of any transfer, sale or other disposition of this Certificate to a Disqualified Organization or an agent (including a broker, nominee or middleman) of a Disqualified Organization, such registration shall be deemed to be of no legal force or effect whatsoever and such Person shall not be deemed to be a Certificateholder for any purpose, including, but not limited to, the receipt of distributions in respect of this Certificate.

The Holder of this Certificate, by its acceptance hereof, shall be deemed to have consented to the provisions of Section 6.3(e) of the Agreement and to any amendment of the Agreement deemed necessary by counsel of the Depositor to ensure that the transfer of this Certificate to any Person other than a Permitted Transferee or any other Person will not cause any portion of the Trust Fund to cease to qualify as a REMIC or cause the imposition of a tax upon any REMIC.

No service charge will be made for any such registration of transfer or exchange of Certificates, but the Securities Administrator may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Certificates.

The Depositor, the Master Servicer, the Trustee, the Securities Administrator and any agent of the Depositor, the Master Servicer, the Trustee or the Securities Administrator may treat the Person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the Depositor, the Master Servicer, the Trustee or the Securities Administrator nor any such agent shall be affected by notice to the contrary.

The obligations created by the Agreement and the Trust Fund created thereby shall terminate upon payment to the Certificateholders of all amounts held by the Securities Administrator and required to be paid to them pursuant to the Agreement following the earlier of (i) the final payment or other liquidation (or any advance with respect thereto) of the last Mortgage Loan remaining in the Trust Fund and (ii) the purchase by the party designated in the Agreement at a price determined as provided in the Agreement of all the Mortgage Loans and all property acquired in respect of such Mortgage Loans. The Agreement permits, but does not require, the party designated in the Agreement to purchase all the Mortgage Loans and all property acquired in respect of any Mortgage Loan at a price determined as provided in the Agreement. The exercise of such right will effect early retirement of the Certificates; however, such right to purchase is subject to the aggregate Scheduled Principal Balance of the Mortgage Loans and the fair market value of each REO Property remaining in the Trust Fund with respect to the Mortgage Loans at the time of purchase being less than or equal to 10% of the aggregate Scheduled Principal Balance of the Mortgage Loans as of the Cut-Off Date.

The recitals contained herein shall be taken as statements of the Depositor and neither the Trustee nor the Securities Administrator assume any responsibility for their correctness.

Unless the certificate of authentication hereon has been executed by the Securities Administrator, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose.

IN WITNESS WHEREOF, the Securities Administrator has caused this Certificate to be duly executed.

Dated:

WELLS FARGO BANK, N.A.

as Securities Administrator

By:

                                                      

Authorized Officer

ERTIFICATE OF AUTHENTICATION

This is one of the Certificates referred to in the within-mentioned Agreement.

WELLS FARGO BANK, N.A.

as Securities Administrator

By:                                                                   

Authorized Signatory

ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

				
	TEN COM

-

	as tenants in common

	UNIF GIFT MIN ACT -

	     Custodian      

(Cust)        (Minor)

under Uniform Gifts 

to Minors Act

	TEN ENT

-

	as tenants by the entireties

	 
	________________

(State)

	JT TEN

-

	as joint tenants with right 

if survivorship and not as 

tenants in common

	 
	 

	 
	 
	 
	 

	Additional abbreviations may also be used though not in the above list.

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto  ________________________________________________________________

	
	 

(Please print or typewrite name, address including postal zip code, and Taxpayer Identification Number of assignee)

a Percentage Interest equal to _____% evidenced by the within Mortgage Pass-Through Certificate and hereby authorize(s) the registration of transfer of such interest to assignee on the Certificate Register of the Trust Fund.

I (we) further direct the Securities Administrator to issue a new Certificate of a like Percentage Interest and Class to the above named assignee and deliver such Certificate to the following address: ______________________________________________________________

		
	 
	.

		
	Dated:

	 

	 
	Signature by or on behalf of assignor

	 
	 

	 
	 

	 
	Signature Guaranteed

DISTRIBUTION INSTRUCTIONS

The assignee should include the following for purposes of distribution:

								
	Distributions shall be made, by wire transfer or otherwise, in immediately available 

	funds to

	 

	 

	for the account of

	 

	account number

	 
	or, if mailed by check, to

	 

	Applicable statements should be mailed to

	 

	 

	 

	This information is provided by

	 

	assignee named above, or

	 

	its agent.

	 

EXHIBIT A-6

[RESERVED]

EXHIBIT A-7

[RESERVED]

EXHIBIT A-8

FORM OF CLASS B-[_] CERTIFICATE

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A “REGULAR INTEREST” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT,” AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”).

[FOR THE CLASSES OTHER THAN THE CLASS B-10, B-11 AND B-12 CERTIFICATES ONLY] [UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE DEPOSITOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

[FOR THE CLASS B-10, B-11 AND B-12 CERTIFICATES ONLY] [THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT TO A PERSON THAT IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, IN WHICH THE TRANSFEREE MAKES OR IS DEEMED TO MAKE CERTAIN REPRESENTATIONS AND UNDERTAKINGS SET FORTH IN THE AGREEMENT AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.]

THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE SENIOR CERTIFICATES [,/AND] [THE CLASS B-1 CERTIFICATES], [,/AND] [THE CLASS B-2 CERTIFICATES], [,/AND] [THE CLASS B-3 CERTIFICATES], [,/AND] [THE CLASS B-4 CERTIFICATES], [,/AND] [THE CLASS B-5 CERTIFICATES], [,/AND] [THE CLASS B-6 CERTIFICATES], [,/AND] [THE CLASS B-7 CERTIFICATES], [,/AND] [THE CLASS B-8 CERTIFICATES], [,/AND] [THE CLASS B-9 CERTIFICATES], [,/AND] [THE CLASS B-10 CERTIFICATES], [,/AND] [THE CLASS B-11 CERTIFICATES], TO THE EXTENT DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.

[FOR THE CLASS B-10, B-11 AND B-12 CERTIFICATES ONLY] [THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER, SELL OR OTHERWISE TRANSFER SUCH CERTIFICATE EXCEPT IN ACCORDANCE WITH ALL APPLICABLE STATE SECURITIES LAWS AND (A) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE ACT, (B) FOR SO LONG AS THIS CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE ACT (“RULE 144A”), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501 (A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS UNDER THE ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT, SUBJECT IN EACH OF THE FOREGOING CASES TO THE COMPLETION AND DELIVERY BY THE TRANSFEROR TO THE TRUST ADMINISTRATOR OF A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE LAST PAGE OF THIS CERTIFICATE.]

ANY TRANSFEREE OF THIS CERTIFICATE SHALL BE DEEMED TO MAKE THE REPRESENTATIONS SET FORTH IN SECTION 6.3(e) OF THE AGREEMENT REFERRED TO HEREIN.

THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DECREASED BY THE PRINCIPAL PAYMENTS HEREON AND REALIZED LOSSES ALLOCABLE HERETO AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN. ACCORDINGLY, FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CERTIFICATE PRINCIPAL BALANCE BY INQUIRY OF THE SECURITIES ADMINISTRATOR NAMED HEREIN.

NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE CODE WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED IN SECTION 6.3(e) OF THE AGREEMENT REFERRED TO HEREIN.

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e) IN THE AGREEMENT REFERRED TO HEREIN.]

			
	DBALT Series 2007-AB1, Class B-[_]

	 
	Aggregate Certificate Principal Balance of the Class B-[_] Certificates as of the Issue Date:  $____________

	Pass-Through Rate: Floating

	 
	Denomination:  $____________

	Date of Pooling and Servicing Agreement

and Cut-Off Date: March 1, 2007

	 
	Master Servicer: Wells Fargo Bank, N.A.

	First Distribution Date: April 25, 2007

	 
	Trustee: HSBC Bank USA, National Association

	No. __

	 
	Issue Date: April 13, 2007

	 
	 
	CUSIP: _________________

DEUTSCHE ALT-B SECURITIES, INC. MORTGAGE LOAN TRUST, SERIES 2007-AB1

MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a fractional undivided interest in the distributions allocable to the Class B-[_] Certificates with respect to a trust fund generally consisting of a pool of conventional fixed-rate first lien residential mortgage loans (the “Mortgage Loans”), in each case, secured by one- to four- family residences, units in planned unit developments and individual condominium units (the “Trust Fund”) sold by DEUTSCHE ALT-A SECURITIES, INC. The Certificates are limited in right of payment to certain collections and recoveries respecting the related Mortgage Loans.

THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN DEUTSCHE ALT-A SECURITIES, INC., THE MASTER SERVICER, THE SECURITIES ADMINISTRATOR, THE TRUSTEE, ANY SERVICER OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE  LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

This certifies that [Cede & Co.] is the registered owner of the Percentage Interest evidenced hereby in the beneficial ownership interest of Certificates of the same Class as this Certificate in certain assets of the Trust Fund sold by Deutsche Alt-A Securities, Inc. (the “Depositor”). The Mortgage Loans were sold by DB Structured Products, Inc. to the Depositor.  Wells Fargo Bank, N.A. will act as master servicer of the Mortgage Loans (the “Master Servicer”, which term includes any successors thereto under the Agreement referred to below). The Trust Fund was created pursuant to the Pooling and Servicing Agreement dated as of the Cut-Off Date specified above (the “Agreement”), among the Depositor, Wells Fargo Bank, N.A., as Master Servicer and securities administrator (the “Securities Administrator”), HSBC Bank USA, National Association as trustee (the “Trustee”) and Clayton Fixed Income Services Inc. as credit risk manager, a summary of certain of the pertinent provisions of which is set forth hereafter. To the extent not defined herein, capitalized terms used herein shall have the meaning ascribed to them in the Agreement. This Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement, to which Agreement the Holder of this Certificate by virtue of its acceptance hereof assents and by which such Holder is bound.

Pursuant to the terms of the Agreement, distributions will be made on the 25th day of each month or, if such 25th day is not a Business Day, the Business Day immediately following such 25th day (a “Distribution Date”), commencing on the First Distribution Date specified above, to the Person in whose name this Certificate is registered at the close of business on the last Business Day of the month immediately preceding the month in which the related Distribution Date occurs (the “Record Date”), in an amount equal to the product of the Percentage Interest evidenced by this Certificate and the amount required to be distributed to the Holders of Class B-[_] Certificates on such Distribution Date pursuant to the Agreement.

All distributions to the Holder of this Certificate under the Agreement will be made or caused to be made by the Securities Administrator by wire transfer in immediately available funds to the account of the Person entitled thereto if such Person shall have so notified the Securities Administrator in writing at least five Business Days prior to the Record Date immediately prior to such Distribution Date and is the registered owner of Class B-[_] Certificates, or otherwise by check mailed by first class mail to the address of the Person entitled thereto, as such name and address shall appear on the Certificate Register. Notwithstanding the above, the final distribution on this Certificate will be made after due notice by the Securities Administrator of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency appointed by the Securities Administrator for that purpose as provided in the Agreement.

[[The Pass-Through Rate on the Class B-[_] Certificates on any Distribution Date shall be equal to [6.000]% per annum.]]

This Certificate is one of a duly authorized issue of Certificates designated as a Mortgage Pass-Through Certificate of the Series specified on the face hereof (herein called the “Certificates”) and represents a Percentage Interest in the Class of Certificates specified on the face hereof equal to the denomination specified on the face hereof divided by the aggregate Certificate Principal Balance of the Class of Certificates specified on the face hereof.  The Certificates, in the aggregate, evidence the entire beneficial ownership interest in the Trust Fund formed pursuant to the Agreement.

The Certificates are limited in right of payment to certain collections and recoveries respecting the Mortgage Loan and certain other assets of the Trust Fund, all as more specifically set forth herein and in the Agreement. As provided in the Agreement, withdrawals from the Protected Accounts and the Distribution Account may be made from time to time for purposes other than distributions to Certificateholders, such purposes including reimbursement of advances made, or certain expenses incurred, with respect to the Mortgage Loan.  

The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Depositor, the Master Servicer, the Trustee, the Securities Administrator and the rights of the Certificateholders under the Agreement at any time by the Depositor, the Master Servicer, the Trustee and the Securities Administrator with the consent of the Holders of Certificates evidencing, in the aggregate, not less than 66-2/3% Percentage Interest of all Certificates.  Any such consent by the Holder of this Certificate shall be conclusive and binding on such Holder and upon all future Holders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange herefor or in lieu hereof whether or not notation of such consent is made upon this Certificate.  The Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Holders of any of the Certificates.

As provided in the Agreement and subject to certain limitations therein set forth, the transfer of this Certificate is registrable in the Certificate Register upon surrender of this Certificate for registration of transfer at the offices or agencies appointed by the Securities Administrator as provided in the Agreement, duly endorsed by, or accompanied by an assignment in the form below or other written instrument of transfer in form satisfactory to the Securities Administrator duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, and thereupon one or more new Certificates of the same Class in authorized denominations evidencing the same aggregate Percentage Interest will be issued to the designated transferee or transferees.

Any transferee of this Certificate shall be deemed to make the representations set forth in Section 6.3(e) of the Agreement.  

The Certificates are issuable in fully registered form only without coupons in Classes and denominations representing Percentage Interests specified in the Agreement. As provided in the Agreement and subject to certain limitations therein set forth, the Certificates are exchangeable for new Certificates of the same Class in authorized denominations evidencing the same aggregate Percentage Interest, as requested by the Holder surrendering the same.

No service charge will be made for any such registration of transfer or exchange of Certificates, but the Securities Administrator may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Certificates.

The Depositor, the Master Servicer, the Trustee, the Securities Administrator and any agent of the Depositor, the Master Servicer, the Trustee or the Securities Administrator may treat the Person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the Depositor, the Master Servicer, the Trustee or the Securities Administrator nor any such agent shall be affected by notice to the contrary.

The obligations created by the Agreement and the Trust Fund created thereby shall terminate upon payment to the Certificateholders of all amounts held by the Securities Administrator and required to be paid to them pursuant to the Agreement following the earlier of (i) the final payment or other liquidation (or any advance with respect thereto) of the last Mortgage Loan remaining in the Trust Fund and (ii) the purchase by the party designated in the Agreement at a price determined as provided in the Agreement of all the Mortgage Loans and all property acquired in respect of such Mortgage Loans. The Agreement permits, but does not require, the party designated in the Agreement to purchase all the Mortgage Loans and all property acquired in respect of any Mortgage Loan at a price determined as provided in the Agreement. The exercise of such right will effect early retirement of the Certificates; however, such right to purchase is subject to the aggregate Scheduled Principal Balance of the Mortgage Loans and the fair market value of each REO Property remaining in the Trust Fund with respect to the Mortgage Loans at the time of purchase being less than or equal to 10% of the aggregate Scheduled Principal Balance of the Mortgage Loan as of the Cut-Off Date.

The recitals contained herein shall be taken as statements of the Depositor and neither the Trustee nor the Securities Administrator assume any responsibility for their correctness.

Unless the certificate of authentication hereon has been executed by the Securities Administrator, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose.

IN WITNESS WHEREOF, the Securities Administrator has caused this Certificate to be duly executed.

Dated:

WELLS FARGO BANK, N.A.

as Securities Administrator

By:_______________________________________

Authorized Officer

CERTIFICATE OF AUTHENTICATION

This is one of the Certificates referred to in the within-mentioned Agreement.

WELLS FARGO BANK, N.A.

as Securities Administrator

By:_______________________________________

Authorized Signatory

ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

				
	TEN COM

-

	as tenants in common

	UNIF GIFT MIN ACT -

	     Custodian      

(Cust)        (Minor)

under Uniform Gifts 

to Minors Act

	TEN ENT

-

	as tenants by the entireties

	 
	________________

(State)

	JT TEN

-

	as joint tenants with right 

if survivorship and not as 

tenants in common

	 
	 

	 
	 
	 
	 

	Additional abbreviations may also be used though not in the above list.

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto  ________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

 (Please print or typewrite name, address including postal zip code, and Taxpayer Identification Number of assignee)

a Percentage Interest equal to _____% evidenced by the within Mortgage Pass-Through Certificate and hereby authorize(s) the registration of transfer of such interest to assignee on the Certificate Register of the Trust Fund.

I (we) further direct the Trustee or the Securities Administrator to issue a new Certificate of a like Percentage Interest and Class to the above named assignee and deliver such Certificate to the following address: ______________________________________________________________

_____________________________________________________________________________.

Dated:

                                                                                  

Signature by or on behalf of assignor

                                                                                  

Signature Guaranteed

DISTRIBUTION INSTRUCTIONS

The assignee should include the following for purposes of distribution:

Distributions shall be made, by wire transfer or otherwise, in immediately available funds to _______________________________________________________________ for the account of ______________________________________________________________, account number ____________________, or, if mailed by check, to _______________________ _____________________________________________________________________________. Applicable statements should be mailed to _______________________________________ _____________________________________________________________________________. This information is provided by __________________________________________________, the assignee named above, or _______________________________________, as its agent.

EXHIBIT A-9

[RESERVED]

EXHIBIT A-10

[RESERVED]

EXHIBIT A-11

FORM OF CLASS P CERTIFICATE

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A “REGULAR INTEREST” IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT,” AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”).

THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY  IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND (1) OUTSIDE OF THE UNITED STATES WITHIN THE MEANING OF AND IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”), OR (2) WITHIN THE UNITED STATES TO (A) “QUALIFIED INSTITUTIONAL BUYERS” WITHIN THE MEANING OF AND IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) OR (B) TO INSTITUTIONAL INVESTORS THAT ARE “ACCREDITED INVESTORS” WITHIN THE MEANING OF RULE 501(A)(1), (2), (3) OR (7) OF “REGULATION D” UNDER THE SECURITIES ACT.

THIS CERTIFICATE IS A PRINCIPAL ONLY CERTIFICATE AND IS NOT ENTITLED TO ANY DISTRIBUTIONS IN RESPECT OF INTEREST.

ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF SECTION 6.3(e) OF THE AGREEMENT REFERRED TO HEREIN.

NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE CODE WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED IN SECTION 6.3(e) OF THE AGREEMENT REFERRED TO HEREIN.

			
	DBALT Series 2007-AB1, CLASS P

	 
	Aggregate Certificate Principal Balance of the Class P Certificates as of the Issue Date: $100.00

	Cut-Off Date and date of Pooling and Servicing Agreement: March 1, 2007

	 
	Denomination: $100.00

	First Distribution Date: April 25, 2007

	 
	Master Servicer: Wells Fargo Bank, N.A.

	No. __

	 
	Trustee: HSBC Bank USA, National Association

	 
	 
	Issue Date: April 13, 2007

	 
	 
	CUSIP: _____________

DEUTSCHE ALT-B SECURITIES MORTGAGE LOAN TRUST , SERIES 2007-AB1

MORTGAGE PASS-THROUGH CERTIFICATE

evidencing a fractional undivided interest in the distributions allocable to the Class P Certificates with respect to a trust fund generally consisting of a pool of conventional fixed-rate first lien residential mortgage loans (the “Mortgage Loans”), in each case, secured by one- to four- family residences, units in planned unit developments and individual condominium units (the “Trust Fund”) sold by DEUTSCHE ALT-A SECURITIES, INC.

THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN DEUTSCHE ALT-A SECURITIES, INC., THE MASTER SERVICER, THE SECURITIES ADMINISTRATOR, THE TRUSTEE, ANY SERVICER OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.

This certifies that [Deutsche Bank Securities Inc.] is the registered owner of the Percentage Interest evidenced hereby in the beneficial ownership interest of Certificates of the same Class as this Certificate in certain assets of the Trust Fund sold by Deutsche Alt-A Securities, Inc. (the “Depositor”).  The Mortgage Loans were sold by DB Structured Products, Inc. to the Depositor.  Wells Fargo Bank, N.A. will act as master servicer of the Mortgage Loans (the “Master Servicer”, which term includes any successors thereto under the Agreement referred to below). The Trust Fund was created pursuant to the Pooling and Servicing Agreement dated as of the Cut-Off Date specified above (the “Agreement”), among the Depositor, Wells Fargo Bank, N.A., as Master Servicer and securities administrator (the “Securities Administrator”),  HSBC Bank USA, National Association as trustee (the “Trustee”) and Clayton Fixed Income Services Inc. as credit risk manager, a summary of certain of the pertinent provisions of which is set forth hereafter. To the extent not defined herein, capitalized terms used herein shall have the meaning ascribed to them in the Agreement. This Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement, to which Agreement the Holder of this Certificate by virtue of its acceptance hereof assents and by which such Holder is bound.

Pursuant to the terms of the Agreement, distributions will be made on the 25th day of each month or, if such 25th day is not a Business Day, the Business Day immediately following such 25th day (a “Distribution Date”), commencing on the First Distribution Date specified above, to the Person in whose name this Certificate is registered at the close of business on the last Business Day of the month immediately preceding the month in which the related Distribution Date occurs (the “Record Date”), in an amount equal to the product of the Percentage Interest evidenced by this Certificate and the amount required to be distributed to the Holders of Class P Certificates on such Distribution Date pursuant to the Agreement.

All distributions to the Holder of this Certificate under the Agreement will be made or caused to be made by the Securities Administrator by check mailed by first class mail to the address of the Person entitled thereto, as such name and address shall appear on the Certificate Register. Notwithstanding the above, the final distribution on this Certificate will be made after due notice by the Securities Administrator of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency appointed by the Securities Administrator for that purpose as provided in the Agreement.

This Certificate is one of a duly authorized issue of Certificates designated as Mortgage Pass-Through Certificate of the Series specified on the face hereof (herein called the “certificates”) and representing a Percentage Interest in the Class of Certificates specified on the face hereof equal to the denomination specified on the face hereof divided by the aggregate Certificate Principal Balance of the Class of Certificates specified on the face hereof.  The Certificates, in the aggregate, evidence the entire beneficial ownership interest in the Trust Fund formed pursuant to the Agreement.

The certificates are limited in right of payment to certain collections and recoveries respecting the Mortgage Loans and certain other assets of the Trust Fund, all as more specifically set forth herein and in the Agreement. As provided in the Agreement, withdrawals from the Protected Accounts and the Distribution Account may be made from time to time for purposes other than distributions to Certificateholders, such purposes including reimbursement of advances made, or certain expenses incurred, with respect to the Mortgage Loans.  

The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Depositor, the Master Servicer, the Trustee, the Securities Administrator, and the rights of the Certificateholders under the Agreement at any time by the Depositor, the Master Servicer, the Trustee and the Securities Administrator with the consent of the Holders of Certificates entitled to at least 66-2/3% of the Voting Rights.  Any such consent by the Holder of this Certificate shall be conclusive and binding on such Holder and upon all future Holders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange herefor or in lieu hereof whether or not notation of such consent is made upon this Certificate.  The Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Holders of any of the Certificates.

As provided in the Agreement and subject to certain limitations therein set forth, the transfer of this Certificate is registrable in the Certificate Register upon surrender of this Certificate for registration of transfer at the offices or agencies appointed by the Securities Administrator as provided in the Agreement, duly endorsed by, or accompanied by an assignment in the form below or other written instrument of transfer in form satisfactory to the Securities Administrator duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, and thereupon one or more new Certificates of the same Class in authorized denominations evidencing the same aggregate Percentage Interest will be issued to the designated transferee or transferees.

The Certificates are issuable in fully registered form only without coupons in Classes and denominations representing Percentage Interests specified in the Agreement. As provided in the Agreement and subject to certain limitations therein set forth, the Certificates are exchangeable for new Certificates of the same Class in authorized denominations evidencing the same aggregate Percentage Interest, as requested by the Holder surrendering the same.  No service charge will be made for any such registration of transfer or exchange of Certificates, but the Securities Administrator may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Certificates.

No transfer of this Certificate shall be made unless the transfer is made pursuant to an effective registration statement under the Securities Act, and an effective registration or qualification under applicable state securities laws, or is made in a transaction that does not require such registration or qualification. In the event of any such transfer in reliance upon an exemption from the 1933 Act and such state securities laws, in order to assure compliance with the 1933 Act and such state securities laws, the Certificateholder desiring to effect such Transfer and such Certificateholder’s prospective Transferee shall each certify to the Trustee and the Securities Administrator in writing the facts surrounding the Transfer in substantially the forms set forth in Exhibit D (the “Transferor Certificate”) and (x) deliver a letter in substantially the form of either Exhibit E (the “Investment Letter”) or Exhibit F (the “Rule 144A Letter”) or (y) there shall be delivered to the Trustee, the Depositor and the Securities Administrator an Opinion of Counsel acceptable to and in form reasonably satisfactory to the Trustee, the Depositor and the Securities Administrator that such Transfer may be made pursuant to an exemption from the Securities Act, which Opinion of Counsel shall not be an expense of the Depositor, the Seller, the Master Servicer, the Securities Administrator or the Trustee.  None of the Depositor, the Trustee or the Securities Administrator is obligated to register or qualify the Class of Certificates specified on the face hereof under the Securities Act or any other securities law or to take any action not otherwise required under the Agreement to permit the transfer of such Certificates without registration or qualification.  Any Holder desiring to effect a transfer of this Certificate shall be required to indemnify the Trustee, the Depositor, the Master Servicer and the Securities Administrator against any liability that may result if the transfer is not so exempt or is not made in accordance with such federal and state laws.

The Depositor, the Master Servicer, the Trustee, the Securities Administrator and any agent of the Depositor, the Master Servicer, the Trustee or the Securities Administrator may treat the Person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the Depositor, the Master Servicer, the Trustee, the Securities Administrator nor any such agent shall be affected by notice to the contrary.

The obligations created by the Agreement and the Trust Fund created thereby shall terminate upon payment to the Certificateholders of all amounts held by the Securities Administrator and required to be paid to them pursuant to the Agreement following the earlier of (i) the final payment or other liquidation (or any advance with respect thereto) of the last Mortgage Loan remaining in the Trust Fund and (ii) the purchase by the party designated in the Agreement at a price determined as provided in the Agreement of all of the Mortgage Loans and all property acquired in respect of such Mortgage Loans. The Agreement permits, but does not require, the party designated in the Agreement to purchase all the Mortgage Loans and all property acquired in respect of any Mortgage Loan at a price determined as provided in the Agreement. The exercise of such right will effect early retirement of the Certificates relating to the applicable Mortgage Loan; however, such right to purchase is subject to the aggregate Scheduled Principal Balance of the Mortgage Loans, as applicable, and the fair market value of each related REO Property remaining in the Trust Fund with respect to the Mortgage Loans at the time of purchase, being less than or equal to 10% of the aggregate Scheduled Principal Balance of the Mortgage Loans as of the Cut-Off Date.

The recitals contained herein shall be taken as statements of the Depositor and neither the Trustee nor the Securities Administrator assume any responsibility for their correctness.

Unless the certificate of authentication hereon has been executed by the Securities Administrator, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose.

IN WITNESS WHEREOF, the Securities Administrator has caused this certificate to be duly executed.

Dated:

WELLS FARGO BANK, N.A.

as Securities Administrator

By:_______________________________________

Authorized Officer

CERTIFICATE OF AUTHENTICATION

This is one of the Certificates referred to in the within-mentioned Agreement.

WELLS FARGO BANK, N.A.

as Securities Administrator

By:_______________________________________

Authorized Officer

ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

				
	TEN COM

-

	as tenants in common

	UNIF GIFT MIN ACT -

	     Custodian      

(Cust)        (Minor)

under Uniform Gifts 

to Minors Act

	TEN ENT

-

	as tenants by the entireties

	 
	________________

(State)

	JT TEN

-

	as joint tenants with right 

if survivorship and not as 

tenants in common

	 
	 

	 
	 
	 
	 

	Additional abbreviations may also be used though not in the above list.

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)  unto  ________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

(Please print or typewrite name, address including postal zip code, and Taxpayer Identification Number of assignee)

a Percentage Interest equal to ____% evidenced by the within Asset Backed Pass-Through Certificate and hereby authorize(s) the registration of transfer of such interest to assignee on the Certificate Register of the Trust Fund.

I (we) further direct the Trustee or the Securities Administrator to issue a new Certificate of a like Percentage Interest and Class to the above named assignee and deliver such Certificate to the following address: ______________________________________________________________

_____________________________________________________________________________.

Dated:

____________________________________ 

Signature by or on behalf of assignor

____________________________________

Signature Guaranteed

DISTRIBUTION INSTRUCTIONS

The assignee should include the following for purposes of distribution:

Distributions shall be made, by wire transfer or otherwise, in immediately available funds to _______________________________________________________________ for the account of ______________________________________________________________, account number ____________________, or, if mailed by check, to _______________________ _____________________________________________________________________________. Applicable statements should be mailed to _______________________________________ _____________________________________________________________________________. This information is provided by __________________________________________________, the assignee named above, or _______________________________________, as its agent.

EXHIBIT A-12

[RESERVED]

EXHIBIT B

[RESERVED]

EXHIBIT C

FORM OF TRANSFER AFFIDAVIT

Affidavit pursuant to Section 860E(e)(4) of the Internal Revenue Code of 1986, as amended, and for other purposes 

STATE OF

)

)ss:

COUNTY OF

)

[NAME OF OFFICER], being first duly sworn, deposes and says:

1.

That he/she is [Title of Officer] of [Name of Investor] (the “Investor”), a [savings institution] [corporation] duly organized and existing under the laws of [the State of _____] [the United States], on behalf of which he makes this affidavit.

2.

That (i) the Investor is not a “disqualified organization” as defined in Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended (the “Code”), and will not be a disqualified organization as of [Closing Date] [date of purchase]; (ii) it is not acquiring the Deutsche Alt-B Securities Mortgage Loan Trust, Series 2007-AB1 Mortgage Pass-Through Certificates, Class AR Certificates (the “Residual Certificates”) for the account of a disqualified organization; (iii) it consents to any amendment of the Pooling and Servicing Agreement that shall be deemed necessary by Deutsche Alt-A Securities, Inc. (upon advice of counsel) to constitute a reasonable arrangement to ensure that the Residual Certificates will not be owned directly or indirectly by a disqualified organization; and (iv) it will not transfer such Residual Certificates unless (a) it has received from the transferee an affidavit in substantially the same form as this affidavit containing these same four representations and (b) as of the time of the transfer, it does not have actual knowledge that such affidavit is false.

3.

[Either (i) the Investor is not an employee benefit plan or other retirement arrangement subject to Section 406 of ERISA and/or Section 4975 of the Code, or a person acting for, on behalf of or with the assets of, any such plan or arrangement, (ii) in the case of a Certificate which is the subject of an ERISA-Qualifying Underwriting, if the investor is an insurance company, the Investor is an insurance company that is purchasing such Certificates with funds contained in an “insurance company general account” (as such term is defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 (“PTCE 95-60”)) and the purchase and holding of such Certificates are covered under Sections I and III of PTCE 95-60 or (iii) the investor has provided the Trust Administrator with a satisfactory Opinion of Counsel as required in the Agreement to the effect that the purchase or holding of such ERISA-Restricted Certificate will not result in prohibited transactions under Section 406 of ERISA and/or Section 4975 of the Code and will not subject the Trustee, the Transferor, the Depositor, the Master Servicer or the Trust Administrator to any obligation in addition to those undertaken in the Agreement.]

4.

That the Investor is one of the following: (i) a citizen or resident of the United States, (ii) a corporation or partnership (including an entity treated as a corporation or partnership for federal income tax purposes) created or organized in, or under the laws of, the United States or any state thereof or the District of Columbia (except, in the case of a partnership, to the extent provided in regulations), provided that no partnership or other entity treated as a partnership for United States federal income tax purposes shall be treated as a United States Person unless all persons that own an interest in such partnership either directly or through any entity that is not a corporation for United States federal income tax purposes are United States Persons, (iii) an estate whose income is subject to United States federal income tax regardless of its source, or (iv) a trust other than a “foreign trust,” as defined in Section 7701 (a)(31) of the Code.

5.

That the Investor’s taxpayer identification number is ______________________.

6.

That no purpose of the acquisition of the Residual Certificates is to avoid or impede the  assessment or collection of tax.

7.

That the Investor understands that, as the holder of the Residual Certificates, the Investor may incur tax liabilities in excess of any cash flows generated by such Residual Certificates.

8.

That the Investor intends to pay taxes associated with holding the Residual Certificates as they become due.

IN WITNESS WHEREOF, the Investor has caused this instrument to be executed on its behalf, pursuant to authority of its Board of Directors, by its [Title of Officer] this ____ day  of  _________, 20__.

[NAME OF INVESTOR]

By:

                                                

[Name of Officer]

[Title of Officer]

[Address of Investor for receipt of distributions]

Address of Investor for receipt of tax information:

Personally appeared before me the above-named [Name of Officer], known or proved to me to be the same person who executed the foregoing instrument and to be the [Title of Officer] of the Investor, and acknowledged to me that he/she executed the same as his/her free act and deed and the free act and deed of the Investor.

Subscribed and sworn before me this ___ day of _________, 20___.

NOTARY PUBLIC

COUNTY OF

STATE OF

My commission expires the ___ day of ___________________, 20___.

EXHIBIT D

FORM OF TRANSFEROR CERTIFICATE

______________,200___

Wells Fargo Bank, N.A.

Sixth Street and Marquette Avenue

Minneapolis, Minnesota 55479

Attention:

Deutsche Alt-B Securities Mortgage Loan Trust, Series 2007-AB1

Re:

Deutsche Alt-B Securities Mortgage Loan Trust,

Series 2007-AB1, Class [P][B-[_]

Mortgage Pass-Through Certificates                      

Ladies and Gentlemen:

In connection with the transfer by ______________________ (the “Transferor”) to ___________________ (the “Transferee”) of the captioned mortgage pass-through Certificates (the “Certificates”), the Transferor hereby certifies as follows:

Neither the Transferor nor anyone acting on its behalf has (a) offered, pledged, sold, disposed of or otherwise transferred any Certificate, any interest in any Certificate or any other similar security to any person in any manner, (b) has solicited any offer to buy or to accept a pledge, disposition or other transfer of any Certificate, any interest in any Certificate or any other similar security from any person in any manner, (c) has otherwise approached or negotiated with respect to any Certificate, any interest in any Certificate or any other similar security with any person in any manner, (d) has made any general solicitation by means of general advertising or in any other manner, (e) has taken any other action, that (in the case of each of subclauses (a) through (e) above) would constitute a distribution of the Certificates under the Securities Act of 1933, as amended (the “1933 Act”), or would render the disposition of any Certificate a violation of Section 5 of the 1933 Act or any state securities law or would require registration or qualification pursuant thereto. The Transferor will not act, nor has it authorized or will it authorize any person to act, in any manner set forth in the foregoing sentence with respect to any Certificate. The Transferor will not sell or otherwise transfer any of the Certificates, except in compliance with the provisions of that certain Pooling and Servicing Agreement, dated as of March 1, 2007, among Deutsche Alt-A Securities, Inc. as Depositor, Wells Fargo Bank, N.A. as Master Servicer and Securities Administrator, HSBC Bank USA, National Association as Trustee and Clayton Fixed Income Services Inc. as credit risk manager (the  “Pooling and Servicing Agreement”), pursuant to which Pooling and Servicing Agreement the Certificates were issued.

Capitalized terms used but not defined herein shall have the meanings assigned thereto in the Pooling and Servicing Agreement.

Very truly yours,

 (Seller)

By:                                            

Name:                                         

Title:                                                               

EXHIBIT E

FORM OF INVESTMENT LETTER (NON-RULE 144A)

[Date]

Wells Fargo Bank, N.A.

Sixth Street and Marquette Avenue

Minneapolis, Minnesota 55479

Attention:

Deutsche Alt-B Securities Mortgage Loan Trust, Series 2007-AB1

		
	Re:

	Deutsche Alt-B Securities Mortgage Loan Trust, Series 2007-AB1 Mortgage Pass-Through Certificates, [Class P][Class B-[_]] Certificates

Ladies and Gentlemen:

In connection with our acquisition of the above Certificates we certify that (a) we understand that the Certificates are not being registered under the Securities Act of 1933, as amended (the “Act”), or any state securities laws and are being transferred to us in a transaction that is exempt from the registration requirements of the Act and any such laws, (b) we are an “accredited investor,” as defined in Regulation D under the Act, and have such knowledge and experience in financial and business matters that we are capable of evaluating the merits and risks of investments in the Certificates, (c) we have had the opportunity to ask questions of and receive answers from the Depositor concerning the purchase of the Certificates and all matters relating thereto or any additional information deemed necessary to our decision to purchase the Certificates, we are acquiring the Certificates for investment for our own account and not with a view to any distribution of such Certificates (but without prejudice to our right at all times to sell or otherwise dispose of the Certificates in accordance with clause (e) below), (d) we have not offered or sold any Certificates to, or solicited offers to buy any Certificates from, any person, or otherwise approached or negotiated with any person with respect thereto, or taken any other action which would result in a violation of Section 5 of the Act, and (e) we will not sell, transfer or otherwise dispose of any Certificates unless (1) such sale, transfer or other disposition is made pursuant to an effective registration statement under the Act or is exempt from such registration requirements, and if requested, we will at our expense provide an opinion of counsel satisfactory to the addressees of this Certificate that such sale, transfer or other disposition may be made pursuant to an exemption from the Act, (2) the purchaser or transferee of such Certificate has executed and delivered to you a certificate to substantially the same effect as this certificate, and (3) the purchaser or transferee has otherwise complied with any conditions for transfer set forth in the Pooling and Servicing Agreement.

Very truly yours,

                                                                 

Print Name of Transferor

By:                                                           

Authorized Officer

EXHIBIT F

FORM OF RULE 144A INVESTMENT LETTER

[Date]

Wells Fargo Bank, N.A.

Sixth Street and Marquette Avenue

Minneapolis, Minnesota 53479

Attention:

Deutsche Alt-B Securities Mortgage Loan Trust, Series 2007-AB1

		
	Re:

	Deutsche Alt-B Securities Mortgage Loan Trust, Series 2007-AB1 Mortgage Pass-Through Certificates, [Class P][Class B-[_]] Certificates

Ladies and Gentlemen:

In connection with the purchase from ______________________________ (the “Transferor”) on the date hereof of the captioned trust certificates (the “Certificates”), (the “Transferee”) hereby certifies as follows:

The Transferee is a “qualified institutional buyer” as that term is defined in Rule 144A (“Rule 144A”) under the Securities Act of 1933, as amended (the “1933 Act”) and has completed either of the forms of certification to that effect attached hereto as Annex 1 or Annex 2. The Transferee is aware that the sale to it is being made in reliance on Rule 144A. The Transferee is acquiring the Certificates for its own account or for the account of a qualified institutional buyer, and understands that such Certificate may be resold, pledged or transferred only (i) to a person reasonably believed to be a qualified institutional buyer that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that the resale, pledge or transfer is being made in reliance on Rule 144A, or (ii) pursuant to another exemption from registration under the 1933 Act.

The Transferee has been furnished with all information regarding (a) the Certificates and distributions thereon, (b) the nature, performance and servicing of the [Mortgage Loans], (c) the Pooling and Servicing Agreement referred to below, and (d) any credit enhancement mechanism associated with the Certificates, that it has requested.

In addition, the Transferee hereby certifies, represents and warrants to, and covenants with, the Depositor, the Trustee, the Securities Administrator and the Master Servicer that the Transferee will not transfer such Certificates to any Plan or person unless such Plan or person meets the requirements set forth in paragraph 3 above.

All capitalized terms used but not otherwise defined herein have the respective meanings assigned thereto in the Pooling and Servicing Agreement (the “Pooling and Servicing Agreement”), dated as of March 1, 2007, among Deutsche Alt-A Securities, Inc. as Depositor, Wells Fargo Bank, N.A. as Master Servicer and Securities Administrator, HSBC Bank USA, National Association as Trustee and Clayton Fixed Income Services Inc. as credit risk manager, pursuant to which the Certificates were issued.

[TRANSFEREE]

By:                                       

Name:

Title:

ANNEX 1 TO EXHIBIT F

QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

[For Transferees Other Than Registered Investment Companies]

The undersigned hereby certifies as follows to [name of Transferor] (the “Transferor”) and Wells Fargo Bank, N.A., as Securities Administrator, with respect to the mortgage backed pass-through certificates (the “Certificates”) described in the Transferee Certificate to which this certification relates and to which this certification is an Annex:

1.

As indicated below, the undersigned is the President, Chief Financial Officer, Senior Vice President or other executive officer of the entity purchasing the Certificates (the “Transferee”).

2.

In connection with purchases by the Transferee, the Transferee is a “qualified institutional buyer” as that term is defined in Rule 144A under the Securities Act of 1933 (“Rule 144A”) because (i) the Transferee owned and/or invested on a discretionary basis $________________1 in securities (except for the excluded securities referred to below) as of the end of the Transferee’s most recent fiscal year (such amount being calculated in accordance with Rule 144A) and (ii) the Transferee satisfies the criteria in the category marked below.

___

Corporation, etc. The Transferee is a corporation (other than a bank, savings and loan association or similar institution), Massachusetts or similar business trust, partnership, or any organization described in Section 501(c)(3) of the Internal Revenue Code of 1986.

___

Bank. The Transferee (a) is a national bank or banking institution organized under the laws of any State, territory or the District of Columbia, the business of which is substantially confined to banking and is supervised by the State or territorial banking commission or similar official or is a foreign bank or equivalent institution, and (b) has an audited net worth of at least $25,000,000 as demonstrated in its latest annual financial statements, a copy of which is attached hereto.

___

Savings and Loan. The Transferee (a) is a savings and loan association, building and loan association, cooperative bank, homestead association or similar institution, which is supervised and examined by a State or Federal authority having supervision over any such institutions or is a foreign savings and loan association or equivalent institution and (b) has an audited net worth of at least $25,000,000 as demonstrated in its latest annual financial statements, a copy of which is attached hereto.

___

Broker-dealer. The Transferee is a dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934.

___

Insurance Company. The Transferee is an insurance company whose primary and predominant business activity is the writing of insurance or the reinsuring of risks underwritten by insurance companies and which is subject to supervision by the insurance commissioner or a similar official or agency of a State, territory or the District of Columbia.

___

State or Local Plan. The Transferee is a plan established and maintained by a State, its political subdivisions, or any agency or instrumentality of the State or its political subdivisions, for the benefit of its employees.

___

ERISA Plan. The Transferee is an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974.

___

Investment Advisor  The Transferee is an investment advisor registered under the Investment Advisers Act of 1940.

3.

The term “securities” as used herein does not include (i) securities of issuers that are affiliated with the Transferee, (ii) securities that are part of an unsold allotment to or subscription by the Transferee, if the Transferee is a dealer, (iii) securities issued or guaranteed by the U.S. or any instrumentality thereof, (iv) bank deposit notes and certificates of deposit, (v) loan participations, (vi) repurchase agreements, (vii) securities owned but subject to a repurchase agreement and (viii) currency, interest rate and commodity swaps.

4.

For purposes of determining the aggregate amount of securities owned and/or invested on a discretionary basis by the Transferee, the Transferee used the cost of such securities to the Transferee and did not include any of the securities referred to in the preceding paragraph. Further, in determining such aggregate amount, the Transferee may have included securities owned by subsidiaries of the Transferee, but only if such subsidiaries are consolidated with the Transferee in its financial statements prepared in accordance with generally accepted accounting principles and if the investments of such subsidiaries are managed under the Transferee’s direction. However, such securities were not included if the Transferee is a majority-owned, consolidated subsidiary of another enterprise and the Transferee is not itself a reporting company under the Securities Exchange Act of 1934.

5.

The Transferee acknowledges that it is familiar with Rule 144A and understands that the Transferor and other parties related to the Certificates are relying and will continue to rely on the statements made herein because one or more sales to the Transferee may be in reliance on Rule 144A.

				
	 
	___

	___

	Will the Transferee be purchasing the Certificates

	 
	Yes

	No

	only for the Transferee’s own account?

	 
	 
	 
	 

6.

If the answer to the foregoing question is “no”, the Transferee agrees that, in connection with any purchase of securities sold to the Transferee for the account of a third party (including any separate account) in reliance on Rule 144A, the Transferee will only purchase for the account of a third party that at the time is a “qualified institutional buyer” within the meaning of Rule 144A. In addition, the Transferee agrees that the Transferee will not purchase securities for a third party unless the Transferee has obtained a current representation letter from such third party or taken other appropriate steps contemplated by Rule 144A to conclude that such third party independently meets the definition of “qualified institutional buyer” set forth in Rule 144A.

7.

The Transferee will notify each of the parties to which this certification is made of any changes in the information and conclusions herein. Until such notice is given, the Transferee’s purchase of the Certificates will constitute a reaffirmation of this certification as of the date of such purchase. In addition, if the Transferee is a bank or savings and loan as provided above, the Transferee agrees that it will furnish to such parties updated annual financial statements promptly after they become available.

Dated:

Print Name of Transferee

By:

Name:

Title:

1

Transferee must own and/or invest on a discretionary basis at least $100,000,000 in securities unless Transferee is a dealer, and, in that case, Transferee must own and/or invest on a discretionary basis at least $10,000,000 in securities.

ANNEX 2 TO EXHIBIT F

QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

[For Transferees That Are Registered Investment Companies]

The undersigned hereby certifies as follows to [name of Transferor] (the “Transferor”) and Wells Fargo Bank, N.A., as Securities Administrator, with respect to the mortgage backed pass-through certificates (the “Certificates”) described in the Transferee Certificate to which this certification relates and to which this certification is an Annex:

1.

As indicated below, the undersigned is the President, Chief Financial Officer or Senior Vice President of the entity purchasing the Certificates (the “Transferee”) or, if the Transferee is a “qualified institutional buyer” as that term is defined in Rule 144A under the Securities Act of 1933 (“Rule 144A”) because the Transferee is part of a Family of Investment Companies (as defined below), is such an officer of the investment adviser (the “Adviser”).

2.

In connection with purchases by the Transferee, the Transferee is a “qualified institutional buyer” as defined in Rule 144A because (i) the Transferee is an investment company registered under the Investment Company Act of 1940, and (ii) as marked below, the Transferee alone, or the Transferee’s Family of Investment Companies, owned at least $100,000,000 in securities (other than the excluded securities referred to below) as of the end of the Transferee’s most recent fiscal year. For purposes of determining the amount of securities owned by the Transferee or the Transferee’s Family of Investment Companies, the cost of such securities was used.

___

The Transferee owned $________________________ in securities (other than the excluded securities referred to below) as of the end of the Transferee’s most recent fiscal year (such amount being calculated in accordance with Rule 144A).

___

The Transferee is part of a Family of Investment Companies which owned in the aggregate $_______________ in securities (other than the excluded securities referred to below) as of the end of the Transferee’s most recent fiscal year (such amount being calculated in accordance with Rule 144A).

3.

The term “Family of Investment Companies” as used herein means two or more registered investment companies (or series thereof) that have the same investment adviser or investment advisers that are affiliated (by virtue of being majority owned subsidiaries of the same parent or because one investment adviser is a majority owned subsidiary of the other).

4.

The term “securities” as used herein does not include (i) securities of issuers that are affiliated with the Transferee or are part of the Transferee’s Family of Investment Companies, (ii) securities issued or guaranteed by the U.S. or any instrumentality thereof, (iii) bank deposit notes and certificates of deposit, (iv) loan participations, (v) repurchase agreements, (vi) securities owned but subject to a repurchase agreement and (vii) currency, interest rate and commodity swaps.

5.

The Transferee is familiar with Rule 144A and understands that the parties to which this certification is being made are relying and will continue to rely on the statements made herein because one or more sales to the Transferee will be in reliance on Rule 144A. In addition, the Transferee will only purchase for the Transferee’s own account.

6.

The undersigned will notify the parties to which this certification is made of any changes in the information and conclusions herein.  Until such notice, the Transferee’s purchase of the Certificates will constitute a reaffirmation of this certification by the undersigned as of the date of such purchase.

Dated:

Print Name of Transferee

By:

Name:

Title:

IF AN ADVISER:

Print Name of Transferee

EXHIBIT G 

[Reserved]

EXHIBIT H

FORM OF ADDITION NOTICE

_______, 2007

	
	HSBC Bank USA, National Association

452 Fifth Avenue

New York, NY  10018

	 

	Wells Fargo Bank, N.A.

9062 Old Annapolis Road

Columbia, MD  21045

Attn: Deutsche Alt-B Securities 2007-AB1

	 

	Standard & Poor’s Ratings Services

55 Water Street, 41st Floor

New York, NY  10041-0003

	 

	Moody’s Investors Service

99 Church Street, 4th Floor

New York, NY  10004

	 

Re:

Deutsche Alt-B Securities Mortgage Loan Trust , Series 2007-AB1

Ladies and Gentlemen:

Reference is made to the above-referenced transaction.  Please be advised that we intend to sell mortgage loans (the “Subsequent Mortgage Loans”) to the Deutsche Alt-B Securities Mortgage Loan Trust , Series 2007-AB1 (the “Trust Fund”) on  [        ], 2007.  The Trust Fund will purchase the Subsequent Mortgage Loans with a portion of the amounts on deposit in the Prefunding Account.

Capitalized terms used herein have the meaning set forth in the Pooling and Servicing Agreement among Deutsche Alt-A Securities, Inc., as depositor, Wells Fargo Bank, N.A., as master servicer and securities administrator and HSBC Bank USA, National Association, as trustee, dated as of March 1, 2007 (the “Pooling and Servicing Agreement”).

Very truly yours,

Deutsche Alt-A Securities, Inc.

as Depositor

By:________________________

Name:

Title:

By:________________________

Name:

Title:

EXHIBIT I

FORM OF SUBSEQUENT TRANSFER INSTRUMENT

Pursuant to this Subsequent Transfer Instrument, dated ________, 2007 (the “Instrument”), between Deutsche Alt-A Securities, Inc. as seller (the “Depositor”), and HSBC Bank USA, National Association as trustee of the Deutsche Alt-B Securities Mortgage Loan Trust, Series 2007-AB1, Mortgage Pass-Through Certificates, as purchaser (the “Trustee”), and pursuant to the Pooling and Servicing Agreement, dated as of March 1, 2007 (the “Pooling and Servicing Agreement”), among the Depositor, Wells Fargo Bank, N.A. as Master Servicer and Securities Administrator and the Trustee, the Depositor and the Trustee agree to the sale by the Depositor and the purchase by the Trustee in trust, on behalf of the Trust Fund, of the Loans listed on the attached Schedule of Subsequent Loans (the “Subsequent Loans”).

Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Pooling and Servicing Agreement.

Section 1.

Conveyance of Subsequent Loans.

(a)

The Depositor does hereby sell, transfer, assign, set over and convey to the Trustee in trust, on behalf of the Trust Fund, without recourse, all of its right, title and interest in and to the Subsequent Loans, and including all amounts due on the Subsequent Loans after the related Subsequent Cut-Off Date, and all items with respect to the Subsequent Loans to be delivered pursuant to Section 2.1 of the Pooling and Servicing Agreement; provided, however that the Depositor reserves and retains all right, title and interest in and to amounts due on the Subsequent Loans on or prior to the related Subsequent Cut-Off Date. The Depositor, contemporaneously with the delivery of this Agreement, has delivered or caused to be delivered to the Trustee each item set forth in Section 2.1 of the Pooling and Servicing Agreement. The transfer to the Trustee by the Depositor of the Subsequent Loans identified on the Loan Schedule shall be absolute and is intended by the Depositor, the Trustee and the Certificateholders to constitute and to be treated as a sale by the Depositor to the Trust Fund.

(b)

The Depositor, concurrently with the execution and delivery hereof, does hereby transfer, assign, set over and otherwise convey to the Trustee without recourse for the benefit of the Certificateholders all the right, title and interest of the Depositor, in, to and under the Subsequent Mortgage Loan Purchase Agreement, dated the date hereof, between the Depositor as purchaser and the Mortgage Loan Seller as seller, to the extent of the Subsequent Loans.

Section 2.

Representations and Warranties; Conditions Precedent.

(a)

The Depositor hereby confirms that each of the conditions and the representations and warranties set forth in Section 2.6 of the Pooling and Servicing Agreement are satisfied as of the date hereof.

(b)

All terms and conditions of the Pooling and Servicing Agreement are hereby ratified and confirmed; provided, however, that in the event of any conflict, the provisions of this Instrument shall control over the conflicting provisions of the Pooling and Servicing Agreement.

Section 3.

Recordation of Instrument.

To the extent permitted by applicable law, this Instrument, or a memorandum thereof if permitted under applicable law, is subject to recordation in all appropriate public offices for real property records in all of the counties or other comparable jurisdictions in which any or all of the properties subject to the Mortgages are situated, and in any other appropriate public recording office or elsewhere, such recordation to be effected by the Depositor at the Certificateholders’ expense on direction of the related Certificateholders, but only when accompanied by an Opinion of Counsel to the effect that such recordation materially and beneficially affects the interests of the Certificateholders or is necessary for the administration or servicing of the Mortgage Loans.

Section 4.

Governing Law.

This Instrument shall be construed in accordance with the laws of the State of New York and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws, without giving effect to principles of conflicts of law (other than Section 5-1401 of the New York General Obligations Law).

Section 5.

Counterparts.

This Instrument may be executed in one or more counterparts and by the different parties hereto on separate counterparts, each of which, when so executed, shall be deemed to be an original; such counterparts, together, shall constitute one and the same instrument.

Section 6.

Successors and Assigns.

This Instrument shall inure to the benefit of and be binding upon the Depositor and the Trustee and their respective successors and assigns.

DEUTSCHE ALT-A SECURITIES, INC.

By:

Name:

Title:

By:

Name:

Title:

HSBC BANK USA, NATIONAL ASSOCIATION, as Trustee for Deutsche Alt-B Securities Mortgage Loan Trust, Series 2007-AB1, Mortgage Pass-Through Certificates

By:

Name:

Title:

Attachment

Schedule of Subsequent Mortgage Loans.

EXHIBIT J

MORTGAGE LOAN PURCHASE AGREEMENT BETWEEN THE DEPOSITOR AND THE SELLER

[PROVIDED UPON REQUEST]

EXHIBIT K-1

ADDITIONAL FORM 10-D DISCLOSURE 

		
	ADDITIONAL FORM 10-D DISCLOSURE

	Item on Form 10-D

	Party Responsible 

	Item 1: Distribution and Pool Performance Information

	 

	Information included in the [Monthly Statement]

	Servicer

Master Servicer

Securities Administrator

	Any information required by 1121 which is NOT included on the [Monthly Statement]

	Depositor

	Item 2: Legal Proceedings

Any legal proceeding pending against the following entities or their respective property, that is material to Certificateholders, including any proceedings known to be contemplated by governmental authorities:

	 

	▪ Issuing Entity (Trust Fund)

	Trustee, Master Servicer, Securities Administrator and Depositor

	▪ Sponsor (Seller)

	Seller (if a party to the Pooling and Servicing Agreement) or Depositor

	▪ Depositor

	Depositor

	▪ Trustee

	Trustee

	▪ Securities Administrator

	Securities Administrator

	▪ Master Servicer

	Master Servicer

	▪ Custodian

	Custodian

	▪ 1110(b) Originator

	Depositor

	▪ Any 1108(a)(2) Servicer (other than the Master Servicer or Securities Administrator)

	Servicer

	▪ Any other party contemplated by 1100(d)(1)

	Depositor

	Item 3:  Sale of Securities and Use of Proceeds

Information from Item 2(a) of Part II of Form 10-Q:

With respect to any sale of securities by the sponsor, depositor or issuing entity, that are backed by the same asset pool or are otherwise issued by the issuing entity, whether or not registered, provide the sales and use of proceeds information in Item 701 of Regulation S-K.  Pricing information can be omitted if securities were not registered.

	Depositor

	Item 4:  Defaults Upon Senior Securities

Information from Item 3 of Part II of Form 10-Q:

Report the occurrence of any Event of Default (after expiration of any grace period and provision of any required notice)

	Securities Administrator

Trustee

	Item 5:  Submission of Matters to a Vote of Security Holders

Information from Item 4 of Part II of Form 10-Q

	Securities Administrator

Trustee

	Item 6:  Significant Obligors of Pool Assets

Item 1112(b) – Significant Obligor Financial Information*

	Depositor

	*This information need only be reported on the Form 10-D for the distribution period in which updated information is required pursuant to the Item.

	 

	Item 7:  Significant Enhancement Provider Information

Item 1114(b)(2) – Credit Enhancement Provider Financial Information*

	 

	▪ Determining applicable disclosure threshold

	Depositor

	▪ Requesting required financial information (including any required accountants’ consent to the use thereof) or effecting incorporation by reference

	Depositor

	Item 1115(b) – Derivative Counterparty Financial Information*

	 

	▪ Determining current maximum probable exposure

	Depositor

	▪ Determining current significance percentage

	Depositor

	▪ Requesting required financial information (including any required accountants’ consent to the use thereof) or effecting incorporation by reference

	Depositor

	*This information need only be reported on the Form 10-D for the distribution period in which updated information is required pursuant to the Items.

	 

	Item 8:  Other Information

Disclose any information required to be reported on Form 8-K during the period covered by the Form 10-D but not reported

	Any party responsible for the applicable Form 8-K Disclosure item

	Item 9:  Exhibits

	 

	Monthly Statement to Certificateholders

	Securities Administrator

	Exhibits required by Item 601 of Regulation S-K, such as material agreements

	Depositor

EXHIBIT K-2

ADDITIONAL FORM 10-K DISCLOSURE 

		
	ADDITIONAL FORM 10-K DISCLOSURE

	Item on Form 10-K

	Party Responsible 

	Item 1B: Unresolved Staff Comments

	Depositor

	Item 9B:  Other Information

Disclose any information required to be reported on Form 8-K during the fourth quarter covered by the Form 10-K but not reported

	Any party responsible for disclosure items on Form 8-K

	Item 15:  Exhibits, Financial Statement Schedules

	Securities Administrator

Depositor

	Reg AB Item 1112(b):  Significant Obligors of Pool Assets

	 

	Significant Obligor Financial Information*

	Depositor

	*This information need only be reported on the Form 10-D for the distribution period in which updated information is required pursuant to the Item.

	 

	Reg AB Item 1114(b)(2):  Credit Enhancement Provider Financial Information

	 

	▪ Determining applicable disclosure threshold

	Depositor

	▪ Requesting required financial information (including any required accountants’ consent to the use thereof) or effecting incorporation by reference

	Depositor

	*This information need only be reported on the Form 10-D for the distribution period in which updated information is required pursuant to the Items.

	 

	Reg AB Item 1115(b):  Derivative Counterparty Financial Information

	 

	▪ Determining current maximum probable exposure

	Depositor

	▪ Determining current significance percentage

	Depositor

	▪ Requesting required financial information (including any required accountants’ consent to the use thereof) or effecting incorporation by reference

	Depositor

	*This information need only be reported on the Form 10-D for the distribution period in which updated information is required pursuant to the Items.

	 

	Reg AB Item 1117: Legal Proceedings

Any legal proceeding pending against the following entities or their respective property, that is material to Certificateholders, including any proceedings known to be contemplated by governmental authorities:

	 

	▪ Issuing Entity (Trust Fund)

	Trustee, Master Servicer, Securities Administrator and Depositor

	▪ Sponsor (Seller)

	Seller (if a party to the Pooling and Servicing Agreement) or Depositor

	▪ Depositor

	Depositor

	▪ Trustee

	Trustee

	▪ Securities Administrator

	Securities Administrator

	▪ Master Servicer

	Master Servicer

	▪ Custodian

	Custodian

	▪ 1110(b) Originator

	Depositor

	▪ Any 1108(a)(2) Servicer (other than the Master Servicer or Securities Administrator)

	Servicer

	▪ Any other party contemplated by 1100(d)(1)

	Depositor

	Reg AB Item 1119:  Affiliations and Relationships

	 

	Whether (a) the Sponsor (Seller), Depositor or Issuing Entity is an affiliate of the following parties, and (b) to the extent known and material, any of the following parties are affiliated with one another:

	Depositor as to (a) 

Sponsor/Seller as to (a)

	▪ Master Servicer

	Master Servicer 

	▪ Securities Administrator

	Securities Administrator

	▪ Trustee

	Trustee

	▪ Any other 1108(a)(3) servicer

	Servicer

	▪ Any 1110 Originator

	Depositor/Sponsor

	▪ Any 1112(b) Significant Obligor

	Depositor/Sponsor

	▪ Any 1114 Credit Enhancement Provider

	Depositor/Sponsor

	▪ Any 1115 Derivate Counterparty Provider

	Depositor/Sponsor

	▪ Any other 1101(d)(1) material party

	Depositor/Sponsor

	Whether there are any “outside the ordinary course business arrangements” other than would be obtained in an arm’s length transaction between (a) the Sponsor (Seller), Depositor or Issuing Entity on the one hand, and (b) any of the following parties (or their affiliates) on the other hand, that exist currently or within the past two years and that are material to a Certificateholder’s understanding of the Certificates:

	Depositor as to (a) 

Sponsor/Seller as to (a)

	▪ Master Servicer

	Master Servicer 

	▪ Securities Administrator

	Securities Administrator

	▪ Trustee

	Depositor/Sponsor

	▪ Any other 1108(a)(3) servicer

	Servicer

	▪ Any 1110 Originator

	Depositor/Sponsor

	▪ Any 1112(b) Significant Obligor

	Depositor/Sponsor

	▪ Any 1114 Credit Enhancement Provider

	Depositor/Sponsor

	▪ Any 1115 Derivate Counterparty Provider

	Depositor/Sponsor

	▪ Any other 1101(d)(1) material party

	Depositor/Sponsor

	Whether there are any specific relationships involving the transaction or the pool assets between (a) the Sponsor (Seller), Depositor or Issuing Entity on the one hand, and (b) any of the following parties (or their affiliates) on the other hand, that exist currently or within the past two years and that are material:

	Depositor as to (a) 

Sponsor/Seller as to (a)

	▪ Master Servicer

	Master Servicer 

	▪ Securities Administrator

	Securities Administrator

	▪ Trustee

	Depositor/Sponsor

	▪ Any other 1108(a)(3) servicer

	Servicer

	▪ Any 1110 Originator

	Depositor/Sponsor

	▪ Any 1112(b) Significant Obligor

	Depositor/Sponsor

	▪ Any 1114 Credit Enhancement Provider

	Depositor/Sponsor

	▪ Any 1115 Derivate Counterparty Provider

	Depositor/Sponsor

	▪ Any other 1101(d)(1) material party

	Depositor/Sponsor

EXHIBIT K-3

FORM 8-K DISCLOSURE INFORMATION

		
	FORM 8-K DISCLOSURE INFORMATION

	Item on Form 8-K

	Party Responsible 

	Item 1.01- Entry into a Material Definitive Agreement

Disclosure is required regarding entry into or amendment of any definitive agreement that is material to the securitization, even if depositor is not a party.  

Examples: servicing agreement, custodial agreement.

Note: disclosure not required as to definitive agreements that are fully disclosed in the prospectus

	All parties

	Item 1.02- Termination of a Material Definitive Agreement

Disclosure is required regarding termination of  any definitive agreement that is material to the securitization (other than expiration in accordance with its terms), even if depositor is not a party.  

Examples: servicing agreement, custodial agreement.

	All parties

	Item 1.03- Bankruptcy or Receivership

Disclosure is required regarding the bankruptcy or receivership, with respect to any of the following: 

	Depositor

	▪ Sponsor (Seller)

	Depositor/Sponsor (Seller)

	▪ Depositor

	Depositor

	▪ Master Servicer

	Master Servicer

	▪ Affiliated Servicer

	Servicer

	▪ Other Servicer servicing 20% or more of the pool assets at the time of the report

	Servicer

	▪ Other material servicers

	Servicer

	▪ Trustee

	Trustee

	▪ Securities Administrator

	Securities Administrator

	▪ Significant Obligor

	Depositor

	▪ Credit Enhancer (10% or more)

	Depositor

	▪ Derivative Counterparty

	Depositor

	▪ Custodian

	Custodian

	Item 2.04- Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement

Includes an early amortization, performance trigger or other event, including event of default, that would materially alter the payment priority/distribution of cash flows/amortization schedule.

Disclosure will be made of events other than waterfall triggers which are disclosed in the monthly statements to the certificateholders.

	Depositor

Master Servicer

Securities Administrator

	Item 3.03- Material Modification to Rights of Security Holders

Disclosure is required of any material modification to documents defining the rights of Certificateholders, including the Pooling and Servicing Agreement.

	Securities Administrator

Trustee

Depositor

	Item 5.03- Amendments of Articles of Incorporation or Bylaws; Change of Fiscal Year

Disclosure is required of any amendment “to the governing documents of the issuing entity”.

	Depositor

	Item 6.01- ABS Informational and Computational Material

	Depositor

	Item 6.02- Change of Servicer or Securities Administrator

Requires disclosure of any removal, replacement, substitution or addition of any master servicer, affiliated servicer, other servicer servicing 10% or more of pool assets at time of report, other material servicers or trustee.

	Master Servicer/Securities Administrator/Depositor/

Servicer/Trustee

	Reg AB disclosure about any new servicer or master servicer is also required.

	Servicer/Master Servicer/Depositor

	Reg AB disclosure about any new Trustee is also required.

	Trustee

	Item 6.03- Change in Credit Enhancement or External Support

Covers termination of any enhancement in manner other than by its terms, the addition of an enhancement, or a material change in the enhancement provided.  Applies to external credit enhancements as well as derivatives.  

	Depositor/Securities Administrator

	Reg AB disclosure about any new enhancement provider is also required.

	Depositor

	Item 6.04- Failure to Make a Required Distribution

	Securities Administrator

Trustee

	Item 6.05- Securities Act Updating Disclosure

If any material pool characteristic differs by 5% or more at the time of issuance of the securities from the description in the final prospectus, provide updated Reg AB disclosure about the actual asset pool.

	Depositor

	If there are any new servicers or originators required to be disclosed under Regulation AB as a result of the foregoing, provide the information called for in Items 1108 and 1110 respectively.

	Depositor

	Item 7.01- Reg FD Disclosure

	All parties

	Item 8.01- Other Events

Any event, with respect to which information is not otherwise called for in Form 8-K, that the registrant deems of importance to certificateholders.

	Depositor

	Item 9.01- Financial Statements and Exhibits

	Responsible party for reporting/disclosing the financial statement or exhibit

EXHIBIT L

FORM OF SERVICER CERTIFICATION

Re:

__________ (the “Trust”)

Mortgage Pass-Through Certificates, Series 2007-AB1

I, [identify the certifying individual], certify to Deutsche Alt-A Securities, Inc.  (the “Depositor”), HSBC Bank USA, National Association (the “Trustee”) and Wells Fargo Bank, National Association (the “Master Servicer”), and their respective officers, directors and affiliates, and with the knowledge and intent that they will rely upon this certification, that:

(1)

I have reviewed the servicer compliance statement of the Servicer provided in accordance with Item 1123 of Regulation AB (the “Compliance Statement”), the report on assessment of the Servicer’s compliance with the servicing criteria set forth in Item 1122(d) of Regulation AB (the “Servicing Criteria”), provided in accordance with Rules 13I-A-18 and 15d-18 under Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Item 1122 of Regulation AB (the “Servicing Assessment”), the registered public accounting firm’s attestation report provided in accordance with Rules 13I-A-18 and 15d-18 under the Exchange Act and Section 1122(b) of Regulation AB (the “Attestation Report”), and all servicing reports, officer’s certificates and other information relating to the servicing of the [Mortgage Loans] by the Servicer during 200[ ] that were delivered by the Servicer to the Master Servicer pursuant to the Agreement (collectively, the “Servicer Servicing Information”);

(2)

Based on my knowledge, the Servicer Servicing Information, 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 the light of the circumstances under which such statements were made, not misleading with respect to the period of time covered by the Servicer Servicing Information;

(3)

Based on my knowledge, all of the Servicer Servicing Information required to be provided by the Servicer under the Agreement has been provided to the Master Servicer;

(4)

I am responsible for reviewing the activities performed by the Servicer as servicer under the Agreement, and based on my knowledge and the compliance review conducted in preparing the Compliance Statement and except as disclosed in the Compliance Statement, the Servicing Assessment or the Attestation Report, the Servicer has fulfilled its obligations under the Agreement in all material respects; and

(5)

The Compliance Statement required to be delivered by the Servicer pursuant to the Agreement, and the Servicing Assessment and Attestation Report required to be provided by the Servicer and by any Subservicer or Subcontractor pursuant to the Agreement, have been provided to the Master Servicer.  Any material instances of noncompliance described in such reports have been disclosed to the Master Servicer.  Any material instance of noncompliance with the Servicing Criteria has been disclosed in such reports.

Capitalized terms used and not otherwise defined herein have the meanings assigned thereto in the Pooling and Servicing Agreement (the “Agreement”), dated as of March 1, 2007, among Deutsche Alt-A Securities, Inc., Wells Fargo Bank, N.A., HSBC Bank USA, National Association and Clayton Fixed Income Services Inc.

		
	Date:

	 

	 

	 

	[Signature]

	 

	[Title]

EXHIBIT M

SERVICING CRITERIA

SCHEDULE 1122 (POOLING AND SERVICING AGREEMENT)

 

Assessments of Compliance and Attestation Reports Servicing Criteria1

									
	Reg. AB Item 1122(d) Servicing Criteria

	DEPOSITOR

	SELLER

	SERVICER

	TRUSTEE

	CUSTODIAN

	PAYING AGENT

	MASTER SERVICER

	SECURITIES ADMINISTRATOR

	(1)

General Servicing Considerations

	 
	 
	 
	 
	 
	 
	 
	 

	(i)

monitoring performance or other triggers and events of default

	 
	 
	X

	 
	 
	 
	X

	X

	(ii)

monitoring performance of vendors of activities outsourced

	 
	 
	X

	 
	 
	 
	X

	 

	(iii)

maintenance of back-up servicer for pool assets

	 
	 
	 
	 
	 
	 
	 
	 

	(iv)

fidelity bond and E&O policies in effect

	 
	 
	X

	 
	 
	 
	X

	 

	(2)

Cash Collection and Administration

	 
	 
	 
	 
	 
	 
	 
	 

	(i)

timing of deposits to custodial account

	 
	 
	X

	 
	 
	X

	X

	X

	(ii)

wire transfers to investors by authorized personnel

	 
	 
	X

	 
	 
	X

	 
	X

	(iii)

advances or guarantees made, reviewed and approved as required

	 
	 
	X

	 
	 
	 
	X

	 

	(iv)

accounts maintained as required

	 
	 
	X

	 
	 
	X

	 
	X

	(v)

accounts at federally insured depository institutions

	 
	 
	X

	 
	 
	X

	 
	X

	(vi)

unissued checks safeguarded

	 
	 
	X

	 
	 
	 
	 
	 

	(vii)

monthly reconciliations of accounts

	 
	 
	X

	 
	 
	X

	X

	X

	(3)

Investor Remittances and Reporting

	 
	 
	 
	 
	 
	 
	 
	 

	(i)

investor reports

	 
	 
	X

	 
	 
	 
	X

	X

	(ii)

remittances

	 
	 
	X

	 
	 
	X

	 
	X

	(iii)

proper posting of distributions

	 
	 
	X

	 
	 
	X

	 
	X

	(iv)

reconciliation of remittances and payment statements

	 
	 
	X

	 
	 
	X

	X

	X

	(4)

Pool Asset Administration

	 
	 
	 
	 
	 
	 
	 
	 

	(i)

maintenance of pool collateral

	 
	 
	X

	 
	X

	 
	 
	 

	(ii)

safeguarding of pool assets/documents

	 
	 
	X

	 
	X

	 
	 
	 

	(iii)

additions, removals and substitutions of pool assets

	 
	 
	X

	 
	 
	 
	X*

	 

	(iv)

posting and allocation of pool asset payments to pool assets

	 
	 
	X

	 
	 
	 
	 
	 

	(v)

reconciliation of servicer records

	 
	 
	X

	 
	 
	 
	 
	 

	(vi)

modifications or other changes to terms of pool assets

	 
	 
	X

	 
	 
	 
	 
	 

	(vii)

loss mitigation and recovery actions

	 
	 
	X

	 
	 
	 
	 
	 

	(viii)records regarding collection efforts

	 
	 
	X

	 
	 
	 
	 
	 

	(ix)

adjustments to variable interest rates on pool assets

	 
	 
	X

	 
	 
	 
	 
	 

	(x)

matters relating to funds held in trust for obligors

	 
	 
	X

	 
	 
	 
	 
	 

	(xi)

payments made on behalf of obligors (such as for taxes or insurance)

	 
	 
	X

	 
	 
	 
	 
	 

	(xii)

late payment penalties with respect to payments made on behalf of obligors 

	 
	 
	X

	 
	 
	 
	 
	 

	(xiii)records with respect to payments made on behalf of obligors

	 
	 
	X

	 
	 
	 
	 
	 

	(xiv)

recognition and recording of delinquencies, charge-offs and uncollectible accounts

	 
	 
	X

	 
	 
	 
	X

	 

	(xv)

maintenance of external credit enhancement or other support

	 
	 
	 
	 
	 
	 
	X

	 

* Only with respect to the Master Servicer’s obligations under Section 2.3(b) of this Agreement. 

1* The descriptions of the Item 1122(d) servicing criteria use key words and phrases and are not verbatim recitations of the servicing criteria.  Refer to Regulation AB, Item 1122 for a full description of servicing criteria.

EXHIBIT N

ADDITIONAL DISCLOSURE NOTIFICATION

**SEND VIA FAX TO [410-715-2380] AND VIA EMAIL TO cts.sec.notifications@wellsfargo.com AND VIA OVERNIGHT MAIL TO THE ADDRESSES IMMEDIATELY BELOW

Wells Fargo Bank, N.A. as Securities Administrator 

9062 Old Annapolis Road

Columbia, Maryland 21045

Fax: (410) 715-2380

E-mail:  cts.sec.notifications@wellsfargo.com

Deutsche Alt-A Securities, Inc.

60 Wall Street

New York, NY 10005

Fax: (212) 797-5152

Attn: Corporate Trust Services – DBALT 2007-AB1 – SEC REPORT PROCESSING

RE: **Additional Form [10-D][10-K][8-K] Disclosure** Required

Ladies and Gentlemen:

In accordance with Section [__] of the Pooling and Servicing Agreement, dated as of March 1, 2007 (the “Pooling and Servicing Agreement”), among Deutsche Alt-A Securities, Inc., as depositor, Wells Fargo, N.A., as master servicer and as securities administrator, HSBC Bank USA, National Association, as trustee, and Clayton Fixed Income Services Inc., as credit risk manager, the undersigned, as [_____________________] hereby notifies you that certain events have come to our attention that [will][may] need to be disclosed on Form [10-D][10-K][8-K].

Description of Additional Form [10-D][10-K][8-K] Disclosure:

List of any Attachments hereto to be included in the Additional Form [10-D][10-K][8-K] Disclosure:

Any inquiries related to this notification should be directed to [______________], phone number [__________]; email address [_______________].

[NAME OF PARTY]

As [role]

By:

Name:

Title:

EXHIBIT O

ERISA REPRESENTATION LETTER

____________, 200__

Wells Fargo Bank, N.A.

P.O. Box 98

Columbia, Maryland 21046

Attention:

Deutsche Alt-A Securities, Inc., 2007-AB1

Re: 

Deutsche Alt-B Securities Mortgage Loan Trust , 

Series 2007-AB1 Mortgage Pass-through certificates, (the “Trust”) 

Class [__] Certificates (the “Certificates”)                                        

Ladies and Gentlemen:

In connection with our acquisition of the above Certificates we certify that: 

(a) we are not an employee benefit plan or arrangement that is subject to the Employee Retirement Income Security Act of 1974, as amended, or Section 4975 of the Internal Revenue Code of 1986, as amended, or an entity whose underlying assets include such plan’s or arrangement’s assets (a “Plan”), nor are we acquiring such certificates for, on behalf of or with the assets of, any such Plan (a “Benefit Plan Investor”), or

(b) if we are a Benefit Plan Investor in the case of ERISA-Restricted Certificates, either (X) we are providing an Opinion of Counsel which establishes to the reasonable satisfaction of the Trustee that the purchase and holding of ERISA-Restricted Certificates will not cause a prohibited transactions under Section 406 of ERISA or Section 4975 of the Code or subject Depositor, the Seller, the Trustee, the Master Servicer or the Securities Administrator to any obligation in addition to those undertaken in this Agreement or (Y) if the  Certificates have been the subject of an ERISA-Qualifying Underwriting, we are an insurance company purchasing such Certificates with funds contained in an “insurance company general account” (as such term is defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 (“PTCE 95-60”)) and our purchase and holding of such Certificates are covered under Sections I and III of PTCE 95-60. 

Very truly yours,

___________________________

Print Name of Transferee

By:_________________________

Authorized Officer

EXHIBIT P

[RESERVED]

EXHIBIT Q

[RESERVED]

EXHIBIT R

[RESERVED]

SCHEDULE 1

LOAN SCHEDULE

[PROVIDED UPON REQUEST]

SCHEDULE 2

PREPAYMENT CHARGE SCHEDULE

[FILED BY PAPER]

SCHEDULE 3

[RESERVED]

SCHEDULE 4

[RESERVED]

SCHEDULE 5

TRUST PREPAYMENT CHARGE SCHEDULE

[PROVIDED UPON REQUEST]

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