Document:

exv4w2

 

Exhibit 4.2

FREMONT MORTGAGE SECURITIES CORPORATION,

as Purchaser

and

FREMONT INVESTMENT & LOAN,

as Originator

MORTGAGE LOAN PURCHASE AGREEMENT

Dated as of December 1, 2006

Fixed-Rate and Adjustable-Rate Mortgage Loans

Fremont Home Loan Trust 2006-E,

Mortgage-Backed Certificates, Series 2006-E

 

 

Table of Contents

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I DEFINITIONS AND SCHEDULES
	 	 	1	 
	 
	 	 	 	 
	Section 1.01. Definitions
	 	 	1	 
	 
	 	 	 	 
	ARTICLE II SALE OF MORTGAGE LOANS; PAYMENT OF PURCHASE PRICE
	 	 	1	 
	 
	 	 	 	 
	Section 2.01. Sale of Mortgage Loans
	 	 	1	 
	Section 2.02. Obligations of the Originator Upon Sale
	 	 	2	 
	Section 2.03. Payment of Purchase Price for the Mortgage Loans
	 	 	3	 
	 
	 	 	 	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH
	 	 	3	 
	 
	 	 	 	 
	Section 3.01. Originator’s Representations and Warranties Relating to the Mortgage Loans
	 	 	3	 
	Section 3.02. Additional Originator’s Representations and Warranties
	 	 	3	 
	Section 3.03. Remedies for Breach of Representations and Warranties
	 	 	6	 
	 
	 	 	 	 
	ARTICLE IV ORIGINATOR’S COVENANTS
	 	 	9	 
	 
	 	 	 	 
	Section 4.01. Covenants of the Originator
	 	 	9	 
	 
	 	 	 	 
	ARTICLE V INDEMNIFICATION WITH RESPECT TO THE MORTGAGE LOANS
	 	 	9	 
	 
	 	 	 	 
	Section 5.01. Indemnification
	 	 	9	 
	 
	 	 	 	 
	ARTICLE VI TERMINATION
	 	 	10	 
	 
	 	 	 	 
	Section 6.01. Termination
	 	 	10	 
	 
	 	 	 	 
	ARTICLE VII MISCELLANEOUS PROVISIONS
	 	 	10	 
	 
	 	 	 	 
	Section 7.01. Amendment
	 	 	10	 
	Section 7.02. Governing Law
	 	 	10	 
	Section 7.03. Notices
	 	 	10	 
	Section 7.04. Severability of Provisions
	 	 	11	 
	Section 7.05. Counterparts
	 	 	11	 
	Section 7.06. Further Agreements
	 	 	11	 
	Section 7.07. Intention of the Parties
	 	 	12	 
	Section 7.08. Successors and Assigns: Assignment of Purchase Agreement
	 	 	13	 
	Section 7.09. Survival
	 	 	13	 
	Section 7.10. Third Party Beneficiaries
	 	 	13	 
	Section 7.11. Confidentiality
	 	 	13	 

i
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Exhibit A: Representations and Warranties Relating to the Mortgage Loans

Exhibit B: Appendix E of the Standard & Poor’s Glossary for File Format for LEVELSÒ Version 5.7

Schedule A: Mortgage Loan Schedule

 

 

     THIS MORTGAGE LOAN PURCHASE AGREEMENT, dated as of December 1, 2006 (the “Agreement”), is made
and entered into between Fremont Investment & Loan (the “Originator” or “Fremont”) and Fremont
Mortgage Securities Corporation (the “Purchaser”).

WITNESSETH

     WHEREAS, the Originator is the owner of the notes or other evidence of indebtedness
(collectively, the “Mortgage Notes”) so indicated on Schedule A attached hereto and the other
documents or instruments constituting the Mortgage File (collectively, the “Mortgage Loans”); and

     WHEREAS, the Originator, as of the date hereof, owns the mortgages (collectively, the
“Mortgages”) on the properties (collectively, the “Mortgaged Properties”) securing the Mortgage
Loans, including rights to (a) any property acquired by foreclosure or deed in lieu of foreclosure
or otherwise and (b) the proceeds of any insurance policies covering such Mortgage Loans or the
related Mortgaged Properties or the obligors on such Mortgage Loans; and

     WHEREAS, the parties hereto desire that the Originator sell the Mortgage Loans to the
Purchaser pursuant to the terms of this Agreement; and

     WHEREAS, pursuant to the terms of that certain Pooling and Servicing Agreement dated as of
December 1, 2006 (the “Pooling and Servicing Agreement”) among the Purchaser, as depositor,
Fremont, as sponsor, originator and servicer, HSBC Bank USA, National Association, as trustee (the
“Trustee”), Wells Fargo Bank, N.A., as master servicer (in such capacity, the “Master Servicer”),
trust administrator (in such capacity, the “Trust Administrator”) and swap administrator (in such
capacity, the “Swap Administrator”), the Purchaser will convey the Mortgage Loans to Fremont Home
Loan Trust 2006-E (the “Trust”).

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

ARTICLE I

DEFINITIONS AND SCHEDULES

     Section 1.01. Definitions.

     Any capitalized term used but not defined herein and below shall have the meaning assigned
thereto in the Pooling and Servicing Agreement.

ARTICLE II

SALE OF MORTGAGE LOANS; PAYMENT OF PURCHASE PRICE

     Section 2.01. Sale of Mortgage Loans.

     The Originator, concurrently with the execution and delivery of this Agreement, does hereby
sell, transfer, assign, set over, and otherwise convey to the Purchaser, without recourse,

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(i) all of its right, title and interest in and to each of the Mortgage Loans, including the
related principal balance of such Mortgage Loan as of the Cut-off Date (the “Cut-off Date Principal
Balance”) and interest and principal received on or with respect thereto after the Cut-off Date,
other than such amounts which were due on the Mortgage Loans on or before the Cut-off Date; (ii)
property which secured such Mortgage Loan and which has been acquired by foreclosure, deed in lieu
of foreclosure or otherwise; (iii) its interest in any insurance policies in respect of the
Mortgage Loans; and (iv) all proceeds of the conversion, voluntary or involuntary, of any of the
foregoing into cash or other liquid property.

     Section 2.02. Obligations of the Originator Upon Sale.

     In connection with the transfer pursuant to Section 2.01 hereof, the Originator further
agrees, at its own expense, on or prior to the Closing Date or as otherwise indicated in this
Section 2.02, (a) to indicate in its books, records and computer systems that the Mortgage Loans
have been sold to the Purchaser pursuant to this Agreement, (b) to deliver to the Purchaser and the
Trustee a computer file containing a true and complete list of all such Mortgage Loans specifying
for each Mortgage Loan, as of the Cut-off Date, (i) its account number and (ii) the Cut-off Date
Principal Balance and such file, which forms a part of Schedule I to the Pooling and Servicing
Agreement, shall also be marked as Schedule A to this Agreement and is hereby incorporated into and
made a part of this Agreement and (c) for each Mortgage Loan that is not a MERS Mortgage Loan, to
execute an Assignment of Mortgage in blank for each Mortgage Loan.

     In connection with such conveyance by the Originator, the Originator shall on behalf of the
Purchaser deliver to, and deposit with the Trust Administrator, as custodian on behalf of the
Trustee, as assignee of the Purchaser, the Mortgage Files relating to the Mortgage Loans on or
before the Closing Date in the manner set forth in Section 2.01 of the Pooling and Servicing
Agreement.

     The Purchaser hereby acknowledges its acceptance of all right, title and interest to the
Mortgage Loans and other property, now existing or hereafter created, conveyed to it pursuant to
Section 2.01 hereof.

     The parties hereto intend that the transaction set forth herein be a non-recourse sale by the
Originator to the Purchaser of all of the Originator’s right, title and interest in and to the
Mortgage Loans and other property described above. Nonetheless, in the event the transaction set
forth herein is deemed not to be a sale, the Originator hereby grants to the Purchaser a security
interest in all of the Originator’s right, title and interest in, to and under the Mortgage Loans
and other property described above, whether now existing or hereafter created, to secure all of the
Originator’s obligations hereunder, and this Agreement shall constitute a security agreement under
applicable law. The Originator and the Purchaser shall, to the extent consistent with this
Agreement, take such actions as may be necessary to ensure that, if this Agreement were deemed to
create a security interest in the Mortgage Loans, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be maintained as such
throughout the term of the Pooling and Servicing Agreement.

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     Section 2.03. Payment of Purchase Price for the Mortgage Loans.

In consideration of the sale of the Mortgage Loans from the Originator to the Purchaser on the
Closing Date, the Purchaser agrees to pay to the Originator on the Closing Date by transfer of
immediately available funds, an amount equal to $1,247,074,783.94 and to transfer to the Originator
or its designee on the Closing Date the Class M10, Class C, Class P and Class R Certificates
(collectively, the “Purchase Price”). The Originator shall pay, and be billed directly for, all
reasonable expenses incurred by the Purchaser in connection with the issuance of the Certificates,
including, without limitation, printing fees incurred in connection with the offering documents
relating to the Certificates, fees and expenses of Purchaser’s counsel, fees of the rating agencies
requested to rate the Certificates, accountant’s fees and expenses and the fees and expenses of the
Trustee and the Trust Administrator and other out-of-pocket costs, if any.

ARTICLE III

REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH

     Section 3.01. Originator’s Representations and Warranties Relating to the Mortgage
Loans.

     The Originator represents and warrants to the Purchaser the representations and warranties set
forth in Exhibit A attached hereto with respect to each Mortgage Loan as of the Closing Date (or as
of such date specifically provided therein).

     Section 3.02. Additional Originator’s Representations and Warranties.

     The Originator represents, warrants and covenants to the Purchaser as of the Closing Date (or
as of such other date specifically provided herein) that:

     (a) The Originator is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or formation and has all licenses necessary to
carry on its business as now being conducted and is licensed, qualified and in good standing in
each state wherein it owns or leases any material properties or where a Mortgaged Property is
located, if the laws of such state require licensing or qualification in order to conduct business
of the type conducted by the Originator, and in any event the Originator is in compliance with the
laws of any such state to the extent necessary to ensure the enforceability of the related Mortgage
Loan in accordance with the terms of this Agreement; the Originator has the full corporate power,
authority and legal right to hold, transfer and convey the Mortgage Loans and to execute and
deliver this Agreement and to perform its obligations hereunder; the execution, delivery and
performance of this Agreement (including all instruments of transfer to be delivered pursuant to
this Agreement) by the Originator and the consummation of the transactions contemplated hereby have
been duly and validly authorized; this Agreement and all agreements contemplated hereby have been
duly executed and delivered and constitute the valid, legal, binding and enforceable obligations of
the Originator, regardless of whether such enforcement is sought in a proceeding in equity or at
law; and all requisite corporate action has been taken by the Originator to make this Agreement and
all agreements contemplated hereby valid and binding upon the Originator in accordance with their
terms;

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     (b) Neither the execution and delivery of this Agreement, the acquisition or origination of
the Mortgage Loans by the Originator, the sale of the Mortgage Loans to the Purchaser, the
consummation of the transactions contemplated hereby and by the Pooling and Servicing Agreement,
nor the fulfillment of or compliance with the terms and conditions of this Agreement, will conflict
with or result in a breach of any of the terms, conditions or provisions of the Originator’s
charter, by-laws or other organizational documents or any legal restriction or any agreement or
instrument to which the Originator is now a party or by which it is bound, or constitute a default
or result in an acceleration under any of the foregoing, or result in the violation of any law,
rule, regulation, order, judgment or decree to which the Originator or its property is subject, or
result in the creation or imposition of any lien, charge or encumbrance that would have material
adverse effect upon any of its properties pursuant to the terms of any mortgage, contract, deed of
trust or other instrument, or impair the ability of the Purchaser to realize on the Mortgage Loans,
impair the value of the Mortgage Loans, or impair the ability of the Purchaser to realize the full
amount of any insurance benefits accruing pursuant to this Agreement;

     (c) The Originator does not believe, nor does it have any reason or cause to believe, that it
cannot perform each and every covenant contained in this Agreement. The Originator is solvent and
the sale of the Mortgage Loans will not cause the Originator to become insolvent. The sale of the
Mortgage Loans is not undertaken with the intent to hinder, delay or defraud any of Originator’s
creditors;

     (d) Immediately prior to the delivery of each Mortgage Loan, the Originator was the owner of
the related Mortgage and the indebtedness evidenced by the related Mortgage Note. In the event
that the Originator retains record title, it shall retain such record title to each Mortgage, each
related Mortgage Note and the related Mortgage Files with respect thereto in trust for the
Purchaser or its assignee as the owner thereof and only for the purpose of servicing and
supervising the servicing of each such Mortgage Loan;

     (e) There is no action, suit, proceeding or investigation pending or, to the best of the
Originator’s knowledge, threatened against the Originator, before any court, administrative agency
or other tribunal (i) asserting the invalidity of this Agreement, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement, (iii) which, either in any
one instance or in the aggregate, is likely to result in any material adverse change in the
business, operations, financial condition, properties or assets of the Originator, or in any
material impairment of the right or ability of the Originator to carry on its business
substantially as now conducted, or in any material liability on the part of the Originator, or
which would draw into question the validity of this Agreement or the Mortgage Loans or of any
action taken or to be taken in connection with the obligations of the Originator contemplated
herein, or which would be likely to impair materially the ability of the Originator to perform
under the terms of this Agreement, (iv) relating to fraud, or (v) relating to predatory lending, or
the Originator’s origination, servicing or closing practices which is likely to result in any
material adverse change in the business, operations, financial condition, properties or assets of
the Originator.

     (f) No consent, approval, authorization or order of, or registration or filing with, or notice
to any court or governmental agency is required for the execution, delivery and performance by the
Originator of or compliance by the Originator with this Agreement or the

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Mortgage Loans, the delivery of a portion of the Mortgage Files to the Trustee or the sale of
the Mortgage Loans or the consummation of the transactions contemplated by this Agreement, or if
required, such approval has been obtained prior to the Closing Date;

     (g) The consummation of the transactions contemplated by this Agreement are in the ordinary
course of business of the Originator, and the transfer, assignment and conveyance of the Mortgage
Notes and the Mortgages by the Originator pursuant to this Agreement are not subject to the bulk
transfer or any similar statutory provisions in effect in any applicable jurisdiction;

     (h) Neither this Agreement nor any information, statement, tape, diskette, report, form, or
other document furnished or to be furnished by the Originator pursuant to this Agreement or any
Transaction Agreement or in connection with the transactions contemplated hereby contains or will
contain any material untrue statement of fact;

     (i) The Originator, as Servicer, has the facilities, procedures, and experienced personnel
necessary for the sound servicing of mortgage loans of the same type as the Mortgage Loans. The
Originator is duly qualified, licensed, registered and otherwise authorized under all applicable
federal, state and local laws, and regulations, and is in good standing to enforce, originate, sell
mortgage loans, and service mortgage loans in each jurisdiction wherein the Mortgaged Properties
are located;

     (j) The Originator is a member of MERS in good standing, and will comply in all material
respects with the rules and procedures of MERS in connection with the servicing of the MERS
Mortgage Loans for as long as such Mortgage Loans are registered with MERS.

     (k) The Mortgage Loans were not intentionally selected from among the outstanding one- to
four-family mortgage loans in the Originator’s portfolio at the Closing Date as to which the
representations and warranties set forth in Exhibit A could not be made;

     (l) The Originator has delivered to the Purchaser financial statements as to its last three
complete fiscal years and any later quarter ended more than 60 days prior to the execution of this
Agreement. All such financial statements fairly present the pertinent results of operations and
changes in financial position for each of such periods and the financial position at the end of
each such period of the Originator and its subsidiaries and have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the periods involved,
except as set forth in the notes thereto or as required by the Originator’s regulator. There has
been no change in the business, operations, financial condition, properties or assets of the
Originator since the date of the Originator’s financial statements that would have a material
adverse effect on its ability to perform its obligations under this Agreement;

     (m) The Originator has been advised by its independent certified public accountants that under
generally accepted accounting principles the transfer of the Mortgage Loans may be treated as a
sale on the books and records of the Originator and the Originator has determined that the
disposition of the Mortgage Loans pursuant to this Agreement will be afforded sale treatment for
tax and accounting purposes;

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     (n) The consideration received by the Originator upon the sale of the Mortgage Loans under
this Agreement constitutes fair consideration and reasonably equivalent value for the Mortgage
Loans;

     (o) The Originator’s decision to purchase or originate any mortgage loan or to deny any
mortgage loan application is an independent decision based upon Originator’s underwriting
guidelines, and is in no way made as a result of Purchaser’s decision to purchase, or not to
purchase, or the price Purchaser may offer to pay for, any such mortgage loan, if originated;

     (p) The Originator makes the following additional representations and warranties:

     (i) This Agreement conforms to all statutory and regulatory requirements applicable to
the Originator. This Agreement is (a) executed contemporaneously with the agreement reached
by the Originator and the Purchaser, (b) approved by a specific corporate or banking
association resolution by the board of directors of the Originator, which approval shall be
reflected in the minutes of said board, and (c) continuously, from the time of its
execution, an official record of the Originator;

     (ii) This Agreement has been duly and validly authorized by a specific corporate or
banking association resolution by the board of directors of the Originator. A copy of such
resolution, certified by the corporate secretary of the Originator or attested to by a vice
president or higher officer of the Originator has been provided to the Purchaser; and

     (iii) The Originator will maintain a copy of this Agreement in its official books and
records.

     Section 3.03. Remedies for Breach of Representations and Warranties.

     It is understood and agreed that the representations and warranties set forth in Sections 3.01
and 3.02 shall survive the sale of the Mortgage Loans to the Purchaser and shall inure to the
benefit of the Purchaser and the Trustee, notwithstanding any restrictive or qualified endorsement
on any Mortgage Note or Assignment or the examination or lack of examination of any Mortgage File.
With respect to the representations and warranties contained herein that are made to the knowledge
or the best knowledge of the Originator or as to which the Originator has no knowledge, if it is
discovered that the substance of any such representation and warranty is inaccurate and the
inaccuracy materially and adversely affects the value of the Mortgage Loan or Loans, or the
interest therein of the Purchaser or the Purchaser’s assignee, designee or transferee, then
notwithstanding such lack of knowledge with respect to the substance of such representation and
warranty being inaccurate at the time the representation and warranty was made, such inaccuracy
shall be deemed a breach of the applicable representation and warranty. Upon discovery by the
Originator, the Servicer, the Master Servicer, the Trust Administrator, the Trustee or the
Purchaser of a breach of any of the foregoing representations and warranties that materially and
adversely affects the value of any Mortgage Loan or the interest of the Purchaser or the Trustee
(or which materially and adversely affects the value of a Mortgage Loan or the interests of the
Purchaser or the Trustee in such Mortgage Loan in the case of a representation and warranty
relating to a particular Mortgage Loan) (it being understood that a breach of the

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representations and warranties set forth in clauses I(ss), I(tt), I(uu), I(ww), I(bbb),
I(jjj), I(lll) and II of Exhibit A attached hereto will be deemed to materially and adversely
affect the value of any Mortgage Loan or the interest of the Purchaser or the Trustee), the party
discovering such breach shall give prompt written notice to the other parties.

     Within 60 days of the earlier of either discovery by or notice to the Originator of any breach
of a representation or warranty that materially and adversely affects the value of a Mortgage Loan
or the interest of the Purchaser or the Trustee in such Mortgage Loan, the Originator shall use its
best efforts promptly to cure such breach in all material respects. If such breach is not so
cured, the Originator shall, (i) if such 60-day period expires prior to the second anniversary of
the Closing Date, remove such Mortgage Loan (a “Deleted Mortgage Loan”) from the Trust Fund and
substitute in its place a Qualified Substitute Mortgage Loan or Loans, in the manner and subject to
the conditions set forth in this Section and the Pooling and Servicing Agreement; or (ii)
repurchase the affected Mortgage Loan or Mortgage Loans from the Trustee at the Purchase Price in
the manner set forth in this Section and in the Pooling and Servicing Agreement; provided, however,
that any such substitution pursuant to (i) above shall not be effected prior to the delivery to the
Trustee and the Trust Administrator of an Opinion of Counsel required by Section 2.04 of the
Pooling and Servicing Agreement, if any. The Originator shall promptly reimburse the Trustee, the
Master Servicer and the Trust Administrator for any actual out-of-pocket expenses reasonably
incurred by the Trustee, the Master Servicer and the Trust Administrator in respect of enforcing
the remedies for such breach.

     At the time of substitution or repurchase of any deficient Mortgage Loan, the Purchaser and
Originator shall arrange for the reassignment of the deficient or repurchased Mortgage Loan to the
Originator, including delivery to the Trustee of a Request for Release substantially relating to
the Deleted Mortgage Loan, and the delivery to the Originator of any documents held by the Trustee
relating to the deficient or repurchased Mortgage Loan. In the event the Purchase Price is
deposited in the Collection Account, the Originator shall, simultaneously with such deposit, give
written notice to the Purchaser that such deposit has taken place. Upon such repurchase, the
Mortgage Loan Schedule shall be amended to reflect the withdrawal of the repurchased Mortgage Loan
from this Agreement and, if applicable, the substitution of the applicable Qualified Substitute
Mortgage Loan or Loans.

     If pursuant to this Section 3.03 the Originator repurchases or substitutes a Mortgage Loan
that is a MERS Mortgage Loan, the Originator shall, at the Originator’s expense, either (i) cause
MERS to execute and deliver an Assignment of Mortgage in recordable form to transfer the Mortgage
from MERS to the Originator and shall cause such Mortgage to be removed from registration on the
MERS® System in accordance with MERS’ rules and regulations or (ii) cause MERS to designate on the
MERS® System the Originator as the beneficial holder of such Mortgage Loan.

     As to any Deleted Mortgage Loan for which the Originator substitutes a Qualified Substitute
Mortgage Loan or Loans, the Originator shall effect such substitution by delivering to the
Purchaser or its designee for such Qualified Substitute Mortgage Loan or Loans the Mortgage File
and such other documents and agreements as are required by the Pooling and Servicing Agreement,
with the Mortgage Note endorsed as required therein. No substitution is permitted to be made in
any calendar month after the Determination Date for such month.

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     The amount, if any, by which (x) the aggregate principal balance of all such Qualified
Substitute Mortgage Loans as of the date of substitution is less than (y) the sum of the aggregate
Stated Principal Balance of all such Deleted Mortgage Loans (after application of the scheduled
principal portion of the monthly payments due in the month of substitution) (the “Substitution
Adjustment Amount”) plus an amount equal to the aggregate of any unreimbursed Advances with respect
to such Deleted Mortgage Loans shall be deposited in the Collection Account by the Originator on or
before the Business Day immediately preceding the Distribution Date in the month succeeding the
calendar month during which the Originator became obligated hereunder to repurchase or replace the
related Mortgage Loan. Upon any such substitution and the deposit to the Collection Account of any
required Substitution Adjustment Amount, the Trustee or the custodian, as applicable, shall release
the Mortgage File held for the benefit of the Certificateholders relating to such Deleted Mortgage
Loan and shall execute and deliver at the Originator’s direction such instruments of transfer or
assignment prepared by the Originator, in each case without recourse, as shall be necessary to
transfer title to the Originator, or its designee, of the Trustee’s interest in any Deleted
Mortgage Loan substituted pursuant to this Section 3.03. Upon such substitution, the Qualified
Substitute Mortgage Loans shall be subject to the terms of this Agreement in all respects, and the
Originator shall be deemed to have made with respect to such Qualified Substitute Mortgage Loan or
Loans, as of the date of substitution, the covenants, representations and warranties set forth in
Subsections 3.01 and 3.02 hereof.

     One or more mortgage loans may be substituted for one or more Deleted Mortgage Loans,
provided, however, that any such substitution shall not be effected prior to the delivery to the
Trustee and the Trust Administrator of an Opinion of Counsel required by Section 2.04 of the
Pooling and Servicing Agreement, if any. The determination of whether a mortgage loan is a
Qualified Substitute Mortgage Loan may be satisfied on an individual basis. Alternatively, if more
than one mortgage loan is to be substituted for one or more Deleted Mortgage Loans, the
characteristics of such mortgage loans and Deleted Mortgage Loans shall be aggregated or calculated
on a weighted average basis, as applicable, in determining whether such mortgage loans are
Qualified Substitute Mortgage Loans.

     In the event that the Originator shall have repurchased a Mortgage Loan, the Purchase Price
therefor shall be deposited in the Collection Account on or before the Business Day immediately
preceding the Distribution Date in the month following the month during which the Originator became
obligated hereunder to repurchase or replace such Mortgage Loan and upon such deposit of the
Purchase Price and receipt of a Request for Release in the form of Exhibit J to the Pooling and
Servicing Agreement, the Trustee or the custodian, as applicable, shall release the related
Mortgage File held for the benefit of the Certificateholders to the Originator or its designee, and
the Trustee shall execute and deliver at such Person’s direction such instruments of transfer or
assignment prepared by such Person, in each case without recourse, as shall be necessary to
transfer title to the Originator or its designee of the Trustee’s interest in such Mortgage Loan.

     It is understood and agreed that the representations and warranties set forth in Section 3.01
shall survive delivery of the respective Mortgage Files to the Trustee on behalf of the Purchaser.

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     It is understood and agreed that the obligations of the Originator set forth in this Section
3.03 to cure, repurchase or substitute for a defective Mortgage Loan and to indemnify the Purchaser
as provided in Section 5.01 constitute the sole remedies of the Purchaser respecting a missing or
defective document or a breach of the representations and warranties contained in 3.01.

ARTICLE IV

ORIGINATOR’S COVENANTS

     Section 4.01. Covenants of the Originator.

     The Originator hereby covenants that except for the transfer hereunder, it will not sell,
pledge, assign or transfer to any other Person, or grant, create, incur, assume or suffer to exist
any Lien on any Mortgage Loan, or any interest therein; it will notify the Trustee, as assignee of
the Purchaser, of the existence of any Lien on any Mortgage Loan immediately upon discovery
thereof; and it will defend the right, title and interest of the Trustee, as assignee of the
Purchaser, in, to and under the Mortgage Loans, against all claims of third parties claiming
through or under the Originator; provided, however, that nothing in this Section 4.01 shall prevent
or be deemed to prohibit the Originator from suffering to exist upon any of the Mortgage Loans any
Liens for municipal or other local taxes and other governmental charges if such taxes or
governmental charges shall not at the time be due and payable or if the Originator shall currently
be contesting the validity thereof in good faith by appropriate proceedings and shall have set
aside on its books adequate reserves with respect thereto.

ARTICLE V

INDEMNIFICATION WITH RESPECT TO THE MORTGAGE LOANS

     Section 5.01. Indemnification.

     (a) The Originator agrees to indemnify and to hold the Purchaser, each of its officers and
directors and each person or entity who controls the Purchaser or such person, the Trustee and each
Certificateholder harmless against any and all claims, losses, penalties, fines, forfeitures, legal
fees and related costs, judgments, and any other costs, fees and expenses that the Purchaser or any
such person or entity and any Certificateholder may sustain in any way (i) related to the failure
of the Originator to perform its duties in compliance with the terms of this Agreement, (ii)
arising from a breach by the Originator of its representations and warranties in Section 3.01 or
(iii) related to the origination or prior servicing of the Mortgage Loans by reason of any acts,
omissions, or alleged acts or omissions of the Originator or any servicer. The Originator shall
promptly notify the Purchaser and the Trustee if a claim is made by a third party with respect to
this Agreement. The Originator shall assume the defense of any such claim and pay all expenses in
connection therewith, including reasonable counsel fees, and promptly pay, discharge and satisfy
any judgment or decree which may be entered against the Purchaser or any such person or entity
and/or the Trustee or any Certificateholder in respect of such claim.

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ARTICLE VI

TERMINATION

     Section 6.01. Termination.

     The respective obligations and responsibilities of the Originator and the Purchaser created
hereby shall terminate, except for the Originator’s indemnity obligations as provided herein, upon
the termination of the Trust as provided in Article IX of the Pooling and Servicing Agreement.

ARTICLE VII

MISCELLANEOUS PROVISIONS

     Section 7.01. Amendment.

     This Agreement may be amended from time to time by the Originator and the Purchaser by written
agreement signed by the parties hereto.

     Section 7.02. Governing Law.

     This Agreement shall be governed by and construed in accordance with the laws of the State of
New York, without regard to its material conflict of laws rules (except for Section 5-1401 of the
General Obligations Law which shall apply hereto), and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.

     Section 7.03. Notices.

     All demands, notices and communications hereunder shall be in writing and shall be deemed to
have been duly given if personally delivered at or mailed by registered mail, postage prepaid,
addressed as follows:

if to the Originator:

Fremont Investment & Loan

2727 East Imperial Highway

Brea, California 92821

Attention: Senior Vice President — Finance

with a copy to:

Fremont General Corporation

2425 Olympic Boulevard

Santa Monica, California 90404

Attention: General Counsel

or such other address as may hereafter be furnished to the Purchaser in writing by the Originator.

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if to the Purchaser:

Fremont Mortgage Securities Corporation

2727 East Imperial Highway

Brea, California 92821

Attention: Senior Vice President — Treasurer

with a copy to:

Fremont General Corporation

2425 Olympic Boulevard

Santa Monica, California 90404

Attention: General Counsel

or such other address as may hereafter be furnished to Fremont in writing by the Purchaser.

     Section 7.04. Severability of Provisions.

     If any one or more of the covenants, agreements, provisions or terms of this Agreement shall
be held invalid for any reason whatsoever, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the other provisions of this
Agreement.

     Section 7.05. Counterparts.

     This Agreement may be executed in one or more counterparts and by the different parties hereto
on separate counterparts, which may be transmitted by telecopier each of which, when so executed,
shall be deemed to be an original and such counterparts, together, shall constitute one and the
same agreement.

     Section 7.06. Further Agreements.

     The parties hereto each agree to execute and deliver to the other such additional documents,
instruments or agreements as may be necessary or reasonable and appropriate to effectuate the
purposes of this Agreement or in connection with the issuance of any Series of Certificates
representing interests in the Mortgage Loans.

     Without limiting the generality of the foregoing, as a further inducement for the Purchaser to
purchase the Mortgage Loans from the Originator, the Originator will cooperate with the Purchaser
in connection with the sale of any of the securities representing interests in the Mortgage Loans.
In that connection, the Originator will provide to the Purchaser any and all information and
appropriate verification of information, whether through letters of its auditors and counsel or
otherwise, as the Purchaser shall reasonably request and will provide to the Purchaser such
additional representations and warranties, covenants, opinions of counsel, letters from auditors,
and certificates of public officials or officers of the Originator as are reasonably required in
connection with such transactions and the offering of investment grade securities rated by the
Rating Agencies.

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     Without limiting the foregoing, the Originator agrees to deliver to the Purchaser the
following documents and opinions in connection with the issuance of the Fremont Home Loan Trust
2006-E, Mortgage-Backed Certificates, Series 2006-E (the “Certificates”) on or before the Closing
Date:

     • one or more opinions of counsel addressed to the Purchaser, and to
any Person designated by the Purchaser, in a form reasonably acceptable to the
Purchaser, from counsel to the Originator as to due incorporation and good
standing, due authorization, execution and delivery by Fremont of related
agreements for which Fremont is a signatory; the enforceability of such
documents by Fremont; and other corporate matters;

     • an opinion of counsel to the Originator, addressed to the
Purchaser, and to any Person designated by the Purchaser, in a form acceptable
to the Purchaser, addressing the characterization of the transfer of the
Mortgage Loans from the Originator to the Purchaser;

     • an indemnification agreement executed by and among Fremont,
Goldman, Sachs & Co., Barclays Capital Inc., Deutsche Bank Securities Inc.,
Greenwich Capital Markets, Inc., Keefe, Bruyette and Woods and Lehman Brothers
Inc. (collectively, the “Underwriters”) for losses as a result of material
misstatements and omissions in the information provided by or on behalf of the
parties thereto and their affiliates for inclusion in the prospectus supplement
or any other offering document relating to the Certificates; and

     • a statement rendered by counsel for Fremont to the Purchaser and
the Underwriters as to the lack of material misstatements and omissions in the
information provided by Fremont for inclusion in the prospectus supplement or
any other offering document relating to the Certificates.

     In addition, the Originator shall sign the certification for the benefit of Wells Fargo Bank,
N.A., relating to the Form 10-K relating to the Trust to be filed on or before March 31, 2007.
The Originator shall execute the Pooling and Servicing Agreement in its capacity as originator and
servicer and will make the representations and warranties set forth in Sections 3.01 and 3.02
herein to the Trustee in the Pooling and Servicing Agreement.

     Section 7.07. Intention of the Parties.

     It is the intention of the parties that the Purchaser is purchasing, and the Originator is
selling, the Mortgage Loans rather than pledging such Mortgage Loans to secure a loan by the
Purchaser to the Originator. Accordingly, the parties hereto each intend to treat the transaction
as a sale by the Originator, and a purchase by the Purchaser, of the Mortgage Loans. The Purchaser
will have the right to review the Mortgage Loans and the related Mortgage Files to determine the
characteristics of the Mortgage Loans which will affect the federal income tax consequences of
owning the Mortgage Loans and the Originator will cooperate with all reasonable requests made by
the Purchaser in the course of such review.

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     Section 7.08. Successors and Assigns: Assignment of Purchase Agreement.

     This Agreement shall bind and inure to the benefit of and be enforceable by the Originator,
the Purchaser and the Trustee. The obligations of the Originator under this Agreement cannot be
assigned or delegated to a third party without the consent of the Purchaser which consent shall be
at the Purchaser’s sole discretion, except that the Purchaser acknowledges and agrees that the
Originator may assign its obligations hereunder to any Person into which the Originator is merged
or any corporation resulting from any merger, conversion or consolidation to which the Originator
is a party or any Person succeeding to the business of the Originator. The parties hereto
acknowledge that the Purchaser is acquiring the Mortgage Loans for the purpose of contributing them
to a trust that will issue a Series of Certificates representing undivided interests in such
Mortgage Loans. As an inducement to the Purchaser to purchase the Mortgage Loans, the Originator
acknowledges and consents to the assignment by the Purchaser directly or indirectly through an
affiliate to the Trustee of all of the Purchaser’s rights against the Originator pursuant to this
Agreement insofar as such rights relate to Mortgage Loans transferred to the Trustee and to the
enforcement or exercise of any right or remedy against the Originator pursuant to this Agreement by
the Trustee. Such enforcement of a right or remedy by the Trustee shall have the same force and
effect as if the right or remedy had been enforced or exercised by the Purchaser directly.

     Section 7.09. Survival.

     The representations and warranties set forth in Sections 3.01 and 3.02 and the provisions of
Article V hereof shall survive the purchase of the Mortgage Loans hereunder.

     Section 7.10. Third Party Beneficiaries.

     The Trustee and the Trust Administrator are the intended third-party beneficiaries of this
Agreement.

     Section 7.11. Confidentiality.

     The parties hereto understand and agree that personal information relating to the borrowers
under the Mortgage Loans subject of this Agreement, including, names, addresses, social security
numbers and/or other identifying information (collectively, the “Borrower Information”) is
confidential, and the Purchaser, and each person that acquires an interest in the Mortgage Loans
through the Purchaser, agrees to hold such Borrower Information confidential and not to divulge
such information to anyone except (a) to the extent required by law or judicial order or to enforce
its rights or remedies under any agreements executed in connection with the sale contemplated
hereunder or any agreements executed in connection with the securitization of the Mortgage Loans,
(b) to the extent such information enters into the public domain other than through the wrongful
act of the Purchaser or any person that acquires an interest in the Mortgage Loans through the
Purchaser or (c) as is necessary in working with legal counsel, auditors, agents, rating agencies,
taxing authorities or other governmental agencies.

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     IN WITNESS WHEREOF, the Originator and the Purchaser have caused their names to be signed to
this Mortgage Loan Purchase Agreement by their respective officers thereunto duly authorized as of
the day and year first above written.

	 	 	 	 	 
	 	FREMONT MORTGAGE SECURITIES
CORPORATION, as Purchaser

 	 
	 	By:  	/s/ Jeff Cruinberry
 	 
	 	 	Name:  	Jeff Crusinberry 	 
	 	 	Title:  	Vice President 	 
	 
	 	FREMONT INVESTMENT & LOAN,

as Originator

 	 
	 	By:  	/s/ Jeff Crusinberry
 	 
	 	 	Name:  	Jeff Crusinberry 	 
	 	 	Title:  	Senior Vice President 	 
	 

(Signature Page One to Mortgage Loan Purchase Agreement)

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	STATE OF CALIFORNIA
	 	)
	 
	 	) ss.:
	COUNTY OF ORANGE
	 	)

     On the 6th day of December, 2006 before me, a Notary Public in and for said
State, personally appeared Jeff Crusinberry, known to me to be an officer of FREMONT MORTGAGE
SECURITIES CORPORATION, the corporation that executed the within instrument, and also known to me
to be the person who executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year
in this certificate first above written.

	 	 	 
	/s/ E.C. Chavez
 

	 	 
	 
	 	 
	E.C. Chavez
	 	 
	COMM. #1572716
	 	 
	Notary Public — California
	 	 
	San Bernardino County
	 	 
	My Comm. Expires Apr. 24, 2009
	 	 

(Notary Page — Mortgage Loan Purchase Agreement)

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	STATE OF CALIFORNIA
	 	)
	 
	 	) ss.:
	COUNTY OF ORANGE
	 	)

     On the 6th day of December, 2006 before me, a Notary Public in and for said
State, personally appeared Jeff Crusinberry, known to me to be an officer of FREMONT INVESTMENT &
LOAN, the corporation that executed the within instrument, and also known to me to be the person
who executed it on behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.

     IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year
in this certificate first above written.

	 	 	 
	/s/ E.C. Chavez
 

	 	 
	 
	 	 
	E.C. Chavez
	 	 
	COMM. #1572716
	 	 
	Notary Public — California
	 	 
	San Bernardino County
	 	 
	My Comm. Expires Apr. 24, 2009
	 	 

(Notary Page — Mortgage Loan Purchase Agreement)

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EXHIBIT A

Representations and Warranties Relating to the Mortgage Loans

     I. The Originator hereby represents and warrants to the Purchaser, with respect to each
Mortgage Loan that is a Mortgage Loan as of the Closing Date (or in the case of certain specified
representations and warranties, as of the Cut-off Date) or as of such other date specifically
provided herein (except that with respect to any Qualified Substitute Mortgage Loan such
representations and warranties shall be as of the date of substitution and made by the Originator),
that:

     (a) Mortgage Loans as Described. The information set forth in the Mortgage Loan
Schedule is complete, true and correct in all material respects as of the Cut-off Date;

     (b) Payments Current. As of the Closing Date, other than with respect to not more
than 0.50% of the Mortgage Loans by outstanding principal balance, all payments required to be made
up to the Closing Date for the Mortgage Loan under the terms of the Mortgage Note, other than
payments not yet one month delinquent, have been made and credited. No payment required under the
Mortgage Loan is 90 days or more delinquent;

     (c) No Outstanding Charges. As of the Closing Date, other than payments due but not
yet one month or more delinquent, there are no defaults in complying with the terms of the
Mortgage, and all taxes, governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously became due and owing have been paid,
or an escrow of funds has been established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed but is not yet due and payable. The Originator has not
advanced funds, or induced, solicited or knowingly received any advance of funds by a party other
than the Mortgagor, directly or indirectly, for the payment of any amount required under the
Mortgage Loan, except for interest accruing from the date of the Mortgage Note or date of
disbursement of the Mortgage Loan proceeds, whichever is earlier, to the date which precedes by one
month the Due Date of the first installment of principal and interest;

     (d) Original Terms Unmodified. The terms of the Mortgage Note and Mortgage have not
been impaired, waived, altered or modified in any respect, from the date of origination except by a
written instrument which has been recorded, if necessary to protect the interests of the Purchaser,
and which has been delivered to the Custodian or to such other Person as the Purchaser shall
designate in writing, and the terms of which are reflected in the Mortgage Loan Schedule. No
Mortgage Loan has been modified so as to restructure the payment obligations or re-age the Mortgage
Loan. The substance of any such waiver, alteration or modification has been approved by the title
insurer, if any, to the extent required by the policy, and its terms are reflected on the Mortgage
Loan Schedule, if applicable. No Mortgagor has been released, in whole or in part, except in
connection with an assumption agreement, approved by the title insurer, to the extent required by
the policy, and which assumption agreement is part of the Mortgage Loan File delivered to the
Custodian or to such other Person as the Purchaser shall designate in writing and the terms of
which are reflected in the Mortgage Loan Schedule;

A-1
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     (e) No Defenses. The Mortgage Loan is not subject to any right of rescission,
set-off, counterclaim or defense, including without limitation the defense of usury, nor will the
operation of any of the terms of the Mortgage Note or the Mortgage, or the exercise of any right
thereunder, render either the Mortgage Note or the Mortgage unenforceable, in whole or in part, or
subject to any right of rescission, set-off, counterclaim or defense, including without limitation
the defense of usury, and no such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto, and no Mortgagor was a debtor in any state or federal bankruptcy or
insolvency proceeding at, or subsequent to, the time the Mortgage Loan was originated;

     (f) Hazard Insurance. Pursuant to the terms of the Mortgage, all buildings or other
improvements upon the Mortgaged Property are insured by a generally acceptable insurer against loss
by fire, hazards of extended coverage and such other hazards as are customary in the area where the
Mortgaged Property is located. If required by the National Flood Insurance Act of 1968, as
amended, each Mortgage Loan is covered by a flood insurance policy meeting the requirements of the
current guidelines of the Federal Insurance Administration as in effect. All individual insurance
policies contain a standard mortgagee clause naming the Originator and its successors and assigns
as mortgagee, and all premiums thereon have been paid and such policies may not be reduced,
terminated or cancelled without 30 days’ prior written notice to the mortgagee. The Mortgage
obligates the Mortgagor thereunder to maintain the hazard insurance policy at the Mortgagor’s cost
and expense, and on the Mortgagor’s failure to do so, authorizes the holder of the Mortgage to
obtain and maintain such insurance at such Mortgagor’s cost and expense, and to seek reimbursement
therefor from the Mortgagor. Where required by state law or regulation, the Mortgagor has been
given an opportunity to choose the carrier of the required hazard insurance, provided the policy is
not a “master” or “blanket” hazard insurance policy covering a condominium, or any
hazard insurance policy covering the common facilities of a planned unit development. The hazard
insurance policy is the valid and binding obligation of the insurer, is in full force and effect,
and will be in full force and effect and inure to the benefit of the Purchaser upon the
consummation of the transactions contemplated by this Agreement. The Originator has not engaged
in, and has no knowledge of the Mortgagor’s or any servicer’s having engaged in, any act or
omission which would impair the coverage of any such policy, the benefits of the endorsement
provided for herein, or the validity and binding effect of such policy, including, without
limitation, no unlawful fee, commission, kickback or other unlawful compensation or value of any
kind has been or will be received, retained or realized by any attorney, firm or other person or
entity, and no such unlawful items have been received, retained or realized by the Originator;

     (g) Compliance with Applicable Laws. Any and all requirements of any federal, state
or local law including, without limitation, usury, truth-in-lending, real estate settlement
procedures, consumer credit protection, equal credit opportunity and disclosure laws, all
predatory, abusive and fair lending laws or unfair and deceptive practices laws applicable to the
Mortgage Loan, including, without limitation, any provisions relating to Prepayment Penalties, have
been complied with; the consummation of the transactions contemplated hereby will not involve the
violation of any such laws or regulations. Originator shall maintain in its possession, available
for the Purchaser’s inspection, and shall deliver to the Purchaser upon demand, evidence of
compliance with all such requirements;

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     (h) No Satisfaction of Mortgage. The Mortgage has not been satisfied, canceled,
subordinated or rescinded, in whole or in part, and the Mortgaged Property has not been released
from the lien of the Mortgage, in whole or in part, nor has any instrument been executed that would
effect any such release, cancellation, subordination or rescission. The Originator has not waived
the performance by the Mortgagor of any action, if the Mortgagor’s failure to perform such action
would cause the Mortgage Loan to be in default, nor has the Originator waived any default resulting
from any action or inaction by the Mortgagor;

     (i) Location and Type of Mortgaged Property. The Mortgaged Property is a fee simple
property located in the state identified in the Mortgage Loan Schedule except that with respect to
real property located in jurisdictions in which the use of leasehold estates for residential
properties is a widely-accepted practice, the Mortgaged Property may be a leasehold estate and
consists of a single parcel of real property with a detached single family residence erected
thereon, or a two- to four-family dwelling, or an individual residential condominium unit in a
low-rise condominium project, or an individual unit in a planned unit development and that no
residence or dwelling is (i) a mobile home or (ii) a manufactured home. As of the date of
origination, no portion of the Mortgaged Property was used for commercial purposes, and since the
date of origination, no portion of the Mortgaged Property has been used for commercial purposes;
provided, that Mortgaged Properties which contain a home office shall not be considered as being
used for commercial purposes as long as the Mortgaged Property has not been altered for commercial
purposes and is not storing any chemicals or raw materials other than those commonly used for
homeowner repair, maintenance and/or household purposes;

     (j) Valid First or Second Lien. Each Mortgage is a valid and subsisting first or
second lien of record on a single parcel of real estate constituting the Mortgaged Property,
including all buildings and improvements on the Mortgaged Property and all installations and
mechanical, electrical, plumbing, heating and air conditioning systems located in or annexed to
such buildings, and all additions, alterations and replacements made at any time, with respect to
the related Mortgage Loan, which exceptions are generally acceptable to prudent mortgage lending
companies, and such other exceptions to which similar properties are commonly subject and which do
not individually, or in the aggregate, materially and adversely affect the benefits of the security
intended to be provided by such Mortgage. The lien of the Mortgage is subject only to:

     (i) the lien of current real property taxes and assessments not yet due and payable;

     (ii) covenants, conditions and restrictions, rights of way, easements and other matters
of the public record as of the date of recording acceptable to prudent mortgage lending
institutions generally and specifically referred to in the lender’s title insurance policy
delivered to the originator of the Mortgage Loan and (A) specifically referred to or
otherwise considered in the appraisal made for the originator of the Mortgage Loan or (B)
which do not adversely affect the Appraised Value of the Mortgaged Property set forth in
such appraisal;

     (iii) with respect to each second lien Mortgage, the first or senior lien on the
related Mortgaged Property; and

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     (iv) other matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be provided by the
Mortgage or the use, enjoyment, value or marketability of the related Mortgaged Property.

Any security agreement, chattel mortgage or equivalent document related to and delivered in
connection with the Mortgage Loan establishes and creates a valid, subsisting, enforceable and
perfected first lien and first priority security interest on the property described therein and the
Originator has full right to sell and assign the same to Purchaser;

     (k) Validity of Mortgage Documents. The Mortgage Note and the Mortgage and any other
agreement executed and delivered by a Mortgagor in connection with a Mortgage Loan are genuine, and
each is the legal, valid and binding obligation of the maker thereof enforceable in accordance with
its terms (including, without limitation, any provisions therein relating to Prepayment Penalties),
except as such enforcement may be limited by bankruptcy, insolvency, reorganization, receivership,
moratorium or other similar laws relating to or affecting the rights of creditors generally, and by
general equity principles (regardless of whether such enforcement is considered a proceeding in
equity or a law). All parties to the Mortgage Note, the Mortgage and any other such related
agreement had legal capacity to enter into the Mortgage Loan and to execute and deliver the
Mortgage Note, the Mortgage and any such agreement, and the Mortgage Note, the Mortgage and any
other such related agreement have been duly and properly executed by other such related parties.
The documents, instruments and agreements submitted for loan underwriting were not falsified and
contain no untrue statement of material fact or omit to state a material fact required to be stated
therein or necessary to make the information and statements therein not misleading. No fraud,
error, omission, misrepresentation, gross negligence or similar occurrence with respect to a
Mortgage Loan has taken place on the part of any Person, including without limitation, the
Mortgagor, any appraiser, any builder or developer, or any other party involved in the origination
or servicing of the Mortgage Loan. The Originator has reviewed all of the documents constituting
the Servicing File;

     (l) Full Disbursement of Proceeds. The Mortgage Loan has been closed and the proceeds
of the Mortgage Loan have been fully disbursed and there is no requirement for future advances
thereunder, and any and all requirements as to completion of any on-site or off-site improvement
and as to disbursements of any escrow funds therefor have been complied with. All costs, fees and
expenses incurred in making or closing the Mortgage Loan and the recording of the Mortgage were
paid, and the Mortgagor is not entitled to any refund of any amounts paid or due under the Mortgage
Note or Mortgage;

     (m) Ownership. Immediately prior to the sale of the Mortgage Loan hereunder on the
Closing Date, the Originator is the sole owner of record and holder of the Mortgage Loan and the
indebtedness evidenced by each Mortgage Note and upon the sale of the Mortgage Loans to the
Purchaser, the Originator will retain the Mortgage Files or any part thereof not delivered to the
Custodian, the Purchaser or the Purchaser’s designee, in trust only for the purpose of servicing
and supervising the servicing of each Mortgage Loan. The Mortgage Loan is not assigned or pledged,
and the Originator has good, indefeasible and marketable title thereto, and has full right to
transfer and sell the Mortgage Loan to the Purchaser free and clear of any encumbrance, equity,
participation interest, lien, pledge, charge, claim or security interest, and has full right and

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authority subject to no interest or participation of, or agreement with, any other party, to
sell and assign each Mortgage Loan pursuant to this Agreement and following the sale of each
Mortgage Loan, the Purchaser will own such Mortgage Loan free and clear of any encumbrance, equity,
participation interest, lien, pledge, charge, claim or security interest. The Originator intends
to relinquish all rights to possess, control and monitor the Mortgage Loan. After the Closing
Date, the Originator will have no right to modify or alter the terms of the sale of the Mortgage
Loan and the Originator will have no obligation or right to repurchase the Mortgage Loan or
substitute another Mortgage Loan, except as provided in this Agreement;

     (n) Doing Business. All parties which have had any interest in the Mortgage Loan,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period in which they held
and disposed of such interest, were) (i) in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Mortgaged Property is located, and (ii) either
(A) organized under the laws of such state, or (B) qualified to do business in such state, or (C) a
federal savings and loan association, a savings bank or a national bank having a principal office
in such state, or (iii) not doing business in such state;

     (o) LTV. Other than with respect to one Mortgage Loan representing not more than
0.01% of the Mortgage Loans by outstanding principal balance, no Mortgage Loan was originated with
an LTV greater than 100%;

     (p) Title Insurance. The Mortgage Loan is covered by an ALTA lender’s title insurance
policy, or with respect to any Mortgage Loan for which the related Mortgaged Property is located in
California a CLTA lender’s title insurance policy, and each such title insurance policy is issued
by a title insurer and qualified to do business in the jurisdiction where the Mortgaged Property is
located, insuring the Originator, its successors and assigns, as to the first or second priority
lien of the Mortgage in the original principal amount of the Mortgage Loan, subject only to the
exceptions contained in clauses (i), (ii) and (iv) of paragraph (j) above and in the case of second
liens, the exception contained in clause (iii) of paragraph (j) above, and in the case of
Adjustable Rate Mortgage Loans, against any loss by reason of the invalidity or unenforceability of
the lien resulting from the provisions of the Mortgage providing for adjustment to the Mortgage
Interest Rate and Monthly Payment. Where required by state law or regulation, the Mortgagor has
been given the opportunity to choose the carrier of the required mortgage title insurance.
Additionally, such lender’s title insurance policy affirmatively insures ingress and egress, and
against encroachments by or upon the Mortgaged Property or any interest therein. The title policy
does not contain any special exceptions (other than the standard exclusions) for zoning and uses
and has been marked to delete the standard survey exception or to replace the standard survey
exception with a specific survey reading. The Originator, its successor and assigns, are the sole
insureds of such lender’s title insurance policy, and such lender’s title insurance policy is valid
and remains in full force and effect and will be in force and effect upon the consummation of the
transactions contemplated by this Agreement. No claims are pending under such lender’s title
insurance policy, and no prior holder of the related Mortgage, including the Originator, has done,
by act or omission, anything which would impair the coverage of such lender’s title insurance
policy, including without limitation, no unlawful fee, commission, kickback or other unlawful
compensation or value of any kind has been or will be received, retained or realized by any
attorney, firm or other person or entity, and no such unlawful items have been received, retained
or realized by the Originator;

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     (q) No Defaults. As of the Closing Date, other than with respect to not more than
0.50% of the Mortgage Loans by outstanding principal balance, and other than payment delinquencies
of less than one month, there is no default, breach, violation or event which would permit
acceleration existing under the Mortgage or the Mortgage Note and no event which, with the passage
of time or with notice and the expiration of any grace or cure period, would constitute a default,
breach, violation or event which would permit acceleration, and as of the Closing Date neither the
Originator nor any of its affiliates nor any of their respective predecessors, have waived any
default, breach, violation or event which would permit acceleration; in addition, as of the Closing
Date, no Mortgage Loan was in foreclosure, nor are foreclosure proceedings imminent with respect to
any Mortgage Loan;

     (r) No Mechanics’ Liens. As of the Closing Date, there are no mechanics’ or similar
liens or claims which have been filed for work, labor or material (and no rights are outstanding
that under law could give rise to such liens) affecting the related Mortgaged Property which are or
may be liens prior to, or equal or coordinate with, the lien of the related Mortgage;

     (s) Location of Improvements; No Encroachments. All improvements which were
considered in determining the Appraised Value of the Mortgaged Property lay wholly within the
boundaries and building restriction lines of the Mortgaged Property, and no improvements on
adjoining properties encroach upon the Mortgaged Property. No improvement located on or being part
of the Mortgaged Property is in violation of any applicable zoning law or regulation;

     (t) Origination; Payment Terms. The Mortgage Loan was originated by a mortgagee
approved by the Secretary of Housing and Urban Development pursuant to Sections 203 and 211 of the
National Housing Act, savings and loan association, a savings bank, a commercial bank, credit
union, insurance company or other similar institution which is supervised and examined by a federal
or state authority. The documents, instruments and agreements submitted for loan underwriting were
not falsified and contain no untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the information and statements therein not
misleading. No Mortgage Loan contains terms or provisions which would result in negative
amortization. Principal payments on the Mortgage Loan (other than a Mortgage Loan that does not
provide for payment of principal for a period of twenty-four to thirty-six months after the date of
origination (such Mortgage Loan, an “Interest Only Mortgage Loan”)) commenced no more than sixty
days after funds were disbursed in connection with the Mortgage Loan. The Mortgage Interest Rate
as well as the Lifetime Rate Cap and the Periodic Mortgage Interest Rate Cap are as set forth on
the Mortgage Loan Schedule. With respect to any Mortgage Loan other than an Interest Only Mortgage
Loan and Balloon Mortgage Loan, the Mortgage Note is payable in equal monthly installments of
principal and interest, which installments of interest, with respect to Adjustable Rate Mortgage
Loans, are subject to change due to the adjustments to the Mortgage Interest Rate on each Mortgage
Interest Rate Adjustment Date, with interest calculated and payable in arrears, sufficient to
amortize the Mortgage Loan fully by the stated maturity date, over an original term of not more
than thirty years from commencement of amortization. Each Balloon Mortgage Loan has on original
term to maturity of 30 years and an amortization schedule of 40 years. None of the Mortgage Loans
allows for conversion of the interest rate thereon from an adjustable rate to a fixed rate. No
Mortgage Loan is a simple interest mortgage loan;

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     (u) Customary Provisions. The Mortgage contains customary and enforceable provisions
such as to render the rights and remedies of the holder thereof adequate for the realization
against the Mortgaged Property of the benefits of the security provided thereby, including, (i) in
the case of a Mortgage designated as a deed of trust, by trustee’s sale, and (ii) otherwise by
judicial foreclosure. Upon default by a Mortgagor on a Mortgage Loan and foreclosure on, or
trustee’s sale of, the Mortgaged Property pursuant to the proper procedures, the holder of the
Mortgage Loan will be able to deliver good and merchantable title to the Mortgaged Property. There
is no homestead or other exemption available to a Mortgagor which would interfere with the right to
sell the Mortgaged Property at a trustee’s sale or the right to foreclose the Mortgage, subject to
applicable federal and state laws and judicial precedent with respect to bankruptcy and right of
redemption or similar law;

     (v) Conformance with Underwriting Guidelines. The Mortgage Loan was underwritten in
accordance with the Underwriting Guidelines in effect as of the date of origination of such
Mortgage Loan (as described in the Prospectus Supplement). The Mortgage Note and Mortgage are on
forms generally acceptable to Freddie Mac or Fannie Mae and the Originator has not made any
representations to a Mortgagor that are inconsistent with the mortgage instruments used;

     (w) Occupancy of the Mortgaged Property. As of the Closing Date the Mortgaged
Property is lawfully occupied under applicable law. All inspections, licenses and certificates
required to be made or issued with respect to all occupied portions of the Mortgaged Property and,
with respect to the use and occupancy of the same, including but not limited to certificates of
occupancy and fire underwriting certificates, have been made or obtained from the appropriate
authorities;

     (x) No Additional Collateral. The Mortgage Note is not and has not been secured by
any collateral except the lien of the corresponding Mortgage and the security interest of any
applicable security agreement or chattel mortgage referred to in clause (j) above;

     (y) Deeds of Trust. In the event the Mortgage constitutes a deed of trust, a trustee,
authorized and duly qualified under applicable law to serve as such, has been properly designated
and currently so serves and is named in the Mortgage, and no fees or expenses are or will become
payable by the Purchaser to the trustee under the deed of trust, except in connection with a
reconveyance of the deed of trust or a trustee’s sale after default by the Mortgagor;

     (z) Condominiums/Planned Unit Developments. If the Mortgaged Property is a condominium
unit or a planned unit development (other than a de minimis planned unit development) such
condominium or planned unit development project is acceptable to Originator and underwritten in
accordance with the Underwriting Guidelines;

     (aa) Transfer of Mortgage Loans. The Assignment of Mortgage with respect to each
Mortgage Loan is in recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property is located. The transfer, assignment and conveyance
of the Mortgage Notes and the Mortgages by the Originator is not subject to the bulk transfer or
similar statutory provisions in effect in any applicable jurisdiction;

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     (bb) Due-On-Sale. The Mortgage contains an enforceable provision (except as such
enforcement may be effected by bankruptcy and insolvency laws or by general principals of equity)
for the acceleration of the payment of the unpaid principal balance of the Mortgage Loan in the
event that the Mortgaged Property is sold or transferred without the prior written consent of the
mortgagee thereunder, and to the best of the Originator’s knowledge, such provision is enforceable;

     (cc) Assumability. None of the Mortgage Loans are, by their terms, assumable;

     (dd) No Buydown Provisions; No Graduated Payments or Contingent Interests. The
Mortgage Loan does not contain provisions pursuant to which Monthly Payments are paid or partially
paid with funds deposited in any separate account established by the Originator, the Mortgagor, or
anyone on behalf of the Mortgagor, or paid by any source other than the Mortgagor nor does it
contain any other similar provisions which may constitute a “buydown” provision. The Mortgage Loan
is not a graduated payment mortgage loan and the Mortgage Loan does not have a shared appreciation
or other contingent interest feature;

     (ee) Consolidation of Future Advances. Any future advances made to the Mortgagor
prior to the Cut-off Date have been consolidated with the outstanding principal amount secured by
the Mortgage, and the secured principal amount, as consolidated, bears a single interest rate and
single repayment term. The lien of the Mortgage securing the consolidated principal amount is
expressly insured as having first or second lien priority, as applicable, by a title insurance
policy, an endorsement to the policy insuring the mortgagee’s consolidated interest or by other
title evidence. The consolidated principal amount does not exceed the original principal amount of
the Mortgage Loan;

     (ff) Mortgaged Property Undamaged; No Condemnation Proceedings. There is no
proceeding pending or, to the best of the Originator’s knowledge, threatened for the total or
partial condemnation of the Mortgaged Property. As of the Closing Date, the Mortgaged Property is
undamaged by waste, fire, earthquake or earth movement, windstorm, flood, tornado or other casualty
so as to affect adversely the value of the Mortgaged Property as security for the Mortgage Loan or
the use for which the premises were intended and each Mortgaged Property is inhabitable under
applicable state and local laws;

     (gg) Collection Practices; Escrow Deposits; Interest Rate Adjustments. The
origination, servicing and collection practices used by the Originator with respect to the Mortgage
Loan have been in all respects in compliance with Accepted Servicing Practices, applicable laws and
regulations, and have been in all respects legal and proper and prudent in the mortgage origination
and servicing business. With respect to escrow deposits and Escrow Payments, all such payments are
in the possession of, or under the control of, the Originator and there exist no deficiencies in
connection therewith for which customary arrangements for repayment thereof have not been made.
All Escrow Payments have been collected in full compliance with state and federal law and the
provisions of the related Mortgage Note and Mortgage. An escrow of funds is not prohibited by
applicable law and has been established in an amount sufficient to pay for every item that remains
unpaid and has been assessed but is not yet due and payable. No escrow deposits or Escrow Payments
or other charges or payments due the Originator have been capitalized under the Mortgage or the
Mortgage Note. All Mortgage

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Interest Rate adjustments have been made in strict compliance with state and federal law and
the terms of the related Mortgage and Mortgage Note on the related Interest Rate Adjustment Date.
If, pursuant to the terms of the Mortgage Note, another index was selected for determining the
Mortgage Interest Rate, the same index was used with respect to each Mortgage Note which required a
new index to be selected, and such selection did not conflict with the terms of the related
Mortgage Note. The Originator executed and delivered any and all notices required under applicable
law and the terms of the related Mortgage Note and Mortgage regarding the Mortgage Interest Rate
and the Monthly Payment adjustments. Any interest required to be paid pursuant to state, federal
and local law has been properly paid and credited;

     (hh) Conversion to Fixed Interest Rate. With respect to Adjustable Rate Mortgage
Loans, the Mortgage Loan is not a Convertible Mortgage Loan;

     (ii) No Violation of Environmental Laws. To the best of the Originator’s knowledge,
the Mortgaged Property is free from any and all toxic or hazardous substances and there exists no
violation of any local, state or federal environmental law, rule or regulation. To the best of the
Originator’s knowledge, there is no pending action or proceeding directly involving the Mortgaged
Property in which compliance with any environmental law, rule or regulation is an issue; there is
no violation of any environmental law, rule or regulation with respect to the Mortgage Property;
and nothing further remains to be done to satisfy in full all requirements of each such law, rule
or regulation constituting a prerequisite to use and enjoyment of said property;

     (jj) Servicemembers Civil Relief Act. The Mortgagor has not notified the Originator,
and the Originator has no knowledge of any relief requested or allowed to the Mortgagor under the
Servicemembers Civil Relief Act;

     (kk) Appraisal. The Mortgage File contains an appraisal of the related Mortgaged
Property signed prior to the approval of the Mortgage Loan application by a qualified appraiser,
duly appointed by the related originator, who had no interest, direct or indirect in the Mortgaged
Property or in any loan made on the security thereof, and whose compensation is not affected by the
approval or disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy the
requirements of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 and the
regulations promulgated thereunder, all as in effect on the date the Mortgage Loan was originated;

     (ll) Disclosure Materials. The Mortgagor has received all disclosure materials
required by, and the Originator has complied with, all applicable law with respect to the making of
the Mortgage Loans;

     (mm) Construction or Rehabilitation of Mortgaged Property. No Mortgage Loan was made
in connection with the construction or rehabilitation of a Mortgaged Property or facilitating the
trade-in or exchange of a Mortgaged Property;

     (nn) Value of Mortgaged Property. The Originator has no knowledge of any
circumstances existing that could reasonably be expected to adversely affect the value or the
marketability of any Mortgaged Property or Mortgage Loan or to cause the Mortgage Loans to

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prepay during any period materially faster or slower than similar mortgage loans originated to
the same Underwriting Guidelines held by the Originator generally secured by properties in the same
geographic area as the related Mortgaged Property;

     (oo) No Defense to Insurance Coverage. The Originator has caused or will cause to be
performed any and all acts required to preserve the rights and remedies of the Purchaser in any
insurance policies applicable to the Mortgage Loans including, without limitation, any necessary
notifications of insurers, assignments of policies or interests therein, and establishments of
coinsured, joint loss payee and mortgagee rights in favor of the Purchaser. No action has been
taken or failed to be taken, no event has occurred and no state of facts exists or has existed on
or prior to the Closing Date (whether or not known to the Originator on or prior to such date)
which has resulted or will result in an exclusion from, denial of, or defense to coverage under any
applicable, special hazard insurance policy, or bankruptcy bond (including, without limitation, any
exclusions, denials or defenses which would limit or reduce the availability of the timely payment
of the full amount of the loss otherwise due thereunder to the insured) whether arising out of
actions, representations, errors, omissions, negligence, or fraud of the Originator, the related
Mortgagor or any party involved in the application for such coverage, including the appraisal,
plans and specifications and other exhibits or documents submitted therewith to the insurer under
such insurance policy, or for any other reason under such coverage, but not including the failure
of such insurer to pay by reason of such insurer’s breach of such insurance policy or such
insurer’s financial inability to pay;

     (pp) Escrow Analysis. With respect to each Mortgage with an Escrow Account, the
Originator has within the last twelve months (unless such Mortgage was originated within such
twelve month period) analyzed the required Escrow Payments for each Mortgage and adjusted the
amount of such payments so that, assuming all required payments are timely made, any deficiency
will be eliminated on or before the first anniversary of such analysis, or any overage will be
refunded to the Mortgagor, in accordance with RESPA and any other applicable law;

     (qq) Prior Servicing. Each Mortgage Loan has been serviced in all material respects
in compliance with Accepted Servicing Practices and the Originator has reported or caused to be
reported, the Mortgagor credit files to each of the three primary credit repositories monthly in a
timely manner;

     (rr) Leaseholds. If the Mortgage Loan is secured by a long-term residential lease, (i)
the lessor under the lease holds a fee simple interest in the land; (ii) the terms of such lease
expressly permit the mortgaging of the leasehold estate, the assignment of the lease without the
lessor’s consent and the acquisition by the holder of the Mortgage of the rights of the lessee upon
foreclosure or assignment in lieu of foreclosure or provide the holder of the Mortgage with
substantially similar protections; (iii) the terms of such lease do not (A) allow the termination
thereof upon the lessee’s default without the holder of the Mortgage being entitled to receive
written notice of, and opportunity to cure, such default, (B) allow the termination of the lease in
the event of damage or destruction as long as the Mortgage is in existence, (C) prohibit the holder
of the Mortgage from being insured (or receiving proceeds of insurance) under the hazard insurance
policy or policies relating to the Mortgaged Property or (D) permit any increase in rent other than
pre-established increases set forth in the lease; (iv) the original term of such lease is not less
than 15 years; (v) the term of such lease does not terminate earlier than five years after

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the maturity date of the Mortgage Note; and (vi) the Mortgaged Property is located in a
jurisdiction in which the use of leasehold estates in transferring ownership in residential
properties is a widely accepted practice;

     (ss) Prepayment Premiums. The Mortgage Loan is subject to a prepayment penalty as
provided in the related Mortgage Note except as set forth on the Mortgage Loan Schedule. With
respect to each Mortgage Loan that has a prepayment penalty feature, each such prepayment penalty
is enforceable and will be enforced by the Originator, as servicer of the Mortgage Loan, for the
benefit of the Purchaser, and each prepayment penalty is permitted pursuant to federal, state and
local law. Each such prepayment penalty is in an amount equal to the maximum amount permitted
under applicable law and no such prepayment penalty may be imposed for a term in excess of three
(3) years. With respect to any Mortgage Loan that contains a provision permitting imposition of a
prepayment penalty upon a prepayment prior to maturity: (i) prior to the loan’s origination, the
borrower agreed to such prepayment penalty in exchange for a monetary benefit, including but not
limited to a rate or fee reduction, (ii) originator has available programs that offered the option
of obtaining a mortgage loan that did not require payment of such a prepayment penalty and prior to
the Mortgage Loan’s origination, the Mortgage Loan was available to the Mortgagor with and without
the prepayment penalty, (iii) the prepayment penalty was disclosed to the borrower in the loan
documents pursuant to applicable state and federal law, and (iv) notwithstanding any state or
federal law to the contrary, the Servicer shall not impose such prepayment penalty in any instance
when the mortgage debt is accelerated as the result of the borrower’s default in making the loan
payments;

     (tt) Predatory Lending Regulations. None of the Mortgage Loans are (i) subject to the
Home Ownership and Equity Protection Act of 1994 as amended or (ii) in violation of, or classified
as “high cost”, “threshold”, “covered”, “high risk” or “predatory” loans under, any other
applicable state, federal or local law (or a similarly classified loan using different terminology
under a law imposing heightened regulatory scrutiny or additional legal liability for residential
mortgage loans having high interest rates, points and/or fees);

     (uu) Single-Premium Credit Life Insurance Policy. In connection with the origination
of any Mortgage Loan, no proceeds from any Mortgage Loan were used to finance or acquire
single-premium credit insurance policies. No Mortgagor was required to purchase any credit life,
disability, accident or health insurance product as a condition of obtaining the extension of
credit. No Mortgagor obtained a prepaid single-premium credit life, credit disability, credit
unemployment, credit property, accident or health insurance policy in connection with the
origination of the Mortgage Loan;

     (vv) Tax Service Contract; Flood Certification Contract. Each first lien Mortgage
Loan is covered by a paid in full, life of loan, tax service contract and a paid in full, life of
loan, flood certification contract and each of these contracts is assignable to the Purchaser;

     (ww) Qualified Mortgage. Each Mortgage Loan is a “qualified mortgage” within the
meaning of Section 860G(a)(3) of the Code and Treasury Regulation Section 1.860G-2;

     (xx) Regarding the Mortgagor. The Mortgagor is one or more natural persons and/or
trustees for an Illinois land trust;

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     (yy) Recordation. Each original Mortgage was recorded and, except for those Mortgage
Loans subject to the MERS identification system, all subsequent assignments of the original
Mortgage (other than the assignment to the Purchaser) have been recorded in the appropriate
jurisdictions wherein such recordation is necessary to perfect the lien thereof as against
creditors of the Originator, or is in the process of being recorded;

     (zz) Credit Scores. Except as permitted by the Underwriting Guidelines, each Mortgagor
has a non-zero credit score;

     (aaa) Compliance with Anti-Money Laundering Laws. The Originator has complied with
all applicable anti-money laundering laws and regulations, including without limitation the USA
Patriot Act of 2001 (collectively, the “Anti-Money Laundering Laws”); to the extent
required to comply with the Anti-Money Laundering Laws, as of the Closing Date, the Originator has
established an anti-money laundering compliance program as required by the Anti-Money Laundering
Laws, has conducted the requisite due diligence in connection with the origination of each Mortgage
Loan for purposes of the Anti-Money Laundering Laws, including with respect to the legitimacy of
the applicable Mortgagor and the origin of the assets used by the said Mortgagor to purchase the
property in question, and maintains, and will maintain, sufficient information to identify the
applicable Mortgagor for purposes of the Anti-Money Laundering Laws;

     (bbb) Georgia Fair Lending Act. There is no Mortgage Loan that was originated on or
after October 1, 2002 and on or prior to March 7, 2003, which is secured by property located in the
State of Georgia. There is no Mortgage Loan that was originated on or after March 7, 2003 that is a
“high cost home loan” as defined under the Georgia Fair Lending Act;

     (ccc) New York State Banking Law. There is no Mortgage Loan that (a) is secured by
property located in the State of New York; (b) had an original principal balance of $300,000 or
less, and (c) has an application date on or after April 1, 2003, the terms of which loan equal or
exceed either the annual percentage rate or the points and fees threshold for “high-cost home
loans,” as defined in Section 6-L of the New York State Banking Law;

     (ddd) New Jersey Mortgage Loans. All Mortgage Loans originated in New Jersey on or
after November 27, 2003 are ratable by Standard & Poor’s and Moody’s;

     (eee) New Mexico Mortgage Loans. There is no Mortgage Loan that was originated on or
after January 1, 2004, and is a “high-cost” loan subject to the New Mexico Home Loan Protection
Act.

     (fff) Arkansas Mortgage Loans. No Mortgage Loan is a “High-Cost Home Loan” as defined
in the Arkansas Home Loan Protection Act effective July 16, 2003 (Act 1340 of 2003);

     (ggg) Kentucky Mortgage Loans. No Mortgage Loan is a “High-Cost Home Loan” as defined
in the Kentucky high-cost home loan statute effective June 24, 2003 (Ky. Rev. Stat. Section
360.100);

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     (hhh) Illinois Mortgage Loans. No Mortgage Loan is a “High-Risk Home Loan” as defined
in the Illinois High-Risk Home Loan Act effective January 1, 2004 (815 Ill. Comp. Stat. 137/1 et
seq.);

     (iii) Massachusetts Mortgage Loans. No Mortgage Loan is a “High-Cost Home Mortgage
Loan” as defined in the Massachusetts Predatory Home Loan Practices Act, effective November 7, 2004
(Mass. Ann. Laws Ch. 183C);

     (jjj) Indiana Mortgage Loans. No Mortgage Loan is a “High Cost Home Loan” as defined
in the Indiana Home Loan Practices Act, effective January 1, 2005 (Ind. Code Ann. Sections 24-9-1
through 24-9-9);

     (kkk) MERS Designations. With respect to each MERS Designated Mortgage Loan, the
Originator has designated the Custodian as the Investor and no Person is listed as Interim Funder
on the MERS® System;

     (lll) Delivery to the Custodian. The Mortgage Note, the Mortgage, the Assignment of
Mortgage and any other documents required to be delivered with respect to each Mortgage Loan
pursuant to this Agreement and the Pooling and Servicing Agreement, have been delivered to the
Trust Administrator in its capacity as Custodian all in compliance with the specific requirements
of this Agreement and the Pooling and Servicing Agreement;

     (mmm) Mortgage File Complete. The related Mortgage File contains each of the
documents and instruments required by the Pooling and Servicing Agreement;

     (nnn) Reports. On or prior to the Closing Date, the Originator has provided the
Custodian and the Purchaser with a MERS Report listing the Custodian as the Investor with respect
to each MERS Designated Mortgage Loan;

     (ooo) Payoffs. No Mortgage Loans prepaid in full prior to the Closing Date;

     (ppp) Credit Information. As to each consumer report (as defined in the Fair Credit
Reporting Act, Public Law 91-508) or other credit information furnished by the Originator to the
Purchaser, the Originator has full right and authority and is not precluded by law or contract from
furnishing such information to the Purchaser and the Purchaser is not precluded by the terms of the
Mortgage Loan Documents from furnishing the same to any subsequent or prospective purchaser of such
Mortgage. The Originator shall hold the Purchaser harmless from any and all damages, losses, costs
and expenses (including attorney’s fees) arising from disclosure of credit information in
connection with the Purchaser’s secondary marketing operations and the purchase and sale of
mortgages. The Originator has or has caused the related servicer to, for each Mortgage Loan, fully
furnish, in accordance with the Fair Credit Reporting Act and its implementing regulations,
accurate and complete information (e.g., favorable and unfavorable) on its borrower credit files to
Equifax, Experian and Trans Union Credit Information Company (three of the credit repositories), on
a monthly basis;

     (qqq) Origination Practices. Each Mortgagor was assigned the highest credit grade
available with respect to a mortgage loan product offered by such Mortgage Loan’s originator,

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taking into account the credit history, debt to income ratio and loan requirement of such
Mortgagor;

     (rrr) No Arbitration Provision. No Mortgage Loan originated on or after August 1,
2004 requires the borrower to submit to arbitration to resolve any dispute arising out of or
relating in any way to the Mortgage Loan transaction;

     (sss) S&P Glossary. No Mortgage Loan is a High Cost Loan or Covered Loan, as
applicable (as such terms are defined in the then current Standard & Poor’s LEVELS® Glossary which
is now Version 5.7, Appendix E) and no Mortgage Loan originated on or after October 1, 2002 through
March 6, 2003 is governed by the Georgia Fair Lending Act; and

     (ttt) Manufactured Housing. No manufactured home securing any manufactured housing
contract is other than a “single family residence” as defined in section 25(e)(10) of the Code,
i.e., it is used as a single family residence, has a minimum living space of 400 square feet and a
minimum width of over 102 inches and is of the kind customarily used at a fixed location. The
manufactured home securing each manufactured housing contract is a “manufactured home” as defined
in 42 U.S.C. section 5402(6).

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          II. With respect to each Mortgage Loan that has been designated as a Group 1 Mortgage Loan,
the Originator hereby represents and warrants to the Purchaser, as of the Closing Date or as of
such other date specifically provided herein (except that with respect to any Qualified Substitute
Mortgage Loan such representations and warranties shall be as of the date of substitution and made
by the Originator), that:

     (a) HOEPA Thresholds Applicable to all Loans. No refinance or purchase money Mortgage
Loan has an APR or total points and fees that exceed the thresholds set by the Home Ownership and
Equity Protection Act of 1994 (“HOEPA”) and its implementing regulations, including 12 CFR §
226.32(a)(1)(i) and (ii);

     (b) Borrower’s Ability to Repay. The methodology used in underwriting the extension
of credit for each mortgage Loan did not rely solely on the extent of the borrower’s equity in the
collateral as the principal determining factor in approving such extension of credit. The
methodology employed objective criteria such as the borrower’s income, assets and liabilities, to
the proposed mortgage payment and, based on such methodology, the mortgage loan’s originator made a
reasonable determination that at the time of origination the borrower had the ability to make
timely payments on the mortgage loan;

     (c) Points and Fees. No borrower under a Mortgage Loan was charged “points and fees”
in an amount greater than (a) $1,000 or (b) 5% of the principal amount of such Mortgage Loan,
whichever is greater. For purposes of this representation, “points and fees” (x) include
origination, underwriting, broker and finder’s fees and charges that the lender imposed as a
condition of making the mortgage loan, whether they are paid to the lender or a third party; and
(y) exclude bona fide discount points, fees paid for actual services rendered in connection
with the origination of the mortgage (such as attorneys’ fees, notaries fees and fees paid for
property appraisals, credit reports, surveys, title examinations and extracts, flood and tax
certifications, and home inspections); the cost of mortgage insurance or credit-risk price
adjustments; the costs of title, hazard, and flood insurance policies; state and local transfer
taxes or fees; escrow deposits for the future payment of taxes and insurance premiums; and other
miscellaneous fees and charges, which miscellaneous fee and charges, in total, do not exceed 0.25
percent of the loan amount;

     (d) Manufactured Housing. With respect to any Mortgage Loan that is on manufactured
housing, upon the origination of each such mortgage Loan, the manufactured housing unit either: (i)
will be the principal residence of the borrower or (ii) will be classified as real property under
applicable state law; and

     (e) Loan Limits.

     (i) No first lien Mortgage Loan has an original principal balance that exceeds the
applicable Freddie Mac loan limit (as in effect on the Closing Date);

     (ii) With respect to any subordinate lien Mortgage Loan,

     (A) such lien is on a one- to four-family residence that is the principal
residence of the borrower;

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     (B) has an original principal balance that exceeds one-half of the
one-unit limitation for first lien mortgage loans, i.e., $208,500
(in Alaska, Guam, Hawaii or Virgin Islands: $312,750), without regard to the number
of units; and

     (C) the original principal balance of the related first lien mortgage loan plus
the original principal balance of subordinate lien Mortgage Loan does not exceed the
applicable Freddie Mac loan limit for first lien mortgage loans for that property
type (as in effect on the Closing Date).

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EXHIBIT B

APPENDIX E OF THE STANDARD & POOR’S GLOSSARY FOR

FILE FORMAT FOR LEVELS® VERSION 5.7

(Appendix begins on the following page)

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APPENDIX E — Standard & Poor’s Predatory Lending Categories

Standard & Poor’s has categorized loans governed by anti-predatory lending laws in the
Jurisdictions listed below into three categories based upon a combination of factors that include
(a) the risk exposure associated with the assignee liability and (b) the tests and thresholds set
forth in those laws. Note that certain loans classified by the relevant statute as Covered are
included in Standard & Poor’s High Cost Loan Category because they included thresholds and tests
that are typical of what is generally considered High Cost by the industry.

Standard & Poor’s High Cost Loan Categorization

	 	 	 	 	 
	 	 	 	 	Category under
	 	 	Name of Anti-Predatory Lending	 	Applicable Anti-
	State/Jurisdiction	 	Law/Effective Date	 	Predatory Lending Law
	Arkansas

	 	Arkansas Home Loan Protection
Act, Ark. Code Ann. §§
23-53-101 et seq.
	 	High Cost Home Loan
	 
	 	 	 	 
	 

	 	Effective July 16, 2003	 	 
	 
	 	 	 	 
	Cleveland Heights, OH

	 	Ordinance No. 72-2003 (PSH),
Mun. Code §§ 757.01 et seq.
	 	Covered Loan
	 
	 	 	 	 
	 

	 	Effective June 2, 2003	 	 
	 
	 	 	 	 
	Colorado

	 	Consumer Equity Protection,
Colo. Stat. Ann. §§ 5-3.5-101
et seq.
	 	Covered Loan
	 
	 	 	 	 
	 

	 	Effective for covered loans
offered or entered into on or
after January 1, 2003. Other
provisions of the Act took
effect on June 7, 2002	 	 
	 
	 	 	 	 
	Connecticut

	 	Connecticut Abusive Home Loan
Lending Practices Act, Conn.
Gen. Stat. §§ 36a-746 et seq.
	 	High Cost Home Loan
	 
	 	 	 	 
	 

	 	Effective October 1, 2001	 	 
	 
	 	 	 	 
	District of Columbia

	 	Home Loan Protection Act,
D.C. Code §§ 26-1151.01 et
seq.
	 	Covered Loan
	 
	 	 	 	 
	 

	 	Effective for loans closed on
or after January 28, 2003	 	 
	 
	 	 	 	 
	Florida

	 	Fair Lending Act, Fla. Stat.
Ann. §§ 494.0078 et seq.
	 	High Cost Home Loan
	 

	 	Effective October 2, 2002	 	 
	 
	 	 	 	 
	Georgia (Oct. 1, 2002
- Mar. 6, 2003)

	 	Georgia Fair Lending Act, Ga.
Code Ann. §§ 7-6A-1 et seq.	 	 
	 

	 	Effective October 1, 2002 -
March 6, 2003
	 	High Cost Home Loan

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Standard & Poor’s High Cost Loan Categorization (continued)

	 	 	 	 	 
	 	 	Name of Anti-Predatory Lending	 	Category under Applicable
	State/Jurisdiction	 	Law/Effective Date	 	Anti-Predatory Lending Law
	Georgia as amended
(Mar. 7, 2003 -
current)

	 	Georgia Fair Lending Act, Ga.
Code Ann. §§ 7-6A-1 et seq.

Effective for loans closed on
or after March 7, 2003
	 	High Cost Home Loan
	 
	 	 	 	 
	HOEPA Section 32

	 	Home Ownership and Equity
Protection Act of 1994, 15
U.S.C. § 1639, 12 C.F.R. §§
226.32 and 226.34

Effective October 1, 1995,
amendments October 1, 2002
	 	High Cost Loan
	 
	 	 	 	 
	Illinois

	 	High Risk Home Loan Act, Ill.
Comp. Stat. tit. 815, §§
137/5 et seq.

Effective January 1, 2004
(prior to this date,
regulations under Residential
Mortgage License Act
effective from May 14, 2001)
	 	High Risk Home Loan
	 
	 	 	 	 
	Kansas

	 	Consumer Credit Code, Kan.
Stat. Ann. §§ 16a-1-101 et
seq.

Sections 16a-1-301 and
16a-3-207 became effective
April 14, 1999; Section
16a-3-308a became effective
July 1, 1999
	 	High Loan to Value
Consumer Loan (id. §
16a-3-207) and;

High APR Consumer Loan
(id. § 16a-3-308a)
	 
	 	 	 	 
	Kentucky

	 	2003 KY H.B. 287 — High Cost
Home Loan Act, Ky. Rev. Stat.
§§ 360.100 et seq.

Effective June 24, 2003
	 	High Cost Home Loan
	 
	 	 	 	 
	Maine

	 	Truth in Lending, Me. Rev.
Stat. tit. 9-A, §§ 8-101 et
seq.

Effective September 29, 1995
and as amended from time to
time
	 	High Rate High Fee Mortgage
	 
	 	 	 	 
	Massachusetts

	 	Part 40 and Part 32, 209
C.M.R. §§ 32.00 et seq. and
209 C.M.R. §§ 40.01 et seq.

Effective March 22, 2001 and
amended from time to time
	 	High Cost Home Loan

B-3
Fremont 2006-E

Mortgage Loan Purchase Agreement

 

 

Standard & Poor’s High Cost Loan Categorization (continued)

	 	 	 	 	 
	 	 	 	 	Category under
	 	 	Name of Anti-Predatory Lending	 	Applicable Anti-
	State/Jurisdiction	 	Law/Effective Date	 	Predatory Lending Law
	Nevada

	 	Assembly Bill No. 284, Nev.
Rev. Stat. §§ 598D.010 et
seq.

Effective October 1, 2003
	 	Home Loan
	 
	 	 	 	 
	New Jersey

	 	New Jersey Home Ownership
Security Act of 2002, N.J.
Rev. Stat. §§ 46:10B-22 et
seq.

Effective for loans closed on
or after November 27, 2003
	 	High Cost Home Loan
	 
	 	 	 	 
	New Mexico

	 	Home Loan Protection Act,
N.M. Rev. Stat. §§ 58-21A-1
et seq.

Effective as of January 1,
2004; Revised as of February
26, 2004
	 	High Cost Home Loan
	 
	 	 	 	 
	New York

	 	N.Y. Banking Law Article 6-l
Effective for applications
made on or after April 1,
2003
	 	High Cost Home Loan
	 
	 	 	 	 
	North Carolina

	 	Restrictions and Limitations
on High Cost Home Loans, N.C.
Gen. Stat. §§ 24-1.1E et seq.

Effective July 1, 2000;
amended October 1, 2003
(adding open-end lines of
credit)
	 	High Cost Home Loan
	 
	 	 	 	 
	Ohio

	 	H.B. 386 (codified in various
sections of the Ohio Code),
Ohio Rev. Code Ann. §§
1349.25 et seq.

Effective May 24, 2002
	 	Covered Loan
	 
	 	 	 	 
	Oklahoma

	 	Consumer Credit Code
(codified in various sections
of Title 14A)

Effective July 1, 2000;
amended effective January 1,
2004 

	 	Subsection 10 Mortgage
	South Carolina

	 	South Carolina High Cost and
Consumer Home Loans Act, S.C.
Code 

 
Ann. §§ 37-23-10 et seq.

Effective for loans taken on
or after January 1, 2004
	 	High Cost Home Loan

B-4
Fremont 2006-E

Mortgage Loan Purchase Agreement

 

 

Standard & Poor’s High Cost Loan Categorization (continued)

	 	 	 	 	 
	 	 	Name of Anti-Predatory Lending	 	Category under Applicable
	State/Jurisdiction	 	Law/Effective Date	 	Anti-Predatory Lending Law
	West Virginia

	 	West Virginia
Residential Mortgage
Lender, Broker and
Servicer Act, W. Va.
Code Ann. §§ 31-17-1
et seq.

Effective June 5, 2002
	 	West Virginia Mortgage Loan Act Loan

Standard & Poor’s Covered Loan Categorization

	 	 	 	 	 
	 	 	Name of Anti-Predatory Lending	 	Category under Applicable
	State/Jurisdiction	 	Law/Effective Date	 	Anti-Predatory Lending Law
	Georgia (Oct. 1, 2002 -
Mar. 6, 2003)

	 	Georgia Fair Lending
Act, Ga. Code Ann.
§§ 7-6A-1 et seq.

Effective October 1,
2002 — March 6, 2003
	 	Covered Loan
	 
	 	 	 	 
	New Jersey

	 	New Jersey Home
Ownership Security
Act of 2002, N.J.
Rev. Stat. §§
46:10B-22 et seq.

Effective November
27, 2003 — July 5,
2004
	 	Covered Home Loan

B-5
Fremont 2006-E

Mortgage Loan Purchase Agreement

 

 

Standard & Poor’s Home Loan Categorization

	 	 	 	 	 
	 	 	 	 	Category under
	 	 	Name of Anti-Predatory Lending	 	Applicable Anti-
	State/Jurisdiction	 	Law/Effective Date	 	Predatory Lending Law
	Georgia (Oct. 1,
2002 — Mar. 6, 2003)

	 	Georgia Fair Lending Act, Ga. Code Ann.
§§ 7-6A-1 et seq.
	 	Home Loan
	 
	 	 	 	 
	 

	 	Effective October 1, 2002 — March 6, 2003	 	 
	 
	 	 	 	 
	New Jersey

	 	New Jersey Home Ownership Security
Act of 2002, N.J. Rev. Stat. §§
46:10B-22 et seq.
	 	Home Loan
	 
	 	 	 	 
	 

	 	Effective for loans closed on or after
November 27, 2003	 	 
	 
	 	 	 	 
	New Mexico

	 	Home Loan Protection Act, N.M. Rev.
Stat. §§ 58-21A-1 et seq.
	 	Home Loan
	 
	 	 	 	 
	 

	 	Effective as of January 1, 2004; Revised
as of February 26, 2004	 	 
	 
	 	 	 	 
	North Carolina

	 	Restrictions and Limitations on High
Cost Home Loans, N.C. Gen. Stat. §§
24-1.1E et seq.
	 	Consumer Home Loan
	 
	 	 	 	 
	 

	 	Effective July 1, 2000; amended October
1, 2003 (adding open-end lines of
credit)	 	 
	 
	 	 	 	 
	South Carolina

	 	South Carolina High Cost and Consumer
Home Loans Act, S.C. Code Ann. §§
37-23-10 et seq.
	 	Consumer Home Loan
	 
	 	 	 	 
	 

	 	Effective for loans taken on or after
January 1, 2004	 	 

Revised 7/11/05

B-6
Fremont 2006-E

Mortgage Loan Purchase Agreement

 

 

SCHEDULE A

MORTGAGE LOAN SCHEDULE

[On file with Trust Administrator]

Schedule A

Fremont 2006-E

Mortgage Loan Purchase Agreementexv4w3

 

Exhibit
4.3

(Multicurrency-Cross Border)

ISDAâ

International Swaps and Derivatives Association, Inc.

MASTER AGREEMENT

dated as of December 6, 2006

	 	 	 
	LEHMAN BROTHERS 

SPECIAL FINANCING INC.

	 	WELLS FARGO BANK, N.A., not in its individual or
corporate capacity but solely as Trust
Administrator for FREMONT HOME LOAN
TRUST 2006-E, Mortgage-Backed Certificates,
Series 2006-E, pursuant to a Pooling and Servicing
Agreement

have entered and/or anticipate entering into one or more transactions (each a “Transaction”) that
are or will be governed by this Master Agreement, which includes the schedule (the “Schedule”), and
the documents and other confirming evidence (each a “Confirmation”) exchanged between the parties
confirming those Transactions.

Accordingly, the parties agree as follows:3⁄4

1. Interpretation

(a) Definitions. The terms defined in Section 14 and in the Schedule will have the meanings
therein specified for the purpose of this Master Agreement.

(b) Inconsistency. In the event of any inconsistency between the provisions of the Schedule and
the other provisions of this Master Agreement, the Schedule will prevail. In the event of any
inconsistency between the provisions of any Confirmation and this Master Agreement (including the
Schedule), such Confirmation will prevail for the purposes of the relevant Transaction.

(c) Single Agreement. All Transactions are entered into in reliance on the fact that this Master
Agreement and all Confirmations form a single agreement between the parties (collectively referred
to as this “Agreement”), and the parties would not otherwise enter into any Transactions.

	2.	 	Obligations

	(a)	 	General Conditions.

(i) Each party will make each payment or delivery specified in each Confirmation to be
made by it, subject to the other provisions of this Agreement.

(ii) Payments under this Agreement will be made on the due date for value on that date in
the place of the account specified in the relevant Confirmation or otherwise pursuant to
this Agreement, in freely transferable funds and in the manner customary for payments in the
required currency. Where settlement is by delivery (that is, other than by payment), such
delivery will be made for receipt on the due date in the manner customary for the relevant
obligation unless otherwise specified in the relevant Confirmation or elsewhere in this
Agreement.

(iii) Each obligation of each party under Section 2(a)(i) is subject to (1) the condition
precedent that no Event of Default or Potential Event of Default with respect to the other
party has occurred and is continuing, (2) the condition precedent that no Early Termination
Date in respect of the relevant Transaction has occurred or been effectively designated and
(3) each other applicable condition precedent specified in this Agreement.

Copyright © 1992 by International Swap and Derivatives Association, Inc.

 

 

value of that which was (or would have been) required to be delivered as of the
originally scheduled date for delivery, in each case together with (to the extent permitted
under applicable law) interest, in the currency of such amounts, from (and including) the
date such amounts or obligations were or would have been required to have been paid or
performed to (but excluding) such Early Termination Date, at the Applicable Rate. Such
amounts of interest will be calculated on the basis of daily compounding and the actual
number of days elapsed. The fair market value of any obligation referred to in clause (b)
above shall be reasonably determined by the party obliged to make the determination under
Section 6(e) or, if each party is so obliged, it shall be the average of the Termination
Currency Equivalents of the fair market values reasonably determined by both parties.

IN WITNESS WHEREOF the parties have executed this document on the respective dates specified below
with effect from the date specified on the first page of this document.

	 	 	 
	LEHMAN BROTHERS 

SPECIAL FINANCING INC.

	 	WELLS FARGO BANK, N.A., not in its individual
or corporate capacity but solely as Trust
Administrator for FREMONT HOME LOAN TRUST
2006-E, Mortgage-Backed Certificates, Series
2006-E, pursuant to a Pooling and Servicing
Agreement

	 	 	 
	(Name of Party)
	 	(Name of Party)

	 	 	 	 	 	 	 
	/s/ Allyson M. Carine
 

Name: Allyson M. Carine

	 	 
	 	/s/ Peter A. Gobell
 

Name: Peter A. Gobell
	 	 
	Title: Authorized Signatory

	 	 	 	Title: Vice President	 	 
	Date:

	 	 	 	Date: December 6, 2006	 	 

18

 

(Multicurrency-Cross Border)

SCHEDULE

to the

Master Agreement

dated as of December 6, 2006

between

LEHMAN BROTHERS SPECIAL FINANCING INC. (“Party A”),

and

WELLS FARGO BANK, N.A., not in its individual or corporate capacity but solely as Trust Administrator for FREMONT HOME LOAN TRUST 2006-E, Mortgage-Backed Certificates, Series 2006-E, pursuant to a Pooling and Servicing Agreement

(‘Party B”)

All terms used herein and not otherwise defined are given their meaning in the Pooling and Servicing Agreement dated as of December

1st, 2006 among FREMONT MORTGAGE SECURITIES CORP., as depositor (the “Depositor”), FREMONT INVESTMENT & LOAN, as

originator, sponsor and servicer (the “Originator,” “Sponsor” and the “Servicer”, as applicable; and together

“Fremont”), and WELLS FARGO BANK, N.A., as master servicer, trust administrator and swap administrator (the “Master

Servicer”, the “Trust Administrator” and the “Swap Administrator” in such capacities, respectively), and HSBC BANK

USA, NATIONAL ASSOCIATION, as trustee (the “Trustee”) (the “Pooling and Servicing Agreement”)

Part 1: Termination Provisions

In this Agreement:-

(a) “Specified Entity” means in relation to Party A for the purpose of:-

	 	 	 
	Section 5(a)(v),

	 	Not applicable.
	Section 5(a)(vi),

	 	Not applicable.
	Section 5(a)(vii),

	 	Not applicable.
	Section 5(b)(iv),

	 	Not applicable.

and in relation to Party B for the purpose of:-

	 	 	 
	Section 5(a)(v),

	 	Not applicable.
	Section 5(a)(vi),

	 	Not applicable.
	Section 5(a)(vii),

	 	Not applicable.
	Section 5(b)(iv),

	 	Not applicable.

	(b)	 	“Specified Transaction” will have the meaning specified in Section 14 of this
Agreement.
	 
	(c)	 	Events of Default.
	 
	 	 	The statement below that an Event of Default will apply to a specific party means that upon
the occurrence of such an Event of Default with respect to such party, the other party shall
have the rights of a Non-defaulting Party under Section 6 of this Agreement; conversely, the
statement below that such event will not apply to a specific party means that the other
party shall not have such rights.

	 	(i)	 	The “Failure to Pay or Deliver” provisions of Section 5(a)(i) will apply to
Party A and will apply to Party B; provided, however, that Section 5(a)(i) is hereby
amended by replacing the word “third” with the word “first”; provided, further, that
notwithstanding anything to the contrary in Section 5(a)(i), any failure by Party A to
comply with or perform any obligation to be complied with or performed by Party A under
the Credit Support Annex shall not constitute an Event of Default under Section 5(a)(i)
unless (A) a Required Ratings Downgrade Event has occurred and been continuing for 30
or more Local Business Days and (B) such failure is not remedied on or before the third
Local Business Day after notice of such failure is given to Party A.

19

 

	 	(ii)	 	The “Breach of Agreement” provisions of Section 5(a)(ii) will apply to Party A
and will not apply to Party B; provided however that Section 5(a)(ii) will not apply to
Party A with respect to Party A’s failure to comply with Part 5(b)(i), Part 5(b)(ii) or
Part 5(b)(iii) herein.
	 
	 	(iii)	 	The “Credit Support Default” provisions of Section 5(a)(iii) will apply to
Party A and will not apply to Party B except that Section 5(a)(iii)(1) will apply to
Party B solely in respect of Party B’s obligations under Paragraph 3(b) of the Credit
Support Annex; provided, however, that notwithstanding anything to the contrary in
Section 5(a)(iii)(1), any failure by Party A to comply with or perform any obligation
to be complied with or performed by Party A under the Credit Support Annex shall not
constitute an Event of Default under Section 5(a)(iii) unless (A) a Required Ratings
Downgrade Event has occurred and been continuing for 30 or more Local Business Days and
(B) such failure is not remedied on or before the third Local Business Day after notice
of such failure is given to Party A.
	 
	 	(iv)	 	The “Misrepresentation” provisions of Section 5(a)(iv) will apply to Party A
and will not apply to Party B.
	 
	 	(v)	 	The “Default under Specified Transaction” provisions of Section 5(a)(v) will
not apply to Party A and will not apply to Party B.
	 
	 	(vi)	 	The “Cross Default” provisions of Section 5(a)(vi) will apply to Party A and
will not apply to Party B. For purposes of Section 5(a)(vi), solely with respect to
Party A:
	 
	 	 	 	“Specified Indebtedness” will have the meaning specified in Section 14.
	 
	 	 	 	“Threshold Amount” means the lesser of (i) USD 100 million and (ii) two percent (2%)
of the Shareholders’ Equity of Lehman Brothers Holdings Inc. (“Lehman Brothers
Holdings Inc.” or “Holdings”), in the case of Party A (or its equivalent in any
other currency) or, if applicable, the Eligible Guarantor.
	 
	 	 	 	“Shareholders’ Equity” means with respect to an entity, at any time, the sum (as
shown in the most recent annual audited financial statements of such entity) of (i)
its capital stock (including preferred stock) outstanding, taken at par value, (ii)
its capital surplus and (iii) its retained earnings, minus (iv) treasury stock, each
to be determined in accordance with generally accepted accounting principles.
	 
	 	(vii)	 	The “Bankruptcy” provisions of Section 5(a)(vii) will apply to Party A and
will apply to Party B except that the provisions of Section 5(a)(vii)(2), (6) (to the
extent that such provisions refer to any appointment contemplated or effected by the
Pooling and Servicing Agreement or any appointment to which Party B has not become
subject), (7) and (9) will not apply to Party B; provided that, with respect to Party B
only, Section 5(a)(vii)(4) is hereby amended by adding after the words “against it” the
words “(excluding any proceeding or petition instituted or presented by Party A or its
Affiliates)”, and Section 5(a)(vii)(8) is hereby amended by deleting the words “to (7)
inclusive” and inserting lieu thereof “, (3), (4) as amended, (5), (6) as amended, or
(7)”.
	 
	 	(viii)	 	The “Merger Without Assumption” provisions of Section 5(a)(viii) will apply to Party
A and will apply to Party B.

	(d)	 	Termination Events.
	 
	 	 	The statement below that a Termination Event will apply to a specific party means that upon
the occurrence of such a Termination Event, if such specific party is the Affected Party
with respect to a Tax Event, the Burdened Party with respect to a Tax Event Upon Merger
(except as noted below) or the non-Affected Party with respect to a Credit Event Upon
Merger, as the case may be, such specific party shall have the right to designate an Early
Termination Date in accordance with Section 6 of this Agreement; conversely, the statement
below that such an event will not apply to a specific party means that such party shall not
have such right; provided, however, with respect to “Illegality” the statement that such
event will apply to a specific

20

 

	 	 	party means that upon the occurrence of such a Termination Event with respect to such party,
either party shall have the right to designate an Early Termination Date in accordance with
Section 6 of this Agreement.

	 	(i)	 	The “Illegality” provisions of Section 5(b)(i) will apply to Party A and will apply to
Party B.
	 
	 	(ii)	 	The “Tax Event” provisions of Section 5(b)(ii) will apply to Party A and Party
B, except that, for purposes of the application of Section 5(b)(ii), Section 5(b)(ii)
is hereby amended by deleting the words “(x) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or after the date on which a
Transaction is entered into (regardless of whether such action is taken or brought with
respect to a party to this Agreement) or (y)”.
	 
	 	(iii)	 	The “Tax Event Upon Merger” provisions of Section 5(b)(iii) will apply to
Party A and will apply to Party B, provided that Party A shall not be entitled to
designate an Early Termination Date by reason of a Tax Event upon Merger in respect of
which it is the Affected Party.
	 
	 	(iv)	 	The “Credit Event Upon Merger” provisions of Section 5(b)(iv) will not apply to
Party A and will not apply to Party B.

	(e)	 	The “Automatic Early Termination” provision of Section 6(a) will not apply to Party A
and will not apply to Party B.
	 
	(f)	 	Payments on Early Termination. For the purpose of Section 6(e) of this Agreement,
Market Quotation and Second Method will apply;

“Calculations” Notwithstanding Section 6 of this Agreement, so long as Party A is (A) the
Affected Party in respect to an Additional Termination Even or a Tax Event Upon Merger or
(B) the Default Party in respect of any Event of Default, paragraphs (i) to (vi) below shall
apply:

(i) The definition of “Market Quotation” shall be deleted in its entirety and replaced with
the following:

“Market Quotation” means, with respect to one or more Terminated Transactions, a Firm Offer
which is (1) made by a Reference Market-maker, (2) for an amount that would be paid to Party
B (expressed as a negative number) or by Party B (expressed as a positive number) in
consideration of an agreement between Party B and such Reference Market-maker to enter into
a transaction (the “Replacement Transaction”) that would have the effect for preserving for
such party the economic equivalent of any payment or delivery (whether the underlying
obligation was absolute or contingent and assuming the satisfaction of each applicable
condition precedent) by the parties under Section 2(a)(i) in respect of such Termination
transactions or group of Terminated Transactions that would, but for the occurrence of the
relevant Early Termination Date, have been required after that Date, (3) made on the basis
that Unpaid Amounts in respect of the Terminated Transaction or group of Transactions are to
be excluded but, without limitation, any payment or delivery that would, but for the
relevant Early Termination Date, have been required (assuming satisfaction of each
applicable condition precedent) after that Early Termination Date is to be included and (4)
made in respect of a Replacement Transaction with terms substantially the same as those of
this Agreement (save for the exclusion of provisions relating to Transactions that are not
Terminated Transactions).”

(iii) The definition of “Settlement Amount” shall be deleted in its entirety and replaced
with the following:

”Settlement Amount” means, with respect to any Early Termination Date, an amount (as
determined by Party B) equal to the Termination Currency Equivalent of the amount (whether
positive or negative) of any Market Quotation for the relevant Terminated Transaction or
group of Terminated Transactions that is accepted by Party B so as to become legally
binding, Provided that:

(1) If, on the day falling ten Local Business Days after the day on which the Early
Termination Date is designated or such later day as Party B may specify in writing
to Party A (but

21

 

in either case no later than the Early Termination Date) (such day the “Latest
Settlement Amount Determination Day”), no Market Quotation for the relevant
Terminated Transaction or group of Terminated Transactions has been accepted by
Party B so as to become legally binding and one or more Market Quotations have been
made and remain capable of becoming legally binding upon acceptance, the Settlement
Amount shall equal the Termination Currency Equivalent of the amount (whether
positive or negative) of the lowest of such Market Quotations; and

(2) If, on the Latest Settlement Amount Determination Day, no Market Quotation for
the relevant Terminated Transaction or group of Terminated Transactions is accepted
by Party B so as to become legally binding and no Market Quotations have been made
and remain capable of becoming legally binding upon acceptance, the Settlement
Amount shall equal Party B’s Loss (whether positive or negative and without
reference to any Unpaid amounts) for the relevant Terminated Transaction or group of
Terminated Transactions.

(iii) For the purpose of paragraph (4) of the definition of Market Quotation, Party B shall
determine in its sole discretion, acting in a commercially reasonable manner, whether a Firm
Offer is made in respect of a Replacement Transaction with commercial terms substantially
the same as those of this Agreement (save for the exclusion of provisions relating to
Transactions that are not Terminated Transactions).

(iv) At any time on or before the Latest Settlement Amount Determination Day at which two or
more Market Quotations remain capable of becoming legally binding upon acceptance, Party B
shall be entitled to accept only the lowest of such Market Quotations.

(v) if Party B requests Party A in writing to obtain Market Quotations, Party A shall use
its reasonable efforts to do so before the Latest Settlement Amount Determination Day.

(vi) If the Settlement Amount is a negative number, Section 6(e)(i)(3) of this
Agreement shall be deleted in its entirety and replaced with the following:

“Second Method and Market Quotation. If Second Method and Market Quotation apply, (1) Party
B shall pay to Party A an amount equal to the absolute value of the Settlement Amount in
respect of the Terminated Transactions, (2) Party B shall pay to Party A the Termination
Currency Equivalent of the Unpaid Amounts owing to Party A and (3) Party A shall pay to
Party B the Termination Currency Equivalent of the Unpaid Amounts owing to Party B, Provided
that, (i) the amounts payable under (2) and (3) shall be subject to netting in accordance
with Section 2(c) of this Agreement and (ii) notwithstanding any other provision of this
Agreement, any amount payable by Party A under (3) shall not be netted-off against any
amount payable by Party B under (1).”

	(g)	 	“Termination Currency” means USD.
	 
	(h)	 	Section 6(b)(iv) is hereby amended by adding the following to the end thereof before
the period:
	 
	 	 	provided, however, that upon the occurrence of an Additional Termination
Event described in Section 5(b)(v)(A), an Early Termination Date will occur with
respect to each Transaction on the Redemption Date or on such next Payment Date, as
applicable, and the amount payable in respect of such Additional Termination Event shall be
payable by either party, as applicable, on such Early Termination Date.
	 
	(i)	 	Additional Termination Events will apply. Each of the following shall constitute an
Additional Termination Event:

(A) Payment of Notes prior to Termination Date. (i) The Notes are redeemed on any Payment
Date prior to the Termination Date pursuant to the Pooling and Servicing Agreement, (ii)
Party B shall not receive sufficient Interest Proceeds and Principal Proceeds in respect of
a Payment Date to pay (a) interest or principal due on the Notes of the most senior Class of
which any Notes are outstanding on any such Payment Date prior to the Termination Date or
(b) the principal due on the Notes at their Stated Maturity, in each case in accordance with
the Priority of Distribution pursuant to the Pooling and Servicing Agreement, or (iii)(x)
the Notes are accelerated in accordance with the Pooling and Servicing Agreement

22

 

and (y) the Trustee has proceeded to liquidate the Collateral in accordance with the Pooling
and Servicing Agreement on or before any Distribution Date preceding the Termination Date.
For the purpose of the foregoing Termination Event, Party B shall be the sole Affected
Party.

(B) (I) Collateralization Event. If either (i) an S&P First Rating Trigger; (ii) a Moody’s
First Rating Trigger or (iii) a Fitch First Rating Trigger occurs and Party A does not take
the steps set forth below.

     Not later than 30 calendar days after the occurrence of an S&P First Rating Trigger or
a Fitch First Rating Trigger, Party A shall, at its own expense, assign all of its rights
and obligations under the Transactions to a counterparty with the S&P Required Ratings or
Fitch Required Ratings or whose guarantor (pursuant to a form of guarantee that satisfies
S&P’s or Fitch’s then-current published criteria) satisfies the S&P Required Ratings or
Fitch Required Ratings (or which enables S&P or Fitch to deliver a Rating Agency
Confirmation) pursuant to either the same documentation (except for necessary factual
changes to the identity of the new counterparty and its Credit Support Provider, if
applicable) or subject to Rating Agency Confirmation and subject to prior written notice to
the Rating Agencies; provided, that, in the event that Party A fails to make such assignment
within the applicable 30 day period Party A shall (i) post collateral no later than 30
calendar days after such downgrade in accordance with the Credit Support Annex attached
hereto, until such time as it has secured a substitute counterparty, and (ii) continue
actively to seek to assign all of its rights and obligations under the Transactions to a
counterparty with the S&P Required Ratings or Fitch Required Ratings, as applicable or whose
guarantor (pursuant to a form of guaranty either substantially the same as the guarantee
then in effect or that satisfies S&P’s or Fitch’s then-current published criteria) satisfies
the S&P Required Ratings or Fitch’s Required Ratings (or which enables S&P or Fitch to
deliver a Rating Agency Confirmation pursuant to either the same documentation (except for
necessary factual changes to the identity of the new counterparty and its Credit Support
Provider, if applicable) or subject to Rating Agency Confirmation and subject to prior
written notice to the Rating Agencies.

     Not later than 30 Local Business Days after the occurrence of a Moody’s First Rating
Trigger, Party A fails to post collateral in accordance with the Credit Support Annex
attached hereto, provided that in the event that Party A fails to post collateral within the
applicable period, Party A shall (i) assign all of its rights and obligations under the
Transactions to a counterparty with the Moody’s Required Ratings or whose guarantor
(pursuant to a form of guaranty that satisfies Moody’s then-current published criteria)
satisfies the Moody’s Required Ratings (or which enables Moody’s to deliver a Rating Agency
Confirmation) pursuant to either the same documentation (except for necessary factual
changes to the identity of the new counterparty and its Credit Support Provider, if
applicable) or subject to Rating Agency Confirmation and subject to prior written notice to
the Rating Agencies or (ii) obtain a guarantor (pursuant to a form of guaranty that
satisfies Moody’s then-current published criteria) that satisfies the Moody’s Required
Ratings (or which enables Moody’s to deliver a Rating Agency Confirmation).

     (II) Replacement Event. If (i) an S&P Second Rating Trigger, (ii) a Moody’s Second
Rating Trigger or (iii) a Fitch Second Rating Trigger occurs and Party A does not take the
steps set forth below.

     Upon the occurrence of an S&P Second Rating Trigger, Party A shall immediately post
collateral in accordance with the Credit Support Annex attached hereto, until such time as
it has secured a substitute counterparty. Not later than 10 Local Business Days after the
occurrence of an S&P Second Rating Trigger or a Fitch Second Rating Trigger, Party A shall,
at its own expense, assign all of its rights and obligations under the Transactions to a
counterparty with the S&P Required Ratings or Fitch Required Rating or whose guarantor
satisfies the S8P Required Ratings or Fitch Required Rating (unless in each case such
counterparty enables Moody’s to deliver a Rating Agency Confirmation) pursuant to either the
same documentation (except for necessary factual changes to the identity of the new
counterparty and its Credit Support Provider, if applicable) or subject to Rating Agency
Confirmation and subject to prior written notice to the Rating Agencies.

     Not later than 30 local Business Days after the occurrence of a Moody’s Second Rating
Trigger, at least one counterparty with the Moody’s Required Ratings or whose guarantor
satisfies the Moody’s Required Ratings (unless in each case such counterparty enables
Moody’s to deliver a Rating Agency

23

 

Confirmation has made a Firm Offer (which remains capable of becoming legally binding upon
acceptance to be the transferee of all or substantially all of Party A’s rights and
obligations with respect to this Agreement through a novation or other assignment and
assumption agreement or similar agreement in form and substance reasonably satisfactory to
Party B; provided that (A) Party B shall determine in its sole discretion, acting in a
commercially reasonable manner, whether or not a transfer relates to all or substantially
all of Party A’s rights and obligations under this Agreement, (B) as of the date of such
transfer the Transferee will not be required to withhold or deduct on account of a Tax from
any payments under this Agreement unless the Transferee will be required to make payments of
additional amounts pursuant to Section 2(d)(i)(4) of this Agreement in respect of such Tax,
and (C) a Termination Event or Event of Default does not occur under this Agreement as a
result of such transfer.

For the purpose of the foregoing Termination Event, Party A shall be the sole Affected
Party.

	(C)	 	Amendment to Pooling and Servicing Agreement without Party A’s Prior Written Consent. Party
B enters into amendments or other modification to the Pooling and Servicing Agreement that
could reasonably be expected to have a material adverse effect on Party A without at least ten
(10) Business Days’ prior notice to Party A (where such notice is required under the Pooling
and Servicing Agreement) and the prior written consent of Party A (where such consent is
required under the Pooling and Servicing Agreement). For the purpose of the foregoing
Termination Event, Party B shall be the sole Affected Party.

	(D)	 	Return of Collateral. Party B or its Custodian fails to transfer any Return Amount pursuant
to the terms of the Credit Support Annex within 10 days following any applicable notice, cure
and grace periods provided for thereunder. For the purpose of the foregoing Termination Event,
Party B shall be the sole Affected Party.

Part 2: Tax Representations

	(a)	 	Payer Tax Representations. For the purpose of Section 3(e) of this Agreement, Party
A and Party B will each make the following representation:
	 
	 	 	It is not required by any applicable law, as modified by the practice of any relevant
governmental revenue authority, of any Relevant Jurisdiction to make any deduction or
withholding for or on account of any Tax from any payment (other than interest under
Sections 2(e), 6(d)(ii) or 6(e) of this Agreement) to be made by
it to the other party under this Agreement. In making this representation, it may rely
on (i) the accuracy of any representation made by the other party pursuant to
Section 3(f) of this Agreement, (ii) the satisfaction(s) of the agreement of the
other party contained in Section 4(a)(i) or 4(a)(iii) of this Agreement
and the accuracy and effectiveness of any document provided by the other party pursuant
to Section 4(a)(i) or 4(a)(iii) of this Agreement; and (iii) the
satisfaction of the agreement of the other party contained in Section 4(d) of
this Agreement, provided that it shall not be a breach of this representation where
reliance is placed on clause (ii) and the other party does not deliver a form or
document under Section 4(a)(iii) of this Agreement by reason of material
prejudice to its legal or commercial position.
	 
	(b)	 	Payee Tax Representations. For the purpose of Section 3(e) of this Agreement, Party A
represents that it is a corporation duly organized and validly existing under the laws of the
State of Delaware. For the purpose of Section 3(e)of this Agreement, Party B represents that
it is the Trust Administrator for Fremont Home Loan Trust 2006-E under the Pooling and
Servicing Agreement.
	 
	(c)	 	Tax Provisions.

	 	(i)	 	Gross Up. Section 2(d)(i)(4) shall not apply to Party B as X, and Section
2(d)(ii) shall not apply to Party B as Y, in each case such that Party B shall not be
required to pay any additional amounts referred to therein.
	 
	 	(ii)	 	Indemnifiable Tax. The definition of “Indemnifiable Tax” in Section 14 is
deleted in its entirety and replaced with the following:

24

 

	 	 	 	“Indemnifiable Tax” means, in relation to payments by Party A, any Tax and, in
relation to payments by Party B, no Tax.
	 
	 	(iii)	 	Tax Representations in Confirmations. For purposes of Sections
2(d)(i)(4) and 3(f), any payee tax representation specified in a
Confirmation under this Agreement shall be deemed to be specified in this Schedule.

Part 3: Agreement to Deliver Documents

For the purpose of Sections 4(a)(i) and (ii) of this Agreement, each party agrees
to deliver the following documents, as applicable:-

	(a)	 	Tax forms, documents or certificates to be delivered are:-

	 	 	 	 	 
	Party required to	 	Form/Document/	 	Date by which
	deliver document	 	Certificate	 	to be Delivered
	Party A and Party B

	 	Forms and/or documents
described in Section
4(a)(iii) of the
Agreement.
	 	Upon reasonable demand
by the other party.

	(b)	 	Other documents to be delivered are:-

	 	 	 	 	 	 	 
	Party required	 	 	 	 	 	 
	to deliver	 	Form/Document/	 	Date by which	 	Covered by
	document	 	Certificate	 	to be Delivered	 	Section 3(d)
	Party A and Party B

	 	For each party, an
incumbency
certificate with
respect to each
signatory to this
Agreement and the
Credit Support
Documents.
	 	Upon execution of
this Agreement.
	 	Yes
	 
	 	 	 	 	 	 
	Party A

	 	A copy of the
annual report of
its Credit Support
Provider containing
audited
consolidated
financial
statements for such
fiscal year
certified by
independent public
accountants and
prepared in
accordance with
generally accepted
accounting
principles
consistently
applied.
	 	Upon request.
	 	Yes
	 
	 	 	 	 	 	 
	Party A

	 	For its most recent
fiscal quarter, a
copy of the
unaudited financial
statements of its
Credit Support
Provider, prepared
in accordance with
generally accepted
accounting
principles
consistently
applied.
	 	Upon request.
	 	Yes

25

 

	 	 	 	 	 	 	 
	Party required	 	 	 	 	 	 
	to deliver	 	Form/Document/	 	Date by which	 	Covered by
	document	 	Certificate	 	to be Delivered	 	Section 3(d)
	Party A and Party B

	 	(i) In the case of
Party A, a copy of
the resolutions or
other action of
the board of
directors of each
of Party A and its
Credit Support
Provider and (ii)
in the case of
Party B, (x) a
resolution of the
board of directors
certified by a
secretary or
assistant secretary
of Party B, or (y)
a Pooling and
Servicing Agreement
or other document
of Party B,
pursuant to which
Party B is
authorized to enter
into this
Agreement, each
Credit Support
Document to which
it is a party, and
each Transaction
from time to time
entered into
hereunder (the
“Authorizing
Resolution”).
	 	Upon execution of
this Agreement.
	 	Yes
	 
	 	 	 	 	 	 
	Party A

	 	A guarantee of
Holdings
substantially in
the form of Exhibit
A to this Schedule.
	 	Upon execution of
this Agreement.
	 	No
	 
	 	 	 	 	 	 
	Party A

	 	An opinion of
counsel to Party A
substantially in
the form of Exhibit
C to this Schedule.
	 	Upon execution of
this Agreement.
	 	No
	 
	 	 	 	 	 	 
	Party B

	 	An opinion of
counsel to Party B
substantially in
the form of Exhibit
B to this Schedule,
relating to the
Pooling and
Servicing Agreement
and other deal
documents
reasonably
satisfactory in
form and substance
to Party A.
	 	Upon execution of
this Agreement.
	 	No
	 
	 	 	 	 	 	 
	Party B

	 	Monthly Report
	 	At such time as
each Monthly Report
is delivered to the
Trustee.
	 	Yes
	 
	 	 	 	 	 	 
	Party B

	 	Noteholder Report
	 	Each Determination
Date or otherwise
in accordance with
the terms of the
Pooling and
Servicing
Agreement.	 	 
	 
	 	 	 	 	 	 
	Party B

	 	All reports that go
to the Rating
Agencies.
	 	As applicable.
	 	Yes
	 
	 	 	 	 	 	 
	Party B

	 	An executed copy of
the Pooling and
Servicing
Agreement.
	 	Upon execution.
	 	No

26

 

	 	 	 	 	 	 	 
	Party required	 	 	 	 	 	 
	to deliver	 	Form/Document/	 	Date by which	 	Covered by
	document	 	Certificate	 	to be Delivered	 	Section 3(d)
	Party B

	 	Each material
amendment,
supplement or
waiver to the
Pooling and
Servicing
Agreement, as
proposed from time
to time, or any
other amendment or
modification of the
Pooling and
Servicing Agreement
that requires the
consent of Party A
under the terms of
the Pooling and
Servicing
Agreement.
	 	Promptly upon
learning of any
proposed amendment,
supplement or
waiver.
	 	No

Part 4: Miscellaneous

	(a)	 	Addresses for Notices. For the purpose of Section 12(a) of this Agreement:-
	 
	 	 	Address for notices or communications to Party A:-

	 	 	 
	Address:

	 	Lehman Brothers Special Financing Inc.
	 

	 	c/o Lehman Brothers Inc.
	 

	 	Corporate Advisory Division
	 

	 	Transaction Management Group
	 

	 	745 Seventh Avenue
	 

	 	New York, New York 10019
	Attention:

	 	Documentation Manager
	Telephone No.:

	 	(212) 526-7187
	Facsimile No.:

	 	(212) 526-7672
	 

	 	For all purposes.
	 
	 	 
	Address for notices or communications to Party B:-
	 
	 	 
	Address:

	 	Wells Fargo Bank, N.A. not individually, but solely as the trust administrator on
behalf of Fremont Home Loan Trust 2006-E
	 

	 	9062 Old Annapolis Road
	 

	 	Columbia, MD 21045
	Attention:

	 	Client Manager – Fremont 2006-E
	Telephone No.:

	 	(410) 715-2380
	Facsimile No.:

	 	(410) 884-2000
	 

	 	For all purposes.

	(b)	 	Process Agent. For the purpose of Section 13(c) of this Agreement:-
	 
	 	 	Party A appoints as its Process Agent: Not applicable.

Party B appoints as its Process Agent: Not applicable.
	 
	(c)	 	Offices. The provisions of Section 10(a) will apply to this Agreement.
	 
	(d)	 	Multibranch Party. For the purpose of Section 10(c) of this Agreement:-

Party A is not a Multibranch Party.

Party B is not a Multibranch Party.

27

 

	(e)	 	Calculation Agent. The Calculation Agent is Party A; provided, however, that if an Event of
Default has occurred and is continuing with respect to Party A, then the parties will mutually
appoint a financial institution acceptable to both parties which would qualify as a Reference
Market-maker to act as Calculation Agent until the earlier of (i) a designation under Section
6(c)(ii), or (ii) the discontinuance of such Event of Default with respect to Party A.
	 
	(f)	 	Credit Support Document. In the case of Party A: (1) A guarantee of Party A’s obligations
hereunder substantially in the form annexed hereto as Exhibit A to this Schedule. (2)
The Credit Support Annex which supplements, forms part of, and is subject to this Agreement.
	 
	 	 	In the case of Party B: the Pooling and Servicing Agreement.
	 
	(g)	 	Credit Support Provider. Credit Support Provider means in relation to Party A: Lehman
Brothers Holdings Inc.
	 
	 	 	Credit Support Provider means in relation to Party B: None.
	 
	(h)	 	Governing Law. This Agreement will be governed by and construed in accordance with the laws
of the State of New York (without reference to choice of law doctrine other than Sections
5-1401 and 5-1402 of the New York General Obligations Law).
	 
	(i)	 	Jurisdiction. Section 13(b) is hereby amended by: (i) deleting in the second line of
subparagraph (i) thereof the word “non-”; and (ii) deleting the final paragraph thereof.
	 
	(j)	 	Netting of Payments. Subparagraph (ii) of Section 2(c) of this Agreement
will apply.
	 
	(k)	 	“Affiliate” will have the meaning specified in Section 14 of this Agreement, except
that the only Affiliate of Party B shall be the Co-Issuer; provided, however,
that with respect to Party A, such definition shall be understood to exclude Lehman Brothers
Derivative Products Inc. and Lehman Brothers Financial Products Inc.
	 
	(l)	 	Local Business Day. The definition of Local Business Day in Section 14 of this Agreement
shall be amended by the addition of the words “or any Credit Support Document” after “Section
2(a)(i)” and the addition of the words “or Credit Support Document” after “Confirmation”.

Part 5: Other Provisions

	(a)	 	General Conditions. Section 2(a)(iii) is hereby amended by (X) inserting in the
third line thereof after the words “and is continuing, (2)” and before the words “the
condition precedent” the following phrase “the condition precedent that no Additional
Termination Event has occurred and is continuing with respect to which the other party is an
Affected Party and with respect to which all outstanding Transactions are Affected
Transactions, (3)” and (Y) delete the symbol “(3)” before the words “each other applicable
condition” and substitute the symbol “(4)” in lieu thereof.
	 
	(b)	 	Accuracy of Specified Information. Section 3(d) is hereby amended by inserting in
the third line thereof after the words “in every material respect” and before the period the
phrase “or, in the case of audited or unaudited financial statements, a fair presentation, in
all material respects, of the financial condition of the relevant person.”
	 
	(c)	 	No Violation or Conflict Representation. Section 3(a)(iii) is hereby amended by
inserting in the second line thereof after the words “constitutional documents” and before the
words “, any order or judgment” the phrase “(including, but not limited to, the Pooling and
Servicing Agreement, as amended, and any and all resolutions, investment policies, guidelines,
procedures or restrictions).”; provided, such amendment shall be applicable only with
respect to the Representations of Party B.

28

 

	(d)	 	Representations. Section 3 is hereby amended by adding the following subsections
after subsection (f) thereof:

	 	(g)	 	No Agency. Party A is acting as principal and not as agent when entering into
this Agreement and each Transaction. Party B is acting not in its individual capacity
but solely as Trust Administrator on behalf of the Trust.
	 
	 	(h)	 	Eligible Contract Participant. It is an “eligible contract participant” within
the meaning of Section 1a(12) of the Commodity Exchange Act, as amended.
	 
	 	(i)	 	Non-Reliance. It is acting for its own account, and it has made its own
independent decisions to enter into each Transaction and as to whether that Transaction
is appropriate or proper for it based upon its own judgment and upon advice from such
advisers as it has deemed necessary. It is not relying on any communication (written
or oral) of the other party as investment advice or as a recommendation to enter into
that Transaction; it being understood that information and explanations related to the
terms and conditions of a Transaction shall not be considered investment advice or a
recommendation to enter into that Transaction. No communication (written or oral)
received from the other party shall be deemed to be an assurance or guarantee as to the
expected results of that Transaction.
	 
	 	(j)	 	Assessment and Understanding. It is capable of assessing the merits of and
understanding (on its own behalf or through independent professional advice), and
understands and accepts, the terms, conditions and risks of that Transaction. It is
also capable of assuming, and assumes, the risks of that Transaction.
	 
	 	(k)	 	Status of Parties. The other party is not acting as a fiduciary for or an
adviser to it in respect of that Transaction.

	(e)	 	Additional Representations and Warranties of Party B. Party B represents to Party A in
accordance with Section 3 of the Agreement (which representations will be deemed to be
repeated by Party B at all times until the termination of this Agreement) that:

	 	(i)	 	Constitutional Documents. Party B is in compliance, in all material respects,
with its constitutional documents (including, but not limited to, the Pooling and
Servicing Agreement, as amended from time-to-time, and any and all resolutions,
investment policies, guidelines, procedures or restrictions), and each Transaction
contemplated hereunder is and will be an authorized and permitted transaction
thereunder and an Authorizing Resolution is in full force and effect.
	 
	 	(ii)	 	Assessment and Understanding. It is capable of assessing the merits of and
understanding (on its own behalf or through independent professional advice), and
understands and accepts, the terms, conditions and risks of that Transaction. It is
also capable of assuming, and assumes, the risks of that Transaction.
	 
	 	(iii)	 	Compliance with Laws. Party B is in compliance, in all respects, with all
applicable laws, rules, regulations, interpretations, guidelines, procedures, and
policies of applicable regulatory authorities affecting Party B, this Agreement, the
Transactions, or the performance of Party B’s obligations hereunder.

	(f)	 	Reserved.

	(g)	 	Third-Party Beneficiary. Party B agrees with Party A that Party A shall be an express
third-party beneficiary of the Pooling and Servicing Agreement.

29

 

	(h)	 	Set-off. (i) All payments under this Agreement shall be made without set-off or counterclaim,
except as expressly provided for in Section 2(c), Section 6, Part 5(w) below or Paragraph
8(a) or (b) of the Collateral Support Annex attached hereto.

(ii) Section 6(e) shall be amended by the deletion of the following sentence: “The amount,
if any, payable in respect of an Early Termination Date and determined pursuant to this
Section will be subject to any set-off.”

	(i)	 	Transfer and Assignment. Notwithstanding anything to the contrary in Section 7 of
the Agreement, Party A may assign its rights and obligations under the Agreement, in whole or
in part, (1) to any Affiliate of Holdings effective upon delivery to Party B of the guarantee
by Holdings, in favor of Party B, of the obligations of such Affiliate, such guarantee to be
substantially the same as the guarantee then in effect of the obligations of the transferor,
or (2) to any entity with the same or higher long term senior unsecured debt rating (as
determined by S&P or Moody’s) as Holdings at the time of such transfer. Party A will provide
prior written notice to each Rating Agency of any such assignment. If an entity has made a
Firm Offer (which remains capable of becoming legally binding upon acceptance) to be the
transferee of a transfer, Party B shall at Party A’s written request take any reasonable
steps required to be taken by it to effect such transfer. All collateral posted by Party A
shall be returned to Party A immediately upon Party A securing a substitute counterparty.

	(j)	 	Notices. For the purposes of subsections (iii) and (v) of Section
12(a), the date of receipt shall be presumed to be the date sent if sent on a Local
Business Day or, if not sent on a Local Business Day, the date of receipt shall be presumed to
be the first Local Business Day following the date sent.

	(k)	 	Service of Process. The third sentence of Section 13(c) shall be amended by adding
the following language at the end thereof: “if permitted in the jurisdiction where the
proceedings are initiated and in the jurisdiction where service is to be made.”

	(l)	 	Additional Representations and Warranties of Party B. Party B represents to Party A in
accordance with Section 3 of the Agreement that its obligations under this Agreement
rank pari passu with all of its other unsecured, unsubordinated obligations except those
obligations preferred by operation of law.

	(m)	 	Arms’-Length Transaction. Party B acknowledges and agrees that Party A has had and will have
no involvement in and, accordingly Party A accepts no responsibility for: (i) the
establishment, structure, or choice of assets of Party B; (ii) the selection of any person
performing services for or acting on behalf of Party B; (iii) the selection of Party A as the
Counterparty; (iv) the terms of the Notes; (v) the preparation of or passing on the disclosure
and other information contained in any offering circular or similar document for the Notes,
the Pooling and Servicing Agreement, or any other agreements or documents used by Party B or
any other party in connection with the marketing and sale of the Notes; (vi) the ongoing
operations and administration of Party B, including the furnishing of any information to Party
B which is not specifically required under this Agreement; or (vii) any other aspect of Party
B’s existence.

	(n)	 	Amendments. Section 9(b) is hereby amended by adding at the end thereof the
sentence: “In addition, any amendment or modification of this Agreement shall be subject to
the Rating Agency Condition.”

	(o)	 	Amendments to Pooling and Servicing Agreement. Party B will provide Party A with at least
ten (10) days prior written notice of and obtain Party A’s prior written consent to any
proposed amendment, supplement or modification to its Pooling and Servicing Agreement that
could have a material, adverse effect on Party A or otherwise give Party A the right to
terminate any Transactions pursuant to the provisions of Part 1(i)(C) above.

	(p)	 	No Bankruptcy Petition. Party A agrees that it will not, for a period of one year and one
day, after the payment in full of all of the Notes issued under the Pooling and Servicing
Agreement, acquiesce, petition, invoke or otherwise cause Party B to invoke the process of any
governmental authority for the purpose of commencing or sustaining a case (whether voluntary
or involuntary) against Party B under any bankruptcy, insolvency or similar law or appointing
a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official
of Party B or any substantial part of its property or ordering the winding-up or

30

 

	 	 	liquidation of the affairs of Party B; provided, that this provision shall not
restrict or prohibit Party A from joining any other person, including, without limitation,
the Trustee, in any bankruptcy, reorganization, arrangement, insolvency, moratorium or
liquidation proceedings already commenced or other analogous proceedings already commenced
under applicable law.
	 
	(q)	 	Party B Agent. Party A acknowledges that Party B has appointed the Trust Administrator as
its agent under the Pooling and Servicing Agreement to carry out certain functions on behalf
of Party B, and that the Trust Administrator shall be entitled to give notices and to perform
and satisfy the obligations of Party B hereunder on behalf of Party B. It is expressly
understood and agreed by the parties hereto that insofar as this Agreement is executed by the
Trust Administrator (i) this Agreement is delivered by Wells Fargo Bank, N.A., not in its
individual capacity but solely as Trust Administrator under the Pooling and Servicing
Agreement in the exercise of the powers and authority conferred and vested in it thereunder,
(ii) each of the representations, undertakings and agreements herein made on behalf of the
trust formed under the Pooling and Servicing Agreement is made and intended not as personal
representations, undertakings and agreements of the Trust Administrator but is made and
intended solely for the purpose of binding only the trust, and (iii) under no circumstances
shall Wells Fargo Bank, N.A., in its individual capacity be personally liable for the payment
of any indebtedness or expenses or be personally liable for the breach of failure of any
obligation, representation, warranty or covenant made or undertaken by it on behalf of the
Fremont Home Loan Trust 2006-E under this Agreement.

	(r)	 	Limited Recourse. Party A acknowledges and agree that, notwithstanding any provision in this
Agreement to the contrary, the obligations of Party B hereunder are limited recourse
obligations of Party B, payable solely from the Trust and the proceeds thereof, in accordance
with the priority of payments and other terms of the Pooling and Servicing Agreement and that
Party A will not have any recourse to any of the directors, officers, employees, shareholders
or affiliates of the Party B with respect to any claims, losses, damages, liabilities,
indemnities or other obligations in connection with any transactions contemplated hereby.
Notwithstanding the foregoing or anything herein to the contrary, Party A shall not be
precluded from declaring an Event of Default or from exercising any other right or remedy as
set forth in this Agreement or the Pooling and Servicing Agreement.

	(s)	 	Additional Definitions. Section 14 is hereby amended by adding the following
definitions in their appropriate alphabetical order:

“Fitch” means Fitch, Inc.

“Fitch First Rating Trigger” shall mean Party A’s Credit Support Provider shall fail to have
an unsecured long-term senior debt obligation of “A” or above by Fitch or an unsecured,
short term debt obligation of “F1” or above by Fitch.

“Fitch Required Ratings” shall mean a long-term unsecured debt or counterparty rating of “A”
or above by Fitch or an unsecured short-term rating of “F1” or above by Fitch

“Fitch Second Rating Trigger” shall mean Party A’s Credit Support Provider shall fail to
have a an unsecured, long-term senior debt obligation of “BBB+” or above by Fitch or an
unsecured, short-term debt obligation of “F2” or above by Fitch.

“Moody’s” means Moody’s Investor Services, Inc.

“Moody’s First Rating Trigger” shall mean Party A’s Credit Support Provider shall fail to
have both a short-term rating of “Prime-1” and a long-term senior unsecured debt or
counterparty rating of “A2” by Moody’s or, if Party A’s Credit Support Provider does not
have a short-term rating by Moody’s, Party A’s Credit Support Provider shall fail to have a
long-term senior unsecured debt or counterparty rating of “A1” or above by Moody’s.

“Moody’s Required Ratings” shall mean both a short-term rating of “Prime-1” and a long-term
senior unsecured debt or counterparty rating of “A2” by Moody’s or, if an entity or its
Credit Support Provider

31

 

does not have a short-term rating by Moody’s, a long-term senior unsecured debt or
counterparty rating of “A1” or above by Moody’s.

“Moody’s Second Rating Trigger” shall mean Party A’s Credit Support Provider shall fail to
have both a short-term rating of “Prime-2” or above and a long-term senior unsecured debt or
counterparty rating of “A3” or above by Moody’s or, if Party A’s Credit Support Provider
does not have a short-term rating by Moody’s, Party A’s Credit Support Provider shall fail
to have a long-term senior unsecured debt or counterparty rating of “A3” or above by
Moody’s.

“Rating Agency Condition” means, with respect to any particular proposed act or omission to
act hereunder, that the party acting or failing to act has consulted with each Rating Agency
then providing a rating of any Class of Notes and has received from each Rating Agency a
written confirmation that the proposed action or inaction would not cause such Rating Agency
to downgrade or withdraw its then-current rating of any Class of Notes.

“S&P” means Standard & Poor’s Ratings Services, a division of McGraw-Hill, Inc.

“S&P First Rating Trigger” shall mean Party A’s Credit Support Provider shall fail to have a
short-term rating of “A-1” or above by S&P or, if Party A’s Credit Support Provider does not
have a short-term rating by S&P, a long-term unsecured debt or counterparty rating of “A+”
or above by S&P.

“S&P Required Ratings” shall mean a short-term rating of “A-1” or above by S&P or, if an
entity or its Credit Support Provider does not have a short-term rating by S&P, a long-term
unsecured debt or counterparty rating of “A+” or above by S&P.

“S&P Second Rating Trigger” shall mean Party A’s Credit Support Provider shall fail to have
a long-term unsecured debt or counterparty rating of “BBB-” or above by S&P.

“Stockholders’ Equity” means with respect to an entity, at any time, the sum at such time of
(i) its capital stock (including preferred stock) outstanding, taken at par value, (ii) its
capital surplus and (iii) its retained earnings, minus (iv) treasury stock, each to be
determined in accordance with generally accepted accounting principles consistently applied.

“USD” means United States Dollars.

	(t)	 	Waiver of Trial By Jury. Insofar as is permitted by law, each party irrevocably waives any
and all rights to trial by jury in any legal proceeding in connection with this agreement or
any transaction, and acknowledges that this waiver is a material inducement to the other
party’s entering into this agreement and each transaction hereunder.

	(u)	 	Severability. If any term, provision, covenant or condition of this Agreement, or the
application thereof to any party or circumstance, shall be held to be invalid or unenforceable
(in whole or in part) for any reason, the remaining terms, provisions, covenants and
conditions hereof shall continue in full force and effect as if this Agreement had been
executed with the invalid or unenforceable portion eliminated, so long as this Agreement as so
modified continues to express, without material change, the original intentions of the parties
as to the subject matter of this Agreement and the deletion of such portion of this Agreement
will not substantially impair the respective benefits or expectations of the parties to this
Agreement; provided, however, that this severability provision shall not be
applicable if any provision of Section 2, 5, 6 or 13 (or any
definition or provision in Section 14 to the extent it relates to, or is used in or
connection with any such Section) shall be held to be invalid or unenforceable.

	(v)	 	Replacement Agreement. At any time, Party A may designate a Payment Date (as defined in the
Pooling and Servicing Agreement) as an Early Termination Date; provided that Party A
has identified a counterparty (the “New Counterparty”) that (i) satisfies the Required
Ratings and with respect to which the Rating Agency Confirmation is satisfied and (ii) has
agreed to enter into an agreement, effective as of such Early Termination Date, with Party B
on terms substantially identical to the terms of this Agreement, and all Transactions
hereunder (a “Replacement Agreement”). For the purpose of the foregoing designation of

32

 

	 	 	an Early Termination Date, Party A shall be the sole Affected Party and all Transactions
shall be Affected Transactions. If, as a condition to entering into the Replacement
Agreement, the New Counterparty agrees to make a payment to Party B that is less than an
amount required to be paid upon termination as if a Termination Event had occurred and Party
A was the sole Affected Party and all Transactions were Affected Transactions (such amount,
the “Replacement Amount”), then Party B shall pay to Party A an amount equal to the
New Counterparty’s payment, which amount shall be the only amount payable to Party A in
connection with the termination of the Agreement. If, however, as a condition to entering
into the Replacement Agreement, the New Counterparty is to receive a payment from Party B
that is greater than the Replacement Amount, then Party A shall pay to Party B an amount
equal to the amount the New Counterparty is to receive. Upon Party B successfully entering
into a Replacement Agreement, Party A’s obligations to post collateral contemplated by
paragraph 13(b) of the Credit Support Annex shall terminate and Party B shall release its
security interest in, and return to Party A, any then-posted collateral.

	(w)	 	Guarantee Demand. If Party A fails to pay punctually any amounts under this Agreement, to
the extent that Party B desires to exercise its rights under the Guarantee, the Trustee shall
on behalf of Party B, make the written demand for payment pursuant to the Guarantee.
	 
	(x)	 	Reserved.

	(y)	 	Accuracy of Specified Information. Section 3(d) is hereby amended by adding in the
third line thereof after the word “respect” and before the period the words “or, in the case
of audited or unaudited financial statements or balance sheets, a fair presentation of the
financial condition of the relevant person.”

	(z)	 	Escrow Payments. If (whether by reason of the time difference between the cities in which
payments are to be made or otherwise), it is not possible for simultaneous payments to be made
on any date on which both parties are required to make payments hereunder, either party may,
at its option and in its sole discretion, notify the other party that payments on that date
are to be made in escrow. In this case, deposit of the payment due earlier on that date shall
be made by 2:00 p.m. (local time at the place for the earlier payment) on that date with an
escrow agent selected by the notifying party, accompanied by irrevocable payment instructions
(1) to release the deposited payment to the intended recipient upon receipt by the escrow
agent of the required deposit of the corresponding payment from the other party on the same
date accompanied by irrevocable payment instructions to the same effect or (2) if the required
deposit of the corresponding payment is not made on that same date, to return the payment
deposited to the party that paid it into escrow. The party that elects to have payments made
in escrow shall pay all costs of the escrow arrangements and shall cause those arrangements to
provide that the intended recipient of the payment due to be deposited first shall be entitled
to interest on that deposited payment for each day in the period of its deposit at the rate
offered by the escrow agent for that day for overnight deposits in the relevant currency in
the office where it holds that deposited payment (at 11:00 a.m. local time on that day) if
that payment is not released by 5:00 p.m. local time on the date it is deposited for any
reason, other than the intended recipient’s failure to make the escrow deposit it is required
to make hereunder in a timely fashion.

	(aa)	 	Severability. If any term, provision, covenant, or condition of this Agreement, or the
application thereof to any party or circumstance, shall be held to be illegal, invalid or
unenforceable (in whole or in part) for any reason, the remaining terms, provisions, covenants
and conditions hereof shall continue in full force and effect as if this Agreement had been
executed with the illegal, invalid or unenforceable portion eliminated, so long as this
Agreement as so modified continues to express, without material change, the original
intentions of the parties as to the subject matter of this Agreement and the deletion of such
portion of this Agreement will not substantially impair the respective benefits or
expectations of the parties to this Agreement. It shall in particular be understood that this
Severability clause shall not affect the “single agreement” concept of Section 1(c) of the
Master Agreement.

	(bb)	 	Recording of Conversations. Each party consents to the recording of telephone conversations
between trading, marketing and other relevant personnel of the parties in connection with this
Agreement or any potential Transaction. Promptly upon the request by a party, the other party
will provide a copy of such recording to the party making the request.

33

 

	(cc)	 	Other Criteria. Notwithstanding anything to the contrary herein, in the event that S&P has
other published criteria with respect to the downgrade of counterparty in effect at the time
of such a downgrade of Party A, Party A shall be entitled to elect to take such other measures
specified in such published criteria subject to Rating Agency Confirmation by S&P.

     The parties executing this Schedule have executed the Master Agreement and have agreed as to
the contents of this Schedule.

	 	 	 
	LEHMAN BROTHERS 

SPECIAL FINANCING INC.

	 	WELLS FARGO BANK, N.A., not in its individual
or corporate capacity but solely as Trust
Administrator for FREMONT HOME LOAN TRUST
2006-E, Mortgage-Backed Certificates, Series
2006-E, pursuant to a Pooling and Servicing
Agreement

	 	 	 
	Party A
	 	Party B

	 	 	 
	/s/ Allyson M. Carine

	 	/s/ Peter A. Gobell
	 

	 	 
	Name: Allyson M. Carine

	 	Name: Peter A. Gobell
	Title: Authorized Signatory

	 	Title: Vice President
	Date:

	 	Date: December 6, 2006

34

 

Lehman Brothers

EXHIBIT A to Schedule

GUARANTEE OF LEHMAN BROTHERS HOLDINGS INC.

LEHMAN BROTHERS SPECIAL FINANCING INC. (“Party A”) and WELLS FARGO BANK, N.A., not in its
individual or corporate capacity but solely as Trust Administrator for FREMONT HOME LOAN TRUST
2006-E, Mortgage-Backed Certificates, Series 2006-E, pursuant to a Pooling and Servicing Agreement
(“Party B”) have entered into a Master Agreement dated as of December 6, 2006, as amended from time
to time (the “Master Agreement”), pursuant to which Party A and Party B have entered and/or
anticipate entering into one or more transactions (each a “Transaction”), the Confirmation of each
of which supplements, forms part of, and will be read and construed as one with, the Master
Agreement (collectively referred to as the “Agreement”). This Guarantee is a Credit Support
Document as contemplated in the Agreement. For value received, and in consideration of the
financial accommodation accorded to Party A by Party B under the Agreement, LEHMAN BROTHERS
HOLDINGS INC., a corporation organized and existing under the laws of the State of Delaware
(“Guarantor”), hereby agrees to the following:

     (a) Guarantor hereby unconditionally guarantees to Party B the due and punctual payment of all
amounts payable by Party A in connection with each Transaction when and as Party A’s obligations
thereunder shall become due and payable in accordance with the terms of the Agreement (whether at
maturity, by acceleration or otherwise). Guarantor hereby agrees, upon written demand by Party B,
to pay or cause to be paid any such amounts punctually when and as the same shall become due and
payable.

     (b) Guarantor hereby agrees that its obligations under this Guarantee constitute a guarantee
of payment when due and not of collection.

     (c) Guarantor hereby agrees that its obligations under this Guarantee shall be unconditional,
irrespective of the validity, regularity or enforceability of the Agreement against Party A (other
than as a result of the unenforceability thereof against Party B), the absence of any action to
enforce Party A’s obligations under the Agreement, any waiver or consent by Party B with respect to
any provisions thereof, the entry by Party A and Party B into any amendments to the Agreement,
additional Transactions under the Agreement or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor (excluding the defense of
payment or statute of limitations, neither of which is waived) provided, however, that Guarantor
shall be entitled to exercise any right that Party A could have exercised under the Agreement to
cure any default in respect of its obligations under the Agreement or to setoff, counterclaim or
withhold payment in respect of any Event of Default or Potential Event of Default in respect of
Party B or any Affiliate, but only to the extent such right is provided to Party A under the
Agreement. The Guarantor acknowledges that Party A and Party B may from time to time enter into one
or more Transactions pursuant to the Agreement and agrees that the obligations of the Guarantor
under this Guarantee will upon the execution of any such Transaction by Party A and Party B extend
to all such Transactions without the taking of further action by the Guarantor.

     (d) This Guarantee shall remain in full force and effect until the first to occur of (i)
receipt by Party B of a written notice of termination from Guarantor or (ii) none of the
obligations of Party A remain outstanding. Termination of this Guarantee shall not affect
Guarantor’s liability hereunder as to obligations incurred or arising out of Transactions entered
into prior to the termination hereof.

     (e) Guarantor further agrees that this Guarantee shall continue to be effective or be
reinstated, as the case may be, if at any time, payment, or any part thereof, of any obligation or
interest thereon is rescinded or must otherwise be restored by Party B upon an Event of Default as
set forth in Section 5(a)(vii) of the Master Agreement affecting Party A or Guarantor.

     (f) Guarantor hereby waives (i) promptness, diligence, presentment, demand of payment,
protest, order and, except as set forth in paragraph (a) hereof, notice of any kind in connection
with the Agreement and this Guarantee, or (ii) any requirement that Party B exhaust any right to
take any action against Party A or any other person prior to or contemporaneously with proceeding
to exercise any right against Guarantor under this Guarantee.

Lehman Brothers Holdings Inc.

745 Seventh Avenue, New York, New York 10019

1

 

Lehman Brothers

     This Guarantee shall be governed by and construed in accordance with the laws of the
State of New York without regard to conflicts of laws principles. All capitalized terms not defined
in this Guarantee, but defined in the Agreement, shall have the meanings assigned thereto in the
Agreement.

     IN WITNESS WHEREOF, Guarantor has caused this Guarantee to be executed by its duly authorized
officer as of the date of the Agreement.

	 	 	 	 	 	 	 
	 	 	LEHMAN BROTHERS HOLDINGS INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	Date:	 	 	 	 

Lehman Brothers Holdings Inc.

745 Seventh Avenue, New York, New York 10019

2

 

EXHIBIT B to Schedule

[Form of Opinion of Counsel for Party B]

[Date]                                                            

Lehman Brothers Special Financing Inc.

c/o Lehman Brothers Inc.

745 Seventh Avenue, 28th Floor

New York, New York 10019

USA

1

 

EXHIBIT C to Schedule

[Form of Opinion of Counsel for

Lehman Brothers Special Financing Inc. and

Lehman Brothers Holdings Inc.]

December 6, 2006                                                            

Wells Fargo Bank, N.A. not individually,

but solely as the trust administrator

on behalf of Fremont Home Loan Trust 2006-E

9062 Old Annapolis Road

Columbia, MD 21045

Ladies and Gentlemen:

     I have acted as counsel to Lehman Brothers Special Financing Inc., a Delaware corporation
(“Party A”) and Lehman Brothers Holdings Inc., a Delaware corporation (“Guarantor”), and am
familiar with matters pertaining to the execution and delivery of the Master Agreement (the “Master
Agreement”) dated as of December 6, 2006 between Party A and WELLS FARGO BANK, N.A., not in its
individual or corporate capacity but solely as Trust Administrator for FREMONT HOME LOAN TRUST
2006-E, Mortgage-Backed Certificates, Series 2006-E, pursuant to a Pooling and Servicing Agreement
and the guarantee of Guarantor (the "Guarantee") delivered in connection with the Master Agreement.

     In connection with this opinion, I have examined, or have had examined on my behalf, an
executed copy of the Master Agreement and the Guarantee, certificates and statements of public
officials and officers of Party A and Guarantor and such other agreements, instruments, documents
and records as I have deemed necessary or appropriate for the purposes of this opinion.

     Except as expressly set forth herein, no independent investigation (including, without
limitation, conducting any review, search or investigation of any public files, records or dockets)
has been undertaken to determine the existence or absence of the facts that are material to my
opinions, and no inference as to my knowledge concerning such facts should be made.

     When used herein the phrase “to my knowledge” means to my actual knowledge without independent
investigation.

     References in this letter to “Applicable Laws” are to those laws, rules and regulations of the
State of New York which, in my experience, are normally applicable to transactions of the type
contemplated by the Master Agreement and the Guarantee. References in this letter to “Governmental
Authorities” are to executive, legislative, judicial, administrative or regulatory bodies of the
State of New York. References in this letter to “Governmental Approval” are to any consent,
approval, license, authorization or validation of, or filing, recording or registration with, any
Governmental Authority pursuant to Applicable Laws.

     Based on the foregoing but subject to the assumptions, exceptions, qualifications and
limitations hereinafter expressed, I am of the opinion that:

	 	1.	 	Each of Party A and Guarantor is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.
	 
	 	2.	 	The execution, delivery and performance of the Master Agreement in the case
of Party A, and the Guarantee, in the case of Guarantor, are within its corporate
power, have been

1

 

	 	 	 	duly authorized by all corporate action and do not conflict with any provision of
its certificate of incorporation or by-laws.
	 
	 	3.	 	The Master Agreement, in the case of Party A, and the Guarantee, in the case
of Guarantor, have been duly executed and delivered and each constitutes a legal,
valid and binding obligation, enforceable against it in accordance with its respective
terms.
	 
	 	4.	 	To the best of my knowledge, no Governmental Approval is required in
connection with the execution, delivery and performance of the Master Agreement in the
case of Party A, or the Guarantee, in the case of Guarantor, except those that have
been obtained and, to my knowledge, are in effect.

     The foregoing opinions are subject to the following assumptions, exceptions, qualifications
and limitations:

     A. My opinion in paragraph 3 above is subject to: (i) bankruptcy, insolvency, reorganization,
receivership, moratorium or similar laws affecting creditors’ rights generally (including, without
limitation, the effect of statutory or other laws regarding fraudulent or other similar transfers
or conveyances); (ii) general principles of equity, regardless of whether enforceability is
considered in a proceeding in equity or at law; (iii) laws and considerations of public policy that
may limit the enforceability of provisions (a) regarding the termination and close-out methodology
under the Master Agreement, including but not limited to Section 6(e), (b) regarding
indemnification and contribution rights and obligations, (c) regarding the waiver or limitation
of rights to trial by jury, oral amendments to written agreements or rights of setoff, (d) relating
to submission to jurisdiction, venue or service of process, and (e) purporting to prohibit or
restrict, or require the consent of the “account debtor” (as defined in Section 9-102 of the
Uniform Commercial Code as in effect in the State of New York (the “NYUCC” )) for, the creation,
perfection or enforcement of a security interest in “accounts” or “general intangibles” (in each
case, as defined in Section 9-102 of the NYUCC).

     B. I am a member of the Bar of the State of New York and render no opinion on the laws of any
jurisdiction other than the laws of the State of New York and the General Corporation Law of the
State of Delaware. Except as described, I have not examined, or had examined on my behalf, and I
do not express any opinion with respect to, Delaware law.

     C. My opinions are limited to the present laws and to the facts as they presently exist, and
no opinion is to be inferred or implied beyond the matters expressly so stated. I assume no
obligation to revise or supplement this opinion should the present laws of the jurisdictions
referred to in paragraph B above be changed by legislative action, judicial decision or otherwise.

     D. This letter is rendered solely to you solely for your benefit in connection with the Master
Agreement and the Guarantee and the transactions related thereto and may not be relied upon by any
other person, entity or agency or by you in any other context or for any other purpose. This
letter may not be circulated, used or quoted in whole or in part, nor may copies thereof be
furnished or delivered to any other person, without the prior written consent of Lehman Brothers
Holdings Inc., except that you may furnish copies hereof (i) to your independent auditors and
attorneys, (ii) to any United States, state or local authority having jurisdiction over you or
over Party A or Guarantor, (iii) pursuant to the order of any legal process of any court of
competent jurisdiction or any governmental agency, and (iv) in connection with any legal action
arising out of the Master Agreement or the Guarantee.

     E. I have assumed with your permission (i) the genuineness of all signatures by each party
other than Party A or Guarantor, (ii) the authenticity of documents submitted to me as originals
and the conformity to authentic original documents of all documents submitted to me as copies,
(iii) the accuracy of the matters set forth in the documents, agreements and instruments I
reviewed, (iv) that each party other than Party A and Guarantor is duly organized, validly existing
and in good standing under the laws of its

2

 

jurisdiction of organization, (v) the due execution and delivery, pursuant to due
authorization, of the Master Agreement by each party other than Party A, and (vi) that the Master
Agreement is the legal, valid, binding and enforceable obligation of each party other than Party A,
enforceable against each such party in accordance with its terms.

     F. My opinion in paragraph 3 is subject to the qualification that certain provisions contained
in the Agreement and the Guarantee may not be enforceable, but such unenforceability will not
render the Agreement or the Guarantee invalid as a whole or substantially interfere with the
practical realization of the principal benefits provided thereby.

     The foregoing opinions are given on the express understanding that the undersigned is an
officer of Lehman Brothers Inc. and shall in no event incur any personal liability in connection
with said opinions.

Very truly yours,

3

 

ISDAÒ

International Swaps and Derivatives Association, Inc.

CREDIT SUPPORT ANNEX

to the Schedule to the

Master Agreement

dated as of December 6, 2006

between

	 	 	 
	LEHMAN BROTHERS
SPECIAL FINANCING INC.

	 	WELLS FARGO BANK, N.A., not in its individual or
corporate capacity but solely as Trust Administrator
for FREMONT HOME LOAN TRUST 2006-E, Mortgage-Backed
Certificates, Series 2006-E, pursuant to a Pooling and
Servicing Agreement.
	Party A

	 	Party B

This Annex supplements, forms part of, and is subject to, the above-referenced Agreement, is part
of its Schedule and is a Credit Support Document under this Agreement with respect to each party.

Accordingly, the parties agree as follows:

Paragraph 1. Interpretation

(a) Definitions and Inconsistency. Capitalized terms not otherwise defined herein or elsewhere in
this Agreement have the meanings specified pursuant to Paragraph 12, and all references in this
Annex to Paragraphs are to Paragraphs of this Annex. In the event of any inconsistency between
this Annex and the other provisions of this Schedule, this Annex will prevail and in the event of
any inconsistency between Paragraph 13 and the other provisions of this Annex, Paragraph 13 will
prevail.

(b) Secured Party and Pledgor. All references in this Annex to the “Secured Party” will be to
either party when acting in that capacity and all corresponding references to the “Pledgor” will be
to the other party when acting in that capacity; provided, however, that if Other Posted Support is
held by a party to this Annex, all references herein to that party as the Secured Party with
respect to that Other Posted Support will be to that party as the beneficiary thereof and will not
subject that support or that party as the beneficiary thereof to provisions of law generally
relating to security interests and secured parties.

Paragraph 2. Security Interest

Each party, as the Pledgor, hereby pledges to the other party, as the Secured Party, as security
for its Obligations, and grants to the Secured Party a first priority continuing security interest
in, lien on and right of Set-off against all Posted Collateral Transferred to or received by the
Secured Party hereunder. Upon the Transfer by the Secured Party to the Pledgor of Posted
Collateral, the security interest and lien granted hereunder on that Posted Collateral will be
released immediately and, to the extent possible, without further action by either party.

Copyright ã 1994 by International Swaps and Derivatives Association, Inc.

 

 

CREDIT SUPPORT ANNEX

Elections and Variables

dated as of December 6, 2006

between

LEHMAN BROTHERS SPECIAL FINANCING INC.

(hereinafter referred to as “Party A” or “Pledgor”)

and

WELLS FARGO BANK, N.A., not in its individual or corporate capacity but solely as Trust
Administrator for FREMONT HOME LOAN TRUST 2006-E, Mortgage-Backed Certificates, Series 2006-E,
pursuant to a Pooling and Servicing Agreement

(hereinafter referred to as “Party B” or “Secured Party”)

Paragraph 13. Elections and Variables

	(a)	 	Security Interest for “Obligations”. The term “Obligations” as used in this Annex includes
the following additional obligations:
	 
	 	 	With respect to Party A, not applicable.
	 
	 	 	With respect to Party B, not applicable.
	 
	(b)	 	Credit Support Obligations.

	 	(i)	 	Delivery Amount, Return Amount and Credit Support Amount

	 	(A)	 	“Delivery Amount” has the meaning specified in Paragraph
3(a)
	 
	 	(B)	 	“Return Amount” has the meaning specified in Paragraph 3(b).
	 
	 	(C)	 	“Credit Support Amount” has the meaning specified in
Paragraph 13(p).

	 	(ii)	 	Eligible Collateral. At such time as Party A is required to post collateral
pursuant to Part 1(i)(B) of the Schedule), the following items will qualify as
“Eligible Collateral” (together with such other collateral types (and related
valuation percentages) with respect to which Rating Agency Confirmation is provided):

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Moody’s	 	Moody’s	 	 
	 	 	S&P	 	First Trigger	 	Second Trigger	 	 
	 	 	Valuation	 	Valuation	 	Valuation	 	Fitch Valuation
	Collateral	 	Percentage	 	Percentage	 	Percentage	 	Percentage
	(A) Cash
	 	 	100	%	 	 	100	%	 	 	100	%	 	 	100	%
	(B) Fixed-rate
negotiable debt
obligations issued
by the U.S.
Treasury Department
having a maturity
at issuance on such
date of not more
than one year.
	 	 	98.5	%	 	 	100	%	 	 	100	%	 	 	97.5	%
	(C) Fixed-rate
negotiable debt
obligations issued
by the U.S.
Treasury Department
having a maturity
at issuance on such
date of more than
one year but not
more than ten
years.
	 	 	89.9	%	 	 	100	%	 	 	94	%	 	 	86.3	%
	(D) Fixed-rate
negotiable debt
obligations issued
by the U.S.
Treasury Department
having a at
maturity at
issuance on such
date of more than
ten years.
	 	 	83.9	%	 	 	100	%	 	 	87	%	 	 	86.7	%

11

 

	 	(iii)	 	Other Eligible Support. The following items will qualify as “Other Eligible
Support” for the party specified: Not applicable.
	 
	 	(iv)	 	Thresholds.

	 	(A)	 	“Independent Amount” shall not be applicable with respect to
Party A or Party B unless otherwise specified in a Confirmation.
	 
	 	(B)	 	“Threshold” means, with respect to Party A, zero at any
time that (1) Party A (or to the extent applicable, its Credit Support
Provider) does not have the S&P Required Ratings and has failed to transfer
its rights and obligations under this Agreement within 30 days of its
downgrade or (2) Party A (or to the extent applicable, its Credit Support
Provider) does not have the Moody’s Required Ratings or (3) Party A (or to
the extent applicable, its Credit Support Provider) does not have the Fitch
Required Ratings as set forth in Part 1(i)(B); otherwise the Threshold shall
be unlimited.
	 
	 	(C)	 	“Minimum Transfer Amount” means, with respect to a party,
$100,000. If the aggregate Principal Balance of the Certificates rated by
S&P ceases to be more than USD 50,000,000, the Minimum Transfer Amount shall
be USD 50,000.
	 
	 	(D)	 	“Rounding”. The Delivery Amount and the Return Amount will
be rounded up and down respectively to the nearest integral multiple of
$1,000.

	 	(v)	 	"Exposure” has the meaning specified in Paragraph 12, except that (1) after
the word “Agreement” the words “(assuming, for this purpose only, that Part (1)(f)
“Calculations” of the Schedule is deleted)” shall be inserted and (2) at the end of
such definitions, the words “with terms substantially the same as those of this
Agreement”

	(c)	 	Valuation and Timing.

	 	(i)	 	“Valuation Agent” means Party A. All calculations by the Valuation Agent
must be made in accordance with standard market practice, including, in the event of
a dispute as to the Value of any Eligible Credit Support or Posted Credit Support, by
making reference to quotations received by the Valuation Agent from commonly accepted
third party sources.
	 
	 	(ii)	 	“Valuation Date” means, for purposes of each time that Party A is required to
post collateral pursuant to Part 1(i)(B) of the Schedule, each Wednesday or, if such
day is not a Local Business Day, the next following Local Business Day.
	 
	 	(iii)	 	“Valuation Time” means the close of business in the location where the
relevant product is traded, provided that the calculations of Value and Exposure will
made as of approximately the same time on the same date.
	 
	 	(iv)	 	“Notification Time” means 3:00 p.m., New York time, on a Local Business Day.

	(d)	 	Conditions Precedent and Secured Party’s Rights and Remedies. There will be no Specified
Conditions for Party A and Party B.

	(e)	 	Substitution

	 	(i)	 	“Substitution Date” has the meaning specified in Paragraph 4(d)(ii).
	 
	 	(ii)	 	“Consent.” The Pledgor need not obtain the Secured Party’s consent for any
substitution pursuant to Paragraph 4(d).

	(f)	 	Dispute Resolution

	 	(i)	 	“Resolution Time” means 1:00 p.m. on the Local Business Day following the
date on

12

 

	 	 	 	which notice is given that gives rise to a default.
	 
	 	(ii)	 	Value. For the purpose of Paragraph 5(i)c) and 5(ii), the Value of Posted
Credit Support will be calculated as follows:
	 
	 	 	 	With respect to any Eligible Collateral in the form of securities listed in
Paragraph 13(b)(ii) (referred to herein as “Collateral Obligations”) the sum of
(I)(x) the bid price quoted on such date by a mutually acceptable principal market
maker for such Collateral Obligations, or (y) if no such quotation is available
from a principal market maker for such date, such bid price as of the day, next
preceding such date, on which such quotation was available, in either case
multiplied by the applicable Valuation Percentage, plus (II) the accrued interest
on such Collateral Obligations (except to the extent Transferred to a party
pursuant to any applicable section of this Agreement or included in the applicable
price referred to in (I) of this Clause) as of such date.
	 
	 	 	 	With respect to any Cash, the face amount thereof.
	 
	 	(ii)	 	“Alternative.” Paragraph 5 will apply.

	(g)	 	Holding and Using Posted Collateral.

	 	(i)	 	“Eligibility to Hold Posted Collateral; Custodians.”
	 
	 	 	 	Party B and or its Custodian will be entitled to hold Posted Collateral pursuant
to Paragraph 6(b), provided that the following conditions applicable to it
are satisfied:

	 	(1)	 	The Custodian is a bank or trust company located in the
United States having total assets of at least $250,000,000 and a short term
unsecured debt or counterparty rating of “Prime-1” from Moody’s and “A-1”
from Standard & Poor‘s or is the Trust Administrator; and F1 from Fitch.

	 	 	 	Initially, the Custodian for Party B is: the Trust Administrator pursuant to the
Pooling and Servicing Agreement.
	 
	 	(ii)	 	“Use of Posted Collateral” The provisions of Paragraph 6(c) will not apply
with respect to the collateral posted by Party A.
	 
	 	(iii)	 	The Custodian for Party B shall hold Eligible Credit Support in an Eligible
Account segregated from the Swap Account, as defined in the related Pooling and
Servicing Agreement.

	(h)	 	Distributions and Interest Amount.

	 	(i)	 	“Interest Rate. The Interest Rate will be the rate per annum equal to the
overnight Federal Funds Rate for each day cash is held by the Secured Party as
reported in Federal Reserve Publication H.15-519. Party B’s Custodian shall hold
Posted Collateral in the form of Cash in such deposit or investment account as
specified by Party A to Party B and reasonably acceptable to Party B’s Custodian.
	 
	 	(ii)	 	“Transfer of Interest Amount.” The Transfer of the Interest Amount will be
made on the second Local Business Day of each calendar month and on any Local Business
Day that Posted Collateral in the form of Cash is Transferred to the Pledgor pursuant
to Paragraph 3(b); in each case to the extent that a Delivery Amount would not be
created or increased by that Transfer, provided that Party B shall not be obliged to
so Transfer any Interest Amount unless and until it has earned and received such
interest.
	 
	 	(iii)	 	“Alternative to Interest Amount.” The provisions of Paragraph 6(d)(ii) will
apply.

	(i)	 	Additional Representation(s). Not applicable.
	 
	(j)	 	“Other Eligible Support and Other Posted Support.”

13

 

	 	(i)	 	“Value” with respect to Other Eligible Support and Other Posted Support
means: Not applicable.
	 
	 	(ii)	 	“Transfer” with respect to Other Eligible Support and Other Posted Support
means: Not applicable.

	(k)	 	Demands and Notices. All demands, specifications and notices made by a party to this Annex
will be made pursuant to the Notices Section of this Agreement.
	 
	(l)	 	Addresses for Transfers. As agreed upon between the parties from time to time.
	 
	(m)	 	Agreement as to Single Secured Party and Pledgor. Party A and Party B agree that,
notwithstanding anything to the contrary in the recital of this Annex, Paragraph 1(b) or
Paragraph 2 of the definitions in Paragraph 12, (a) the term “Secured Party” as used in this
Annex means only Party B, (b) the term “Pledgor” as used in this Annex means only Party A, (c)
only Party A makes the pledge and grant in Paragraph 2, the acknowledgment in the final
sentence of Paragraph 8(a) and the representations in Paragraph 9 and (d) only Party A will be
required to post Eligible Credit Support hereunder. Party A also agrees that it shall pay all
costs of transferring Eligible Credit Support required to be delivered by Party A hereunder.
	 
	(n)	 	Costs of Transfer on Exchange. Notwithstanding Paragraph 10, the Pledgor will be responsible
for, and will reimburse the Secured Party for, all transfer and other taxes and other costs
involved in the transfer of Eligible Credit Support either from the Pledgor to the Secured
Party or from the Secured Party to the Pledgor.
	 
	(o)	 	Cumulative Rights. The rights, powers and remedies of the Secured Party under this Annex
shall be in addition to all rights, powers and remedies given to the Secured Party by the
Agreement or by virtue of any statue or rule of law, all of which rights, powers and remedies
shall be cumulative and may be exercised successively or concurrently without impairing the
rights of the Secured Party in the Posted Credit Support created pursuant to this Annex.
	 
	(p)	 	Ratings Criteria

	 	 	 	“Credit Support Amount” shall be the greater of (a) the S&P Credit Support Amount,
(b) the Fitch Credit Support Amount, and (c) the Moody’s First Trigger Credit
Support Amount, or the Moody’s Second Trigger Credit Support Amount, as applicable.

	 	 	With respect to Fitch:

	 	 	 	“Fitch Credit Support Amount” means, for any Valuation Date, the excess, if any,
of:

	 	(I)	(A) 	for any Valuation Date (x) on which a Collateralization
Event with respect to Fitch has occurred and been continuing for at least 30
calendar days or (y) on which a Ratings Event with respect to Fitch has
occurred and is continuing, an amount equal to the sum of (1) the aggregate
Secured Party’s Exposure for such Valuation Date with respect to all
Transactions and (2) the aggregate of the products of the Volatility Buffer
for each Transaction and the Notional Amount of each Transaction for the
Calculation Period of each such Transaction which includes such Valuation
Date, or
	 
	 	 	(B)	for any other Valuation Date, zero, over

14

 

	 	(II)	 	the Threshold for Party A for such Valuation Date.

	 	 	 	“Volatility Buffer” shall mean the percentage set forth in the following table with
respect to any Transaction (other than a Transaction identified in the related
Confirmation as a Timing Hedge):

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Weighted Average Life (Years)
	Notes' Rating	 	1	 	2	 	3	 	4	 	5	 	6	 	7	 	8	 	9	 	10	 	11	 	12	 	13	 	14	 	>=15
	 
	USD Interest Rate Swaps	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	AA- or Better
	 	 	0.8	 	 	 	1.7	 	 	 	2.5	 	 	 	3.3	 	 	 	4.0	 	 	 	4.7	 	 	 	5.3	 	 	 	5.9	 	 	 	6.5	 	 	 	7.0	 	 	 	7.5	 	 	 	8.0	 	 	 	8.5	 	 	 	9.0	 	 	 	9.5	 
	A+/A
	 	 	0.6	 	 	 	1.2	 	 	 	1.8	 	 	 	2.3	 	 	 	2.8	 	 	 	3.3	 	 	 	3.8	 	 	 	4.2	 	 	 	4.6	 	 	 	5.0	 	 	 	5.3	 	 	 	5.7	 	 	 	6.0	 	 	 	6.4	 	 	 	6.7	 
	A-/BBB+
	 	 	0.5	 	 	 	1.0	 	 	 	1.6	 	 	 	2.0	 	 	 	2.5	 	 	 	2.9	 	 	 	3.3	 	 	 	3.6	 	 	 	4.0	 	 	 	4.3	 	 	 	4.7	 	 	 	5.0	 	 	 	5.3	 	 	 	5.6	 	 	 	5.9	 

	 	 	With respect to Moody’s:

	 	 	 	“Moody’s First Trigger Credit Support Amount” means, for any Valuation Date,
the excess, if any, of

	 	(I)	 	(A) for any Valuation Date on which (I) a First Trigger
Failure Condition has occurred and has been continuing (x) for at least 30
Local Business Days or (y) since this Annex was executed and (II) it is not
the case that a Moody’s Second Trigger Event has occurred and been continuing
for at least 30 Local Business Days, an amount equal to the greater of (a)
zero and (b) the sum of the Secured Party’s aggregate Exposure for all
Transactions and the aggregate of Moody’s Additional Collateralized Amounts
for each Transaction.
	 
	 	 	 	For the purposes of this definition, the “Moody’s Additional
Collateralized Amount” with respect to any Transaction shall mean:
	 
	 	 	 	the product of the applicable Moody’s First Trigger Factor set forth in
Table 1 annexed hereto as Exhibit A to this Credit Support Annex and the
Notional Amount for such Transaction for the Calculation Period which
includes such Valuation Date; or

	 	(B)	 	for any other Valuation Date, zero, over

	 	(II)	 	the Threshold for Party A on such Valuation Date.

	 	 	 	“First Trigger Failure Condition” means that no Relevant Entity has credit ratings
from Moody’s at least equal to the Moody’s First Trigger Required Ratings.
	 
	 	 	 	“Moody’s First Trigger Value” means, on any date and with respect to any Eligible
Collateral other than Cash, the bid price obtained by the Valuation Agent
multiplied by the Moody’s First Trigger Valuation Percentage for such Eligible
Collateral set forth in Paragraph 13(b)(ii).
	 
	 	 	 	“Moody’s First Trigger Notional Amount Multiplier” means (A) if each Local Business
Day is a Valuation Date, 2%, or (B) otherwise, 4%.
	 
	 	 	 	“Moody’s Second Trigger Credit Support Amount” means, for any Valuation Date,
the excess, if any, of

15

 

	 	(I)	 	(A) for any Valuation Date on which it is the case that a
Second Trigger Failure Condition has occurred and been continuing for at least
30 Local Business Days, an amount equal to the greatest of (a) zero, (b) the
aggregate amount of the next payments due to be paid by Party A under each
Transaction and (c) the sum of the Secured Party’s aggregate Exposure and the
aggregate of Moody’s Additional Collateralized Amounts for each Transaction.
	 
	 	 	 	For the purposes of this definition, the “Moody’s Additional
Collateralized Amount“with respect to any Transaction shall mean:
	 
	 	 	 	if such Transaction is not a Transaction-Specific Hedge,
	 
	 	 	 	the product of the applicable Moody’s Second Trigger Factor set forth in
Table 2 annexed hereto as Exhibit B to this Credit Support Annex and the
Notional Amount for such Transaction for the Calculation Period which
includes such Valuation Date; or
	 
	 	 	 	if such Transaction is a Transaction-Specific Hedge,
	 
	 	 	 	the product of the applicable Moody’s Second Trigger Factor set forth in
Table 3 and the Notional Amount for such Transaction for the Calculation
Period which includes such Valuation Date; or

	 	(B)	 	for any other Valuation Date, zero, over

	 	(II)	 	the Threshold for Party A for such Valuation Date.

	 	 	 	“Transaction-Specific Hedge” means any Transaction that is an interest rate cap,
interest rate floor or interest rate swaption, or an interest rate swap if (x) the
notional amount of the interest rate swap is “balance guaranteed” or (y) the
notional amount of the interest rate swap for any Calculation Period otherwise is
not a specific dollar amount that is fixed at the inception of the Transaction.
	 
	 	 	 	“Second Trigger Failure Condition” means that no Relevant Entity has credit ratings
from Moody’s at least equal to the Moody’s Second Trigger Ratings Threshold.
	 
	 	 	 	“Moody’s Second Trigger Transaction-Specific Hedge Notional Amount Multiplier”
means (A) if each Local Business Day is a Valuation Date, 10%, or (B) otherwise,
11%.
	 
	 	 	 	“Moody’s Second Trigger Value” means, on any date and with respect to any Eligible
Collateral other than Cash, the bid price obtained by the Valuation Agent
multiplied by the Moody’s Second Trigger Valuation Percentage for such Eligible
Collateral set forth in Paragraph 13(b)(ii).
	 
	 	 	 	“Moody’s Second Trigger Notional Amount Multiplier” means (A) if each Local
Business Day is a Valuation Date, 8% or (B) otherwise, 9%.

	 	 	With respect to S&P:

	 	 	 	“S&P Credit Support Amount” means, for any Valuation Date, the excess, if any, of:

	 	(I)	 	(A) for any Valuation Date (x) on which a Collateralization
Event with respect to S&P has occurred and been continuing for at least 30

16

 

	 	 	 	calendar days or (y) on which a Ratings Event with respect to S&P
has occurred and is continuing, an amount equal to the sum of (1)
the aggregate Secured Party’s Exposure for such Valuation Date
with respect to all Transactions and (2) the aggregate of the
products of the Volatility Buffer for each Transaction and the
Notional Amount of each Transaction for the Calculation Period of
each such Transaction which includes such Valuation Date, or
	 
	 	(B)	 	for any other Valuation Date, zero, over

	 	(II)	 	the Threshold for Party A for such Valuation Date.

	 	 	 	“Volatility Buffer” shall mean the percentage set forth in the following table with
respect to any Transaction (other than a Transaction identified in the related
Confirmation as a Timing Hedge):

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Short-term credit	 	Remaining	 	Remaining	 	Remaining Weighted	 	Remaining
	rating of Party A’s	 	Weighted Average	 	Weighted Average	 	Average Life	 	Weighted Average
	Credit Support	 	Life Maturity up to	 	Life Maturity up to	 	Maturity	 	Life Maturity up to
	Provider	 	3 years	 	5 years	 	up to 10 years	 	30 years
	At least “A-2”
	 	 	2.75	 	 	 	3.25	 	 	 	4.00	 	 	 	4.75	 
	“A-3”
	 	 	3.25	 	 	 	4.00	 	 	 	5.00	 	 	 	6.25	 
	“BB+” or lower
	 	 	3.50	 	 	 	4.50	 	 	 	6.75	 	 	 	7.50	 

     The parties executing this Credit Support Annex have executed the Master Agreement and have
agreed as to the contents of this Credit Support Annex.

	 	 	 
	LEHMAN BROTHERS SPECIAL FINANCING INC.

	 	WELLS FARGO BANK, N.A., not in its
individual or corporate capacity
but solely as Trust Administrator
for FREMONT HOME LOAN TRUST 2006-E,
Mortgage-Backed Certificates,
Series 2006-E, pursuant to a
Pooling and Servicing Agreement.
	 
	 	 
	Party A

	 	Party B
	 
	 	 
	/s/ Allyson M. Carine

	 	/s/ Peter A. Gobell
	 

	 	 
	Name: Allyson M. Carine

	 	Name: Peter A. Gobell
	Title: Authorized Signatory

	 	Title: Vice President
	Date:

	 	Date: December 6, 2006

17

 

Exhibit A to Credit Support Annex

Table 1

Moody’s First Trigger Factor

If “Valuation Date” means “each Wednesday or, if such day is not a Local Business Day, the next

following Local Business Day”, the “Weekly Collateral

	 	 	 	 	 
	Remaining	 	Weekly
	Weighted Average Life	 	Collateral
	of Hedge in Years 	 	Posting
	1 or less
	 	 	0.25	%
	More than 1 but not more than 2
	 	 	0.50	%
	More than 2 but not more than 3
	 	 	0.70	%
	More than 3 but not more than 4
	 	 	1.00	%
	More than 4 but not more than 5
	 	 	1.20	%
	More than 5 but not more than 6
	 	 	1.40	%
	More than 6 but not more than 7
	 	 	1.60	%
	More than 7 but not more than 8
	 	 	1.80	%
	More than 8 but not more than 9
	 	 	2.00	%
	More than 9 but not more than 10
	 	 	2.20	%
	More than 10 but not more than 11
	 	 	2.30	%
	More than 11 but not more than 12
	 	 	2.50	%
	More than 12 but not more than 13
	 	 	2.70	%
	More than 13 but not more than 14
	 	 	2.80	%
	More than 14 but not more than 15
	 	 	3.00	%
	More than 15 but not more than 16
	 	 	3.20	%
	More than 16 but not more than 17
	 	 	3.30	%
	More than 17 but not more than 18
	 	 	3.50	%
	More than 18 but not more than 19
	 	 	3.60	%
	More than 19 but not more than 20
	 	 	3.70	%
	More than 20 but not more than 21
	 	 	3.90	%
	More than 21 but not more than 22
	 	 	4.00	%
	More than 22 but not more than 23
	 	 	4.00	%
	More than 23 but not more than 24
	 	 	4.00	%
	More than 24 but not more than 25
	 	 	4.00	%
	More than 25 but not more than 26
	 	 	4.00	%
	More than 26 but not more than 27
	 	 	4.00	%
	More than 27 but not more than 28
	 	 	4.00	%
	More than 28 but not more than 29
	 	 	4.00	%
	More than 29
	 	 	4.00	%

 

 

Exhibit B to the Credit Support Annex

Table 2

Moody’s Second Trigger Factor for Transaction-Specific Hedges

If “Valuation Date” means the first Local Business Day in each

week, the “Weekly Collateral Posting” column will apply.

	 	 	 	 	 
	Remaining	 	Weekly
	Weighted Average Life	 	Collateral
	of Hedge in Years	 	Posting
	1 or less
	 	 	0.75	%
	More than 1 but not more than 2
	 	 	1.50	%
	More than 2 but not more than 3
	 	 	2.20	%
	More than 3 but not more than 4
	 	 	2.90	%
	More than 4 but not more than 5
	 	 	3.60	%
	More than 5 but not more than 6
	 	 	4.20	%
	More than 6 but not more than 7
	 	 	4.80	%
	More than 7 but not more than 8
	 	 	5.40	%
	More than 8 but not more than 9
	 	 	6.00	%
	More than 9 but not more than 10
	 	 	6.60	%
	More than 10 but not more than 11
	 	 	7.00	%
	More than 11 but not more than 12
	 	 	7.50	%
	More than 12 but not more than 13
	 	 	8.00	%
	More than 13 but not more than 14
	 	 	8.50	%
	More than 14 but not more than 15
	 	 	9.00	%
	More than 15 but not more than 16
	 	 	9.50	%
	More than 16 but not more than 17
	 	 	9.90	%
	More than 17 but not more than 18
	 	 	10.40	%
	More than 18 but not more than 19
	 	 	10.80	%
	More than 19 but not more than 20
	 	 	11.00	%
	More than 20 but not more than 21
	 	 	11.00	%
	More than 21 but not more than 22
	 	 	11.00	%
	More than 22 but not more than 23
	 	 	11.00	%
	More than 23 but not more than 24
	 	 	11.00	%
	More than 24 but not more than 25
	 	 	11.00	%
	More than 25 but not more than 26
	 	 	11.00	%
	More than 26 but not more than 27
	 	 	11.00	%
	More than 27 but not more than 28
	 	 	11.00	%
	More than 28 but not more than 29
	 	 	11.00	%
	More than 29
	 	 	11.00	%

 

 

Lehman Brothers

GUARANTEE OF LEHMAN BROTHERS HOLDINGS INC.

LEHMAN BROTHERS SPECIAL FINANCING INC. (“Party A”) and WELLS FARGO BANK, N.A., not in its
individual or corporate capacity but solely as Trust Administrator for FREMONT HOME LOAN TRUST
2006-E, Mortgage-Backed Certificates, Series 2006-E, pursuant to a Pooling and Servicing Agreement
(“Party B”) have entered into a Master Agreement dated as of December 6, 2006, as amended from time
to time (the “Master Agreement”), pursuant to which Party A and Party B have entered and/or
anticipate entering into one or more transactions (each a “Transaction”), the Confirmation of each
of which supplements, forms part of, and will be read and construed as one with, the Master
Agreement (collectively referred to as the “Agreement”). This Guarantee is a Credit Support
Document as contemplated in the Agreement. For value received, and in consideration of the
financial accommodation accorded to Party A by Party B under the Agreement, LEHMAN BROTHERS
HOLDINGS INC., a corporation organized and existing under the laws of the State of Delaware
(“Guarantor”), hereby agrees to the following:

     (a) Guarantor hereby unconditionally guarantees to Party B the due and punctual payment of all
amounts payable by Party A in connection with each Transaction when and as Party A’s obligations
thereunder shall become due and payable in accordance with the terms of the Agreement (whether at
maturity, by acceleration or otherwise). Guarantor hereby agrees, upon written demand by Party B,
to pay or cause to be paid any such amounts punctually when and as the same shall become due and
payable.

     (b) Guarantor hereby agrees that its obligations under this Guarantee constitute a guarantee
of payment when due and not of collection.

     (c) Guarantor hereby agrees that its obligations under this Guarantee shall be unconditional,
irrespective of the validity, regularity or enforceability of the Agreement against Party A (other
than as a result of the unenforceability thereof against Party B), the absence of any action to
enforce Party A’s obligations under the Agreement, any waiver or consent by Party B with respect to
any provisions thereof, the entry by Party A and Party B into any amendments to the Agreement,
additional Transactions under the Agreement or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor (excluding the defense of
payment or statute of limitations, neither of which is waived) provided, however, that Guarantor
shall be entitled to exercise any right that Party A could have exercised under the Agreement to
cure any default in respect of its obligations under the Agreement or to setoff, counterclaim or
withhold payment in respect of any Event of Default or Potential Event of Default in respect of
Party B or any Affiliate, but only to the extent such right is provided to Party A under the
Agreement. The Guarantor acknowledges that Party A and Party B may from time to time enter into one
or more Transactions pursuant to the Agreement and agrees that the obligations of the Guarantor
under this Guarantee will upon the execution of any such Transaction by Party A and Party B extend
to all such Transactions without the taking of further action by the Guarantor.

     (d) This Guarantee shall remain in full force and effect until the first to occur of (i)
receipt by Party B of a written notice of termination from Guarantor or (ii) none of the
obligations of Party A remain outstanding. Termination of this Guarantee shall not affect
Guarantor’s liability hereunder as to obligations incurred or arising out of Transactions entered
into prior to the termination hereof.

     (e) Guarantor further agrees that this Guarantee shall continue to be effective or be
reinstated, as the case may be, if at any time, payment, or any part thereof, of any obligation or
interest thereon is rescinded or must otherwise be restored by Party B upon an Event of Default as
set forth in Section 5(a)(vii) of the Master Agreement affecting Party A or Guarantor.

     (f) Guarantor hereby waives (i) promptness, diligence, presentment, demand of payment,
protest, order and, except as set forth in paragraph (a) hereof, notice of any kind in connection
with the Agreement and this Guarantee, or (ii) any requirement that Party B exhaust any right to
take any action against Party A or any other person prior to or contemporaneously with proceeding
to exercise any right against Guarantor under this Guarantee.

Lehman Brothers Holdings Inc.

745 Seventh Avenue, New York, New York 10019

1

 

Lehman Brothers

     This Guarantee shall be governed by and construed in accordance with the laws of the
State of New York without regard to conflicts of laws principles. All capitalized terms not defined
in this Guarantee, but defined in the Agreement, shall have the meanings assigned thereto in the
Agreement.

     IN WITNESS WHEREOF, Guarantor has caused this Guarantee to be executed by its duly authorized
officer as of the date of the Agreement.

	 	 	 	 	 	 
	 	 	LEHMAN BROTHERS HOLDINGS INC.	 
	 
	 	 	 	 	 
	 

	 	By:
	 	/s/ James J. Killerlane III	 
	 

	 	 	 	 	 
	 

	 	Name:
	 	James J. Killerlane III	 
	 

	 	Title:
	 	Vice President	 

Lehman Brothers Holdings Inc.

745 Seventh Avenue, New York, New York 10019

2

 

Lehman Brothers

Transaction

	 	 	 
	Date:

	 	6 December, 2006
	 
	 	 
	To:

	 	Fremont Investment & Loan
	 

	 	Attention: Documentation Unit
	 
	 	 
	From:

	 	Lehman Brothers Special Financing Inc.
	 

	 	Mandy Lee — Confirmations Group
	 

	 	Facsimile:     (+1) 646-885-9551 (United States of America)
	 

	 	Telephone:   212-526-9257
	 
	 	 
	Ref. Numbers:

	 	Risk ID: 1356299L / Effort ID: N1132192 / Global Deal ID: 2751808

Dear Sir or Madam:

The purpose of this communication (this “Confirmation”) is to confirm the terms and conditions of
the transaction (the “Transaction”) entered into between Lehman Brothers Special Financing Inc.
(“Party A”) and Fremont Investment & Loan (“Party B”) on the Trade Date specified below. This
Confirmation constitutes a “Confirmation” as referred to in the Agreement specified below.

This Confirmation supplements, forms part of, and is subject to, the ISDA Master Agreement dated as
of 17 November, 2006, as amended and supplemented from time to time, between Party A and Party B
(the “Agreement”). All provisions contained in the Agreement shall govern this Confirmation except
as expressly modified below.

The definitions and provisions contained in the 2000 ISDA Definitions as published by the
International Swaps and Derivatives Association, Inc. (the “Definitions”) are incorporated into
this Confirmation. In the event of any inconsistency between the Definitions and the terms of this
Confirmation, this Confirmation will govern. For the purpose of the Definitions, references herein
to a “Transaction” shall be deemed to be references to a “Swap Transaction”.

Party A and Party B each represents that entering into the Transaction is within its capacity, is
duly authorized and does not violate any laws of its jurisdiction of organization or residence or
the terms of any agreement to which it is a party. Party A and Party B each represents that (a) it
is not relying on the other party in connection with its decision to enter into this Transaction,
and neither party is acting as an advisor to or fiduciary of the other party in connection with
this Transaction regardless of whether the other party provides it with market information or its
views; (b) it understands the risks of the Transaction and any legal, regulatory, tax, accounting
and economic consequences resulting therefrom; and (c) it has determined based upon its own
judgment and upon any advice received from its own professional advisors as it has deemed necessary
to consult that entering into the Transaction is appropriate for such party in light of its
financial capabilities and objectives. Party A and Party B each represents that upon due execution
and delivery of this Confirmation, it will constitute a legally valid and binding obligation,
enforceable against it in accordance with its terms, subject to applicable principles of bankruptcy
and creditors’ rights generally and to equitable principles of general application.

LEHMAN BROTHERS SPECIAL FINANCING INC.

LEHMAN BROTHERS INC.

745 SEVENTH AVENUE, NEW YORK NY 10019

 

 

The terms of the particular Transaction to which this Confirmation relates are as follows:

	 	 	 	 	 
	General Terms:	 	 
	 
	 	 	 	 
	 

	 	Trade Date:
	 	16 November, 2006
	 
	 	 	 	 
	 

	 	Effective Date:
	 	06 December, 2006
	 
	 	 	 	 
	 

	 	Termination Date:
	 	25 December, 2012, subject to
adjustment in accordance with the
Following Business Day Convention.
	 
	 	 	 	 
	 

	 	Adjusted Notional Amount:
	 	With respect to each Calculation
Period, the lesser of (i) the Scheduled
Maximum Adjusted Swap Notional Amount
as set forth in Appendix A attached
hereto and (ii) the product of (x) the
aggregate Principal Balance of the
Reference Assets on or about the 15th
calendar day of each month, commencing
in the month of December 2006 and (y)
1/250
	 
	 	 	 	 
	 

	 	Notional Amount:
	 	The product of (i) 250 and (ii) the
Adjusted Notional Amount.
	 
	 	 	 	 
	 

	 	Referenced Assets:
	 	FHLT 2006-E, Class 1-A-1 (Cusip: 35729NAA3),
Class 2-A-1 (Cusip: 35729NAB1),
Class 2-A-2 (Cusip: 35729NAC9),
Class 2-A-3 (Cusip: 35729NAD7),
Class 2-A-4 (Cusip: 35729NAT2),
Class M-1 (Cusip: 35729NAE5),
Class M-2 (Cusip: 35729NAF2),
Class M-3 (Cusip: 35729NAG0),
Class M-4 (Cusip: 35729NAH8),
Class M-5 (Cusip: 35729NAJ4),
Class M-6 (Cusip: 35729NAK1),
Class M-7 (Cusip: 35729NAL9),
Class M-8 (Cusip: 35729NAM7),
and Class M-9 (Cusip: 35729NAN5).
	 
	 	 	 	 
	 

	 	Principal Balance:
	 	As reported on Bloomberg Financial
Services, Inc. (“Bloomberg”): by
entering the Cusip, <Mtge>, type
“pdi4”, <Go>. If Bloomberg fails
to publish the aggregate Principal
Balance of the Referenced Assets or the
parties fail to agree on the aggregate
Principal Balance of the Referenced
Assets for any Calculation Period, the
aggregate Principal Balance of the
Referenced Assets shall be determined
by the Calculation Agent pursuant to
Pooling and Servicing Agreement, dated
as of December 1, 2006 (the “Pooling
and Servicing Agreement”), among
Fremont Mortgage Securities
Corporation, as depositor, Fremont
Investment & Loan, as sponsor,
originator and servicer, Wells Fargo
Bank, N.A., as master servicer, trust
administrator and swap administrator
and HSBC Bank USA, National
Association, as trustee.
	 
	 	 	 	 
	Floating Amounts:	 	 
	 
	 	 	 	 
	 

	 	Floating Amount Payer:
	 	Party A

 

 

	 	 	 	 	 
	 

	 	Floating Amount Payer Period End

Dates:
	 	The 25th calendar day of each month,
from and including 25 January, 2007 to
and including the Termination Date,
subject to adjustment in accordance
with the Following Business Day
Convention.
	 
	 	 	 	 
	 

	 	Floating Amount Payer Payment Dates:
	 	One Business Day prior to each Floating
Amount Payer Period End Date.
	 
	 	 	 	 
	 

	 	Floating Rate Option:
	 	USD-LIBOR-BBA 
	 
	 	 	 	 
	 

	 	Designated Maturity:
	 	1 month 
	 
	 	 	 	 
	 

	 	Floating Rate for initial

Calculation Period:
	 	5.35% 
	 
	 	 	 	 
	 

	 	Spread:
	 	Inapplicable
	 
	 	 	 	 
	 

	 	Floating Rate Day Count Fraction:
	 	Actual/360 
	 
	 	 	 	 
	 

	 	Reset Dates:
	 	The first day of each Calculation Period
	 
	 	 	 	 
	Fixed Amounts:	 	 
	 
	 	 	 	 
	 

	 	Fixed Amount Payer:
	 	Party B
	 
	 	 	 	 
	 

	 	Fixed Amount Payer Period End Dates:
	 	The 25th calendar day of each month,
from and including 25 January, 2007 to
and including the Termination Date,
subject to adjustment in accordance
with the Following Business Day
Convention.
	 
	 	 	 	 
	 

	 	Fixed Amount Payer Payment Dates:
	 	One Business Day prior to each Fixed
Amount Payer Period End Date.
	 
	 	 	 	 
	 

	 	Fixed Rate:
	 	5.14% per annum 
	 
	 	 	 	 
	 

	 	Fixed Rate Day Count Fraction:
	 	Actual/360 
	 
	 	 	 	 
	 

	 	Additional Amount Payable by Party B:
	 	In the event that a net payment from
Party A to Party B under this
Transaction results in an amount that
would be payable to Fremont Investment
& Loan, as holder of the Class M10
Certificates, issued pursuant to the
Pooling and Servicing Agreement, then
such payment shall not be paid to
Fremont Investment & Loan, as holder of
the Class M10 Certificates and shall
instead be paid to Party A, on the
relevant Floating Amount Payer Payment
Date
	 
	 	 	 	 
	Business Days:

	 	New York

 

 

	 	 	 	 	 
	Additional Payment:

	 	(i) Party A shall pay Party B the sum
of USD 1,850,000.00 on 20 November,
2006 subject to adjustment in
accordance with the Following Business
Day Convention.
	 
	 	 	 	 
	 

	 	 	 	(ii) Party B shall pay Party A the sum
of USD 310,000.00 on 08 December, 2006
subject to adjustment in accordance
with the Following Business Day
Convention.
	 
	 	 	 	 
	Miscellaneous:	 	 
	 
	 	 	 	 
	 

	 	Calculation Agent:
	 	Party A
	 
	 	 	 	 
	 

	 	Office:
	 	For the purposes of this Transaction,
Party A is not a Multibranch Party, and
the Office of Party B is its Head
Office.

 

 

Please confirm your agreement with the foregoing by executing this Confirmation and returning such
Confirmation, in its entirety, to us at facsimile number (+1) 646-885-9551 (United States of
America), Attention: Confirmations Group.

	 	 	 	 	 	 
	Yours sincerely,	 	Accepted and agreed to:	 
	 
	 	 	 	 	 
	Lehman Brothers Special Financing Inc.	 	Fremont Investment & Loan	 
	 
	 	 	 	 	 
	/s/ Anatoly Kozlov
	 	 	 	 	 
	 

	 	 	 	 	 
	 

	 	By:
	 	/s/ Jeff Crusinberry	 
	 

	 	 	 	 	 
	 

	 	Name:
	 	Jeff Crusinberry	 
	 

	 	Title:
	 	Senior Vice President	 

 

 

Appendix A

	 	 	 	 	 
	*Calculation Periods up to but excluding	 	Scheduled Maximum Adjusted Swap Notional
	the Payment Date scheduled to occur:	 	Amount:
	25 January, 2007
	 	 	4,885,448.00	 
	25 February, 2007
	 	 	4,865,189.76	 
	25 March, 2007
	 	 	4,844,931.52	 
	25 April, 2007
	 	 	4,824,673.28	 
	25 May, 2007
	 	 	4,752,185.58	 
	25 June, 2007
	 	 	4,671,221.36	 
	25 July, 2007
	 	 	4,582,009.58	 
	25 August, 2007
	 	 	4,484,826.68	 
	25 September, 2007
	 	 	4,379,997.32	 
	25 October, 2007
	 	 	4,267,906.59	 
	25 November, 2007
	 	 	4,149,871.70	 
	25 December, 2007
	 	 	4,028,120.22	 
	25 January, 2008
	 	 	3,908,212.36	 
	25 February, 2008
	 	 	3,791,697.94	 
	25 March, 2008
	 	 	3,678,480.24	 
	25 April, 2008
	 	 	3,568,465.28	 
	25 May, 2008
	 	 	3,461,561.79	 
	25 June, 2008
	 	 	3,357,664.08	 
	25 July, 2008
	 	 	3,256,653.57	 
	25 August, 2008
	 	 	3,158,267.80	 
	25 September, 2008
	 	 	3,053,934.70	 
	25 October, 2008
	 	 	2,933,958.91	 
	25 November, 2008
	 	 	2,774,653.18	 
	25 December, 2008
	 	 	1,070,839.48	 
	25 January, 2009
	 	 	1,029,229.33	 
	25 February, 2009
	 	 	989,702.93	 
	25 March, 2009
	 	 	952,569.08	 
	25 April, 2009
	 	 	919,891.63	 
	25 May, 2009
	 	 	895,131.48	 
	25 June, 2009
	 	 	871,071.87	 

 

 

Appendix A

	 	 	 	 	 
	*Calculation Periods up to but excluding	 	Scheduled Maximum Adjusted Swap Notional
	the Payment Date scheduled to occur:	 	Amount:
	25 July, 2009
	 	 	847,691.92	 
	25 August, 2009
	 	 	824,971.38	 
	25 September, 2009
	 	 	802,890.67	 
	25 October, 2009
	 	 	781,430.80	 
	25 November, 2009
	 	 	760,573.40	 
	25 December, 2009
	 	 	506,315.01	 
	25 January, 2010
	 	 	494,926.18	 
	25 February, 2010
	 	 	483,792.80	 
	25 March, 2010
	 	 	472,909.12	 
	25 April, 2010
	 	 	462,269.52	 
	25 May, 2010
	 	 	451,868.50	 
	25 June, 2010
	 	 	441,700.68	 
	25 July, 2010
	 	 	431,760.83	 
	25 August, 2010
	 	 	422,043.80	 
	25 September, 2010
	 	 	412,544.60	 
	25 October, 2010
	 	 	403,258.31	 
	25 November, 2010
	 	 	394,180.15	 
	25 December, 2010
	 	 	385,305.45	 
	25 January, 2011
	 	 	376,629.63	 
	25 February, 2011
	 	 	368,148.23	 
	25 March, 2011
	 	 	359,856.88	 
	25 April, 2011
	 	 	351,751.30	 
	25 May, 2011
	 	 	343,827.33	 
	25 June, 2011
	 	 	336,080.90	 
	25 July, 2011
	 	 	328,508.01	 
	25 August, 2011
	 	 	321,104.78	 
	25 September, 2011
	 	 	313,867.39	 
	25 October, 2011
	 	 	306,792.14	 
	25 November, 2011
	 	 	299,875.38	 
	25 December, 2011
	 	 	289,025.06	 
	25 January, 2012
	 	 	282,560.39	 
	25 February, 2012
	 	 	276,238.61	 

 

 

Appendix A

	 	 	 	 	 
	*Calculation Periods up to but excluding	 	Scheduled Maximum Adjusted Swap Notional
	the Payment Date scheduled to occur:	 	Amount:
	25 March, 2012
	 	 	270,056.60	 
	25 April, 2012
	 	 	264,011.27	 
	25 May, 2012
	 	 	258,099.64	 
	25 June, 2012
	 	 	252,318.77	 
	25 July, 2012
	 	 	246,665.79	 
	25 August, 2012
	 	 	241,137.90	 
	25 September, 2012
	 	 	235,732.34	 
	25 October, 2012
	 	 	230,446.44	 
	25 November, 2012
	 	 	225,277.57	 
	25 December, 2012
	 	 	220,223.15	 

 

			
	*	 	subject to adjustment in accordance with the relevant Business Day Convention.

 

 

ISDAÒ

International Swaps and Derivatives Association, Inc.

NOVATION AGREEMENT

dated as of December 6, 2006 among:

Lehman Brothers Special Financing Inc. (the “Remaining Party”),

Fremont Investment & Loan (the “Transferor”)

AND

Wells Fargo Bank, N.A., not in its individual capacity, but solely as Trust Administrator (the
“Trust Administrator”), on behalf of Fremont Home Loan Trust 2006-E, Mortgage Backed Certificates,
Series 2006-E pursuant to the Pooling and Servicing Agreement dated as of December 1, 2006 (the
“Pooling and Servicing Agreement”)

(the “Transferee”)

The Transferor and the Remaining Party have entered into a Transaction (the “Old Transaction”)
evidenced by a Confirmation dated December 6, 2006 (the “Old Confirmation”) attached hereto as
Exhibit I subject to a 1992 ISDA Master Agreement (as defined below) dated as of November 17, 2006
(the “Old Agreement”).

The Remaining Party and the Transferee have entered into an ISDA Master Agreement (the “New
Agreement”) dated as of December 6, 2006.

With effect from and including December 6, 2006 (the “Novation Date”), the Transferor wishes to
transfer by novation to the Transferee, and the Transferee wishes to accept the transfer by
novation of, all the rights, liabilities, duties and obligations of the Transferor under and in
respect of the Old Transaction, with the effect that the Remaining Party and the Transferee enter
into a new transaction (the “New Transaction”) between them having terms identical to those of each
Old Transaction, as more particularly described below other than the right of the Transferor to
receive and to pay the Additional Payment as set forth in the Old Confirmation.

The Remaining Party wishes to accept the Transferee as its sole counterparty with respect to the
New Transaction.

The Transferor and the Remaining Party wish to have released and discharged, as a result and to the
extent of the transfer described above, their respective obligations under and in respect of the
Old Transaction.

Accordingly, the parties agree as follows: —

	1.	 	Definitions.

Terms defined in the ISDA Master Agreement (Multicurrency-Cross Border) as published in 1992 by the
International Swaps and Derivatives Association, Inc., (the “1992 ISDA Master Agreement”) are used
herein as so defined, unless otherwise provided herein.

 

 

	2.	 	Transfer, Release, Discharge and Undertakings.

With effect from and including the Novation Date and in consideration of the mutual
representations, warranties and covenants contained in this Novation Agreement and other good and
valuable consideration (the receipt and sufficiency of which are hereby acknowledged by each of the
parties):

	 	(a)	 	the Remaining Party and the Transferor are each released and discharged from further
obligations to each other with respect to each Old Transaction and their respective rights
against each other thereunder are cancelled, provided that such release and discharge shall
not affect any rights, liabilities or obligations of the Remaining Party or the Transferor
with respect to the Additional Payment or other payments or other obligations due and
payable or due to be performed on or prior to the Novation Date, and all such payments and
obligations shall be paid or performed by the Remaining Party or the Transferor in
accordance with the terms of the Old Transaction;
	 
	 	(b)	 	in respect of the New Transaction, the Transferee and the Remaining Party each
undertakes liabilities and obligations towards the other and acquires rights against each
other identical in their terms to the Old Transaction (and, for the avoidance of doubt, as
if the Transferee were the Transferor and with the Remaining Party remaining the Remaining
Party, save for any rights, liabilities or obligations of the Remaining Party or the
Transferor with respect to payments or other obligations due and payable or due to be
performed on or prior to the Novation Date);
	 
	 	(c)	 	the New Transaction shall be governed by and form part of the New Agreement and the
relevant Old Confirmation (which, in conjunction and as deemed modified to be consistent
with this Novation Agreement,, shall be deemed to be a Confirmation between the Remaining
Party and the Transferee); and
	 
	 	(d)	 	It is expressly understood and agreed by the parties hereto that (i) this Novation
Agreement is executed and delivered by Wells Fargo Bank, N.A. (“Wells Fargo”), not in its
individual capacity but solely as Trust Administrator under the Pooling and Servicing
Agreement in the exercise of the powers and authority conferred and vested in it
thereunder, (ii) each of the representations, undertakings and agreements herein made on
behalf of the Transferee is made and intended not as personal representations, undertakings
and agreements of Wells Fargo but is made and intended for the purpose of binding only the
Transferee, and (iii) under no circumstances shall Wells Fargo in its individual capacity
be personally liable for the payment of any indebtedness or expenses or be personally
liable for the breach of failure of any obligation, representation, warranty or covenant
made or undertaken by the Transferee under this Novation Agreement .

	3.	 	Representations and Warranties.

	 	(a)	 	On the date of this Novation Agreement and on the Novation Date:

	 	(i)	 	Each of the parties makes to each of the other parties those
representations and warranties set forth in Section 3(a) of the 1992 ISDA Master
Agreement with references in such Section to “this Agreement” or “any Credit
Support Document” being deemed references to this Novation Agreement alone.
	 
	 	(ii)	 	The Remaining Party and the Transferor each makes to the other and
the Remaining Party and the Transferee each makes to the other the representation
set forth in Section 3(b) of the 1992 ISDA Master Agreement, in the former case
with respect to the Old Agreement, and in the latter case with respect to the New
Agreement and taking into account the parties entering into and performing their
obligations under this Novation Agreement.

 

 

	 	(iii)	 	Each of the Transferor and the Remaining Party represents and
warrants to each other and to the Transferee that:

	 	(A)	 	as of the date hereof, no other party has any interest or
obligation in or under the Old Agreement in respect of the Old Transaction
(whether by way of security or otherwise); and
	 
	 	(B)	 	as of the Novation Date, all obligations of the
Transferor and the Remaining Party under each Old Transaction required to be
performed on or before the Novation Date have been fulfilled.

	 	(b)	 	The Transferor makes no representation or warranty and does not assume any
responsibility with respect to the legality, validity, effectiveness, adequacy or
enforceability of any New Transaction or the New Agreement or any documents relating
thereto and assumes no responsibility for the condition, financial or otherwise, of the
Remaining Party, the Transferee or any other person or for the performance and observance
by the Remaining Party, the Transferee or any other person of any of its obligations
under any New Transaction or the New Agreement or any document relating thereto and any
and all such conditions and warranties, whether express or implied by law or otherwise,
are hereby excluded.

	4.	 	Counterparts.

This Novation Agreement (and each amendment, modification and waiver in respect of it) may be
executed and delivered in counterparts (including by facsimile transmission), each of which will be
deemed an original.

	5.	 	Costs and Expenses.

The parties will each pay their own costs and expenses (including legal fees) incurred in
connection with this Novation Agreement and as a result of the negotiation, preparation and
execution of this Novation Agreement.

	6.	 	Amendments.

No amendment, modification or waiver in respect of this Novation Agreement will be effective unless
in writing (including a writing evidenced by a facsimile transmission) and executed by each of the
parties or confirmed by an exchange of telexes or electronic messages on an electronic messaging
system.

	7.	(a)	Governing Law.

	 	 	 	This Novation Agreement will be governed by and construed in accordance with the laws of the
State of New York without reference to the conflict of laws provisions thereof other than
New York General Obligations Laws Sections 5-1401 and 5-1402.
	 
	 	(b)	 	Jurisdiction.
	 
	 	 	 	The terms of Section 13(b) of the 1992 ISDA Master Agreement shall apply to this Novation
Agreement with references in such Section to “this Agreement” being deemed references to
this Novation Agreement alone.

 

 

	8.	 	Notices.

For the purposes of this Novation Agreement and Section 12(a) of the New Agreement, the addresses
for notices or communications are as follows: (i) in the case of the Transferor, Fremont Investment
& Loan, 2727 East Imperial Highway, Brea, California, 92821, Attention: Jeffrey Crusinberry, with a
copy to the same address, Attention: Legal Department, or such other address as may be hereafter
furnished in writing to the Transferee and the Remaining Party; (ii) in the case of The Transferee
Address: Wells Fargo Bank, N.A., 9062 Old Annapolis Rd., Columbia, Maryland, 21045 Attention:
Client Manager – Fremont 2006-E, Facsimile: (410) 715-2380, Phone: (410) 884-2000, or such other
address as may be hereafter furnished in writing to the Transferor and the Remaining Party; and
(iii) in the case of the Remaining Party, as specified in the Old Confirmation and, for purposes of
Sections 5 and 6 of the New Agreement, to the following address:

	 	 	 	 	 
	 

	 	Address:
	 	Lehman Brothers Special Financing Inc.
	 

	 	 	 	c/o Lehman Brothers Inc.
	 

	 	 	 	Transaction Management Division
	 

	 	 	 	745 Seventh Avenue
	 

	 	 	 	New York, NY 10019
	 

	 	Attention:
	 	Documentation Manager
	 

	 	Telephone No.:
	 	(212) 526-7187
	 

	 	Facsimile No.:
	 	(212) 526-7672

          or such other address as may be hereafter furnished in writing to the Transferor and The
Transferee.

	9.	 	Account Details.

	 	 	 	 	 
	 

	 	Payments to Remaining Party in USD:	 	 
	 
	 	 	 	 
	 

	 	 	 	JPMorgan Chase Bank, New York
	 

	 	 	 	ABA # 021000021
	 

	 	 	 	A/C of Lehman Brothers Special Financing Inc.
	 

	 	 	 	A/C # 066-143-543
	 
	 	 	 	 
	 

	 	Payments to Transferee in USD:	 	 
	 
	 	 	 	 
	 

	 	 	 	Wells Fargo Bank, N.A.
	 

	 	 	 	ABA 121-000-248
	 

	 	 	 	Account Number: 3970771416
	 

	 	 	 	Account Name: Corporate Trust Clearing
	 

	 	 	 	FFC: 50969802, Fremont 2006-E Swap Account

 

 

IN WITNESS WHEREOF the parties have executed this Novation Agreement on the respective dates
specified below with effect from and including the Novation Date.

	 	 	 	 	 	 	 	 	 	 	 	 
	Lehman Brothers Special Financing Inc.	 	Fremont Investment & Loan	 
	 
	 	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Anatoly Kozlov	 	By:	 	/s/ Jeff Crusinberry	 
	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Anatoly Kozlov
	 	 	 	Name:
	 	Jeff Crusinberry	 
	 

	 	Title:
	 	 	 	 	 	Title:
	 	Senior Vice President	 
	 

	 	Date:
	 	 	 	 	 	Date:
	 	December 6, 2006	 

Wells Fargo Bank, N.A., not in its individual capacity, but solely as Trust Administrator on behalf
of Fremont Home Loan Trust 2006-E, Mortgage Backed Certificates, Series 2006-E

	 	 	 	 	 
	By:  	/s/ Peter A. Gobell
 	 	 
	 	Name:  	Peter A. Gobell 	 	 
	 	Title:  	Vice President

	 	Date: 	December 6, 2006 	 	 

 

 

SWAP ADMINISTRATION AGREEMENT

          This Swap Administration Agreement, dated as of December 6, 2006 (this “Agreement”), among
Wells Fargo Bank N.A., a national banking association (“Wells Fargo”), as swap administrator (in
such capacity, the “Swap Administrator”), Wells Fargo, not in its individual capacity but solely as
trust administrator for Fremont Home Loan Trust 2006-E, Mortgage Backed Certificates, Series 2006-E
(in such capacity, the “Trust Administrator”) and HSBC Bank USA, National Association, as trustee
for Fremont Home Loan Trust 2006-E, Mortgage Backed Certificates, Series 2006-E (“Trustee”).

          WHEREAS, the Trust Administrator is party to an Interest Rate Swap Agreement (the “Swap
Agreement”), a copy of which is attached hereto as Exhibit A, between Wells Fargo, not
individually, but solely as Trust Administrator on behalf of the Fremont Home Loan Trust 2006-E,
Mortgage Backed Certificates, Series 2006-E and Lehman Brothers Special Financing Inc., as
counterparty (together with its successors in interest, the “Swap Provider”);

          WHEREAS, the Trustee, pursuant to the Pooling and Servicing Agreement, dated as of December 1,
2006, among Fremont Mortgage Securities Corporation, Fremont Investment & Loan (“Fremont”), as
sponsor, originator and servicer, Wells Fargo, as master servicer, swap administrator and trust
administrator, and the Trustee (the “Pooling and Servicing Agreement”), assigns all of its right,
title and interest to receive Net Swap Payments (as defined in the Pooling and Servicing
Agreement) pursuant to the Swap Agreement to the Swap Administrator;

          WHEREAS, the Trustee has specified the Swap Account as the account to receive the Net Swap
Payments; and

          WHEREAS; the Trustee desires to appoint the Swap Administrator, and the Swap Administrator
desires to accept such appointment, to distribute funds received from the Swap Providers as
provided herein.

          NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other good
and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties
agree as follows:

     1. Definitions.

     Capitalized terms used but not otherwise defined herein shall have the respective meanings
assigned thereto in the Pooling and Servicing Agreement or in the related Indenture, as the case
may be, as in effect on the date hereof.

     2. Swap Administrator.

     (a) The Trustee hereby appoints the Swap Administrator to receive all funds paid by the
Swap Providers under the Swap Agreement (including any Swap Termination Payments) and the
Swap Administrator hereby agrees to receive such amounts and to distribute on each
Distribution Date such amounts in the following order of priority:

 

 

          (i) first, to the Trust Administrator for deposit into the Swap Account, an amount
equal to the sum of the following amounts, if any, remaining outstanding after distribution
of the Excess Cashflow for such Distribution Date: (A) Current Interest or Unpaid Interest
Shortfall Amounts, (B) Net WAC Rate Carryover Amounts; (C) Overcollateralization Deficiency
amounts; and (D) Allocated Realized Loss Amounts;

          (ii) second, to Wells Fargo, as the indenture trustee of the NIM Trust, if any, as and
to the extent designated in writing by Fremont to the Swap Administrator, and

          (iii) third, to holder(s) of the Class C Certificates, or to such other Person as
designated in writing by such holder(s) to the Swap Administrator from time to time.

     (b) On or before the second Business Day prior to each LIBOR Determination Date, the
Swap Administrator shall make available to the Swap Provider and the Servicer the aggregate
Certificate Principal Balance of the Senior Certificates and the Subordinate Certificates,
as of such date.

     3. Swap Administration Account.

     (a) The Swap Administrator shall segregate and hold all funds received pursuant to the
Swap Agreement (including any Swap Termination Payments) separate and apart from any of its
own funds and general assets and shall establish and maintain in the name of the Swap
Administrator one or more segregated accounts (such account or accounts, the “Swap
Administration Account”), which may be a subaccount of the Swap Account, held in trust for
the benefit of the Trustee and the parties to this Agreement. All amounts on deposit in the
Swap Administration Account shall remain uninvested unless the Swap Administrator receives
instructions to the contrary from Fremont. The Swap Administrator hereby agrees that it
holds and shall hold the Swap Administration Account and all amounts deposited therein in
trust for the exclusive use and benefit of the Trustee as their interests may appear.

     (b) With respect to the Swap Agreement and notwithstanding anything contained herein,
in the event that a replacement swap agreement cannot be obtained within thirty (30) days
after receipt by the Swap Administrator of a Swap Termination Payment paid by a terminated
Swap Provider, the Swap Administrator shall deposit such Swap Termination Payment into a
separate, non-interest bearing account established by the Swap Administrator and the Swap
Administrator shall, on each Distribution Date following receipt of such Swap Termination
Payment (unless a replacement swap agreement has been entered into) withdraw from such
account, an amount equal to the Net Swap Payment, if any, that would have been paid to the
Trust by the original Swap Provider (computed in accordance with Section 2 of the original
Swap Agreement) and distribute such amount in accordance with Section 2(a) of this
Agreement. On the Distribution Date immediately after the termination date of an original
Swap Agreement, the Swap Administrator shall withdraw any funds remaining in the related
account and distribute such amount in accordance with Section 2(a)(iii) of this Agreement.

2

 

     4. Representations and Warranties of the Swap Administrator. Wells Fargo represents
and warrants as follows:

     (a) Wells Fargo is duly organized and validly existing national banking association
under the laws of the United States and has all requisite power and authority to execute and
deliver this Agreement, to perform its obligations as Swap Administrator hereunder.

     (b) The execution, delivery and performance of this Agreement by Wells Fargo as Swap
Administrator has been duly authorized by Wells Fargo.

     (c) This Agreement has been duly executed and delivered by Wells Fargo as Swap
Administrator and is enforceable against Wells Fargo in accordance with its terms, except as
enforceability may be affected by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting creditors’ rights
generally, general equitable principles (whether considered in a proceeding in equity or at
law).

     (d) No consent of any Person and no consent, license, permit, approval or authorization
of, exemption by, notice or report to, or registration, filing or declaration with, any
governmental instrumentality is required in connection with the execution, delivery,
performance, validity or enforceability of this Agreement by Wells Fargo as Swap
Administrator.

     (e) The execution, delivery and performance of this Agreement by Wells Fargo as Swap
Administrator does not conflict with or result in a violation of (i) any law or regulation
applicable to Wells Fargo, (ii) Wells Fargo’s charter or (iii) any other agreement or
instrument to which Wells Fargo is a party or by which its assets are bound.

     (f) There is no litigation pending or threatened against Wells Fargo that would
materially and adversely affect the execution, delivery or enforceability of this Agreement
or the ability of the Swap Administrator to perform any of its other obligations hereunder
in accordance with the terms hereof.

     5. Certain Matters Relating to the Swap Administrator.

     (a) The rights, duties and liabilities of the Swap Administrator in respect of this
Agreement shall be as follows:

          (i) The Swap Administrator shall have the full power and authority that it may deem
advisable in order to enforce the provisions of this Agreement that it may deem advisable in
order to enforce the provisions hereof. The Swap Administrator shall not be answerable or
accountable except for its own bad faith, willful misconduct or negligence. The Swap
Administrator shall not be required to take any action to exercise or enforce any of its
rights or powers hereunder which, in the opinion of the Swap Administrator, shall be likely
to involve expense or liability to the Swap Administrator, unless the Swap Administrator
shall have received an agreement satisfactory to it in its sole discretion to indemnify it
against such liability and expense.

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          (ii) The Swap Administrator shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of any party hereto
or otherwise as provided herein, relating to the time, method and place of conducting any
proceeding for any remedy available to the Swap Administrator under this Agreement.

          (iii) The Swap Administrator may perform any duties hereunder either directly or by or
through agents or attorneys of the Swap Administrator. The Swap Administrator shall not be
liable for the acts or omissions of its agents or attorneys so long as the Swap
Administrator chose such Persons with due care.

     (b) The Swap Administrator shall be entitled to the same rights, protections and
indemnities afforded to the Trustee and Trust Administrator under the Pooling and Servicing
Agreement, as if specifically set forth herein with respect to the Swap Administrator.

     6. Replacement of Swap Administrator.

          Any corporation, bank, trust company or association into which the Swap Administrator may be
merged or converted or with which it may be consolidated, or any corporation, bank, trust company
or association resulting from any merger, conversion or consolidation to which the Swap
Administrator shall be a party, or any corporation, bank trust company or association succeeding to
all or substantially all the corporate trust business of the Swap Administrator, shall be the
successor of the Swap Administrator hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, except to the extent that assumption of its
duties and obligations, as such, is not effected by operation of law.

          No resignation or removal of the Swap Administrator and no appointment of a successor Swap
Administrator shall become effective until the appointment by Fremont of a successor swap
administrator. Any successor swap administrator shall execute such documents or instruments
necessary or appropriate to vest in and confirm to such successor swap administrator all such
rights and powers conferred by this Agreement.

          The Swap Administrator may resign at any time by giving written notice thereof to the other
parties thereto. If a successor swap administrator shall not have accepted the appointment
hereunder within thirty (30) days after the giving by the resigning Swap Administrator of such
notice of resignation, the resigning Swap Administrator may petition any court of competent
jurisdiction for the appointment of a successor swap administrator.

          In the event of a resignation or removal of the Swap Administrator, Fremont shall promptly
appoint a success Swap Administrator.

     7. Miscellaneous.

     (a) This Agreement shall be governed by and construed in accordance with the laws of
the State of New York.

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     (b) Any action or proceeding against any of the parties hereto relating in any way to
this Agreement may be brought and enforced in the courts of the State of New York sitting in
the borough of Manhattan or of the United States District Court for the Southern District of
New York and the Swap Administrator irrevocably submits to the jurisdiction of each such
court in respect of any such action or proceeding. The Swap Administrator waives, to the
fullest extent permitted by law, any right to remove any such action or proceeding by reason
of improper venue or inconvenient forum.

     (c) This Agreement may be amended, supplemented or modified in writing by the parties
hereto.

     (d) This Agreement may be executed by one or more of the parties to this Agreement on
any number of separate counterparts (including by facsimile transmission), and all such
counterparts taken together shall be deemed to constitute one and the same instrument.

     (e) Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

     (f) The representations and warranties made by the parties to this Agreement shall
survive the execution and delivery of this Agreement. No act or omission on the part of any
party hereto shall constitute a waiver of any such representation or warranty

     (g) The article and section headings herein are for convenience of reference only, and
shall not limit or otherwise affect the meaning hereof.

     8. Nonpetition.

          Notwithstanding any prior termination of this Agreement, each of the Swap Administrator, the
Trust Administrator and the Trustee agrees that it shall not acquiesce, petition or otherwise
invoke or cause Fremont Home Loan Trust 2006-E (the “Trust”) to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case against the Trust under any
federal or state bankruptcy, insolvency or similar law, or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the Trust or any
substantial part of the property of the Trust, or ordering the winding up or liquidation of the
affairs of the Trust.

     9. Third Party Beneficiaries.

          Fremont, the indenture trustee under the NIM Trust, if any, and the NIM Insurer, if any, shall
each be deemed a third-party beneficiary of this Agreement to the same extent as if it were a party
hereto, and shall have the right to enforce the provisions of this Agreement.

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          IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered
as of the day and year first above written.

	 	 	 	 	 
	 	 	WELLS FARGO BANK, N.A.,
	 	 	as Swap Administrator
and, not in its individual capacity but solely as Trust Administrator
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Graham Oglesby
	 

	 	 	 	 
	 

	 	Name:
	 	Graham Oglesby
	 

	 	Title:
	 	Assistant Vice President
	 
	 	 	 	 
	 	 	HSBC BANK USA, NATIONAL ASSOCIATION,
	 	 	not in its individual capacity but solely as trustee for

the Fremont Home Loan Trust 2006-E
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Elena Zheng
	 

	 	 	 	 
	 

	 	Name:
	 	Elena Zheng
	 

	 	Title:
	 	Assistant Vice President

(Signature Page to Swap Administration Agreement — Fremont 2006-E)

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EXHIBIT A

SWAP AGREEMENT

7

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