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      SACO
        I
        TRUST 2006-12

       

      Issuing
        Entity,

       

       

      LASALLE
        BANK NATIONAL ASSOCIATION

      

       

      Securities
        Administrator

      

       

      and
        

       

       

      CITIBANK,
        N.A.

       

       

      Indenture
        Trustee

       

      

       

      INDENTURE

       

      Dated
        as
        of December 19, 2006

       

      
 

       

      MORTGAGE-BACKED
        NOTES

       

      

       

      

       

      

       

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      

      TABLE
        OF
        CONTENTS

       

      

       

       

      

       

      
        	
                ARTICLE
                  I

              
	
                Definitions

              
	
                Section
                  1.01

              	
                Definitions

              
	
                Section
                  1.02

              	
                Incorporation
                  by Reference of Trust Indenture Act

              
	
                Section
                  1.03

              	
                Rules
                  of Construction

              
	 	 
	
                ARTICLE
                  II

              
	
                Original
                  Issuance of Notes

              
	
                Section
                  2.01

              	
                Form

              
	
                Section
                  2.02

              	
                Execution,
                  Authentication and Delivery

              
	 	 
	
                ARTICLE
                  III

              
	
                Covenants

              
	
                Section
                  3.01

              	
                Existence

              
	
                Section
                  3.02

              	
                Payment
                  of Principal and Interest.

              
	
                Section
                  3.03

              	
                Protection
                  of Trust Estate

              
	
                Section
                  3.04

              	
                Opinions
                  as to Trust Estate

              
	
                Section
                  3.05

              	
                Performance
                  of Obligations

              
	
                Section
                  3.06

              	
                Negative
                  Covenants

              
	
                Section
                  3.07

              	
                Annual
                  Statement as to Compliance

              
	
                Section
                  3.08

              	
                Representations
                  and Warranties Concerning the HELOCs

              
	
                Section
                  3.09

              	
                Investment
                  Company Act

              
	
                Section
                  3.10

              	
                No
                  Other Business

              
	
                Section
                  3.11

              	
                No
                  Borrowing

              
	
                Section
                  3.12

              	
                Guarantees,
                  Loans, Advances and Other Liabilities

              
	
                Section
                  3.13

              	
                Capital
                  Expenditures

              
	
                Section
                  3.14

              	
                Determination
                  of Note Interest Rate.

              
	
                Section
                  3.15

              	
                Restricted
                  Payments

              
	
                Section
                  3.16

              	
                Notice
                  of Events of Default

              
	
                Section
                  3.17

              	
                Further
                  Instruments and Acts

              
	
                Section
                  3.18

              	
                Certain
                  Representations Regarding the Trust Estate.

              
	
                Section
                  3.19

              	
                Allocation
                  of Group I Charge-Off Amounts.

              
	
                Section
                  3.20

              	
                Allocation
                  of Group II Charge-Off Amounts.

              
	
                Section
                  3.21

              	
                Claims
                  on the Policy; Policy Payments Account.

              
	 	 
	
                ARTICLE
                  IV

              
	
                The
                  Notes; Satisfaction and Discharge of Indenture

              
	
                Section
                  4.01

              	
                The
                  Notes

              
	
                Section
                  4.02

              	
                Registration
                  of and Limitations on Transfer and Exchange of Notes; Appointment
                  of Note
                  Registrar and Certificate Registrar

              
	
                Section
                  4.03

              	
                Mutilated,
                  Destroyed, Lost or Stolen Notes

              
	
                Section
                  4.04

              	
                Persons
                  Deemed Owners

              
	
                Section
                  4.05

              	
                Cancellation

              
	
                Section
                  4.06

              	
                Book-Entry
                  Notes

              
	
                Section
                  4.07

              	
                Notices
                  to Depository

              
	
                Section
                  4.08

              	
                Definitive
                  Notes

              
	
                Section
                  4.09

              	
                Application
                  of Trust Money

              
	
                Section
                  4.10

              	
                Subrogation
                  and Cooperation

              
	
                Section
                  4.11

              	
                Repayment
                  of Monies Held by Paying Agent

              
	
                Section
                  4.12

              	
                Temporary
                  Notes

              
	
                Section
                  4.13

              	
                Representation
                  Regarding ERISA

              
	 	 
	
                ARTICLE
                  V

              
	
                Default
                  and Remedies

              
	
                Section
                  5.01

              	
                Events
                  of Default

              
	
                Section
                  5.02

              	
                Acceleration
                  of Maturity; Rescission and Annulment

              
	
                Section
                  5.03

              	
                Collection
                  of Indebtedness and Suits for Enforcement by Indenture
                  Trustee.

              
	
                Section
                  5.04

              	
                Remedies;
                  Priorities

              
	
                Section
                  5.05

              	
                Optional
                  Preservation of the Trust Estate

              
	
                Section
                  5.06

              	
                Limitation
                  of Suits

              
	
                Section
                  5.07

              	
                Unconditional
                  Rights of Noteholders To Receive Principal and Interest

              
	
                Section
                  5.08

              	
                Restoration
                  of Rights and Remedies

              
	
                Section
                  5.09

              	
                Rights
                  and Remedies Cumulative

              
	
                Section
                  5.10

              	
                Delay
                  or Omission Not a Waiver

              
	
                Section
                  5.11

              	
                Control
                  By Note Insurer and Noteholders

              
	
                Section
                  5.12

              	
                Waiver
                  of Past Defaults

              
	
                Section
                  5.13

              	
                Undertaking
                  for Costs

              
	
                Section
                  5.14

              	
                Waiver
                  of Stay or Extension Laws

              
	
                Section
                  5.15

              	
                Sale
                  of Trust Estate

              
	
                Section
                  5.16

              	
                Action
                  on Notes

              
	 	 
	
                ARTICLE
                  VI

              
	
                The
                  Indenture Trustee and The Securities Administrator

              
	
                Section
                  6.01

              	
                Duties
                  of Indenture Trustee and Securities Administrator

              
	
                Section
                  6.02

              	
                Rights
                  of Indenture Trustee and Securities Administrator

              
	
                Section
                  6.03

              	
                Individual
                  Rights of Indenture Trustee

              
	
                Section
                  6.04

              	
                Indenture
                  Trustee’s and Securities Administrator’s Disclaimer

              
	
                Section
                  6.05

              	
                Notice
                  of Event of Default

              
	
                Section
                  6.06

              	
                Reports
                  to Residual Certificateholders

              
	
                Section
                  6.07

              	
                Compensation

              
	
                Section
                  6.08

              	
                Replacement
                  of Indenture Trustee and the Securities Administrator

              
	
                Section
                  6.09

              	
                Successor
                  Indenture Trustee and Securities Administrator by
                  Merger

              
	
                Section
                  6.10

              	
                Appointment
                  of Co-Indenture Trustee or Separate Indenture Trustee

              
	
                Section
                  6.11

              	
                Eligibility;
                  Disqualification

              
	
                Section
                  6.12

              	
                Representations
                  and Warranties

              
	
                Section
                  6.13

              	
                Representations
                  and Warranties

              
	
                Section
                  6.14

              	
                Directions
                  to Indenture Trustee and the Securities Administrator.

              
	
                Section
                  6.15

              	
                The
                  Agents

              
	 	 
	
                ARTICLE
                  VII

              
	
                Noteholders’
                  Lists and Reports

              
	
                Section
                  7.01

              	
                Issuing
                  Entity To Furnish Securities Administrator and Indenture Trustee
                  Names and
                  Addresses of Noteholders

              
	
                Section
                  7.02

              	
                Preservation
                  of Information; Communications to Noteholders

              
	
                Section
                  7.03

              	
                Financial
                  Information

              
	
                Section
                  7.04

              	
                Statements
                  to Noteholders and Certificateholders

              
	 	 
	
                ARTICLE
                  VIII

              
	
                Accounts,
                  Disbursements and Releases

              
	
                Section
                  8.01

              	
                Collection
                  of Money

              
	
                Section
                  8.02

              	
                Officer’s
                  Certificate

              
	
                Section
                  8.03

              	
                Termination
                  Upon Distribution to Noteholders

              
	
                Section
                  8.04

              	
                Release
                  of Trust Estate

              
	
                Section
                  8.05

              	
                Surrender
                  of Notes Upon Final Payment

              
	
                Section
                  8.06

              	
                Optional
                  Redemption of the Group I HELOCs

              
	
                Section
                  8.07

              	
                Optional
                  Redemption of the Group II HELOCs

              
	
                Section
                  8.08

              	
                Additional
                  Requirements for Optional Redemption

              
	
                Section
                  8.09

              	
                Group
                  I Interest Coverage Account

              
	
                Section
                  8.10

              	
                Group
                  II Interest Coverage Account

              
	 	 
	
                ARTICLE
                  IX

              
	
                Supplemental
                  Indentures

              
	
                Section
                  9.01

              	
                Supplemental
                  Indentures Without Consent of Noteholders

              
	
                Section
                  9.02

              	
                Supplemental
                  Indentures With Consent of Noteholders

              
	
                Section
                  9.03

              	
                Execution
                  of Supplemental Indentures

              
	
                Section
                  9.04

              	
                Effect
                  of Supplemental Indenture

              
	
                Section
                  9.05

              	
                Conformity
                  with Trust Indenture Act

              
	
                Section
                  9.06

              	
                Reference
                  in Notes to Supplemental Indentures

              
	 	 
	
                ARTICLE
                  X

              
	
                TAX
                  MATTERS

              
	
                Section
                  10.01

              	
                Description
                  of REMICs and Designation of REMIC Interests.

              
	
                Section
                  10.02

              	
                REMIC
                  Elections and REMIC Distributions.

              
	
                Section
                  10.03

              	
                Allocation
                  of Charge-Off Amounts.

              
	
                Section
                  10.04

              	
                Tax
                  Administration.

              
	
                Section
                  10.05

              	
                Tax
                  Treatment of Net WAC Cap Rate Carryover Amounts.

              
	 	 
	
                ARTICLE
                  XI

              
	
                Miscellaneous

              
	
                Section
                  11.01

              	
                Compliance
                  Certificates and Opinions, etc

              
	
                Section
                  11.02

              	
                Form
                  of Documents Delivered to Indenture Trustee

              
	
                Section
                  11.03

              	
                Acts
                  of Noteholders

              
	
                Section
                  11.04

              	
                Notices
                  etc., to Indenture Trustee Issuing Entity, Securities Administrator,
                  Note
                  Insurer and Rating Agencies

              
	
                Section
                  11.05

              	
                Notices
                  to Noteholders; Waiver

              
	
                Section
                  11.06

              	
                Conflict
                  with Trust Indenture Act

              
	
                Section
                  11.07

              	
                Effect
                  of Headings

              
	
                Section
                  11.08

              	
                Successors
                  and Assigns

              
	
                Section
                  11.09

              	
                Separability

              
	
                Section
                  11.10

              	
                Legal
                  Holidays

              
	
                Section
                  11.11

              	
                GOVERNING
                  LAW

              
	
                Section
                  11.12

              	
                Counterparts

              
	
                Section
                  11.13

              	
                Recording
                  of Indenture

              
	
                Section
                  11.14

              	
                Issuing
                  Entity Obligation

              
	
                Section
                  11.15

              	
                No
                  Petition

              
	
                Section
                  11.16

              	
                Inspection

              
	
                Section
                  11.17

              	
                Benefits
                  of Indenture

              
	
                Section
                  11.18

              	
                Securities
                  Administrator to Hold Policy

              

      

      

      

      EXHIBITS

      

      
        	 	
                Exhibit
                  A-1

              	
                —

              	
                Form
                  of Class A Notes

              
	 	
                Exhibit
                  A-2

              	
                —

              	
                Form
                  of Class A-IO Notes

              
	 	
                Exhibit
                  A-3

              	
                —

              	
                Form
                  of Class I-M Notes

              
	 	
                Exhibit
                  B

              	
                —

              	
                Mortgage
                  Loan Schedule

              
	 	
                Exhibit
                  C

              	
                —

              	
                Form
                  of Transferee Certificate

              
	 	
                Exhibit
                  D

              	
                —

              	
                Form
                  of Transferor Certificate

              
	 	
                Exhibit
                  E

              	
                —

              	
                Form
                  of Mortgage Loan Purchase Agreement

              

      

      

      

      

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      

      This
        Indenture, dated as of December 19, 2006, is entered into among SACO I Trust
        2006-12, a Delaware statutory trust, as Issuing Entity (the “Issuing Entity”),
        LaSalle Bank National Association, as Securities Administrator (the “Securities
        Administrator”) and Citibank, N.A., as Indenture Trustee (the “Indenture
        Trustee”). 

       

      WITNESSETH
        THAT:

       

      Each
        party hereto agrees as follows for the benefit of the other party and for
        the
        equal and ratable benefit of the Holders of the Issuing Entity’s Mortgage-Backed
        Notes, Series 2006-12 (the “Notes”) and the Note Insurer.

       

      GRANTING
        CLAUSE

       

      The
        Issuing Entity hereby Grants to the Indenture Trustee at the Closing Date,
        as
        trustee for the benefit of the Holders of the Notes and the Note Insurer,
        all of
        the Issuing Entity's right, title and interest in and to, whether now existing
        or hereafter created, (a) the HELOCs; (b) all funds on deposit from time
        to time
        in the Master Servicer Collection Account, excluding any investment income
        from
        such funds; (c) all
        funds
        on deposit from time to time in the Payment Account and in all proceeds thereof;
        (d) any
        REO
        Property; (e) all rights under (I) the Mortgage Loan Purchase Agreement as
        assigned to the Issuing Entity, with respect to the HELOCs, (II) the Required
        Insurance Policies and any amounts paid or payable by the insurer under any
        Insurance Policy (to the extent the mortgagee has a claim thereto) and (III)
        the
        rights with respect to the Sale and Servicing Agreement, the GMACM Servicing
        Agreement and the Greenpoint Servicing Agreement, as assigned to the Issuing
        Entity by the related Assignment Agreements; and (f) all present and future
        claims, demands, causes and choses in action in respect of any or all of
        the
        foregoing and all payments on or under, and all proceeds of every kind and
        nature whatsoever in respect of, any or all of the foregoing and all payments
        on
        or under, and all proceeds of every kind and nature whatsoever in the conversion
        thereof, voluntary or involuntary, into cash or other liquid property, all
        cash
        proceeds, accounts, accounts receivable, notes, drafts, acceptances, checks,
        deposit accounts, rights to payment of any and every kind, and other forms
        of
        obligations and receivables, instruments and other property which at any
        time
        constitute all or part of or are included in the proceeds of any of the
        foregoing (collectively, the "Trust Estate" or the "Collateral"). 

       

      In
        addition, the Indenture Trustee and the Securities Administrator, on behalf
        of
        the Holders of the Class II-A Notes, will have the benefit of the
        Policy.

       

      The
        foregoing Grant is made in trust to secure the payment of principal of and
        interest on, and any other amounts owing in respect of, the Notes, subject
        to
        the priority set forth herein, and to secure compliance with the provisions
        of
        this Indenture, all as provided in this Indenture.

       

      The
        Indenture Trustee, as trustee on behalf of the Holders of the Notes and the
        Note
        Insurer, acknowledges such Grant, accepts the trust under this Indenture
        in
        accordance with the provisions hereof and each of the Indenture Trustee and
        the
        Securities Administrator agree to perform their respective duties as Indenture
        Trustee and Securities Administrator as required herein. The Securities
        Administrator, on behalf of the Indenture Trustee, agrees that it will hold
        the
        Policy in trust and that it will hold any proceeds of any claim made upon
        the
        Policy solely for the use and benefit of the Holders of the Class II-A Notes
        in
        accordance with the terms hereof and the terms of the Policy.

       

      ARTICLE
        I

       

      DEFINITIONS

       

      Section
        1.01  Definitions.
        For all
        purposes of this Indenture, except as otherwise expressly provided herein
        or
        unless the context otherwise requires, capitalized terms not otherwise defined
        herein shall have the meanings assigned to such terms in the Definitions
        attached hereto as Appendix A which is incorporated by reference herein.
        All
        other capitalized terms used herein shall have the meanings specified
        herein.

       

      Section
        1.02  Incorporation
        by Reference of Trust Indenture Act.
        Whenever this Indenture refers to a provision of the Trust Indenture Act
        (the
“TIA”), the provision is incorporated by reference in and made a part of this
        Indenture. The following TIA terms used in this Indenture have the following
        meanings:

       

      “Commission”
        means the Securities and Exchange Commission.

       

      “indenture
        securities” means the Notes.

       

      “indenture
        security holder” means a Noteholder.

       

      “indenture
        to be qualified” means this Indenture.

       

      “indenture
        trustee” or “institutional trustee” means the Indenture Trustee.

       

      “obligor”
        on the indenture securities means the Issuing Entity and any other obligor
        on
        the indenture securities.

       

      All
        other
        TIA terms used in this Indenture that are defined by the TIA, defined by
        TIA
        reference to another statute or defined by Commission rules have the meanings
        assigned to them by such definitions.

       

      Section
        1.03  Rules
        of Construction.
        Unless
        the context otherwise requires:

       

      (i)  a
        term
        has the meaning assigned to it;

       

      (ii)  an
        accounting term not otherwise defined has the meaning assigned to it in
        accordance with generally accepted accounting principles as in effect from
        time
        to time;

       

      (iii)  “or”
is
        not exclusive;

       

      (iv)  “including”
        means including without limitation;

       

      (v)  words
        in
        the singular include the plural and words in the plural include the singular;
        and

       

      (vi)  any
        agreement, instrument or statute defined or referred to herein or in any
        instrument or certificate delivered in connection herewith means such agreement,
        instrument or statute as from time to time amended, modified or supplemented
        and
        includes (in the case of agreements or instruments) references to all
        attachments thereto and instruments incorporated therein; references to a
        Person
        are also to its permitted successors and assigns.

       

      ARTICLE
        II

       

      ORIGINAL
        ISSUANCE OF NOTES

       

      Section
        2.01  Form.
        The
        Class A, Class A-IO and Class I-M Notes, together with the Securities
        Administrator’s certificate of authentication, shall be in substantially the
        form set forth in Exhibits A-1, A-2 and A-3 to this Indenture, as applicable,
        with such appropriate insertions, omissions, substitutions and other variations
        as are required or permitted by this Indenture.

       

      The
        Notes
        shall be typewritten, printed, lithographed or engraved or produced by any
        combination of these methods (with or without steel engraved
        borders).

       

      The
        terms
        of the Notes set forth in Exhibits A-1, A-2 and A-3 to this Indenture are
        part
        of the terms of this Indenture.

       

      Section
        2.02  Execution,
        Authentication and Delivery.
        The
        Notes shall be executed on behalf of the Issuing Entity by any of its Authorized
        Officers. The signature of any such Authorized Officer on the Notes may be
        manual or facsimile.

       

      Notes
        bearing the manual or facsimile signature of individuals who were at any
        time
        Authorized Officers of the Issuing Entity shall bind the Issuing Entity,
        notwithstanding that such individuals or any of them have ceased to hold
        such
        offices prior to the authentication and delivery of such Notes or did not
        hold
        such offices at the date of such Notes.

       

      The
        Securities Administrator shall upon Issuer Request authenticate and deliver
        each
        Class of Notes for original issue in an aggregate initial principal amount
        or
        notional amount equal to the Initial Note Principal Balance or Notional Amount,
        as applicable, for such Class of Notes.

       

      Each
        of
        the Notes shall be dated the date of its authentication. The Notes shall
        be
        issuable as registered Notes in book-entry form, in the minimum initial Note
        Principal Balances or Notional Amounts, as applicable, of $100,000 and in
        integral multiples of $1 in excess thereof.

       

      No
        Note
        shall be entitled to any benefit under this Indenture or be valid or obligatory
        for any purpose, unless there appears on such Note a certificate of
        authentication substantially in the form provided for herein executed by
        the
        Securities Administrator by the manual signature of one of its authorized
        signatories, and such certificate upon any Note shall be conclusive evidence,
        and the only evidence, that such Note has been duly authenticated and delivered
        hereunder.

       

      ARTICLE
        III

       

      COVENANTS

       

      Section
        3.01  Existence.
        The
        Issuing Entity will keep in full effect its existence, rights and franchises
        as
        a statutory trust under the laws of the State of Delaware (unless it becomes,
        or
        any successor Issuing Entity hereunder is or becomes, organized under the
        laws
        of any other state or of the United States of America, in which case the
        Issuing
        Entity will keep in full effect its existence, rights and franchises under
        the
        laws of such other jurisdiction) and will obtain and preserve its qualification
        to do business in each jurisdiction in which such qualification is or shall
        be
        necessary to protect the validity and enforceability of this Indenture, the
        Notes and each other instrument or agreement included in the Trust
        Estate.

       

      Section
        3.02  Payment
        of Principal and Interest. 

       

      (a)  On
        each
        Payment Date, the Group I Floating Allocation Percentage of the Group I Interest
        Collection Amount for such Payment Date, reduced by the related Servicing
        Fees
        and master servicing fees, will be distributed in the following order of
        priority: 

       

      (i)  to
        the
        Class I-A Notes and Class I-A-IO Notes, pro rata, the Current Interest and
        any
        Unpaid Interest Shortfall Amount for such Payment Date; 

       

      (ii)  to
        the
        Class I-M-1, Class I-M-2, Class I-M-3 and Class I-M-4 Notes, in that order,
        the
        related Current Interest for such Class and Payment Date; 

       

      (iii)  from
        amounts otherwise distributable to the Class I-E Interest and Class I-E
        Certificates, to the Classes of Group I Notes (other than the Class I-A-IO
        Notes), as a payment of principal, the amount necessary to build and maintain
        the Group I Overcollateralization Amount to the Group I Overcollateralization
        Target Amount, including covering the Group I Floating Allocation Percentage
        of
        the Group I Charge-Off Amounts during the related Collection
        Period;

       

      (iv)  to
        cover
        any Group I Charge-Off Amounts allocated to the Class I-A Notes;

       

      (v)  to
        the
        Class I-M-1, Class I-M-2, Class I-M-3 and Class I-M-4 Notes, any Unpaid Interest
        Shortfall Amount for such Payment Date and such Class;

       

      (vi)  from
        amounts otherwise distributable to the Class I-E Interest and Class I-E
        Certificates, to the Group I Net WAC Cap Rate Carryover Reserve Account,
        (x)
        first to pay the Class I-A Notes and Class I-A-IO Notes, pro rata, and then
        to
        the Class I-M-1, Class I-M-2, Class I-M-3 and Class I-M-4 Notes, in that
        order,
        any Net WAC Cap Rate Carryover Amount with respect to the Group I Notes for
        such
        Payment Date and such Class to the extent such amount exceeds the amounts
        then
        on deposit in the Group I WAC Cap Rate Carryover Reserve Account, and (y)
        second, to maintain a balance equal to the Group I Net WAC Cap Rate Carryover
        Reserve Account Deposit;

       

      

      (vii)  to
        the
        Class I-E Interest, and to the Certificate Paying Agent for distribution
        to the
        Class I-E Certificates, as specified in the Trust Agreement, any remaining
        amounts not exceeding the Class I-E Distribution Amount reduced by amounts
        distributed in clauses (iii) and (vi);

       

      (viii)  to
        the
        Certificate Paying Agent for distribution to the Group I Residual Certificates,
        as specified in the Trust Agreement.

       

      (b)  (1)On
        each
        Payment Date, the Class I-S Floating Allocation Percentage of the Group I
        Interest Collection Amount for such Payment Date, reduced by the Servicing
        Fees
        and master servicing fees, shall be distributed to the holders of the Class
        I-S
        Certificates.

       

      (2) On
        each
        Payment Date during the Group I Managed Amortization Period, the Class I-S
        Principal Payment Amount shall be distributed to the holders of the Class
        I-S
        Certificates, until their Certificate Principal Balance has been reduced
        to
        zero.

       

      (c)  On
        each
        Payment Date, the Group I Available Principal Payment Amount will be distributed
        as principal funds in the following order of priority: 

       

      (1) For
        each
        Payment Date prior to the Group I Stepdown Date or on which a Group I Trigger
        Event is in effect:

       

      (i)
        to
        the Class I-A Notes, the Group I Available Principal Payment Amount for such
        Payment Date, until the Note Principal Balance thereof is reduced to zero;
        

       

      (ii)
        sequentially, to the Class I-M-1, Class I-M-2, Class I-M-3 and Class I-M-4
        Notes, in that order, the remaining Group I Available Principal Payment Amount,
        in each case until the Note Principal Balance of each such Class has been
        reduced to zero;

       

      (iii)
        during the Group I Rapid Amortization Period, to the Class I-S Certificates,
        in
        reduction of the Certificate Principal Balance thereof, until the Certificate
        Principal Balance is reduced to zero; 

       

      (iv)
        to
        the Class I-E Interest, and to the Certificate Paying Agent for distribution
        to
        the Class I-E Certificates, as specified in the Trust Agreement, any remaining
        amounts up to the portion of the Class I-E Distribution Amount remaining
        after
        the distributions made pursuant to Section 3.02(a) above; and

       

      (v)
        to
        the Certificate Paying Agent for distribution to the Group I Residual
        Certificates, as specified in the Trust Agreement.

       

      (2) For
        each
        Payment Date on or after the Group I Stepdown Date, so long as a Group I
        Trigger
        Event is not in effect:

       

      (i)
        to
        the Class I-A Notes, the Class I-A Principal Payment Amount, for such Payment
        Date, until the Note Principal Balance thereof is reduced to zero;

       

      (ii)
        to
        the Class I-M-1 Notes, the Class I-M-1 Principal Payment Amount for such
        Payment
        Date, until the Note Principal Balance thereof is reduced to zero;

       

      (iii)
        to
        the Class I-M-2 Notes, the Class I-M-2 Principal Payment Amount for such
        Payment
        Date, until the Note Principal Balance thereof is reduced to zero;

       

      (iv)
        to
        the Class I-M-3 Notes, the Class I-M-3 Principal Payment Amount for such
        Payment
        Date, until the Note Principal Balance thereof is reduced to zero;

       

      (v)
        to
        the Class I-M-4 Notes, the Class I-M-4 Principal Payment Amount for such
        Payment
        Date, until the Note Principal Balance thereof is reduced to zero;

       

      (vi)
        during the Group I Rapid Amortization Period, to the Class I-S Certificates,
        in
        reduction of the Certificate Principal Balance thereof, until the Certificate
        Principal Balance is reduced to zero; 

       

      (vii)
        to
        the Class I-E Interest, and to the Certificate Paying Agent for distribution
        to
        the Class I-E Certificates, as specified in the Trust Agreement, any remaining
        amounts up to the portion of the Class I-E Distribution Amount remaining
        after
        the distributions made pursuant to Section 3.02(a); and

       

      (viii)
        to
        the Certificate Paying Agent for distribution to the Group I Residual
        Certificates, as specified in the Trust Agreement.

      

      (d)  On
        each
        Payment Date, the Group II Floating Allocation Percentage of the Group II
        Interest Collection Amount for such Payment Date, reduced by the Servicing
        Fees
        and master servicing fees, will be distributed in the following order of
        priority: 

       

      (i)  to
        the
        Note Insurer, the current and any past due Premium Amount; 

       

      (ii)  to
        the
        Class II-A Notes and Class II-A-IO Notes, pro rata, the Current Interest
        and any
        Unpaid Interest Shortfall Amount for such Payment Date; 

       

      (iii)  to
        the
        Note Insurer, as reimbursement for prior draws (including applicable interest)
        made under the Policy;

       

      (iv)  from
        amounts otherwise distributable to the Class II-E Interest and the Class
        II-E
        Certificates, to the Class II-A Notes, as a payment of principal, the amount
        necessary to build the Group II Overcollateralization Amount to the Group
        II
        Overcollateralization Target Amount, including covering the Group II Floating
        Allocation Percentage of the Group II Charge-Off Amounts during the related
        Collection Period;

       

      (v)  to
        cover
        any Group II Charge-Off Amounts allocated to the Class II-A Notes (to the
        extent
        not covered by the Policy);

       

      (vi)  from
        amounts otherwise distributable to the Class II-E Interest and Class II-E
        Certificates, to the Group II Net WAC Cap Rate Carryover Reserve Account,
        (x)
        first to pay the Class II-A Notes and Class II-A-IO Notes, pro rata, any
        Net WAC
        Cap Rate Carryover Amount with respect to the Group II Notes for such Payment
        Date and such Class to the extent such amount exceeds the amounts then on
        deposit in the Group II WAC Cap Rate Carryover Reserve Account, and (y) second,
        to maintain a balance equal to the Group II Net WAC Cap Rate Carryover Reserve
        Account Deposit;

       

      (vii)  to
        the
        Note Insurer, any other amounts owed to the Note Insurer pursuant to the
        Insurance Agreement; 

       

      (viii)  to
        the
        Class II-E Interest, and to the Certificate Paying Agent for distribution
        to the
        Class II-E Certificates, as specified in the Trust Agreement, any remaining
        amounts not exceeding the Class II-E Distribution Amount reduced by amounts
        distributed in clauses (iv) and (vi);

       

      (ix)  to
        the
        Certificate Paying Agent for distribution to the Group II Residual Certificates
        and the Class I-R-1 Certificates and Class I-R-2 Certificates, as specified
        in
        the Trust Agreement.

       

      (e)  (1)On
        each
        Payment Date, the Class II-S Floating Allocation Percentage of the Group
        II
        Interest Collection Amount for such Payment Date shall be distributed to
        the
        holders of the Class II-S Certificates.

       

      (2) On
        each
        Payment Date during the Group II Managed Amortization Period, the Class II-S
        Principal Payment Amount shall be distributed to the holders of the Class
        II-S
        Certificates, until their Certificate Principal Balance has been reduced
        to
        zero.

       

      (f)  On
        each
        Payment Date, the Group II Available Principal Payment Amount will be
        distributed as principal funds in the following order of priority: 

       

      (1) For
        each
        Payment Date prior to the Group II Stepdown Date or on which a Group II Trigger
        Event is in effect:

       

      (i)
        to
        the Class II-A Notes, the Group II Available Principal Payment Amount for
        such
        Payment Date, until the Note Principal Balance thereof is reduced to zero;
        

       

      (ii)
        to
        the Note Insurer, as reimbursement for prior draws (including applicable
        interest) made under the Policy, to the extent not covered by the Group II
        Interest Collection Amount;

       

      (iii)
        during the Group II Rapid Amortization Period, to the Class II-S Certificates,
        in reduction of the Certificate Principal Balance thereof, until the Certificate
        Principal Balance is reduced to zero; 

       

      (iv)
        to
        the Note Insurer, any other amounts owed to the Note Insurer pursuant to
        the
        Insurance Agreement; 

       

      (v)
        to
        the Class II-E Interest, and to the Certificate Paying Agent for distribution
        to
        the Class II-E Certificates, as specified in the Trust Agreement, any remaining
        amounts up to the portion of the Class II-E Distribution Amount remaining
        after
        the distributions made pursuant to Section 3.02(d); and

       

      (vi)
        to
        the Certificate Paying Agent for distribution to the Group II Residual
        Certificates and the Class I-R-1 Certificates and Class I-R-2 Certificates,
        as
        specified in the Trust Agreement.

       

      (2) For
        each
        Payment Date on or after the Group II Stepdown Date, so long as a Group II
        Trigger Event is not in effect:

       

      (i)
        to
        the Class II-A Notes, the Class II-A Principal Payment Amount, for such Payment
        Date, until the Note Principal Balance thereof is reduced to zero;

       

      (ii)
        to
        the Note Insurer, as reimbursement for prior draws (including applicable
        interest) made under the Policy, to the extent not covered by the Group II
        Interest Collection Amount;

       

      (iii)
        during the Group II Rapid Amortization Period, to the Class II-S Certificates,
        in reduction of the Certificate Principal Balance thereof, until the Certificate
        Principal Balance is reduced to zero; 

       

      (iv)
        to
        the Note Insurer, any other amounts owed to the Note Insurer pursuant to
        the
        Insurance Agreement;

       

      (v)
        to
        the Class II-E Interest, and to the Certificate Paying Agent for distribution
        to
        the Class II-E Certificates, as specified in the Trust Agreement, any remaining
        amounts up to the portion of the Class II-E Distribution Amount remaining
        after
        the distributions made pursuant to Section 3.02(d); and

       

      (vi)
        to
        the Certificate Paying Agent for distribution to the Group II Residual
        Certificates and the Class I-R-1 Certificates and Class I-R-2 Certificates,
        as
        specified in the Trust Agreement.

      

      (g)  No
        Current Interest will be payable with respect to any Class of Notes after
        the
        Payment Date on which the Note Principal Balance or Notional Amount of such
        Class has been reduced to zero.

       

      (h)  Each
        distribution with respect to a Book-Entry Note shall be paid to the Depository,
        as Holder thereof, and the Depository shall be responsible for crediting
        the
        amount of such distribution to the accounts of its Depository Participants
        in
        accordance with its normal procedures. Each Depository Participant shall
        be
        responsible for disbursing such distribution to the Note Owners that it
        represents and to each indirect participating brokerage firm (a “brokerage firm”
or “indirect participating firm”) for which it acts as agent. Each brokerage
        firm shall be responsible for disbursing funds to the Note Owners that it
        represents. None of the Securities Administrator, the Note Registrar, the
        Paying
        Agent, the Depositor or the Master Servicer shall have any responsibility
        therefor.

       

      (i)  On
        each
        Payment Date, the Certificate Paying Agent shall deposit in the Payment Account
        all amounts it received pursuant to this Section 3.02 for the purpose of
        distributing such funds to the Certificateholders. The Certificate Paying
        Agent
        shall make distributions to the Certificateholders under the Trust Agreement
        as
        directed by the Securities Administrator hereunder.

       

      (j)  Any
        installment of interest or principal, if any, payable on any Note that is
        punctually paid or duly provided for by the Issuing Entity on the applicable
        Payment Date shall, if such Holder shall have so requested at least five
        Business Days prior to the related Record Date, be paid to each Holder of
        record
        on the preceding Record Date, by wire transfer to an account specified in
        writing by such Holder as of the preceding Record Date or in all other cases
        or
        if no such instructions have been delivered to the Securities Administrator,
        by
        check to such Noteholder mailed to such Holder’s address as it appears in the
        Note Register in the amount required to be distributed to such Holder on
        such
        Payment Date pursuant to such Holder’s Notes; provided, however, that the
        Securities Administrator shall not pay to such Holders any amount required
        to be
        withheld from a payment to such Holder by the Code.

       

      (k)  The
        Note
        Principal Balance of each Note (other than the Class A-IO Notes) shall be
        due
        and payable in full on the related Final Scheduled Payment Date. All principal
        payments on the Notes shall be made to the Noteholders entitled thereto in
        accordance with the Percentage Interests represented by such Notes. Upon
        notice
        to the Securities Administrator by the Issuing Entity, the Securities
        Administrator shall notify the Person in whose name a Note is registered
        at the
        close of business on the Record Date preceding the related Final Scheduled
        Payment Date or other final Payment Date (including any final Payment Date
        resulting from any redemption pursuant to Section 8.06 hereof). Such notice
        shall to the extent practicable be mailed no later than five Business Days
        prior
        to such Final Scheduled Payment Date or other final Payment Date and shall
        specify that payment of the principal amount and any interest due with respect
        to such Note at the related Final Scheduled Payment Date or other final Payment
        Date will be payable only upon presentation and surrender of such Note and
        shall
        specify the place where such Note may be presented and surrendered for such
        final payment. No interest shall accrue on the Notes on or after the related
        Final Scheduled Payment Date or any such other final Payment Date.

       

      Section
        3.03  Protection
        of Trust Estate.
        (a)
        The
        Issuing Entity will from time to time prepare, execute and deliver all such
        supplements and amendments hereto and all such financing statements,
        continuation statements, instruments of further assurance and other instruments,
        and will take such other action necessary or advisable to:

       

      (i)  maintain
        or preserve the lien and security interest (and the priority thereof) of
        this
        Indenture or carry out more effectively the purposes hereof;

       

      (ii)  perfect,
        publish notice of or protect the validity of any Grant made or to be made
        by
        this Indenture;

       

      (iii)  cause
        the Issuing Entity or the Securities Administrator to enforce any of the
        rights
        to the HELOCs;
        or

       

      (iv)  preserve
        and defend title to the Trust Estate and the rights of the Indenture Trustee,
        the Note Insurer and the Noteholders in such Trust Estate against the claims
        of
        all persons and parties.

       

      (b)  Except
        as
        otherwise provided in this Indenture, the Indenture Trustee shall not remove
        or
        permit the Custodian to remove any portion of the Trust Estate that consists
        of
        money or is evidenced by an instrument, certificate or other writing from
        the
        jurisdiction in which it was held at the date of the most recent Opinion
        of
        Counsel delivered pursuant to Section 3.04 hereof (or from the jurisdiction
        in
        which it was held as described in the Opinion of Counsel delivered on the
        Closing Date pursuant to Section 3.04(a) hereof, if no Opinion of Counsel
        has
        yet been delivered pursuant to Section 3.04(b) hereof), unless the Indenture
        Trustee shall have first received an Opinion of Counsel to the effect that
        the
        lien and security interest created by this Indenture with respect to such
        property will continue to be maintained after giving effect to such action
        or
        actions.

       

      The
        Issuing Entity hereby designates the Securities Administrator its agent and
        attorney-in-fact to sign any financing statement, continuation statement
        or
        other instrument required to be signed pursuant to this Section 3.03 upon
        the
        Issuing Entity’s preparation thereof and delivery to the Indenture
        Trustee.

       

      Section
        3.04  Opinions
        as to Trust Estate.
        (a)
        On the
        Closing Date, the Issuing Entity shall furnish to the Indenture Trustee,
        the
        Note Insurer and the Owner Trustee an Opinion of Counsel either stating that,
        in
        the opinion of such counsel, such action has been taken with respect to the
        recording and filing of this Indenture, any indentures supplemental hereto,
        and
        any other requisite documents, and with respect to the execution and filing
        of
        any financing statements and continuation statements, as are necessary to
        perfect and make effective the lien and first priority security interest
        in the
        Collateral and reciting the details of such action, or stating that, in the
        opinion of such counsel, no such action is necessary to make such lien and
        first
        priority security interest effective.

       

      (b)  On
        or
        before December 31st in each calendar year, beginning in 2006, the Issuing
        Entity shall furnish to the Indenture Trustee and the Note Insurer an Opinion
        of
        Counsel at the expense of the Issuing Entity either stating that, in the
        opinion
        of such counsel, such action has been taken with respect to the recording,
        filing, rerecording and refiling of this Indenture, any indentures supplemental
        hereto and any other requisite documents and with respect to the execution
        and
        filing of any financing statements and continuation statements as is necessary
        to maintain the lien and security interest in the Collateral and reciting
        the
        details of such action or stating that in the opinion of such counsel no
        such
        action is necessary to maintain such lien and security interest. Such Opinion
        of
        Counsel shall also describe the recording, filing, re-recording and refiling
        of
        this Indenture, any indentures supplemental hereto and any other requisite
        documents and the execution and filing of any financing statements and
        continuation statements that will, in the opinion of such counsel, be required
        to maintain the lien and security interest in the Collateral until December
        31
        in the following calendar year. 

       

      Section
        3.05  Performance
        of Obligations.
        (a)
        The
        Issuing Entity will punctually perform and observe all of its obligations
        and
        agreements contained in this Indenture, the Basic Documents and in the
        instruments and agreements included in the Trust Estate.

       

      (b)  The
        Issuing Entity, with the consent of the Note Insurer so long as no Note Insurer
        Default exists, may contract with other Persons to assist it in performing
        its
        duties under this Indenture, and any performance of such duties by a Person
        identified to the Indenture Trustee in an Officer’s Certificate of the Issuing
        Entity shall be deemed to be action taken by the Issuing Entity.

       

      (c)  The
        Issuing Entity will not take any action or permit any action to be taken
        by
        others which would release any Person from any of such Person’s covenants or
        obligations under any of the documents relating to the HELOCs or under any
        instrument included in the Trust Estate, or which would result in the amendment,
        hypothecation, subordination, termination or discharge of, or impair the
        validity or effectiveness of, any of the documents relating to the HELOCs
        or any
        such instrument, except such actions as the Master Servicer is expressly
        permitted to take in the Sale and Servicing Agreement.

       

      (d)  The
        Issuing Entity may retain an administrator and may enter into contracts
        acceptable to the Note Insurer with other Persons for the performance of
        the
        Issuing Entity’s obligations hereunder, and performance of such obligations by
        such Persons shall be deemed to be performance of such obligations by the
        Issuing Entity.

       

      (e)  The
        Issuing Entity will perform and observe all of its obligations and agreements
        contained in this Indenture, the Basic Documents and in the instruments and
        agreements included in the Trust Estate and take such other actions, all
        as may
        be required to have the Trust Estate qualify as one or more REMICs formed
        pursuant to the Indenture.

       

      Section
        3.06  Negative
        Covenants.
        So long
        as any Notes are Outstanding, the Issuing Entity shall not:

       

      (i)  except
        as
        expressly permitted by this Indenture, sell, transfer, exchange or otherwise
        dispose of the Trust Estate without the consent of the Note Insurer (if
        applicable);

       

      (ii)  (A)
        permit the validity or effectiveness of this Indenture to be impaired, or
        permit
        the lien of this Indenture to be amended, hypothecated, subordinated, terminated
        or discharged, or permit any Person to be released from any covenants or
        obligations with respect to the Notes under this Indenture except as may
        be
        expressly permitted hereby, (B) permit any lien, charge, excise, claim, security
        interest, mortgage or other encumbrance (other than the lien of this Indenture)
        to be created on or extend to or otherwise arise upon or burden the Trust
        Estate
        or any part thereof or any interest therein or the proceeds thereof or (C)
        permit the lien of this Indenture not to constitute a valid first priority
        security interest in the Trust Estate; 

       

      (iii)  waive
        or
        impair, or fail to assert rights under, the HELOCs, or impair or cause to
        be
        impaired the Issuing Entity’s interest in the HELOCs, the Mortgage Loan Purchase
        Agreement or in any Basic Document, if any such action would materially and
        adversely affect the interests of the Noteholders, the Certificateholders
        or the
        Note Insurer; or

       

      (iv)  take
        any
        action or fail to take any action that would cause any REMIC created hereunder
        to cease to qualify as a REMIC or result in an imposition of tax on the Issuing
        Entity (including, but not limited to, the tax on prohibited transactions
        under
        Section 860F of the Code).

       

      Section
        3.07  Annual
        Statement as to Compliance.
        The
        Issuing Entity will deliver to the Indenture Trustee, the Securities
        Administrator and the Note Insurer, by March 1 of each year commencing with
        the
        calendar year 2007, an Officer’s Certificate stating, as to the Authorized
        Officer signing such Officer’s Certificate, that:

       

      (i)  a
        review
        of the activities of the Issuing Entity during the previous calendar year
        and of
        its performance under this Indenture and the Trust Agreement has been made
        under
        such Authorized Officer’s supervision; and

       

      (ii)  to
        the
        best of such Authorized Officer’s knowledge, based on such review, the Issuing
        Entity has complied with all conditions and covenants under this Indenture
        and
        the provisions of the Trust Agreement throughout such year, or, if there
        has
        been a default in its compliance with any such condition or covenant, specifying
        each such default known to such Authorized Officer and the nature and status
        thereof.

       

      Section
        3.08  Representations
        and Warranties Concerning the HELOCs.
        The
        Indenture Trustee, as pledgee of the HELOCs, has the benefit of the
        representations and warranties made by the Seller in the Mortgage Loan Purchase
        Agreement concerning the Seller and the HELOCs. If a Responsible Officer
        of the
        Indenture Trustee has actual knowledge of any breach of any representation
        or
        warranty made by the Seller in the Mortgage Loan Purchase Agreement, or any
        Subsequent Mortgage Loan Purchase Agreement, the Indenture Trustee shall
        promptly notify the Seller and the Note Insurer of such finding and of the
        Seller’s obligation to cure such defect or repurchase or substitute for the
        related HELOC. 

       

      Section
        3.09  Investment
        Company Act.
        The
        Issuing Entity shall not become an “investment company” or be under the
“control” of an “investment company” as such terms are defined in the Investment
        Company Act of 1940, as amended (or any successor or amendatory statute),
        and
        the rules and regulations thereunder (taking into account not only the general
        definition of the term “investment company” but also any available exceptions to
        such general definition); provided, however, that the Issuing Entity shall
        be in
        compliance with this Section 3.09 if it shall have obtained an order exempting
        it from regulation as an “investment company” so long as it is in compliance
        with the conditions imposed in such order.

       

      Section
        3.10  No
        Other Business.
        The
        Issuing Entity shall not engage in any business other than as set forth with
        respect thereto in the Trust Agreement and other than financing, purchasing,
        owning and selling and managing the HELOCs and the issuance of the Notes
        and
        Certificates in the manner contemplated by this Indenture and the Basic
        Documents and all activities incidental thereto.

       

      Section
        3.11  No
        Borrowing.
        The
        Issuing Entity shall not issue, incur, assume, guarantee or otherwise become
        liable, directly or indirectly, for any indebtedness except for the Notes
        under
        this Indenture and amounts due to the Note Insurer.

       

      Section
        3.12  Guarantees,
        Loans, Advances and Other Liabilities.
        Except
        as contemplated by this Indenture or the Basic Documents, the Issuing Entity
        shall not make any loan or advance or credit to, or guarantee (directly or
        indirectly or by an instrument having the effect of assuring another’s payment
        or performance on any obligation or capability of so doing or otherwise),
        endorse or otherwise become contingently liable, directly or indirectly,
        in
        connection with the obligations, stocks or dividends of, or own, purchase,
        repurchase or acquire (or agree contingently to do so) any stock, obligations,
        assets or securities of, or any other interest in, or make any capital
        contribution to, any other Person.

       

      Section
        3.13  Capital
        Expenditures.
        The
        Issuing Entity shall not make any expenditure (by long-term or operating
        lease
        or otherwise) for capital assets (either realty or personalty).

       

      Section
        3.14  Determination
        of Note Interest Rate. 

       

      On
        each
        Interest Determination Date other than first Interest Determination Date
        for
        which One-Month LIBOR shall be 5.350%, the Securities Administrator shall
        determine One-Month LIBOR and the related Note Interest Rate for each Class
        of
        Notes (other than the Class A-IO Notes) for the following Accrual Period
        and
        shall make such rate available to the Issuing Entity, the Indenture Trustee,
        the
        Master Servicer, the Note Insurer and the Depositor. The establishment of
        One-Month LIBOR on each Interest Determination Date by the Securities
        Administrator and the Securities Administrator’s calculation of the rate of
        interest applicable to each Class of Notes for the related Accrual Period
        shall
        (in the absence of manifest error) be final and binding.

       

      Section
        3.15  Restricted
        Payments.
        The
        Issuing Entity shall not, directly or indirectly, (i) pay any dividend or
        make
        any distribution (by reduction of capital or otherwise), whether in cash,
        property, securities or a combination thereof, to the Owner Trustee or any
        owner
        of a beneficial interest in the Issuing Entity or otherwise with respect
        to any
        ownership or equity interest or security in or of the Issuing Entity, (ii)
        redeem, purchase, retire or otherwise acquire for value any such ownership
        or
        equity interest or security or (iii) set aside or otherwise segregate any
        amounts for any such purpose; provided, however, that the Issuing Entity
        may
        make, or cause to be made, (x) distributions and payments to the Owner Trustee,
        the Indenture Trustee, the Securities Administrator, the Master Servicer,
        the
        Servicers, the Certificate Registrar, the Certificate Paying Agent, the
        Noteholders, the Note Insurer and the Certificateholders as contemplated
        by, and
        to the extent funds are available for such purpose under this Indenture and
        the
        Basic Documents and (y) payments to the Master Servicer and the Servicers
        pursuant to the terms of the Sale and Servicing Agreement or the Servicing
        Agreement, as applicable. The Issuing Entity will not, directly or indirectly,
        make payments to or distributions from the Master Servicer Collection Account
        or
        the Payment Account except in accordance with this Indenture and the Basic
        Documents.

       

      Section
        3.16  Notice
        of Events of Default.
        The
        Issuing Entity shall give the Indenture Trustee, the Securities Administrator,
        the Note Insurer and each Rating Agency prompt written notice of each Event
        of
        Default hereunder.

       

      Section
        3.17  Further
        Instruments and Acts.
        Upon
        request of the Indenture Trustee or the Note Insurer, the Issuing Entity
        will
        execute and deliver such further instruments and do such further acts as
        may be
        reasonably necessary or proper to carry out more effectively the purpose
        of this
        Indenture.

       

      Section
        3.18  Certain
        Representations Regarding the Trust Estate. 

       

      (a)  With
        respect to that portion of the Collateral described in clauses (a) through
        (c)
        of the definition of Trust Estate, the Issuing Entity represents to the
        Indenture Trustee that:

       

      (i)  This
        Indenture creates a valid and continuing security interest (as defined in
        the
        applicable UCC) in the Collateral in favor of the Indenture Trustee, which
        security interest is prior to all other liens, and is enforceable as such
        as
        against creditors of and purchasers from the Issuing Entity.

       

      (ii)  The
        Collateral constitutes “deposit accounts,” “instruments” or “certificated
        securities,” as applicable within the meaning of the applicable
        UCC.

       

      (iii)  The
        Issuing Entity owns and has good and marketable title to the Collateral,
        free
        and clear of any lien, claim or encumbrance of any Person.

       

      (iv)  The
        Issuing Entity has caused or will have caused, within ten days of the Closing
        Date, the filing of all appropriate financing statements in the proper filing
        office in the appropriate jurisdictions under applicable law in order to
        perfect
        the security interest in the Collateral granted to the Indenture Trustee
        hereunder.

       

      (v)  Other
        than the security interest granted to the Indenture Trustee pursuant to this
        Indenture, the Issuing Entity has not pledged, assigned, sold, granted a
        security interest in, or otherwise conveyed any of the Collateral. The Issuing
        Entity has not authorized the filing of and is not aware of any financing
        statements against the Issuing Entity that include a description of collateral
        covering the Collateral other than any financing statement relating to the
        security interest granted to the Indenture Trustee hereunder or that has
        been
        terminated.

       

      (vi)  The
        Collateral is not in the name of any Person other than the Issuing Entity
        or the
        Indenture Trustee. The Issuing Entity has in its possession all original
        copies
        of the security certificates that constitute or evidence the Collateral.
        The
        security certificates that constitute or evidence the Collateral do not have
        any
        marks or notations indicating that they have been pledged, assigned or otherwise
        conveyed to any Person other than the Indenture Trustee. The Issuing Entity
        has
        not consented to the bank maintaining the Collateral to comply with instructions
        of any Person other than the Indenture Trustee. All
        financing statements filed or to be filed against the Issuing Entity in favor
        of
        the Indenture Trustee in connection herewith describing the Collateral contain
        a
        statement to the following effect: "A purchase of or security interest in
        any
        collateral described in this financing statement will violate the rights
        of the
        Secured Party.” 

       

      Section
        3.19  Allocation
        of Group I Charge-Off Amounts. 

       

      (a)  On
        or
        prior to each Payment Date, the Master Servicer shall determine, based solely
        on
        information provided to it by the related Servicer the amount of any Group
        I
        Charge-Off Amount in respect of each Group I HELOC that occurred during the
        immediately preceding calendar month.

       

      (b)  The
        Group
        I Floating Allocation Percentage of Group I Charge-Off Amounts on the Group
        I
        HELOCs will be applied on any Payment Date as follows:

       

      first,
        to any
        available Group I Interest Collection Amount through an increase in the Group
        I
        Overcollateralization Amount as provided in Section 3.02(a)(iv) hereof;
        and

       

      second,
        in
        reduction of the Group I Overcollateralization Amount until reduced to
        zero.

       

      (c)  If
        on any
        Payment Date, as a result of the Group I Charge-Off Amounts, the sum of the
        aggregate Note Principal Balances of the Group I Notes (other than the Class
        I-A-IO Notes) exceeds the Group I Invested Amount as of the last day of the
        related Collection Period, such excess shall be allocated to the Group I
        Notes
        (other than the Class I-A-IO Notes) in the following order:

       

      first,
        to the
        Class I-M-4 Notes, until the Note Principal Balance thereof has been reduced
        to
        zero; 

       

      second,
        to the
        Class I-M-3 Notes, until the Note Principal Balance thereof has been reduced
        to
        zero;

       

      third,
        to the
        Class I-M-2 Notes, until the Note Principal Balance thereof has been reduced
        to
        zero;

       

      fourth,
        to the
        Class I-M-1 Notes, until the Note Principal Balance thereof has been reduced
        to
        zero; and

       

      fifth,
        to the
        Class I-A Notes, until the Note Principal Balance thereof has been reduced
        to
        zero.

       

      (d)  Once
        Group I Charge-Off Amounts have been allocated to a Class of Group I Notes,
        such
        amounts with respect to such Group I Notes will no longer accrue interest
        nor
        will such amounts in respect of interest be reinstated thereafter.

       

      (e)  Group
        I
        Charge-Off Amounts shall be allocated on the Payment Date in the month following
        the month in which such loss was incurred and, in the case of the principal
        portion thereof, after giving effect to distributions made on such Payment
        Date.

       

      (f)  In
        the
        event that the related Servicer receives any Group I Subsequent Recoveries,
        such
        Group I Subsequent Recoveries shall be remitted to the Master Servicer and
        then
        distributed by the Securities Administrator pursuant to Section 3.02 of this
        Indenture.

       

      (g)  In
        addition, the related Servicer must charge off a Group I HELOC at the time
        such
        HELOC becomes 180 days delinquent unless the related Servicer reasonably
        believes that it may be able to obtain a net recovery through foreclosure
        proceedings or other conversion of the related HELOC. Once a Group I HELOC
        is
        charged off, the related Servicer will not be entitled to any additional
        Servicing Fee for such HELOC, except to the extent of any unpaid Servicing
        Fees
        and expenses which will be reimbursable from any recoveries on such HELOC,
        and
        the Group I HELOC will be treated as a liquidated HELOC relating to Group
        I.

       

      Unless
        specific Group I Subsequent Recoveries are anticipated by the related Servicer,
        as applicable, on a particular Group I HELOC that is charged off as described
        in
        the preceding paragraph, such charged off Group I HELOC will be released
        from
        the Trust Estate related to the Group I HELOCs, and will be transferred to
        the
        Class I-X Certificateholders. If any Group I Subsequent Recoveries are
        anticipated on such Group I Charged-Off HELOC, the release of such HELOC
        from
        the Trust Estate related to the Group I HELOCs will be delayed until the
        Payment
        Date after receipt of such Group I Subsequent Recoveries. After the release
        of a
        Group I Charged-Off HELOC, the Class I-X Certificateholders will be entitled
        to
        any amounts subsequently received in respect of any such released Group I
        Charged-Off HELOC, subject to any fees or expenses owed to the related Servicer.
        Such Class I-X Certificateholder may designate any servicer to service any
        such
        released Group I Charged-Off HELOC and the Class I-X Certificateholder may
        sell
        any such released Group I Charged-Off HELOC to a third party. To the extent
        the
        servicing of such released Group I Charged-Off HELOC is not transferred from
        the
        related Servicer, the servicing of such released Group I Charged-Off HELOC
        and
        the fees therefor shall be governed by a separate servicing agreement under
        terms similar to the Sale and Servicing Agreement or the related Servicing
        Agreement.

      

      (h)  The
        Class
        I-S Floating Allocation Percentage of Group I Charge-Off Amounts on the Group
        I
        HELOCS shall be applied on any Payment Date to the Class I-S
        Certificates.

       

      Section
        3.20  Allocation
        of Group II Charge-Off Amounts.

       

      (a)  On
        or
        prior to each Payment Date, the Master Servicer shall determine, based solely on
        information provided to it by the related Servicer the amount of any Group
        II
        Charge-Off Amount in respect of each Group II HELOC that occurred during
        the
        immediately preceding calendar month.

       

      (b)  The
        Group
        II Floating Allocation Percentage of Group II Charge-Off Amounts on the Group
        II
        HELOCs will be applied on any Payment Date as follows:

       

      first,
        to any
        available Group II Interest Collection Amount through an increase in the
        Group
        II Overcollateralization Amount as provided in Section 3.02(d)(v) hereof;
        and

       

      second,
        in
        reduction of the Group II Overcollateralization Amount until reduced to
        zero.

       

      If
        on any
        Payment Date, as a result of the Group II Charge-Off Amounts, the Note Principal
        Balance of the Class II-A Notes exceeds the Group II Invested Amount as of
        the
        last day of the related Collection Period, such excess shall be allocated
        to the
        Class II-A Notes, until the Note Principal Balance thereof has been reduced
        to
        zero; provided, however, that any Group II Charge-Off Amounts allocated to
        the
        Class II-A Notes shall be covered by the Policy to the extent set forth
        therein.

       

      (c)  Once
        Group II Charge-Off Amounts have been allocated to a Class of Group II Notes,
        such amounts with respect to such Group II Notes will no longer accrue interest
        nor will such amounts in respect of interest be reinstated
        thereafter.

       

      (d)  Group
        II
        Charge-Off Amounts shall be allocated on the Payment Date in the month following
        the month in which such loss was incurred and, in the case of the principal
        portion thereof, after giving effect to distributions made on such Payment
        Date.

       

      (e)  In
        the
        event that the related Servicer receives any Group II Subsequent Recoveries,
        such Group II Subsequent Recoveries shall be remitted to the Master Servicer
        and
        then distributed by the Securities Administrator pursuant to Section 3.02
        of
        this Indenture.

       

      (f)  In
        addition, the related Servicer must charge off a Group II HELOC at the time
        such
        HELOC becomes 180 days delinquent unless the related Servicer reasonably
        believes that it may be able to obtain a net recovery through foreclosure
        proceedings or other conversion of the related HELOC. Once a Group II HELOC
        is
        charged off, the related Servicer will not be entitled to any additional
        servicing fee for such HELOC, except to the extent of any unpaid Servicing
        Fees
        and expenses which will be reimbursable from any recoveries on such HELOC,
        and
        the Group II HELOC will be treated as a liquidated HELOC relating to Group
        II.

       

      Unless
        specific Group II Subsequent Recoveries are anticipated by the related Servicer,
        as applicable, on a particular Group II HELOC that is charged off as described
        in the preceding paragraph, such charged off Group II HELOC will be released
        from the Trust Estate related to the Group II HELOCs, and will be transferred
        to
        the Class II-X Certificateholders. If any Group II Subsequent Recoveries
        are
        anticipated on such Group II Charged-Off HELOC, the release of such HELOC
        from
        the Trust Estate related to the Group II HELOCs will be delayed until the
        payment date after receipt of such Group II Subsequent Recoveries. After
        the
        release of a Group II Charged-Off HELOC, the Class II-X Certificateholders
        will
        be entitled to any amounts subsequently received in respect of any such released
        Group II Charged-Off HELOC, subject to any fees or expenses owed to the related
        Servicer. Such Class II-X Certificateholder may designate any servicer to
        service any such released Group II Charged-Off HELOC and the Class II-X
        Certificateholder may sell any such released Group II Charged-Off HELOC to
        a
        third party. To the extent the servicing of such released Group II Charged-Off
        HELOC is not transferred from the related Servicer, the servicing of such
        released Group II Charged-Off HELOC and the fees therefor shall be governed
        by a
        separate servicing agreement under terms similar to the Sale and Servicing
        Agreement.

      

      (g)  The
        Class
        II-S Floating Allocation Percentage of Group II Charge-Off Amounts shall
        be
        applied on any Payment Date to the Class II-S Certificates.

       

      Section
        3.21  Claims
        on the Policy; Policy Payments Account. 

       

      (a)  The
        Securities Administrator shall establish the Policy Payments Account. The
        Securities Administrator shall deposit upon receipt any amount paid under
        the
        Policy in the Policy Payments Account and use that amount only to pay the
        Class
        II-A Notes the Regular Payments for which a claim was made. Such amount may
        not
        be applied to satisfy any costs, expenses, or liabilities of the Master
        Servicer, the Securities Administrator, the Indenture Trustee or the Issuing
        Entity (other than payments of principal and interest on the Class II-A Notes).
        Amounts paid under the Policy, to the extent needed to pay any Regular Payments,
        shall be transferred to the Payment Account on the related Payment Date,
        and the
        portion thereof representing the Regular Payments shall be disbursed by the
        Securities Administrator to the Holders of the Class II-A Notes, in each
        case as
        if it were a payment to such Noteholders pursuant to Section 3.02. Payments
        from
        draws on the Policy need not be made by checks or wire transfers separate
        from
        the checks or wire transfers used to pay other payments to the Holders of
        the
        Class II-A Notes. However, the amount of any payment of principal of or interest
        on the Class II-A Notes to be paid from funds transferred from the Policy
        Payments Account shall be noted as provided in paragraph (d) below and in
        the
        statement to be furnished to Holders of the Notes pursuant to Section 7.04.
        Funds held in the Policy Payments Account shall not be invested. Any funds
        remaining in the Policy Payments Account on the first Business Day following
        the
        later of the Payment Date and the Business Day after the day on which a payment
        on the Policy has been paid to the Holders of the Class II-A Notes shall
        be
        returned to the Note Insurer, pursuant to the instructions of the Note Insurer,
        by the end of the Business Day.

       

      (b)  If
        the
        Securities Administrator has determined that a payment is required to be
        paid
        under the Policy with respect to a Payment Date, it shall deliver a notice
        of
        claim and certificate (substantially in the form of the Notice of Claim and
        Certificate attached as Exhibit A to the Financial Guaranty Insurance Policy
        No.
        CIFG NA-1405) to the Note Insurer no later than 12:00 noon, New York, New
        York
        City time on the second Business Day preceding the Payment Date and shall
        provide a copy of such notice to the Master Servicer at the time the Notice
        of
        Claim and Certificate is delivered to the Note Insurer. That notice of claim
        and
        certificate (substantially in the form of the Notice of Claim and Certificate
        attached as Exhibit A to the Financial Guaranty Insurance Policy No. CIFG
        NA-1405) shall constitute a claim for payment pursuant to the
        Policy.

       

      (c)  If
        the
        Indenture Trustee receives a certified copy of a final order of a court
        exercising jurisdiction in an insolvency proceeding (an “Order”) that any prior
        payment made on the Class II-A Notes constitutes a Preference Payment (as
        defined in the Policy), the Indenture Trustee shall so notify the Securities
        Administrator and deliver such Order to it. Upon receipt of the Order, whether
        directly or from the Indenture Trustee, the Securities Administrator shall
        notify the Note Insurer and comply with the Policy to obtain payment by the
        Note
        Insurer of the Preference Payment, and shall, at the time notice is provided
        to
        the Note Insurer, notify each Holder of the affected Notes by mail that,
        subject
        to the terms of the Policy, the Note Insurer will disburse the Preference
        Payment directly to the receiver, conservator, debtor-in-possession, or trustee
        in bankruptcy named in the Order (unless a Holder of the Class II-A Notes
        has
        provided evidence satisfactory to the Note Insurer that it has previously
        paid
        such amount to the receiver, conservator, debtor-in-possession or trustee
        in
        bankruptcy named in the Order, in which case such payment shall be disbursed
        to
        the Securities Administrator) by 12:00 noon, New York City time on the third
        Business Day following the delivery to the Securities Administrator on behalf
        of
        the Noteholder of (1) a certified copy of the Order to the effect that the
        Securities Administrator or such Noteholder, as applicable, is required to
        return such Preference Payment or portion thereof because such payment was
        avoided as a preferential transfer or otherwise rescinded or required to
        be
        restored by the Securities Administrator, the Indenture Trustee or the
        Noteholder, (2) a certificate that the Order has been entered and is not
        subject
        to any stay, (3) an assignment, in form and substance satisfactory to the
        Note
        Insurer, irrevocably assigning to the Note Insurer all rights and claims
        of the
        Securities Administrator, the Indenture Trustee or the Noteholder relating
        to or
        arising under the Insurance Agreement against the estate of the Securities
        Administrator or the Indenture Trustee or otherwise with respect to such
        Preference Payment, and (4) a payment notice in the form of Exhibit A to
        the
        Policy appropriately completed and executed by the Securities Administrator
        or
        the Indenture Trustee. If the documents are received after 12:00 noon, New
        York
        City time, on a Business Day, they will be considered received on the following
        Business Day.

       

      A
        copy of
        the Policy shall be made available to each affected Class II-A Noteholder
        through the Securities Administrator, and the Securities Administrator shall
        furnish to the Note Insurer a copy of its records evidencing the payments
        that
        have been made by the Securities Administrator in respect of any Preference
        Amounts paid by the Note Insurer and the dates on which the payments were
        made.

       

      (d)  The
        Securities Administrator shall keep a complete and accurate record of the
        amount
        of interest and principal paid on the Class II-A Notes from moneys received
        under the Policy. The Note Insurer may inspect the records at reasonable
        times
        during normal business hours on two Business Days’ notice to the Securities
        Administrator.

       

      (e)  The
        Holders of the Class II-A Notes are not entitled to institute proceedings
        directly against the Note Insurer. Each Holder of the Class II-A Notes, by
        its
        purchase of Class II-A Notes, agrees that the Note Insurer may at any time
        during the continuation of any proceeding relating to a Preference Payment,
        direct all matters relating to the Preference Payment on its behalf, including
        the direction of any appeal of any order relating to the preference claim
        and
        the posting of any surety, supersedeas, or performance bond pending any
        appeal.

       

      (f)  Any
        payments to the Note Insurer shall be made by wire transfer of immediately
        available funds to the following Federal Reserve Account (until the Note
        Insurer
        notifies the Securities Administrator of a change in the account
        information):

       

      CIFG
        Assurance North America, Inc.

      JPMorgan
        Chase Bank

      ABA
        Number: 0210-0002-1

      

      For
        the
        account of Brown Brothers Harriman & Co.

      Account
        Number: 920-1-033231

      For
        further credit to account number: 2311694

      CIFG
        Assurance North America, Inc. (Premium Account)

      CIFG
        NA
        Policy Number: CIFG
        NA-1405

      

      (g)  The
        Securities Administrator shall, upon retirement of the Class II-A Notes,
        furnish
        to the Note Insurer a notice of the retirement, and, after retirement of
        the
        Class II- Notes and the expiration of the term of the Policy, surrender the
        Policy to the Note Insurer for cancellation.

       

      (h)  The
        Securities Administrator shall hold the Policy in trust as agent for the
        Holders
        of the Class II-A Notes for the purpose of making claims on the Policy and
        distributing the proceeds of claims on the Policy. Neither the Policy nor
        the
        amounts paid on the Policy shall constitute part of the Trust Estate created
        by
        this Indenture. Each Holder of the Class II-A Notes, by accepting its Class
        II-A
        Notes, irrevocably appoints the Securities Administrator as attorney-in-fact
        to
        make claims on the Policy and to sign on its behalf any certification required
        with respect to any Notice under the Policy.

       

      (i)  Anything
        in this Indenture to the contrary notwithstanding, any payment with respect
        to
        principal of or interest on the Class II-A Notes that is made with money
        received pursuant to the Policy shall not be considered payment of the Class
        II-A Notes from the Issuing Entity. The Depositor, the Master Servicer, the
        Indenture Trustee and the Securities Administrator acknowledge, and each
        Holder
        of the Class II-A Notes by its acceptance of the Class II-A Notes agrees
        that,
        without the need for any further action on the part of the Note Insurer,
        the
        Depositor, the Master Servicer, the Indenture Trustee, the Securities
        Administrator, or the Note Registrar 

       

      (i)  to
        the
        extent the Note Insurer makes payments, directly or indirectly, on account
        of
        principal of or interest on the Class II-A Notes to the related Noteholders,
        the
        Note Insurer shall be fully subrogated to, and each such Noteholder hereby
        delegates and assigns to the Note Insurer, to the fullest extent permitted
        by
        law, the rights of such Noteholders to receive such principal and interest
        from
        the Issuing Entity, and 

       

      (ii)  the
        Note
        Insurer shall be paid such amounts from the sources and in the manner provided
        in this Indenture for the payment of such amounts and as provided in this
        Indenture until full reimbursement of all Insured Payments and Preference
        Payments (together with interest thereon at the Late Payment Rate from the
        date
        paid by the Note Insurer until the date of their reimbursement). 

       

      The
        Securities Administrator and the Master Servicer shall cooperate in all respects
        with any reasonable request by the Note Insurer for action to preserve or
        enforce the Note Insurer’s rights or interests under this Indenture (without
        limiting the rights or affecting the interests of the Holders of the Class
        II-A
        Notes as otherwise provided in this Indenture).

       

      

      

      ARTICLE
        IV

      THE
        NOTES; SATISFACTION AND DISCHARGE OF INDENTURE

       

      Section
        4.01  The
        Notes. 
        Each Class of Class A, Class A-IO and Class I-M Notes shall be registered
        in the
        name of a nominee designated by the Depository. Beneficial Owners will hold
        interests in the Class A, Class A-IO and Class I-M Notes through the book-entry
        facilities of the Depository in minimum initial Note Principal Balances or
        Notional Amounts, as applicable, of $100,000 and integral multiples of $1
        in
        excess thereof.

       

      The
        Indenture Trustee and Securities Administrator may for all purposes (including
        the making of payments due on the Notes) deal with the Depository as the
        authorized representative of the Beneficial Owners with respect to the Notes
        for
        the purposes of exercising the rights of Holders of the Notes hereunder.
        Except
        as provided in the next succeeding paragraph of this Section 4.01, the rights
        of
        Beneficial Owners with respect to the Notes shall be limited to those
        established by law and agreements between such Beneficial Owners and the
        Depository and Depository Participants. Except as provided in Section 4.08
        hereof, Beneficial Owners shall not be entitled to definitive certificates
        for
        the Notes as to which they are the Beneficial Owners. Requests and directions
        from, and votes of, the Depository as Holder of the Notes shall not be deemed
        inconsistent if they are made with respect to different Beneficial Owners.
        The
        Securities Administrator may establish a reasonable record date in connection
        with solicitations of consents from or voting by Noteholders and give notice
        to
        the Depository of such record date. Without the consent of the Issuing Entity
        and the Securities Administrator, no Note may be transferred by the Depository
        except to a successor Depository that agrees to hold such Note for the account
        of the Beneficial Owners.

       

      In
        the
        event the Depository Trust Company resigns or is removed as Depository, the
        Depositor may appoint a successor Depository. If no successor Depository
        has
        been appointed within 30 days of the effective date of the Depository’s
        resignation or removal, each Beneficial Owner shall be entitled to certificates
        representing the Notes it beneficially owns in the manner prescribed in Section
        4.08.

       

      The
        Notes
        shall, on original issue, be executed on behalf of the Issuing Entity by
        the
        Owner Trustee, not in its individual capacity but solely as Owner Trustee,
        authenticated by the Securities Administrator and delivered by the Securities
        Administrator to or upon the order of the Issuing Entity.

       

      Section
        4.02  Registration
        of and Limitations on Transfer and Exchange of Notes; Appointment of Note
        Registrar and Certificate Registrar.
        The
        Issuing Entity shall cause to be kept at the Corporate Trust Office of the
        Securities Administrator a Note Register in which, subject to such reasonable
        regulations as it may prescribe, the Note Registrar shall provide for the
        registration of Notes and of transfers and exchanges of Notes as herein
        provided.

       

      Subject
        to the restrictions and limitations set forth below, upon surrender for
        registration of transfer of any Note at the Corporate Trust Office of the
        Securities Administrator, the Issuing Entity shall execute and the Note
        Registrar shall authenticate and deliver, in the name of the designated
        transferee or transferees, one or more new Notes in authorized initial Note
        Principal Balances or Notional Amounts, as applicable, evidencing the same
        Class
        and aggregate Percentage Interests.

       

      Subject
        to the foregoing and Section 4.08, Notes may be exchanged for other Notes
        of
        like tenor and in authorized initial Note Principal Balances or Notional
        Amounts, as applicable, evidencing the same Class and aggregate Percentage
        Interests upon surrender of the Notes to be exchanged at the Corporate Trust
        Office of the Note Registrar. Whenever any Notes are so surrendered for
        exchange, the Issuing Entity shall execute and the Securities Administrator
        shall authenticate and deliver the Notes which the Noteholder making the
        exchange is entitled to receive. Each Note presented or surrendered for
        registration of transfer or exchange shall (if so required by the Note
        Registrar) be duly endorsed by, or be accompanied by a written instrument
        of
        transfer in form reasonably satisfactory to the Note Registrar duly executed
        by
        the Holder thereof or his attorney duly authorized in writing with such
        signature guaranteed by a commercial bank or trust company located or having
        a
        correspondent located in the city of New York. Notes delivered upon any such
        transfer or exchange will evidence the same obligations, and will be entitled
        to
        the same rights and privileges, as the Notes surrendered.

       

      No
        service charge shall be made for any registration of transfer or exchange
        of
        Notes, but the Note Registrar shall require payment of a sum sufficient to
        cover
        any tax or governmental charge that may be imposed in connection with any
        registration of transfer or exchange of Notes.

       

      The
        Issuing Entity hereby appoints the Securities Administrator as (i) Certificate
        Registrar to keep at its Corporate Trust Office a Certificate Register pursuant
        to Section 3.09 of the Trust Agreement in which, subject to such reasonable
        regulations as it may prescribe, the Certificate Registrar shall provide
        for the
        registration of Certificates and of transfers and exchanges thereof pursuant
        to
        Section 3.04 of the Trust Agreement and (ii) Note Registrar under this
        Indenture. The Securities Administrator hereby accepts such
        appointments.

       

      Any
        transfer of a Note shall be made in accordance with the ERISA restrictions
        in
        Section 4.13.

       

      Section
        4.03  Mutilated,
        Destroyed, Lost or Stolen Notes.
        If (i)
        any mutilated Note is surrendered to the Securities Administrator, or the
        Securities Administrator receives evidence to its satisfaction of the
        destruction, loss or theft of any Note, and (ii) there is delivered to the
        Securities Administrator such security or indemnity as may be required by
        it to
        hold the Issuing Entity, the Note Insurer and the Securities Administrator
        harmless, then, in the absence of notice to the Issuing Entity, the Note
        Registrar or the Securities Administrator that such Note has been acquired
        by a
        bona fide purchaser, and provided that the requirements of Section 8-405
        of the
        UCC are met, the Issuing Entity shall execute, and upon its request the
        Securities Administrator shall authenticate and deliver, in exchange for
        or in
        lieu of any such mutilated, destroyed, lost or stolen Note, a replacement
        Note;
        provided, however, that if any such destroyed, lost or stolen Note, but not
        a
        mutilated Note, shall have become or within seven days shall be due and payable,
        instead of issuing a replacement Note, the Issuing Entity may pay such
        destroyed, lost or stolen Note when so due or payable without surrender thereof.
        If, after the delivery of such replacement Note or payment of a destroyed,
        lost
        or stolen Note pursuant to the proviso to the preceding sentence, a bona
        fide
        purchaser of the original Note in lieu of which such replacement Note was
        issued
        presents for payment such original Note, the Issuing Entity, the Note Insurer
        and the Securities Administrator shall be entitled to recover such replacement
        Note (or such payment) from the Person to whom it was delivered or any Person
        taking such replacement Note from such Person to whom such replacement Note
        was
        delivered or any assignee of such Person, except a bona fide purchaser, and
        shall be entitled to recover upon the security or indemnity provided therefor
        to
        the extent of any loss, damage, cost or expense incurred by the Issuing Entity,
        the Indenture Trustee, the Note Insurer or the Securities Administrator in
        connection therewith.

       

      Upon
        the
        issuance of any replacement Note under this Section 4.03, the Issuing Entity
        or
        the Securities Administrator may require the payment by the Holder of such
        Note
        of a sum sufficient to cover any tax or other governmental charge that may
        be
        imposed in relation thereto and any other reasonable expenses (including
        the
        fees and expenses of the Securities Administrator) connected
        therewith.

       

      Every
        replacement Note issued pursuant to this Section 4.03 in replacement of any
        mutilated, destroyed, lost or stolen Note shall constitute an original
        additional contractual obligation of the Issuing Entity, whether or not the
        mutilated, destroyed, lost or stolen Note shall be at any time enforceable
        by
        anyone, and shall be entitled to all the benefits of this Indenture equally
        and
        proportionately with any and all other Notes duly issued hereunder.

       

      The
        provisions of this Section 4.03 are exclusive and shall preclude (to the
        extent
        lawful) all other rights and remedies with respect to the replacement or
        payment
        of mutilated, destroyed, lost or stolen Notes.

       

      Section
        4.04  Persons
        Deemed Owners.
        Prior
        to due presentment for registration of transfer of any Note, the Issuing
        Entity,
        the Note Insurer, the Indenture Trustee, the Securities Administrator, the
        Paying Agent and any agent of the Issuing Entity or the Securities Administrator
        or the Paying Agent may treat the Person in whose name any Note is registered
        (as of the day of determination) as the owner of such Note for the purpose
        of
        receiving payments of principal of and interest, if any, on such Note and
        for
        all other purposes whatsoever, whether or not such Note be overdue, and none
        of
        the Issuing Entity, the Indenture Trustee, the Securities Administrator,
        the
        Note Insurer, the Paying Agent or any agent of the Issuing Entity, the
        Securities Administrator, the Indenture Trustee, the Note Insurer or the
        Paying
        Agent shall be affected by notice to the contrary.

       

      Section
        4.05  Cancellation.
        All
        Notes surrendered for payment, registration of transfer, exchange or redemption
        shall, if surrendered to any Person other than the Securities Administrator,
        be
        delivered to the Securities Administrator and shall be promptly cancelled
        by the
        Securities Administrator. The Issuing Entity may at any time deliver to the
        Securities Administrator for cancellation any Notes previously authenticated
        and
        delivered hereunder which the Issuing Entity may have acquired in any manner
        whatsoever, and all Notes so delivered shall be promptly cancelled by the
        Securities Administrator. No Notes shall be authenticated in lieu of or in
        exchange for any Notes cancelled as provided in this Section 4.05, except
        as
        expressly permitted by this Indenture. All cancelled Notes may be held or
        disposed of by the Securities Administrator in accordance with its standard
        retention or disposal policy as in effect at the time unless the Issuing
        Entity
        shall direct by an Issuer Request that they be destroyed or returned to it;
        provided, however, that such Issuer Request is timely and the Notes have
        not
        been previously disposed of by the Securities Administrator.

       

      Section
        4.06  Book-Entry
        Notes.
        The
        Class A, Class A-IO and Class I-M Notes, upon original issuance, will be
        issued
        in the form of typewritten Notes representing the Book-Entry Notes, to be
        delivered to The Depository Trust Company, the initial Depository or to the
        Securities Administrator, as custodian for the Depository Trust Company,
        by, or
        on behalf of, the Issuing Entity. The Notes shall initially be registered
        on the
        Note Register in the name of Cede & Co., the nominee of the initial
        Depository, and no Beneficial Owner will receive a Definitive Note representing
        such Beneficial Owner’s interest in such Note, except as provided in Section
        4.08. With respect to such Notes, unless and until definitive, fully registered
        Notes (the “Definitive Notes”) have been issued to Beneficial Owners pursuant to
        Section 4.08:

       

      (i)  the
        provisions of this Section 4.06 shall be in full force and effect;

       

      (ii)  the
        Note
        Registrar, the Paying Agent, the Indenture Trustee and the Securities
        Administrator shall be entitled to deal with the Depository for all purposes
        of
        this Indenture (including the payment of principal of and interest on the
        Notes
        and the giving of instructions or directions hereunder) as the sole holder
        of
        the Notes, and shall have no obligation to the Beneficial Owners of the
        Notes;

       

      (iii)  to
        the
        extent that the provisions of this Section 4.06 conflict with any other
        provisions of this Indenture, the provisions of this Section 4.06 shall
        control;

       

      (iv)  the
        rights of Beneficial Owners shall be exercised only through the Depository
        and
        shall be limited to those established by law and agreements between such
        Owners
        of Notes and the Depository and/or the Depository Participants. Unless and
        until
        Definitive Notes are issued pursuant to Section 4.08, the initial Depository
        will make book-entry transfers among the Depository Participants and receive
        and
        transmit payments of principal of and interest on the Notes to such Depository
        Participants; and

       

      (v)  whenever
        this Indenture requires or permits actions to be taken based upon instructions
        or directions of Holders of Notes evidencing a specified percentage of the
        Note
        Principal Balances of the Notes, the Depository shall be deemed to represent
        such percentage with respect to the Notes only to the extent that it has
        received instructions to such effect from Beneficial Owners and/or Depository
        Participants owning or representing, respectively, such required percentage
        of
        the beneficial interest in the Notes and has delivered such instructions
        to the
        Securities Administrator and the Indenture Trustee. 

       

      None
        of
        the Depositor, the Issuing Entity, the Master Servicer, the Seller, the
        Securities Administrator, the Indenture Trustee, the Note Registrar and the
        Owner Trustee shall have any liability for any aspect of the records relating
        to
        or payments made on account of beneficial ownership interests in the Book-Entry
        Notes or for maintaining, supervising or reviewing any records relating to
        beneficial ownership interests or transfers thereof.

       

      Section
        4.07  Notices
        to Depository.
        Whenever a notice or other communication to the Note Holders is required
        under
        this Indenture, unless and until Definitive Notes shall have been issued
        to
        Beneficial Owners pursuant to Section 4.08, the Indenture Trustee or Securities
        Administrator, as applicable, shall give all such notices and communications
        specified herein to be given to Holders of the Notes to the Depository, and
        shall have no obligation to the Beneficial Owners.

       

      Section
        4.08  Definitive
        Notes.
        If (i)
        the Depositor advises the Securities Administrator in writing that the
        Depository is no longer willing or able to properly discharge its
        responsibilities with respect to the Book-Entry Notes and the Depositor is
        unable to locate a qualified successor within 30 days or (ii) the Depositor,
        at
        its option (with the consent of the Securities Administrator, such consent
        not
        to be unreasonably withheld) elects to terminate the book-entry system through
        the Depository, then the Securities Administrator shall request that the
        Depository notify all Beneficial Owners of the occurrence of any such event
        and
        of the availability of Definitive Notes to Beneficial Owners requesting the
        same. Upon surrender to the Securities Administrator of the typewritten Notes
        representing the Book-Entry Notes by the Depository, accompanied by registration
        instructions, the Issuing Entity shall execute and the Securities Administrator
        shall authenticate the Definitive Notes in accordance with the instructions
        of
        the Depository. None of the Issuing Entity, the Note Registrar or the Securities
        Administrator shall be liable for any delay in delivery of such instructions
        and
        may conclusively rely on, and shall be protected in relying on, such
        instructions. Upon the issuance of Definitive Notes, the Securities
        Administrator shall recognize the Holders of the Definitive Notes as
        Noteholders.

       

      In
        addition, if an Event of Default has occurred and is continuing, each Note
        Owner
        materially adversely affected thereby may at its option request a Definitive
        Note evidencing such Noteholder's interest in the related Class of Notes.
        In
        order to make such request, such Noteholder shall, subject to the rules and
        procedures of the Depository, provide the Depository or the related Depository
        Participant with directions for the Securities Administrator to exchange
        or
        cause the exchange of the Noteholder's interest in such Class of Notes for
        an
        equivalent interest in fully registered definitive form. Upon receipt by
        the
        Securities Administrator of instructions from the Depository directing the
        Securities Administrator to effect such exchange (such instructions to contain
        information regarding the Class of Notes and the Note Principal Balance or
        Notional Amount, as applicable, being exchanged, the Depository Participant
        account to be debited with the decrease, the registered holder of and delivery
        instructions for the Definitive Note, and any other information reasonably
        required by the Securities Administrator), (i) the Securities Administrator
        shall instruct the Depository to reduce the related Depository Participant's
        account by the aggregate Note Principal Balance or Notional Amount, as
        applicable, of the Definitive Note, (ii) the Securities Administrator shall
        execute, authenticate and deliver, in accordance with the registration and
        delivery instructions provided by the Depository, a Definitive Note evidencing
        such Noteholder's interest in such Class of Notes and (iii) the Issuing Entity
        shall execute and the Securities Administrator shall authenticate a new
        Book-Entry Note reflecting the reduction in the Note Principal Balance or
        Notional Amount, as applicable, of such Class of Notes by the amount of the
        Definitive Notes.

       

      Section
        4.09  Application
        of Trust Money.
        All
        monies deposited with the Securities Administrator pursuant to this Indenture
        shall be held in trust and applied by it, in accordance with the provisions
        of
        the Notes and this Indenture, to the payment, either directly or through
        any
        Paying Agent or the Certificate Paying Agent as designee of the Issuing Entity,
        as the Securities Administrator may determine, to the Holders of Securities,
        of
        all sums due and to become due thereon for principal and interest or otherwise;
        but such monies need not be segregated from other funds except to the extent
        required herein or required by law.

       

      Section
        4.10  Subrogation
        and Cooperation.
        (a) The
        Issuing Entity and the Indenture Trustee acknowledge that (i) to the extent
        the
        Note Insurer makes payments under the Policy on account of principal of or
        interest on the Class II-A Notes, the Note Insurer will be fully subrogated
        to
        the rights of such Holders to receive such principal and interest from the
        Issuing Entity, and (ii) the Note Insurer shall be paid such principal and
        interest but only from the sources and in the manner provided herein and
        in the
        Insurance Agreement for the payment of such principal and interest.

       

      (b)  The
        Indenture Trustee shall, so long as it is indemnified to its satisfaction,
        cooperate in all respects with any reasonable written request by the Note
        Insurer for action to preserve or enforce the Note Insurer’s rights or interest
        under this Indenture or the Insurance Agreement, consistent with this Indenture
        and without limiting the rights of the Noteholders as otherwise set forth
        in the
        Indenture, including, without limitation, upon the occurrence and continuance
        of
        a default under the Insurance Agreement, a request to take any one or more
        of
        the following actions:

       

      (i)
        institute Proceedings for the collection of all amounts then payable on the
        Class II-A Notes, or under this Indenture in respect of the Class II-A Notes
        and
        all amounts payable under the Insurance Agreement, enforce any judgment obtained
        and collect from the Issuing Entity monies adjudged due;

      

      (ii)
        sell or cause to be sold the Trust Estate or any portion thereof or rights
        or
        interest therein, at one or more public or private Sales (as defined in Section
        5.15 hereof) called and conducted in any manner permitted by law;

      

      (iii)
        institute Proceedings from time to time for the complete or partial foreclosure
        of this Indenture; and

      

      (iv)
        exercise any remedies of a secured party under the UCC and take any other
        appropriate action to protect and enforce the rights and remedies of the
        Note
        Insurer hereunder;

       

      provided,
        however, action shall be taken pursuant to this Section 4.10 by the Indenture
        Trustee to preserve the Note Insurer’s rights or interest under this Indenture
        or the Insurance Agreement only to the extent such action is available to
        the
        Class II-A Noteholders or the Note Insurer under other provisions of this
        Indenture.

       

      Notwithstanding
        any provision of this Indenture to the contrary, so long as no Note Insurer
        Default exists, the Note Insurer shall at all times be treated as if it were
        the
        exclusive owner of all Class II-A Notes Outstanding for the purposes of all
        approvals, consents, waivers and the institution of any action and the written
        direction of all remedies, and the Indenture Trustee shall act in accordance
        with the written directions of the Note Insurer so long as it is indemnified
        therefor to its reasonable satisfaction.

       

      Section
        4.11  Repayment
        of Monies Held by Paying Agent.
        In
        connection with the satisfaction and discharge of this Indenture with respect
        to
        the Notes, all monies then held by any Person other than the Securities
        Administrator under the provisions of this Indenture with respect to such
        Notes
        shall, upon demand of the Issuing Entity, be paid to the Securities
        Administrator to be held and applied according to Section 3.02 and thereupon
        such Person shall be released from all further liability with respect to
        such
        monies.

       

      Section
        4.12  Temporary
        Notes.
        Pending
        the preparation of any Definitive Notes, the Issuing Entity may execute and
        upon
        its written direction, the Securities Administrator may authenticate and
        make
        available for delivery, temporary Notes that are printed, lithographed,
        typewritten, photocopied or otherwise produced, in any denomination,
        substantially of the tenor of the Definitive Notes in lieu of which they
        are
        issued and with such appropriate insertions, omissions, substitutions and
        other
        variations as the officers executing such Notes may determine, as evidenced
        by
        their execution of such Notes.

       

      If
        temporary Notes are issued, the Issuing Entity will cause Definitive Notes
        to be
        prepared without unreasonable delay. After the preparation of the Definitive
        Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
        surrender of the temporary Notes at the Corporate Trust Office of the Securities
        Administrator, without charge to the Holder. Upon surrender for cancellation
        of
        any one or more temporary Notes, the Issuing Entity shall execute and the
        Securities Administrator shall authenticate and make available for delivery, in
        exchange therefor, Definitive Notes of authorized denominations and of like
        tenor, class and aggregate principal amount. Until so exchanged, such temporary
        Notes shall in all respects be entitled to the same benefits under this
        Indenture as Definitive Notes.

       

      Section
        4.13  Representation
        Regarding ERISA.
        By
        acquiring a Class A, Class A-IO, and Class I-M Notes or interest therein,
        each
        Holder of such Note or Beneficial Owner of any such interest will be deemed
        to
        represent that either (1) it is not acquiring such Note with Plan Assets
        or (2)
        in the case of a Class A Note and Class I-M Note, (A) the acquisition, holding
        and transfer of such Note will not give rise to a nonexempt prohibited
        transaction under Section 406 of ERISA or Section 4975 of the Code and (B)
        the
        Notes are rated investment grade or better and such person believes that
        the
        Notes are properly treated as indebtedness without substantial equity features
        for purposes of the Department of Labor regulation 29 C.F.R. § 2510.3-101, and
        agrees to so treat the Notes. Alternatively, regardless of the rating of
        the
        Class A Note and Class I-M Notes, such person may provide the Securities
        Administrator and the Note Registrar with an opinion of counsel, which opinion
        of counsel will not be at the expense of the Issuing Entity, the Seller,
        the
        Owner Trustee, the Trust, the Indenture Trustee, the Depositor, the Securities
        Administrator, the Note Registrar, the Master Servicer, the Note Insurer
        or any
        Servicer which opines that the acquisition, holding and transfer of such
        Note or
        interest therein is permissible under applicable law, will not constitute
        or
        result in a non-exempt prohibited transaction under ERISA or Section 4975
        of the
        Code and will not subject the Issuing Entity, the Seller, the Depositor,
        the
        Owner Trustee, the Trust, the Indenture Trustee, the Securities Administrator,
        the Note Registrar, the Master Servicer, the Note Insurer or any Servicer
        to any
        obligation in addition to those undertaken in the Indenture and the other
        Basic
        Documents. The Class A-IO Notes may not be acquired by a Plan or any person
        purchasing on behalf of a Plan or with Plan Assets.

       

      ARTICLE
        V

       

      DEFAULT
        AND REMEDIES

       

      Section
        5.01  Events
        of Default.
        The
        Issuing Entity shall deliver to the Indenture Trustee, the Securities
        Administrator and the Note Insurer, within five days after learning of the
        occurrence of a Default, written notice in the form of an Officer’s Certificate
        of any event which with the giving of notice and the lapse of time would
        become
        an Event of Default under clause (ii), (iii) or (iv) of the definition of
“Event
        of Default”, its status and what action the Issuing Entity is taking or proposes
        to take with respect thereto. The Indenture Trustee shall not be deemed to
        have
        knowledge of any Default or Event of Default unless a Responsible Officer
        has
        actual knowledge thereof or unless written notice of such Default or Event
        of
        Default is received by a Responsible Officer and such notice references the
        Notes, the Trust Estate or this Indenture.

       

      Section
        5.02  Acceleration
        of Maturity; Rescission and Annulment.
        If an
        Event of Default should occur and be continuing, then and in every such case
        the
        Indenture Trustee at the written direction of the Note Insurer or the Holders
        of
        Notes representing not less than a majority of the aggregate Note Principal
        Balance of the Notes may, with the written consent of the Note Insurer, declare
        the Notes to be immediately due and payable, by a notice in writing to the
        Issuing Entity (and to the Indenture Trustee if such notice is given by
        Noteholders), and upon any such declaration the unpaid Note Principal Balance
        of
        the Notes, together with accrued and unpaid interest thereon through the
        date of
        acceleration, shall become immediately due and payable; provided, however,
        that
        for purposes of this sentence and for purposes of this Article V, unless
        a Note
        Insurer Default exists, the Note Insurer may exercise the rights of all of
        the
        Holders of the Class II-A Notes.

       

      At
        any
        time after such declaration of acceleration of maturity with respect to an
        Event
        of Default has been made and before a judgment or decree for payment of the
        money due has been obtained by the Indenture Trustee as hereinafter in this
        Article V provided, the Note Insurer or Holders of the Notes representing
        not
        less than a majority of the aggregate Note Principal Balance of each Class
        of
        Notes, with the written consent of the Note Insurer, so long as no Note Insurer
        Default exists, by written notice to the Issuing Entity and the Indenture
        Trustee, may, subject to Section 5.12, waive the related Event of Default
        and
        rescind and annul such declaration and its consequences if:

       

      (i)  the
        Issuing Entity has paid or deposited with the Indenture Trustee or Securities
        Administrator a sum sufficient to pay:

       

      (A)  all
        payments of principal of and interest on the Notes and all other amounts
        that
        would then be due hereunder or under the Notes if the Event of Default giving
        rise to such acceleration had not occurred;

       

      (B)  all
        sums
        paid or advanced by the Indenture Trustee hereunder and the reasonable
        compensation, expenses, disbursements and advances of the Indenture Trustee
        and
        the Securities Administrator and their respective agents and counsel;

       

      (C)  all
        amounts owed to the Note Insurer; and

       

      (ii)  all
        Events of Default, other than the nonpayment of the principal of the Notes
        that
        has become due solely by such acceleration, have been cured or waived as
        provided in Section 5.12; provided, however, the Note Insurer, so long as
        no
        Note Insurer Default exists, may waive an Event of Default regardless of
        Section
        5.02(i) above.

       

      No
        such
        rescission shall affect any subsequent default or impair any right consequent
        thereto.

       

      Section
        5.03  Collection
        of Indebtedness and Suits for Enforcement by Indenture Trustee. 

       

      (a)  The
        Issuing Entity covenants that if (i) default is made in the payment of any
        interest on any Note when the same becomes due and payable, and such default
        continues for a period of five days, or (ii) default is made in the payment
        of
        the principal of or any installment of the principal of any Note when the
        same
        becomes due and payable, the Issuing Entity shall, upon demand of the Indenture
        Trustee, at the direction of the Note Insurer, so long as no Note Insurer
        Default exists, or if a Note Insurer Default does exist, at the direction
        of the
        Holders of a majority of the aggregate Note Principal Balances of the Notes,
        pay
        to the Securities Administrator, for the benefit of the Holders of Notes
        and the
        Note Insurer, the whole amount then due and payable on the Notes for principal
        and interest, with interest at the applicable Note Interest Rate upon the
        overdue principal, and in addition thereto such further amount as shall be
        sufficient to cover the costs and expenses of collection, including the
        reasonable compensation, expenses, disbursements and advances of the Indenture
        Trustee and the Securities Administrator and their respective agents and
        counsel
        and all amounts owed to the Note Insurer hereunder and under the Insurance
        Agreement.

       

      (b)  In
        case
        the Issuing Entity shall fail forthwith to pay such amounts upon such demand,
        the Indenture Trustee, in its own name and as trustee of an express trust,
        and
        at the direction of the Note Insurer, so long as no Note Insurer Default
        exists,
        subject to the provisions of Section 10.15 hereof, may institute a Proceeding
        for the collection of the sums so due and unpaid, and may prosecute such
        Proceeding to judgment or final decree, and may enforce the same against
        the
        Issuing Entity or other obligor upon the Notes and collect in the manner
        provided by law out of the property of the Issuing Entity or other obligor
        upon
        the Notes, wherever situated, the monies adjudged or decreed to be
        payable.

       

      (c)  If
        an
        Event of Default occurs and is continuing, the Indenture Trustee, at the
        direction of the Note Insurer, so long as no Note Insurer Default exists
        subject
        to the provisions of Section 10.15 hereof, may, as more particularly provided
        in
        Section 5.04 hereof, in its discretion, proceed to protect and enforce its
        rights and the rights of the Noteholders and the Note Insurer by such
        appropriate Proceedings as directed in writing by the Note Insurer, so long
        as
        no Note Insurer Default exists, to protect and enforce any such rights, whether
        for the specific enforcement of any covenant or agreement in this Indenture
        or
        in aid of the exercise of any power granted herein, or to enforce any other
        proper remedy or legal or equitable right vested in the Indenture Trustee
        by
        this Indenture or by law.

       

      (d)  In
        case
        there shall be pending, relative to the Issuing Entity or any other obligor
        upon
        the Notes or any Person having or claiming an ownership interest in the Trust
        Estate, Proceedings under Title 11 of the United States Code or any other
        applicable federal or state bankruptcy, insolvency or other similar law,
        or in
        case a receiver, assignee or trustee in bankruptcy or reorganization,
        liquidator, sequestrator or similar official shall have been appointed for
        or
        taken possession of the Issuing Entity or its property or such other obligor
        or
        Person, or in case of any other comparable judicial Proceedings relative
        to the
        Issuing Entity or other obligor upon the Notes, or to the creditors or property
        of the Issuing Entity or such other obligor, the Indenture Trustee, at the
        direction of the Note Insurer, so long as no Note Insurer Default exists,
        irrespective of whether the principal of any Notes shall then be due and
        payable
        as therein expressed or by declaration or otherwise and irrespective of whether
        the Indenture Trustee shall have made any demand pursuant to the provisions
        of
        this Section, shall be entitled and empowered, by intervention in such
        Proceedings or otherwise:

       

      (i)  to
        file
        and prove a claim or claims for the whole amount of principal and interest
        owing
        and unpaid in respect of the Notes and to the Note Insurer and to file such
        other papers or documents as may be necessary or advisable in order to have
        the
        claims of the Indenture Trustee (including any claim for reasonable compensation
        to the Indenture Trustee and each predecessor Indenture Trustee, and their
        respective agents, attorneys and counsel, and for reimbursement of all expenses
        and liabilities incurred, and all advances made, by the Indenture Trustee
        and
        each predecessor Indenture Trustee, except as a result of negligence, willful
        misconduct or bad faith), the Note Insurer and of the Noteholders allowed
        in
        such Proceedings;

       

      (ii)  unless
        prohibited by applicable law and regulations, to vote on behalf of the Holders
        of Notes in any election of a trustee, a standby trustee or Person performing
        similar functions in any such Proceedings;

       

      (iii)  to
        collect and receive any monies or other property payable or deliverable on
        any
        such claims and to distribute all amounts received with respect to the claims
        of
        the Noteholders, the Note Insurer and of the Indenture Trustee on their behalf,
        and

       

      (iv)  to
        file
        such proofs of claim and other papers or documents as may be necessary or
        advisable in order to have the claims of the Indenture Trustee, the Note
        Insurer
        or the Holders of Notes allowed in any judicial proceedings relative to the
        Issuing Entity, its creditors and its property;

       

      and
        any
        trustee, receiver, liquidator, custodian or other similar official in any
        such
        Proceeding is hereby authorized by each of such Noteholders to make payments
        to
        the Securities Administrator, with the consent of the Note Insurer so long
        as no
        Note Insurer Default exists, and, in the event that the Indenture Trustee
        and
        the Securities Administrator shall consent to the making of payments directly
        to
        such Noteholders, to pay to the Indenture Trustee such amounts as shall be
        sufficient to cover reasonable compensation to the Indenture Trustee, each
        predecessor Indenture Trustee and their respective agents, attorneys and
        counsel, and all other expenses and liabilities incurred, and all advances
        made,
        by the Indenture Trustee and each predecessor Indenture Trustee and all amounts
        due to the Note Insurer hereunder and under the Insurance
        Agreement.

       

      (e)  Nothing
        herein contained shall be deemed to authorize the Indenture Trustee to authorize
        or consent to or vote for or accept or adopt on behalf of any Noteholder
        any
        plan of reorganization, arrangement, adjustment or composition affecting
        the
        Notes or the rights of any Holder thereof or to authorize the Indenture Trustee
        to vote in respect of the claim of any Noteholder in any such proceeding
        except,
        as aforesaid, to vote for the election of a trustee in bankruptcy or similar
        Person.

       

      (f)  All
        rights of action and of asserting claims under this Indenture, or under any
        of
        the Notes, may be enforced by the Indenture Trustee without the possession
        of
        any of the Notes or the production thereof in any trial or other Proceedings
        relative thereto, and any such action or proceedings instituted by the Indenture
        Trustee shall be brought in its own name as trustee of an express trust,
        and any
        recovery of judgment, subject to the payment of the expenses, disbursements
        and
        compensation of the Indenture Trustee, each predecessor Indenture Trustee
        and
        their respective agents and attorneys, shall be for the ratable benefit of
        the
        Holders of the Notes, subject to Section 5.05 hereof.

       

      In
        any
        Proceedings brought by the Indenture Trustee with the consent of the Note
        Insurer so long as no Note Insurer Default exists (and also any Proceedings
        involving the interpretation of any provision of this Indenture to which
        the
        Indenture Trustee shall be a party), the Indenture Trustee shall be held
        to
        represent all the Holders of the Notes, and it shall not be necessary to
        make
        any Noteholder a party to any such Proceedings.

       

      Section
        5.04  Remedies;
        Priorities.
        (a)
        If an
        Event of Default shall have occurred and be continuing and if an acceleration
        has been declared and not rescinded pursuant to Section 5.02 hereof, the
        Indenture Trustee, subject to the provisions of Section 10.15 hereof, may,
        with
        the consent of the Note Insurer so long as no Note Insurer Default exists,
        and
        shall, at the direction of the Note Insurer, so long as the Note Insurer
        is not
        in default under the Policy, or at the written direction of the Holders of
        a
        majority of the aggregate Note Principal Balances of the Notes then outstanding
        with the consent of the Note Insurer, do one or more of the following (subject
        to Section 5.05 hereof):

       

      (i)  institute
        Proceedings in its own name and as trustee of an express trust for the
        collection of all amounts then payable on the Notes and to the Note Insurer
        or
        under this Indenture with respect thereto, whether by declaration or otherwise,
        and all amounts payable under the Insurance Agreement, enforce any judgment
        obtained, and collect from the Issuing Entity and any other obligor upon
        such
        Notes monies adjudged due;

       

      (ii)  institute
        Proceedings from time to time for the complete or partial foreclosure of
        this
        Indenture with respect to the Trust Estate;

       

      (iii)  exercise
        any remedies of a secured party under the UCC and take any other appropriate
        action to protect and enforce the rights and remedies of the Indenture Trustee
        and the Holders of the Notes and the Note Insurer; and

       

      (iv)  sell
        the
        Trust Estate or any portion thereof or rights or interest therein, at one
        or
        more public or private sales called and conducted in any manner permitted
        by
        law;

       

      provided,
        however, that the Indenture Trustee may not sell or otherwise liquidate the
        Trust Estate following an Event of Default, unless (1)(A) the Indenture Trustee
        obtains the consents required under Section 5.11 below, (B) the proceeds
        of such
        sale or liquidation distributable to the Holders of the Notes are sufficient
        to
        discharge in full all amounts then due and unpaid upon such Notes for principal
        and interest and to reimburse the Note Insurer for any amounts drawn under
        the
        Policy and any other amounts due to the Note Insurer under the Insurance
        Agreement or (C) the Indenture Trustee determines that the HELOCs will not
        continue to provide sufficient funds for the payment of principal of and
        interest on the applicable Notes as they would have become due if the Notes
        had
        not been declared due and payable, and the Indenture Trustee obtains the
        consents required under Section 5.11 below and (2) the Securities Administrator
        complies with each of the requirements for a qualified liquidation under
        Section
        860F of the Code set forth in Section 8.06(c) as if it were the related Class
        E
        Certificateholder. In determining such sufficiency or insufficiency with
        respect
        to clause (B) and (C), the Indenture Trustee may, but need not, obtain and
        rely
        upon an opinion (obtained at the expense of the Trust) of an Independent
        investment banking or accounting firm of national reputation as to the
        feasibility of such proposed action and as to the sufficiency of the Trust
        Estate for such purpose. Notwithstanding the foregoing, any Sale of the Trust
        Estate shall be made subject to the continued servicing of the HELOCs by
        the
        related Servicer (other than the Servicer as to which an Event of Servicer
        Termination has occurred and is continuing) as provided in the Sale and
        Servicing Agreement. Notwithstanding any contrary provision of this Indenture,
        no Sale of the Trust Estate shall be made unless an Opinion of Counsel is
        rendered, addressed to the Indenture Trustee, the Note Insurer, the Securities
        Administrator and the Owner Trustee, to the effect that such Sale would not
        (i)
        result in the imposition of the tax on “prohibited transactions” as defined in
        sections 860F(a)(2) of any REMIC created hereunder or (ii) cause any REMIC
        created hereunder to fail to qualify as a REMIC at any time that any Notes
        or
        Certificates are outstanding.

       

      If
        the
        Securities Administrator collects any money or property pursuant to this
        Article
        V, the Securities Administrator shall pay out the money or property in
        accordance with Section 3.02 hereof.

       

      The
        Securities Administrator may fix a record date and Payment Date for any payment
        to Noteholders pursuant to this Section 5.04. With respect to any acceleration
        at the direction of the Note Insurer, the first Payment Date after the
        acceleration shall be the first Payment Date after the acceleration. At least
        15
        days before such record date, the Securities Administrator shall mail to
        each
        Noteholder a notice that states the record date, the Payment Date and the amount
        to be paid.

       

      Section
        5.05  Optional
        Preservation of the Trust Estate.
        If the
        Notes have been declared to be due and payable under Section 5.02 following
        an
        Event of Default and such declaration and its consequences have not been
        rescinded and annulled, the Indenture Trustee may, with the consent of the
        Note
        Insurer (which consent shall not be required if a Note Insurer Default exists),
        and shall, at the direction of the Note Insurer so long as no Note Insurer
        Default exists, elect to take and maintain possession of the Trust Estate.
        It is
        the desire of the parties hereto and the Noteholders that there be at all
        times
        sufficient funds for the payment of principal of and interest on the Notes
        and
        other obligations of the Issuing Entity, and the Indenture Trustee shall
        take
        such desire into account when determining whether or not to take and maintain
        possession of the Trust Estate. In determining whether to take and maintain
        possession of the Trust Estate, the Indenture Trustee may, but need not,
        obtain
        and rely upon an opinion of an Independent investment banking or accounting
        firm
        of national reputation as to the feasibility of such proposed action and
        as to
        the sufficiency of the Trust Estate for such purpose.

       

      Section
        5.06  Limitation
        of Suits.
        So long
        as the majority Holder of the Class I-E Certificates or Class II-E Certificates
        owns 100% of the Securities in a related group of Notes, no Holder of any
        related Note (other than the Note Insurer acting pursuant to Section 4.10
        hereof) shall have any right to institute any Proceeding, judicial or otherwise,
        with respect to this Indenture, or for the appointment of a receiver or trustee,
        or for any other remedy hereunder. No Holder of any related Note (other than
        the
        Note Insurer acting pursuant to Section 4.10 hereof) shall have any right
        to
        institute any Proceeding, judicial or otherwise, with respect to this Indenture,
        or for the appointment of a receiver or trustee, or for any other remedy
        hereunder, unless and subject to the foregoing and the provisions of Section
        10.15 hereof:

       

      (i)  such
        Holder has previously given written notice to the Indenture Trustee of a
        continuing Event of Default;

       

      (ii)  the
        Holders of not less than 25% of the aggregate Note Principal Balance of the
        related Notes have made a written request to the Indenture Trustee to institute
        such Proceeding in respect of such Event of Default in its own name as Indenture
        Trustee hereunder;

       

      (iii)  such
        Holder or Holders have offered to the Indenture Trustee reasonable indemnity
        against the costs, expenses and liabilities to be incurred in complying with
        such request;

       

      (iv)  the
        Indenture Trustee, for 60 days after its receipt of such notice of request
        and
        offer of indemnity, has failed to institute such Proceedings; 

       

      (v)  such
        Holders have obtained consent of the Note Insurer; and

       

      (vi)  no
        direction inconsistent with such written request has been given to the Indenture
        Trustee during such 60-day period by the Holders of a majority of the Note
        Principal Balances of the related Notes.

       

      It
        is
        understood and intended that no one or more Holders of Notes shall have any
        right in any manner whatever by virtue of, or by availing of, any provision
        of
        this Indenture to affect, disturb or prejudice the rights of any other Holders
        of Notes or to obtain or to seek to obtain priority or preference over any
        other
        Holders or to enforce any right under this Indenture, except in the manner
        herein provided.

       

      Subject
        to the last paragraph of Section 5.11 herein, in the event the Indenture
        Trustee
        shall receive conflicting or inconsistent requests and indemnity from two
        or
        more groups of Holders of Notes, each representing less than a majority of
        the
        Note Principal Balances of the Notes, the Indenture Trustee shall take such
        action as requested by the Holders representing the highest amount (in the
        aggregate) of the Note Principal Balances, notwithstanding any other provisions
        of this Indenture.

       

      Section
        5.07  Unconditional
        Rights of Noteholders To Receive Principal and Interest.
        Notwithstanding any other provisions in this Indenture, the Holder of any
        Note
        shall have the right, which is absolute and unconditional, to receive payment
        of
        the principal of and interest, if any, on such Note on or after the respective
        due dates thereof expressed in such Note or in this Indenture and to institute
        suit for the enforcement of any such payment, and such right shall not be
        impaired without the consent of such Holder.

       

      Section
        5.08  Restoration
        of Rights and Remedies.
        If the
        Indenture Trustee or any Noteholder has instituted any Proceeding to enforce
        any
        right or remedy under this Indenture and such Proceeding has been discontinued
        or abandoned for any reason or has been determined adversely to the Indenture
        Trustee, the Note Insurer or to such Noteholder, then and in every such case
        the
        Issuing Entity, the Note Insurer, the Indenture Trustee and the Noteholders
        shall, subject to any determination in such Proceeding, be restored severally
        and respectively to their former positions hereunder, and thereafter all
        rights
        and remedies of the Indenture Trustee, the Note Insurer and the Noteholders
        shall continue as though no such Proceeding had been instituted.

       

      Section
        5.09  Rights
        and Remedies Cumulative.
        No
        right or remedy herein conferred upon or reserved to the Indenture Trustee,
        to
        the Note Insurer or to the Noteholders is intended to be exclusive of any
        other
        right or remedy, and every right and remedy shall, to the extent permitted
        by
        law, be cumulative and in addition to every other right and remedy given
        hereunder or now or hereafter existing at law or in equity or otherwise.
        The
        assertion or employment of any right or remedy hereunder, or otherwise, shall
        not prevent the concurrent assertion or employment of any other appropriate
        right or remedy.

       

      Section
        5.10  Delay
        or Omission Not a Waiver.
        No
        delay or omission of the Indenture Trustee, the Note Insurer or any Holder
        of
        any Note to exercise any right or remedy accruing upon any Event of Default
        shall impair any such right or remedy or constitute a waiver of any such
        Event
        of Default or an acquiescence therein. Every right and remedy given by this
        Article V or by law to the Indenture Trustee, the Note Insurer or to the
        Noteholders may be exercised from time to time, and as often as may be deemed
        expedient, by the Indenture Trustee or by the Noteholders, as the case may
        be.

       

      Section
        5.11  Control
        By Note Insurer and Noteholders.
        The
        Note Insurer, unless a Note Insurer Default exists, or the Holders of a majority
        of the aggregate Note Principal Balances of Notes, if a Note Insurer Default
        exists, shall have the right to direct the time, method and place of conducting
        any Proceeding for any remedy available to the Indenture Trustee with respect
        to
        the Notes or exercising any trust or power conferred on the Indenture Trustee;
        provided that:

       

      (i)  such
        direction shall not be in conflict with any rule of law or with this
        Indenture;

       

      (ii)  if
        a Note
        Insurer Default exists, any direction to the Indenture Trustee to sell or
        liquidate the Trust Estate shall be by Holders of related Notes representing
        not
        less than 100% of the aggregate Note Principal Balance of the Notes or the
        Holders of 66 2/3% of the aggregate Note Principal Balance of each Class
        of
        Notes then outstanding, voting separately as set forth in Section 5.04(a)
        hereof; and

       

      (iii)  the
        Indenture Trustee may take any other action deemed proper by the Indenture
        Trustee that is not inconsistent with such direction of the Holders of Group
        II
        Notes representing a majority of the Note Principal Balances of the Group
        II
        Notes.

       

      Notwithstanding
        the rights of Noteholders set forth in this Section 5.11 the Indenture Trustee
        need not take any action that it determines might involve it in
        liability.

       

      Section
        5.12  Waiver
        of Past Defaults.
        Prior
        to the declaration of the acceleration of the maturity of the Notes as provided
        in Section 5.02 hereof, the Note Insurer or the Holders of related Notes
        representing not less than a majority of the aggregate Note Principal Balance
        of
        each Class of related Notes, with the Note Insurer’s written consent may waive
        any past Event of Default and its consequences except an Event of Default
        (a)
        with respect to payment of principal of or interest on any of the related
        Notes,
        (b) in respect of a covenant or provision hereof which cannot be modified
        or
        amended without the consent of the Holder of each related Note, or (c) the
        waiver of which would materially and adversely affect the interests of the
        Note
        Insurer or modify its obligation under the Policy. In the case of any such
        waiver, the Issuing Entity, the Indenture Trustee, the Note Insurer and the
        Holders of the related Notes shall be restored to their former positions
        and
        rights hereunder, respectively, but no such waiver shall extend to any
        subsequent or other Event of Default or impair any right consequent
        thereto.

       

      Upon
        any
        such waiver, any Event of Default arising therefrom shall be deemed to have
        been
        cured and not to have occurred for every purpose of this Indenture; but no
        such
        waiver shall extend to any subsequent or other Event of Default or impair
        any
        right consequent thereto.

       

      Section
        5.13  Undertaking
        for Costs.
        All
        parties to this Indenture agree, and each Holder of any Note and each Beneficial
        Owner of any interest therein by such Holder’s or Beneficial Owner’s acceptance
        thereof shall be deemed to have agreed, that any court may in its discretion
        require, in any suit for the enforcement of any right or remedy under this
        Indenture, or in any suit against the Indenture Trustee for any action taken,
        suffered or omitted by it as Indenture Trustee, the filing by any party litigant
        in such suit of an undertaking to pay the costs of such suit, and that such
        court may in its discretion assess reasonable costs, including reasonable
        attorneys’ fees, against any party litigant in such suit, having due regard to
        the merits and good faith of the claims or defenses made by such party litigant;
        but the provisions of this Section 5.13 shall not apply to (a) any suit
        instituted by the Indenture Trustee, (b) any suit instituted by any Noteholder,
        or group of Noteholders, in each case holding in the aggregate more than
        10% of
        the Note Principal Balances of the Notes or (c) any suit instituted by any
        Noteholder for the enforcement of the payment of principal of or interest
        on any
        Note on or after the respective due dates expressed in such Note and in this
        Indenture.

       

      Section
        5.14  Waiver
        of Stay or Extension Laws.
        The
        Issuing Entity covenants (to the extent that it may lawfully do so) that
        it will
        not at any time insist upon, or plead or in any manner whatsoever, claim
        or take
        the benefit or advantage of, any stay or extension law wherever enacted,
        now or
        at any time hereafter in force, that may affect the covenants or the performance
        of this Indenture; and the Issuing Entity (to the extent that it may lawfully
        do
        so) hereby expressly waives all benefit or advantage of any such law, and
        covenants that it shall not hinder, delay or impede the execution of any
        power
        herein granted to the Indenture Trustee, but will suffer and permit the
        execution of every such power as though no such law had been
        enacted.

       

      Section
        5.15  Sale
        of Trust Estate.
        (a)
        The
        power to effect any sale or other disposition (a “Sale”) of any portion of the
        Trust Estate pursuant to Section 5.04 hereof is expressly subject to the
        provisions of Sections 5.04 and 5.11(ii) hereof and this Section 5.15. The
        power
        to effect any such Sale shall not be exhausted by any one or more Sales as
        to
        any portion of the Trust Estate remaining unsold, but shall continue unimpaired
        until the entire Trust Estate shall have been sold or all amounts payable
        on the
        Notes and under this Indenture and under the Insurance Agreement shall have
        been
        paid. The Indenture Trustee with the consent of the Note Insurer (which consent
        shall not be required if a Note Insurer Default exists) may from time to
        time
        postpone any public Sale by public announcement made at the time and place
        of
        such Sale. The Indenture Trustee hereby expressly waives its right to any
        amount
        fixed by law as compensation for any Sale.

       

      (b)  The
        Indenture Trustee shall not in any private Sale sell the Trust Estate, or
        any
        portion thereof, unless

       

      (1)  The
        Note
        Insurer, unless a Note Insurer Default exists, or the Holders of all Notes
        if a
        Note Insurer Default exists consent to or direct the Indenture Trustee to
        make,
        such Sale, or

       

      (2)  the
        proceeds of such Sale would be not less than the entire amount which would
        be
        payable to the Noteholders under the Notes and the Note Insurer in respect
        of
        amounts drawn under the Policy and any other amounts due to the Note Insurer
        under the Insurance Agreement, in full payment thereof in accordance with
        Section 5.02 hereof, on the Payment Date next succeeding the date of such
        Sale,
        or

       

      (3)  the
        Indenture Trustee determines that the conditions for retention of the Trust
        Estate set forth in Section 5.05 hereof cannot be satisfied (in making any
        such
        determination, the Indenture Trustee may rely upon an opinion of an Independent
        investment banking firm obtained and delivered as provided in Section 5.05
        hereof), and the Note Insurer consents to such Sale, or if a Note Insurer
        Default exists, and the Holders of Notes representing at least 100% of the
        Note
        Principal Balances of the Notes consent to such Sale.

       

      The
        purchase by the Indenture Trustee of all or any portion of the Trust Estate
        at a
        private Sale shall not be deemed a Sale or other disposition thereof for
        purposes of this Section 5.15(b).

       

      (c)  Unless
        the Note Insurer, or if a Note Insurer Default exists, the Holders representing
        at least 100% of the aggregate Note Principal Balance of the Notes or the
        Holders of 66 2/3% of the aggregate Note Principal Balance of each Class
        of
        Notes then outstanding, voting separately as set forth in Section 5.11 hereof,
        have otherwise consented or directed the Indenture Trustee, at any public
        Sale
        of all or any portion of the Trust Estate at which a minimum bid equal to
        or
        greater than the amount described in paragraph (2) of subsection (b) of this
        Section 5.15 has not been established by the Indenture Trustee and no Person
        bids an amount equal to or greater than such amount, the Indenture Trustee,
        as
        trustee for the benefit of the Holders of the Notes, shall bid an amount
        (which
        shall include the Indenture Trustee’s right, in its capacity as Indenture
        Trustee, to credit bid) at least $1.00 more than the highest other bid in
        order
        to preserve the Trust Estate on behalf of the Noteholders.

       

      (d)  In
        connection with a Sale of all or any portion of the Trust Estate,

       

      (1)  any
        Holder or Holders of Notes or the Note Insurer may bid for and purchase the
        property offered for sale, and upon compliance with the terms of sale may
        hold,
        retain and possess and dispose of such property, without further accountability,
        and may, in paying the purchase money therefor, deliver any Notes or claims
        for
        interest thereon in lieu of cash up to the amount which shall, upon distribution
        of the net proceeds of such sale, be payable thereon, and such Notes, in
        case
        the amounts so payable thereon shall be less than the amount due thereon,
        shall
        be returned to the Holders thereof after being appropriately stamped to show
        such partial payment;

       

      (2)  the
        Indenture Trustee, with the consent of the Note Insurer so long as no Note
        Insurer Default exists may bid for and acquire the property offered for Sale
        in
        connection with any Sale thereof, and, subject to any requirements of, and
        to
        the extent permitted by, applicable law in connection therewith, may purchase
        all or any portion of the Trust Estate in a private sale, and, in lieu of
        paying
        cash therefor, may make settlement for the purchase price by crediting the
        gross
        Sale price against the sum of (A) the amount which would be distributable
        to the
        Holders of the Notes and Holders of Certificates and amounts distributable
        to
        the Note Insurer on the Payment Date next succeeding the date of such Sale
        and
        (B) the expenses of the Sale and of any Proceedings in connection therewith
        which are reimbursable to it, without being required to produce the Notes
        in
        order to complete any such Sale or in order for the net Sale price to be
        credited against such Notes, and any property so acquired by the Indenture
        Trustee shall be held and dealt with by it in accordance with the provisions
        of
        this Indenture;

       

      (3)  the
        Indenture Trustee shall execute and deliver an appropriate instrument of
        conveyance, prepared by the Issuing Entity and satisfactory to the Indenture
        Trustee, transferring its interest in any portion of the Trust Estate in
        connection with a Sale thereof; and

       

      (4)  the
        Indenture Trustee is hereby irrevocably appointed the agent and attorney-in-fact
        of the Issuing Entity to transfer and convey its interest in any portion
        of the
        Trust Estate in connection with a Sale thereof, and to take all action necessary
        to effect such Sale.

       

      (e)  So
        long
        as a single Holder of the Class I-E Certificates owns 100% of the Group I
        Securities, the Majority Holder of the Class I-E Certificates shall not consent
        to any Sale of the Trust Estate with respect to Group I as set forth herein.
        So
        long as a single Holder of the Class II-E Certificates owns 100% of the Group
        II
        Securities, the Majority Holder of the Class II-E Certificates shall not
        consent
        to any Sale of the Trust Estate with respect to Group II as set forth herein.
        

       

      (f)  Notwithstanding
        any contrary provision of this Indenture, no Sale of the Trust Estate
shall
        be
        made unless an Opinion of Counsel is rendered, addressed to the Indenture
        Trustee, the Note Insurer, the Securities Administrator and the Owner Trustee,
        to the effect that (i) such Sale would not (A) result in the imposition of
        the
        tax on “prohibited transactions” as defined in sections 860F(a)(2) of any REMIC
        created hereunder or (B) cause any REMIC created hereunder to fail to qualify
        as
        a REMIC at any time that any Notes or Certificates are outstanding,
        or (ii)
        that the Securities Administrator has complied with the requirements for
        a
“qualified liquidation” under section 860F of the Code set forth in Section
        8.06(c) hereof as if it were any Class E Certificateholder.

       

      Section
        5.16  Action
        on Notes.
        The
        Indenture Trustee’s right to seek and recover judgment on the Notes or under
        this Indenture shall not be affected by the seeking, obtaining or application
        of
        any other relief under or with respect to this Indenture. Neither the lien
        of
        this Indenture nor any rights or remedies of the Indenture Trustee, the
        Noteholders or the Note Insurer shall be impaired by the recovery of any
        judgment by the Indenture Trustee against the Issuing Entity or by the levy
        of
        any execution under such judgment upon any portion of the Trust Estate or
        upon
        any of the assets of the Issuing Entity. Any money or property collected
        by the
        Indenture Trustee or the Securities Administrator shall be applied by the
        Securities Administrator in accordance with Section 5.04(b) hereof.

       

      ARTICLE
        VI

      THE
        INDENTURE TRUSTEE AND THE SECURITIES ADMINISTRATOR

       

      Section
        6.01  Duties
        of Indenture Trustee and Securities Administrator.
        (a)
        If an
        Event of Default has occurred and is continuing, the Indenture Trustee shall
        exercise the rights and powers vested in it by this Indenture and use the
        same
        degree of care and skill in their exercise as a prudent person would exercise
        or
        use under the circumstances in the conduct of such person’s own
        affairs.

       

      (b)  Except
        during the continuance of an Event of Default of which the Indenture Trustee
        has
        actual knowledge or has received written notice, in the case of the Indenture
        Trustee and, at any time, in the case of the Securities
        Administrator:

       

      (i)  the
        Indenture Trustee and the Securities Administrator undertakes to perform
        such
        duties and only such duties as are specifically set forth in this Indenture
        and
        the other Basic Documents to which it is a party and no implied covenants
        or
        obligations shall be read into this Indenture and the other Basic Documents
        against the Indenture Trustee or the Securities Administrator; and

       

      (ii)  in
        the
        absence of bad faith on its part, the Indenture Trustee and the Securities
        Administrator may conclusively rely, as to the truth of the statements and
        the
        correctness of the opinions expressed therein, upon certificates, reports,
        documents, Issuer Requests or other instruments or opinions furnished to
        the
        Indenture Trustee and/or the Securities Administrator and conforming to the
        requirements of this Indenture or the other Basic Documents; however, the
        Indenture Trustee and the Securities Administrator shall examine the
        certificates, reports, documents, Issuer Requests or other instruments and
        opinions to determine whether or not they conform on their face to the
        requirements of this Indenture.

       

      (c)  The
        Indenture Trustee and the Securities Administrator may not be relieved from
        liability for its own negligent action, its own negligent failure to act
        or its
        own willful misconduct, except that:

       

      (i)  this
        paragraph does not limit the effect of paragraph (b) of this Section
        6.01;

       

      (ii)  neither
        the Indenture Trustee nor the Securities Administrator shall be liable for
        any
        error of judgment made in good faith by a Responsible Officer unless it is
        proved that the Indenture Trustee or the Securities Administrator, as
        applicable, was negligent in ascertaining the pertinent facts; and

       

      (iii)  neither
        the Indenture Trustee nor the Securities Administrator shall be liable with
        respect to any action it takes or omits to take in good faith in accordance
        with
        a direction received by it from Noteholders, the Certificateholders or from
        the
        Issuing Entity, which they are entitled to give under the Basic
        Documents.

       

      (d)  Neither
        the Indenture Trustee nor the Securities Administrator shall be liable for
        interest on any money received by it except as set forth in the Basic Documents
        and as the Indenture Trustee or Securities Administrator, as applicable,
        may
        agree in writing with the Issuing Entity.

       

      (e)  Money
        held in trust by the Indenture Trustee or Securities Administrator need not
        be
        segregated from other trust funds except to the extent required by law or
        the
        terms of this Indenture, the Sale and Servicing Agreement or the Trust
        Agreement.

       

      (f)  No
        provision of this Indenture shall require the Indenture Trustee or the
        Securities Administrator to expend or risk its own funds or otherwise incur
        financial liability in the performance of any of its duties hereunder or
        in the
        exercise of any of its rights or powers, if it shall have reasonable grounds
        to
        believe that repayment of such funds or indemnity satisfactory to it against
        such risk or liability is not reasonably assured to it.

       

      (g)  Every
        provision of this Indenture relating to the conduct or affecting the liability
        of or affording protection to the Indenture Trustee or Securities Administrator
        shall be subject to the provisions of this Section.

       

      (h)  The
        Indenture Trustee shall not be deemed to have notice or knowledge of any
        Default
        or Event of Default unless a Responsible Officer of the Indenture Trustee
        has
        actual knowledge thereof or unless written notice of any such event that
        is in
        fact an Event of Default or Default is received by the Indenture Trustee
        at its
        Corporate Trust Office and such notice references the Notes or Certificates
        generally, the Issuing Entity, the Trust Estate or this Indenture.

       

      (i)  All
        funds
        received by the Securities Administrator and required to be deposited in
        the
        related Interest Coverage Account pursuant to this Indenture shall be promptly
        so deposited by the Securities Administrator.

       

      Section
        6.02  Rights
        of Indenture Trustee and Securities Administrator.
        (a)
        The
        Indenture Trustee and the Securities Administrator may rely on any document
        believed by it to be genuine and to have been signed or presented by the
        proper
        person. The Indenture Trustee and the Securities Administrator need not
        investigate any fact or matter stated in the document.

       

      (b)  Before
        the Indenture Trustee or the Securities Administrator acts or refrains from
        acting, it may require an Officer’s Certificate or an Opinion of Counsel.
        Neither the Indenture Trustee nor the Securities Administrator shall be liable
        for any action it takes or omits to take in good faith in reliance on and
        in
        accordance with an Officer’s Certificate or Opinion of Counsel.

       

      (c)  Neither
        the Indenture Trustee nor the Securities Administrator shall be liable for
        any
        action it takes or omits to take in good faith which it believes to be
        authorized or within its rights or powers.

       

      (d)  The
        Indenture Trustee or the Securities Administrator may consult with counsel,
        and
        the written advice or Opinion of Counsel (which shall not be at the expense
        of
        the Indenture Trustee or the Securities Administrator) with respect to legal
        matters relating to this Indenture, the other Basic Documents and the Notes
        shall be full and complete authorization and protection from liability in
        respect to any action taken, omitted or suffered by it hereunder in good
        faith
        and in accordance with the written advice or opinion of such
        counsel.

       

      (e)  For
        the
        limited purpose of effecting any action to be undertaken by each of the
        Indenture Trustee and the Securities Administrator, but not specifically
        as a
        duty of the Indenture Trustee or the Securities Administrator in the Indenture,
        each of the Indenture Trustee and the Securities Administrator may execute
        any
        of the trusts or powers hereunder or perform any duties hereunder, either
        directly or by or through agents, attorneys, custodians or nominees appointed
        with due care, and shall not be responsible for any willful misconduct or
        negligence on the part of any agent, attorney, custodian or nominee so
        appointed.

       

      (f)  The
        Securities Administrator or its Affiliates are permitted to receive additional
        compensation that could be deemed to be in the Securities Administrator’s
        economic self-interest for (i) serving as investment adviser, administrator,
        shareholder servicing agent, custodian or sub-custodian with respect to certain
        of the Permitted Investments, (ii) using Affiliates to effect transactions
        in
        certain Permitted Investments and (iii) effecting transactions in certain
        Permitted Investments. Such compensation shall not be considered an amount
        that
        is reimbursable or payable to the Securities Administrator (i) as part of
        the
        compensation hereunder or (ii) out of Available Funds.

       

      (g)  Anything
        in this Indenture to the contrary notwithstanding, in no event shall the
        Indenture Trustee or the Securities Administrator be liable for special,
        indirect or consequential loss or damage of any kind whatsoever (including
        but
        not limited to lost profits), even if the Indenture Trustee or the Securities
        Administrator has been advised of the likelihood of such loss or damage and
        regardless of the form of action.

       

      (h)  None
        of
        the Securities Administrator, the Issuing Entity or the Indenture Trustee
        shall
        be responsible for the acts or omissions of the other, it being understood
        that
        this Indenture shall not be construed to render them partners, joint venturers
        or agents of one another.

       

      (i)  Neither
        the Indenture Trustee nor the Securities Administrator shall be required
        to
        expend or risk its own funds or otherwise incur financial liability in the
        performance of any of its duties hereunder, or in the exercise of any of
        its
        rights or powers, if there is reasonable ground for believing that the repayment
        of such funds or indemnity reasonably satisfactory to it against such risk
        or
        liability is not reasonably assured to it, and none of the provisions contained
        in this Indenture shall in any event require the Indenture Trustee or the
        Securities Administrator to perform, or be responsible for the manner of
        performance of, any of the obligations of the Master Servicer under the Sale
        and
        Servicing Agreement, except during such time, if any, as the Indenture Trustee
        shall be the successor to, and be vested with the rights, duties, powers
        and
        privileges of, the Master Servicer in accordance with the terms of the Sale
        and
        Servicing Agreement.

       

      (j)  Except
        for those actions that the Indenture Trustee or the Securities Administrator
        are
        required to take hereunder, neither the Indenture Trustee nor the Securities
        Administrator shall have any obligation or liability to take any action or
        to
        refrain from taking any action hereunder in the absence of written direction
        as
        provided hereunder.

       

      (k)  Neither
        the Indenture Trustee nor the Securities Administrator shall be under any
        obligation to exercise any of the trusts or powers vested in it by this
        Indenture, other than its obligation to give notices pursuant to this Indenture,
        or to institute, conduct or defend any litigation hereunder or in relation
        hereto at the request, order or direction of any of the Noteholders pursuant
        to
        the provisions of this Indenture, unless such Noteholders shall have offered
        to
        the Indenture Trustee or the Securities Administrator, as applicable, reasonable
        security or indemnity against the costs, expenses and liabilities which may
        be
        incurred therein or thereby. Nothing contained herein shall, however, relieve
        the Indenture Trustee of the obligation, upon the occurrence of an Event
        of
        Default of which a Responsible Officer of the Indenture Trustee has actual
        knowledge (which has not been cured or waived), to exercise such of the rights
        and powers vested in it by this Indenture and to use the same degree of care
        and
        skill in their exercise as a prudent person would exercise under the
        circumstances in the conduct of his own affairs.

       

      (l)  Neither
        the Indenture Trustee nor the Securities Administrator shall be bound to
        make
        any investigation into the facts or matters stated in any resolution,
        certificate, statement, instrument, opinion, report, notice, request, consent,
        order, approval, bond or other paper or document, unless requested in writing
        to
        do so by the Note Insurer or Holders of Notes representing not less than
        25% of
        the Note Principal Balance of the Notes and provided that the payment within
        a
        reasonable time to the Indenture Trustee or the Securities Administrator,
        as
        applicable, of the costs, expenses or liabilities likely to be incurred by
        it in
        the making of such investigation is, in the opinion of the Indenture Trustee
        or
        the Securities Administrator, as applicable, reasonably assured to the Indenture
        Trustee by the security afforded to it by the terms of this Indenture. The
        Indenture Trustee or the Securities Administrator may require reasonable
        indemnity against such expense or liability as a condition to taking any
        such
        action. The reasonable expense of every such examination shall be paid by
        the
        Noteholders requesting the investigation.

       

      (m)  
        Should
        the Indenture Trustee or the Securities Administrator deem the nature of
        any
        action required on its part to be unclear, the Indenture Trustee or the
        Securities Administrator, respectively, may require prior to such action
        that it
        be provided by the Depositor with reasonable further instructions.

       

      (n)  The
        right
        of the Indenture Trustee or the Securities Administrator to perform any
        discretionary act enumerated in this Indenture shall not be construed as
        a duty,
        and neither the Indenture Trustee nor the Securities Administrator shall
        be
        accountable for other than its negligence or willful misconduct in the
        performance of any such act.

       

      (o)  Neither
        the Indenture Trustee nor the Securities Administrator shall be required
        to give
        any bond or surety with respect to the execution of the trust created hereby
        or
        the powers granted hereunder.

       

      (p)  Neither
        the Indenture Trustee nor the Securities Administrator shall have any duty
        to
        conduct any affirmative investigation as to the occurrence of any condition
        requiring the repurchase of any HELOC by the Seller pursuant to this Indenture,
        the Sale and Servicing Agreement or the Mortgage Loan Purchase Agreement,
        as
        applicable, or the eligibility of any HELOC for purposes of this
        Indenture.

       

      (q)  The
        Indenture Trustee shall not be deemed to have notice or actual knowledge
        of any
        Default or Event of Default unless actually known to a Responsible Officer
        of
        the Indenture Trustee or written notice thereof (making reference to this
        Indenture or the Notes) is received by the Indenture Trustee at the Corporate
        Trust Office.

       

      Section
        6.03  Individual
        Rights of Indenture Trustee.
        The
        Indenture Trustee in its individual or any other capacity may become the
        owner
        or pledgee of Notes and may otherwise deal with the Issuing Entity or its
        Affiliates with the same rights it would have if it were not Indenture Trustee,
        subject to the requirements of the Trust Indenture Act. Any Note Registrar,
        co-registrar or co-paying agent may do the same with like rights. However,
        the
        Indenture Trustee must comply with Section 6.11 hereof.

       

      Section
        6.04  Indenture
        Trustee’s and Securities Administrator’s Disclaimer.
        Neither
        the Indenture Trustee nor the Securities Administrator shall be responsible
        for
        and makes no representation as to the validity or adequacy of this Indenture,
        the Notes or any other Basic Document, it shall not be accountable for the
        Issuing Entity’s use of the proceeds from the Notes, and it shall not be
        responsible for any statement of the Issuing Entity in the Indenture or in
        any
        document issued in connection with the sale of the Notes or in the Notes
        other
        than the Securities Administrator’s certificate of authentication.

       

      Section
        6.05  Notice
        of Event of Default.
        Subject
        to Section 5.01, the Indenture Trustee shall promptly mail to each Noteholder
        and the Note Insurer notice of the Event of Default after it is known to
        a
        Responsible Officer of the Indenture Trustee, unless such Event of Default
        shall
        have been waived or cured. Except in the case of an Event of Default in payment
        of principal of or interest on any Note, the Indenture Trustee may withhold
        the
        notice if and so long as a committee of its Responsible Officers in good
        faith
        determines that withholding the notice is in the best interests of
        Noteholders.

       

      Section
        6.06  Reports
        to Residual Certificateholders.
        The
        Securities Administrator shall furnish quarterly to the Holders of the Residual
        Certificates each applicable Form 1066Q and shall respond promptly to written
        requests made not more frequently than quarterly by any Holder of a Residual
        Certificate with respect to the following matters:

       

      (i)  The
        original projected principal and interest cash flows on the Closing Date
        on each
        class of Regular Interests and Residual Interests created hereunder and on
        the
        HELOCs, based on the Prepayment Assumption;

       

      (ii)  The
        projected remaining principal and interest cash flows as of the end of any
        calendar quarter with respect to each class of Regular Interests and Residual
        Interests created hereunder and the HELOCs, based on the Prepayment
        Assumption;

       

      (iii)  The
        applicable Prepayment Assumption and any interest rate assumptions used in
        determining the projected principal and interest cash flows described above;
        and

       

      (iv)  The
        original issue discount (or, in the case of the HELOCs, market discount)
        or
        premium accrued or amortized through the end of such calendar quarter with
        respect to each class of Regular Interests or Residual Interests created
        hereunder and to the HELOCs, together with each constant yield to maturity
        used
        in computing the same.

       

      Certain
        information pursuant to clauses (i) and (iii) above shall be provided by
        the
        Depositor.

       

      Section
        6.07  Compensation.
        An
        annual fee shall be paid to the Indenture Trustee by the Master Servicer
        pursuant to a separate agreement between the Indenture Trustee and the Master
        Servicer. In addition, the Indenture Trustee and the Securities Administrator
        will each be entitled to recover from the Payment Account pursuant to Section
        5.08 of the Sale and Servicing Agreement all reasonable out-of-pocket expenses,
        disbursements and advances and the expenses of the Indenture Trustee and
        the
        Securities Administrator, respectively, in connection with any breach of
        this
        Indenture or any claim or legal action (including any pending or threatened
        claim or legal action) or otherwise incurred or made by the Indenture Trustee
        or
        the Securities Administrator, respectively, in the administration of the
        trusts
        hereunder (including the reasonable compensation, expenses and disbursements
        of
        its counsel) except any such expense, disbursement or advance as may arise
        from
        its own negligence or intentional misconduct or which is the responsibility
        of
        the Noteholders as provided herein. Such compensation and reimbursement
        obligation shall not be limited by any provision of law in regard to the
        compensation of a trustee of an express trust. Additionally, each of the
        Indenture Trustee and the Securities Administrator (including in their
        individual capacity) and any director, officer, employee or agent of the
        Indenture Trustee or the Securities Administrator shall be indemnified by
        the
        Trust and held harmless against any loss, liability or expense (including
        reasonable attorney's fees and expenses) incurred in the administration of
        this
        Indenture (other than its ordinary out of pocket expenses incurred hereunder)
        or
        in connection with any claim or legal action relating to (a) the Basic
        Documents, (b) the Notes or (c) the HELOCs, other than any loss, liability
        or
        expense incurred by reason of its own negligence or intentional misconduct,
        or
        which is the responsibility of the Noteholders as provided herein.

       

      The
        Issuing Entity's payment obligations to the Indenture Trustee and Securities
        Administrator pursuant to this Section 6.07 shall survive the discharge of
        this
        Indenture and the termination or resignation of the Indenture Trustee or
        Securities Administrator. When the Indenture Trustee or the Securities
        Administrator incurs expenses after the occurrence of an Event of Default
        with
        respect to the Issuing Entity, the expenses are intended to constitute expenses
        of administration under Title 11 of the United States Code or any other
        applicable federal or state bankruptcy, insolvency or similar law.

       

      Section
        6.08  Replacement
        of Indenture Trustee and the Securities Administrator.
        No
        resignation or removal of the Indenture Trustee or the Securities Administrator
        and no appointment of a successor Indenture Trustee or a successor Securities
        Administrator shall become effective until the acceptance of appointment
        by the
        successor Indenture Trustee pursuant to this Section 6.08. The Indenture
        Trustee
        or the Securities Administrator may resign at any time by so notifying the
        Issuing Entity and the Note Insurer. In the event that the Indenture Trustee
        determines that a conflict of interest exists between the Holders of the
        Class
        II-A Notes and the Holders of any Class I-A Notes or Class of Subordinate
        Notes,
        then the Indenture Trustee shall be entitled to resign as the indenture trustee
        for all Classes of Notes other than the Class II-A Notes. In such event the
        Holders of a majority of Note Principal Balances of all of the Class I-A
        Notes
        and Subordinate Notes shall designate a separate indenture trustee to represent
        their interests hereunder. The Note Insurer or, if a Note Insurer Default
        exists, the Holders of a majority of Note Principal Balances of each Class
        of
        Notes may remove the Indenture Trustee by so notifying the Indenture Trustee
        and
        may appoint a successor Indenture Trustee. The Issuing Entity shall, with
        the
        consent of the Note Insurer so long as no Note Insurer Default exists remove
        the
        Indenture Trustee or the Securities Administrator, as applicable,
        if:

       

      (i)  the
        Indenture Trustee or the Securities Administrator fails to comply with or
        qualify pursuant to the provisions of Section 6.11 hereof;

       

      (ii)  the
        Indenture Trustee or the Securities Administrator is adjudged a bankrupt
        or
        insolvent;

       

      (iii)  a
        receiver or other public officer takes charge of the Indenture Trustee or
        the
        Securities Administrator or its property;

       

      (iv)  the
        Indenture Trustee or the Securities Administrator otherwise becomes incapable
        of
        acting; or

       

      (v)  the
        Master Servicer is terminated pursuant to the Sale and Servicing
        Agreement.

       

      If
        the
        Indenture Trustee or the Securities Administrator resigns or is removed or
        if a
        vacancy exists in the office of the Indenture Trustee or the Securities
        Administrator for any reason (the Indenture Trustee or the Securities
        Administrator in such event being referred to herein as the retiring Indenture
        Trustee or the retiring Securities Administrator ), the Issuing Entity shall,
        with the consent of the Note Insurer so long as no Note Insurer Default exists
        promptly appoint a successor Indenture Trustee or successor Securities
        Administrator.

       

      Each
        of a
        successor Indenture Trustee or successor Securities Administrator shall deliver
        a written acceptance of its appointment to the retiring Indenture Trustee,
        to
        the Note Insurer or the retiring Securities Administrator, as applicable,
        and to
        the Issuing Entity. Thereupon, the resignation or removal of the retiring
        Indenture Trustee or the retiring Securities Administrator shall become
        effective, and the successor Indenture Trustee or successor Securities
        Administrator shall have all the rights, powers and duties of the Indenture
        Trustee or the Securities Administrator, as applicable, under this Indenture.
        The successor Indenture Trustee or successor Securities Administrator shall
        each
        mail a notice of its succession to Noteholders. The retiring Indenture Trustee
        or the retiring Securities Administrator shall promptly transfer all property
        held by it as Indenture Trustee or Securities Administrator, as applicable,
        to
        the successor Indenture Trustee or successor Securities
        Administrator.

       

      If
        a
        successor Indenture Trustee or successor Securities Administrator does not
        take
        office within 60 days after the retiring Indenture Trustee or the retiring
        Securities Administrator, as applicable, resigns or is removed, the retiring
        Indenture Trustee, the Note Insurer or the retiring Securities Administrator,
        the Issuing Entity or the Holders of a majority of Note Principal Balances
        of
        the Notes may petition any court of competent jurisdiction for the appointment
        of a successor Indenture Trustee or successor Securities
        Administrator.

       

      Notwithstanding
        the replacement of the Indenture Trustee or the Securities Administrator
        pursuant to this Section, the Issuing Entity's obligations under Section
        6.07
        shall continue for the benefit of the retiring Indenture Trustee or the retiring
        Securities Administrator.

       

      Section
        6.09  Successor
        Indenture Trustee and Securities Administrator by Merger.
        If the
        Indenture Trustee or the Securities Administrator consolidates with, merges
        or
        converts into, or transfers all or substantially all of its corporate trust
        business or assets to, another corporation or banking association, the
        resulting, surviving or transferee corporation, without any further act,
        shall
        be the successor Indenture Trustee or successor Securities Administrator,
        as
        applicable; provided, that such corporation or banking association shall
        be
        otherwise qualified and eligible under Section 6.11 hereof. The Indenture
        Trustee and the Securities Administrator shall provide the Rating Agencies,
        the
        Note Insurer and the Issuing Entity with prior written notice, and the
        Noteholders with prompt written notice, of any such transaction.

       

      If
        at the
        time such successor or successors by merger, conversion or consolidation
        to the
        Indenture Trustee shall succeed to the trusts created by this Indenture and
        any
        of the Notes shall have been authenticated but not delivered, any such successor
        to the Indenture Trustee may adopt the certificate of authentication of any
        predecessor trustee and deliver such Notes so authenticated; and if at that
        time
        any of the Notes shall not have been authenticated, any successor to the
        Indenture Trustee may authenticate such Notes either in the name of any
        predecessor hereunder or in the name of the successor to the Indenture
        Trustee.

       

      Section
        6.10  Appointment
        of Co-Indenture Trustee or Separate Indenture Trustee.
        (a)
        Notwithstanding any other provisions of this Indenture, at any time, for
        the
        purpose of meeting any legal requirement of any jurisdiction in which any
        part
        of the Trust Estate may at the time be located, the Indenture Trustee shall
        have
        the power and may, with the consent of Note Insurer, execute and deliver
        all
        instruments to appoint one or more Persons to act as a co-trustee or
        co-trustees, or separate trustee or separate trustees, of all or any part
        of the
        Trust Estate, and to vest in such Person or Persons, in such capacity and
        for
        the benefit of the Noteholders and the Note Insurer, such title to the Trust
        Estate, or any part hereof, and, subject to the other provisions of this
        Section, such powers, duties, obligations, rights and trusts as the Indenture
        Trustee or the Note Insurer may consider necessary or desirable. No co-trustee
        or separate trustee hereunder shall be required to meet the terms of eligibility
        as a successor trustee under Section 6.11 hereof.

       

      (b)  Every
        separate trustee and co-trustee shall, to the extent permitted by law, be
        appointed and act subject to the following provisions and
        conditions:

       

      (i)  all
        rights, powers, duties and obligations conferred or imposed upon the Indenture
        Trustee shall be conferred or imposed upon and exercised or performed by
        the
        Indenture Trustee and such separate trustee or co-trustee jointly (it being
        understood that such separate trustee or co-trustee is not authorized to
        act
        separately without the Indenture Trustee joining in such act), except to
        the
        extent that under any law of any jurisdiction in which any particular act
        or
        acts are to be performed the Indenture Trustee shall be incompetent or
        unqualified to perform such act or acts, in which event such rights, powers,
        duties and obligations (including the holding of title to the Trust Estate
        or
        any portion thereof in any such jurisdiction) shall be exercised and performed
        singly by such separate trustee or co-trustee, but solely at the direction
        of
        the Indenture Trustee;

       

      (ii)  no
        trustee hereunder shall be personally liable by reason of any act or omission
        of
        any other trustee hereunder; and

       

      (iii)  the
        Indenture Trustee may at any time accept the resignation of or remove any
        separate trustee or co-trustee.

       

      (c)  Any
        notice, request or other writing given to the Indenture Trustee shall be
        deemed
        to have been given to each of the then separate trustees and co-trustees,
        as
        effectively as if given to each of them. Every instrument appointing any
        separate trustee or co-trustee shall refer to this Indenture and the conditions
        of this Article VI. Each separate trustee and co-trustee, upon its acceptance
        of
        the trusts conferred, shall be vested with the estates or property specified
        in
        its instrument of appointment, either jointly with the Indenture Trustee
        or
        separately, as may be provided therein, subject to all the provisions of
        this
        Indenture, specifically including every provision of this Indenture relating
        to
        the conduct of, affecting the liability of, or affording protection to, the
        Indenture Trustee. Every such instrument shall be filed with the Indenture
        Trustee.

       

      (d)  Any
        separate trustee or co-trustee may at any time constitute the Indenture Trustee,
        its agent or attorney-in-fact with full power and authority, to the extent
        not
        prohibited by law, to do any lawful act under or in respect of this Indenture
        on
        its behalf and in its name. If any separate trustee or co-trustee shall die,
        become incapable of acting, resign or be removed, all of its estates,
        properties, rights, remedies and trusts shall vest in and be exercised by
        the
        Indenture Trustee, to the extent permitted by law, without the appointment
        of a
        new or successor trustee.

       

      Section
        6.11  Eligibility;
        Disqualification.
        The
        Indenture Trustee shall at all times be an entity that meets the requirements
        of
        Section 3(c)(3) under the Investment Company Act of 1940 applicable to a
        trustee, and shall have a combined capital and surplus of at least $50,000,000
        as set forth in its most recent published annual report of condition and
        it or
        its parent shall have a long-term debt rating of Baa3 or better by
        Moody’s.

       

      Each
        of
        the Indenture Trustee and the Securities Administrator hereunder shall at
        all
        times be a corporation or an association organized and doing business under
        the
        laws of any state or the United States of America, authorized under such
        laws to
        exercise corporate trust powers, having a combined capital and surplus of
        at
        least $50,000,000 and subject to supervision or examination by federal or
        state
        authority. In case at any time the Indenture Trustee or the Securities
        Administrator shall cease to be eligible in accordance with the provisions
        of
        this Section, the Trustee or the Securities Administrator, as the case may
        be,
        shall resign immediately in the manner and with the effect specified in Section
        6.08 hereof.

       

      The
        Securities Administrator and any successor Securities Administrator (i) may
        not
        be an Originator, the Master Servicer, a subservicer, the Depositor or an
        affiliate of the Depositor unless the Securities Administrator is an
        institutional trust department, (ii) must be authorized to exercise corporate
        trust powers under the laws of its jurisdiction of organization, and (iii)
        must
        at all times be rated at least "A/F1" by Fitch if Fitch is a rating
        agency.

       

      The
        Indenture Trustee shall notify the Rating Agencies of any change of Securities
        Administrator. Any resignation or removal of the Indenture Trustee or the
        Securities Administrator and appointment of a successor trustee or trust
        administrator, as the case may be, pursuant to any of the provisions of this
        Section shall not become effective until acceptance of appointment by the
        successor indenture trustee or securities administrator as provided in Section
        6.08 hereof. Notwithstanding the foregoing, in the event the Securities
        Administrator advises the Indenture Trustee that it is unable to continue
        to
        perform its obligations pursuant to the terms of this Indenture prior to
        the
        appointment of a successor, the Indenture Trustee shall be obligated to perform
        such obligations until a new securities administrator is appointed. Such
        performance shall be without prejudice to any claim by a party hereto or
        beneficiary hereof resulting from the Securities Administrator's breach of
        its
        obligations hereunder. As compensation therefore, the Indenture Trustee shall
        be
        entitled to all fees the Securities Administrator would have been entitled
        to if
        it had continued to act hereunder.

       

      Section
        6.12  Representations
        and Warranties.
        The
        Indenture Trustee hereby represents that:

       

      (i)  The
        Indenture Trustee is duly organized and validly existing as a national banking
        association in good standing under the laws of the United States with power
        and
        authority to own its properties and to conduct its business as such properties
        are currently owned and such business is presently conducted;

       

      (ii)  The
        Indenture Trustee has the power and authority to execute and deliver this
        Indenture and to carry out its terms; and the execution, delivery and
        performance of this Indenture have been duly authorized by the Indenture
        Trustee
        by all necessary corporate action;

       

      (iii)  The
        consummation of the transactions contemplated by this Indenture and the
        fulfillment of the terms hereof do not conflict with, result in any breach
        of
        any of the terms and provisions of, or constitute (with or without notice
        or
        lapse of time) a default under, the articles of incorporation or bylaws of
        the
        Indenture Trustee or any agreement or other instrument to which the Indenture
        Trustee is a party or by which it is bound; and

       

      (iv)  To
        the
        Indenture Trustee’s knowledge, there are no proceedings or investigations
        pending or threatened before any court, regulatory body, administrative agency
        or other governmental instrumentality having jurisdiction over the Indenture
        Trustee or its properties: (A) asserting the invalidity of this Indenture,
        (B)
        seeking to prevent the consummation of any of the transactions contemplated
        by
        this Indenture or (C) seeking any determination or ruling that might materially
        and adversely affect the performance by the Indenture Trustee of its obligations
        under, or the validity or enforceability of, this Indenture.

       

      Section
        6.13  Representations
        and Warranties.
        The
        Securities Administrator hereby represents that:

       

      (i)  The
        Securities Administrator is duly organized and validly existing as a national
        banking association in good standing under the laws of the United States
        with
        power and authority to own its properties and to conduct its business as
        such
        properties are currently owned and such business is presently
        conducted;

       

      (ii)  The
        Securities Administrator has the power and authority to execute and deliver
        this
        Indenture and to carry out its terms; and the execution, delivery and
        performance of this Indenture have been duly authorized by the Securities
        Administrator by all necessary corporate action;

       

      (iii)  The
        consummation of the transactions contemplated by this Indenture and the
        fulfillment of the terms hereof do not conflict with, result in any breach
        of
        any of the terms and provisions of, or constitute (with or without notice
        or
        lapse of time) a default under, the articles of incorporation or bylaws of
        the
        Securities Administrator or any agreement or other instrument to which the
        Securities Administrator is a party or by which it is bound; and

       

      (iv)  To
        the
        Securities Administrator’s knowledge, there are no proceedings or investigations
        pending or threatened before any court, regulatory body, administrative agency
        or other governmental instrumentality having jurisdiction over the Securities
        Administrator or its properties: (A) asserting the invalidity of this Indenture,
        (B) seeking to prevent the consummation of any of the transactions contemplated
        by this Indenture or (C) seeking any determination or ruling that might
        materially and adversely affect the performance by the Securities Administrator
        of its obligations under, or the validity or enforceability of, this
        Indenture.

       

      Section
        6.14  Directions
        to Indenture Trustee and the Securities Administrator. 

       

      (a)  The
        Indenture Trustee is hereby directed to accept the pledge of the HELOCs and
        hold
        the assets of the Trust in trust for the Noteholders and the Note Insurer
        and to
        exercise and deliver the Insurance Agreement and the Custodial Agreement
        and to
        acknowledge and agree to the Assignment Agreements.

       

      (b)  The
        Securities Administrator is hereby directed to authenticate and deliver the
        Notes substantially in the form prescribed by Exhibits A-1, A-2 and A-3 to
        this
        Indenture in accordance with the terms of this Indenture and to take all
        other
        actions as shall be required to be taken by the Securities Administrator
        pursuant to the terms of this Indenture and the other Basic
        Documents.

       

      Section
        6.15  The
        Agents.
        The
        provisions of this Indenture relating to the limitations of the Indenture
        Trustee’s liability and to its rights and protections shall inure also to the
        Paying Agent, Note Registrar and Certificate Registrar.

       

      ARTICLE
        VII

      NOTEHOLDERS’
        LISTS AND REPORTS

       

      Section
        7.01  Issuing
        Entity To Furnish Securities Administrator and Indenture Trustee Names and
        Addresses of Noteholders.
        The
        Issuing Entity will furnish or cause to be furnished to the Securities
        Administrator and the Indenture Trustee (a)
        not more
        than five days after each Record Date, a list, in such form as the Securities
        Administrator may reasonably require, of the names and addresses of the Holders
        of Notes as of such Record Date, and (b) at such other times as the Securities
        Administrator and the Note Insurer may request in writing, within 30 days
        after
        receipt by the Issuing Entity of any such request, a list of similar form
        and
        content as of a date not more than 10 days prior to the time such list is
        furnished; provided, however, that so long as the Securities Administrator
        is
        the Note Registrar, no such list shall be required to be furnished to the
        Securities Administrator.

       

      Section
        7.02  Preservation
        of Information; Communications to Noteholders.
        (a)
        The
        Securities Administrator shall preserve, in as current a form as is reasonably
        practicable, the names and addresses of the Holders of Notes contained in
        the
        most recent list furnished to the Securities Administrator as provided in
        Section 7.01 hereof and the names and addresses of Holders of Notes received
        by
        the Securities Administrator in its capacity as Note Registrar. The Securities
        Administrator may destroy any list furnished to it as provided in such Section
        7.01 upon receipt of a new list so furnished.

       

      (b)  Noteholders
        may communicate with other Noteholders with respect to their rights under
        this
        Indenture or under the Notes.

       

      Section
        7.03  Financial
        Information.
        For so
        long as any of the Notes bearing a restrictive legend remains outstanding
        and is
        a “restricted security” within the meaning of Rule 144(a)(3) under the
        Securities Act, the Issuing Entity shall, during any period in which it is
        not
        subject to Section 13 or 15(d) of the Exchange Act nor exempt from reporting
        pursuant to Rule 12g3-2(b) under such Act, cause the Securities Administrator
        to
        make available to any Holder of any such Note in connection with any sale
        thereof and to any prospective purchaser of any such Note from such Holder,
        in
        each case upon request, the information specified in, and meeting the
        requirements of, Rule 144A(d)(4) under the Securities Act that is in the
        Securities Administrator’s possession or reasonably obtainable by it, if
        requested, from the Master Servicer (and to the extent such information is
        in
        the Master Servicer’s possession or is reasonably obtainable by it from the
        Servicers).

       

      Unless
        the Issuing Entity otherwise determines, the fiscal year of the Issuing Entity
        shall end on December 31 of each year.

       

      Section
        7.04  Statements
        to Noteholders and Certificateholders.
        (a)
        With respect to each Payment Date, the Securities Administrator shall make
        available via the Securities Administrator’s website, initially located at
        www.etrustee.net, to each Noteholder and each Certificateholder, the Indenture
        Trustee, the Depositor, the Issuing Entity, the Seller, the Owner Trustee,
        the
        Certificate Paying Agent, the Note Insurer and the Rating Agencies, a statement
        setting forth the following information as to the Notes, to the extent
        applicable:

       

      (i)  the
        applicable Record Dates, Accrual Periods, Interest Determination Dates and
        Payment Dates;

       

      (ii)  with
        respect to each HELOC group, the related Available Funds, the related Net
        WAC
        Cap Rate Carryover Amount on each Class of Notes for such Payment Date and
        the
        aggregate Unpaid Interest Shortfall Amount on each Class of Notes for such
        Payment Date;

       

      (iii)  the
        amount of fees and expenses accrued and paid;

       

      (iv)  with
        respect to each HELOC group, the amount of Servicing Fees for the related
        Collection Period;

       

      (v)  with
        respect to each HELOC group, (a) the amount of such distribution to each
        Class
        of Notes (other than the Class I-A-IO Notes and Class II-A-IO Notes) applied
        to
        reduce the Note Principal Balance thereof, and (b) the aggregate amount included
        therein representing Principal Prepayments;

       

      (vi)  with
        respect to each HELOC group, the amount of such distribution to Holders of
        each
        Class of Notes allocable to interest;

       

      (vii)  the
        amount of any distribution to the related Certificates;

       

      (viii)  with
        respect to each HELOC group, the related Overcollateralization Amount and
        the
        related Overcollateralization Target Amount;

       

      (ix)  the
        amount, if any, paid by the Note Insurer under the Policy for such Payment
        Date
        and the aggregate amounts for all prior Payment Dates paid by the Note Insurer
        under the Policy and not yet reimbursed;

       

      (x)  with
        respect to each HELOC group, if the distribution to the Holders of any Class
        of
        Notes is less than the full amount that would be distributable to such Holders
        if there were sufficient funds available therefor, the amount of the
        shortfall;

       

      (xi)  with
        respect to each HELOC group, the number and the aggregate related Scheduled
        Principal Balance of the HELOCs as of the end of the related Due Period and
        the
        amount of related Draws on the HELOCs;

       

      (xii)  with
        respect to each HELOC group, the aggregate Note Principal Balance of each
        Class
        of Notes (other than the Class A-IO Notes), after giving effect to the amounts
        distributed on such Payment Date, separately identifying any reduction thereof
        due to related Charge-Off Amounts and the aggregate Note Principal Balance
        of
        the Notes (other than the Class A-IO Notes) after giving effect to the
        distribution of principal on such Payment Date;

       

      (xiii)  with
        respect to each HELOC group, the number and aggregate Scheduled Principal
        Balance of the HELOCs (a) as to which the Monthly Payment is delinquent for
        31-60 days, 61-90 days, 91 or more days, respectively, (b) in foreclosure
        and
        delinquent for 31-60 days, 61-90 days, 91 or more days, respectively, (c)
        that
        have become REO Property, and (d) subject to bankruptcy or similar insolvency
        proceedings, in each case as of the end of the preceding calendar
        month;

       

      (xiv)  with
        respect to each HELOC group, the aggregate related Charge-Off Amounts with
        respect to the related Payment Date and cumulative related Charge-Off Amounts
        since the Closing Date;

       

      (xv)  with
        respect to each HELOC group, the number and aggregate Scheduled Principal
        Balance of HELOCs repurchased pursuant to the Mortgage Loan Purchase Agreement
        for the related Payment Date and cumulatively since the Closing
        Date;

       

      (xvi)  with
        respect to each HELOC group, the book value (if available) of any REO
        Property;

       

      (xvii)  with
        respect to each HELOC group, the amount of any Relief Act Shortfalls for
        such
        Payment Date; 

       

      (xviii)  with
        respect to each HELOC group, the aggregate Scheduled Principal Balance of
        HELOCs
        purchased pursuant to Section 2.04 of the Sale and Servicing Agreement for
        the
        related Payment Date and cumulatively since the Closing Date;

       

      (xix)  with
        respect to each HELOC group, a statement as to whether each element in the
        definitions of the related Trigger Event and the related Rapid Amortization
        Trigger Event, respectively, is satisfied;

       

      (xx)  with
        respect to each HELOC group, if applicable, material modifications, extensions
        or waivers to pool asset terms, fees, penalties or payments during the payment
        period or that have become material over time;

       

      (xxi)  with
        respect to each HELOC group, material breaches of pool asset representations
        or
        warranties or transaction covenants;

       

      (xxii)  with
        respect to each HELOC group, the Group I 60 Day Plus Delinquent Percentage
        and
        the Group II 60 Day Plus Delinquent Percentage, as applicable, for the related
        Payment Date; 

       

      (xxiii)  the
        special hazard amount, fraud loss amount and bankruptcy amount, if applicable,
        as of the close of business on the applicable Payment Date and a description
        of
        any change in the calculation of these amounts; and

       

      (xxiv)  With
        respect to each HELOC group, each HELOC that has been released from the Trust
        Estate to the related Class X Certificateholder.

       

      Items
        (iii) and (iv) above shall be presented on the basis of a Note having a $1,000
        denomination. In addition, by January 31 of each calendar year following
        any
        year during which the Notes are outstanding, the Securities Administrator
        shall
        furnish a report to each Noteholder of record if so requested in writing
        at any
        time during each calendar year as to the aggregate of amounts reported pursuant
        to (iii) and (iv) with respect to the Notes for such calendar year.

       

      The
        Securities Administrator may conclusively rely upon the information provided
        by
        the Master Servicer to the Securities Administrator in its preparation of
        monthly statements to Noteholders.

       

      The
        Securities Administrator will make the monthly statements provided for in
        this
        section (and, at its option, any additional files containing the same
        information in an alternative format) available each month to the Note Insurer,
        each Noteholder and each Certificateholder, the Depositor, the Issuing Entity,
        the Seller, the Owner Trustee, the Certificate Paying Agent and the Rating
        Agency via the Securities Administrator's website. The Securities
        Administrator’s website shall initially be located at “www.etrustee.net.”
Assistance in using the website can be obtained by calling the Securities
        Administrator’s customer service desk at (312) 992-0668. Parties that are unable
        to use the website are entitled to have a paper copy mailed to them via first
        class mail by calling the Securities Administrator’s customer service desk and
        indicating such. The Securities Administrator may have the right to change
        the
        way the monthly statements are distributed in order to make such distribution
        more convenient and/or more accessible to the above parties and the Securities
        Administrator shall provide timely and adequate notification to all above
        parties regarding any such changes.

       

      (b)  The
        Securities Administrator shall be entitled to rely on but shall not be
        responsible for the content or accuracy of any information provided by third
        parties for purposes of preparing the monthly statement, and may affix thereto
        any disclaimer it deems appropriate in its reasonable discretion (without
        suggesting liability on the part of any other party hereto).

       

      ARTICLE
        VIII

      ACCOUNTS,
        DISBURSEMENTS AND RELEASES

       

      Section
        8.01  Collection
        of Money.
        Except
        as otherwise expressly provided herein, the Securities Administrator may
        demand
        payment or delivery of, and shall receive and collect, directly and without
        intervention or assistance of any fiscal agent or other intermediary, all
        money
        and other property payable to or receivable by the Securities Administrator
        pursuant to this Indenture. The Securities Administrator shall apply all
        such
        money received by it as provided in this Indenture. Except as otherwise
        expressly provided in this Indenture, if any default occurs in the making
        of any
        payment or performance under any agreement or instrument that is part of
        the
        Trust Estate, the Indenture Trustee may take such action as may be appropriate
        to enforce such payment or performance, including the institution and
        prosecution of appropriate Proceedings. Any such action shall be without
        prejudice to any right to claim a Default or Event of Default under this
        Indenture and any right to proceed thereafter as provided in Article
        V.

       

      Section
        8.02  Officer’s
        Certificate.
        The
        Indenture Trustee shall receive at least seven Business Days’ notice when
        requested by the Issuing Entity to take any action pursuant to Section 8.06(a)
        hereof, accompanied by copies of any instruments to be executed, and the
        Indenture Trustee shall also require, as a condition to such action, an
        Officer’s Certificate, in form and substance satisfactory to the Indenture
        Trustee, stating the legal effect of any such action, outlining the steps
        required to complete the same, and concluding that all conditions precedent
        to
        the taking of such action have been complied with.

       

      Section
        8.03  Termination
        Upon Distribution to Noteholders.
        This
        Indenture and the respective obligations and responsibilities of the Issuing
        Entity, the Securities Administrator and the Indenture Trustee created hereby
        shall terminate upon the distribution to Noteholders, the Note Insurer, the
        Certificate Paying Agent on behalf of the Certificateholders, the Securities
        Administrator and the Indenture Trustee of all amounts required to be
        distributed pursuant to Article III; provided, however, that in no event
        shall
        the trust created hereby continue beyond the earlier of (i) the expiration
        of 21
        years from the death of the survivor of the descendants of Joseph P. Kennedy,
        the late ambassador of the United States to the Court of St. James, living
        on
        the date hereof or (ii) the Latest Possible Maturity Date.

       

      Section
        8.04  Release
        of Trust Estate.
        (a)
        Subject
        to the payment of its fees and expenses, the Indenture Trustee may, and when
        required by the provisions of this Indenture shall, execute instruments to
        release property from the lien of this Indenture, or convey the Indenture
        Trustee’s interest in the same, in a manner and under circumstances that are not
        inconsistent with the provisions of this Indenture, including for the purposes
        of any purchase of a related HELOC by the majority Holder of the Class I-E
        Certificates or Class II-E Certificates pursuant to Section 8.06 of this
        Indenture. No party relying upon an instrument executed by the Indenture
        Trustee
        as provided in Article VIII hereunder shall be bound to ascertain the Indenture
        Trustee’s authority, inquire into the satisfaction of any conditions precedent,
        or see to the application of any monies.

       

      (b)  The
        Indenture Trustee shall, at such time as (i) it is notified by the Securities
        Administrator that there are no Notes Outstanding, (ii) all sums then due
        and
        unpaid to the Indenture Trustee pursuant to this Indenture have been paid
        and
        (iii) all sums due to the Note Insurer have been paid, release any remaining
        portion of the Trust Estate that secured the Notes from the lien of this
        Indenture.

       

      (c)  The
        Indenture Trustee shall release property from the lien of this Indenture
        pursuant to this Section 8.04 only upon receipt of a request from the Issuing
        Entity and a letter from the Note Insurer stating that the Note Insurer has
        no
        objection to such request from the Issuing Entity.

       

      Section
        8.05  Surrender
        of Notes Upon Final Payment.
        By
        acceptance of any Note, the Holder thereof agrees to surrender such Note
        to the
        Securities Administrator promptly, prior to such Noteholder’s receipt of the
        final payment thereon.

       

      Section
        8.06  Optional
        Redemption of the Group I HELOCs.
        (a)
        The
        Holder of the Class I-E Certificates, or if there is no single holder, the
        majority Holder of the Class I-E Certificates, shall have the option to purchase
        the assets of the Trust related to the Group I HELOCs and thereby cause the
        redemption of the Group I Notes, in whole, but not in part, on or after the
        Payment Date on which the sum of the Note Principal Balances of the Group
        I
        Notes is reduced to an amount less than or equal to 10% of the sum of the
        original Note Principal Balances of the Group I Notes. The aggregate redemption
        price (the “Redemption Price”) for the Group I Notes will be equal to the lesser
        of (i) the fair market value of the Group I HELOCs and (ii) the sum of the
        Outstanding Principal Balance of the Group I HELOCs, and accrued and unpaid
        interest thereon at the weighted average of the Mortgage Rates through the
        day
        preceding the final Payment Date; provided that the option shall only be
        exercised if the Purchase Price is sufficient to repay all outstanding principal
        and accrued and unpaid interest on the Group I Notes.

       

      (b)  In
        order
        to exercise the foregoing option, the Holder of the Class I-E Certificates,
        or
        if there is no single holder, the majority Holder of the Class I-E Certificates,
        shall provide written notice of its exercise of such option to the Securities
        Administrator, the Issuing Entity, the Owner Trustee and the Master Servicer
        at
        least 15 days prior to its exercise. Following receipt of the notice, the
        Securities Administrator shall provide written notice to the Group I Noteholders
        of the final payment on the Group I Notes. In addition, the Holder of the
        Class
        I-E Certificates, or if there is no single holder, the majority Holder of
        the
        Class I-E Certificates, shall, not less than one Business Day prior to the
        proposed Payment Date on which such redemption is to be made, deposit the
        Group
        I Redemption Price specified in (a) above with the Securities Administrator,
        who
        shall deposit the Group I Redemption Price into the Payment Account and shall,
        on the Payment Date after receipt of the funds, apply such funds to make
        final
        payments of principal and interest on the Notes in accordance with Section
        3.02
        hereof and payment to the Securities Administrator and the Master Servicer
        as
        set forth in (a) above, and this Indenture shall be discharged subject to
        the
        provisions of Section 4.09 hereof. If for any reason the amount deposited
        by the
        Holder of the Class I-E Certificates, or if there is no single holder, the
        majority Holder of the Class I-E Certificates, is not sufficient to make
        such
        redemption or such redemption cannot be completed for any reason, (a) the
        amount
        so deposited by the Holder of the Class I-E Certificates, or if there is
        no
        single holder, the majority Holder of the Class I-E Certificates, with the
        Securities Administrator shall be immediately returned to the Holder of the
        Class I-E Certificates, or if there is no single holder, the majority Holder
        of
        the Class I-E Certificates, in full and shall not be used for any other purpose
        or be deemed to be part of the Trust Estate related to the Group I HELOCs
        and
        (b) the related Note Principal Balance or the Notional Amount, as applicable,
        of
        the Group I Notes shall continue to bear interest at the related Note Interest
        Rate.

       

      Section
        8.07  Optional
        Redemption of the Group II HELOCs.
        (a)
        The
        Holder of the Class II-E Certificates, or if there is no single holder, the
        majority Holder of the Class II-E Certificates, shall have the option to
        purchase the assets of the Trust related to the Group II HELOCs and thereby
        cause the redemption of the Group II Notes, in whole, but not in part, on
        or
        after the Payment Date on which the sum of the Note Principal Balances of
        the
        Group II Notes is reduced to an amount less than or equal to 10% of the sum
        of
        the original Note Principal Balances of the Group II Notes. Such optional
        purchase shall be subject to the Note Insurer’s consent if the termination would
        result in a draw on the Policy or if, after such purchase, amounts would
        remain
        owed to the Note Insurer under either this Indenture or the Insurance Agreement.
        The aggregate redemption price (the “Redemption Price”) for the Group II Notes
        will be equal to the lesser of (i) the fair market value of the Group II
        HELOCs
        and (ii) the sum of the Outstanding Principal Balance of the Group II HELOCs,
        and accrued and unpaid interest thereon at the weighted average of the Mortgage
        Rates through the day preceding the final Payment Date; provided that the
        option
        shall only be exercised if the Purchase Price is sufficient to repay all
        outstanding principal and accrued and unpaid interest on the Group II Notes
        and
        all amounts owing under the Insurance Agreement.

       

      (b)  In
        order
        to exercise the foregoing option, the Holder of the Class II-E Certificates,
        or
        if there is no single holder, the majority Holder of the Class II-E
        Certificates, shall provide written notice of its exercise of such option
        to the
        Securities Administrator, the Note Insurer, the Issuing Entity, the Owner
        Trustee and the Master Servicer at least 15 days prior to its exercise.
        Following receipt of the notice, the Securities Administrator shall provide
        written notice to the Group II Noteholders of the final payment on the Group
        II
        Notes. In addition, the Holder of the Class II-E Certificates, or if there
        is no
        single holder, the majority Holder of the Class II-E Certificates, shall,
        not
        less than one Business Day prior to the proposed Payment Date on which such
        redemption is to be made, deposit the Group II Redemption Price specified
        in (a)
        above with the Securities Administrator, who shall deposit the Group II
        Redemption Price into the Payment Account and shall, on the Payment Date
        after
        receipt of the funds, apply such funds to make final payments of principal
        and
        interest on the Group II Notes in accordance with Section 3.02 hereof and
        payment to the Securities Administrator and the Master Servicer as set forth
        in
        (a) above, and this Indenture shall be discharged subject to the provisions
        of
        Section 4.09 hereof. If for any reason the amount deposited by the Holder
        of the
        Class II-E Certificates, or if there is no single holder, the majority Holder
        of
        the Class II-E Certificates, is not sufficient to make such redemption or
        such
        redemption cannot be completed for any reason, (a) the amount so deposited
        by
        the Holder of the Class II-E Certificates, or if there is no single holder,
        the
        majority Holder of the Class II-E Certificates, with the Securities
        Administrator shall be immediately returned to the Holder of the Class II-E
        Certificates, or if there is no single holder, the majority Holder of the
        Class
        II-E Certificates, in full and shall not be used for any other purpose or
        be
        deemed to be part of the Trust Estate related to the Group II HELOCs and
        (b) the
        Note Principal Balance or the Notional Amount, as applicable, of the Group
        II
        Notes shall continue to bear interest at the related Note Interest
        Rate.

       

      Section
        8.08  Additional
        Requirements for Optional Redemption.
        Upon
        exercise by any Class E Certificateholder or majority Holder of any Class
        E
        Certificates, as applicable, of its purchase option as provided in clause
        (a)
        above, the related Notes shall be redeemed and the portion of the Trust Estate
        related to such Notes shall be terminated in accordance with the following
        additional requirements, unless the Indenture Trustee, the Securities
        Administrator and Owner Trustee have been supplied with an Opinion of Counsel
        addressed to the Indenture Trustee, the Note Insurer (with respect to Group
        II),
        the Securities Administrator and Owner Trustee, at the expense of the related
        Class E Certificateholder or the majority Holder of the related Class E
        Certificates, as applicable, to the effect that the failure of the Trust
        Estate
        to comply with the requirements of this Section respect to such termination
        will
        not (i) result in the imposition of taxes on “prohibited transactions” of a
        REMIC created hereunder, or (ii) cause a REMIC created hereunder to fail
        to
        qualify as a REMIC at any time that any Notes or Certificates are
        outstanding:

       

      (i) The
        related Class E Certificateholder or the majority Holder of the related Class
        E
        Certificates, as applicable, shall establish a 90-day liquidation period
        and
        notify the Indenture Trustee, the Securities Administrator and Owner Trustee
        thereof, and the Securities Administrator shall in turn specify the first
        day of
        such period in a statement attached to the tax return for each related REMIC
        created hereunder pursuant to Treasury Regulation Section 1.860F-1. The related
        Class E Certificateholder or the majority Holder of the related Class E
        Certificates, as applicable, shall satisfy all the requirements of a “qualified
        liquidation” under Section 860F of the Code and any regulations thereunder, as
        evidenced by an Opinion of Counsel obtained at the expense of such Class
        E
        Certificateholder or the majority Holder of such Class E Certificates, as
        applicable;

       

      (ii) During
        such 90-day liquidation period, and at or prior to the time of making the
        final
        payment on the related Notes and related Certificates, the Indenture Trustee
        shall sell all of the assets of REMIC I or REMIC II, as applicable, for cash;
        and

       

      (iii) At
        the
        time of the making of the final payment on the related Notes and related
        Certificates, the Securities Administrator and Owner Trustee shall distribute
        or
        credit, or cause to be distributed or credited, to the Certificate Paying
        Agent
        for distribution to the Holders of the related Residual Certificates all
        cash on
        hand (other than cash retained to meet claims), and REMIC I or REMIC II,
        as
        applicable, shall terminate at that time.

       

      (iv) By
        their
        acceptance of the Notes, the Holders thereof hereby authorize the adoption
        of a
        90-day liquidation period and the adoption of a plan of complete liquidation
        for
        each related REMIC created hereunder, which authorization shall be binding
        upon
        all successor related Noteholders.

       

      (v) The
        Securities Administrator, as agent for each related REMIC, hereby agrees
        to
        adopt and sign such a plan of complete liquidation meeting the requirements
        for
        a “qualified liquidation” under Section 860F of the Code and any regulations
        thereunder upon the written request of the related Class E Certificateholder
        or
        the majority Holder of the related Class E Certificates, as applicable, and
        the
        receipt of the Opinion of Counsel referred to in clause (i) above and to
        take
        such other action in connection therewith as may be reasonably requested
        by the
        related Class E Certificateholder or the majority Holder of the related Class
        E
        Certificates, as applicable.

       

      Section
        8.09  Group
        I Interest Coverage Account

       

      (a)  No
        later
        than the Closing Date, the Securities Administrator shall establish and maintain
        a segregated trust account or a sub account of a trust account entitled the
        “Group I Interest Coverage Account”. The Group I Interest Coverage Account shall
        be an Eligible Account or a sub-account of an Eligible Account. On the Closing
        Date, the Securities Administrator shall, promptly upon receipt, deposit
        in the
        Group I Interest Coverage Account and retain therein the Group I Initial
        Interest Coverage Deposit for the Group I HELOCs remitted on the Closing
        Date to
        the Securities Administrator by the Depositor. Funds deposited in the Group
        I
        Interest Coverage Account shall be held in trust by the Securities Administrator
        for the Group I Noteholders for the uses and purposes set forth
        herein.

       

      (b)  The
        amount on deposit in the Group I Interest Coverage Account shall be specifically
        allocated to cover related Unpaid Interest Shortfall Amounts and related
        Net WAC
        Cap Rate Carryover Amounts on each Class of Group I Notes with respect to
        the
        first and second Payment Dates. On each of the first two Payment Dates, the
        Securities Administrator shall withdraw from the Group I Interest Coverage
        Account, first, the Group I Interest Coverage Distribution Amount and include
        such amount in the Group I Interest Collection Amount for that Payment Date,
        and
        second, the related Net WAC Cap Rate Carryover Amount for that Payment Date,
        to
        the extent not otherwise covered by the Group I Interest Collection Amount,
        and
        distribute such amount to the Holders of the Group I Notes in the priorities
        specified in clause (a) of Section 3.02. Any payments to the Holders of Group
        I
        Notes in respect of related Net WAC Cap Rate Carryover Amounts pursuant to
        the
        preceding sentence shall not be payments with respect to a “regular interest” in
        a REMIC within the meaning of Section 860(G)(a)(1) of the Code. Any amounts
        remaining in the Group I Interest Coverage Account after the first and second
        Payment Dates and not needed for such purposes will be paid to the Depositor
        and
        will not thereafter be available for payment to the related
        Noteholders.

       

      (c)  For
        federal income tax purposes, the Depositor shall be the owner of the Group
        I
        Interest Coverage Account and shall report all items of income, deduction,
        gain
        or loss arising therefrom. At no time will the Group I Interest Coverage
        Account
        be an asset of any REMIC created hereunder. All income and gain realized
        from
        investment of funds deposited in the Group I Interest Coverage Account, which
        investment shall be made solely upon the written direction of the Depositor,
        shall be for the sole and exclusive benefit of the Depositor and shall be
        remitted by the Securities Administrator to the Depositor no later than the
        first Business Day following receipt of such income and gain by the Securities
        Administrator. If no written direction with respect to such investment shall
        be
        received by the Securities Administrator from the Depositor, then funds in
        such
        Account shall remain uninvested. The Depositor shall deposit in the Group
        I
        Interest Coverage Account the amount of any net loss incurred in respect
        of any
        such Permitted Investment immediately upon realization of such
        loss.

       

      Section
        8.10  Group
        II Interest Coverage Account

       

      (a)  No
        later
        than the Closing Date, the Securities Administrator shall establish and maintain
        a segregated trust account or a sub-account of a trust account entitled the
        “Group II Interest Coverage Account”. The Group II Interest Coverage Account
        shall be an Eligible Account or a sub account of an Eligible Account. On
        the
        Closing Date, the Securities Administrator shall, promptly upon receipt,
        deposit
        in the Group II Interest Coverage Account and retain therein the Group II
        Initial Interest Coverage Deposit for the Group II HELOCs remitted on the
        Closing Date to the Securities Administrator by the Depositor. Funds deposited
        in the Group II Interest Coverage Account shall be held in trust by the
        Securities Administrator for the Group II Noteholders for the uses and purposes
        set forth herein.

       

      (b)  The
        amount on deposit in the Group II Interest Coverage Account shall be
        specifically allocated to cover related Unpaid Interest Shortfall Amounts
        and
        related Net WAC Cap Rate Carryover Amounts on each Class of Group II Notes
        with
        respect to the first and second Payment Dates. On each of the first two Payment
        Dates, the Securities Administrator shall withdraw from the Group II Interest
        Coverage Account, first, the Group II Interest Coverage Distribution Amount
        and
        include such amount in the Group II Interest Collection Amount for that Payment
        Date, and second, the related Net WAC Cap Rate Carryover Amount for that
        Payment
        Date, to the extent not otherwise covered by the Group II Interest Collection
        Amount, and distribute such amount to the Holders of the Group II Notes in
        the
        priorities specified in clause (d) of Section 3.02. Any payments to the Holders
        of Group II Notes in respect of related Net WAC Cap Rate Carryover Amounts
        pursuant to the preceding sentence shall not be payments with respect to
        a
“regular interest” in a REMIC within the meaning of Section 860(G)(a)(1) of
        the Code. Any amounts remaining in the Group II Interest Coverage Account
        after
        the first and second Payment Dates and not needed for such purposes will
        be paid
        to the Depositor and will not thereafter be available for payment to the
        related
        Noteholders.

       

      (c)  For
        federal income tax purposes, the Depositor shall be the owner of the Group
        II
        Interest Coverage Account and shall report all items of income, deduction,
        gain
        or loss arising therefrom. At no time will the Group II Interest Coverage
        Account be an asset of any REMIC created hereunder. All income and gain realized
        from investment of funds deposited in the Group II Interest Coverage Account,
        which investment shall be made solely upon the written direction of the
        Depositor, shall be for the sole and exclusive benefit of the Depositor and
        shall be remitted by the Securities Administrator to the Depositor no later
        than
        the first Business Day following receipt of such income and gain by the
        Securities Administrator. If no written direction with respect to such
        investment shall be received by the Securities Administrator from the Depositor,
        then funds in such Account shall remain uninvested. The Depositor shall deposit
        in the Group II Interest Coverage Account the amount of any net loss incurred
        in
        respect of any such Permitted Investment immediately upon realization of
        such
        loss.

       

      

       

      

       

      ARTICLE
        IX

      SUPPLEMENTAL
        INDENTURES

       

      Section
        9.01  Supplemental
        Indentures Without Consent of Noteholders.
        (a)
        Without
        the consent of the Holders of any Notes or Certificates but with prior written
        consent of the Note Insurer (which consent shall not be unreasonably withheld)
        and prior notice to the Rating Agencies, the Issuing Entity, the Indenture
        Trustee, the Note Insurer and the Securities Administrator, when authorized
        by
        an Issuer Request, at any time and from time to time, may enter into one
        or more
        indentures supplemental hereto, in form satisfactory to the Indenture Trustee
        and the Securities Administrator, for any of the following
        purposes:

       

      (i)  to
        correct or amplify the description of any property at any time subject to
        the
        lien of this Indenture, or better to assure, convey and confirm unto the
        Indenture Trustee any property subject or required to be subjected to the
        lien
        of this Indenture, or to subject to the lien of this Indenture additional
        property;

       

      (ii)  to
        evidence the succession, in compliance with the applicable provisions hereof,
        of
        another person to the Issuing Entity, and the assumption by any such successor
        of the covenants of the Issuing Entity herein and in the Notes
        contained;

       

      (iii)  to
        add to
        the covenants of the Issuing Entity, for the benefit of the Holders of the
        Notes
        and Certificates, or to surrender any right or power herein conferred upon
        the
        Issuing Entity;

       

      (iv)  to
        cure
        any ambiguity, to correct or supplement any provision herein or in any
        supplemental indenture that may be inconsistent with any other provision
        herein
        or in any supplemental indenture;

       

      (v)  to
        make
        any other provisions with respect to matters or questions arising under this
        Indenture or in any supplemental indenture; provided, that such action shall
        not
        materially and adversely affect the interests of the Holders of the Notes
        or
        adversely affect the interests of the Note Insurer; provided further, that
        such
        supplemental indenture will be deemed to not materially and adversely affect
        the
        interests of the Holders of the Notes if a Rating Confirmation is received
        with
        respect to such supplemental indenture; 

       

      (vi)  to
        evidence and provide for the acceptance of the appointment hereunder by a
        successor trustee with respect to the Notes and to add to or change any of
        the
        provisions of this Indenture as shall be necessary to facilitate the
        administration of the trusts hereunder by more than one trustee, pursuant
        to the
        requirements of Article VI hereof; or 

       

      (vii)  to
        modify, eliminate or add to any of the provisions herein to such extent as
        shall
        be necessary or appropriate to maintain the qualification of any REMIC created
        hereunder as a REMIC under the Code or to avoid or minimize the risk of the
        imposition of any tax on any REMIC created hereunder, provided that the
        Indenture Trustee, the Securities Administrator, the Note Insurer and Owner
        Trustee have been provided an Opinion of Counsel addressed to the Indenture
        Trustee, the Securities Administrator and Owner Trustee, which opinion shall
        be
        an expense of the party requesting such opinion but in any case shall not
        be an
        expense of the Indenture Trustee, the Securities Administrator, Owner Trustee,
        the Note Insurer or the Trust Estate, to the effect that such action is
        necessary or appropriate to maintain such qualification or to avoid or minimize
        the risk of the imposition of such a tax;

       

      provided,
        however,
        that no
        such indenture supplements shall be entered into unless the Indenture Trustee,
        the Note Insurer, Owner Trustee and the Securities Administrator shall have
        received an Opinion of Counsel not at the expense of the Indenture Trustee
        or
        the Securities Administrator as to the enforceability of any such indenture
        supplement and to the effect that (i) such indenture supplement is permitted
        hereunder and will not materially and adversely affect the Holders of the
        Notes
        or the Note Insurer and (ii) entering into such indenture supplement will
        not
        cause the imposition of any tax on any REMIC created hereunder, any Noteholder
        or any Certificateholder or cause any of REMIC created hereunder to cease
        to
        qualify as a REMIC at any time that any Notes or Certificates are outstanding.
        

       

      The
        Indenture Trustee and the Securities Administrator are hereby authorized
        to join
        in the execution of any such supplemental indenture and to make any further
        appropriate agreements and stipulations that may be therein
        contained.

       

      (b)  With
        the
        consent of the Note Insurer (which consent shall not be unreasonably withheld),
        the Issuing Entity, the Securities Administrator and the Indenture Trustee,
        when
        authorized by an Issuer Request, in the case of the Securities Administrator
        and
        the Indenture Trustee may, also without the consent of any of the Holders
        of the
        Notes and prior notice to the Rating Agency enter into an indenture or
        indentures supplemental hereto for the purpose of adding any provisions to,
        or
        changing in any manner or eliminating any of the provisions of, this Indenture
        or of modifying in any manner the rights of the Holders of the Notes under
        this
        Indenture; provided, however, that such action as evidenced by an Opinion
        of
        Counsel addressed to the Indenture Trustee, the Note Insurer, the Securities
        Administrator and Owner Trustee, (i) is permitted by this Indenture, (ii)
        shall
        not adversely affect in any material respect the interests of any Noteholder
        or
        adversely affect the interests of the Note Insurer and (iii) shall not cause
        the
        imposition of any tax on any REMIC created hereunder, any Noteholder or any
        Certificateholder or cause any of REMIC created hereunder to cease to qualify
        as
        a REMIC at any time that any Notes or Certificates are outstanding.

       

      Section
        9.02  Supplemental
        Indentures With Consent of Noteholders.
        The
        Issuing Entity, the Securities Administrator and the Indenture Trustee, when
        authorized by an Issuer Request in the case of the Securities Administrator
        and
        the Indenture Trustee, also may, with prior notice to the Rating Agencies
        and,
        with the consent of the Note Insurer and the Holders of not less than a majority
        of the Note Principal Balance of each Class of Notes affected thereby, by
        Act
        (as defined in Section 10.03 hereof) of such Holders delivered to the Issuing
        Entity, the Securities Administrator and the Indenture Trustee, enter into
        an
        indenture or indentures supplemental hereto for the purpose of adding any
        provisions to, or changing in any manner or eliminating any of the provisions
        of, this Indenture or of modifying in any manner the rights of the Holders
        of
        the Notes under this Indenture; provided, however, that no such supplemental
        indenture shall, without the consent of the Holder of each Note affected
        thereby:

       

      (i)  change
        the date of payment of any installment of principal of or interest on any
        Note,
        or reduce the principal amount thereof or the interest rate thereon, change
        the
        provisions of this Indenture relating to the application of collections on,
        or
        the proceeds of the sale of, the Trust Estate and to payment of principal
        of or
        interest on the Notes, or change any place of payment where, or the coin
        or
        currency in which, any Note or the interest thereon is payable, or impair
        the
        right to institute suit for the enforcement of the provisions of this Indenture
        requiring the application of funds available therefor, as provided in Article
        V,
        to the payment of any such amount due on the related Notes on or after the
        respective due dates thereof;

       

      (ii)  reduce
        the percentage of the Note Principal Balances of the Notes, or any Class
        of
        Notes, the consent of the Holders of which is required for any such supplemental
        indenture, or the consent of such Holders of which is required for any waiver
        of
        compliance with certain provisions of this Indenture or certain defaults
        hereunder and their consequences provided for in this Indenture;

       

      (iii)  modify
        or
        alter the provisions of the proviso to the definition of the term “Outstanding”
or modify or alter the exception in the definition of the term
“Holder”;

       

      (iv)  reduce
        the percentage of the Note Principal Balances of the Notes, or any Class
        of
        Notes, required to direct the Indenture Trustee to direct the Issuing Entity
        to
        sell or liquidate the Trust Estate pursuant to Section 5.04 hereof;

       

      (v)  modify
        any provision of this Section 9.02 except to increase any percentage specified
        herein or to provide that certain additional provisions of this Indenture
        or the
        Basic Documents cannot be modified or waived without the consent of the Holder
        of each Note affected thereby;

       

      (vi)  modify
        any of the provisions of this Indenture in such manner as to affect the
        calculation of the amount of any payment of interest or principal due on
        any
        Note on any Payment Date (including the calculation of any of the individual
        components of such calculation); or

       

      (vii)  permit
        the creation of any lien ranking prior to or on a parity with the lien of
        this
        Indenture with respect to any part of the Trust Estate or, except as otherwise
        permitted or contemplated herein, terminate the lien of this Indenture on
        any
        property at any time subject hereto or deprive the Holder of any Note of
        the
        security provided by the lien of this Indenture; 

       

      and
        provided,
        further,
        that
        such action shall not, as evidenced by an Opinion of Counsel addressed to
        the
        Indenture Trustee, the Note Insurer, the Securities Administrator and Owner
        Trustee, cause the imposition of any tax on any REMIC created hereunder,
        any
        Noteholder or any Certificateholder or cause any of REMIC created hereunder
        to
        cease to qualify as a REMIC at any time that any Notes or Certificates are
        outstanding.

       

      Any
        such
        action shall not adversely affect in any material respect the interest of
        any
        Holder (other than a Holder who shall consent to such supplemental indenture)
        as
        evidenced by an Opinion of Counsel (provided by the Person requesting such
        supplemental indenture) delivered to the Indenture Trustee and the Securities
        Administrator.

       

      It
        shall
        not be necessary for any Act of Noteholders under this Section 9.02 to approve
        the particular form of any proposed supplemental indenture, but it shall
        be
        sufficient if such Act shall approve the substance thereof.

       

      Promptly
        after the execution by the Issuing Entity, the Securities Administrator and
        the
        Indenture Trustee of any supplemental indenture pursuant to this Section
        9.02,
        the Securities Administrator shall mail to the Holders of the Notes to which
        such amendment or supplemental indenture relates a notice setting forth in
        general terms the substance of such supplemental indenture. Any failure of
        the
        Securities Administrator to mail such notice, or any defect therein, shall
        not,
        however, in any way impair or affect the validity of any such supplemental
        indenture.

       

      Section
        9.03  Execution
        of Supplemental Indentures.
        In
        executing, or permitting the additional trusts created by, any supplemental
        indenture permitted by this Article IX or the modification thereby of the
        trusts
        created by this Indenture, the Indenture Trustee and the Securities
        Administrator shall be entitled to receive, and subject to Sections 6.01
        and
        6.02 hereof, shall be fully protected in relying upon, an Opinion of Counsel
        not
        at the expense of the Indenture Trustee or the Securities Administrator stating
        that the execution of such supplemental indenture is authorized or permitted
        by
        this Indenture. The Indenture Trustee and the Securities Administrator each
        may,
        but shall not be obligated to, enter into any such supplemental indenture
        that
        affects the Indenture Trustee’s or the Securities Administrator’s own rights,
        duties, liabilities or immunities under this Indenture or
        otherwise.

       

      Section
        9.04  Effect
        of Supplemental Indenture.
        Upon
        the execution of any supplemental indenture pursuant to the provisions hereof,
        this Indenture shall be and shall be deemed to be modified and amended in
        accordance therewith with respect to the Notes affected thereby, and the
        respective rights, limitations of rights, obligations, duties, liabilities
        and
        immunities under this Indenture of the Indenture Trustee, the Securities
        Administrator, the Issuing Entity and the Holders of the Notes shall thereafter
        be determined, exercised and enforced hereunder subject in all respects to
        such
        modifications and amendments, and all the terms and conditions of any such
        supplemental indenture shall be and be deemed to be part of the terms and
        conditions of this Indenture for any and all purposes.

       

      Section
        9.05  Conformity
        with Trust Indenture Act.
        Every
        amendment of this Indenture and every supplemental indenture executed pursuant
        to this Article IX shall conform to the requirements of the Trust Indenture
        Act
        as then in effect so long as this Indenture shall then be qualified under
        the
        Trust Indenture Act.

       

      Section
        9.06  Reference
        in Notes to Supplemental Indentures.
        Notes
        authenticated and delivered after the execution of any supplemental indenture
        pursuant to this Article IX may, and if required by the Securities Administrator
        shall, bear a notation in form approved by the Securities Administrator as
        to
        any matter provided for in such supplemental indenture. If the Issuing Entity
        or
        the Securities Administrator shall so determine, new Notes so modified as
        to
        conform, in the opinion of the Securities Administrator and the Issuing Entity,
        to any such supplemental indenture may be prepared and executed by the Issuing
        Entity and authenticated and delivered by the Securities Administrator in
        exchange for Outstanding Notes.

       

      ARTICLE
        X

      TAX
        MATTERS

       

      Section
        10.01  Description
        of REMICs and Designation of REMIC Interests. 

       

      REMIC
        I

       

      As
        provided herein, the Securities Administrator will elect to treat the segregated
        pool of assets consisting of the Group I HELOCs and certain other related
        assets
        subject to this Indenture and the Basic Documents (other than the Group I
        Net
        WAC Cap Rate Carryover Reserve Account and the Group I Interest Coverage
        Account) as a REMIC for federal income tax purposes, and such segregated
        pool of
        assets will be designated as “REMIC I”. The Class I-S Certificates will be the
        sole class of Residual Interests in REMIC I for purposes of the REMIC
        Provisions. The following table irrevocably sets forth the designation, the
        Uncertificated REMIC I Pass-Through Rate, the initial Uncertificated Principal
        Balance and, for purposes of satisfying Treasury Regulation Section
        1.860G-1(a)(4)(iii), the “latest possible maturity date” for each of the REMIC I
        Regular Interests. None of the REMIC I Regular Interests will be
        certificated.

      

      
        	
                Designation

              	
                Uncertificated
                  REMIC I

                Pass-Through
                  Rate

              	
                Initial
                  Uncertificated Principal Balance

              	
                Latest
                  Possible Maturity Date (1)

              
	
                Non-IO

              	
                Variable(2)

              	
                $

              	
                100,017,727.68

              	
                September
                  25, 2036

              
	
                1-IO

              	
                Variable(2)

              	
                $

              	
                8,775,000.00

              	
                September
                  25, 2036

              
	
                2-IO

              	
                Variable(2)

              	
                $

              	
                7,000,000.00

              	
                September
                  25, 2036

              
	
                3-IO

              	
                Variable(2)

              	
                $

              	
                8,000,000.00

              	
                September
                  25, 2036

              
	
                4-IO

              	
                Variable(2)

              	
                $

              	
                10,000,000.00

              	
                September
                  25, 2036

              
	
                5-IO

              	
                Variable(2)

              	
                $

              	
                12,000,000.00

              	
                September
                  25, 2036

              
	
                6-IO

              	
                Variable(2)

              	
                $

              	
                18,725,000.00

              	
                September
                  25, 2036

              
	
                7-IO

              	
                Variable(2)

              	
                $

              	
                6,125,000.00

              	
                September
                  25, 2036

              
	
                8-IO

              	
                Variable(2)

              	
                $

              	
                6,150,000.00

              	
                September
                  25, 2036

              

      

      ___________________________

      
        	
                (1)

              	
                For
                  purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations,
                  the
                  Payment Date in the month following the maturity date for the Group
                  I
                  HELOC with the latest maturity date has
                  been designated as the “latest possible maturity date” for each REMIC I
                  Regular Interest.

              

      

      

      
        	
                (2)

              	
                Calculated
                  in accordance with the definition of “Uncertificated REMIC I Pass-Through
                  Rate” herein.

              

      

      

       

      REMIC
        II

       

      As
        provided herein, the Securities Administrator will elect to treat the segregated
        pool of assets consisting of the Group II HELOCs and certain other related
        assets subject to this Indenture and the Basic Documents (other than the
        Group
        II Net WAC Cap Rate Carryover Reserve Account and the Group II Interest Coverage
        Account) as a REMIC for federal income tax purposes, and such segregated
        pool of
        assets will be designated as “REMIC II”. The Class II-S Certificates will be the
        sole class of Residual Interests in REMIC II for purposes of the REMIC
        Provisions. The following table irrevocably sets forth the designation, the
        Uncertificated REMIC II Pass-Through Rate, the initial Uncertificated Principal
        Balance and, for purposes of satisfying Treasury Regulation Section
        1.860G-1(a)(4)(iii), the “latest possible maturity date” for each of the REMIC
        II Regular Interests. None of the REMIC II Regular Interests will be
        certificated.

      

      
        	
                Designation

              	
                Uncertificated
                  REMIC II

                Pass-Through
                  Rate

              	
                Initial
                  Uncertificated Principal Balance

              	
                Latest
                  Possible Maturity Date (1)

              
	
                Non-IO

              	
                Variable(2)

              	
                $

              	
                244,799,771.48

              	
                March
                  25, 2032

              
	
                1-IO

              	
                Variable(2)

              	
                $

              	
                37,582,000.00

              	
                March
                  25, 2032

              
	
                2-IO

              	
                Variable(2)

              	
                $

              	
                45,099,000.00

              	
                March
                  25, 2032

              
	
                3-IO

              	
                Variable(2)

              	
                $

              	
                30,065,000.00

              	
                March
                  25, 2032

              
	
                4-IO

              	
                Variable(2)

              	
                $

              	
                45,099,000.00

              	
                March
                  25, 2032

              
	
                5-IO

              	
                Variable(2)

              	
                $

              	
                15,033,000.00

              	
                March
                  25, 2032

              
	
                6-IO

              	
                Variable(2)

              	
                $

              	
                15,033,000.00

              	
                March
                  25, 2032

              

      

      ___________________________

      
        
          
            	(1)	
                    For
                      purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations,
                      the
                      Payment Date in the sixth month following the maturity date
                      for the Group
                      II HELOC with the latest maturity date has been designated
                      as the “latest
                      possible maturity date” for each REMIC II Regular
                      Interest.

                  

          

        

      

      

      
        	(2)	
                Calculated
                  in accordance with the definition of “Uncertificated REMIC II Pass-Through
                  Rate” herein.

              

      

      

       

      REMIC
        III

       

      As
        provided herein, the Securities Administrator will elect to treat the segregated
        pool of assets consisting of the REMIC I Regular Interests and REMIC II Regular
        Interests as a REMIC for federal income tax purposes, and such segregated
        pool
        of assets will be designated as “REMIC III”. The Class I-R-1 Certificates will
        be the sole class of Residual Interests in REMIC III for purposes of the
        REMIC
        Provisions. The following table irrevocably sets forth the designation, the
        Uncertificated REMIC III Pass-Through Rate, the initial Uncertificated Principal
        Balance and, for purposes of satisfying Treasury Regulation Section
        1.860G-1(a)(4)(iii), the “latest possible maturity date” for each of the REMIC
        III Regular Interests. None of the REMIC III Regular Interests will be
        certificated.

      

      
        	
                Designation

              	
                Uncertificated
                  REMIC III

                Pass-Through
                  Rate

              	
                Initial
                  Uncertificated Principal Balance

              	
                Latest
                  Possible Maturity Date (1)

              
	
                I-AA

              	
                Variable(2)

              	
                $

              	
                173,256,873.13

              	
                September
                  25, 2036

              
	
                I-A

              	
                Variable(2)

              	
                $

              	
                1,412,570.00

              	
                September
                  25, 2036

              
	
                I-M-1

              	
                Variable(2)

              	
                $

              	
                134,360.00

              	
                September
                  25, 2036

              
	
                I-M-2

              	
                Variable(2)

              	
                $

              	
                106,070.00

              	
                September
                  25, 2036

              
	
                I-M-3

              	
                Variable(2)

              	
                $

              	
                86,630.00

              	
                September
                  25, 2036

              
	
                I-M-4

              	
                Variable(2)

              	
                $

              	
                28,290.00

              	
                September
                  25, 2036

              
	
                I-ZZ

              	
                Variable(2)

              	
                $

              	
                1,767,934.55

              	
                September
                  25, 2036

              
	
                I-A-IO

              	
                (2)

              	
                $

              	
                (3)

              	
                September
                  25, 2036

              
	
                II-AA

              	
                Variable(2)

              	
                $

              	
                424,056,556.05

              	
                March
                  25, 2032

              
	
                II-A

              	
                Variable(2)

              	
                $

              	
                4,244,890.00

              	
                March
                  25, 2032

              
	
                II-ZZ

              	
                Variable(2)

              	
                $

              	
                4,409,325.43

              	
                March
                  25, 2032

              
	
                II-A-IO

              	
                (2)

              	
                $

              	
                (3)

              	
                March
                  25, 2032

              

      

      ___________________________

      
        	
                (1)

              	
                For
                  purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations,
                  the
                  Payment Date in the month following the maturity date for the Group
                  I
                  HELOC with the latest maturity date has been designated as the
“latest
                  possible maturity date” for each REMIC III Group I Regular Interest, and
                  the Payment Date in the sixth month following the maturity date
                  for the
                  Group II HELOC with the latest maturity date has been designated
                  as the
                  “latest possible maturity date” for each REMIC III Group II Regular
                  Interest

              

      

      

      
        	
                (2)

              	
                Calculated
                  in accordance with the definition of “Uncertificated REMIC III
                  Pass-Through Rate” herein.

              

      

      

      
        	
                (3)

              	
                REMIC
                  III Regular Interests I-A-IO and II-A-IO will not have Uncertificated
                  Principal Balances but will accrue interest on their uncertificated
                  notional amounts calculated in accordance with the related definition
                  of
                  “Uncertificated Notional Amount”
herein.

              

      

      

       

      REMIC
        IV

       

      As
        provided herein, the Securities Administrator will elect to treat the segregated
        pool of assets consisting of the REMIC III Regular Interests as a REMIC for
        federal income tax purposes, and such segregated pool of assets will be
        designated as “REMIC IV”. The Class I-R-2 Certificates will represent the sole
        class of Residual Interests in REMIC IV for purposes of the REMIC
        Provisions.

       

      The
        following table irrevocably sets forth the class designation, interest rate,
        initial principal balance and, for purposes of satisfying Treasury Regulation
        Section 1.860G-1(a)(4)(iii), the “latest possible maturity date” for each Class
        of Notes, the Class I-E Interest and the Class II-E Interest that represent
        ownership of one or more of the Regular Interests in REMIC IV created hereunder.
        

       

      

      
        	
                Class
                  Designation

              	
                Interest
                  Rate

              	
                 Initial
                  Principal Balance

              	
                Latest
                  Possible Maturity Date(1)

              
	
                I-A

              	
                Variable(2)

              	
                $

              	
                141,257,000.00

              	
                September
                  25, 2036

              
	
                I-A-IO

              	
                (2)

              	
                $

              	
                (3)

              	
                September
                  25, 2036

              
	
                I-M-1

              	
                Variable(2)

              	
                $

              	
                13,436,000.00

              	
                September
                  25, 2036

              
	
                I-M-2

              	
                Variable(2)

              	
                $

              	
                10,607,000.00

              	
                September
                  25, 2036

              
	
                I-M-3

              	
                Variable(2)

              	
                $

              	
                8,663,000.00

              	
                September
                  25, 2036

              
	
                I-M-4

              	
                Variable(2)

              	
                $

              	
                2,829,000.00

              	
                September
                  25, 2036

              
	
                Class
                  I-E Interest

              	
                Variable(4)

              	
                $

              	
                727.68

              	
                September
                  25, 2036

              
	
                II-A

              	
                Variable(2)

              	
                $

              	
                424,489,000.00

              	
                March
                  25, 2032

              
	
                II-A-IO

              	
                (2)

              	
                $

              	
                (3)

              	
                March
                  25, 2032

              
	
                Class
                  II-E Interest

              	
                Variable(4)

              	
                $

              	
                8,221,771.48

              	
                March
                  25, 2032

              

      

      ___________________

      
        	
                (1)

              	
                For
                  purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations,
                  the
                  Payment Date in the month following the maturity date for the Group
                  I
                  HELOC with the latest maturity date has been designated as the
“latest
                  possible maturity date” for each Group I Note and Class I-E Interest
                  described above, and the Payment Date in the sixth month following
                  the
                  maturity date for the Group II HELOC with the latest maturity date
                  has
                  been designated as the “latest possible maturity date” for each Group II
                  Note and Class II-E Interest described
                  above.

              

      

      

      
        	
                (2)

              	
                Calculated
                  in accordance with the definition of “Note Interest Rate” herein.
                  

              

      

      

      
        	
                (3)

              	
                The
                  Class I-A-IO Notes and Class II-A-IO Notes are interest only notes,
                  are
                  not entitled to payments of principal and do not have an original
                  note
                  principal balance. The Class I-A-IO Notes and Class II-A-IO Notes
                  will
                  accrue interest on their notional amounts.

              

      

      

      
        	
                (4)

              	
                The
                  Class I-E Interest and the Class II-E Interest will accrue interest
                  at
                  their variable interest rates calculated in accordance with the
                  definitions of “Class I-E Interest Rate” and “Class II-E Interest Rate”,
                  as applicable, on the Class I-E Notional Amount of the Class I-E
                  Interest
                  and the Class II-E Notional Amount of the Class II-E Interest,
                  as
                  applicable, outstanding from time to time, each of which shall
                  equal the
                  aggregate Uncertificated Principal Balances of the REMIC III Group
                  I
                  Regular Interests and the REMIC III Group II Regular Interests,
                  respectively. The Class I-E Interest and the Class II-E Interest
                  will not
                  accrue interest on their Uncertificated Principal
                  Balances.

              

      

      

      REMIC
        V

       

      As
        provided herein, the Securities Administrator will elect to treat the segregated
        pool of assets consisting of the Class I-E Interest as a REMIC for federal
        income tax purposes, and such segregated pool of assets will be designated
        as
“REMIC V”. The Class I-RX Certificates will represent the sole class of Residual
        Interests in REMIC V for purposes of the REMIC Provisions.

       

      The
        following table irrevocably sets forth the Class designation, interest rate,
        initial principal balance and, for purposes of satisfying Treasury Regulation
        Section 1.860G-1(a)(4)(iii), the “latest possible maturity date” for the Class
        of Certificates that represents ownership of one or more of the Regular
        Interests in REMIC V created hereunder:

       

      
        	
                Class
                  Designation

              	
                Interest
                  Rate

              	
                Initial
                  Principal Balance

              	
                Latest
                  Possible

                Maturity
                  Date(1)

              
	
                I-E

              	
                (2)

              	
                $
                  727.68

              	
                September
                  25, 2036

              

      

      _______________

      
        	
                (1)

              	
                For
                  purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations,
                  the
                  Payment Date in the month following the maturity date for the Group
                  I
                  HELOC with the latest maturity date has been designated as the
“latest
                  possible maturity date” for the Class I-E Certificates described
                  above.

              

      

      

      
        	
                (2)

              	
                The
                  Class I-E Certificates will receive 100% of the amounts received
                  in
                  respect of the Class I-E Interest.

              

      

      

      REMIC
        VI

       

      As
        provided herein, the Securities Administrator will elect to treat the segregated
        pool of assets consisting of the Class II-E Interest as a REMIC for federal
        income tax purposes, and such segregated pool of assets will be designated
        as
“REMIC VI”. The Class II-RX Certificates will represent the sole class of
        Residual Interests in REMIC VI for purposes of the REMIC
        Provisions.

       

      The
        following table irrevocably sets forth the Class designation, interest rate,
        initial principal balance and, for purposes of satisfying Treasury Regulation
        Section 1.860G-1(a)(4)(iii), the “latest possible maturity date” for the Class
        of Certificates that represents ownership of one or more of the Regular
        Interests in REMIC VI created hereunder:

       

      
        	
                Class
                  Designation

              	
                Interest
                  Rate

              	
                Initial
                  Principal Balance

              	
                Latest
                  Possible

                Maturity
                  Date(1)

              
	
                II-E

              	
                (2)

              	
                $
                  8,221,771.48

              	
                March
                  25, 2032

              

      

      _______________

      
        	
                (1)

              	
                For
                  purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations,
                  the
                  Payment Date in the sixth month following the maturity date for
                  the Group
                  II HELOC with the latest maturity date has been designated as the
“latest
                  possible maturity date” for the Class II-E Certificates described
                  above.

              

      

      

      
        	
                (2)

              	
                The
                  Class II-E Certificates will receive 100% of the amounts received
                  in
                  respect of the Class II-E Interest.

              

      

      

      

      Section
        10.02  REMIC
        Elections and REMIC Distributions. 

       

      (a)  The
        Securities Administrator shall elect that each of REMIC I, REMIC II, REMIC
        III,
        REMIC IV, REMIC V and REMIC VI shall be treated as a REMIC under Section
        860D of
        the Code. Any inconsistencies or ambiguities in this Indenture or any of
        the
        Basic Documents or in the administration of this Indenture or the Basic
        Documents shall be resolved in a manner that preserves the validity of such
        REMIC elections. 

       

      (b)  On
        each
        Payment Date, the following amounts, in the following order of priority,
        shall
        be distributed by REMIC I to REMIC III on account of the REMIC I Regular
        Interests or withdrawn from the Payment Account and distributed to the Holders
        of the Class I-S Certificates, as the case may be:

       

      (i) from
        the
        Group I Floating Allocation Percentage of the Group I Interest Collection
        Amount, to REMIC I Regular Interest Non-IO and REMIC I Regular Interest 1-IO
        through REMIC I Regular Interest 8-IO, pro
        rata,
        in an
        amount equal to (A) the Uncertificated Accrued Interest for such REMIC I
        Regular
        Interest for such Payment Date, plus (B) any amounts payable in respect thereof
        remaining unpaid from previous Payment Dates;

       

      (ii) from
        the
        Group I Available Principal Payment Amount, first, to REMIC I Regular Interest
        Non-IO, until the Uncertificated Principal Balance of such REMIC I Regular
        Interest is reduced to zero, and second, to REMIC I Regular Interest 1-IO
        through REMIC I Regular Interest 8-IO, starting with the lowest numerical
        denomination, until the Uncertificated Principal Balances of each such REMIC
        I
        Regular Interest is reduced to zero; and

       

      (iii) any
        remaining amount to the Holders of the Class I-S Certificates.

       

      (c)  On
        each
        Payment Date, the following amounts, in the following order of priority,
        shall
        be distributed by REMIC II to REMIC III on account of the REMIC II Regular
        Interests or withdrawn from the Payment Account and distributed to the Holders
        of the Class II-S Certificates, as the case may be:

       

      (i) from
        the
        Group II Floating Allocation Percentage of the Group II Interest Collection
        Amount, to REMIC II Regular Interest Non-IO and REMIC II Regular Interest
        1-IO
        through REMIC II Regular Interest 6-IO, pro
        rata,
        in an
        amount equal to (A) the Uncertificated Accrued Interest for such REMIC II
        Regular Interest for such Payment Date, plus (B) any amounts payable in respect
        thereof remaining unpaid from previous Payment Dates;

       

      (ii) from
        the
        Group II Available Principal Payment Amount, first, to REMIC II Regular Interest
        Non-IO, until the Uncertificated Principal Balance of such REMIC II Regular
        Interest is reduced to zero, and second, to REMIC II Regular Interest 1-IO
        through REMIC II Regular Interest 6-IO, starting with the lowest numerical
        denomination, until the Uncertificated Principal Balances of each such REMIC
        II
        Regular Interest is reduced to zero; and

       

      (iii) any
        remaining amount to the Holders of the Class II-S Certificates.

       

      (d)  (1)On
        each
        Payment Date, the following amounts, in the following order of priority,
        shall
        be distributed by REMIC III to REMIC IV on account of the REMIC III Group
        I
        Regular Interests or withdrawn from the Payment Account and distributed to
        the
        Holders of the Class I-R-1 Certificates, as the case may be:

       

      (i) from
        the
        Group I Floating Allocation Percentage of the Group I Interest Collection
        Amount, to REMIC III Regular Interest I-A-IO, in an amount equal to (A) the
        Uncertificated Accrued Interest for such REMIC III Regular Interest for such
        Payment Date, plus (B) any amounts in respect thereof remaining unpaid from
        previous Payment
        Dates;

       

      (ii) to
        the
        extent of the Group I Floating Allocation Percentage of the Group I Interest
        Collection Amount remaining after the distribution pursuant to clause (i),
        to
        each REMIC III Group I Regular Interest (other than REMIC III Regular Interest
        I-A-IO), pro
        rata,
        in an
        amount equal to (A) the Uncertificated Accrued Interest for such REMIC III
        Group
        I Regular Interest for such Payment Date, plus (B) any amounts in respect
        thereof remaining unpaid from previous Payment Dates. Amounts payable as
        Uncertificated Accrued Interest in respect of REMIC III Regular Interest
        I-ZZ
        shall be reduced when the REMIC III Group I Overcollateralization Amount
        is less
        than the REMIC III Group I Required Overcollateralization Amount, by the
        lesser
        of (x) the amount of such difference and (y) the Group I Maximum Uncertificated
        Accrued Interest Deferral Amount, and such amount will be payable to the
        holders
        of each REMIC III Group I Regular Interest (other than REMIC III Regular
        Interest I-A-IO) for which a Note is the Corresponding Note in the same
        proportion as the Group I Overcollateralization Increase Amount is allocated
        to
        the Corresponding Notes for each such REMIC III Group I Regular Interest,
        and
        the Uncertificated Principal Balance of REMIC III Regular Interest I-ZZ shall
        be
        increased by such amount; and

       

      (iii) to
        the
        holders of REMIC III Group I Regular Interests (other than REMIC III Regular
        Interest I-A-IO), the Group I Available Principal Payment Amount, allocated
        as
        follows:

       

      (A)  98%
        of
        such amount to REMIC III Regular Interest I-AA, until the Uncertificated
        Principal Balance of such REMIC III Regular Interest is reduced to
        zero;

       

      (B)  2%
        of
        such remainder, first, to each REMIC III Group I Regular Interest (other
        than
        REMIC III Regular Interest I-A-IO) for which a Note is the Corresponding
        Note in
        an aggregate amount equal to 1% of and in the same proportion as principal
        payments are allocated to the Corresponding Notes for each such REMIC III
        Group
        I Regular Interest, until the Uncertificated Principal Balances of such REMIC
        III Regular Interests are reduced to zero; and second, to REMIC III Regular
        Interest I-ZZ, until the Uncertificated Principal Balance of such REMIC III
        Regular Interest is reduced to zero; and

       

      (C)  any
        remaining amount to the Holders of the Class I-R-1 Certificates. 

       

      (2) On
        each
        Payment Date, the following amounts, in the following order of priority,
        shall
        be distributed by REMIC III to REMIC IV on account of the REMIC III Group
        II
        Regular Interests or withdrawn from the Payment Account and distributed to
        the
        Holders of the Class I-R-1 Certificates, as the case may be:

       

      (i) from
        the
        Group II Floating Allocation Percentage of the Group II Interest Collection
        Amount, to REMIC III Regular Interest II-A-IO, in an amount equal to (A)
        the
        Uncertificated Accrued Interest for such REMIC III Regular Interest for such
        Payment Date, plus (B) any amounts in respect thereof remaining unpaid from
        previous Payment Dates;

       

      (ii) to
        the
        extent of the Group II Floating Allocation Percentage of the Group II Interest
        Collection Amount remaining after the distribution pursuant to clause (i),
        to
        each REMIC III Group II Regular Interest (other than REMIC III Regular Interest
        II-A-IO), pro
        rata,
        in an
        amount equal to (A) the Uncertificated Accrued Interest for such REMIC III
        Group
        II Regular Interest for such Payment Date, plus (B) any amounts in respect
        thereof remaining unpaid from previous Payment Dates. Amounts payable as
        Uncertificated Accrued Interest in respect of REMIC III Regular Interest
        II-ZZ
        shall be reduced when the REMIC III Group II Overcollateralization Amount
        is
        less than the REMIC III Group II Required Overcollateralization Amount, by
        the
        lesser of (x) the amount of such difference and (y) the Group II Maximum
        Uncertificated Accrued Interest Deferral Amount, and such amount will be
        payable
        to the holders of REMIC III Regular Interest II-A in the same proportion
        as the
        Group II Overcollateralization Increase Amount is allocated to the Corresponding
        Notes for such REMIC III Regular Interest, and the Uncertificated Principal
        Balance of REMIC III Regular Interest II-ZZ shall be increased by such amount;
        and

       

      (iii) to
        the
        holders of REMIC III Group II Regular Interests (other than REMIC III Regular
        Interest II-A-IO), the Group II Available Principal Payment Amount, allocated
        as
        follows:

       

      (A) 98%
        of
        such amount to REMIC III Regular Interest II-AA, until the Uncertificated
        Principal Balance of such REMIC III Regular Interest is reduced to
        zero;

       

      (B) 2%
        of
        such remainder, first, to each REMIC III Regular Interest II-A in an aggregate
        amount equal to 1% of and in the same proportion as principal payments are
        allocated to the Corresponding Notes for such REMIC III Regular Interest,
        until
        the Uncertificated Principal Balance of such REMIC III Regular Interest is
        reduced to zero; and second, to REMIC III Regular Interest II-ZZ, until the
        Uncertificated Principal Balance of such REMIC III Regular Interest is reduced
        to zero; and

       

      (C) any
        remaining amount to the Holders of the Class I-R-1 Certificates. 

       

      (e)  On
        each
        Payment Date, an amount equal to the amounts distributed pursuant to Sections
        3.02(a)(iii), (vi) and (vii) and Sections 3.02(c)(1)(iv) and (2)(vii), on
        such
        date shall be deemed distributed from REMIC IV to REMIC V in respect of the
        Class I-E Distribution Amount distributable to the Class I-E
        Interest.

       

      (f)  On
        each
        Payment Date, an amount equal to the amounts distributed pursuant to Sections
        3.02(d)(iv), (vi) and (vii) and Sections 3.02(f)(1)(v) and (2)(v), on such
        date
        shall be deemed distributed from REMIC IV to REMIC VI in respect of the Class
        II-E Distribution Amount distributable to the Class II-E Interest.

       

      Section
        10.03  Allocation
        of Charge-Off Amounts. 

       

      The
        Group
        I
        Floating Allocation Percentage of Group
        I
        Charge-Off Amounts on the Group I HELOCs shall be allocated on each Payment
        Date, first, to REMIC I Regular Interest Non-IO, until the Uncertificated
        Principal Balance of such REMIC I Regular Interest has been reduced to zero,
        and
        second, to REMIC I Regular Interests 1-IO through REMIC I Regular Interest
        8-IO,
        starting with the lowest numerical denomination, until the Uncertificated
        Principal Balance of each such REMIC I Regular Interest has been reduced
        to
        zero.

       

      The
        Group
        II Floating Allocation Percentage of Group II Charge-Off Amounts on the Group
        II
        HELOCs shall be allocated on each Payment Date, first, to REMIC II Regular
        Interest Non-IO, until the Uncertificated Principal Balance of such REMIC
        II
        Regular Interest has been reduced to zero, and second, to REMIC II Regular
        Interests 1-IO through REMIC II Regular Interest 6-IO, starting with the
        lowest
        numerical denomination, until the Uncertificated Principal Balance of each
        such
        REMIC II Regular Interest has been reduced to zero.

       

      The
        Group
        I Floating Allocation Percentage of Group I Charge-Off Amounts on the Group
        I
        HELOCs shall be allocated on each Payment Date to the following REMIC III
        Group
        I Regular Interests in the following specified percentages: first, to
        Uncertificated Accrued Interest payable to the REMIC III Regular Interest
        I-AA
        and REMIC III Regular Interest I-ZZ up to an aggregate amount equal to the
        REMIC
        III Group I Interest Loss Allocation Amount, 98.00% and 2.00%, respectively;
        and
        second, to the Uncertificated Principal Balances of REMIC III Regular Interest
        I-AA and REMIC III Regular Interest I-ZZ up to an aggregate amount equal
        to the
        REMIC III Group I Principal Loss Allocation Amount, 98.00% and 2.00%,
        respectively. Any subsequent allocation of the Group I Floating Allocation
        Percentage of Group I Charge-Off Amounts to the Group I Notes pursuant to
        Section 3.19 shall be allocated on each Payment Date to the following REMIC
        III
        Group I Regular Interests in the following specified percentages: first,
        to the
        Uncertificated Principal Balances of REMIC III Regular Interest I-AA, REMIC
        III
        Regular Interest I-M-4 and REMIC III Regular Interest I-ZZ, 98.00%, 1.00%
        and
        1.00%, respectively, until the Uncertificated Principal Balance of REMIC
        III
        Regular Interest I-M-4 has been reduced to zero; second, to the Uncertificated
        Principal Balances of REMIC III Regular Interest I-AA, REMIC III Regular
        Interest I-M-3 and REMIC III Regular Interest I-ZZ, 98.00%, 1.00% and 1.00%,
        respectively, until the Uncertificated Principal Balance of REMIC III Regular
        Interest I-M-3 has been reduced to zero; third, to the Uncertificated Principal
        Balances of REMIC III Regular Interest I-AA, REMIC III Regular Interest I-M-2
        and REMIC III Regular Interest I-ZZ, 98.00%, 1.00% and 1.00%, respectively,
        until the Uncertificated Principal Balance of REMIC III Regular Interest
        I-M-2
        has been reduced to zero; fourth, to the Uncertificated Principal Balances
        of
        REMIC III Regular Interest I-AA, REMIC III Regular Interest I-M-1 and REMIC
        III
        Regular Interest I-ZZ, 98.00%, 1.00% and 1.00%, respectively, until the
        Uncertificated Principal Balance of REMIC III Regular Interest I-M-1 has
        been
        reduced to zero; and fifth, to the Uncertificated Principal Balances of REMIC
        III Regular Interest I-AA, REMIC III Regular Interest I-A and REMIC III Regular
        Interest I-ZZ, 98.00%, 1.00% and 1.00%, respectively, until the Uncertificated
        Principal Balance of REMIC III Regular Interest I-A has been reduced to
        zero.

       

      The
        Group
        II Floating Allocation Percentage of Group II Charge-Off Amounts on the Group
        II
        HELOCs shall be allocated on each Payment Date to the following REMIC III
        Group
        II Regular Interests in the following specified percentages: first, to
        Uncertificated Accrued Interest payable to the REMIC III Regular Interest
        II-AA
        and REMIC III Regular Interest II-ZZ up to an aggregate amount equal to the
        REMIC III Group II Interest Loss Allocation Amount, 98.00% and 2.00%,
        respectively; and second, to the Uncertificated Principal Balances of REMIC
        III
        Regular Interest II-AA and REMIC III Regular Interest II-ZZ up to an aggregate
        amount equal to the REMIC III Group II Principal Loss Allocation Amount,
        98.00%
        and 2.00%, respectively. Any subsequent allocation of the Group II Floating
        Allocation Percentage of Group II Charge-Off Amounts to the Class II-A Notes
        pursuant to Section 3.19 shall be allocated on each Payment Date to the
        Uncertificated Principal Balances of REMIC III Regular Interest II-AA, REMIC
        III
        Regular Interest II-A and REMIC III Regular Interest II-ZZ, 98.00%, 1.00%
        and
        1.00%, respectively, until the Uncertificated Principal Balance of REMIC
        III
        Regular Interest II-A has been reduced to zero. 

       

      Section
        10.04  Tax
        Administration. 

       

      It
        is
        intended that the Trust Estate shall constitute, and that the affairs of
        the
        Trust Estate shall be conducted so that each REMIC formed hereunder qualifies
        as, a “real estate mortgage investment conduit” as defined in and in accordance
        with the REMIC Provisions. In furtherance of such intention, the Securities
        Administrator covenants and agrees that it shall act as agent (and the
        Securities Administrator is hereby appointed to act as agent) on behalf of
        the
        Trust Estate. The Securities Administrator, as agent on behalf of the Trust
        Estate, shall do or refrain from doing, as applicable, the following: (a)
        the
        Securities Administrator shall prepare and file, or cause to be prepared
        and
        filed, in a timely manner, U.S. Real Estate Mortgage Investment Conduit Income
        Tax Returns (Form 1066 or any successor form adopted by the Internal Revenue
        Service) and prepare and file or cause to be prepared and filed with the
        Internal Revenue Service and applicable state or local tax authorities income
        tax or information returns for each taxable year with respect to each such
        REMIC
        containing such information and at the times and in the manner as may be
        required by the Code or state or local tax laws, regulations, or rules, and
        furnish or cause to be furnished to Noteholders and Certificateholders the
        schedules, statements or information at such times and in such manner as
        may be
        required thereby; (b) the Securities Administrator shall apply for an employer
        identification number with the Internal Revenue Service via a Form SS-4 or
        other
        comparable method for each REMIC that is or becomes a taxable entity, and
        within
        thirty days of the Closing Date, furnish or cause to be furnished to the
        Internal Revenue Service, on Forms 8811 or as otherwise may be required by
        the
        Code, the name, title, address, and telephone number of the Person that the
        Holders of the Notes and Certificates may contact for tax information relating
        thereto, together with such additional information as may be required by
        such
        Form, and update such information at the time or times in the manner required
        by
        the Code for the Trust Estate; (c) the Securities Administrator shall make
        or
        cause to be made elections, on behalf of each REMIC formed hereunder to be
        treated as a REMIC on the federal tax return of such REMIC for its first
        taxable
        year (and, if necessary, under applicable state law); (d) the Securities
        Administrator shall prepare and forward, or cause to be prepared and forwarded,
        to the Noteholders and Certificateholders and to the Internal Revenue Service
        and, if necessary, state tax authorities, all information returns and reports
        as
        and when required to be provided to them in accordance with the REMIC
        Provisions, including without limitation, the calculation of any original
        issue
        discount using the Prepayment Assumption; (e) the Securities Administrator
        shall
        provide information necessary for the computation of tax imposed on the Transfer
        of a Residual Certificate to a Person that is not a Permitted Transferee,
        or an
        agent (including a broker, nominee or other middleman) of a Person that is
        not a
        Permitted Transferee, or a pass-through entity in which a Person that is
        not a
        Permitted Transferee is the record holder of an interest (the reasonable
        cost of
        computing and furnishing such information may be charged to the Person liable
        for such tax); (f) the Indenture Trustee and Securities Administrator shall,
        to
        the extent under their control, conduct the affairs of the Trust Estate at
        all
        times that any Notes or Certificates are outstanding so as to maintain the
        status of each REMIC formed hereunder as a REMIC under the REMIC Provisions;
        (g)
        the Indenture Trustee and Securities Administrator shall not knowingly or
        intentionally take any action or omit to take any action that would (i) cause
        the termination of the REMIC status of any REMIC formed hereunder or
        (ii) result in the imposition of a tax upon any of REMIC formed hereunder
        (including but not limited to the tax on prohibited transactions as defined
        in
        Section 860F(a)(2) of the Code and the tax on contributions to a REMIC set
        forth
        in Section 860G(d) of the Code);
        (h) the
        Securities Administrator shall pay, from the sources specified in this Section
        10.04, the amount of any federal, state and local taxes, including prohibited
        transaction taxes as described below, imposed on any REMIC formed hereunder
        prior to the termination of the Trust Estate when and as the same shall be
        due
        and payable (but such obligation shall not prevent the Securities Administrator
        or any other appropriate Person from contesting any such tax in appropriate
        proceedings and shall not prevent the Securities Administrator from withholding
        payment of such tax, if permitted by law, pending the outcome of such
        proceedings); (i) the
        Indenture Trustee shall sign or cause to be signed federal, state or local
        income tax or information returns or any other document prepared by the
        Securities Administrator pursuant to this Section 10.04 requiring a signature
        thereon by the Indenture Trustee;
        (j) the
        Securities Administrator shall maintain records relating to each REMIC formed
        hereunder including but not limited to the income, expenses, assets and
        liabilities of each such REMIC and adjusted basis of the Trust Estate property
        determined at such intervals as may be required by the Code, as may be necessary
        to prepare the foregoing returns, schedules, statements or information; (k)
        the
        Securities Administrator shall, for federal income tax purposes, maintain
        books
        and records with respect to the REMICs on a calendar year and on an accrual
        basis; (l) the Indenture Trustee and Securities Administrator shall not enter
        into any arrangement not otherwise provided for in this Indenture or the
        Basic
        Documents by which the REMICs will receive a fee or other compensation for
        services nor permit the REMICs to receive any income from assets other than
        “qualified mortgages” as defined in Section 860G(a)(3) of the Code or “permitted
        investments” as defined in Section 860G(a)(5) of the Code; and (m) as and when
        necessary and appropriate, the Securities Administrator, at the expense of
        the
        Trust Estate, shall represent the Trust Estate in any administrative or judicial
        proceedings relating to an examination or audit by any governmental taxing
        authority, request an administrative adjustment as to any taxable year of
        any
        REMIC formed hereunder, enter into settlement agreements with any governmental
        taxing agency, extend any statute of limitations relating to any tax item
        of the
        Trust Estate, and otherwise act on behalf of each REMIC formed hereunder
        in
        relation to any tax matter involving any such REMIC.

       

      In
        order
        to enable the Securities Administrator to perform its duties as set forth
        herein, the Depositor shall provide, or cause to be provided, to the Securities
        Administrator within 10 days after the Closing Date all information or data
        that
        the Securities Administrator requests in writing and determines to be relevant
        for tax purposes to the valuations and offering prices of the Notes and
        Certificates, including, without limitation, the price, yield, prepayment
        assumption and projected cash flows of the Notes and Certificates and the
        HELOCs. Thereafter, the Depositor shall provide to the Securities Administrator
        promptly upon written request therefor, any such additional information or
        data
        that the Securities Administrator may, from time to time, request in order
        to
        enable the Securities Administrator to perform its duties as set forth herein.
        The Depositor hereby indemnifies the Securities Administrator for any losses,
        liabilities, damages, claims or expenses of the Securities Administrator
        arising
        from any errors or miscalculations of the Securities Administrator that result
        from any failure of the Depositor to provide, or to cause to be provided,
        accurate information or data to the Securities Administrator on a timely
        basis.

       

      Neither
        the Indenture Trustee nor the Securities Administrator shall sell, dispose
        of or
        substitute for any of the HELOCs (except in connection with (i) the default,
        imminent default or foreclosure of a HELOC, including but not limited to,
        the
        acquisition or sale of a Mortgaged Property acquired by deed in lieu of
        foreclosure, (ii) the bankruptcy of the Trust Fund, (iii) the termination
        of any
        REMIC pursuant to Section 8.06 of this Agreement or (iv) a purchase of HELOCs
        pursuant to Article II of the Sale and Servicing Agreement and except as
        otherwise expressly permitted by this Indenture or the Basic Documents),
        acquire
        any assets for any REMIC or sell or dispose of any investments in any Account
        for gain, or accept any contributions to any REMIC after the Closing Date,
        unless it has received an Opinion of Counsel that such sale, disposition,
        substitution, acquisition or contribution will not (a) affect adversely the
        status of any of REMIC formed hereunder as a REMIC or (b) cause any REMIC
        to be
        subject to a tax on “prohibited transactions” or “ contributions” pursuant to
        the REMIC Provisions.

       

      In
        the
        event that any tax is imposed on “prohibited transactions” as defined in Section
        860F(a)(2) of the Code of any REMIC created hereunder, on the “net income from
        foreclosure property” of the Trust Estate as defined in Section 860G(c) of the
        Code, on any contribution to any REMIC created hereunder after the Closing
        Date
        pursuant to Section 860G(d) of the Code, or any other tax, including, without
        limitation, any federal, state or local tax or minimum tax, is imposed upon
        any
        REMIC created hereunder, and is not paid as otherwise provided for herein
        and is
        attributable to the activities of REMIC I and the Group I HELOCs, such tax
        shall
        be paid (i) by the Indenture Trustee, the Securities Administrator or Owner
        Trustee, if any such other tax arises out of or results from a breach by
        the
        Indenture Trustee, the Securities Administrator or Owner Trustee of any of
        its
        obligations under this Indenture or the Basic Documents, (ii) by any party
        hereto (other than the Indenture Trustee, the Securities Administrator and
        Owner
        Trustee) to the extent any such other tax arises out of or results from a
        breach
        by such other party of any of its obligations under this Indenture or the
        Basic
        Documents or (iii) in all other cases, or in the event that any liable party
        hereto fails to honor its obligations under the preceding clauses (i) or
        (ii),
        first, with amounts otherwise to be distributed to the Group I Residual
        Certificateholders, and second, with amounts otherwise to be distributed
        to all
        Group I Noteholders in the following order of priority: first,
        to
        the
        Class I-M-4 Notes, second,
        to
        the
        Class I-M-3 Notes,
        third, to
        the
        Class I-M-2 Notes,
        fourth, to
        the
        Class I-M-3 Notes, and
        fifth, to the Class I-A Notes.

       

      In
        the
        event that any tax is imposed on “prohibited transactions” as defined in Section
        860F(a)(2) of the Code of any REMIC created hereunder, on the “net income from
        foreclosure property” of the Trust Estate as defined in Section 860G(c) of the
        Code, on any contribution to any REMIC created hereunder after the Closing
        Date
        pursuant to Section 860G(d) of the Code, or any other tax, including, without
        limitation, any federal, state or local tax or minimum tax, is imposed upon
        any
        REMIC created hereunder, and is not paid as otherwise provided for herein
        and is
        attributable to the activities of REMIC II and the Group II HELOCs, such
        tax
        shall be paid (i) by the Indenture Trustee, the Securities Administrator
        or
        Owner Trustee, if any such other tax arises out of or results from a breach
        by
        the Indenture Trustee, the Securities Administrator or Owner Trustee of any
        of
        its obligations under this Indenture or the Basic Documents, (ii) by any
        party
        hereto (other than the Indenture Trustee, the Securities Administrator and
        Owner
        Trustee) to the extent any such other tax arises out of or results from a
        breach
        by such other party of any of its obligations under this Indenture or the
        Basic
        Documents or (iii) in all other cases, or in the event that any liable party
        hereto fails to honor its obligations under the preceding clauses (i) or
        (ii),
        first, with amounts otherwise to be distributed to the Group II Residual
        Certificateholders and the Class I-R-1 and Class I-R-2 Certificateholders,
        and
        second, with amounts otherwise to be distributed to the Class II-A Noteholders.
        

       

      Notwithstanding
        anything to the contrary contained herein, to the extent that any tax described
        in the preceding two paragraphs is payable by the Holder of any Notes or
        Certificates, the Securities Administrator is hereby authorized to retain
        on any
        Payment Date, from the Holders of the related Residual Certificates and the
        Class I-R-1 and Class I-R-2 Certificateholders (and, if necessary, second,
        from
        the Holders of the related Notes in the priority specified in the two preceding
        paragraphs), funds otherwise distributable to such Holders in an amount
        sufficient to pay such tax. The Securities Administrator shall promptly notify
        in writing the party liable for any such tax of the amount thereof and the
        due
        date for the payment thereof.

       

      The
        Securities Administrator agrees that, in the event it should obtain any
        information necessary for the other party to perform its obligations pursuant
        to
        this Section 10.04, it will promptly notify and provide such information
        to such
        other party.

       

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

       

      Section
        10.05  Tax
        Treatment of Net WAC Cap Rate Carryover Amounts. 

       

      On
        each
        Payment Date as to which there is a related Net WAC Cap Rate Carryover Amount
        payable to any Class of Notes, the Securities Administrator shall deposit
        the
        amounts distributable pursuant to Section 3.02(a)(vi) or Section 3.02(d)(vi),
        as
        applicable, into the Group I Net WAC Cap Rate Carryover Reserve Account or
        Group
        II Net WAC Cap Rate Carryover Reserve Account, as applicable, and the Securities
        Administrator has been directed by the related Class E Certificateholder
        to
        distribute amounts in the Group I Net WAC Cap Rate Carryover Reserve Account
        or
        Group II Net WAC Cap Rate Carryover Reserve Account, as applicable, to the
        Holders of the related Notes in the priorities set forth in Section 3.02(a)
        or
        Section 3.02(d), as applicable. Any amount paid to the Holders of the related
        Notes pursuant to the preceding sentence in respect of related Net WAC Cap
        Rate
        Carryover Amounts shall be treated as distributed to the related Class E
        Certificateholder in respect of the related Class E Certificates and paid
        by the
        related Class E Certificateholder to the Holders of such Notes. Any payments
        to
        the Holders of the related Notes in respect of related Net WAC Cap Rate
        Carryover Amounts pursuant to the second preceding sentence shall not be
        payments with respect to a “regular interest” in a REMIC within the meaning of
        Section 860(G)(a)(1) of the Code.

       

      ARTICLE
        XI

       

      MISCELLANEOUS

       

      Section
        11.01  Compliance
        Certificates and Opinions, etc.
        (a)
        Upon any
        application or request by the Issuing Entity to the Indenture Trustee or
        the
        Securities Administrator to take any action under any provision of this
        Indenture, the Issuing Entity shall furnish to the Indenture Trustee, the
        Securities Administrator and the Note Insurer (i) an Officer’s Certificate
        stating that all conditions precedent, if any, provided for in this Indenture
        relating to the proposed action have been complied with and (ii) an Opinion
        of
        Counsel stating that in the opinion of such counsel all such conditions
        precedent, if any, have been complied with, except that, in the case of any
        such
        application or request as to which the furnishing of such documents is
        specifically required by any provision of this Indenture, no additional
        certificate or opinion need be furnished.

       

      Every
        certificate or opinion with respect to compliance with a condition or covenant
        provided for in this Indenture shall include:

       

      (1)  a
        statement that each signatory of such certificate or opinion has read or
        has
        caused to be read such covenant or condition and the definitions herein relating
        thereto;

       

      (2)  a
        brief
        statement as to the nature and scope of the examination or investigation
        upon
        which the statements or opinions contained in such certificate or opinion
        are
        based;

       

      (3)  a
        statement that, in the opinion of each such signatory, such signatory has
        made
        such examination or investigation as is necessary to enable such signatory
        to
        express an informed opinion as to whether or not such covenant or condition
        has
        been complied with;

       

      (4)  a
        statement as to whether, in the opinion of each such signatory, such condition
        or covenant has been complied with; and

       

      (5)  if
        the
        signatory of such certificate or opinion is required to be Independent, the
        statement required by the definition of the term “Independent”.

       

      (b)  (i)
        Prior
        to the deposit of any Collateral or other property or securities with the
        Indenture Trustee that is to be made the basis for the release of any property
        or securities subject to the lien of this Indenture, the Issuing Entity shall,
        in addition to any obligation imposed in Section 10.01 (a) or elsewhere in
        this
        Indenture, furnish to the Indenture Trustee and the Note Insurer an Officer’s
        Certificate certifying or stating the opinion of each person signing such
        certificate as to the fair value (within 90 days prior to such deposit) to
        the
        Issuing Entity of the Collateral or other property or securities to be so
        deposited and a report from a nationally recognized accounting firm verifying
        such value.

       

      (ii)  Whenever
        the Issuing Entity is required to furnish to the Indenture Trustee, the
        Securities Administrator and the Note Insurer an Officer’s Certificate
        certifying or stating the opinion of any signer thereof as to the matters
        described in clause (i) above, the Issuing Entity shall also deliver to the
        Indenture Trustee an Independent Certificate from a nationally recognized
        accounting firm as to the same matters, if the fair value of the securities
        to
        be so deposited and of all other such securities made the basis of any such
        withdrawal or release since the commencement of the then current fiscal year
        of
        the Issuing Entity, as set forth in the certificates delivered pursuant to
        clause (i) above and this clause (ii), is 10% or more of the Note Principal
        Balances of the Notes, but such a certificate need not be furnished with
        respect
        to any securities so deposited, if the fair value thereof as set forth in
        the
        related Officer’s Certificate is less than $25,000 or less than one percent of
        the then outstanding Note Principal Balances of the Notes.

       

      (iii)  Whenever
        any property or securities are to be released from the lien of this Indenture,
        the Issuing Entity shall also furnish to the Indenture Trustee an Officer’s
        Certificate certifying or stating the opinion of each person signing such
        certificate as to the fair value (within 90 days prior to such release) of
        the
        property or securities proposed to be released and stating that in the opinion
        of such person the proposed release will not impair the security under this
        Indenture in contravention of the provisions hereof.

       

      (iv)  Whenever
        the Issuing Entity is required to furnish to the Indenture Trustee, the
        Securities Administrator and the Note Insurer an Officer’s Certificate
        certifying or stating the opinion of any signer thereof as to the matters
        described in clause (iii) above, the Issuing Entity shall also furnish to
        the
        Indenture Trustee and the Securities Administrator an Independent Certificate
        as
        to the same matters if the fair value of the property or securities and of
        all
        other property or securities released from the lien of this Indenture since
        the
        commencement of the then-current calendar year, as set forth in the certificates
        required by clause (iii) above and this clause (iv), equals 10% or more of
        the
        Note Principal Balances of the Notes, but such certificate need not be furnished
        in the case of any release of property or securities if the fair value thereof
        as set forth in the related Officer’s Certificate is less than $25,000 or less
        than one percent of the then outstanding Note Principal Balances of the
        Notes.

       

      Section
        11.02  Form
        of Documents Delivered to Indenture Trustee.
        In any
        case where several matters are required to be certified by, or covered by
        an
        opinion of, any specified Person, it is not necessary that all such matters
        be
        certified by, or covered by the opinion of, only one such Person, or that
        they
        be so certified or covered by only one document, but one such Person may
        certify
        or give an opinion with respect to some matters and one or more other such
        Persons as to other matters, and any such Person may certify or give an opinion
        as to such matters in one or several documents.

       

      Any
        certificate or opinion of an Authorized Officer of the Issuing Entity may
        be
        based, insofar as it relates to legal matters, upon a certificate or opinion
        of,
        or representations by, counsel, unless such officer knows, or in the exercise
        of
        reasonable care should know, that the certificate or opinion or representations
        with respect to the matters upon which his certificate or opinion is based
        are
        erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel
        may be based, insofar as it relates to factual matters, upon a certificate
        or
        opinion of, or representations by, an officer or officers of the Seller or
        the
        Issuing Entity, stating that the information with respect to such factual
        matters is in the possession of the Seller or the Issuing Entity, unless
        such
        counsel knows, or in the exercise of reasonable care should know, that the
        certificate or opinion or representations with respect to such matters are
        erroneous.

       

      Where
        any
        Person is required to make, give or execute two or more applications, requests,
        consents, certificates, statements, opinions or other instruments under this
        Indenture, they may, but need not, be consolidated and form one
        instrument.

       

      Whenever
        in this Indenture, in connection with any application or certificate or report
        to the Indenture Trustee, it is provided that the Issuing Entity shall deliver
        any document as a condition of the granting of such application, or as evidence
        of the Issuing Entity’s compliance with any term hereof, it is intended that the
        truth and accuracy, at the time of the granting of such application or at
        the
        effective date of such certificate or report (as the case may be), of the
        facts
        and opinions stated in such document shall in such case be conditions precedent
        to the right of the Issuing Entity to have such application granted or to
        the
        sufficiency of such certificate or report. The foregoing shall not, however,
        be
        construed to affect the Indenture Trustee’s right to rely upon the truth and
        accuracy of any statement or opinion contained in any such document as provided
        in Article VI.

       

      Section
        11.03  Acts
        of Noteholders.
        (a)
        Any
        request, demand, authorization, direction, notice, consent, waiver or other
        action provided by this Indenture to be given or taken by Noteholders may
        be
        embodied in and evidenced by one or more instruments of substantially similar
        tenor signed by such Noteholders in person or by agents duly appointed in
        writing; and except as herein otherwise expressly provided, such action shall
        become effective when such instrument or instruments are delivered to the
        Indenture Trustee, and, where it is hereby expressly required, to the Issuing
        Entity. Such instrument or instruments (and the action embodied therein and
        evidenced thereby) are herein sometimes referred to as the “Act” of the
        Noteholders signing such instrument or instruments. Proof of execution of
        any
        such instrument or of a writing appointing any such agent shall be sufficient
        for any purpose of this Indenture and (subject to Section 6.01 hereof)
        conclusive in favor of the Indenture Trustee and the Issuing Entity, if made
        in
        the manner provided in this Section 10.03 hereof.

       

      (b)  The
        fact
        and date of the execution by any person of any such instrument or writing
        may be
        proved in any manner that the Indenture Trustee deems sufficient.

       

      (c)  The
        ownership of Notes shall be proved by the Note Registrar.

       

      (d)  Any
        request, demand, authorization, direction, notice, consent, waiver or other
        action by the Holder of any Notes shall bind the Holder of every Note issued
        upon the registration thereof or in exchange therefor or in lieu thereof,
        in
        respect of anything done, omitted or suffered to be done by the Indenture
        Trustee or the Issuing Entity in reliance thereon, whether or not notation
        of
        such action is made upon such Note.

       

      Section
        11.04  Notices
        etc., to Indenture Trustee Issuing Entity, Securities Administrator, Note
        Insurer and Rating Agencies.
        Any
        request, demand, authorization, direction, notice, consent, waiver or Act
        of
        Noteholders or other documents provided or permitted by this Indenture shall
        be
        in writing and if such request, demand, authorization, direction, notice,
        consent, waiver or act of Noteholders is to be made upon, given or furnished
        to
        or filed with:

       

      (i)  the
        Indenture Trustee by any Noteholder or by the Issuing Entity shall be sufficient
        for every purpose hereunder if made, given, furnished or filed in writing
        to or
        with the Indenture Trustee at its Corporate Trust Office. The Indenture Trustee
        shall promptly transmit any notice received by it from the Noteholders to
        the
        Issuing Entity and the Note Insurer; 

       

      (ii)  the
        Securities Administrator by any Noteholder or by the Issuing Entity shall
        be
        sufficient for every purpose hereunder if made, given, furnished or filed
        in
        writing to or with the Securities Administrator at the Corporate Trust Office,
        or such other address as may hereafter be furnished to the other parties
        hereto
        in writing. The Securities Administrator shall promptly transmit any notice
        received by it from the Noteholders to the Issuing Entity; 

       

      (iii)  the
        Note
        Insurer, CIFG Assurance North America, Inc. 825 3rd Avenue, 6th Floor, New
        York,
        NY 10022 (SACO I Trust 2006-12, Policy No.
        CIFG
        NA-1405), Attention: Paul Kwiatkoski, Head of Surveillance with a copy to
        the
        General Counsel at the above address, and in each case in which a demand,
        notice
        or other communication to the Note Insurer refers to a Default, an Event
        of
        Default or any event with respect to which failure on the part of the Note
        Insurer to respond shall be deemed to constitute consent or acceptance, then
        such demand, notice or other communication shall be marked to indicate "URGENT
        MATERIAL ENCLOSED"; or

       

      (iv)  the
        Issuing Entity by the Indenture Trustee or by any Noteholder shall be sufficient
        for every purpose hereunder if made, given, furnished or filed in writing
        and
        mailed first-class, postage prepaid to the Issuing Entity addressed to: SACO
        I
        Trust 2006-12, in care of Owner Trustee at the Corporate Trust Office, or
        at any
        other address previously furnished in writing to the Indenture Trustee by
        the
        Issuing Entity. The Issuing Entity shall promptly transmit any notice received
        by it from the Noteholders to the Indenture Trustee.

       

      Notices
        required to be given to the Rating Agencies by the Issuing Entity, the Indenture
        Trustee, the Securities Administrator or the Owner Trustee shall be in writing,
        mailed first-class postage pre-paid: in the case of Moody’s, to Moody’s, at the
        following address: Moody's Investors Service, Inc., 99 Church Street, New
        York,
        New York 10007; and in the case of S&P, Standard & Poor's, a division of
        The McGraw-Hill Companies, Inc., 55 Water Street, New York, New York 10041,
        or
        as to each of the foregoing, at such other address as shall be designated
        by
        written notice to the other parties.

       

      Section
        11.05  Notices
        to Noteholders; Waiver.
        Where
        this Indenture provides for notice to Noteholders of any event, such notice
        shall be sufficiently given (unless otherwise herein expressly provided)
        if
        made, given, furnished or filed in writing and mailed, first-class, postage
        prepaid to each Noteholder affected by such event, at such Person’s address as
        it appears on the Note Register, not later than the latest date, and not
        earlier
        than the earliest date, prescribed for the giving of such notice. In any
        case
        where notice to Noteholders is given by mail, neither the failure to mail
        such
        notice nor any defect in any notice so mailed to any particular Noteholder
        shall
        affect the sufficiency of such notice with respect to other Noteholders,
        and any
        notice that is mailed in the manner herein provided shall conclusively be
        presumed to have been duly given regardless of whether such notice is in
        fact
        actually received.

       

      Where
        this Indenture provides for notice in any manner, such notice may be waived
        in
        writing by any Person entitled to receive such notice, either before or after
        the event, and such waiver shall be the equivalent of such notice. Waivers
        of
        notice by Noteholders shall be filed with the Indenture Trustee but such
        filing
        shall not be a condition precedent to the validity of any action taken in
        reliance upon such a waiver.

       

      In
        case,
        by reason of the suspension of regular mail service as a result of a strike,
        work stoppage or similar activity, it shall be impractical to mail notice
        of any
        event to Noteholders when such notice is required to be given pursuant to
        any
        provision of this Indenture, then any manner of giving such notice as shall
        be
        satisfactory to the Indenture Trustee shall be deemed to be a sufficient
        giving
        of such notice.

       

      Where
        this Indenture provides for notice to the Rating Agency, failure to give
        such
        notice shall not affect any other rights or obligations created hereunder,
        and
        shall not under any circumstance constitute an Event of Default.

       

      Section
        11.06  Conflict
        with Trust Indenture Act.
        If any
        provision hereof limits, qualifies or conflicts with another provision hereof
        that is required to be included in this Indenture by any of the provisions
        of
        the Trust Indenture Act, such required provision shall control.

       

      The
        provisions of TIA §§ 310 through 317 that impose duties on any Person (including
        the provisions automatically deemed included herein unless expressly excluded
        by
        this Indenture) are a part of and govern this Indenture, whether or not
        physically contained herein.

       

      Section
        11.07  Effect
        of Headings.
        The
        Article and Section headings herein are for convenience only and shall not
        affect the construction hereof.

       

      Section
        11.08  Successors
        and Assigns.
        All
        covenants and agreements in this Indenture and the Notes by the Issuing Entity
        shall bind its successors and assigns, whether so expressed or not. All
        agreements of the Indenture Trustee in this Indenture shall bind its successors,
        co-trustees and agents.

       

      Section
        11.09  Separability.
        In case
        any provision in this Indenture or in the Notes shall be invalid, illegal
        or
        unenforceable, the validity, legality, and enforceability of the remaining
        provisions shall not in any way be affected or impaired thereby.

       

      Section
        11.10  Legal
        Holidays.
        In any
        case where the date on which any payment is due shall not be a Business Day,
        then (notwithstanding any other provision of the Notes or this Indenture)
        payment need not be made on such date, but may be made on the next succeeding
        Business Day with the same force and effect as if made on the date on which
        nominally due, and no interest shall accrue for the period from and after
        any
        such nominal date.

       

      Section
        11.11  GOVERNING
        LAW.
        THIS
        INDENTURE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
        NEW
        YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS (OTHER THAN SECTIONS
        5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAWS, WHICH SHALL APPLY
        HERETO), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
        SHALL
        BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

       

      Section
        11.12  Counterparts.
        This
        Indenture may be executed in any number of counterparts, each of which when
        so
        executed shall be deemed to be an original, but all such counterparts shall
        together constitute but one and the same instrument.

       

      Section
        11.13  Recording
        of Indenture.
        If this
        Indenture is subject to recording in any appropriate public recording offices,
        such recording is to be effected by the Issuing Entity and at its expense
        accompanied by an Opinion of Counsel at its expense (which may be counsel
        to the
        Indenture Trustee or any other counsel reasonably acceptable to the Indenture
        Trustee) to the effect that such recording is necessary either for the
        protection of the Noteholders, the Note Insurer or any other Person secured
        hereunder or for the enforcement of any right or remedy granted to the Indenture
        Trustee under this Indenture.

       

      Section
        11.14  Issuing
        Entity Obligation.
        No
        recourse may be taken, directly or indirectly, with respect to the obligations
        of the Issuing Entity, the Owner Trustee or the Securities Administrator
        on the
        Notes or under this Indenture or any certificate or other writing delivered
        in
        connection herewith or therewith, against (i) the Indenture Trustee or the
        Owner
        Trustee in its individual capacity, (ii) any owner of a beneficial interest
        in
        the Issuing Entity or (iii) any partner, owner, beneficiary, agent, officer,
        director, employee or agent of the Securities Administrator, the Owner Trustee
        in its individual capacity, any holder of a beneficial interest in the Issuing
        Entity, the Securities Administrator, the Owner Trustee or the Indenture
        Trustee
        or of any successor or assign of the Indenture Trustee or the Owner Trustee
        in
        its individual capacity, except as any such Person may have expressly agreed
        (it
        being understood that the Indenture Trustee and the Owner Trustee have no
        such
        obligations in their individual capacity) and except that any such partner,
        owner or beneficiary shall be fully liable, to the extent provided by applicable
        law, for any unpaid consideration for stock, unpaid capital contribution
        or
        failure to pay any installment or call owing to such entity. For all purposes
        of
        this Indenture, in the performance of any duties or obligations of the Issuing
        Entity hereunder, the Owner Trustee shall be subject to, and entitled to
        the
        benefits of, the terms and provisions of Article VI, VII and VIII of the
        Trust
        Agreement.

       

      Section
        11.15  No
        Petition.
        The
        Indenture Trustee and the Securities Administrator, by entering into this
        Indenture, each Noteholder, by accepting a Note and each Certificateholder,
        by
        accepting a Certificate, hereby covenant and agree that they will not at
        any
        time prior to one year from the date of termination hereof, institute against
        the Depositor or the Issuing Entity, or join in any institution against the
        Depositor or the Issuing Entity of, any bankruptcy, reorganization, arrangement,
        insolvency or liquidation proceedings, or other proceedings under any United
        States federal or state bankruptcy or similar law in connection with any
        obligations relating to the Notes, this Indenture or any of the Basic Documents;
        provided however, that nothing herein shall prohibit the Indenture Trustee
        from
        filing proofs of claim in any proceeding.

       

      Section
        11.16  Inspection.
        The
        Issuing Entity agrees that, at its expense, on reasonable prior notice, it
        shall
        permit any representative of the Indenture Trustee, the Note Insurer or the
        Securities Administrator, during the Issuing Entity’s normal business hours, to
        examine all the books of account, records, reports and other papers of the
        Issuing Entity, to make copies and extracts therefrom, to cause such books
        to be
        audited by Independent certified public accountants, and to discuss the Issuing
        Entity’s affairs, finances and accounts with the Issuing Entity’s officers,
        employees, and Independent certified public accountants, all at such reasonable
        times and as often as may be reasonably requested. The Indenture Trustee
        and the
        Note Insurer shall cause its representatives to hold in confidence all such
        information except to the extent disclosure may be required by law (and all
        reasonable applications for confidential treatment are unavailing) and except
        to
        the extent that the Indenture Trustee, the Note Insurer or the Securities
        Administrator may reasonably determine that such disclosure is consistent
        with
        its obligations hereunder.

       

      Section
        11.17  Benefits
        of
        Indenture.
        The
        Note Insurer and its successors and assigns shall be a third-party beneficiary
        to the provisions of this Indenture. To the extent that this Indenture confers
        upon or gives or grants to the Note Insurer any right, remedy or claim under
        or
        by reason of this Indenture, the Note Insurer may enforce any such right,
        remedy
        or claim conferred, given or granted hereunder. Nothing in this Indenture,
        express or implied, shall give to any Person, other than the parties hereto
        and
        their successors hereunder, and the Noteholders and the Note Insurer, any
        benefit or any legal or equitable right, remedy or claim under this
        Indenture.

       

      Section
        11.18  Securities
        Administrator to Hold Policy.
        The
        Securities Administrator will hold the Policy in trust as agent for the Class
        II-A Noteholders for the purpose of making claims thereon and distributing
        the
        proceeds thereof. Each Class II-A Noteholder, by accepting its Note, appoints
        the Securities Administrator as attorney-in-fact for the purpose of making
        claims on the Policy. The Securities Administrator shall surrender the Policy
        to
        the Note Insurer for cancellation upon the expiration of the term of the
        Policy
        following the retirement of the Class II-A Notes.

       

      

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      

      IN
        WITNESS WHEREOF, the Issuing Entity, the Securities Administrator and the
        Indenture Trustee have caused their names to be signed hereto by their
        respective officers thereunto duly authorized, all as of the day and year
        first
        above written.

       

      
        	
                SACO
                  I TRUST 2006-12, 

                as
                  Issuing Entity

                 

                By:
                  Wilmington Trust Company, not in its individual capacity but solely
                  as
                  Owner Trustee

              
	 	 
	
                By:

              	/s/ J.
                Christopher Murphy 
	
                Name:

              	J.
                Christopher Murphy
	
                Title:

              	Financial
                Services Officer 
	 
	 
	
                LASALLE
                  BANK NATIONAL ASSOCIATION, 

                as
                  Securities Administrator

              
	 	 
	
                By:

              	/s/
                Rita Lopez 
	
                Name:

              	Rita
                Lopez 
	
                Title:

              	Vice
                President 
	 
	 
	
                CITIBANK,
                  N.A., 

                as
                  Indenture Trustee

              
	 	 
	
                By:

              	/s/
                John Hannon
	
                Name:

              	John
                Hannon 
	
                Title:

              	Vice
                President 

      

      

       

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

       

      
        	
                STATE
                  OF 

              	
                )

              	 
	 	
                )

              	
                ss.:

              
	
                COUNTY
                  OF___________

              	
                )

              	 

      

      

       

      On
        the
        19th
        day of
        December 2006,
        before
        me, a notary public in and for said State, personally appeared
        _______________________________, known to me to be
        a(n)____________________________ of LaSalle Bank National Association, the
        entity that executed the within instrument, and also known to me to be the
        person who executed it on behalf of said entity, and acknowledged to me that
        such entity executed the within instrument.

       

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

       

      
        	 	 
	 	
                Notary
                  Public

              

      

      

      [NOTARIAL
        SEAL]

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      
        	
                STATE
                  OF DELAWARE

              	
                )

              	 
	 	
                )

              	
                ss.:

              
	
                COUNTY
                  OF___________

              	
                )

              	 

      

      

       

      On
        the
        19th
        day of
        December 2006, before me personally appeared ___________________________
        to me
        known, who being by me duly sworn, did depose and say, that he/she is a(n)
        ____________________of the Owner Trustee, one of the entities described in
        and
        which executed the above instrument; and that he/her signed his/her name
        thereto
        by like order.

       

      

       

      
        	 	 
	 	
                Notary
                  Public

              

      

      

      [NOTARIAL
        SEAL]

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

       

      
        	
                STATE
                  OF 

              	
                )

              	 
	 	
                )

              	
                ss.:

              
	
                COUNTY
                  OF___________

              	
                )

              	 

      

      

       

      On
        the
        19th
        day of
        December 2006, before me personally appeared _______________________ to me
        known, who being by me duly sworn, did depose and say, that he/she is a(n)
        ___________________ of the Indenture Trustee, one of the corporations described
        in and which executed the above instrument; and that he/she signed his/her
        name
        thereto by like order.

       

      
        	 	 
	 	
                Notary
                  Public

              

      

      

      [NOTARIAL
        SEAL]

       

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        A-1

       

      CLASS
        [I][II]-A NOTE

       

      SOLELY
        FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS NOTE REPRESENTS A “REGULAR INTEREST”
IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT,” AS THOSE TERMS ARE DEFINED,
        RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986
        (THE “CODE”).

       

      THE
        NOTE PRINCIPAL BALANCE OF THIS NOTE WILL BE DECREASED BY THE PRINCIPAL PAYMENTS
        HEREON AND CHARGE OFF AMOUNTS ALLOCABLE THERETO. ACCORDINGLY, FOLLOWING THE
        INITIAL ISSUANCE OF THE NOTES, THE NOTE PRINCIPAL BALANCE OF THIS NOTE WILL
        BE
        DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS NOTE MAY
        ASCERTAIN ITS NOTE PRINCIPAL BALANCE BY INQUIRY OF THE SECURITIES ADMINISTRATOR
        NAMED HEREIN.

       

      EACH
        HOLDER OF A NOTE OR BENEFICIAL OWNERSHIP SHALL BE DEEMED TO HAVE MADE THE
        REPRESENTATIONS SET FORTH IN SECTION 4.13 OF THE
        INDENTURE.

       

      UNLESS
        THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
        TRUST
        COMPANY TO THE DEPOSITOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
        OR
        PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
        OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
        TRUST
        COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER
        USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
        REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
        HEREIN.

       

      THIS
        NOTE IS A NON-RECOURSE OBLIGATION OF THE ISSUING ENTITY, AND IS LIMITED IN
        RIGHT
        OF PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST AS PROVIDED IN THE INDENTURE
        REFERRED TO BELOW. THE ISSUING ENTITY IS NOT OTHERWISE PERSONALLY LIABLE
        FOR
        PAYMENTS ON THIS NOTE.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      
        	
                Certificate
                  No. 1

              	
                Note
                  Interest Rate: Adjustable Rate

              
	 	 
	
                Class
                  [I][II]-A Senior

              	 
	 	 
	
                Cut-off
                  Date: [     ]

              	
                Aggregate
                  Initial Note Principal Balance of this Note as of the related Cut-off
                  Date:

                $[    
                  ]

              
	
                Date
                  of Indenture: As of December 19, 2006

              	 
	 	 
	
                First
                  Payment Date:

                December
                  26, 2006

              	
                Initial
                  Note Principal Balance of this Note as of the related Cut-off
                  Date:

                $[     ]

              
	 	 
	
                Master
                  Servicer and Securities Administrator:

                LaSalle
                  Bank National Association

              	
                CUSIP:
                  [     ]

              
	 	 
	
                Final
                  Scheduled Payment Date:

                [     ]

              	 
	 	 

      

      

      SACO
        I
        TRUST 2006-12

      MORTGAGE-BACKED
        NOTES

      SERIES
        2006-12

       

      evidencing
        a Percentage Interest in the distributions allocable to the Class [I][II]-A
        Notes with respect to a Trust Estate consisting primarily of a pool of home
        equity lines of credit (“HELOCs”) that are secured by first and second liens on
        one- to four- family residences sold by BEAR STEARNS ASSET BACKED SECURITIES
        I
        LLC (“BSABS I LLC”). 

       

      This
        Note
        is payable solely from the assets of the Trust Estate relating to the Group
        [I][II] HELOCs, and does not represent an obligation of or interest in BSABS
        I
        LLC, the Master Servicer, the Indenture Trustee, the Owner Trustee or the
        Securities Administrator referred to below or any of their affiliates or
        any
        other person. Neither this Note nor the underlying HELOCs are guaranteed
        or
        insured by any governmental entity or by BSABS I LLC, the Master Servicer,
        the
        Indenture Trustee or the Securities Administrator or any of their affiliates
        or
        any other person. None of BSABS I LLC, the Master Servicer or any of their
        affiliates will have any obligation with respect to any note or other obligation
        secured by or payable from payments on the Group [I][II] Notes.

       

      This
        certifies that Cede & Co. is the registered owner of the Percentage Interest
        evidenced by this Note. This Note is one of a duly authorized issue of the
        Issuing Entity’s Mortgage-Backed Notes, Series 2006-12 (the “Notes”), issued
        under an Indenture dated as of December 19, 2006 (the “Indenture” or
“Agreement”), among the Issuing Entity, LaSalle Bank National Association, as
        Securities Administrator and Citibank, N.A., as indenture trustee (the
“Indenture Trustee”, which term includes any successor Indenture Trustee under
        the Indenture) to which Indenture and all indentures supplemental thereto
        reference is hereby made for a statement of the respective rights thereunder
        of
        the Issuing Entity, the Indenture Trustee, and the Holders of the Notes and
        the
        terms upon which the Notes are to be authenticated and delivered. All terms
        used
        in this Note which are defined in the Indenture shall have the meanings assigned
        to them in the Indenture.

       

      Interest
        on this Note will accrue from and including the immediately preceding Payment
        Date (or with respect to the First Payment Date, the Closing Date) to and
        including the day prior to the current Payment Date on the Note Principal
        Balance hereof at a per annum rate equal to the Note Interest Rate set forth
        above. The Securities Administrator will distribute on the 25th day of each
        month, or, if such 25th day is not a Business Day, the immediately following
        Business Day (each, a “Payment Date”), commencing on the First Payment Date
        specified above, to the Person in whose name this Note is registered at the
        close of business on the Business Day immediately preceding such Payment
        Date so
        long as such Note remains in book-entry form (and otherwise, the close of
        business on the last Business Day of the month immediately preceding the
        month
        of such Payment Date), an amount equal to the product of the Percentage Interest
        evidenced by this Note and the amount (of interest and principal, if any)
        required to be distributed to the Holders of Notes of the same Class as this
        Note. The Final Scheduled Payment Date is the Payment Date in the month
        following the latest scheduled maturity date of any HELOC.

       

      Payments
        on this Note will be made by the Securities Administrator by check mailed
        to the
        address of the Person entitled thereto as such name and address shall appear
        on
        the Certificate Register or, if such Person so requests by notifying the
        Securities Administrator in writing as specified in the Indenture.
        Notwithstanding the above, the final distribution on this Note will be made
        after due notice by the Securities Administrator of the pendency of such
        distribution and only upon presentation and surrender of this Note at the office
        or agency appointed by the Securities Administrator for that purpose and
        designated in such notice. The initial Note Principal Balance of this Note
        is
        set forth above. The Note Principal Balance hereof will be reduced to the
        extent
        of distributions allocable to principal hereon and any Charge-off Amounts
        applicable hereto.

       

      This
        Note
        is one of a duly authorized issue of Notes designated as set forth on the
        face
        hereof (the “Notes”). The Notes, in the aggregate, evidence the entire
        beneficial ownership interest in the Trust Estate formed pursuant to the
        Indenture.

       

      [In
        the
        case of the Class II-A Notes] [This Note is entitled to the benefits of an
        irrevocable and unconditional financial guaranty insure policy issued by
        CIFG
        Assurance North America Inc. (the “Policy”).]

       

      The
        Noteholder, by its acceptance of this Note, agrees that it will look solely
        to
        the Trust Estate [and the Policy] for payment hereunder and that the Securities
        Administrator is not liable to the Noteholders for any amount payable under
        this
        Note or the Indenture or, except as expressly provided in the Indenture,
        subject
        to any liability under the Indenture.

       

      This
        does
        not purport to summarize the Indenture and reference is made to the Indenture
        for the interests, rights and limitations of rights, benefits, obligations
        and
        duties evidenced hereby, and the rights, duties and immunities of the Securities
        Administrator.

       

      Each
        holder of a Note or beneficial ownership shall be deemed to have made the
        representations set forth in Section 4.13 of the Indenture.

       

      The
        Indenture permits, with certain exceptions therein provided, the amendment
        thereof and the modification of the rights and obligations of the Depositor
        and
        the rights of the related Noteholders under the Indenture from time to time
        by
        the parties thereto with [the written consent of the Note Insurer and] the
        consent of the Holder of each Class of related Notes affected thereby evidencing
        over 50% of the Voting Rights of such Class or Classes. Any such written
        consent
        of the Note Insurer and any such consent by the Holder of this Note shall
        be
        conclusive and binding on such Holder and upon all future Holders of this
        Note
        and of any Note issued upon the transfer hereof or in lieu hereof whether
        or not
        notations of such consents are made upon such Notes. The Indenture also permits
        the amendment thereof, in certain limited circumstances, without the consent
        of
        the Holders of any of the related Notes.

       

      As
        provided in the Indenture and subject to certain limitations therein set
        forth,
        the transfer of this Notes is registrable with the Securities Administrator
        upon
        surrender of this Notes for registration of transfer at the offices or agencies
        maintained by the Securities Administrator for such purposes, duly endorsed
        by,
        or accompanied by a written instrument of transfer in form satisfactory to
        the
        Securities Administrator duly executed by the Holder hereof or such Holder’s
        attorney duly authorized in writing, and thereupon one or more new Notes
        in
        authorized denominations representing a like aggregate Percentage Interest
        will
        be issued to the designated transferee.

       

      The
        Notes
        are issuable only as registered Notes without coupons in the Classes and
        denominations specified in the Indenture. As provided in the Indenture and
        subject to certain limitations therein set forth, this Note is exchangeable
        for
        one or more new Notes evidencing the same Class and in the same aggregate
        Percentage Interest, as requested by the Holder surrendering the
        same.

       

      No
        service charge will be made to the Noteholders for any such registration
        of
        transfer, but the Securities Administrator may require payment of a sum
        sufficient to cover any tax or other governmental charge payable in connection
        therewith. The Depositor, the Master Servicer, the Securities Administrator,
        the
        Indenture Trustee and any agent of any of them may treat the Person in whose
        name this Note is registered as the owner hereof for all purposes, and none
        of
        Depositor, the Master Servicer, the Securities Administrator, the Indenture
        Trustee or any such agent shall be affected by notice to the
        contrary.

       

      The
        obligations created by the Indenture and the Trust Estate related to the
        Group
        [I][II] HELOCs created thereby (other than the obligations to make payments
        to
        Noteholders with respect to the termination of the Indenture) shall terminate
        upon the earlier of (i) the later of (A) the maturity or other liquidation
        (or
        Advance with respect thereto) of the last HELOC remaining in the Trust Estate
        relating to the Group [I][II] HELOCs and disposition of all property acquired
        upon foreclosure or deed in lieu of foreclosure of any Group [I][II] HELOC
        and
        (B) the remittance of all funds relating to the Group [I][II] HELOCs due
        under
        the Indenture, or (ii) the optional repurchase by the party named in the
        Indenture of all the HELOCs and other assets of the Trust Estate relating
        to
        Group [I][II] in accordance with the terms of the Indenture. Such optional
        repurchase may be made only on or after the first Payment Date on which the
        sum
        of the Note Principal Balances of the Group [I][II] Notes is reduced to an
        amount less than or equal to 10% of the sum of the original Note Principal
        Balances of the Group [I][II] Notes as of the related Cut-off Date as set
        forth
        in the Indenture. The exercise of such right will effect the early retirement
        of
        the Group [I][II] Notes. In no event, however, will the Trust Estate related
        to
        the Group [I][II] HELOCs created by the Indenture continue beyond the earlier
        of
        (i) the expiration of 21 years after the death of certain persons identified
        in
        Section [8.06][8.07] of the Indenture and (ii) the Latest Possible Maturity
        Date
        as specified in the Indenture.

       

      Unless
        this Note has been countersigned by an authorized signatory of the Securities
        Administrator by manual signature, this Note shall not be entitled to any
        benefit under the Indenture, or be valid for any purpose.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the Owner Trustee has caused this Note to be duly executed
        on
        behalf of the Trust. 

       

      Dated:
        December 19, 2006

      
        	
                SACO
                  I TRUST 2006-12

                 

                By
                  Wilmington Trust Company, not in its individual capacity but solely
                  as
                  Owner Trustee

                 

              
	 	 
	
                By:

              	 
	 	
                Authorized
                  Signatory

              

      

      

      CERTIFICATE
        OF AUTHENTICATION

       

      This
        is
        one of the Class [I][II]-A Notes referred to in the within-mentioned
        Agreement.

       

      
        	
                LASALLE
                  BANK NATIONAL ASSOCIATION, authorized signatory of LaSalle Bank
                  National
                  Association, not in its individual capacity but solely as Securities
                  Administrator

                 

              
	 	 
	
                By:

              	 
	 	
                Authorized
                  Signatory

              

      

      

       

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      ASSIGNMENT

       

      FOR
        VALUE
        RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto
        __________________________________ (Please print or typewrite name and address
        including postal zip code of assignee) a Percentage Interest evidenced by
        the
        within Mortgage-Backed Notes and hereby authorizes the transfer of registration
        of such interest to assignee on the Certificate Register of the Trust
        Estate.

       

      I
        (We)
        further direct the Securities Administrator to issue a new Note of a like
        denomination and Class, to the above named assignee and deliver such Note
        to the
        following address:

       

      
        	
                Dated:

              	 
	 	
                Signature
                  by or on behalf of assignor

              
	 	 
	 	 
	 	
                Signature
                  Guaranteed

              

      

      

       

      PAYMENT
        INSTRUCTIONS

       

      The
        assignee should include the following for purposes of distribution:

       

      Payments
        shall be made, by wire transfer or otherwise, in immediately available funds
        to
        _________________________________ for the account of _________________________
        account number _____________, or, if mailed by check, to
        ______________________________. Applicable statements should be mailed to
        _____________________________________________.

       

      This
        information is provided by __________________,
        the assignee named above, or ________________________, as its agent.

       

      

       

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
        A-2

       

      CLASS
        [I][II]-A-IO
        NOTE

       

      SOLELY
        FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS NOTE REPRESENTS A “REGULAR INTEREST”
IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT,” AS THOSE TERMS ARE DEFINED,
        RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986
        (THE “CODE”).

       

      EACH
        HOLDER OF A NOTE OR BENEFICIAL OWNERSHIP SHALL BE DEEMED TO HAVE MADE THE
        REPRESENTATIONS SET FORTH IN SECTION 4.13 OF THE INDENTURE.

       

      UNLESS
        THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
        TRUST
        COMPANY TO THE DEPOSITOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
        OR
        PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
        OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
        TRUST
        COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER
        USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
        REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
        HEREIN.

       

      THIS
        NOTE IS A NON-RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED IN RIGHT
        OF
        PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST AS PROVIDED IN THE INDENTURE
        REFERRED TO BELOW. THE ISSUER IS NOT OTHERWISE PERSONALLY LIABLE FOR PAYMENTS
        ON
        THIS NOTE.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      
        	
                Certificate
                  No. 1

              	
                Note
                  Interest Rate: Fixed Rate

              
	 	 
	
                Class
                  [I][II]-A-IO Senior

              	 
	 	 
	
                Cut-off
                  Date: [     ]

              	
                Aggregate
                  Initial Notional Amount of this Note as of the related Cut-off
                  Date:

                $[     ]

              
	
                Date
                  of Indenture: As of December 19, 2006

              	 
	 	 
	
                First
                  Payment Date:

                December
                  26, 2006

              	
                Initial
                  Notional Amount of this Note as of the related Cut-off Date:

                $[    
                  ]

              
	 	 
	
                Master
                  Servicer and Securities Administrator:

                LaSalle
                  Bank National Association

              	
                CUSIP:
                  [     ]

              
	 	 

      

      

      SACO
        I
        TRUST 2006-12

      MORTGAGE-BACKED
        NOTES

      SERIES
        2006-12

       

      evidencing
        a Percentage Interest in the distributions allocable to the Class [I][II]-A-IO
        Notes with respect to a Trust Estate consisting primarily of a pool of home
        equity lines of credit (“HELOCs”) that are secured by first and second liens on
        one- to four- family residences sold by BEAR STEARNS ASSET BACKED SECURITIES
        I
        LLC (“BSABS I LLC”).

       

      This
        Note
        is payable solely from the assets of the Trust Estate relating to the Group
        [I][II] HELOCs, and does not represent an obligation of or interest in BSABS
        I
        LLC, the Master Servicer, the Indenture Trustee, the Owner Trustee or the
        Securities Administrator referred to below or any of their affiliates or
        any
        other person. Neither this Note nor the underlying HELOCs are guaranteed
        or
        insured by any governmental entity or by BSABS I LLC, the Master Servicer,
        the
        Indenture Trustee or the Securities Administrator or any of their affiliates
        or
        any other person. None of BSABS I LLC, the Master Servicer or any of their
        affiliates will have any obligation with respect to any note or other obligation
        secured by or payable from payments on the Group [I][II] Notes.

       

      This
        certifies that Cede & Co. is the registered owner of the Percentage Interest
        evidenced by this Note. This Note is one of a duly authorized issue of the
        Issuing Entity’s Mortgage-Backed Notes, Series 2006-12 (the “Notes”), issued
        under an Indenture dated as of December 19, 2006 (the “Indenture” or
“Agreement”), among the Issuing Entity, LaSalle Bank National Association, as
        Securities Administrator and Citibank, N.A., as indenture trustee (the
“Indenture Trustee”, which term includes any successor Indenture Trustee under
        the Indenture) to which Indenture and all indentures supplemental thereto
        reference is hereby made for a statement of the respective rights thereunder
        of
        the Issuing Entity, the Indenture Trustee, and the Holders of the Notes and
        the
        terms upon which the Notes are to be authenticated and delivered. All terms
        used
        in this Note which are defined in the Indenture shall have the meanings assigned
        to them in the Indenture.

       

      Interest
        on this Note will accrue during the month prior to the month in which the
        current Payment Date occurs on the Notional Amount hereof at a per annum
        rate
        equal to the Note Interest Rate set forth above. The Securities Administrator
        will distribute on the 25th day of each month, or, if such 25th day is not
        a
        Business Day, the immediately following Business Day (each, a “Payment Date”),
        commencing on the First Payment Date specified above, to the Person in whose
        name this Note is registered at the close of business on the last Business
        Day
        (or if such last day is not a Business Day, the Business Day immediately
        preceding such last day) of the month immediately preceding the month of
        such
        Payment Date, an amount equal to the product of the Percentage Interest
        evidenced by this Note and the amount (of interest, if any) required to be
        distributed to the Holders of Notes of the same Class as this Note.

       

      Payments
        on this Note will be made by the Securities Administrator by check mailed
        to the
        address of the Person entitled thereto as such name and address shall appear
        on
        the Certificate Register or, if such Person so requests by notifying the
        Securities Administrator in writing as specified in the Indenture.
        Notwithstanding the above, the final distribution on this Note will be made
        after due notice by the Securities Administrator of the pendency of such
        distribution and only upon presentation and surrender of this Note at the
        office
        or agency appointed by the Securities Administrator for that purpose and
        designated in such notice. The initial Notional Amount of this Note is set
        forth
        above. Reference to the Notional Amount of the Class A-IO Notes is solely
        for
        convenience in calculations and does not represent the right to receive any
        payments allocable to principal.

       

      This
        Note
        is one of a duly authorized issue of Notes designated as set forth on the
        face
        hereof (the “Notes”). The Notes, in the aggregate, evidence the entire
        beneficial ownership interest in the Trust Estate formed pursuant to the
        Indenture.

       

      The
        Noteholder, by its acceptance of this Note, agrees that it will look solely
        to
        the Trust Estate for payment hereunder and that the Securities Administrator
        is
        not liable to the Noteholders for any amount payable under this Note or the
        Indenture or, except as expressly provided in the Indenture, subject to any
        liability under the Indenture.

       

      This
        does
        not purport to summarize the Indenture and reference is made to the Indenture
        for the interests, rights and limitations of rights, benefits, obligations
        and
        duties evidenced hereby, and the rights, duties and immunities of the Securities
        Administrator.

       

      Each
        holder of a Note or beneficial ownership shall be deemed to have made the
        representations set forth in Section 4.13 of the Indenture.

       

      The
        Indenture permits, with certain exceptions therein provided, the amendment
        thereof and the modification of the rights and obligations of the Depositor
        and
        the rights of the related Noteholders under the Indenture from time to time
        by
        the parties thereto with [the written consent of the Note Insurer and] the
        consent of the Holder of each Class of related Notes affected thereby evidencing
        over 50% of the Voting Rights of such Class or Classes. Any such written
        consent
        of the Note Insurer and any such consent by the Holder of this Note shall
        be
        conclusive and binding on such Holder and upon all future Holders of this
        Note
        and of any Note issued upon the transfer hereof or in lieu hereof whether
        or not
        notations of such consents are made upon such Notes. The Indenture also permits
        the amendment thereof, in certain limited circumstances, without the consent
        of
        the Holders of any of the related Notes.

       

      As
        provided in the Indenture and subject to certain limitations therein set
        forth,
        the transfer of this Notes is registrable with the Securities Administrator
        upon
        surrender of this Notes for registration of transfer at the offices or agencies
        maintained by the Securities Administrator for such purposes, duly endorsed
        by,
        or accompanied by a written instrument of transfer in form satisfactory to
        the
        Securities Administrator duly executed by the Holder hereof or such Holder’s
        attorney duly authorized in writing, and thereupon one or more new Notes
        in
        authorized denominations representing a like aggregate Percentage Interest
        will
        be issued to the designated transferee.

       

      The
        Notes
        are issuable only as registered Notes without coupons in the Classes and
        denominations specified in the Indenture. As provided in the Indenture and
        subject to certain limitations therein set forth, this Note is exchangeable
        for
        one or more new Notes evidencing the same Class and in the same aggregate
        Percentage Interest, as requested by the Holder surrendering the
        same.

       

      No
        service charge will be made to the Noteholders for any such registration
        of
        transfer, but the Securities Administrator may require payment of a sum
        sufficient to cover any tax or other governmental charge payable in connection
        therewith. The Depositor, the Master Servicer, the Securities Administrator,
        the
        Indenture Trustee and any agent of any of them may treat the Person in whose
        name this Note is registered as the owner hereof for all purposes, and none
        of
        Depositor, the Master Servicer, the Securities Administrator, the Indenture
        Trustee or any such agent shall be affected by notice to the
        contrary.

       

      The
        obligations created by the Indenture and the Trust Estate related to the
        Group
        [I][II] HELOCs created thereby (other than the obligations to make payments
        to
        Noteholders with respect to the termination of the Indenture) shall terminate
        upon the earlier of (i) the later of (A) the maturity or other liquidation
        (or
        Advance with respect thereto) of the last HELOC remaining in the Trust Estate
        relating to the Group [I][II] HELOCs and disposition of all property acquired
        upon foreclosure or deed in lieu of foreclosure of any Group [I][II] HELOC
        and
        (B) the remittance of all funds relating to the Group [I][II] HELOCs due
        under
        the Indenture, or (ii) the optional repurchase by the party named in the
        Indenture of all the HELOCs and other assets of the Trust Estate relating
        to
        Group [I][II] in accordance with the terms of the Indenture. Such optional
        repurchase may be made only on or after the first Payment Date on which the
        sum
        of the Note Principal Balances of the Group [I][II] Notes is reduced to an
        amount less than or equal to 10% of the sum of the original Note Principal
        Balances of the Group [I][II] Notes as of the related Cut-off Date as set
        forth
        in the Indenture. The exercise of such right will effect the early retirement
        of
        the Group [I][II] Notes. In no event, however, will the Trust Estate related
        to
        the Group [I][II] HELOCs created by the Indenture continue beyond the earlier
        of
        (i) the expiration of 21 years after the death of certain persons identified
        in
        Section [8.06][8.07] of the Indenture and (ii) the Latest Possible Maturity
        Date
        as specified in the Indenture.

       

      Unless
        this Note has been countersigned by an authorized signatory of the Securities
        Administrator by manual signature, this Note shall not be entitled to any
        benefit under the Indenture, or be valid for any purpose.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the Owner Trustee has caused this Note to be duly executed
        on
        behalf of the Trust. 

       

      Dated:
        December 19, 2006

      
        	
                SACO
                  I TRUST 2006-12

                 

                By
                  Wilmington Trust Company, not in its individual capacity but solely
                  as
                  Owner Trustee

                 

              
	 	 
	
                By:

              	 
	 	
                Authorized
                  Signatory

              

      

      

      CERTIFICATE
        OF AUTHENTICATION

       

      This
        is
        one of the Class [I][II]-A-IO Notes referred to in the within-mentioned
        Agreement.

       

      
        	
                LASALLE
                  BANK NATIONAL ASSOCIATION, authorized signatory of LaSalle Bank
                  National
                  Association, not in its individual capacity but solely as Securities
                  Administrator

                 

              
	 	 
	
                By:

              	 
	 	
                Authorized
                  Signatory

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      ASSIGNMENT

       

      FOR
        VALUE
        RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto
        __________________________________ (Please print or typewrite name and address
        including postal zip code of assignee) a Percentage Interest evidenced by
        the
        within Mortgage-Backed Notes and hereby authorizes the transfer of registration
        of such interest to assignee on the Certificate Register of the Trust
        Estate.

       

      I
        (We)
        further direct the Certificate Registrar to issue a new New York of a like
        denomination and Class, to the above named assignee and deliver such New
        York to
        the following address:

       

      
        	
                Dated:

              	 
	 	
                Signature
                  by or on behalf of assignor

              
	 	 
	 	 
	 	
                Signature
                  Guaranteed

              

      

      

       

      PAYMENT
        INSTRUCTIONS

       

      The
        assignee should include the following for purposes of distribution:

       

      Payments
        shall be made, by wire transfer or otherwise, in immediately available funds
        to
        _________________________________ for the account of _________________________
        account number _____________, or, if mailed by check, to
        ______________________________. Applicable statements should be mailed to
        _____________________________________________.

       

      This
        information is provided by __________________,
        the assignee named above, or ________________________, as its
        agent.

       

       

       

      

       

      EXHIBIT
        A-3 

       

      CLASS
        I-M-[1][2][3][4] NOTE

       

      THIS
        NOTE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS I-A NOTES AND THE CLASS
        I-A-IO NOTES AS DESCRIBED IN THE INDENTURE (AS DEFINED BELOW).

      

      SOLELY
        FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS NOTE REPRESENTS A “REGULAR INTEREST”
IN A “REAL ESTATE MORTGAGE INVESTMENT CONDUIT,” AS THOSE TERMS ARE DEFINED,
        RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986,
        AS
        AMENDED (THE “CODE”).

      

      EACH
        HOLDER OF A NOTE OR BENEFICIAL OWNERSHIP SHALL BE DEEMED TO HAVE MADE THE
        REPRESENTATIONS SET FORTH IN SECTION 4.13 OF THE
        INDENTURE.

      

      THE
        NOTE PRINCIPAL BALANCE OF THIS NOTE WILL BE DECREASED BY THE PRINCIPAL PAYMENTS
        HEREON AND CHARGE-OFF AMOUNTS ALLOCABLE THERETO. ACCORDINGLY, FOLLOWING THE
        INITIAL ISSUANCE OF THE NOTES, THE NOTE PRINCIPAL BALANCE OF THIS NOTE WILL
        BE
        DIFFERENT FROM THE DENOMINATION SHOWN BELOW. ANYONE ACQUIRING THIS NOTE MAY
        ASCERTAIN ITS NOTE PRINCIPAL BALANCE BY INQUIRY OF THE SECURITIES ADMINISTRATOR
        NAMED HEREIN.

      

      NOTWITHSTANDING
        THE PREVIOUS PARAGRAPH, A CERTIFICATION WILL NOT BE REQUIRED WITH RESPECT
        TO THE
        TRANSFER OF THIS NOTE TO A DEPOSITORY, OR FOR ANY SUBSEQUENT TRANSFER OF
        THIS
        NOTE FOR SO LONG AS THIS NOTE IS A BOOK-ENTRY NOTE. ANY TRANSFEREE OF THIS
        NOTE
        WILL BE DEEMED TO HAVE REPRESENTED BY VIRTUE OF ITS PURCHASE OR HOLDING OF
        THIS
        NOTE (OR INTEREST HEREIN) THAT SUCH TRANSFEREE IS A “QUALIFIED INSTITUTIONAL
        BUYER” WITHIN THE MEANING OF RULE 144A UNDER THE 1933 ACT.

      

      UNLESS
        THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
        TRUST
        COMPANY TO THE DEPOSITOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
        OR
        PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
        OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
        TRUST
        COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER
        USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
        REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
        HEREIN.

      

      THIS
        NOTE IS A NON-RECOURSE OBLIGATION OF THE ISSUER, AND IS LIMITED IN RIGHT
        OF
        PAYMENT TO AMOUNTS AVAILABLE FROM THE TRUST AS PROVIDED IN THE INDENTURE
        REFERRED TO BELOW. THE ISSUER IS NOT OTHERWISE PERSONALLY LIABLE FOR PAYMENTS
        ON
        THIS NOTE.

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      
        	
                Certificate
                  No.1

              	
                Note
                  Interest Rate: Adjustable Rate

              
	 	 
	
                Class
                  I-M-[1][2][3][4] Subordinate

              	 
	 	 
	
                Cut-off
                  Date: December 1, 2006

              	
                Aggregate
                  Initial Note Principal Balance of this Note as of the related Cut-off
                  Date:

                $[    
                  ]

              
	
                Date
                  of Indenture: As of December 19, 2006

              	 
	 	
                Initial
                  Note Principal Balance of this Note as of the related Cut-off
                  Date:

                $[     ]

              
	
                First
                  Payment Date:

                December
                  26, 2006

              	 
	 	
                CUSIP:
                  [     ]

              
	
                Master
                  Servicer and Securities Administrator:

                LaSalle
                  Bank National Association

              	 
	 	 
	
                Final
                  Scheduled Payment Date:

                September
                  25, 2036

              	 

      

      

      SACO
        I
        TRUST 2006-12

      MORTGAGE-BACKED
        NOTES

       

      SERIES
        2006-12

       

      evidencing
        a Percentage Interest in the distributions allocable to the Class
        I-M-[1][2][3][4] Notes with respect to a Trust Estate consisting primarily
        of a
        pool of home equity lines of credit (“HELOCs”) that are secured by first and
        second liens on one- to four- family residences sold by BEAR STEARNS ASSET
        BACKED SECURITIES I LLC (“BSABS I LLC”).

       

      This
        Note
        is payable solely from the assets of the Trust Estate relating to the Group
        [I][II] HELOCs, and does not represent an obligation of or interest in BSABS
        I
        LLC, the Master Servicer, the Indenture Trustee, the Owner Trustee or the
        Securities Administrator referred to below or any of their affiliates or
        any
        other person. Neither this Note nor the underlying HELOCs are guaranteed
        or
        insured by any governmental entity or by BSABS I LLC, the Master Servicer,
        the
        Indenture Trustee or the Securities Administrator or any of their affiliates
        or
        any other person. None of BSABS I LLC, the Master Servicer or any of their
        affiliates will have any obligation with respect to any note or other obligation
        secured by or payable from payments on the Group I Notes.

       

      This
        certifies that Cede & Co. is the registered owner of the Percentage Interest
        evidenced by this Note. This Note is one of a duly authorized issue of the
        Issuing Entity’s Mortgage-Backed Notes, Series 2006-12 (the “Notes”), issued
        under an Indenture dated as of December 19, 2006 (the “Indenture” or
“Agreement”), among the Issuing Entity, LaSalle Bank National Association, as
        Securities Administrator and Citibank, N.A., as indenture trustee (the
“Indenture Trustee”, which term includes any successor Indenture Trustee under
        the Indenture) to which Indenture and all indentures supplemental thereto
        reference is hereby made for a statement of the respective rights thereunder
        of
        the Issuing Entity, the Indenture Trustee, and the Holders of the Notes and
        the
        terms upon which the Notes are to be authenticated and delivered. All terms
        used
        in this Note which are defined in the Indenture shall have the meanings assigned
        to them in the Indenture.

      

      Interest
        on this Note will accrue from and including the immediately preceding Payment
        Date (or with respect to the First Payment Date, the Closing Date) to and
        including the day prior to the current Payment Date on the Note Principal
        Balance hereof at a per annum rate equal to the Note Interest Rate set forth
        above. The Securities Administrator will distribute on the 25th day of each
        month, or, if such 25th day is not a Business Day, the immediately following
        Business Day (each, a “Payment Date”), commencing on the First Payment Date
        specified above, to the Person in whose name this Note is registered at the
        close of business on the Business Day immediately preceding such Payment
        Date so
        long as such Note remains in book-entry form (and otherwise, the close of
        business on the last Business Day of the month immediately preceding the
        month
        of such Payment Date), an amount equal to the product of the Percentage Interest
        evidenced by this Note and the amount (of interest and principal, if any)
        required to be distributed to the Holders of Notes of the same Class as this
        Note. The Final Scheduled Payment Date is the Payment Date in the month
        following the latest scheduled maturity date of any HELOC.

      

      Payments
        on this Note will be made by the Securities Administrator by check mailed
        to the
        address of the Person entitled thereto as such name and address shall appear
        on
        the Certificate Register or, if such Person so requests by notifying the
        Securities Administrator in writing as specified in the Indenture.
        Notwithstanding the above, the final distribution on this Note will be made
        after due notice by the Securities Administrator of the pendency of such
        distribution and only upon presentation and surrender of this Note at the
        office
        or agency appointed by the Securities Administrator for that purpose and
        designated in such notice. The initial Note Principal Balance of this Note
        is
        set forth above. The Note Principal Balance hereof will be reduced to the
        extent
        of distributions allocable to principal hereon and any Charge-off Amounts
        applicable hereto.

      

      This
        Note
        is one of a duly authorized issue of Notes designated as set forth on the
        face
        hereof (the “Notes”). The Notes, in the aggregate, evidence the entire
        beneficial ownership interest in the Trust Estate formed pursuant to the
        Indenture.

      

      The
        Noteholder, by its acceptance of this Note, agrees that it will look solely
        to
        the Trust Estate for payment hereunder and that the Securities Administrator
        is
        not liable to the Noteholders for any amount payable under this Note or the
        Indenture or, except as expressly provided in the Indenture, subject to any
        liability under the Indenture.

      

      Each
        holder of a Note or beneficial ownership shall be deemed to have made the
        representations set forth in Section 4.13 of the Indenture.

      

      The
        Indenture permits, with certain exceptions therein provided, the amendment
        thereof and the modification of the rights and obligations of the Depositor
        and
        the rights of the related Noteholders under the Indenture from time to time
        by
        the parties thereto with the consent of the Holder of each Class of related
        Notes affected thereby evidencing over 50% of the Voting Rights of such Class
        or
        Classes. Any such written consent of the Note Insurer and any such consent
        by
        the Holder of this Note shall be conclusive and binding on such Holder and
        upon
        all future Holders of this Note and of any Note issued upon the transfer
        hereof
        or in lieu hereof whether or not notations of such consents are made upon
        such
        Notes. The Indenture also permits the amendment thereof, in certain limited
        circumstances, without the consent of the Holders of any of the related
        Notes.

       

      As
        provided in the Indenture and subject to certain limitations therein set
        forth,
        the transfer of this Notes is registrable with the Securities Administrator
        upon
        surrender of this Notes for registration of transfer at the offices or agencies
        maintained by the Securities Administrator for such purposes, duly endorsed
        by,
        or accompanied by a written instrument of transfer in form satisfactory to
        the
        Securities Administrator duly executed by the Holder hereof or such Holder’s
        attorney duly authorized in writing, and thereupon one or more new Notes
        in
        authorized denominations representing a like aggregate Percentage Interest
        will
        be issued to the designated transferee.

      

      The
        Notes
        are issuable only as registered Notes without coupons in the Classes and
        denominations specified in the Indenture. As provided in the Indenture and
        subject to certain limitations therein set forth, this Note is exchangeable
        for
        one or more new Notes evidencing the same Class and in the same aggregate
        Percentage Interest, as requested by the Holder surrendering the
        same.

      

      No
        service charge will be made to the Noteholders for any such registration
        of
        transfer, but the Securities Administrator may require payment of a sum
        sufficient to cover any tax or other governmental charge payable in connection
        therewith. The Depositor, the Master Servicer, the Securities Administrator,
        the
        Indenture Trustee and any agent of any of them may treat the Person in whose
        name this Note is registered as the owner hereof for all purposes, and none
        of
        Depositor, the Master Servicer, the Securities Administrator, the Indenture
        Trustee or any such agent shall be affected by notice to the
        contrary.

      

      The
        obligations created by the Indenture and the Trust Estate related to the
        Group I
        HELOCs created thereby (other than the obligations to make payments to
        Noteholders with respect to the termination of the Indenture) shall terminate
        upon the earlier of (i) the later of (A) the maturity or other liquidation
        (or
        Advance with respect thereto) of the last HELOC remaining in the Trust Estate
        relating to the Group I HELOCs and disposition of all property acquired upon
        foreclosure or deed in lieu of foreclosure of any Group I HELOC and (B) the
        remittance of all funds relating to the Group I HELOCs due under the Indenture,
        or (ii) the optional repurchase by the party named in the Indenture of all
        the
        HELOCs and other assets of the Trust Estate relating to Group I in accordance
        with the terms of the Indenture. Such optional repurchase may be made only
        on or
        after the first Payment Date on which the sum of the Note Principal Balances
        of
        the Group I Notes is reduced to an amount less than or equal to 10% of the
        sum
        of the original Note Principal Balances of the Group I Notes as of the related
        Cut-off Date as set forth in the Indenture. The exercise of such right will
        effect the early retirement of the Group I Notes. In no event, however, will
        the
        Trust Estate related to the Group I HELOCs created by the Indenture continue
        beyond the earlier of (i) the expiration of 21 years after the death of certain
        persons identified in Section 8.06 of the Indenture and (ii) the Latest Possible
        Maturity Date as specified in the Indenture.

       

      Unless
        this Note has been countersigned by an authorized signatory of the Securities
        Administrator by manual signature, this Note shall not be entitled to any
        benefit under the Indenture, or be valid for any purpose.

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

       

      IN
        WITNESS WHEREOF, the Owner Trustee has caused this Note to be duly executed
        on
        behalf of the Trust. 

       

      Dated:
        December 19, 2006

      
        	
                SACO
                  I TRUST 2006-12

                 

                By
                  Wilmington Trust Company, not in its individual capacity but solely
                  as
                  Owner Trustee

                 

              
	 	 
	
                By:

              	 
	 	
                Authorized
                  Signatory

              

      

      

       

      CERTIFICATE
        OF AUTHENTICATION

       

      This
        is
        one of the Class I-M-[1][2][3][4] Notes referred to in the within-mentioned
        Agreement.

      

      
        	
                LASALLE
                  BANK NATIONAL ASSOCIATION, authorized signatory of LaSalle Bank
                  National
                  Association, not in its individual capacity but solely as Securities
                  Administrator

                 

              
	 	 
	
                By:

              	 
	 	
                Authorized
                  Signatory

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      ASSIGNMENT

       

      FOR
        VALUE
        RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto
        __________________________________ (Please print or typewrite name and address
        including postal zip code of assignee) a Percentage Interest evidenced by
        the
        within Mortgage-Backed Certificate and hereby authorizes the transfer of
        registration of such interest to assignee on the Certificate Register of
        the
        Trust Fund.

       

      I
        (We)
        further direct the Certificate Registrar to issue a new Certificate of a
        like
        denomination and Class, to the above named assignee and deliver such Certificate
        to the following address:

       

      
        	
                Dated:

              	 
	 	
                Signature
                  by or on behalf of assignor

              
	 	 
	 	 
	 	
                Signature
                  Guaranteed

              

      

      

       

      DISTRIBUTION
        INSTRUCTIONS

       

      The
        assignee should include the following for purposes of distribution:

       

      Distributions
        shall be made, by wire transfer or otherwise, in immediately available funds
        to
        _________________________________ for the account of _________________________
        account number _____________, or, if mailed by check, to
        ______________________________. Applicable statements should be mailed to
        _____________________________________________.

       

      This
        information is provided by __________________,
        the assignee named above, or ________________________, as its
        agent.

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

       

      EXHIBIT
        B

       

      MORTGAGE
        LOAN SCHEDULE

       

      [See
        Exhibit A to the Sale and Servicing Agreement]

       

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
        C

       

      FORM
        OF
        TRANSFEREE CERTIFICATE

       

      [Date]

       

      [NOTE
        REGISTRAR] [SECURITIES ADMINISTRATOR]

       

      
        	
                Re:

              	
                SACO
                  I Trust 2006-12

              
	 	
                Mortgage-Backed
                  Notes, Series 2006-12 (the “Notes”)

              

      

      Ladies
        and Gentlemen:

       

      __________________
        (the “Transferee”) intends to purchase from _________________ (the “Transferor”)
        the Class ___ Notes having an initial aggregate Note Balance as of December
        19,
        2006 (the “Closing Date”) of $_____________ (the “Transferred Notes”). The
        Notes, including the Transferred Notes, were issued pursuant to the Indenture,
        dated as of December 19, 2006 (the “Indenture”), between SACO I Trust 2006-12
        (the “Issuer”), LaSalle Bank National Association (the “Securities
        Administrator”) and Citibank, N.A. (the “Indenture Trustee”). All capitalized
        terms used herein and not otherwise defined shall have the meanings set forth
        in
        the Indenture. The Transferee hereby certifies, represents and warrants to
        you,
        as [Securities Administrator] [Note Registrar], and for the benefit of the
        Issuer, the Securities Administrator, the Indenture Trustee and the Transferor,
        that:

       

      1. The
        Transferee is a “qualified institutional buyer” (a “Qualified Institutional
        Buyer”) as that term is defined in Rule 144A (“Rule l44A”) under the Securities
        Act of 1933, as amended (the “Securities Act”), and has completed one of the
        forms of certification to that effect attached hereto as Annex 1 and Annex
        2.
        The Transferee is aware that the sale to it of the Transferred Notes is being
        made in reliance on Rule 144A. The Transferee is acquiring the Transferred
        Notes
        for its own account or for the account of a Qualified Institutional Buyer,
        and
        understands that such Transferred Notes may be resold, pledged or transferred
        only (i) to a person reasonably believed to be a Qualified Institutional
        Buyer
        that purchases for its own account or for the account of a Qualified
        Institutional Buyer to whom notice is given that the resale, pledge or transfer
        is being made in reliance on Rule 144A, or (ii) pursuant to another exemption
        from registration under the Securities Act.

       

      2. The
        Transferee has been furnished with all information regarding (a) the HELOCs
        and
        payments thereon, (b) the nature and performance of the HELOCs, (c) the
        Indenture, and (d) any credit enhancement mechanism associated with the HELOCs,
        that it has requested.

       

      3. The
        Transferee is neither (A) an employee benefit plan, an Archer MSA as described
        in Section 220(d) of the Code, an education individual retirement account
        as
        described in Section 530 of the Code or other retirement arrangement, including
        individual retirement accounts and annuities, Keogh plans and collective
        investment funds and separate accounts in which such plans, accounts or
        arrangements are invested, including, without limitation, insurance company
        general accounts, that is subject to ERISA or Section 4975 of the Code (each,
        a
“Plan”), nor (B) any Person who is directly or indirectly purchasing such Note
        or interest therein on behalf of, as named fiduciary of, as trustee of, or
        with
“plan assets” (as defined under the DOL Regulation at 29 C.F.R. Section
        2510.3-101) of a Plan.

       

      
        	 	 	 	 	 	 	 	
                Very
                  truly yours,

              
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	
                (Transferee)

              
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	
                By:

              	 
	 	 	 	 	 	 	 	
                Name:

              	 
	 	 	 	 	 	 	 	
                Title:

              	 

      

      

       

      

       

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      ANNEX
        1 TO EXHIBIT C

       

      QUALIFIED
        INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

       

      [for
        Transferees other than Registered Investment Companies]

       

      The
        undersigned hereby certifies as follows to [name of Transferor] (the
“Transferor”) an [name of Securities Administrator] [name of Note Registrar], as
        [Securities Administrator] [Note Registrar], with respect to the Notes being
        transferred (the “Transferred Notes”) as described in the Transferee Certificate
        to which this certification relates and to which this certification is an
        Annex:

       

      1. As
        indicated below, the undersigned is the chief financial officer, a person
        fulfilling an equivalent function, or other executive officer of the entity
        purchasing the Transferred Notes (the “Transferee”).

       

      2. The
        Transferee is a “qualified institutional buyer” as that term is defined in Rule
        144A under the Securities Act of 1933, as amended (“Rule 144A”), because (i) the
        Transferee owned and/or invested on a discretionary basis $____________________
        in securities (other than the excluded securities referred to below) as of
        the
        end of the Transferee’s most recent fiscal year (such amount being calculated in
        accordance with Rule 144A) and (ii) the Transferee satisfies the criteria
        in the
        category marked below.

       

      
        	 	
                ____

              	
                Corporation,
                  etc.
                  The Transferee is a corporation (other than a bank, savings and
                  loan
                  association or similar institution), Massachusetts or similar business
                  trust, partnership, or any organization described in Section 501(c)(3)
                  of
                  the Internal Revenue Code of 1986, as
                  amended.

              

      

       

      
        	 	
                ____

              	
                Bank.
                  The Transferee (a) is a national bank or a banking institution
                  organized
                  under the laws of any State, U.S. territory or the District of
                  Columbia,
                  the business of which is substantially confined to banking and
                  is
                  supervised by the State or territorial banking commission or similar
                  official or is a foreign bank or equivalent institution, and (b)
                  has an
                  audited net worth of at least $25,000,000 as demonstrated in its
                  latest
                  annual financial statements, a
                  copy of which is attached hereto,
                  as of a date not more than 16 months preceding the date of sale
                  of the
                  Note in the case of a U.S. bank, and not more than 18 months preceding
                  such date of sale for a foreign bank or equivalent
                  institution.

              

      

       

      
        	 	
                ____

              	
                Savings
                  and Loan.
                  The Transferee (a) is a savings and loan association, building
                  and loan
                  association, cooperative bank, homestead association or similar
                  institution, which is supervised and examined by a State or Federal
                  authority having supervision over any such institutions or is a
                  foreign
                  savings and loan association or equivalent institution and (b)
                  has an
                  audited net worth of at least $25,000,000 as demonstrated in its
                  latest
                  annual financial statements, a
                  copy of which is attached hereto,
                  as of a date not more than 16 months preceding the date of sale
                  of the
                  Note in the case of a U.S. savings and loan association, and not
                  more than
                  18 months preceding such date of sale for a foreign savings and
                  loan
                  association or equivalent
                  institution.

              

      

       

      
        	 	
                ____

              	
                Broker-dealer.
                  The Transferee is a dealer registered pursuant to Section 15 of
                  the
                  Securities Exchange Act of 1934, as
                  amended.

              

      

       

      
        	 	
                ____

              	
                Insurance
                  Company.
                  The Transferee is an insurance company whose primary and predominant
                  business activity is the writing of insurance or the reinsuring
                  of risks
                  underwritten by insurance companies and which is subject to supervision
                  by
                  the insurance commissioner or a similar official or agency of a
                  State,
                  U.S. territory or the District of
                  Columbia.

              

      

       

      
        	 	
                ____

              	
                State
                  or Local Plan.
                  The Transferee is a plan established and maintained by a State,
                  its
                  political subdivisions, or any agency or instrumentality of the
                  State or
                  its political subdivisions, for the benefit of its
                  employees.

              

      

       

      
        	 	
                ____

              	
                ERISA
                  Plan.
                  The Transferee is an employee benefit plan within the meaning of
                  Title I
                  of the Employee Retirement Income Security Act of
                  1974.

              

      

       

      
        	 	
                ____

              	
                Investment
                  Advisor.
                  The Transferee is an investment advisor registered under the Investment
                  Advisers Act of 1940, as amended.

              

      

       

      
        	 	
                ____

              	
                Other.
                  (Please supply a brief description of the entity and a cross-reference
                  to
                  the paragraph and subparagraph under subsection (a)(1) of Rule
                  l44A
                  pursuant to which it qualifies. Note that registered investment
                  companies
                  should complete Annex 2 rather than this Annex
                  1.)

              

      

       

      3. The
        term
“securities”
as
        used
        herein does
        not include
        (i)
        securities of issuers that are affiliated with the Transferee, (ii) securities
        that are part of an unsold allotment to or subscription by the Transferee,
        if
        the Transferee is a dealer, (iii) bank deposit notes and certificates of
        deposit, (iv) loan participations, (v) repurchase agreements, (vi) securities
        owned but subject to a repurchase agreement and (vii) currency, interest
        rate
        and commodity swaps. For purposes of determining the aggregate amount of
        securities owned and/or invested on a discretionary basis by the Transferee,
        the
        Transferee did not include any of the securities referred to in this
        paragraph.

       

      4. For
        purposes of determining the aggregate amount of securities owned and/or invested
        on a discretionary basis by the Transferee, the Transferee used the cost
        of such
        securities to the Transferee, unless the Transferee reports its securities
        holdings in its financial statements on the basis of their market value,
        and no
        current information with respect to the cost of those securities has been
        published, in which case the securities were valued at market. Further, in
        determining such aggregate amount, the Transferee may have included securities
        owned by subsidiaries of the Transferee, but only if such subsidiaries are
        consolidated with the Transferee in its financial statements prepared in
        accordance with generally accepted accounting principles and if the investments
        of such subsidiaries are managed under the Transferee’s direction. However, such
        securities were not included if the Transferee is a majority-owned, consolidated
        subsidiary of another enterprise and the Transferee is not itself a reporting
        company under the Securities Exchange Act of 1934, as amended.

       

      5. The
        Transferee acknowledges that it is familiar with Rule l44A and understands
        that
        the Transferor and other parties related to the Transferred Notes are relying
        and will continue to rely on the statements made herein because one or more
        sales to the Transferee may be in reliance on Rule 144A.

       

      
        	
                ____

              	
                ____

              	
                Will
                  the Transferee be purchasing the Transferred Notes

              
	
                Yes

              	
                No

              	
                only
                  for the Transferee’s own account?

              

      

       

      6. If
        the
        answer to the foregoing question is “no”, then in each case where the Transferee
        is purchasing for an account other than its own, such account belongs to
        a third
        party that is itself a “qualified institutional buyer” within the meaning of
        Rule 144A, and the “qualified institutional buyer” status of such third party
        has been established by the Transferee through one or more of the appropriate
        methods contemplated by Rule 144A.

       

      7. The
        Transferee will notify each of the parties to which this certification is
        made
        of any changes in the information and conclusions herein. Until such notice
        is
        given, the Transferee’s purchase of the Transferred Notes will constitute a
        reaffirmation of this certification as of the date of such purchase. In
        addition, if the Transferee is a bank or savings and loan as provided above,
        the
        Transferee agrees that it will furnish to such parties any updated annual
        financial statements that become available on or before the date of such
        purchase, promptly after they become available.

       

      
        	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	
                Print
                  Name of Transferee

              
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	
                By:

              	 
	 	 	 	 	 	 	 	
                Name:

              	 
	 	 	 	 	 	 	 	
                Title:

              	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	
                Date:

              	 

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      ANNEX
        2 TO EXHIBIT C

       

      QUALIFIED
        INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

       

      [for
        Transferees that are Registered Investment Companies]

       

      The
        undersigned hereby certifies as follows to [name of Transferor] (the
“Transferor”) and [name of Securities Administrator] [name of Note Registrar],
        as [Securities Administrator] [Note Registrar], with respect to the Notes
        being
        transferred (the “Transferred Notes”) as described in the Transferee Certificate
        to which this certification relates and to which this certification is an
        Annex:

       

      1. As
        indicated below, the undersigned is the chief financial officer, a person
        fulfilling an equivalent function, or other executive officer of the entity
        purchasing the Transferred Certificates (the “Transferee”) or, if the Transferee
        is a “qualified institutional buyer” as that term is defined in Rule 144A under
        the Securities Act of 1933, as amended (“Rule 144A”), because the Transferee is
        part of a Family of Investment Companies (as defined below), is an executive
        officer of the investment adviser (the “Adviser”).

       

      2. The
        Transferee is a “qualified institutional buyer” as defined in Rule 144A because
        (i) the Transferee is an investment company registered under the Investment
        Company Act of 1940, as amended, and (ii) as marked below, the Transferee
        alone
        owned and/or invested on a discretionary basis, or the Transferee’s Family of
        Investment Companies owned, at least $100,000,000 in securities (other than
        the
        excluded securities referred to below) as of the end of the Transferee’s most
        recent fiscal year. For purposes of determining the amount of securities
        owned
        by the Transferee or the Transferee’s Family of Investment Companies, the cost
        of such securities was used, unless the Transferee or any member of the
        Transferee’s Family of Investment Companies, as the case may be, reports its
        securities holdings in its financial statements on the basis of their market
        value, and no current information with respect to the cost of those securities
        has been published, in which case the securities of such entity were valued
        at
        market.

       

      
        	 	
                ____

              	
                The
                  Transferee owned and/or invested on a discretionary basis $____________
                  in
                  securities (other than the excluded securities referred to below)
                  as of
                  the end of the Transferee’s most recent fiscal year (such amount being
                  calculated in accordance with Rule
                  144A).

              

      

       

      
        	 	
                ____

              	
                The
                  Transferee is part of a Family of Investment Companies which owned
                  in the
                  aggregate $_____________ in securities (other than the excluded
                  securities
                  referred to below) as of the end of the Transferee’s most recent fiscal
                  year (such amount being calculated in accordance with Rule
                  144A).

              

      

       

      3. The
        term
“Family
        of Investment Companies”
as
        used
        herein means two or more registered investment companies (or series thereof)
        that have the same investment adviser or I investment advisers that are
        affiliated (by virtue of being majority owned subsidiaries of the same parent
        or
        because one investment adviser is a majority owned subsidiary of the
        other).

       

      4. The
        term
“securities”
as
        used
        herein does not include (i) securities of issuers that are affiliated with
        the
        Transferee or are part of the Transferee’s Family of Investment Companies, (ii)
        bank deposit notes and certificates of deposit, (iii) loan participations,
        (iv)
        repurchase agreements, (v) securities owned but subject to a repurchase
        agreement and (vi) currency, interest rate and commodity swaps. For purposes
        of
        determining the aggregate amount of securities owned and/or invested on a
        discretionary basis by the Transferee, or owned by the Transferee’s Family of
        Investment Companies, the securities referred to in this paragraph were
        excluded.

       

      5. The
        Transferee is familiar with Rule 144A and understands that the parties to
        which
        this certification is being made are relying and will continue to rely on
        the
        statements made herein because one or more sales to the Transferee will be
        in
        reliance on Rule 144A.

       

      
        	
                ____

              	
                ____

              	
                Will
                  the Transferee be purchasing the Transferred Notes

              
	
                Yes

              	
                No

              	
                only
                  for the Transferee’s own account?

              

      

      6. If
        the
        answer to the foregoing question is “no”, then in each case where the Transferee
        is purchasing for an account other than its own, such account belongs to
        a third
        party that is itself a “qualified institutional buyer” within the meaning of
        Rule 144A, and the “qualified institutional buyer” status of such third party
        has been established by the Transferee through one or more of the appropriate
        methods contemplated by Rule l44A.

       

      7. The
        undersigned will notify the parties to which this certification is made of
        any
        changes in the information and conclusions herein. Until such notice, the
        Transferee’s purchase of the Transferred Notes will constitute a reaffirmation
        of this certification by the undersigned as of the date of such
        purchase.

       

      
        	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	
                Print
                  Name of Transferee or Adviser

              
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	
                By:

              	 
	 	 	 	 	 	 	 	
                Name:

              	 
	 	 	 	 	 	 	 	
                Title:

              	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	
                IF
                  AN ADVISER:

              
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	
                Print
                  Name of Transferee

              
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	
                Date:

              	 

      

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      

      EXHIBIT
        D

       

      FORM
        OF
        TRANSFEROR CERTIFICATE

       

      [Date]

       

      [SECURITIES
        ADMINISTRATOR]

       

      
        	
                Re:

              	
                SACO
                  I Trust 2006-12

              
	 	
                Mortgage-Backed
                  Notes, Series 2006-12 (the “Notes”)

              

      

      Ladies
        and Gentlemen:

       

      In
        connection with the sale by _____________________________ (the “Transferor”) to
        _________________________ (the “Transferee”) of the Class __ Notes having an
        initial aggregate Note Balance as of December 19, 2006 (the “Closing Date”) of
        $______________ (the “Transferred Notes”). The Notes, including the Transferred
        Notes, were issued pursuant to the Indenture, dated as of December 19, 2006
        (the
“Indenture”), among SACO I Trust 2006-12 (the “Issuer”), LaSalle Bank National
        Association (the “Securities Administrator”) and Citibank, N.A. (the “Indenture
        Trustee”). All capitalized terms used but not otherwise defined herein shall
        have the respective meanings set forth in the Indenture. The Transferor hereby
        certifies, represents and warrants to you, as [Securities Administrator]
        [Note
        Registrar], and for the benefit of the Issuer, the Securities Administrator,
        the
        Indenture Trustee and the Transferee, that:

       

      1. The
        Transferor is the lawful owner of the Transferred Notes with the full right
        to
        transfer such Notes free from any and all claims and encumbrances
        whatsoever.

       

      2. Neither
        the Transferor nor anyone acting on its behalf has (a) offered, transferred,
        pledged, sold or otherwise disposed of any Note, any interest in any Note
        or any
        other similar security to any person in any manner, (b) solicited any offer
        to
        buy or accept a transfer, pledge or other disposition of any Note, any interest
        in any Note or any other similar security from any person in any manner,
        (c)
        otherwise approached or negotiated with respect to any Note, any interest
        in any
        Note or any other similar security with any person in any manner, (d) made
        any
        general solicitation by means of general advertising or in any other manner,
        or
        (e) taken any other action, which (in the case of any of the acts described
        in
        clauses (a) through (e) hereof) would constitute a distribution of any Note
        under the Securities Act of 1933, as amended (the “Securities Act”), or would
        render the disposition of any Note a violation of Section 5 of the Securities
        Act or any state securities laws, or would require registration or qualification
        of any Note pursuant to the Securities Act or any state securities
        laws.

       

      

       

      

       

      *
        Please
        contact Bear Stearns for pricing information.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      3. The
        Transferor and any person acting on behalf of the Transferor in this matter
        reasonably believe that the Transferee is a “qualified institutional buyer” as
        that term is defined in Rule l44A (“Rule l44A”) under the Securities Act (a
“Qualified Institutional Buyer”) purchasing for its own account or for the
        account of a Qualified Institutional Buyer. In determining whether the
        Transferee is a Qualified Institutional Buyer, the Transferor and any person
        acting on behalf of the Transferor in this matter have relied upon the following
        method(s) of establishing the Transferee’s ownership and discretionary
        investments of securities (check one or more):

       

      
        	 	
                ____

              	
                (a)
                  The Transferee’s most recent publicly available financial statements,
                  which statements present the information as of a date within 16
                  months
                  preceding the date of sale of the Transferred Note in the case
                  of a U.S.
                  purchaser and within 18 months preceding such date of sale for
                  a foreign
                  purchaser; or

              

      

       

      
        	 	
                ____

              	
                (b)
                  The most recent publicly available information appearing in documents
                  filed by the Transferee with the Securities and Exchange Commission
                  or
                  another United States federal, state, or local governmental agency
                  or
                  self-regulatory organization, or with a foreign governmental agency
                  or
                  self-regulatory organization, which information is as of a date
                  within 16
                  months preceding the date of sale of the Transferred Note in the
                  case of a
                  U.S. purchaser and within 18 months preceding such date of sale
                  for a
                  foreign purchaser, or

              

      

       

      
        	 	
                ____

              	
                (c)
                  The most recent publicly available information appearing in a recognized
                  securities manual, which information is as of a date within 16
                  months
                  preceding the date of sale of the Transferred Note in the case
                  of a U.S.
                  purchaser and within 18 months preceding such date of sale for
                  a foreign
                  purchaser, or

              

      

       

      
        	 	
                ____

              	
                (d)
                  A certification by the chief financial officer, a person fulfilling
                  an
                  equivalent function, or other executive officer of the Transferee,
                  specifying the amount of securities owned and invested on a discretionary
                  basis by the Transferee as of a specific date on or since the close
                  of the
                  Transferee’s most recent fiscal year, or, in the case of a Transferee that
                  is a member of a “family of investment companies”, as that term is defined
                  in Rule 144A, a certification by an executive officer of the investment
                  adviser specifying the amount of securities owned by the “family of
                  investment companies” as of a specific date on or since the close of the
                  Transferee’s most recent fiscal
                  year.

              

      

       

      4. The
        Transferor and any person acting on behalf of the Transferor understand that
        in
        determining the aggregate amount of securities owned and invested on a
        discretionary basis by an entity for purposes of establishing whether such
        entity is a Qualified Institutional Buyer:

       

      (a) the
        following instruments and interests shall be excluded: securities of issuers
        that are affiliated with the Transferee; securities that are part of an unsold
        allotment to or subscription by the Transferee, if the Transferee is a dealer;
        securities of issuers that are part of the Transferee’s “family of investment
        companies”, if the Transferee is a registered investment company; bank deposit
        notes and certificates of deposit; loan participations; repurchase agreements;
        securities owned but subject to a repurchase agreement; and currency, interest
        rate and commodity swaps;

       

      (b) the
        aggregate value of the securities shall be the cost of such securities, except
        where the entity reports its securities holdings in its financial statements
        on
        the basis of their market value, and no current information with respect
        to the
        cost of those securities has been published, in which case the securities
        may be
        valued at market;

       

      (c) securities
        owned by subsidiaries of the entity that are consolidated with the entity
        in its
        financial statements prepared in accordance with generally accepted accounting
        principles may be included if the investments of such subsidiaries are managed
        under the direction of the entity, except that, unless the entity is a reporting
        company under Section 13 or 15(d) of the Securities Exchange Act of 1934,
        as
        amended, securities owned by such subsidiaries may not be included if the
        entity
        itself is a majority-owned subsidiary that would be included in the consolidated
        financial statements of another enterprise.

       

      5. The
        Transferor or a person acting on its behalf has taken reasonable steps to
        ensure
        that the Transferee is aware that the Transferor is relying on the exemption
        from the provisions of Section 5 of the Securities Act provided by Rule
        144A.

       

      6. The
        Transferor or a person acting on its behalf has furnished, or caused to be
        furnished, to the Transferee all information regarding (a) the HELOCs and
        payments thereon, (b) the nature and performance of the HELOCs, (c) the
        Indenture and the Trust Estate, and (d) any credit enhancement mechanism
        associated with the HELOCs, that the Transferee has requested.

       

      
        	 	 	 	 	 	 	 	
                Very
                  truly yours,

              
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	
                (Transferor)

              
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	
                By:

              	 
	 	 	 	 	 	 	 	
                Name:

              	 
	 	 	 	 	 	 	 	
                Title:

              	 

      

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        E

       

      FORM
        OF
        MORTGAGE LOAN PURCHASE AGREEMENT

       

      [See
        Exhibit C-3 to the Sale and Servicing Agreement]

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    APPENDIX
      A

     

    DEFINITIONS

     

    10-K
      Filing Deadline:
      As
      defined in Section 4.16(a)(iii) of the Sale and Servicing
      Agreement.

     

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

     

    Accepted
      Servicing Practices:
      With
      respect to each EMC HELOC, those mortgage servicing practices (including
      collection procedures) that are in accordance with all applicable statutes,
      regulations and prudent mortgage banking practices for similar revolving home
      equity line of credit mortgage loans of the same type and quality as HELOCs
      in
      the jurisdiction where the related Mortgaged Property is located.

     

    Account:
      The
      Master Servicer Collection Account, the Payment Account, the Group I Net WAC
      Cap
      Rate Carryover Reserve Account, the Group II Net WAC Cap Rate Carryover Account,
      the Group I Interest Coverage Account, the Group II Interest Coverage Account
      and the related Protected Account, as the context may require.

     

    Accrual
      Period:
      With
      respect to the Class A Notes, Class I-M Notes, the Class E Certificates and
      the
      Class E Interests and any Payment Date, the period from and including the
      preceding Payment Date (or from the Closing Date, in the case of the first
      Payment Date) to and including the day prior to the current Payment Date; and
      with respect to the Class A-IO Notes and any Payment Date prior to and including
      the Payment Date in November 2008, the calendar month preceding the related
      Payment Date. Calculations of interest on the Class A Notes, Class I-M Notes,
      Class E Certificates and Class E Interests will be based on a 360-day year
      and
      the actual number of days elapsed during the related accrual period.
      Calculations of interest on the Class A-IO Notes will be based on a 360-day
      year
      consisting of twelve 30-day months. 

     

    Additional
      Balance:
      As to
      any HELOC, the aggregate amount of all related Draws conveyed to the Trust
      Fund.

     

    Additional
      Disclosure:
      As
      defined in Section 4.16(a)(iv) of the Sale and Servicing Agreement.

     

    Additional
      Disclosure Notification:
      The
      form of notice set forth in Exhibit H to the Sale and Servicing Agreement.
      

     

    Additional
      Form 10-D Disclosure:
      As
      defined in Section 4.16(a)(i) of the Sale and Servicing Agreement.

     

    Additional
      Form 10-K Disclosure:
      As
      defined in Section 4.16(a)(iii) of the Sale and Servicing Agreement.

     

    Administration
      Agreement:
      The
      Administration Agreement, dated as of December 19, among the Issuer, the
      Depositor, the Owner Trustee and the Securities Administrator.

     

    Adjustment
      Date:
      As to
      each HELOC, each date set forth in the related Mortgage Note on which an
      adjustment to the interest rate on such HELOC becomes effective.

     

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

     

    Annual
      Statement of Compliance:
      As
      defined in Section 3.14 of the Sale and Servicing Agreement.

     

    Applicable
      Credit Rating:
      For any
      long-term deposit or security, a credit rating of AAA in the case of each of
      S&P and Fitch or Aaa in the case of Moody’s. For any short-term deposit or
      security, or a rating of A-l+ in the case of each of S&P and Fitch or P-1 in
      the case of Moody’s.

     

    Appraised
      Value:
      For any
      Mortgaged Property related to a HELOC, the amount set forth as the appraised
      value of such Mortgaged Property in an appraisal made for the mortgage
      originator in connection with its origination of the related HELOC.

     

    Assessment
      of Compliance:
      As
      defined in Section 3.15 of the Sale and Servicing Agreement.

     

    Assignment
      Agreement:
      Any of
      the GMACM Assignment Agreement or the GreenPoint Assignment Agreement.

     

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

     

    Attestation
      Report:
      As
      defined in Section 3.15 of the Sale and Servicing Agreement.

     

    Attesting
      Party:
      As
      defined in Section 3.15 of the Sale and Servicing Agreement.

     

    Authorized
      Newspaper:
      A
      newspaper of general circulation in the Borough of Manhattan, The City of New
      York, printed in the English language and customarily published on each Business
      Day, whether or not published on Saturdays, Sundays or holidays.

     

    Authorized
      Officer:
      With
      respect to the Issuer, any officer of the Owner Trustee or the Depositor who
      is
      authorized to act for the Owner Trustee or the Depositor in matters relating
      to
      the Issuer and who is identified on the list of Authorized Officers delivered
      by
      the Owner Trustee or the Depositor to the Indenture Trustee and Securities
      Administrator on the Closing Date (as such list may be modified or supplemented
      from time to time thereafter).

     

    Available
      Principal Payment Amount:
      Any of
      the Group I Available Principal Payment Amount and the Group II Available
      Principal Payment Amount. 

     

    Back-Up
      Certification:
      As
      defined in Section 4.16(a)(iii) of the Sale and Servicing
      Agreement.

     

    Bankruptcy
      Code:
      The
      United States Bankruptcy Code, as amended as codified in 11 U.S.C. §§
101-1330.

     

    Bankruptcy
      Loss:
      With
      respect to any HELOC, any Deficient Valuation or Debt Service Reduction related
      to such HELOC as reported by the related Servicer to the Master
      Servicer.

     

    Basic
      Documents:
      The
      Sale and Servicing Agreement, the GMACM Servicing Agreement, the GreenPoint
      Servicing Agreement, the Indenture, the Trust Agreement, the Mortgage Loan
      Purchase Agreement, the Custodial Agreement, the Administration Agreement,
      the
      Insurance Agreement and the other documents and certificates delivered in
      connection with any of the above.

     

    Basis
      Risk Shortfall:
      With
      respect to the Class A Notes and Class I-M Notes and any Payment Date, if such
      Notes are subject to the related Net WAC Cap Rate on such Payment Date, the
      excess, if any, of (i) the amount of interest that would have been payable
      to
      such Class of Notes on such Payment Date if the Note Interest Rate for such
      Class for such Payment Date were calculated at the Formula Rate over (ii) the
      amount of interest payable on such Class of Notes at the related Net WAC Cap
      Rate for such Payment Date; and with respect to the Class A-IO Notes and any
      Payment Date prior to and including the Payment Date in December 2008, if such
      Notes are subject to the related Net WAC Cap Rate on such Payment Date, the
      excess, if any, of (i) the amount of interest that would have been payable
      to
      such Class of Notes on such Payment Date if the Note Interest Rate for such
      Class were equal to 5.50% per annum over (ii) the amount of interest payable
      on
      such Class of Notes at the related Net WAC Cap Rate for such Payment Date.
      

     

    Beneficial
      Owner:
      With
      respect to any Note or Certificate, the Person who is the beneficial owner
      of
      such Note or Certificate as reflected on the books of the Depository or on
      the
      books of a Person maintaining an account with such Depository (directly as
      a
      Depository Participant or indirectly through a Depository Participant, in
      accordance with the rules of such Depository).

     

    Book-Entry
      Notes:
      Beneficial interests in the Class A, Class A-IO and Class I-M Notes, ownership
      and transfers of which shall be made through book entries by the Depository
      as
      described in the Indenture.

     

    BSABS
      I:
      Bear
      Stearns Asset Backed Securities I LLC.

     

    Business
      Day:
      Any day
      other than (i) a Saturday or a Sunday, or (ii) a day on which the New York
      Stock
      Exchange or Federal Reserve is closed or on which banking institutions in the
      jurisdiction in which the Indenture Trustee, the Owner Trustee, the Master
      Servicer, the Servicers or the Securities Administrator is located are
      authorized or obligated by law or executive order to be closed.

     

    Calendar
      Quarter:
      A
      calendar quarter shall consist of one of the following time periods in any
      given
      year: January 1 through March 31, April 1 through June 30, July 1 through
      September 30, and October 1 through December 31.

     

    Certificateholder:
      Any of
      the Group I Certificateholders or Group II Certificateholders. 

     

    Certificate
      of Trust:
      The
      Certificate of Trust filed for the Trust pursuant to Section 3810(a) of the
      Statutory Trust Statute.

     

    Certificate
      Paying Agent:
      Initially, the Securities Administrator, in its capacity as Certificate Paying
      Agent, or any successor to Securities Administrator in such
      capacity.

     

    Certificate
      Principal Balance:
      With
      respect to the Class I-S Certificates shall equal the amount by which Group
      I
      Draws on any Payment Date exceed the Group I Principal Collection Amount, minus
      (i) all amounts in respect of principal distributed to the Class I-S
      Certificates on previous Payment Dates and (ii) any Group I Charge-Off Amounts
      allocated to such Class on previous Payment Dates; and with respect to the
      Class
      II-S Certificates shall equal the amount by which Group II Draws on any Payment
      Date exceed the Group II Principal Collection Amount, minus (i) all amounts
      in
      respect of principal distributed to the Class II-S Certificates on previous
      Payment Dates and (ii) any Group II Charge-Off Amounts allocated to such Class
      on previous Payment Dates. With respect to the Class I-E Certificates shall
      equal an amount equal to the Uncertificated Principal Balance of the Class
      I-E
      Interest; and with respect to the Class II-E Certificates shall equal an amount
      equal to the Uncertificated Principal Balance of the Class II-E
      Interest.

     

    Certificate
      Register:
      The
      register maintained by the Certificate Registrar in which the Certificate
      Registrar shall provide for the registration of Certificates and of transfers
      and exchanges of Certificates.

     

    Certificate
      Registrar:
      Initially, the Securities Administrator, in its capacity as Certificate
      Registrar, or any successor to the Securities Administrator in such capacity
      pursuant to the Trust Agreement.

     

    Certificates:
      The
      Class I-E, Class I-S, Class I-R-1, Class I-R-2, Class I-RX, Class I-X, Class
      II-E, Class II-S, Class II-RX and Class II-X Certificates.

     

    Certification
      Parties:
      As
      defined in Section 4.16(a)(iii) of the Sale and Servicing
      Agreement.

     

    Certifying
      Person:
      As
      defined in Section 4.16(a)(iii) of the Sale and Servicing
      Agreement.

     

    Charge-Off
      Amount:
      Any of
      the Group I Charge-Off Amount or the Group II Charge-Off Amount. 

     

    Charged-Off
      HELOC:
      Any of
      the Group I Charged-Off HELOC or the Group II Charged-Off HELOC.

     

    Class:
      Any of
      the Class I-A, Class I-A-IO, Class I-M-1, Class I-M-2, Class I-M-3, Class I-M-4,
      Class II-A or Class II-A-IO Notes, or any of the Class I-E, Class I-S, Class
      I-R-1, Class I-R-2, Class I-RX, Class I-X, Class II-E, Class II-S, Class II-RX
      or Class II-X Certificates.

     

    Class
      A Notes:
      Any of
      the Class I-A Notes or Class II-A Notes. 

     

    Class
      A-IO Notes:
      Any of
      the Class I-A-IO Notes or Class II-A-IO Notes.

     

    Class
      E Certificates:
      Any of
      the Class I-E Certificates or Class II-E Certificates.

     

    Class
      E Interests:
      Any of
      the Class I-E Interest or Class II-E Interest.

     

    Class
      I-A Principal Payment Amount:
      With
      respect to any Payment Date is the lesser of (I) the Group I Available Principal
      Payment Amount for such Payment Date and (II) an amount equal to the excess
      (if
      any) of (A) the Note Principal Balance of the Class I-A Notes immediately prior
      to such payment date over (B) the lesser of (x) the product of (1) the Group
      I
      Invested Amount as of the end of the related Collection Period multiplied by
      (2)
      approximately 55.20% and (y) (1) the Group I Invested Amount as of the end
      of
      the related Collection Period, less (2) the Group I Overcollateralization
      Floor.

     

    Class
      I-M-1 Principal Payment Amount:
      With
      respect to any Payment Date is the lesser of (I) the Group I Available Principal
      Payment Amount remaining after payment of the Class I-A Principal Payment Amount
      on such Payment Date, and (II) an amount equal to the excess (if any) of (A)
      the
      sum of (1) the Note Principal Balance of the Class I-A Notes (after taking
      into
      account the payment of the Class I-A Principal Payment Amount for that Payment
      Date) and (2) the Note Principal Balance of the Class I-M-1 Notes immediately
      prior to such Payment Date over (B) the lesser of (x) the product of (1) the
      Group I Invested Amount as of the end of the related Collection Period
      multiplied by (2) approximately 70.40% and (y) (1) the Group I Invested Amount
      as of the end of the related Collection Period, less (2) the Group I
      Overcollateralization Floor.

     

    Class
      I-M-2 Principal Payment Amount:
      With
      respect to any Payment Date is the lesser of (I) the Group I Available Principal
      Payment Amount remaining after payment of the Class I-A Principal Payment Amount
      and Class I-M-1 Principal Payment Amount on such Payment Date, and (II) an
      amount equal to the excess (if any) of (A) the sum of (1) the Note Principal
      Balance of the Class I-A Notes and Class I-M-1 Notes (after taking into account
      the payment of the Class I-A Principal Payment Amount and Class I-M-1 Principal
      Payment Amount for that Payment Date) and (2) the Note Principal Balance of
      the
      Class I-M-2 Notes immediately prior to such Payment Date over (B) the lesser
      of
      (x) the product of (1) the Group I Invested Amount as of the end of the related
      Collection Period multiplied by (2) approximately 82.40% and (y) (1) the Group
      I
      Invested Amount as of the end of the related Collection Period, less (2) the
      Group I Overcollateralization Floor.

     

    Class
      I-M-3 Principal Payment Amount:
      With
      respect to any Payment Date is the lesser of (I) the Group I Available Principal
      Payment Amount remaining after payment of the Class I-A Principal Payment
      Amount, Class I-M-1 Principal Payment Amount and Class I-M-2 Principal Payment
      Amount on such Payment Date, and (II) an amount equal to the excess (if any)
      of
      (A) the sum of (1) the Note Principal Balance of the Class I-A Notes, Class
      I-M-1 Notes and Class I-M-2 Notes (after taking into account the payment of
      the
      Class I-A Principal Payment Amount, Class I-M-1 Principal Payment Amount and
      Class I-M-2 Principal Payment Amount for that Payment Date) and (2) the Note
      Principal Balance of the Class I-M-3 Notes immediately prior to such Payment
      Date over (B) the lesser of (x) the product of (1) the Group I Invested Amount
      as of the end of the related Collection Period multiplied by (2) approximately
      92.20% and (y) (1) the Group I Invested Amount as of the end of the related
      Collection Period, less (2) the Group I Overcollateralization
      Floor.

     

    Class
      I-M-4 Principal Payment Amount:
      With
      respect to any payment date is the lesser of (I) the Group I Available Principal
      Payment Amount remaining after payment of the Class I-A Principal Payment
      Amount, Class I-M-1 Principal Payment Amount, Class I-M-2 Principal Payment
      Amount and Class I-M-3 Principal Payment Amount on such Payment Date, and (II)
      an amount equal to the excess (if any) of (A) the sum of (1) the Note Principal
      Balance of the Class I-A Notes, Class I-M-1 Notes, Class I-M-2 Notes and Class
      I-M-3 Notes (after taking into account the payment of the Class I-A Principal
      Payment Amount, Class I-M-1 Principal Payment Amount, Class I-M-2 Principal
      Payment Amount and Class I-M-3 Principal Payment Amount for that Payment Date)
      and (2) the Note Principal Balance of the Class I-M-4 Notes immediately prior
      to
      such Payment Date over (B) the lesser of (x) the product of (1) the Group I
      Invested Amount as of the end of the related Collection Period multiplied by
      (2)
      approximately 95.40% and (y) (1) the Group I Invested Amount as of the end
      of
      the related Collection Period, less (2) the Group I Overcollateralization
      Floor.

     

    Class
      I-E Distribution Amount:
      With
      respect to any Payment Date, the sum of (i) the Current Interest for the Class
      I-E Interest for such Payment Date, (ii) any Group I Overcollateralization
      Reduction Amount for such Payment Date and (iii) without duplication, any Group
      I Subsequent Recoveries not distributed to the Group I Notes on such Payment
      Date; provided, however that on any Payment Date after the Payment Date on
      which
      the Note Principal Balances of the Group I Notes (other than the Class I-A-IO
      Notes) have been reduced to zero, the Class I-E Distribution Amount shall
      include the Group I Overcollateralization Amount.

     

    Class
      I-E Interest Rate:
      With
      respect to the Class I-E Interest and any Payment Date, a rate per annum equal
      to the percentage equivalent of a fraction, the numerator of which is the sum
      of
      the amount determined for each REMIC III Group I Regular Interest (other than
      REMIC III Regular Interest I-A-IO) equal to (x) the excess, if any, of the
      Uncertificated REMIC III Pass-Through Rate for such REMIC III Group I Regular
      Interest over the Group I Marker Rate, applied to (y) a notional amount equal
      to
      the Uncertificated Principal Balance of such REMIC III Group I Regular Interest,
      and the denominator of which is the aggregate Uncertificated Principal Balance
      of such REMIC III Group I Regular Interests.

     

    Class
      I-E Notional Amount:
      With
      respect to the Class I-E Interest and any Payment Date, an amount equal to
      the
      Group I Invested Amount at the beginning of the related Collection Period.
      The
      initial Class I-E Notional Amount of the Class I-E Interest shall be
      $176,792,727.68. For federal income tax purposes, the Class I-E Notional Amount
      of the Class I-E Interest for any Payment Date shall be an amount equal to
      the
      aggregate Uncertificated Principal Balance of the REMIC III Group I Regular
      Interests for such Payment Date.

     

    Class
      I-M Notes:
      Any of
      the Class I-M-1, Class I-M-2, Class I-M-3 or Class I-M-4 Notes. 

     

    Class
      I-S Floating Allocation Percentage:
      With
      respect to any Payment Date, 100% minus the Group I Floating Allocation
      Percentage.

     

    Class
      I-S Principal Payment Amount:
      With
      respect to the Class I-S Certificates, the sum of: (i) with respect to any
      Payment Date during the Group I Managed Amortization Period and if the Group
      I
      Sponsor’s Certificate Pro Rata Test is not met, the lesser of (a) the
      Certificate Principal Balance of the Class I-S Certificates immediately prior
      to
      such Payment Date and (b) the Group I Principal Collection Amount less the
      aggregate Group I Draws for the related Payment Date, and (ii) with respect
      to
      any Payment Date during the Group I Managed Amortization Period and if the
      Group
      I Sponsor’s Certificate Pro Rata Test is met, the Class I-S Floating Allocation
      Percentage of the Group I Principal Collection Amount less the aggregate Group
      I
      Draws for the related Payment Date.

     

    Class
      II-A Final Scheduled Payment Date:
      March
      25, 2032.

     

    Class
      II-A Principal Payment Amount:
      With
      respect to any Payment Date is the lesser of (I) the Group II Available
      Principal Payment Amount and any amounts drawn on the Policy for Group II
      Charged-Off HELOCs for such Payment Date and (II) an amount equal to the excess
      (if any) of (A) the Note Principal Balance of the Class II-A Notes immediately
      prior to such Payment Date over (B) the lesser of (x) the product of (1) the
      Group II Invested Amount as of the end of the related Collection Period
      multiplied by (2) approximately 93.80% and (y) (1) the Group II Invested Amount
      as of the end of the related Collection Period, less (2) the Group II
      Overcollateralization Floor.

     

    Class
      II-E Distribution Amount:
      With
      respect to any Payment Date, the sum of (i) the Current Interest for the Class
      II-E Interest for such Payment Date, (ii) any Group II Overcollateralization
      Reduction Amount for such Payment Date and (iii) without duplication, any Group
      II Subsequent Recoveries not distributed to the Group II Notes on such Payment
      Date; provided, however that on any Payment Date after the Payment Date on
      which
      the Note Principal Balance of the Class II-A Notes have been reduced to zero,
      the Class II-E Distribution Amount shall include the Group II
      Overcollateralization Amount.

     

    Class
      II-E Interest Rate:
      With
      respect to the Class II-E Interest and any Payment Date, a rate per annum equal
      to the percentage equivalent of a fraction, the numerator of which is the sum
      of
      the amount determined for each REMIC III Group II Regular Interest (other than
      REMIC III
      Regular
      Interest II-A-IO) equal to (x) the excess, if any, of the Uncertificated REMIC
      III Pass-Through Rate for such REMIC III Group II Regular Interest over the
      Group II Marker Rate, applied to (y) a notional amount equal to the
      Uncertificated Principal Balance of such REMIC III Group II Regular Interest,
      and the denominator of which is the aggregate Uncertificated Principal Balance
      of such REMIC III Group II Regular Interests.

     

    Class
      II-E Notional Amount:
      With
      respect to the Class II-E Interest and any Payment Date, an amount equal to
      the
      Group II Invested Amount at the beginning of the related Collection Period.
      The
      initial Class II-E Notional Amount of the Class II-E Interest shall be
      $432,710,771.48. For federal income tax purposes, the Class II-E Notional Amount
      of the Class II-E Interest for any Payment Date shall be an amount equal to
      the
      aggregate Uncertificated Principal Balance of the REMIC III Group II Regular
      Interests for such Payment Date.

     

    Class
      II-S Floating Allocation Percentage:
      With
      respect to any Payment Date, 100% minus the Group II Floating Allocation
      Percentage.

     

    Class
      II-S Principal Payment Amount:
      With
      respect to the Class II-S Certificates, the sum of: (i) with respect to any
      Payment Date during the Group II Managed Amortization Period and if the Group
      II
      Sponsor’s Certificate Pro Rata Test is not met, the lesser of (a) the
      Certificate Principal Balance of the Class II-S Certificates immediately prior
      to such Payment Date and (b) the Group II Principal Collection Amount less
      the
      aggregate Group II Draws for the related Payment Date, and (ii) with respect
      to
      any Payment Date during the Group II Managed Amortization Period and if the
      Group II Sponsor’s Certificate Pro Rata Test is met, the Class II-S Floating
      Allocation Percentage of the Group II Principal Collection Amount less the
      aggregate Group II Draws for the related Payment Date.

     

    Class
      R Certificates:
      Any of
      the Class I-R-1, Class I-R-2, Class I-RX and Class II-RX
      Certificates.

     

    Class
      S Certificates:
      Any of
      the Class I-S Certificates or Class II-S Certificates.

     

    Class
      X Certificates:
      Any of
      the Class I-X Certificates or Class II-X Certificates.

     

    Closing
      Date:
      December 19, 2006.

     

    Code:
      The
      Internal Revenue Code of 1986, as amended, and the rules and regulations
      promulgated thereunder.

     

    Collateral:
      The
      meaning specified in the Granting Clause of the Indenture.

     

    Collection
      Period:
      (1)
      With respect to the first Payment Date and the Group I HELOCs,
      December
      1st through and including Decemeber 15th; and with respect to the first Payment
      Date and the Group II HELOCs, November 15th
      through
      and including November 30th, (2) with respect to the second Payment Date and
      the
      Group I HELOCs, December 16th through and including December 31st; and with
      respect to the second Payment Date and the Group II HELOCs, the month of
      December, and (3) with respect to each Payment Date thereafter, the
      calendar month immediately preceding the calendar month in which such Payment
      Date occurs. 

     

    Commission:
      The
      Securities and Exchange Commission.

     

    Company:
      EMC
      Mortgage Corporation, or its successor in interest.

     

    Constant
      Draw Rate:
      A
      constant rate of additional balances drawn on the HELOCs.

     

    Corporate
      Trust Office:
      With
      respect to the Indenture Trustee, the principal corporate trust office of the
      Indenture Trustee at which at any particular time its corporate trust business
      shall be administered, which office at the date of the execution of this
      instrument is located at 388 Greenwich Street, 14th
      Floor,
      New York, NY 10013, Attention: Agency and Trust - SACO I Trust 2006-12. With
      respect to the Owner Trustee, the principal corporate trust office of the Owner
      Trustee at which at any particular time its corporate trust business shall
      be
      administered, which office at the date of the execution of this Trust Agreement
      is located at 1100 North Market Street, Wilmington, Delaware 19890, Attention:
      Corporate Trust Administration. With respect to the Securities Administrator,
      Certificate Registrar, Note Registrar and Paying Agent, the Corporate Trust
      Office of the Note Registrar and the Certificate Registrar for purposes of
      presentment and surrender of the Notes and the Certificates for the final
      payment or distribution thereon and for transfer is located at 135 South LaSalle
      Street, Suite 1511, Chicago, IL 60603, Attention: Global Securities and Trust
      Services Group - SACO I Trust 2006-12, or any other address that the Securities
      Administrator may designate from time to time by notice to the Noteholders
      and
      the Certificateholders.

     

    Corresponding
      Note:
      With
      respect to each REMIC III Regular Interest (other than REMIC III Regular
      Interests I-AA, II-AA, I-ZZ and II-ZZ), the Note with the corresponding
      designation.

     

    CPR:
      A
      constant rate of prepayment on the HELOCs.

     

    Credit
      Line Agreement:
      With
      respect to any HELOC, the credit line account agreement executed by the related
      Mortgagor and any amendment or modification thereof.

     

    Current
      Interest:
      With
      respect to each Class of Notes and each Payment Date is the interest accrued
      at
      the applicable Note Interest Rate for the applicable accrual period on the
      Note
      Principal Balance or Notional Amount, as applicable, of such Class. With respect
      to the Class I-E Interest and each Payment Date is the interest accrued at
      the
      Class I-E Interest Rate for the applicable Accrual Period on the Class I-E
      Notional Amount of such Class. With respect to the Class I-E Certificates and
      each Payment Date is 100% of the amounts distributed in respect of the Class
      I-E
      Interest. With respect to the Class II-E Interest and each Payment Date is
      the
      interest accrued at the Class II-E Interest Rate for the applicable Accrual
      Period on the Class II-E Notional Amount of such Class. With respect to the
      Class II-E Certificates and each Payment Date is 100% of the amounts distributed
      in respect of the Class II-E Interest

     

    Custodial
      Agreement:
      The
      custodial agreement, dated as of December 19, 2006, among the Indenture Trustee,
      the Custodian, the Sponsor, the Master Servicer and the Depositor, relating
      to
      the SACO I Trust 2006-12, Mortgage-Backed Notes, Series 2006-12. 

     

    Custodian:
      LaSalle, or any successor custodian appointed pursuant to the provisions hereof
      and the Custodial Agreement

     

    Cut-off
      Date:
      Any of
      the Group I Cut-off Date or Group II Cut-off Date. 

     

    Cut-off
      Date Balance:
      Any of
      the Group I Cut-off Date Balance or Group II Cut-off Date Balance.

     

    Cut-off
      Date Principal Balance:
      Any of
      the Group I Cut-off Date Principal Balance or Group II Cut-off Date Principal
      Balance. 

     

    Debt
      Service Reduction:
      Any
      reduction of the Scheduled Payments which a Mortgagor is obligated to pay with
      respect to a HELOC as a result of any proceeding under the Bankruptcy Code
      or
      any other similar state law or other proceeding.

     

    Default:
      Any
      occurrence which is or with notice or the lapse of time or both would become
      an
      Event of Default.

     

    Deficient
      Valuation:
      With
      respect to any HELOC, a valuation of the Mortgaged Property by a court of
      competent jurisdiction in an amount less than the then outstanding indebtedness
      under the HELOC, which valuation results from a proceeding initiated under
      the
      Bankruptcy Code or any other similar state law or other proceeding.

     

    Definitive
      Notes:
      The
      meaning specified in Section 4.08 of the Indenture.

     

    Depositor:
      Bear
      Stearns Asset Backed Securities I LLC, a Delaware limited liability company,
      or
      its successor in interest.

     

    Depository:
      The
      Depository Trust Company, the nominee of which is Cede & Co., or any
      successor thereto.

     

    Depository
      Participant:
      A
      Person for whom, from time to time, the Depository effects book-entry transfers
      and pledges of securities deposited with the Depository.

     

    Designated
      Depository Institution:
      A
      depository institution (commercial bank, federal savings bank, mutual savings
      bank or savings and loan association) or trust company (which may include the
      Indenture Trustee), the deposits of which are fully insured by the FDIC to
      the
      extent provided by law.

     

    Determination
      Date:
      With
      respect to any Payment Date, the 15th day of the month of such Payment Date
      or,
      if such 15th day is not a Business Day, the immediately preceding Business
      Day.

     

    Draw:
      Any of
      the Group I Draws or Group II Draws.

     

    Draw
      Period:
      With
      respect to any HELOC, the period during which the related mortgagor is permitted
      to make Draws.

     

    Due
      Date:
      With
      respect to each HELOC, the day of the month on which each scheduled Monthly
      Payment is due.

     

    Eligible
      Account:
      An
      account that is any of the following: (i) maintained with a depository
      institution the short-term debt obligations of which have been rated by each
      Rating Agency in its highest rating category available, or (ii) an account
      or
      accounts in a depository institution in which such accounts are fully insured
      to
      the limits established by the FDIC, provided that any deposits not so insured
      shall, to the extent acceptable to each Rating Agency, as evidenced in writing,
      be maintained such that (as evidenced by an Opinion of Counsel delivered to
      the
      Indenture Trustee, each Rating Agency and the Note Insurer) the Indenture
      Trustee have a claim with respect to the funds in such account or a perfected
      first priority security interest against any collateral (which shall be limited
      to Permitted Investments) securing such funds that is superior to claims of
      any
      other depositors or creditors of the depository institution with which such
      account is maintained, or (iii) in the case of the Master Servicer Collection
      Account and the Payment Account, a trust account or accounts maintained in
      the
      corporate trust division of the Master Servicer or Securities Administrator,
      or
      (iv) an account or accounts of a depository institution acceptable to each
      Rating Agency and the Note Insurer in writing (in the case of the Rating
      Agencies, as evidenced in writing by each Rating Agency that use of any such
      account as the Master Servicer Collection Account or the Payment Account will
      not reduce the rating assigned to any of the Notes by such Rating Agency as
      of
      the Closing Date by such Rating Agency without regard to the
      Policy).

     

    EMC:
      EMC
      Mortgage Corporation, or its successor in interest.

     

    EMC
      Charged-Off HELOC:
      Any EMC
      HELOC that has been charged off. 

     

    EMC
      Flow Loans:
      The
      HELOCs purchased by EMC pursuant to a flow loan purchase agreement.

     

    EMC
      HELOC:
      Any
      HELOC serviced by EMC.

     

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

     

    Event
      of Default:
      With
      respect to the Indenture, any one of the following events (whatever the reason
      for such Event of Default and whether it shall be voluntary or involuntary
      or be
      effected by operation of law or pursuant to any judgment, decree or order of
      any
      court or any order, rule or regulation of any administrative or governmental
      body):

     

    (i) a
      failure
      by the Issuer to pay Current Interest on the Class A, Class A-IO, or Class
      I-M
      Notes on any Payment Date and such default shall continue for a period of one
      Business Day; or

     

    (ii) the
      failure by the Issuer on the related Final Scheduled Payment Date to pay all
      Current Interest of any Class of related Notes, all remaining related Net WAC
      Cap Rate Carryover Amounts to any of the Class of related Notes and to reduce
      the Note Principal Balances of any Class of related Notes (other than the
      related Class A-IO Notes) to zero; or

     

    (iii) there
      occurs a default in the observance or performance of any covenant or agreement
      of the Issuer made in the Indenture, or any representation or warranty of the
      Issuer made in the Indenture or in any certificate or other writing delivered
      pursuant hereto or in connection herewith proving to have been incorrect in
      any
      material respect as of the time when the same shall have been made, and such
      default shall continue or not be cured, or the circumstance or condition in
      respect of which such representation or warranty was incorrect shall not have
      been eliminated or otherwise cured, for a period of 30 days after there shall
      have been given, by registered or certified mail, to the Issuer by the Indenture
      Trustee (with a copy to the Note Insurer, with respect to Group II) or to the
      Issuer and the Indenture Trustee by the Note Insurer (with respect to Group
      II)
      or Holders of at least 25% of the aggregate Note Principal Balance of the
      Outstanding Notes, a written notice specifying such default or incorrect
      representation or warranty and requiring it to be remedied and stating that
      such
      notice is a notice of default hereunder; or

     

    (iv) there
      occurs the filing of a decree or order for relief by a court having jurisdiction
      in the premises in respect of the Issuer or any substantial part of the Trust
      Estate in an involuntary case under any applicable federal or state bankruptcy,
      insolvency or other similar law now or hereafter in effect, or appointing a
      receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
      official of the Issuer or for any substantial part of the Trust Estate, or
      ordering the winding-up or liquidation of the Issuer’s affairs, and such decree
      or order shall remain unstayed and in effect for a period of 60 consecutive
      days; or

     

    (v) there
      occurs the commencement by the Issuer of a voluntary case under any applicable
      federal or state bankruptcy, insolvency or other similar law now or hereafter
      in
      effect, or the consent by the Issuer to the entry of an order for relief in
      an
      involuntary case under any such law, or the consent by the Issuer to the
      appointment or taking possession by a receiver, liquidator, assignee, custodian,
      trustee, sequestrator or similar official of the Issuer or for any substantial
      part of the assets of the Trust Estate, or the making by the Issuer of any
      general assignment for the benefit of creditors, or the failure by the Issuer
      generally to pay its debts as such debts become due, or the taking of any action
      by the Issuer in furtherance of any of the foregoing.

     

    Event
      of Servicer Termination:
      The
      occurrence of an event permitting termination or removal of the related Servicer
      under the related Servicing Agreement or the Sale and Servicing Agreement,
      as
      applicable, as servicer of the related HELOCs.

     

    Excess
      Liquidation Proceeds:
      Any of
      the Group I Excess Liquidation Proceeds or Group II Excess Liquidation Proceeds.
      

     

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

     

    Expense
      Adjusted Mortgage Rate:
      Any of
      the Group I Expense Adjusted Mortgage Rate or Group II Expense Adjusted Mortgage
      Rate.

     

    Expense
      Fee Rate:
      Any of
      the Group I Expense Fee Rate or Group II Expense Fee Rate.

     

    Expenses:
      The
      meaning specified in Section 7.02 of the Trust Agreement

     

    Extraordinary
      Trust Fund Expenses:
      Any of
      the Group I Extraordinary Trust Fund Expenses or Group II Extraordinary Trust
      Fund Expenses. 

     

    Extraordinary
      Trust Fund Expenses Cap:
      Any of
      the Group I Extraordinary Trust Fund Expenses Cap or the Group II Extraordinary
      Trust Fund Expenses Cap.

     

    Fannie
      Mae:
      Fannie
      Mae (formally, Federal National Mortgage Association), or any successor
      thereto.

     

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

     

    Final
      Certification:
      The
      final certification delivered by the Custodian pursuant to Section 2.3(c) of
      the
      Custodial Agreement in the form attached thereto as Exhibit Three.

     

    Final
      Scheduled Payment Date:
      With
      respect to the Class I-A Notes and Class I-M Notes, the Payment Date in
      September 2036. With respect to the Class I-A-IO Notes, the Payment Date in
      November 2008. With respect to the Class II-A Notes, the Payment Date in March
      2032. With respect to the Class II-A Notes, the Payment Date in March 2032.
      With
      respect to the Class II-A-IO Notes, the Payment Date in November 2008.

     

    Fitch:
      Fitch,
      Inc.

     

    Formula
      Rate:
      With
      respect to any Class of Notes (other than the Class A-IO Notes) and, for
      purposes of the definition of “Note Interest Rate”, each of the REMIC III
      Regular Interests (other than REMIC III Regular Interests I-A-IO and II-A-IO)
      for which a Note is the Corresponding Note, and, for purposes of the definitions
      of “Group II Marker Rate” and “Group II Maximum Uncertificated Accrued Interest
      Deferral Amount”, REMIC III Regular Interest II-A, a per annum rate equal to
      One-Month LIBOR plus the applicable Margin.

     

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

     

    GMACM:
      GMAC
      Mortgage, LLC. 

     

    GMACM
      Assignment Agreement:
      The
      Assignment, Assumption and Recogintion Agreement, dated as of December 19,
      2006
      among EMC, GMACM and the Indenture Trustee, whereby the GMACM Servicing
      Agreement was assigned to the Indenture Trustee for the benefit of the
      Noteholders. 

     

    GMACM
      Servicing Agreement:
      The
      Servicing Agreement, dated as of August 1, 2005, as amended by Amendment Number
      One dated February 1, 2006 between GMACM and EMC. 

     

    Grant:
      Pledge,
      bargain, sell, warrant, alienate, remise, release, convey, assign, transfer,
      create, and grant a lien upon and a security interest in and right of set-off
      against, deposit, set over and confirm pursuant to the Indenture. A Grant of
      the
      Collateral or of any other agreement or instrument shall include all rights,
      powers and options (but none of the obligations) of the granting party
      thereunder, including the immediate and continuing right to claim for, collect,
      receive and give receipt for principal and interest payments in respect of
      such
      collateral or other agreement or instrument and all other moneys payable
      thereunder, to give and receive notices and other communications, to make
      waivers or other agreements, to exercise all rights and options, to bring
      proceedings in the name of the granting party or otherwise, and generally to
      do
      and receive anything that the granting party is or may be entitled to do or
      receive thereunder or with respect thereto.

     

    GreenPoint:
      GreenPoint Mortgage Funding, Inc. 

     

    GreenPoint
      Assignment Agreement: The
      Assignment, Assumption and Recognition Agreement, dated as of December 19,
      2006,
      among EMC, GreenPoint and the Indenture Trustee, whereby the GreenPoint
      Servicing Agreement was assigned to the Indenture Trustee for the benefit of
      the
      Noteholders and the Note Insurer. 

     

    GreenPoint
      Servicing Agreement:
      The
      Seller’s Purchase, Warranties and Servicing Agreement, dated as of October 18,
      2004, as amended by Amendment Number One dated as of September 20, 2006, between
      GreenPoint and EMC.

     

    Group
      I:
      All of
      the HELOCs in group I.

     

    Group
      I Available Principal Payment Amount:
      With
      respect to the Class I-A, and Class I-M Notes and any Payment
      Date:

     

    (i) the
      greater of (A) zero and (B)

     

    (1) with
      respect to any Payment Date during the Group I Managed Amortization Period
      and
      if the Group I Sponsor's Certificate Pro Rata Test is not met, the Group I
      Principal Collection Amount less (a) the aggregate Group I Draws for such
      Payment Date and (b) the aggregate Certificate Principal Balance of the Class
      I-S Certificates immediately prior to that Payment Date;

     

    (2) with
      respect to any Payment Date during the Group I Managed Amortization Period
      and
      if the Group I Sponsor's Certificate Pro Rata Test is met, the Group I Floating
      Allocation Percentage of the Group I Principal Collection Amount less the
      aggregate Group I Draws for the related Payment Date; and

     

    (3) with
      respect to any Payment Date during the Group I Rapid Amortization Period, the
      Group I Principal Collection Amount; plus

     

    (ii) the
      Group
      I Overcollateralization Increase Amount for that Payment Date,

     

    minus

     

    (iii) the
      Group
      I Overcollateralization Reduction Amount for that Payment Date;
      minus

     

    (iv) the
      servicing fees and Group I Extraordinary Trust Fund Expenses (subject to the
      Group I Extraordinary Trust Fund Expense Cap), to the extent not already covered
      by a reduction to the Group I Interest Collection Amount.

     

    Group
      I Certificates:
      Any of
      the Class I-S, Class I-E, Class I-R-1, Class I-R-2, Class I-RX and Class I-X
      Certificates. 

     

    Group
      I Certificateholder:
      The
      Person in whose name a Group I Certificate is registered in the Certificate
      Register. Owners of Group I Certificates that have been pledged in good faith
      may be regarded as Group I Holders if the pledgee establishes to the
      satisfaction of the Securities Administrator or the Owner Trustee, as the case
      may be, the pledgee’s right so to act with respect to such Group I Certificates
      and that the pledgee is not the Issuer, any other obligor upon the Group I
      Certificates or any Affiliate of any of the foregoing Persons.

     

    Group
      I Charge-Off Amount:
      With
      respect to any Group I Charged-Off HELOC, the amount of the Stated Principal
      Balance of such HELOC that has been written down. To the extent that the related
      Servicer or the Master Servicer receive(s) Group I Subsequent Recoveries with
      respect to any HELOC, the amount of Group I Charge-Off Amount with respect
      to
      that HELOC will be reduced to the extent that such recoveries are applied to
      reduce the Note Principal Balance of any Class of Group I Notes on any Payment
      Date.

     

    Group
      I Charged-Off HELOC:
      Any
      Group I HELOC that has been charged off. 

     

    Group
      I Cumulative Charge-Off Percentage:
      With
      respect to the Group I Notes and any Payment Date is equal to the percentage
      obtained by dividing (x) the aggregate Group I Charge-Off Amounts on the Group
      I
      HELOCs incurred since the Group I Cut-off Date through the end of the related
      Collection Period, minus the principal portion of any amounts received in
      respect of the Group I HELOCs following the charge-off, by (y) the aggregate
      Stated Principal Balance of the Group I HELOCs as of the Group I Cut-off
      Date.

     

    Group
      I Current Specified Enhancement Percentage:
      With
      respect to any Payment Date, the percentage obtained by dividing (x) the sum
      of
      (i) the aggregate Note Principal Balance of the Class I-M Notes and (ii) the
      Group I Overcollateralization Amount, in each case prior to the payment of
      the
      Group I Available Principal Payment Amount on such Payment Date, by (y) the
      Group I Invested Amount as of the end of the related Collection
      Period.

     

    Group
      I Cut-off Date:
      With
      respect to the Group I HELOCs, the close of business on November 30,
      2006.

     

    Group
      I Cut-off Date Balance:
      $176,792,727.68.

     

    Group
      I Cut-off Date Principal Balance:
      With
      respect to any Group I HELOC, the unpaid principal balance thereof as of the
      Group I Cut-off Date after applying the principal portion of Monthly Payments
      due on or before such date, whether or not received, and without regard to
      any
      payments due after such date.

     

    Group
      I Draw:
      With
      respect to any Group I HELOC, an additional borrowing by the related mortgagor
      subsequent to the Group I Cut-off Date in accordance with the related mortgage
      note.

     

    Group
      I Draw Period:
      With
      respect to any Group I HELOC, the period during which the related mortgagor
      is
      permitted to make Group I Draws.

     

    Group
      I Excess Liquidation Proceeds:
      To the
      extent that such amount is not required by law to be paid to the related
      Mortgagor, the amount, if any, by which Group I Liquidation Proceeds with
      respect to a Group I Charged-Off HELOC exceed the sum of (i) the Outstanding
      Principal Balance of such HELOC and accrued but unpaid interest at the related
      Mortgage Interest Rate through the last day of the month in which the Group
      I
      Liquidation Date occurs, (ii) related Group I Liquidation Expenses (including
      Group I Liquidation Expenses which are payable therefrom to the Servicers or
      the
      Master Servicer in accordance with the related Servicing Agreement or Sale
      and
      Servicing Agreement) and (iii) unreimbursed advances by the related Servicers
      or
      the Master Servicer.

     

    Group
      I Excess Overcollateralization Amount:
      With
      respect to Group I HELOCs and any Payment Date, the excess, if any, of the
      Group
      I Overcollateralization Amount on that Payment Date over the Group I
      Overcollateralization Target Amount.

     

    Group
      I Expense Adjusted Mortgage Rate:
      With
      respect to any Group I HELOC or Group I REO Property is the applicable interest
      rate thereon less the Group I Expense Fee Rate.

     

    Group
      I Expense Fee Rate:
      With
      respect to any Group I HELOC or Group I REO Property is the sum of (i) the
      Servicing Fee Rate and (ii) the Master Servicing Fee Rate. 

     

    Group
      I Extraordinary Trust Fund Expenses:
      Any
      amounts reimbursable to the Securities Administrator or the Indenture Trustee,
      or any director, officer, employee or agent of the Securities Administrator
      or
      the Indenture Trustee, from the Trust Estate, any amounts reimbursable to the
      Depositor, the Master Servicer, the Securities Administrator, the Custodian,
      or
      any director, officer, employee or agent thereof, and any other amounts with
      respect to Group I payable or reimbursable from the Trust Estate as Group I
      Extraordinary Trust Fund Expenses pursuant to the terms of the Sale and
      Servicing Agreement, the Indenture, the Trust Agreement, the Administration
      Agreement, the Custodial Agreement, the Policy or the Insurance Agreement,
      including Group I Extraordinary Trust Fund Expenses that are not reimbursed
      in
      any calendar year as a result of the Group I Extraordinary Trust Fund Expenses
      Cap. Group I Extraordinary Trust Fund Expenses for any calendar year, to the
      extent they may exceed the Group I Extraordinary Trust Fund Expenses Cap, shall
      be paid pro rata among the parties entitled thereto from the amounts available
      therefor.

     

    Group
      I Extraordinary Trust Fund Expenses Cap:
      With
      respect to Group I, $250,000 for each calendar year; provided, however, that
      such cap will not apply to any costs and expenses (i) of the Indenture Trustee
      incurred in connection with the termination of the Securities Administrator
      or
      the Master Servicer, the transfer of master servicing to a successor master
      servicer, any costs incurred with the replacement of the Custodian and costs
      and
      expenses incurred following an Event of Default (so long as such Event of
      Default is continuing), or (ii) of the Master Servicer incurred in connection
      with the termination of the related Servicer and the transfer of servicing
      to a
      successor servicer.

     

    Group
      I Floating Allocation Percentage:
      With
      respect to any Payment Date, the percentage equivalent of a fraction with a
      numerator equal to the Group I Invested Amount at the end of the previous
      related Collection Period (in the case of the first Payment Date, the Group
      I
      Invested Amount as of the Closing Date) and a denominator equal to the aggregate
      Stated Principal Balance of the Group I HELOCs at the end of the previous
      related Collection Period (in the case of the first Payment Date, the Closing
      Date), provided such percentage shall not be greater than 100%.

     

    Group
      I HELOC:
      A home
      equity line of credit in group I transferred and assigned to the Trust pursuant
      to Section 2.01 or Section 2.04 of the Sale and Servicing Agreement, as
      identified in the Mortgage Loan Schedule, including a HELOC in group I the
      property securing which has become an REO Property.

     

    Group
      I Initial Interest Coverage Deposit:
      The
      amount to be paid by the Depositor to the Securities Administrator for deposit
      in the Group I Interest Coverage Account on the Closing Date, which amount
      is
      approximately $500,000.

     

    Group
      I Insurance Proceeds: Amounts
      paid by the insurer under any Insurance Policy covering any Group I HELOC or
      related Mortgaged Property other than amounts required to be paid over to the
      Mortgagor pursuant to law or the related Mortgage Note or Security Instrument
      and other than amounts used to repair or restore the related Mortgaged Property
      or to reimburse insured expenses.

     

    Group
      I Interest Collection Amount:
      With
      respect to each Payment Date, an amount equal to the amount received by the
      related Servicer and consisting of interest collected during the related
      Collection Period on the Group I HELOCs and allocated to interest in accordance
      with the terms of the related Servicing Agreement or the Sale and Servicing
      Agreement, as applicable, together with the interest portion of any Repurchase
      Price relating to any repurchased Group I HELOCs and the interest portion of
      any
      substitution adjustment amount paid during the related Collection Period, any
      Group I Interest Coverage Distribution Amount for that Payment Date, and any
      Group I Subsequent Recoveries on Group I HELOCs that were previously Group
      I
      Charged-Off HELOCs, to the extent such Group I Subsequent Recoveries relate
      to
      interest, reduced, without duplication, by any Group I Extraordinary Trust
      Fund
      Expenses (subject to the Group I Extraordinary Trust Fund Expense
      Cap).

     

    Group
      I Interest Coverage Account:
      The
      account or sub-account established and maintained pursuant to Section 8.09
      of
      the Indenture and which shall be an Eligible Account or sub-account of an
      Eligible Account. 

     

    Group
      I Interest Coverage Distribution Amount:
      With
      respect to any Payment Date, an amount equal to any related Unpaid Interest
      Shortfall Amounts, to the extent not otherwise covered by the Group I Interest
      Collection Amount.

     

    Group
      I Invested Amount:
      With
      respect to any Payment Date, the aggregate Stated Principal Balance of the
      Group
      I HELOCs reduced by the aggregate Certificate Principal Balance of the Class
      I-S
      Certificates, if any. The Group I Invested Amount on the Closing Date is
      $176,792,727.68.

     

    Group
      I Liquidation Date:
      With
      respect to any Group I Charged-Off HELOC, the date on which the Master Servicer
      or the related Servicer has certified that such Group I HELOC has become a
      Group
      I Charged-Off HELOC.

     

    Group
      I Liquidation Expenses:
      With
      respect to a Group I HELOC in liquidation, unreimbursed expenses paid or
      incurred by or for the account of the Master Servicer or the related Servicer
      in
      connection with the liquidation of such Group I HELOC and the related Mortgaged
      Property, such expenses including (a) property protection expenses, (b) property
      sales expenses, (c) foreclosure and sale costs, including court costs and
      reasonable attorneys’ fees, and (d) similar expenses reasonably paid or incurred
      in connection with liquidation.

     

    Group
      I Liquidation Proceeds:
      Cash
      received in connection with the liquidation of a defaulted Group I HELOC,
      whether through trustee’s sale, foreclosure sale, Insurance Proceeds,
      condemnation proceeds or otherwise.

     

    Group
      I Managed Amortization Period:
      With
      respect to the Group I Notes is the period beginning on the Group I Cut-off
      Date
      and ending on the occurrence of a Group I Rapid Amortization Event.

     

    Group
      I Marker Rate:
      With
      respect to the Class I-E Interest and any Payment Date, a per annum rate equal
      to two (2) times the weighted average of the Uncertificated REMIC III
      Pass-Through Rates for the REMIC III Group I Regular Interests (other than
      REMIC
      III Regular Interests I-AA and I-A-IO), with the rate on each such REMIC III
      Group I Regular Interest (other than REMIC III Regular Interest I-ZZ) subject
      to
      a cap equal to the Note Interest Rate for the Corresponding Note for such
      Payment Date for the purpose of this calculation, and with the rate on REMIC
      III
      Regular Interest I-ZZ subject to a cap of zero for the purpose of this
      calculation; provided, however, that solely for this purpose, the related cap
      with respect to each REMIC III Group I Regular Interest (other than REMIC III
      Regular Interests I-AA, I-A-IO and I-ZZ) shall be multiplied by a fraction,
      the
      numerator of which is 30 and the denominator of which is the actual number
      of
      days in the related Accrual Period. 

     

    Group
      I Maximum Uncertificated Accrued Interest Deferral Amount:
      With
      respect to the any Payment Date, the excess, if any, of (i) accrued interest
      at
      the Uncertificated REMIC III Pass-Through Rate applicable to REMIC III Regular
      Interest I-ZZ for such Payment Date on a balance equal to the Uncertificated
      Principal Balance of REMIC III Regular Interest I-ZZ minus the REMIC III Group
      I
      Overcollateralization Amount, in each case for such Payment Date, over (ii)
      the
      aggregate amount of Uncertificated Accrued Interest for such Payment Date on the
      REMIC III Group I Regular Interests (other than REMIC III Regular Interests
      I-AA, I-A-IO and I-ZZ), with the rate on each such REMIC III Group I Regular
      Interest subject to a cap equal to the Note Interest Rate for the Corresponding
      Note for such Payment Date for the purpose of this calculation; provided,
      however, that solely for this purpose, the related cap with respect to each
      REMIC III Group I Regular Interest (other than REMIC III Regular Interests
      I-AA,
      I-A-IO and I-ZZ) shall be multiplied by a fraction, the numerator of which
      is 30
      and the denominator of which is the actual number of days in the related Accrual
      Period.

     

    Group
      I Net WAC Cap Rate Carryover Reserve
      Account:
      The
      Account created pursuant to Section 5.09 of the Sale and Servicing
      Agreement.

     

    Group
      I Net WAC Cap Rate Carryover Reserve
      Account Deposit:
      With
      respect to the Group I Net WAC Cap Rate Carryover Reserve
      Account, an amount equal to $5,000, which the Depositor shall deposit into
      the
      Group I Net WAC Cap Rate Carryover Reserve
      Account pursuant to Section 5.09 of the Sale and Servicing
      Agreement.

     

    Group
      I Notes:
      Any of
      the Class I-A, Class I-A-IO, Class I-M-1, Class I-M-2, Class I-M-3 and Class
      I-M-4 Notes. 

     

    Group
      I Noteholder:
      The
      Person in whose name a Group I Note is registered in the Note Register, except
      that, any Group I Note registered in the name of the Depositor, the Issuer,
      the
      Indenture Trustee, the Sponsor, the Securities Administrator or the Master
      Servicer or any Affiliate of any of them shall be deemed not to be a Group
      I
      Holder or Group I Holders, nor shall any so owned be considered outstanding,
      for
      purposes of giving any request, demand, authorization, direction, notice,
      consent or waiver under the Indenture or the Trust Agreement; provided that,
      in
      determining whether the Indenture Trustee or Securities Administrator shall
      be
      protected in relying upon any such request, demand, authorization, direction,
      notice, consent or waiver, only Group I Notes that a Responsible Officer of
      the
      Indenture Trustee or Securities Administrator has actual knowledge to be so
      owned shall be so disregarded. Owners of Group I Notes that have been pledged
      in
      good faith may be regarded as Group I Holders if the pledgee establishes to
      the
      satisfaction of the Securities Administrator or the Indenture Trustee the
      pledgee’s right so to act with respect to such Notes and that the pledgee is not
      the Issuer, any other obligor upon the Group I Notes or any Affiliate of any
      of
      the foregoing Persons.

     

    Group
      I Optional Termination Date:
      The
      first date on which the majority holder of the Class I-E Certificates may
      terminate the Group I Sub-Trust. 

     

    Group
      I Overcollateralization Amount:
      With
      respect to any Payment Date is the amount, if any, by which the Group I Invested
      Amount exceeds the aggregate Note Principal Balance of the Group I Notes as
      of
      such Payment Date after giving effect to payments to be made on such Payment
      Date.

     

    Group
      I Overcollateralization Deficit:
      With
      respect to any Payment Date, the amount, if any, by which the aggregate Note
      Principal Balance of the Group I Notes as of such Payment Date, after giving
      effect to payments to be made on such Payment Date, exceeds the Group I Invested
      Amount.

     

    Group
      I Overcollateralization Floor:
      With
      respect to the Group I Notes, 0.50% of the Group I Invested Amount as of the
      Group I Cut-off Date.

     

    Group
      I Overcollateralization Increase Amount:
      With
      respect to any Payment Date, the amount payable to the Group I Notes pursuant
      to
      Section 3.02(a)(3) of the Indenture.

     

    Group
      I Overcollateralization Reduction Amount:
      With
      respect to the Group I Notes and any Payment Date for which the Group I Excess
      Overcollateralization Amount is, or would be, after taking into account all
      other payments to be made on that Payment Date, greater than zero, an amount
      equal to the lesser of (i) the Group I Excess Overcollateralization Amount
      for
      that Payment Date and (ii) the Group I Available Principal Payment Amount for
      that Payment Date (without giving effect to the Group I Overcollateralization
      Reduction Amount).

     

    Group
      I Overcollateralization Target Amount:
      With
      respect to any Payment Date (a) prior to the Group I Stepdown Date, an amount
      equal to 2.30% of the Group I Invested Amount as of the Group I Cut-off Date,
      (b) on or after the Group I Stepdown Date and if a Group I Trigger Event is
      not
      in effect, the greater of (A) the lesser of (i) an amount equal to 2.30% of
      the
      Group I Invested Amount as of the Group I Cut-off Date and (ii) approximately
      4.60% of the then current Group I Invested Amount as of the last day of the
      related Collection Period and (B) the Group I Overcollateralization Floor or
      (c)
      on or after the Group I Stepdown Date and if a Group I Trigger Event is in
      effect, the Group I Overcollateralization Target Amount for the immediately
      preceding Payment Date. 

     

    Group
      I Principal Collection Amount:
      With
      respect to each Payment Date, an amount equal to the amount received by the
      related Servicer and consisting of amounts collected during the related
      Collection Period on the Group I HELOCs and allocated to principal in accordance
      with the terms of the Sale and Servicing Agreement, together with the principal
      portion of any repurchase price relating to any repurchased Group I HELOCs
      and
      substitution adjustment amount paid during the related Collection Period and
      Group I Subsequent Recoveries, to the extent such Group I Subsequent Recoveries
      relate to principal.

     

    Group
      I Rapid Amortization Event:
      With
      respect to the Group I HELOCs, any one of the following events: 

     

    (a)  the
      failure of the Sponsor to make any payments or deposits as required by the
      Sale
      and Servicing Agreement, or to observe or perform in any material respect any
      covenant of the Sponsor in the Mortgage Loan Purchase Agreement or the Sale
      and
      Servicing Agreement that materially and adversely affects the interests of
      the
      Noteholders or the Note Insurer and that continues unremedied and continues
      to
      affect materially and adversely the interests of the Noteholders for sixty
      (60)
      days (five days in the case of any failure to repurchase an affected Group
      I
      HELOC when required or to substitute a related Substitute HELOC for an affected
      related HELOC) after the date on which written notice of the failure, requiring
      it to be remedied, shall have been given to the Sponsor by the Indenture Trustee
      or the Securities Administrator, or to the Sponsor, the Indenture Trustee and
      the Securities Administrator by the Holders of greater than 50% of the aggregate
      Note Principal Balance of the Group I Notes;

     

    (b)  any
      representation or warranty made by the Sponsor in the Mortgage Loan Purchase
      Agreement or the Sale and Servicing Agreement proves to have been incorrect
      in
      any material respect when made, as a result of which the interests of the
      Noteholders are materially and adversely affected and that continues to be
      incorrect in any material respect and continues to affect materially and
      adversely the interests of the Noteholders for thirty (30) days after the date
      on which notice of the failure, requiring it to be remedied, shall have been
      given to the Sponsor by the Indenture Trustee or the Securities Administrator,
      or to the Sponsor, the Indenture Trustee and the Securities Administrator by
      the
      Holders of greater than 50% of the aggregate Note Principal Balance of the
      Group
      I Notes (a Group I Rapid Amortization Event pursuant to this subparagraph (b)
      shall not occur if the Sponsor has repurchased the related Group I HELOCs or
      substituted for them during the 60-day period (or such longer period (not to
      exceed an additional 60 days) as the Indenture Trustee or the Securities
      Administrator may specify) in accordance with the Sale and Servicing
      Agreement);

     

    (c)  a
      declaration of bankruptcy or insolvency by any of the Trust, the Depositor,
      the
      Master Servicer or the Servicers;

     

    (d)  the
      Trust
      becomes subject to the Investment Company Act of 1940; 

     

    (e)  the
      occurrence of a Group I Rapid Amortization Trigger Event; or

     

    If
      any
      event described in clause (a), (b) or (e) occurs, a Group I Rapid Amortization
      Event will occur only if, after the applicable grace period, either the
      Indenture Trustee or the Securities Administrator acting at the direction of
      the
      Group I Noteholders evidencing more than 51% in Note Principal Balance of the
      Group I Notes then outstanding by written notice to the holder of the Class
      I-E
      Certificates, the Depositor, the Sponsor and the related Servicers (and to
      the
      Securities Administrator, if given by the Group I Noteholders) declare that
      a
      Group I Rapid Amortization Event has occurred. If any event described in clauses
      (c) or (d) occurs, a Group I Rapid Amortization Event will occur without any
      notice or other action on the part of the Securities Administrator or the
      Noteholders immediately on the occurrence of such event.

     

    Group
      I Rapid Amortization Period:
      The
      period beginning upon the occurrence of the Group I Rapid Amortization
      Event.

     

    Group
      I Rapid Amortization Trigger Event:
      Is in
      effect with respect to the Group I Notes and any Payment Date if the cumulative
      amount of Group I Charge-Off Amounts (net of Group I Subsequent Recoveries)
      incurred on the Group I HELOCs from the Group I Cut-off Date through the end
      of
      the related Collection Period immediately preceding such Payment Date exceeds
      the applicable percentage set forth below of the aggregate Stated Principal
      Balance of the Group I HELOCs as of the Group I Cut-off Date:

    

    
      	
              Prior
                to July 2009

            	
              2.70%

            
	
              July
                2009 to June 2010

            	
              2.70%,
                plus an additional 1/12th of 2.45% for each Payment Date after July
                2009
                up to and including the Payment Date in June 2010

            
	
              July
                2010 to June 2011

            	
              5.15%,
                plus an additional 1/12th of 1.65% for each Payment Date after July
                2010
                up to and including the Payment Date in June 2011

            
	
              July
                2011 to June 2012

            	
              6.80%,
                plus an additional 1/12th of 1.20% for each Payment Date after July
                2011
                up to and including the Payment Date in June 2012

            
	
              July
                2012 to June 2013

            	
              8.00%,
                plus an additional 1/12th of 0.90% for each Payment Date after July
                2012
                up to and including the Payment Date in June 2013

            
	
              July
                2013 to June 2014

            	
              8.90%,
                plus an additional 1/12th of 0.50% for each Payment Date after July
                2013
                up to and including the Payment Date in June 2014

            
	
              July
                2014 and thereafter

            	
              9.40%

            

    

     

    Group
      I Residual Certificates:
      Any of
      the Class I-S, Class I-R-1, Class I-R-2 and Class I-RX Certificates, each
      evidencing the sole class of Residual Interests in the related
      REMIC.

     

    Group
      I Residual Certificateholders:
      Any of
      the Holders of the Class I-S, Class I-R-1, Class I-R-2 or Class I-RX
      Certificates. 

     

    Group
      I REO Property:
      A
      Mortgaged Property acquired in the name of the Indenture Trustee, for the
      benefit of the Noteholders, by foreclosure or deed-in-lieu of foreclosure in
      connection with a defaulted Group I HELOC.

     

    Group
      I 60 Day Plus Delinquency Percentage:
      With
      respect to any Payment Date is the arithmetic average for each of the three
      successive Payment Dates ending with the applicable Payment Date of the
      percentage equivalent of a fraction, (A) the numerator of which is the aggregate
      Stated Principal Balance of (i) the Group I HELOCs that are 60 or more days
      delinquent in the payment of principal or interest for the relevant Payment
      Date, (ii) Group I HELOCs in foreclosure, (iii) Group I REO Property and (iv)
      Group I HELOCs with a related mortgagor subject to bankruptcy procedures, and
      (B) the denominator of which is the aggregate Stated Principal Balance of all
      of
      the Group I HELOCs immediately preceding the relevant Payment Date.

     

    Group
      I Security:
      Any of
      the Group I Certificates or Group I Notes.

     

    Group
      I Sub-Trust:
      The
      portion of the Trust Estate allocated to the Group I HELOCs.

     

    Group
      I Sponsor Certificate Pro Rata Test:
      Is met
      with respect to any Payment Date during the Group I Managed Amortization Period
      if the Certificate Principal Balance of the Class I-S Certificates is greater
      than 3.00% of the aggregate Stated Principal Balance of the Group I
      HELOCs.

     

    Group
      I Stepdown Date:
      The
      earlier to occur of

     

    (A)
      the
      Payment Date following the Payment Date on which the Class I-A Note is retired;
      and 

     

    (B)
      the
      later to occur of 

     

    (x) the
      Payment Date occurring in July 2009 and

     

    (y) the
      first
      Payment Date for which the Group I Current Specified Enhancement Percentage
      is
      greater than or equal to approximately 44.80%.

     

    Group
      I Subsequent Recoveries:
      Means
      any amount recovered by the related Servicer or the Master Servicer (net of
      reimbursable expenses) with respect to a Group I Charged-Off HELOC with respect
      to which a Group I Charge-Off Amount was incurred after the liquidation or
      disposition of such HELOC.

     

    Group
      I Trigger Event:
      With
      respect to any Payment Date is if any of the following tests is not satisfied:
      (A) the Group I 60 Day Plus Delinquency Percentage is less than 4.75% of the
      aggregate Stated Principal Balance of the Group I HELOCs, (B) for any Payment
      Date, the Group I Cumulative Charge-off Percentage for such Payment Date is
      less
      than the following:

     

    
      	
              Prior
                to July 2009

            	
              2.40%

            
	
              July
                2009 to June 2010

            	
              2.40%,
                plus an additional 1/12th of 1.350% for each Payment Date after July
                2009
                up to and including the Payment Date in June 2010

            
	
              July
                2010 to June 2011

            	
              3.75%,
                plus an additional 1/12th of 0.750% for each Payment Date after July
                2010
                up to and including the Payment Date in June 2011

            
	
              July
                2011 to June 2012

            	
              4.50%,
                plus an additional 1/12th of 0.25% for each Payment Date after July
                2011
                up to and including the Payment Date in June 2012

            
	
              July
                2012 and thereafter

            	
              4.75%

            
	 	 

    

    Group
      II:
      All of
      the HELOCs in group II.

     

    Group
      II Available Principal Payment Amount:
      With
      respect to the Class II-A Notes and any Payment Date:

     

    (i) the
      greater of (A) zero and (B)

     

    (1) with
      respect to any Payment Date during the Group II Managed Amortization Period
      and
      if the Group II Sponsor's Certificate Pro Rata Test is not met, the Group II
      Principal Collection Amount less (a) the aggregate Group II Draws for such
      Payment Date and (b) the aggregate Certificate Principal Balance of the Class
      II-S Certificates immediately prior to that Payment Date;

     

    (2) with
      respect to any Payment Date during the Group II Managed Amortization Period
      and
      if the Group II Sponsor's Certificate Pro Rata Test is met, the Group II
      Floating Allocation Percentage of the Group II Principal Collection Amount
      less
      the aggregate Group II Draws for the related Payment Date; and

     

    (3) with
      respect to any Payment Date during the Group II Rapid Amortization Period,
      the
      Group II Principal Collection Amount; plus

     

    (ii) the
      Group
      II Overcollateralization Increase Amount for that Payment Date,

     

    minus

     

    (iii) the
      Group
      II Overcollateralization Reduction Amount for that Payment Date;
      and

     

    (iv) the
      related Servicing Fees and Group II Extraordinary Trust Fund Expenses (subject
      to the Group II Extraordinary Trust Fund Expense Cap), to the extent not already
      covered by a reduction to the Group II Interest Collection Amount.

     

    Group
      II Certificates:
      Any of
      the Class II-S, Class II-E, Class II-RX and Class II-X Certificates.

     

    Group
      II Certificateholder:
      The
      Person in whose name a Group II Certificate is registered in the Certificate
      Register. Owners of Group II Certificates that have been pledged in good faith
      may be regarded as Group II Holders if the pledgee establishes to the
      satisfaction of the Securities Administrator or the Owner Trustee, as the case
      may be, the pledgee’s right so to act with respect to such Group II Certificates
      and that the pledgee is not the Issuer, any other obligor upon the Group II
      Certificates or any Affiliate of any of the foregoing Persons.

     

    Group
      II Charge-Off Amount:
      With
      respect to any Group II Charged-Off HELOC, the amount of the Stated Principal
      Balance of such HELOC that has been written down. To the extent that the related
      Servicer or the Master Servicer receive(s) Group II Subsequent Recoveries with
      respect to any HELOC, the amount of Group II Charge-Off Amount with respect
      to
      that HELOC will be reduced to the extent that such recoveries are applied to
      reduce the Note Principal Balance of any Class of Group II Notes on any Payment
      Date.

     

    Group
      II Charged-Off HELOC:
      Any
      Group II HELOC that has been charged off. 

     

    Group
      II Cumulative Charge-Off Percentage:
      With
      respect to the Group II Notes and any Payment Date is equal to the percentage
      obtained by dividing (x) the aggregate Group II Charge-Off Amounts on the Group
      II HELOCs incurred since the Group II Cut-off Date through the end of the
      related Collection Period, minus the principal portion of any amounts received
      in respect of the Group II HELOCs following the charge-off, by (y) the aggregate
      Stated Principal Balance of the Group II HELOCs as of the Group II Cut-off
      Date.

     

    Group
      II Cut-off Date:
      With
      respect to the Group II HELOCs, the close of business on November 14,
      2006.

     

    Group
      II Cut-off Date Balance:
      $432,710,771.48.

     

    Group
      II Cut-off Date Principal Balance:
      With
      respect to any Group II HELOC, the unpaid principal balance thereof as of the
      Group II Cut-off Date after applying the principal portion of Monthly Payments
      due on or before such date, whether or not received, and without regard to
      any
      payments due after such date.

     

    Group
      II Draw:
      With
      respect to any Group II HELOC, an additional borrowing by the related Mortgagor
      subsequent to the Group II Cut-off Date in accordance with the related Mortgage
      Note.

     

    Group
      II Draw Period:
      With
      respect to any Group II HELOC, the period during which the related Mortgagor
      is
      permitted to make Group II Draws.

     

    Group
      II Excess Liquidation Proceeds:
      To the
      extent that such amount is not required by law to be paid to the related
      Mortgagor, the amount, if any, by which Group II Liquidation Proceeds with
      respect to a Group II Charged-Off HELOC exceed the sum of (i) the Outstanding
      Principal Balance of such HELOC and accrued but unpaid interest at the related
      Mortgage Interest Rate through the last day of the month in which the related
      Group II Liquidation Date occurs, (ii) related Group II Liquidation Expenses
      (including Group II Liquidation Expenses which are payable therefrom to the
      Servicers or the Master Servicer in accordance with the related Servicing
      Agreement or Sale and Servicing Agreement) and (iii) unreimbursed advances
      by
      the related Servicers or the Master Servicer.

     

    Group
      II Excess Overcollateralization Amount:
      With
      respect to Group II HELOCs and any Payment Date, the excess, if any, of the
      Group II Overcollateralization Amount on that Payment Date over the Group II
      Overcollateralization Target Amount.

     

    Group
      II Expense Adjusted Mortgage Rate:
      With
      respect to any Group II HELOC or Group II REO Property, the applicable interest
      rate thereon less the Group II Expense Fee Rate.

     

    Group
      II Expense Fee Rate:
      With
      respect to any Group II HELOC or Group II REO Property, the sum of (i) the
      Servicing Fee Rate and (ii) the Master Servicing Fee Rate.

     

    Group
      II Extraordinary Trust Fund Expenses:
      Any
      amounts reimbursable to the Securities Administrator or the Indenture Trustee,
      or any director, officer, employee or agent of the Securities Administrator
      or
      the Indenture Trustee, from the Trust Estate, any amounts reimbursable to the
      Depositor, the Master Servicer, the Securities Administrator, the Custodian,
      or
      any director, officer, employee or agent thereof, and any other amounts with
      respect to Group II payable or reimbursable from the Trust Estate as Group
      II
      Extraordinary Trust Fund Expenses pursuant to the terms of the Sale and
      Servicing Agreement, the Indenture, the Trust Agreement, the Administration
      Agreement, the Custodial Agreement, the Policy or the Insurance Agreement,
      including Group II Extraordinary Trust Fund Expenses that are not reimbursed
      in
      any calendar year as a result of the Group II Extraordinary Trust Fund Expenses
      Cap. Group II Extraordinary Trust Fund Expenses for any calendar year, to the
      extent they may exceed the Group II Extraordinary Trust Fund Expenses Cap,
      shall
      be paid pro rata among the parties entitled thereto from the amounts available
      therefor.

     

    Group
      II Extraordinary Trust Fund Expenses Cap:
      With
      respect to Group II, $250,000 for each calendar year; provided, however, that
      such cap will not apply to any costs and expenses (i) of the Indenture Trustee
      incurred in connection with the termination of the Securities Administrator
      or
      the Master Servicer, the transfer of master servicing to a successor master
      servicer, any costs incurred with the replacement of the Custodian and costs
      and
      expenses incurred following an Event of Default (so long as such Event of
      Default is continuing), or (ii) of the Master Servicer incurred in connection
      with the termination of the related Servicer and the transfer of servicing
      to a
      successor servicer.

     

    Group
      II Floating Allocation Percentage:
      With
      respect to any Payment Date, the percentage equivalent of a fraction with a
      numerator equal to the Group II Invested Amount at the end of the previous
      related Collection Period (in the case of the first Payment Date, the Group
      II
      Invested Amount as of the Closing Date) and a denominator equal to the aggregate
      Stated Principal Balance of the Group II HELOCs at the end of the previous
      related Collection Period (in the case of the first Payment Date, the Closing
      Date), provided such percentage shall not be greater than 100%.

     

    Group
      II HELOC:
      A home
      equity line of credit in group II transferred and assigned to the Trust pursuant
      to Section 2.01 or Section 2.04 of the Sale and Servicing Agreement, as
      identified in the Mortgage Loan Schedule, including a HELOC in group II the
      property securing which has become an REO Property.

     

    Group
      II Initial Interest Coverage Deposit:
      The
      amount to be paid by the Depositor to the Securities Administrator for deposit
      in the Group II Interest Coverage Account on the Closing Date, which amount
      is
      approximately $100,000. 

     

    Group
      II Insurance Proceeds: Amounts
      paid by the insurer under any Insurance Policy covering any Group II HELOC
      or
      related Mortgaged Property other than amounts required to be paid over to the
      Mortgagor pursuant to law or the related Mortgage Note or Security Instrument
      and other than amounts used to repair or restore the related Mortgaged Property
      or to reimburse insured expenses.

     

    Group
      II Interest Collection Amount:
      With
      respect to each Payment Date, an amount equal to the amount received by the
      related Servicer and consisting of interest collected during the related
      Collection Period on the Group II HELOCs and allocated to interest in accordance
      with the terms of the related Servicing Agreement or the Sale and Servicing
      Agreement, as applicable, together with the interest portion of any Repurchase
      Price relating to any repurchased Group II HELOCs and the interest portion
      of
      any substitution adjustment amount paid during the related Collection Period,
      any Group II Interest Coverage Distribution Amount for that Payment Date, and
      any Group II Subsequent Recoveries on Group I HELOCs that were previously Group
      II Charged-Off HELOCs, to the extent such Group II Subsequent Recoveries relate
      to interest, reduced, without duplication, by any Group II Extraordinary Trust
      Fund Expenses (subject to the Group II Extraordinary Trust Fund Expense
      Cap).

     

    Group
      II Interest Coverage Account:
      The
      account or sub-account established and maintained pursuant to Section 8.10
      of
      the Indenture and which shall be an Eligible Account or sub-account of an
      Eligible Account. 

     

    Group
      II Interest Coverage Distribution Amount:
      With
      respect to any Payment Date, an amount equal to any related Unpaid Interest
      Shortfall Amounts, to the extent not otherwise covered by the Group II Interest
      Collection Amount.

     

    Group
      II Invested Amount:
      With
      respect to any Payment Date, the aggregate Stated Principal Balance of the
      Group
      II HELOCs reduced by the aggregate Certificate Principal Balance of the Class
      II-S Certificates, if any. The Group II Invested Amount on the Closing Date
      is
      $432,710,771.48.

     

    Group
      II Liquidation Date:
      With
      respect to any Group II Charged-Off HELOC, the date on which the Master Servicer
      or the Servicer has certified that such Group II HELOC has become a Group II
      Charged-Off HELOC.

     

    Group
      II Liquidation Expenses:
      With
      respect to a Group II HELOC in liquidation, unreimbursed expenses paid or
      incurred by or for the account of the Master Servicer or the Servicer in
      connection with the liquidation of such Group II HELOC and the related Mortgaged
      Property, such expenses including (a) property protection expenses, (b) property
      sales expenses, (c) foreclosure and sale costs, including court costs and
      reasonable attorneys’ fees, and (d) similar expenses reasonably paid or incurred
      in connection with liquidation.

     

    Group
      II Liquidation Proceeds:
      Cash
      received in connection with the liquidation of a defaulted Group II HELOC,
      whether through trustee’s sale, foreclosure sale, Insurance Proceeds,
      condemnation proceeds or otherwise.

     

    Group
      II Managed Amortization Period:
      With
      respect to the Group II Notes is the period beginning on the Group II Cut-off
      Date and ending on the occurrence of a Group II Rapid Amortization
      Event.

     

    Group
      II Marker Rate:
      With
      respect to the Class II-E Interest and any Payment Date, a per annum rate equal
      to two (2) times the weighted average of the Uncertificated REMIC III
      Pass-Through Rates for the REMIC III Group II Regular Interests (other than
      REMIC III Regular Interests II-AA and II-A-IO), with the rate on REMIC III
      Regular Interest II-A subject to a cap equal to the lesser of (i) the Formula
      Rate for the Corresponding Note, plus the Premium Percentage, and (ii) the
      Net
      WAC Cap Rate for the Corresponding Note for such Payment Date for the purpose
      of
      this calculation, and with the rate on REMIC III Regular Interest II-ZZ subject
      to a cap of zero for the purpose of this calculation; provided, however, that
      solely for this purpose, the related cap with respect to REMIC III Regular
      Interest II-A shall be multiplied by a fraction, the numerator of which is
      30
      and the denominator of which is the actual number of days in the related Accrual
      Period.

     

    Group
      II Maximum Uncertificated Accrued Interest Deferral Amount:
      With
      respect to the any Payment Date, the excess, if any, of (i) accrued interest
      at
      the Uncertificated REMIC III Pass-Through Rate applicable to REMIC III Regular
      Interest II-ZZ for such Payment Date on a balance equal to the Uncertificated
      Principal Balance of REMIC III Regular Interest II-ZZ minus the REMIC III Group
      II Overcollateralization Amount, in each case for such Payment Date, over (ii)
      the aggregate amount of Uncertificated Accrued Interest for such Payment Date
      on
      REMIC III Regular Interest II-A, with the rate on such REMIC III Regular
      Interest subject to a cap equal to the lesser of (i) the Formula Rate for the
      Corresponding Note, plus the Premium Percentage, and (ii) the Net WAC Cap Rate
      for the Corresponding Note for such Payment Date for the purpose of this
      calculation; provided, however, that solely for this purpose, the related cap
      with respect to REMIC III Regular Interest II-A shall be multiplied by a
      fraction, the numerator of which is 30 and the denominator of which is the
      actual number of days in the related Accrual Period.

     

    Group
      II Net WAC Cap Rate Carryover Reserve
      Account:
      The
      Account created pursuant to Section 5.10 of the Sale and Servicing
      Agreement.

     

    Group
      II Net WAC Cap Rate Carryover Reserve
      Account Deposit:
      With
      respect to the Group II Net WAC Cap Rate Carryover Reserve
      Account, an amount equal to $5,000, which the Depositor shall deposit into
      the
      Group II Net WAC Cap Rate Carryover Reserve
      Account pursuant to Section 5.10 of the Sale and Servicing
      Agreement.

     

    Group
      II Notes:
      Any of
      the Class II-A Notes or Class II-A-IO Notes.

     

    Group
      II Noteholder:
      The
      Person in whose name a Group II Note is registered in the Note Register, except
      that, any Group II Note registered in the name of the Depositor, the Issuer,
      the
      Indenture Trustee, the Sponsor, the Securities Administrator or the Master
      Servicer or any Affiliate of any of them shall be deemed not to be a Group
      II
      Holder or Group II Holders, nor shall any so owned be considered outstanding,
      for purposes of giving any request, demand, authorization, direction, notice,
      consent or waiver under the Indenture or the Trust Agreement; provided that,
      in
      determining whether the Indenture Trustee or Securities Administrator shall
      be
      protected in relying upon any such request, demand, authorization, direction,
      notice, consent or waiver, only Group II Notes that a Responsible Officer of
      the
      Indenture Trustee or Securities Administrator has actual knowledge to be so
      owned shall be so disregarded. Owners of Group II Notes that have been pledged
      in good faith may be regarded as Group II Holders if the pledgee establishes
      to
      the satisfaction of the Securities Administrator or the Indenture Trustee the
      pledgee’s right so to act with respect to such Notes and that the pledgee is not
      the Issuer, any other obligor upon the Group II Notes or any Affiliate of any
      of
      the foregoing Persons.

     

    Group
      II Optional Termination Date:
      The
      first date on which the majority holder of the Class II-E Certificates may
      terminate the Group II Sub-Trust (with the consent of the Note Insurer if such
      termination would result in a draw against the Policy or amounts remain due
      and
      owing under the Insurance Agreement).

     

    Group
      II Overcollateralization Amount:
      With
      respect to any Payment Date, the amount, if any, by which the Group II Invested
      Amount exceeds the aggregate Note Principal Balance of the Group II Notes as
      of
      such Payment Date after giving effect to payments to be made on such Payment
      Date.

     

    Group
      II Overcollateralization Deficit:
      With
      respect to any Payment Date, the amount, if any, by which the aggregate Note
      Principal Balance of the Group II Notes as of such Payment Date, after giving
      effect to payments to be made on such Payment Date, exceeds the Group II
      Invested Amount.

     

    Group
      II Overcollateralization Floor:
      With
      respect to the Group II Notes, 0.50% of the Group II Invested Amount as of
      the
      Group II Cut-Off Date.

     

    Group
      II Overcollateralization Increase Amount:
      With
      respect to any Payment Date is the amount payable to the Group II Notes pursuant
      to Section 3.02(d)(4) of the Indenture.

     

    Group
      II Overcollateralization Reduction Amount:
      With
      respect to the Group II Notes and any Payment Date for which the Group II Excess
      Overcollateralization Amount is, or would be, after taking into account all
      other payments to be made on that Payment Date, greater than zero, an amount
      equal to the lesser of (i) the Group II Excess Overcollateralization Amount
      for
      that Payment Date and (ii) the Group II Available Principal Payment Amount
      for
      that Payment Date (without giving effect to the Group II Overcollateralization
      Reduction Amount).

     

    Group
      II Overcollateralization Target Amount:
      With
      respect to any Payment Date (a) prior to the Group II Stepdown Date, an amount
      equal to 3.10% of the Group II Invested Amount as of the Group II Cut-off Date,
      (b) on or after the Group II Stepdown Date and if a Group II Trigger Event
      is
      not in effect, the greater of (A) the lesser of (i) an amount equal to 3.10%
      of
      the Group II Invested Amount as of the Group II Cut-off Date and (ii)
      approximately 6.20% of the then current Group II Invested Amount as of the
      last
      day of the related Collection Period and (B) the Group I Overcollateralization
      Floor or (c) on or after the Group II Stepdown Date and if a Group II Trigger
      Event is in effect, the Group II Overcollateralization Target Amount for the
      immediately preceding Payment Date. The Group II Overcollateralization Target
      Amount will cease to be in effect when the Group II Step-Up Overollateralization
      Target Amount is in effect. 

     

    Group
      II Principal Collection Amount:
      With
      respect to each Payment Date, an amount equal to the amount received by the
      related Servicer and consisting of amounts collected during the related
      Collection Period on the Group II HELOCs and allocated to principal in
      accordance with the terms of the Sale and Servicing Agreement, together with
      the
      principal portion of any Repurchase Price relating to any repurchased Group
      II
      HELOCs and substitution adjustment amount paid during the related Collection
      Period and Group II Subsequent Recoveries, to the extent such Group II
      Subsequent Recoveries relate to principal.

     

    Group
      II Rapid Amortization Event:
      With
      respect to the Group II HELOCs, any one of the following events: 

     

    (a) the
      failure of the Sponsor to make any payments or deposits as required by the
      Sale
      and Servicing Agreement, or to observe or perform in any material respect any
      covenant of the Sponsor in the Mortgage Loan Purchase Agreement or the Sale
      and
      Servicing Agreement that materially and adversely affects the interests of
      the
      Noteholders or the Note Insurer and that continues unremedied and continues
      to
      affect materially and adversely the interests of the Noteholders or the Note
      Insurer for sixty (60) days (five days in the case of any failure to repurchase
      an affected Group II HELOC when required or to substitute a Substitute HELOC
      for
      an affected related HELOC) after the date on which written notice of the
      failure, requiring it to be remedied, shall have been given to the Sponsor
      by
      the Indenture Trustee or the Securities Administrator, or to the Sponsor, the
      Indenture Trustee and the Securities Administrator by the Note Insurer or the
      Holders of greater than 50% of the aggregate Note Principal Balance of the
      Group
      II Notes;

     

    (b) any
      representation or warranty made by the Sponsor in the Mortgage Loan Purchase
      Agreement or the Sale and Servicing Agreement proves to have been incorrect
      in
      any material respect when made, as a result of which the interests of the
      Noteholders or the Note Insurer are materially and adversely affected and that
      continues to be incorrect in any material respect and continues to affect
      materially and adversely the interests of the Noteholders or the Note Insurer
      for thirty (30) days after the date on which notice of the failure, requiring
      it
      to be remedied, shall have been given to the Sponsor by the Indenture Trustee
      or
      the Securities Administrator, or to the Sponsor, the Indenture Trustee and
      the
      Securities Administrator by either the Note Insurer or the Holders of greater
      than 50% of the aggregate Note Principal Balance of the Group II Notes (a Group
      II Rapid Amortization Event pursuant to this subparagraph (b) shall not occur
      if
      the Sponsor has repurchased the related HELOCs or substituted for them during
      the 60-day period (or such longer period (not to exceed an additional 60 days)
      as the Indenture Trustee or the Securities Administrator may specify) in
      accordance with the Sale and Servicing Agreement);

     

    (c) a
      declaration of bankruptcy or insolvency by any of the Trust, the Depositor,
      the
      Master Servicer or the Servicers;

     

    (d) the
      Trust
      becomes subject to the Investment Company Act of 1940; 

     

    (e) the
      occurrence of a Group II Rapid Amortization Trigger Event; or

     

    (f) a
      draw is
      made on the Policy which remains unreimbursed for three months.

     

    If
      any
      event described in clause (a), (b) or (e) occurs, a Group II Rapid Amortization
      Event will occur only if, after the applicable grace period, either the
      Indenture Trustee, the Note Insurer, or the Securities Administrator acting
      at
      the direction of the Note Insurer or the Group II Noteholders evidencing more
      than 51% in Note Principal Balance of the Group II Notes then outstanding,
      with
      the consent of the Note Insurer, by written notice to the holder of the Class
      II-E Certificates, the Depositor, the Sponsor and the related Servicers (and
      to
      the Securities Administrator, if given by the Note Insurer or the Group II
      Noteholders) declare that a Group II Rapid Amortization Event has occurred.
      If
      any event described in clauses (c), (d) or (f) occurs, a Group II Rapid
      Amortization Event will occur without any notice or other action on the part
      of
      the Securities Administrator, the Note Insurer or the Group II Noteholders
      immediately on the occurrence of such event.

     

    Group
      II Rapid Amortization Period:
      The
      period beginning upon the occurrence of the Group II Rapid Amortization
      Event.

     

    Group
      II Rapid Amortization Trigger Event:
      The
      event that is in effect with respect to the Group II Notes and any Payment
      Date
      if the cumulative amount of Group II Charge-Off Amounts (net of Group II
      Subsequent Recoveries) incurred on the Group II HELOCs from the Group II Cut-off
      Date through the end of the related Collection Period immediately preceding
      such
      Payment Date exceeds the applicable percentage set forth below of the aggregate
      Stated Principal Balance of the Group II HELOCs as of the Group II Cut-off
      Date:

     

    
      	
              Prior
                to July 2009

            	
              4.25%

            
	
              July
                2009- June 2010

            	
              4.25%,
                plus an additional 1/12th of 2.25% for each Payment Date after July
                2009
                up to and including the Payment Date in June 2010

            
	
              July
                2010 to June 2011

            	
              6.50%,
                plus an additional 1/12th of 1.75% for each Payment Date after July
                2010
                up to and including the Payment Date in June 2011

            
	
              July
                2011 to June 2012

            	
              8.25%,
                plus an additional 1/12th of 1.25% for each Payment Date after July
                2011
                up to and including the Payment Date in June 2012

            
	
              July
                2012 to June 2013

            	
              9.50%,
                plus an additional 1/12th of 1.00% for each Payment Date after July
                2012
                up to and including the Payment Date in June 2013

            
	
              July
                2013 to June 2014

            	
              10.50%,
                plus an additional 1/12th of 0.50% for each Payment Date after July
                2013
                up to and including the Payment Date in June 2014

            
	
              July
                2014 and thereafter

            	
              11.00%

            
	 	 

    

    Group
      II Residual Certificates:
      Any of
      the Class II-S Certificates and Class II-RX Certificates, each evidencing the
      sole class of Residual Interests in the related REMIC.

     

    Group
      II Residual Certificateholders:
      Any of
      the Holders of the Class II-S Certificates or Class II-RX Certificates.

     

    Group
      II REO Property:
      A
      Mortgaged Property acquired in the name of the Indenture Trustee, for the
      benefit of the Noteholders and the Note Insurer, by foreclosure or deed-in-lieu
      of foreclosure in connection with a defaulted Group II HELOC.

     

    Group
      II 60 Day Plus Delinquency Percentage:
      With
      respect to any Payment Date, the arithmetic average for each of the three
      successive Payment Dates ending with the applicable Payment Date of the
      percentage equivalent of a fraction, (A) the numerator of which is the aggregate
      Stated Principal Balance of (i) the Group II HELOCs that are 60 or more days
      delinquent in the payment of principal or interest for the relevant Payment
      Date, (ii) Group II HELOCs in foreclosure, (iii) Group II REO Property and
      (iv)
      Group II HELOCs with a related Mortgagor subject to bankruptcy procedures,
      and
      (B) the denominator of which is the aggregate Stated Principal Balance of all
      of
      the Group II HELOCs immediately preceding the relevant Payment
      Date.

     

    Group
      II Security:
      Any of
      the Group II Certificates or Group II Notes.

     

    Group
      II Sponsor Certificate Pro Rata Test:
      The
      test that is met with respect to any Payment Date during the Group I Managed
      Amortization Period if the Certificate Principal Balance of the Class II-S
      Certificates is greater than 3.00% of the aggregate Stated Principal Balance
      of
      the Group II HELOCs.

     

    Group
      II Stepdown Date:
      The
      later to occur of

     

    (x) the
      payment date occurring in July 2009; and

     

    (y) the
      first
      payment date on which the Group II Invested Amount has been reduced to 50.00%
      or
      less of the Group II Invested Amount as of the Group II Cut-off
      Date.

     

    Group
      II Step-Up Overcollateralization Amount:
      Will be
      in effect if the Group II Cumulative Charge-Off Percentage for such payment
      date
      exceed the following percentages:

     

    
      	
              December
                2006-November 2007

            	
              1.650%,
                plus an additional 1/12th of 0.850% for each Payment Date after December
                2006 up to and including the Payment Date in November
                2007

            
	
              December
                2007 to November 2008

            	
              2.500%,
                plus an additional 1/12th of 0.625% for each Payment Date after December
                2007 up to and including the Payment Date in November
                2008

            
	
              December
                2008 to November 2009

            	
              3.125%,
                plus an additional 1/12th of 0.625% for each Payment Date after December
                2008 up to and including the Payment Date in November
                2009

            
	
              December
                2009 to November 2010

            	
              3.750%,
                plus an additional 1/12th of 0.500% for each Payment Date after December
                2009 up to and including the Payment Date in November
                2010

            
	
              December
                2010 and thereafter

            	
              4.250%,
                plus an additional 1/12th of 0.500% for each month
                thereafter

            

    

    

     

    The
      Group
      II Step-Up Overcollateralization Amount will equal (a) prior to the Group II
      Stepdown Date, an amount equal to 4.65% of the Group II Invested Amount as
      of
      the Group II Cut-off Date and (b) on or after the Group II Stepdown Date, the
      lesser of (x) 4.65% of the Group II Invested Amount as of the Group II Cut-off
      Date and (y) 6.975% of the then current Group II Invested Amount as of the
      last
      day of the related Collection Period, but not lower 0.50% of the Group II
      Invested Amount as of the Group II Cut-off Date. 

     

    Group
      II Sub-Trust:
      The
      portion of the Trust Estate allocated to the Group II HELOCs.

     

    Group
      II Subsequent Recoveries:
      Any
      amount recovered by the related Servicer or the Master Servicer (net of
      reimbursable expenses) with respect to a Group II Charged-Off HELOC with respect
      to which a Group II Charge-Off Amount was incurred after the liquidation or
      disposition of such HELOC.

     

    Group
      II Trigger Event:
      With
      respect to any Payment Date, the event that is in effect if any of the following
      tests is not satisfied: (A) the Group II 60 Day Plus Delinquency Percentage
      is
      less than 4.60% of the aggregate Stated Principal Balance of the Group II
      HELOCs, (B) for any Payment Date, the Group II Cumulative Charge-off Percentage
      for such payment date is less than the following:

     

    
      	
              Prior
                to July 2009

            	
              2.50%

            
	
              July
                2009-June 2010

            	
              2.50%,
                plus an additional 1/12th of 0.625% for each payment date after July
                2009
                up to and including the payment date in June 2010

            
	
              July
                2010 to June 2011

            	
              3.125%,
                plus an additional 1/12th of 0.500% for each payment date after July
                2010
                up to and including the payment date in June 2011

            
	
              July
                2011 and thereafter

            	
              3.625%
                

            

    

    

     

    HELOC:
      Any of
      the Group I HELOCs or Group II HELOCs.

     

    Holder:
      Any
      Certificateholder or any Noteholder, as the context requires.

     

    Indemnified
      Persons:
      The
      Indenture Trustee, the Master Servicer, the Company, the Owner Trustee, the
      Trust, the Note Insurer and the Securities Administrator, including LaSalle
      Bank
      National Association in its individual capacity, and their respective officers,
      directors, agents and employees and, with respect to the Indenture Trustee,
      any
      separate co-trustee and its officers, directors, agents and
      employees.

     

    Indenture:
      The
      indenture, dated as of December 19, 2006, among the Issuing Entity, the
      Indenture Trustee and the Securities Administrator, relating to the SACO I
      Trust
      2006-12, Mortgage-Backed Notes, Series 2006-12.

     

    Indenture
      Trustee:
      Citibank, N.A., and its successors and assigns or any successor indenture
      trustee appointed pursuant to the terms of the Indenture.

     

    Independent:
      When
      used with respect to any specified Person, the Person (i) is in fact independent
      of the Issuer, any other obligor on the Notes, the Sponsor, the Master Servicer,
      the Depositor and any Affiliate of any of the foregoing Persons, (ii) does
      not
      have any direct financial interest or any material indirect financial interest
      in the Issuer, any such other obligor, the Sponsor, the Master Servicer, the
      Depositor or any Affiliate of any of the foregoing Persons and (iii) is not
      connected with the Issuer, any such other obligor, the Sponsor, the Master
      Servicer, the Depositor or any Affiliate of any of the foregoing Persons as
      an
      officer, employee, promoter, underwriter, trustee, partner, director or person
      performing similar functions.

     

    Independent
      Certificate:
      A
      certificate or opinion to be delivered to the Indenture Trustee under the
      circumstances described in, and otherwise complying with, the applicable
      requirements of Section 11.01 of the Indenture, made by an independent appraiser
      or other expert appointed by an Issuer Request and approved by the Indenture
      Trustee in the exercise of reasonable care, and such opinion or certificate
      shall state that the signer has read the definition of “Independent” in this
      Indenture and that the signer is Independent within the meaning
      thereof.

     

    Index:
      The
      index, if any, specified in a Mortgage Note by reference to which the related
      Mortgage Interest Rate will be adjusted from time to time.

     

    Initial
      Certification:
      The
      initial certification delivered by the Custodian pursuant to Section 2.3(a)
      of
      the Custodial Agreement in the form attached thereto as Exhibit
      One.

     

    Initial
      Note Principal Balance:
      With
      respect to the Class I-A Notes, $141,257,000, with respect to the Class I-M-1
      Notes, $13,436,000, with respect to the Class I-M-2 Notes, $10,607,000, with
      respect to the Class I-M-3 Notes, $8,663,000, with respect to the Class I-M-4
      Notes, $2,829,000 and with respect to the Class II-A Notes,
      $424,489,000.

     

    Insurance
      Agreement:
      The
      Insurance and Indemnity Agreement dated as of December 19, 2006, among the
      Note
      Insurer, EMC, as seller and the Depositor, including any amendments and
      supplements thereto in accordance with the terms thereof.

     

    Insurance
      Policy:
      With
      respect to any HELOC, any standard hazard insurance policy, flood insurance
      policy or title insurance policy.

     

    Insurance
      Proceeds:
      Any
      Group I Insurance Proceeds or Group II Insurance Proceeds.

     

    Interest
      Adjustment Date:
      With
      respect to a HELOC, the date, if any, specified in the related Mortgage Note
      on
      which the Mortgage Interest Rate is subject to adjustment.

     

    Interest
      Collection Amount:
      Any of
      the Group I Interest Collection Amount or the Group II Interest Collection
      Amount. 

     

    Interest
      Coverage Account:
      Either
      of the Group I Interest Coverage Account or the Group II Interest Coverage
      Account. 

     

    Interest
      Determination Date:
      The
      second LIBOR Business Day preceding the related Payment Date on which such
      Accrual Period commences. 

     

    Interest
      Shortfall:
      With
      respect to any Payment Date and each HELOC that during the related Prepayment
      Period was the subject of a Principal Prepayment or constitutes a Relief Act
      HELOC, an amount determined as follows:

     

    (a) Partial
      principal prepayments received during the relevant Prepayment Period: The
      difference between (i) one month’s interest at the applicable Net Rate on the
      amount of such prepayment and (ii) the amount of interest for the calendar
      month
      of such prepayment (adjusted to the applicable Net Rate) received at the time
      of
      such prepayment;

     

    (b) Principal
      prepayments in full received during the relevant Prepayment Period: The
      difference between (i) one month’s interest at the applicable Net Rate on the
      Stated Principal Balance of such HELOC immediately prior to such prepayment
      and
      (ii) the amount of interest for the calendar month of such prepayment (adjusted
      to the applicable Net Rate) received at the time of such prepayment;
      and

     

    (c) Relief
      Act HELOCs: As to any Relief Act HELOC, the excess of (i) 30 days’ interest (or,
      in the case of a principal prepayment in full, interest to the date of
      prepayment) on the Stated Principal Balance thereof (or, in the case of a
      principal prepayment in part, on the amount so prepaid) at the related Net
      Rate
      over (ii) 30 days’ interest (or, in the case of a principal prepayment in full,
      interest to the date of prepayment) on such Stated Principal Balance (or, in
      the
      case of a Principal Prepayment in part, on the amount so prepaid) at the Net
      Rate required to be paid by the Mortgagor as limited by application of the
      Relief Act.

     

    Interim
      Certification:
      The
      interim certification delivered by the Custodian pursuant to Section 2.3(b)
      of
      the Custodial Agreement in the form attached thereto as Exhibit
      Two.

     

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

     

    Investment
      Company Act:
      The
      Investment Company Act of 1940, as amended, and any amendments
      thereto.

     

    IRS:
      The
      Internal Revenue Service.

     

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

     

    Issuing
      Entity:
      SACO I
      Trust 2006-12, a Delaware statutory trust, or its successor in
      interest.

     

    LaSalle:
      LaSalle
      Bank National Association, and its successors and assigns.

     

    Latest
      Possible Maturity Date:
      With
      respect to the Group I HELOCs, September 25, 2036 and with respect to the Group
      II HELOCs, March 25, 2032. For purposes of the Treasury regulations under
      Sections 860A through 860G of the Code, the Latest Possible Maturity Date for
      the Group I HELOCs shall be the Latest Possible Maturity Date of each REMIC
      I
      Regular Interest, each REMIC III Group I Regular Interest, each Regular Interest
      the ownership of which is represented by the Group I Notes and the Class I-E
      Certificates, and the Class I-E Interest. For purposes of the Treasury
      regulations under Sections 860A through 860G of the Code, the Latest Possible
      Maturity Date for the Group II HELOCs shall be the Latest Possible Maturity
      Date
      of each REMIC II Regular Interest, each REMIC III Group II Regular Interest,
      each Regular Interest the ownership of which is represented by the Group II
      Notes and the Class II-E Certificates, and the Class II-E Interest.

     

    LIBOR
      Business Day:
      A day
      on which banks are open for dealing in foreign currency and exchange in London
      and New York City.

     

    Lien:
      Any
      mortgage, deed of trust, pledge, conveyance, hypothecation, assignment,
      participation, deposit arrangement, encumbrance, lien (statutory or other),
      preference, priority right or interest or other security agreement or
      preferential arrangement of any kind or nature whatsoever, including, without
      limitation, any conditional sale or other title retention agreement, any
      financing lease having substantially the same economic effect as any of the
      foregoing and the filing of any financing statement under the UCC (other than
      any such financing statement filed for informational purposes only) or
      comparable law of any jurisdiction to evidence any of the
      foregoing.

     

    Liquidation
      Date:
      Any of
      the Group I Liquidation Date or Group II Liquidation Date.

     

    Liquidation
      Expenses:
      Any of
      the Group I Liquidation Expenses or Group II Liquidation Expenses.

     

    Liquidation
      Proceeds:
      Any of
      the Group I Liquidation Proceeds or the Group II Liquidation
      Proceeds.

     

    Loan-to-Value
      Ratio:
      With
      respect to any HELOC, the fraction, expressed as a percentage, the numerator
      of
      which is the original principal balance of the related HELOC and the denominator
      of which is the Original Value of the related Mortgaged Property.

     

    Lost
      Notes:
      The
      original Mortgage Notes that have been lost, as indicated on the Mortgage Loan
      Schedule.

     

    Majority
      Securityholders:
      With
      respect to the Group I Notes, the holder or holders of in excess of 50% of
      the
      balance of the Group I Notes, and following the reduction of the aggregate
      balance of the Group I Notes to zero, the holders of the Group I Residual
      Certificates (voting collectively as a single class) and with respect to the
      Group II Notes, the Note Insurer or, if a Note Insurer Default has occurred
      and
      is continuing, the holder or holders of in excess of 50% of the balance of
      the
      Group II Notes, and following the reduction of the aggregate balance of the
      Group II Notes to zero, the holders of the Group II Residual Certificates
      (voting collectively as a single class).

     

    Margin:
      With
      respect to the Group I HELOCs any Payment Date on or prior to the first possible
      Group I Optional Termination Date and (i) with respect to the Class I-A Notes
      and, for purposes of the definition of “Formula Rate”, REMIC III Regular
      Interest I-A, 0.140% per annum, (ii) with respect to the Class I-M-1 Notes
      and,
      for purposes of the definition of “Formula Rate”, REMIC III Regular Interest
      I-M-1, 0.310% per annum, (iii) with respect to the Class I-M-2 Notes and, for
      purposes of the definition of “Formula Rate”, REMIC III Regular Interest I-M-2,
      0.410% per annum, (iv) with respect to the Class I-M-3 Notes and, for purposes
      of the definition of “Formula Rate”, REMIC III Regular Interest I-M-3, 1.500%
      per annum and (v) with respect to the Class I-M-4 Notes and, for purposes of
      the
      definition of “Formula Rate”, REMIC III Regular Interest I-M-4, 2.500% per
      annum; and with respect to any Payment Date after the first possible Group
      I
      Optional Termination Date, the Margin will increase to (i) with respect to
      the
      Class I-A Notes and, for purposes of the definition of “Formula Rate”, REMIC III
      Regular Interest I-A, 0.280% per annum, (ii) with respect to the Class I-M-1
      Notes and, for purposes of the definition of “Formula Rate”, REMIC III Regular
      Interest I-M-1, 0.465% per annum, (iii) with respect to the Class I-M-2 Notes
      and, for purposes of the definition of “Formula Rate”, REMIC III Regular
      Interest I-M-2, 0.705% per annum, (iv) with respect to the Class I-M-3 Notes
      and, for purposes of the definition of “Formula Rate”, REMIC III Regular
      Interest I-M-3, 2.250% per annum and (vi) with respect to the Class I-M-4 Notes
      and, for purposes of the definition of “Formula Rate”, REMIC III Regular
      Interest I-M-4, 3.750% per annum. With respect to the Group II HELOCs any
      Payment Date on or prior to the first possible Group II Optional Termination
      Date, with respect to the Class II-A Notes and, for purposes of the definition
      of “Formula Rate”, REMIC III Regular Interest II-A, 0.140% per annum and with
      respect to any Payment Date after the first possible Group II Optional
      Termination Date, the Margin will increase to with respect to the Class II-A
      Notes and, for purposes of the definition of “Formula Rate”, REMIC III Regular
      Interest II-A, 0.280% per annum.

     

    Master
      Servicer:
      LaSalle
      Bank National Association, and its successors and assigns.

     

    Master
      Servicer Collection Account:
      The
      trust account or accounts created and maintained pursuant to Section 5.05 of
      the
      Sale and Servicing Agreement. The Master Servicer Collection Account shall
      be an
      Eligible Account.

     

    Master
      Servicer Compensation:
      As
      defined in Section 4.13 of the Sale and Servicing Agreement.

     

    Master
      Servicer Event of Default:
      Has the
      meaning assigned to such term in Section 7.01 of the Sale and Servicing
      Agreement.

     

    Master
      Servicing Fee Rate:
      0.020%
      per annum.

     

    Master
      Servicing Officer:
      Any
      officer of the Master Servicer involved in, or responsible for, the
      administration and master servicing of the HELOCs whose name and specimen
      signature appear on a list of master servicing officers furnished to the
      Indenture Trustee by the Master Servicer, as such list may be amended from
      time
      to time.

     

    Material
      Defect:
      The
      meaning specified in Section 2.02(a) of the Sale and Servicing
      Agreement.

     

    Maximum
      Lifetime Mortgage Rate:
      The
      maximum level to which a Mortgage Interest Rate can adjust in accordance with
      its terms, regardless of changes in the applicable Index.

     

    MERS:
      Mortgage Electronic Registration Systems, Inc., a corporation organized and
      existing under the laws of the State of Delaware, or any successor
      thereto.

     

    MERS®
      System:
      The
      system of recording transfers of Mortgages electronically maintained by
      MERS.

     

    MIN:
      The
      Mortgage Identification Number for HELOCs registered with MERS on the MERS®
System.

     

    Minimum
      Lifetime Mortgage Rate:
      The
      minimum level to which a Mortgage Interest Rate can adjust in accordance with
      its terms, regardless of changes in the applicable Index.

     

    MOM
      Loan:
      Any
      HELOC for which MERS is acting as the mortgagee of such HELOC, solely as nominee
      for the originator of such HELOC and its successors and assigns, at the
      origination thereof, or as nominee for any subsequent assignee of the originator
      pursuant to an assignment of mortgage to MERS.

     

    Monthly
      Payment:
      With
      respect to any HELOC (including any REO Property) and any Due Date, the payment
      of principal and interest due thereon in accordance with the amortization
      schedule at the time applicable thereto (after adjustment, if any, for partial
      Principal Prepayments and for Deficient Valuations occurring prior to such
      Due
      Date but before any adjustment to such amortization schedule by reason of any
      bankruptcy, other than a Deficient Valuation, or similar proceeding or any
      moratorium or similar waiver or grace period).

     

    Moody’s:
      Moody’s
      Investors Service, Inc.

     

    Mortgage:
      The
      mortgage, deed of trust or other instrument reflected on the Mortgage Loan
      Schedule as securing a HELOC.

     

    Mortgage
      File:
      The
      file containing the Related Documents pertaining to a particular HELOC and
      any
      additional documents required to be added to the Mortgage File pursuant to
      the
      Indenture.

     

    Mortgage
      Interest Rate:
      The
      annual rate at which interest accrues from time to time on any HELOC pursuant
      to
      the related Mortgage Note, which rate is initially equal to the “Mortgage
      Interest Rate” set forth with respect thereto on the applicable Mortgage Loan
      Schedule.

     

    Mortgage
      Loan Purchase Agreement:
      The
      Mortgage Loan Purchase Agreement, dated as of December 19, 2006, between EMC
      Mortgage Corporation, as seller, and Bear Stearns Asset Backed Securities I
      LLC,
      as purchaser, and all amendments thereof and supplements thereto, attached
      to
      the Sale and Servicing Agreement as Exhibit E.

     

    Mortgage
      Loan Schedule:
      The
      schedule, attached as Exhibit A to the Sale and Servicing Agreement with respect
      to the HELOCs.

     

    Mortgage
      Note:
      The
      originally executed note or other evidence of the indebtedness of a Mortgagor
      under the related HELOC.

     

    Mortgaged
      Property:
      Land
      and improvements securing the indebtedness of a Mortgagor under the related
      HELOC or, in the case of REO Property, such REO Property.

     

    Mortgagor:
      The
      obligor on a Mortgage Note.

     

    Net
      Collections:
      With
      respect to any related Charged-Off HELOC, an amount equal to all payments on
      account of interest and principal on such HELOC.

     

    Net
      Liquidation Proceeds:
      With
      respect to any Charged-Off HELOC, Liquidation Proceeds and Subsequent Recoveries
      net of unreimbursed advances by the related Servicer, expenses incurred by
      the
      Servicer in connection with the liquidation of such HELOC and the related
      Mortgaged Property, and any other amounts payable to the related Servicer under
      the related Servicing Agreement.

     

    Net
      Rate
      or
Net
      Mortgage Rate:
      For any
      HELOC, the then applicable Mortgage Rate thereon less the Servicing Fee
      Rate.

     

    Net
      WAC Cap Rate:
      With
      respect to any Payment Date and any Group I Notes (other than the Class I-A-IO
      Notes), a per annum rate equal to the excess, if any, of (x) the weighted
      average of the Group I Expense Adjusted Mortgage Rates of the Group I HELOCs
      as
      of the first day of the related Collection Period preceding such Payment Date
      over (y) the quotient of (a) the Current Interest payable to the Class I-A-IO
      Notes on such Payment Date, divided by (b) the Group I Invested Amount on such
      Payment Date, multiplied by 12. The Net WAC Cap Rate for each Class of Group
      I
      Notes (other than the Class I-A-IO Notes) will be calculated based on a 360-day
      year and the actual number of days elapsed in the related Accrual Period. For
      federal income tax purposes, however, the Net WAC Cap Rate for the Group I
      Notes
      (other than the Class I-A-IO Notes) shall be the equivalent of the foregoing,
      expressed as the weighted average of (adjusted for the actual number of days
      elapsed in the related Accrual Period) the Uncertificated REMIC III Pass-Through
      Rates on the REMIC III Group I Regular Interests (other than REMIC III Regular
      Interest I-A-IO), weighted on the basis of the Uncertificated Principal Balances
      of each such REMIC III Group I Regular Interest. 

     

    With
      respect to any Payment Date and the Class II-A Notes, a per annum rate equal
      to
      the excess, if any, of (x) the weighted average of the Group II Expense Adjusted
      Mortgage Rates of the Group II HELOCs as of the first day of the related
      Collection Period preceding such Payment Date over (y) the sum of (1) the
      quotient of (a) the Current Interest payable to the Class II-A-IO Notes on
      such
      Payment Date, divided by (b) the Group II Invested Amount on such Payment Date,
      multiplied by 12 and (2) the Premium Percentage. The Net WAC Cap Rate for the
      Class II-A Notes will be calculated based on a 360-day year and the actual
      number of days elapsed in the related Accrual Period. For federal income tax
      purposes, however, the Net WAC Cap Rate for the Class II-A Notes shall be the
      equivalent of the foregoing, expressed as the weighted average of (adjusted
      for
      the actual number of days elapsed in the related Accrual Period) the
      Uncertificated REMIC III Pass-Through Rates on the REMIC III Group II Regular
      Interests (other than REMIC III Regular Interest II-A-IO), weighted on the
      basis
      of the Uncertificated Principal Balances of each such REMIC III Group II Regular
      Interest, minus the Premium Percentage. For purposes of the definitions of
      the
“Group II Marker Rate” and “Group II Maximum Uncertificated Accrued Interest
      Deferral Amount”, the foregoing definitions in this paragraph shall not be
      reduced by the Premium Percentage.

     

    With
      respect to any Payment Date and the Class I-A-IO Notes, a per annum rate equal
      to the weighted average of the Group I Expense Adjusted Mortgage Rates of the
      Group I HELOCs as of the first day of the related Collection Period preceding
      such payment date. The Net WAC Cap Rate for the Class I-A-IO Notes will be
      calculated based on a 360-day year consisting of twelve 30-day months. For
      federal income tax purposes, however, the Net WAC Cap Rate for the Class I-A-IO
      Notes shall be the equivalent of the foregoing, expressed as the weighted
      average of the Uncertificated REMIC III Pass-Through Rates on the REMIC III
      Group I Regular Interests, weighted on the basis of the Uncertificated Principal
      Balances of each REMIC III Group I Regular Interest.

     

    With
      respect to any Payment Date and the Class II-A-IO Notes, a per annum rate equal
      to the weighted average of the Group II Expense Adjusted Mortgage Rates of
      the
      Group II HELOCs as of the first day of the related Collection Period preceding
      such payment date. The Net WAC Cap Rate for the Class II-A-IO Notes will be
      calculated based on a 360-day year consisting of twelve 30-day months. For
      federal income tax purposes, however, the Net WAC Cap Rate for the Class II-A-IO
      Notes shall be the equivalent of the foregoing, expressed as the weighted
      average of the Uncertificated REMIC III Pass-Through Rates on the REMIC III
      Group II Regular Interests, weighted on the basis of the Uncertificated
      Principal Balances of each REMIC III Group II Regular Interest.

     

    Net
      WAC Cap Rate Carryover Amount:
      With
      respect to any Class of Notes (other than the Class I-A-IO Notes and Class
      II-A-IO Notes) and any Payment Date, the sum of (A) if such Notes are subject
      to
      the related Net WAC Cap Rate on such Payment Date, the excess, if any, of (x)
      the amount of interest that would have been payable to such Class of Notes
      on
      such Payment Date if the Note Interest Rate for such Class for such Payment
      Date
      were calculated at the Formula Rate, over (y) the amount of interest payable
      on
      such Class of Notes at the related Net WAC Cap Rate for such Payment Date,
      and
      (B) the Net WAC Cap Rate Carryover Amount for the previous Payment Date not
      previously paid, together with interest thereon at a rate equal to the related
      Formula Rate for such Class of Notes for the current Payment Date. With respect
      to the Class I-A-IO Notes and any Payment Date prior to and including the
      Payment Date in November
      2008,
      the sum
      of (A) if such Notes are subject to the related Net WAC Cap Rate on such Payment
      Date, the excess, if any, of (i) the amount of interest that that would have
      been payable to such Class of Notes on such Payment Date if the Note Interest
      Rate for such Class were equal to 5.50% per annum, over (ii) the amount of
      interest payable on such Class of Notes at the related Net WAC Cap Rate for
      such
      Payment Date, and (B) the related Net WAC Cap Rate Carryover Amount for the
      previous Payment Date not previously paid, together with interest thereon at
      a
      rate equal to 5.50% per annum. With respect to the Class II-A-IO Notes and
      any
      Payment Date prior to and including the Payment Date in November 2008, the
      sum
      of (A) if such Notes are subject to the related Net WAC Cap Rate on such Payment
      Date, the excess, if any, of (i) the amount of interest that that would have
      been payable to such Class of Notes on such Payment Date if the Note Interest
      Rate for such Class were equal to 5.50% per annum, over (ii) the amount of
      interest payable on such Class of Notes at the related Net WAC Cap Rate for
      such
      Payment Date, and (B) the related Net WAC Cap Rate Carryover Amount for the
      previous Payment Date not previously paid, together with interest thereon at
      a
      rate equal to 5.50% per annum

     

    Net
      WAC Cap Rate Carryover Reserve
      Account:
      Any of
      the Group I Net WAC Cap Rate Carryover Reserve
      Account or the Group II Net WAC Cap Rate Carryover Reserve
      Account.

     

    Net
      WAC Cap Rate Carryover Reserve
      Account Deposit:
      Any of
      the Group I Net WAC Cap Rate Carryover Reserve
      Account Deposit or the Group II Net WAC Cap Rate Carryover Reserve
      Account Deposit.

     

    Note:
      A Class
      I-A, Class I-A-IO, Class I-M-1, Class I-M-2, Class I-M-3, Class I-M-4, Class
      II-A and II-A-IO Note. 

     

    Noteholder:
      Any of
      the Group I Noteholder or Group II Noteholder.

     

    Note
      Insurer:
      CIFG
      Assurance North America, Inc. 

     

    Note
      Insurer Default:
      The
      existence and continuance of any of the following: (a) a failure by the Note
      Insurer to make a payment required under the Policy in accordance with its
      terms; or (b) the Note Insurer (A) files any petition or commences any case
      or
      proceeding under any provision or chapter of the Bankruptcy Code or any other
      similar federal or state law relating to insolvency, bankruptcy, rehabilitation,
      liquidation or reorganization, (B) makes a general assignment for the benefit
      of
      its creditors, or (C) has an order for relief entered against it under the
      Bankruptcy Code or any other similar federal or state law relating to
      insolvency, bankruptcy, rehabilitation, liquidation or reorganization which
      is
      final and nonappealable.

     

    Note
      Interest Rate:
      With
      respect to each Class of Notes (other than the Class A-IO Notes) and, for
      purposes of the definitions of “Group I Marker Rate”, “Group II Marker Rate”,
“Group I Maximum Uncertificated Accrued Interest Deferral Amount” and “Group I
      Maximum Uncertificated Accrued Interest Deferral Amount”, each REMIC III Regular
      Interest (other than REMIC III Regular Interests I-A-IO, II-A and II-A-IO)
      for
      which a Note is the Corresponding Note, is the lesser of (a) the Formula Rate
      and (b) the related Net WAC Cap Rate.

     

    With
      respect to the Class I-A-IO Notes (i) for each Payment Date from and including
      December 2006 to and including the Payment Date in November 2008, the lesser
      of
      (a) 5.50% per annum and (b) the related Net WAC Cap Rate, and (ii) for each
      Payment Date thereafter, 0.00% per annum. With respect to the Class II-A-IO
      Notes (i) for each Payment Date from and including December 2006 to and
      including the Payment Date in November 2008, the lesser of (a) 5.50% per annum
      and (b) the related Net WAC Cap Rate, and (ii) for each Payment Date thereafter,
      0.00% per annum. For federal income tax purposes, the Class I-A-IO Notes shall
      not have a Note Interest Rate, but Current Interest for such Notes and each
      Payment Date shall be an amount equal to 100% of the amounts distributable
      to
      REMIC III Regular Interest I-A-IO for such Payment Date. For federal income
      tax
      purposes, the Class II-A-IO Notes shall not have a Note Interest Rate, but
      Current Interest for such Notes and each Payment Date shall be an amount equal
      to 100% of the amounts distributable to REMIC III Regular Interest II-A-IO
      for
      such Payment Date.

     

    Note
      Owner:
      The
      Beneficial Owner of a Note.

     

    Note
      Principal Balance:
      With
      respect to any Group I Note (other than the Class I-A-IO Notes) as of any
      Payment Date, will equal such Note’s initial principal balance on the Closing
      Date, as reduced by (i) all amounts distributed on previous Payment Dates on
      such Note with respect to principal, (ii) the principal portion of all Group
      I
      Charge-Off Amounts allocated prior to such Payment Date to such Note, plus
      any
      Group I Subsequent Recoveries added to the Note Principal Balance of such Note.
      With respect to the Class II-A Notes as of any Payment Date, will equal such
      Note’s initial principal balance on the Closing Date, as reduced by (i) all
      amounts distributed on previous Payment Dates on such Note with respect to
      principal, (ii) the principal portion of all Group II Charge-Off Amounts
      allocated prior to such Payment Date to such Note (to the extent not covered
      by
      the Policy), plus any Group II Subsequent Recoveries added to the Note Principal
      Balance of such Note (to the extent not used to reimburse the Note Insurer
      for
      previous draws on the Policy). With respect to any Class of Note (other than
      the
      Class I-A-IO Notes and Class II-A-IO Notes), the Note Principal Balance thereof
      shall be equal to the sum of the Note Principal Balances of all Outstanding
      Notes of such Class.

     

    Note
      Register:
      The
      register maintained by the Note Registrar in which the Note Registrar shall
      provide for the registration of Notes and of transfers and exchanges of
      Notes.

     

    Note
      Registrar:
      The
      Securities Administrator, in its capacity as Note Registrar, or any successor
      to
      the Securities Administrator in such capacity.

     

    Notional
      Amount:
      With
      respect to the Class I-A-IO Notes, the lesser of (a) the Group I Invested Amount
      as of the first day of the related Collection Period and (b) (i) for each
      Payment Date from and including December 2006 to and including the Payment
      Date
      in February 2007, $76,775,000, (ii) for each Payment Date from and including
      March 2007 to and including the Payment Date in May 2007, $68,000,000, (iii)
      for
      each Payment Date from and including June 2007 to and including the Payment
      Date
      in August 2007, $61,000,000, (iv) for each Payment Date from and including
      September 2007 to and including the Payment Date in November 2007, $53,000,000,
      (v) for each Payment Date from and including December 2007 to and including
      the
      Payment Date in February 2008, $43,000,000, (vi) for each Payment Date from
      and
      including March 2008 to and including the Payment Date in May 2008, $31,000,000,
      and (vii) for each Payment Date from and including June 2008 to and including
      the Payment Date in August 2008, $12,275,000, (viii) for each Payment Date
      from
      and including September 2008 to and including the Payment Date in November
      2008,
      $6,150,000 and (ix) for each Payment Date ment thereafter, $0. With respect
      to
      the Class II-A-IO Notes, the lesser of (a) the Group II Invested Amount as
      of
      the first day of the related Collection Period and (b) (i) for each Payment
      Date
      from and including December 2006 to and including the Payment Date in May 2007,
      $187,911,000, (ii) for each Payment Date from and including June 2007 to and
      including the Payment Date in November 2007, $150,329,000, (iii) for each
      Payment Date from and including December 2007 to and including the Payment
      Date
      in February 2008, $105,230,000, (iv) for each Payment Date from and including
      March 2008 to and including the Payment Date in May 2008, $75,165,000, (v)
      for
      each Payment Date from and including June 2008 to and including the Payment
      Date
      in August 2008, $30,066,000, (vi) for each Payment Date from and including
      September 2008 to and including the Payment Date in November 2008, $15,033,000,
      and (vii) for each Payment Date thereafter, $0. 

     

    Officer’s
      Certificate:
      With
      respect to the Master Servicer, a certificate signed by the President, Managing
      Director, a Director, a Vice President or an Assistant Vice President, of the
      Master Servicer and delivered to the Indenture Trustee or the Securities
      Administrator, as applicable. With respect to the Issuer, a certificate signed
      by any Authorized Officer of the Issuer or a Responsible Officer of the
      Securities Administrator, under the circumstances described in, and otherwise
      complying with, the applicable requirements of Section 11.01 of the Indenture,
      and delivered to the Indenture Trustee. Unless otherwise specified, any
      reference in the Indenture to an Officer’s Certificate shall be to an Officer’s
      Certificate of any Responsible Officer of the Securities
      Administrator.

     

    One-Month
      LIBOR:
      With
      respect to any Accrual Period other than the first Accrual Period, the rate
      determined by the Securities Administrator on the related Interest Determination
      Date on the basis of the London interbank offered rate for one-month United
      States dollar deposits, as such rates appear on the Telerate Screen Page 3750,
      as of 11:00 a.m. (London time) on such Interest Determination Date; provided
      that the parties hereto acknowledge that One-Month LIBOR for the first Accrual
      Period shall equal 5.350% per annum.

     

    In
      the
      event that on any Interest Determination Date, Telerate Screen 3750 fails to
      indicate the London interbank offered rate for one-month United States dollar
      deposits, then One-Month LIBOR for the related Interest Accrual Period will
      be
      established by the Securities Administrator as follows:

     

    1.  If
      on
      such Interest Determination Date two or more Reference Banks provide such
      offered quotations, One-Month LIBOR for the related Accrual Period shall be
      the
      arithmetic mean of such offered quotations (rounded upwards if necessary to
      the
      nearest whole multiple of 1/16%).

     

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

     

    The
      establishment of One-Month LIBOR on each Interest Determination Date by the
      Securities Administrator and the Securities Administrator’s calculation of the
      rate of interest applicable for the related Accrual Period shall (in the absence
      of manifest error) be final and binding. 

     

    Opinion
      of Counsel:
      A
      written opinion of counsel acceptable to the Indenture Trustee (and Owner
      Trustee, if applicable) and the Note Insurer which counsel may be in-house
      counsel for the Depositor or the Sponsor if acceptable to the Indenture Trustee
      (and Owner Trustee, if applicable), the Note Insurer and the Rating Agencies
      or
      outside counsel for the Depositor, the Sponsor, the Issuer or the Master
      Servicer, as the case may be.

     

    Original
      Value:
      The
      lesser of (i) the Appraised Value or (ii) the sales price of a Mortgaged
      Property at the time of origination of a HELOC, except in instances where either
      clauses (i) or (ii) is unavailable, the other may be used to determine the
      Original Value, or if both clauses (i) and (ii) are unavailable, Original Value
      may be determined from other sources reasonably acceptable to the
      Depositor.

     

    Originator:
      Any
      originator of the HELOCs.

     

    Outstanding:
      With
      respect to the Notes, as of the date of determination, all Notes theretofore
      executed, authenticated and delivered under this Indenture except:

     

    (i) Notes
      theretofore canceled by the Note Registrar or delivered to the Securities
      Administrator for cancellation; and

     

    (ii) Notes
      in
      exchange for or in lieu of which other Notes have been executed, authenticated
      and delivered pursuant to the Indenture unless proof satisfactory to the
      Securities Administrator is presented that any such Notes are held by a holder
      in due course;

     

    provided,
      Notes
      that have been paid with proceeds of the Policy will be considered outstanding
      for purposes of Section 4.12 of the Indenture. 

     

    Outstanding
      HELOC:
      With
      respect to any Due Date, a HELOC which, prior to such Due Date, was not the
      subject of a Principal Prepayment in full, did not become a Charged-Off HELOC
      and was not purchased or replaced.

     

    Outstanding
      Principal Balance:
      As of
      the time of any determination, the principal balance of a HELOC remaining to
      be
      paid by the Mortgagor, or, in the case of an REO Property, the principal balance
      of the related HELOC remaining to be paid by the Mortgagor at the time such
      property was acquired by the Trust less any related Excess Liquidation Proceeds
      with respect thereto to the extent applied to principal.

     

    Overcollateralization
      Amount:
      Any of
      the Group I Overcollateralization Amount or Group II Overcollateralization
      Amount.

     

    Overcollateralization
      Target Amount:
      Any of
      the Group I Overcollateralization Target Amount or Group II
      Overcollateralization Target Amount. 

     

    Owner
      Trust Estate:
      The
      corpus of the Issuer created by the Trust Agreement which consists of items
      referred to in Section 3.01 of the Trust Agreement.

     

    Owner
      Trustee:
      Wilmington Trust Company, acting not in its individual capacity but solely
      as
      owner trustee under the Trust Agreement, and its successors and assigns or
      any
      successor owner trustee appointed pursuant to the terms of the Trust
      Agreement.

     

    Paying
      Agent:
      Any
      paying agent or co-paying agent appointed under the Indenture, which initially
      shall be the Securities Administrator.

     

    Payment
      Account:
      The
      trust account or accounts created and maintained pursuant to Section 3.01 of
      the
      Indenture, which shall be denominated LaSalle Bank National Association, as
      Securities Administrator f/b/o holders of SACO I Trust 2006-12, Mortgage-Backed
      Notes, Series 2006-12 - Payment Account.” The Payment Account shall be an
      Eligible Account.

     

    Payment
      Account Deposit Date:
      The
      Business Day prior to each Payment Date.

     

    Payment
      Date:
      The
      25th day of each month, or if such day is not a Business Day, then the next
      Business Day, commencing in December 2006.

     

    Percentage
      Interest:
      With
      respect to any Note, the percentage obtained by dividing the Note Principal
      Balance or the Notional Amount, as applicable, of such Note by the aggregate
      Note Principal Balances of all Notes of that Class. With respect to any
      Certificate, the percentage as stated on the face thereof.

     

    Periodic
      Rate Cap:
      With
      respect to any HELOC, the maximum rate, if any, by which the Mortgage Rate
      on
      such HELOC can adjust on any Adjustment Date, as stated in the related Mortgage
      Note or Mortgage.

     

    Permitted
      Investments:
      Any one
      or more of the following obligations or securities held in the name of the
      Indenture Trustee for the benefit of the Noteholders or in the name of the
      Securities Administrator for the benefit of the Certificateholders:

     

    (i) direct
      obligations of, and obligations the timely payment of which are fully guaranteed
      by the United States of America or any agency or instrumentality of the United
      States of America the obligations of which are backed by the full faith and
      credit of the United States of America;

     

    (ii) (a)
      demand or time deposits, federal funds or bankers’ acceptances issued by any
      depository institution or trust company incorporated under the laws of the
      United States of America or any state thereof (including the Indenture Trustee,
      Securities Administrator or the Master Servicer or its Affiliates acting in
      its
      commercial banking capacity) and subject to supervision and examination by
      federal and/or state banking authorities, provided that the commercial paper
      and/or the short-term debt rating and/or the long-term unsecured debt
      obligations of such depository institution or trust company at the time of
      such
      investment or contractual commitment providing for such investment have the
      Applicable Credit Rating or better from the Rating Agencies and (b) any other
      demand or time deposit or certificate of deposit that is fully insured by the
      FDIC;

     

    (iii) repurchase
      obligations with respect to (a) any security described in clause (i) above
      or
      (b) any other security issued or guaranteed by an agency or instrumentality
      of
      the United States of America, the obligations of which are backed by the full
      faith and credit of the United States of America, in either case entered into
      with a depository institution or trust company (acting as principal) described
      in clause (ii)(a) above where the Securities Administrator holds the security
      therefor;

     

    (iv) securities
      bearing interest or sold at a discount issued by any corporation (including
      the
      Indenture Trustee, Securities Administrator or the Master Servicer or its
      Affiliates) incorporated under the laws of the United States of America or
      any
      state thereof that have the Applicable Credit Rating or better from the Rating
      Agencies at the time of such investment or contractual commitment providing
      for
      such investment; provided, however, that securities issued by any particular
      corporation will not be Permitted Investments to the extent that investments
      therein will cause the then outstanding principal amount of securities issued
      by
      such corporation and held as part of the Trust to exceed 10% of the aggregate
      Outstanding Principal Balances of all the HELOCs and Permitted Investments
      held
      as part of the Trust as determined by the Master Servicer;

     

    (v) commercial
      paper (including both non-interest-bearing discount obligations and
      interest-bearing obligations payable on demand or on a specified date not more
      than one year after the date of issuance thereof) having the Applicable Credit
      Rating or better from the Rating Agencies at the time of such
      investment;

     

    (vi) a
      reinvestment agreement issued by any bank, insurance company or other
      corporation or entity;

     

    (vii) any
      other
      demand, money market or time deposit, obligation, security or investment as
      may
      be acceptable to the Note Insurer and the Rating Agencies as evidenced in
      writing by the Rating Agencies to the Securities Administrator; and

     

    (viii) any
      money
      market or common trust fund having the Applicable Credit Rating or better from
      the Rating Agencies, including any such fund for which the Securities
      Administrator or Master Servicer or any affiliate of the Securities
      Administrator or Master Servicer acts as a manager or an advisor; provided,
      however, that no instrument or security shall be a Permitted Investment if
      such
      instrument or security evidences a right to receive only interest payments
      with
      respect to the obligations underlying such instrument or if such security
      provides for payment of both principal and interest with a yield to maturity
      in
      excess of 120% of the yield to maturity at par or if such instrument or security
      is purchased at a price greater than par as determined by the Master
      Servicer.

     

    Permitted
      Transferee:
      Any
      person (x) other than (i) the United States, any State or political subdivision
      thereof, any possession of the United States or any agency or instrumentality
      of
      any of the foregoing, (ii) a foreign government, International Organization
      or
      any agency or instrumentality of either of the foregoing, (iii) an organization
      (except certain farmers’ cooperatives described in section 521 of the Code) that
      is exempt from tax imposed by Chapter 1 of the Code (including the tax imposed
      by section 511 of the Code on unrelated business taxable income) on any excess
      inclusions (as defined in section 860E(c)(1) of the Code) with respect to any
      Residual Certificate, (iv) rural electric and telephone cooperatives described
      in section 1381(a)(2)(C) of the Code or (v) on electing large partnership within
      the meaning of Section 775(a) of the Code, (y) that is a citizen or resident
      of
      the United States, a corporation, partnership (other than a partnership that
      has
      any direct or indirect foreign partners) or other entity (treated as a
      corporation or a partnership for federal income tax purposes), created or
      organized in or under the laws of the United States, any State thereof or the
      District of Columbia, an estate whose income from sources without the United
      States is includible in gross income for United States federal income tax
      purposes regardless of its connection with the conduct of a trade or business
      within the United States, or a trust if a court within the United States is
      able
      to exercise primary supervision over the administration of the trust and one
      or
      more United States persons have authority to control all substantial decisions
      of the trust or if it has a valid election in effect under applicable U.S.
      Treasury regulations to be treated as a United States person and (z) other
      than
      any other Person so designated by the Securities Administrator based upon an
      Opinion of Counsel addressed to the Securities Administrator (which shall not
      be
      an expense of the Securities Administrator or the Indenture Trustee) that states
      that the Transfer of an ownership interest in a Residual Certificate to such
      Person may cause REMIC I, REMIC II, REMIC III, REMIC IV, REMIC V or REMIC VI
      to
      fail to qualify as a REMIC at any time that any Notes or Certificates are
      Outstanding. The terms “United States,” “State” and “International Organization”
shall have the meanings set forth in section 7701 of the Code or successor
      provisions. A corporation will not be treated as an instrumentality of the
      United States or of any State or political subdivision thereof for these
      purposes if all of its activities are subject to tax and, with the exception
      of
      Freddie Mac, a majority of its board of directors is not selected by such
      government unit.

     

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

     

    Plan:
      Any
      employee benefit plan or certain other retirement plans and arrangements,
      including individual retirement accounts and annuities, Keogh plans and bank
      collective investment funds and insurance company general or separate accounts
      in which such plans, accounts or arrangements are invested, that are subject
      to
      ERISA or Section 4975 of the Code.

     

    Plan
      Assets:
      Assets
      of a Plan within the meaning of Department of Labor regulation 29 C.F.R. §
2510.3-101, as modified by Section 3(42) of ERISA.

     

    Policy:
      The
      financial guaranty insurance policy (No. CIFG NA-1405) with respect to the
      Class
      II-A Notes and all endorsements thereto, if any, dated the Closing Date, issued
      by the Note Insurer for the benefit of the holders of the Class II-A Notes
      only.

     

    Pool
      Balance:
      With
      respect to any date of determination, the aggregate of the Stated Principal
      Balances of all HELOCs as of such date.

     

    Premium
      Amount:
      The
      amount of premium due to the Note Insurer calculated based on the product of
      the
      Premium Percentage and the aggregate Note Principal Balance of the Class II-A
      Notes as of the immediately preceding Payment Date, based on a 360-day year
      consisting of twelve 30-day months. 

     

    Premium
      Percentage:
      0.125%
      per annum.

     

    Prepayment
      Assumption:
      A
      specified CPR and a Constant Draw Rate of 10%.

     

    Prepayment
      Period:
      With
      respect any Payment Date, the calendar month immediately preceding the month
      in
      which such payment occurs.

     

    Principal
      Collection Amount:
      Any of
      the Group I Principal Collection Amount or Group II Principal Collection
      Amount.

     

    Principal
      Prepayment:
      Any
      payment (whether partial or full) or other recovery of principal on a HELOC
      which is received in advance of its scheduled Due Date to the extent that it
      is
      not accompanied by an amount as to interest representing scheduled interest
      due
      on any date or dates in any month or months subsequent to the month of
      prepayment, including Insurance Proceeds and Repurchase Proceeds, but excluding
      the principal portion of Excess Liquidation Proceeds.

     

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

     

    Protected
      Account:
      The
      trust account or accounts created and maintained by each Servicer pursuant
      to
      the related Servicing Agreement or the Sale and Servicing Agreement, as
      applicable. Each Protected Account shall be an Eligible Account. 

     

    Purchaser:
      Bear
      Stearns Asset Backed Securities I LLC, a Delaware limited liability company,
      and
      its successors and assigns.

     

    Qualified
      Insurer:
      Any
      insurance company duly qualified as such under the laws of the state or states
      in which the related Mortgaged Property or Mortgaged Properties is or are
      located, duly authorized and licensed in such state or states to transact the
      type of insurance business in which it is engaged and approved as an insurer
      by
      the Master Servicer, so long as the claims paying ability of which is acceptable
      to the Rating Agencies for mortgage-backed notes having the same rating as
      the
      Notes rated by the Rating Agencies as of the Closing Date.

     

    Rapid
      Amortization Event:
      Any of
      the Group I Rapid Amortization Event or Group II Rapid Amortization
      Event.

     

    Rating
      Agency:
      Any
      nationally recognized statistical rating organization, or its successor, that
      rated the Notes at the request of the Depositor at the time of the initial
      issuance of the Notes. Initially, Standard & Poor’s and Moody’s. If such
      organization or a successor is no longer in existence, “Rating Agency” with
      respect to the Notes shall be such nationally recognized statistical rating
      organization, or other comparable Person, designated by the Depositor, notice
      of
      which designation shall be given to the Securities Administrator, the Indenture
      Trustee, the Note Insurer and Master Servicer. References herein to the highest
      short term unsecured rating category of a Rating Agency shall mean A-1 or better
      in the case of Standard & Poor’s, P-1 in the case of Moody’s and in the case
      of any other Rating Agency shall mean such equivalent ratings. References herein
      to the highest long-term rating category of a Rating Agency shall mean “AAA” in
      the case of Standard & Poor’s, “Aaa” in the case of Moody’s and in the case
      of any other Rating Agency, such equivalent rating.

     

    Rating
      Confirmation:
      A
      letter from each Rating Agency then providing a rating for any of the Notes
      at
      the request of the Issuer confirming that the action proposed to be taken by
      the
      Issuer will not, in and of itself, result in a downgrade of any of the ratings
      then applicable to the Notes (without regard to the Policy), or cause any Rating
      Agency to suspend or withdraw the Ratings then applicable to the Notes (without
      regard to the Policy).

     

    Recordation
      Event:
      Any of
      (i) the resignation of a Servicer, (ii) the occurrence of an Event of Servicer
      Termination, or (iii) the occurrence of a bankruptcy, insolvency or foreclosure
      relating to a Servicer; provided,
      that
      any Recordation Event may be waived by the Majority
      Securityholders.

     

    Record
      Date:
      With
      respect to any Class of Notes (other than the Class I-A-IO Notes and Class
      II-A-IO Notes), the business day preceding the applicable Payment Date so long
      as such Class of Notes is in book-entry form; and otherwise the Record Date
      shall be the close of business on the last business day of the month immediately
      preceding the month of the applicable Payment Date. With respect to the Class
      I-A-IO Notes and Class II-A-IO Notes, the Certificates and the Trust
      Certificate, the close of business on the last business day of the month
      immediately preceding the month of the applicable Payment Date. 

     

    Reference
      Banks:
      Any
      leading banks engaged in transactions in Eurodollar deposits in the
      international Eurocurrency market (i) with an established place of business
      in
      London, (ii) whose quotations appear on the Telerate Screen Page 3750 on the
      Interest Determination Date, (iii) which have been designated as such by the
      Securities Administrator and (iv) which are not Affiliates of the Depositor
      or
      the Sponsor.

     

    Registered
      Holder:
      The
      Person in whose name a Note is registered in the Note Register on the applicable
      Record Date.

     

    Regular
      Payment:
      As
      defined in the Policy.

     

    Regular
      Interest:
      A
“regular interest” in a REMIC within the meaning of Section 860G(a)(1) of the
      Code.

     

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

     

    Related
      Documents:
      With
      respect to each HELOC, the documents specified in Section 2.01(d)(i)-(viii)
      of
      the Sale and Servicing Agreement, and any documents required to be added to
      such
      documents pursuant to the Sale and Servicing Agreement, the Trust Agreement,
      the
      Indenture or the Mortgage Loan Purchase Agreement.

     

    Release:
      The
      Federal Reserve Board’s statistical Release No. H.15(519).

     

    Relief
      Act:
      Servicemembers Civil Relief Act.

     

    Relief
      Act HELOC:
      Any
      HELOC as to which the Scheduled Payment thereof has been reduced due to the
      application of the Relief Act.

     

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

     

    REMIC
      I:
      The
      segregated pool of assets described in Section 10.01 of the
      Indenture.

    

    REMIC
      I Regular Interest:
      Any of
      the separate non-certificated beneficial ownership interests in REMIC I issued
      hereunder and designated as a Regular Interest in REMIC I. Each REMIC I Regular
      Interest shall accrue interest at the related Uncertificated REMIC I
      Pass-Through Rate in effect from time to time, and shall be entitled to
      distributions of principal, subject to the terms and conditions hereof, in
      an
      aggregate amount equal to its initial Uncertificated Principal Balance as set
      forth in the Section 10.01 of the Indenture. The designations for the respective
      REMIC I Regular Interests are set forth in Section 10.01 of the
      Indenture.

    

    REMIC
      II:
      The
      segregated pool of assets described in Section 10.01 of the
      Indenture.

    

    REMIC
      II Regular Interest:
      Any of
      the separate non-certificated beneficial ownership interests in REMIC II issued
      hereunder and designated as a Regular Interest in REMIC II. Each REMIC II
      Regular Interest shall accrue interest at the related Uncertificated REMIC
      II
      Pass-Through Rate in effect from time to time, and shall be entitled to
      distributions of principal, subject to the terms and conditions hereof, in
      an
      aggregate amount equal to its initial Uncertificated Principal Balance as set
      forth in the Section 10.01 of the Indenture. The designations for the respective
      REMIC II Regular Interests are set forth in Section 10.01 of the
      Indenture.

    

    REMIC
      III:
      The
      segregated pool of assets described in Section 10.01 of the
      Indenture.

    REMIC
      III Group I Interest Loss Allocation Amount:
      With
      respect to any Payment Date, an amount (subject to adjustment based on the
      actual number of days elapsed in the respective Accrual Period) equal to (a)
      the
      product of (i) the Group I Invested Amount and related REO Properties then
      outstanding and (ii) the Uncertificated REMIC III Pass-Through Rate for REMIC
      III Regular Interest I-AA minus the Group I Marker Rate, divided by (b)
      12.

     

    REMIC
      III Group I Overcollateralization Amount:
      With
      respect to any date of determination, (i) 1.00% of the aggregate Uncertificated
      Principal Balance of the REMIC III Group I Regular Interests minus (ii) the
      aggregate Uncertificated Principal Balance of each REMIC III Group I Regular
      Interest (other than REMIC III Regular Interest I-A-IO) for which a Note is
      the
      Corresponding Note, in each case, as of such date of determination.

     

    REMIC
      III Group I Principal Loss Allocation Amount:
      With
      respect to any Payment Date, an amount equal to the product of (i) the Group
      I
      Invested Amount and related REO Properties then outstanding and (ii) 1 minus
      a
      fraction, the numerator of which is two (2) times the aggregate Uncertificated
      Principal Balance of each REMIC III Group I Regular Interest (other than REMIC
      III Regular Interest I-A-IO) for which a Note is the Corresponding Note, and
      the
      denominator of which is the aggregate Uncertificated Principal Balance of each
      REMIC III Group I Regular Interest (other than REMIC III Regular Interest
      I-A-IO) for which a Note is the Corresponding Note and REMIC III Regular
      Interest I-ZZ.

     

    REMIC
      III Group I Regular Interest:
      Any of
      the REMIC III Regular Interests I-AA, I-A, I-A-IO, I-M-1, I-M-2, I-M-3, I-M-4
      and I-ZZ.

     

    REMIC
      III Group I Required Overcollateralization Amount:
      1.00%
      of the Group I Overcollateralization Target Amount.

    

    REMIC
      III Group II Interest Loss Allocation Amount:
      With
      respect to any Payment Date, an amount (subject to adjustment based on the
      actual number of days elapsed in the respective Accrual Period) equal to (a)
      the
      product of (i) the Group II Invested Amount and related REO Properties then
      outstanding and (ii) the Uncertificated REMIC III Pass-Through Rate for REMIC
      III Regular Interest II-AA minus the Group II Marker Rate, divided by (b)
      12.

     

    REMIC
      III Group II Overcollateralization Amount:
      With
      respect to any date of determination, (i) 1.00% of the aggregate Uncertificated
      Principal Balance of the REMIC III Group II Regular Interests minus (ii) the
      Uncertificated Principal Balance of REMIC III Regular Interest II-A, in each
      case, as of such date of determination.

     

    REMIC
      III Group II Principal Loss Allocation Amount:
      With
      respect to any Payment Date, an amount equal to the product of (i) the Group
      II
      Invested Amount and related REO Properties then outstanding and (ii) 1 minus
      a
      fraction, the numerator of which is two (2) times the Uncertificated Principal
      Balance of REMIC III Regular Interest II-A, and the denominator of which is
      the
      aggregate Uncertificated Principal Balance of REMIC III Regular Interest II-A
      and REMIC III Regular Interest II-ZZ.

     

    REMIC
      III Group II Regular Interest:
      Any of
      the REMIC III Regular Interests II-AA, II-A, II-A-IO and II-ZZ.

     

    REMIC
      III Group II Required Overcollateralization Amount:
      1.00%
      of the Group II Overcollateralization Target Amount.

     

    REMIC
      III Regular Interest:
      Any of
      the separate non-certificated beneficial ownership interests in REMIC III issued
      hereunder and designated as a Regular Interest in REMIC III. Each REMIC III
      Regular Interest shall accrue interest at the related Uncertificated REMIC
      III
      Pass-Through Rate in effect from time to time, and (other than REMIC III Regular
      Interests I-A-IO and II-A-IO) shall be entitled to distributions of principal,
      subject to the terms and conditions hereof, in an aggregate amount equal to
      its
      initial Uncertificated Principal Balance as set forth in the Section 10.01
      of
      the Indenture. The designations for the respective REMIC III Regular Interests
      are set forth in Section 10.01 of the Indenture.

     

    REMIC
      IV:
      The
      segregated pool of assets described in Section 10.01 of the
      Indenture.

     

    REMIC
      V:
      The
      segregated pool of assets described in Section 10.01 of the
      Indenture.

     

    REMIC
      VI:
      The
      segregated pool of assets described in Section 10.01 of the
      Indenture.

     

    REMIC
      Provisions:
      Provisions of the federal income tax law relating to real estate mortgage
      investment conduits, which appear at Sections 860A through 860G of the Code,
      and
      related provisions, and Treasury Regulations and published rulings, notices
      and
      announcements promulgated thereunder, as the foregoing may be in effect from
      time to time, as well as provisions of applicable state laws.

     

    REO
      Property:
      Any of
      the Group I REO Property or Group II REO Property.

     

    Reportable
      Event:
      As
      defined in Section 4.16(a)(iv) of the Sale and Servicing Agreement.

     

    Repurchase
      Price:
      With
      respect to any HELOC (or any property
      acquired
      with respect thereto) required to be repurchased pursuant to the Mortgage Loan
      Purchase Agreement or the Sale and Servicing Agreement, an amount equal to
      the
      sum of (i) 100% of the principal remaining unpaid on such HELOC as of the date
      of repurchase (including if a foreclosure has already occurred, the principal
      balance of the related HELOC at the time the Mortgage Property was acquired),
      net of any Servicing Advances attributable to principal and payable to the
      repurchaser of the HELOC if such repurchaser is also the Servicer of such HELOC,
      (ii) accrued and unpaid interest thereon at the Mortgage Interest Rate through
      and including the last day of the month of repurchase, net of any portion of
      the
      Servicing Fee and any Servicing Advances attributable to interest that is
      payable to the repurchaser of the HELOC if such repurchaser is also the Servicer
      of such HELOC, plus (iii) any costs and damages (if any) incurred by the Trust
      in connection with any violation of such HELOC of any anti-predatory lending
      laws. 

     

    Repurchase
      Proceeds:
      The
      Repurchase Price in connection with any repurchase of a HELOC by the Sponsor
      and
      any cash deposit in connection with the substitution of a HELOC.

     

    Request
      for Release:
      A
      request for release in the form attached to the Custodial Agreement as Exhibit
      Four.

     

    Required
      Insurance Policy:
      With
      respect to any HELOC, any insurance policy which is required to be maintained
      from time to time under the Sale and Servicing Agreement with respect to such
      HELOC.

     

    Residual
      Certificates:
      Any of
      the Group I Residual Certificates or Group II Residual
      Certificates.

     

    Residual
      Certificateholders:
      Any of
      the Group I Residual Certificateholders or Group II Residual Certificateholders.
      

     

    Residual
      Interest:
      The
      sole class of “residual interests” in a REMIC within the meaning of Section
      860G(a)(2) of the Code.

     

    Responsible
      Officer:
      With
      respect to the Securities Administrator, any officer of the Securities
      Administrator with direct responsibility for the administration of the Indenture
      and also, with respect to a particular matter, any other officer to whom such
      matter is referred because of such officer’s knowledge of and familiarity with
      the particular subject; and with respect to the Indenture Trustee, any vice
      president, assistant vice president, any assistant secretary, any assistant
      treasurer, any associate or any other officer of the Indenture Trustee
      customarily performing functions similar to those performed by any of the above
      designated officers who at such time shall be officers to whom, with respect
      to
      a particular matter, such matter is referred because of such officer’s knowledge
      of and familiarity with the particular subject or who shall have direct
      responsibility for the administration of the Indenture or the Trust
      Agreement.

     

    Sale
      and Servicing Agreement:
      The
      Sale and Servicing Agreement, dated as of December 19, 2006, among the Issuer,
      the Sponsor, the Indenture Trustee, the Master Servicer, the Securities
      Administrator and the Depositor.

     

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

     

    Sarbanes-Oxley
      Certification:
      The
      meaning set forth in Section 4.16(a)(iii) of the Sale and Servicing
      Agreement.

     

    Scheduled
      Payment:
      With
      respect to any HELOC and any month, the scheduled payment or payments of
      principal and interest due during such month on such HELOC which either is
      payable by a Mortgagor in such month under the related Mortgage Note or, in
      the
      case of REO Property, would otherwise have been payable under the related
      Mortgage Note.

     

    Scheduled
      Principal:
      The
      principal portion of any Scheduled Payment.

     

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

     

    Securities
      Administrator:
      LaSalle
      Bank National Association, or its successor in interest, or any successor
      securities administrator.

     

    Security:
      Any of
      the Group I Security or Group II Security. 

     

    Securityholder
      or
Holder:
      Any
      Noteholder or Certificateholder.

     

    Security
      Instrument:
      A
      written instrument creating a valid first lien on a Mortgaged Property securing
      a Mortgage Note, which may be any applicable form of mortgage, deed of trust,
      deed to secure debt or security deed, including any riders or addenda
      thereto.

     

    Seller:
      EMC
      Mortgage Corporation, and its successors and assigns.

     

    Servicer:
      With
      respect to the Group I HELOCs, GMACM or EMC, or its successors and assigns.
      With
      respect to the Group II HELOCs, GreenPoint, or its successors and
      assigns.

     

    Servicer
      Remittance Date:
      With
      respect to each HELOC serviced by GMACM or GreenPoint, the date set forth in
      the
      related Servicing Agreement, and with respect
      to each EMC HELOC, on or before 1:00 p.m. New York City time on the second
      Business Day immediately preceding the related Payment Date. 

     

    Servicing
      Advances:
      All
      customary, reasonable and necessary “out of pocket” costs and expenses
      (including reasonable legal fees) incurred in the performance by the Company,
      GMACM or GreenPoint of its servicing obligations under the Sale and Servicing
      Agreement or the related Servicing Agreement, including, but not limited to,
      the
      cost of (i) the preservation, restoration and protection of a Mortgaged
      Property, (ii) any enforcement or judicial proceedings, including foreclosures,
      and including any expenses incurred in relation to any such proceedings that
      result from the HELOC being registered in the MERS® System, (iii) the management
      and liquidation of any REO Property (including, without limitation, realtor’s
      commissions) and (iv) with respect to the Company, compliance with any
      obligations under Section 3.07, of the Sale and Servicing Agreement to
      cause insurance to be maintained.

     

    Servicing
      Agreement:
      Any of
      the GMACM Servicing Agreement or the GreenPoint Servicing Agreement.

     

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

     

    Servicing
      Fee:
      As
      to any
      HELOC and Payment Date, an amount equal to the product of (i) the Stated
      Principal Balance of such HELOC as of the Due Date in the preceding calendar
      month and (ii) the Servicing Fee Rate.

     

    Servicing
      Fee Rate:
      As
      to any
      HELOC, a per annum rate of 0.500%.

     

    Servicing
      Officer:
      Any
      officer of the related Servicer involved in, or responsible for, the
      administration and master servicing of the related HELOCs whose name and
      specimen signature appear on a list of servicing officers furnished to the
      Indenture Trustee by the related Servicer, as such list may be amended from
      time
      to time.

     

    Sponsor:
      EMC
      Mortgage Corporation, and its successors and assigns.

     

    Standard
      & Poor’s:
      Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., or its
      successor in interest.

     

    Stated
      Principal Balance:
      With
      respect to any HELOC and any Payment Date, the principal balance of the HELOC
      as
      of the related Cut-off date, plus the aggregate amount of all related Draws
      conveyed to the Trust in respect of such HELOC minus all collections credited
      against the principal balance of such HELOC in accordance with the related
      mortgage note and minus all prior related Charge-Off Amounts. The Stated
      Principal Balance of any Charged-Off HELOC is equal to zero.

     

    Statutory
      Trust Statute:
      Chapter
      38 of Title 12 of the Delaware Code, 12 Del.
      Code
§§3801 et seq.,
      as the
      same may be amended from time to time.

     

    Subordinate
      Notes:
      The
      Class I-M-1, Class I-M-2, Class I-M-3 and Class I-M-4 Notes.

     

    Subsequent
      Recoveries:
      Any of
      the Group I Subsequent Recoveries or Group II Subsequent Recoveries.

     

    Substitute
      HELOC:
      The
      meaning specified in the Mortgage Loan Purchase Agreement.

     

    Tax
      Matters Person:
      The
      person designated as “tax matters person” in the manner provided under Treasury
      Regulation Sections 1.860F-4(d) and 301.6231(a)(7)-1T. The Holder of the
      greatest Percentage Interest in a Class of Residual Certificates shall be the
      Tax Matters Person for the related REMIC. The Securities Administrator, or
      any
      successor thereto or assignee thereof, shall serve as tax administrator
      hereunder and as agent for the related Tax Matters Person(s).

     

    Telerate
      Screen Page 3750:
      The
      display designated as page 3750 on the Telerate Service (or such other page
      as
      may replace page 3750 on that service for the purpose of displaying London
      interbank offered rates of major banks).

     

    Transfer:
      Any
      direct or indirect transfer or sale of any ownership interest in a Note or
      a
      Certificate.

     

    Treasury
      Regulations:
      Regulations, including proposed or temporary regulations, promulgated under
      the
      Code. References herein to specific provisions of proposed or temporary
      regulations shall include analogous provisions of final Treasury Regulations
      or
      other successor Treasury Regulations.

     

    Trust:
      The
      SACO I Trust 2006-12 created pursuant to the Trust Agreement.

     

    Trust
      Agreement:
      The
      Trust Agreement, dated as of December 15, 2006 between the Depositor and the
      Owner Trustee, as amended and restated by the Amended and Restated Trust
      Agreement, dated as of December 19, 2006, among the Depositor, the Owner
      Trustee, and the Securities Administrator.

     

    Trust
      Estate:
      The
      meaning specified in the Granting Clause of the Indenture.

     

    Trust
      Indenture Act or TIA:
      The
      Trust Indenture Act of 1939, as amended from time to time, as in effect on
      any
      relevant date.

     

    UCC:
      The
      Uniform Commercial Code, as amended from time to time, as in effect in any
      specified jurisdiction.

     

    Uncertificated
      Accrued Interest:
      With
      respect to each REMIC I Regular Interest, REMIC II Regular Interest and REMIC
      III Regular Interest on each Payment Date, an amount equal to one month’s
      interest at the Uncertificated REMIC I Pass-Through Rate, Uncertificated REMIC
      II Pass-Through Rate or Uncertificated REMIC III Pass-Through Rate, as
      applicable, on the related Uncertificated Principal Balance or Uncertificated
      Notional Amount, as applicable, of such REMIC I Regular Interest, REMIC II
      Regular Interest or REMIC III Regular Interest. In each case, Uncertificated
      Accrued Interest will be reduced by any interest shortfalls allocated to such
      REMIC I Regular Interests, REMIC II Regular Interests and REMIC III Regular
      Interests.

     

    Uncertificated
      Notional Amount:
      With
      respect to REMIC III Regular Interest I-A-IO and each Payment Date listed below,
      the aggregate Uncertificated Principal Balance of the REMIC I Regular Interests
      ending with the designation “IO” listed below:

     

    
      	
              Payment
                Date

            	
              REMIC
                I Regular Interests

            
	
              1
                -
                3

            	
              1-IO
                through 8-IO

            
	
              4
                -
                6

            	
              2-IO
                through 8-IO

            
	
              7
                -
                9

            	
              3-IO
                through 8-IO

            
	
              10
                - 12

            	
              4-IO
                through 8-IO

            
	
              13
                - 15

            	
              5-IO
                through 8-IO

            
	
              16
                - 18

            	
              6-IO
                through 8-IO

            
	
              19
                - 21

            	
              7-IO
                through 8-IO

            
	
              22
                - 24

            	
              8-IO

            
	
              thereafter

            	
              $0.00

            

    

    

    With
      respect to REMIC III Regular Interest II-A-IO and each Payment Date listed
      below, the aggregate Uncertificated Principal Balance of the REMIC II Regular
      Interests ending with the designation “IO” listed below:

     

    
      	
              Payment
                Date

            	
              REMIC
                II Regular Interests

            
	
              1
                -
                6

            	
              1-IO
                through 6-IO

            
	
              7
                -
                12

            	
              2-IO
                through 6-IO

            
	
              13
                - 15

            	
              3-IO
                through 6-IO

            
	
              16
                - 18

            	
              4-IO
                through 6-IO

            
	
              19
                - 21

            	
              5-IO
                through 6-IO

            
	
              22
                - 24

            	
              6-IO

            
	
              thereafter

            	
              $0.00

            

    

    

    Uncertificated
      Principal Balance:
      The
      amount of REMIC I Regular Interests, REMIC II Regular Interests, REMIC III
      Regular Interests, Class I-E Interest or Class II-E Interest outstanding as
      of
      any date of determination. As of the Closing Date, the Uncertificated Principal
      Balance of each REMIC I Regular Interest, REMIC II Regular Interest, REMIC
      III
      Regular Interests, Class I-E Interest and Class II-E Interest shall equal the
      amount set forth in Section 10.01 of the Indenture as its initial uncertificated
      principal balance. On each Payment Date, the Uncertificated Principal Balances
      of the REMIC I Regular Interests, REMIC II Regular Interests and REMIC III
      Regular Interests shall be reduced by all distributions of principal made on
      such REMIC I Regular Interests, REMIC II Regular Interests and REMIC III Regular
      Interests on such Payment Date pursuant to Sections 10.02(b), 10.02(c) and
      10.02(d) of the Indenture and, if and to the extent necessary and appropriate,
      shall be further reduced on such Payment Date by Group I Charge-Off Amounts
      and
      Group II Charge-Off Amounts, as applicable, as provided in Section 10.03 of
      the
      Indenture, and the Uncertificated Principal Balance of REMIC III Regular
      Interests I-ZZ and II-ZZ shall be increased by interest deferrals as provided
      in
      Sections 10.02(d)(1)(ii) and 10.02(d)(2)(ii), as applicable, of the Indenture.
      The Uncertificated Principal Balance of each REMIC I Regular Interest, REMIC
      II
      Regular Interest, REMIC III Regular Interest, Class I-E Interest and Class
      II-E
      Interest shall never be less than zero. With respect to the Class I-E Interest
      as of any date of determination, an amount equal to the excess, if any, of
      (A)
      the then aggregate Uncertificated Principal Balance of the REMIC III Group
      I
      Regular Interests over (B) the then aggregate Note Principal Balance of the
      Group I Notes then outstanding. With respect to the Class II-E Interest as
      of
      any date of determination, an amount equal to the excess, if any, of (A) the
      then aggregate Uncertificated Principal Balance of the REMIC III Group II
      Regular Interests over (B) the then aggregate Note Principal Balance of the
      Class II-A Notes then outstanding.

     

    Uncertificated
      REMIC I Pass-Through Rate:
      With
      respect to any REMIC I Regular Interest and any Payment Date, a per annum rate
      equal to the weighted average of the Group I Expense Adjusted Mortgage Rates
      of
      the Group I HELOCs as of the first day of the related Collection Period
      preceding such Payment Date.

     

    Uncertificated
      REMIC II Pass-Through Rate:
      With
      respect to any REMIC II Regular Interest and any Payment Date, a per annum
      rate
      equal to the weighted average of the Group II Expense Adjusted Mortgage Rates
      of
      the Group II HELOCs as of the first day of the related Collection Period
      preceding such Payment Date.

     

    Uncertificated
      REMIC III Pass-Through Rate:
      With
      respect to each REMIC III Group I Regular Interest (other than REMIC III Regular
      Interest I-A-IO) and any Payment Date, a per annum rate equal to the weighted
      average of the rates listed below for the REMIC I Regular Interests for such
      Payment Date, weighted on the basis of the Uncertificated Principal Balances
      of
      each such REMIC I Regular Interest for such Payment Date: 

     

    
      	
              Payment
                Date

            	
              REMIC
                I Regular Interest

            	
              Rate

            
	
              1
                -
                3

            	
              1-IO
                through 8-IO

            	
              Uncertificated
                REMIC I Pass-Through Rate minus 5.50% per annum

            
	 	
              Non-IO

            	
              Uncertificated
                REMIC I Pass-Through Rate

            
	
              4
                -
                6

            	
              2-IO
                through 8-IO

            	
              Uncertificated
                REMIC I Pass-Through Rate minus 5.50% per annum

            
	 	
              Non-IO
                and 1-IO

            	
              Uncertificated
                REMIC I Pass-Through Rate

            
	
              7
                -
                9

            	
              3-IO
                through 8-IO

            	
              Uncertificated
                REMIC I Pass-Through Rate minus 5.50% per annum

            
	 	
              Non-IO
                and 1-IO through 2-IO

            	
              Uncertificated
                REMIC I Pass-Through Rate

            
	
              10
                - 12

            	
              4-IO
                through 8-IO

            	
              Uncertificated
                REMIC I Pass-Through Rate minus 5.50% per annum

            
	 	
              Non-IO
                and 1-IO through 3-IO

            	
              Uncertificated
                REMIC I Pass-Through Rate

            
	
              13
                - 15

            	
              5-IO
                through 8-IO

            	
              Uncertificated
                REMIC I Pass-Through Rate minus 5.50% per annum

            
	 	
              Non-IO
                and 1-IO through 4-IO

            	
              Uncertificated
                REMIC I Pass-Through Rate

            
	
              16
                - 18

            	
              6-IO
                through 8-IO

            	
              Uncertificated
                REMIC I Pass-Through Rate minus 5.50% per annum

            
	 	
              Non-IO
                and 1-IO through 5-IO

            	
              Uncertificated
                REMIC I Pass-Through Rate

            
	
              19
                - 21

            	
              7-IO
                through 8-IO

            	
              Uncertificated
                REMIC I Pass-Through Rate minus 5.50% per annum

            
	 	
              Non-IO
                and 1-IO through 6-IO

            	
              Uncertificated
                REMIC I Pass-Through Rate

            
	
              22
                - 24

            	
              8-IO

            	
              Uncertificated
                REMIC I Pass-Through Rate minus 5.50% per annum

            
	 	
              Non-IO
                and 1-IO through 7-IO

            	
              Uncertificated
                REMIC I Pass-Through Rate

            
	
              thereafter

            	
              Non-IO
                and 1-IO through 8-IO

            	
              Uncertificated
                REMIC I Pass-Through Rate

            

    

    

    With
      respect to REMIC III Regular Interest I-A-IO, and (i) any Payment Date from
      and
      including the Payment Date in December 2006 to and including the Payment Date
      in
      November 2008, a per annum rate equal to the excess, if any, of (x) the weighted
      average of the Uncertificated REMIC I Pass-Through Rates for the REMIC I Regular
      Interests for such Payment Date over (y) the excess, if any, of (1) the weighted
      average of the Uncertificated REMIC I Pass-Through Rates for each REMIC I
      Regular Interest for such Payment Date over (2) 5.50% per annum, in each case
      weighted on the basis of the Uncertificated Principal Balances of each such
      REMIC I Regular Interest for such Payment Date, and (ii) any Payment Date after
      November 2008, a per annum rate equal to the excess, if any, of (A) the weighted
      average of the Uncertificated REMIC I Pass-Through Rates for the REMIC I Regular
      Interests for such Payment Date over (B) the weighted average of the
      Uncertificated REMIC I Pass-Through Rates for the REMIC I Regular Interests
      for
      such Payment Date, in each case weighted on the basis of the Uncertificated
      Principal Balances of each such REMIC I Regular Interest for such Payment
      Date.

    

    With
      respect to each REMIC III Group II Regular Interest (other than REMIC III
      Regular Interest II-A-IO) and any Payment Date, a per annum rate equal to the
      weighted average of the rates listed below for the REMIC II Regular Interests
      for such Payment Date, weighted on the basis of the Uncertificated Principal
      Balances of each such REMIC II Regular Interest for such Payment Date:

     

    
      	
              Payment
                Date

            	
              REMIC
                II Regular Interest

            	
              Rate

            
	
              1
                -
                6

            	
              1-IO
                through 6-IO

            	
              Uncertificated
                REMIC II Pass-Through Rate minus 5.50% per annum

            
	 	
              Non-IO

            	
              Uncertificated
                REMIC II Pass-Through Rate

            
	
              7
                -
                12

            	
              2-IO
                through 6-IO

            	
              Uncertificated
                REMIC II Pass-Through Rate minus 5.50% per annum

            
	 	
              Non-IO
                and 1-IO

            	
              Uncertificated
                REMIC II Pass-Through Rate

            
	
              13
                - 15

            	
              3-IO
                through 6-IO

            	
              Uncertificated
                REMIC II Pass-Through Rate minus 5.50% per annum

            
	 	
              Non-IO
                and 1-IO through 2-IO

            	
              Uncertificated
                REMIC II Pass-Through Rate

            
	
              16
                - 18

            	
              4-IO
                through 6-IO

            	
              Uncertificated
                REMIC II Pass-Through Rate minus 5.50% per annum

            
	 	
              Non-IO
                and 1-IO through 3-IO

            	
              Uncertificated
                REMIC II Pass-Through Rate

            
	
              19
                - 21

            	
              5-IO
                through 6-IO

            	
              Uncertificated
                REMIC II Pass-Through Rate minus 5.50% per annum

            
	 	
              Non-IO
                and 1-IO through 4-IO

            	
              Uncertificated
                REMIC II Pass-Through Rate

            
	
              22
                - 24

            	
              6-IO
                

            	
              Uncertificated
                REMIC II Pass-Through Rate minus 5.50% per annum

            
	 	
              Non-IO
                and 1-IO through 5-IO

            	
              Uncertificated
                REMIC II Pass-Through Rate

            
	
              thereafter

            	
              Non-IO
                and 1-IO through 6-IO

            	
              Uncertificated
                REMIC II Pass-Through Rate

            

    

    

    With
      respect to REMIC III Regular Interest II-A-IO, and (i) any Payment Date from
      and
      including the Payment Date in December 2006 to and including the Payment Date
      in
      November 2008, a per annum rate equal to the excess, if any, of (x) the weighted
      average of the Uncertificated REMIC II Pass-Through Rates for the REMIC II
      Regular Interests for such Payment Date over (y) the excess, if any, of (1)
      the
      weighted average of the Uncertificated REMIC II Pass-Through Rates for each
      REMIC II Regular Interest for such Payment Date over (2) 5.50% per annum, in
      each case weighted on the basis of the Uncertificated Principal Balances of
      each
      such REMIC II Regular Interest for such Payment Date, and (ii) any Payment
      Date
      after November 2008, a per annum rate equal to the excess, if any, of (A) the
      weighted average of the Uncertificated REMIC II Pass-Through Rates for the
      REMIC
      II Regular Interests for such Payment Date over (B) the weighted average of
      the
      Uncertificated REMIC II Pass-Through Rates for the REMIC II Regular Interests
      for such Payment Date, in each case weighted on the basis of the Uncertificated
      Principal Balances of each such REMIC II Regular Interest for such Payment
      Date.

    

    Underwriter:
      Bear,
      Stearns & Co. Inc.

     

    Uninsured
      Cause:
      Any
      cause of damage to a Mortgaged Property or related REO Property such that the
      complete restoration of such Mortgaged Property or related REO Property is
      not
      fully reimbursable by the hazard insurance policies required to be maintained
      pursuant to the related Servicing Agreement, without regard to whether or not
      such policy is maintained.

     

    Unpaid
      Interest Shortfall Amount:
      With
      respect to any Class of Notes and (i) the first Payment Date, zero, and (ii)
      any
      Payment Date after the first Payment Date, the amount, if any, by which (A)
      the
      sum of (1) the Current Interest for such Class of Notes for the immediately
      preceding Payment Date and (2) the outstanding Unpaid Interest Shortfall Amount,
      if any, for such Class of Notes for such preceding Payment Date exceeds (B)
      the
      aggregate amount distributed on such Class of Notes in respect of interest
      pursuant to clause (A) above on such preceding Payment Date, plus interest
      on
      the amount of the interest due but not paid on such Class of Notes on such
      preceding Payment Date, to the extent permitted by law, at the Note Interest
      Rate for such Class for the related Accrual Period.Valspar Corporation Exhibit 10.4 to Form 10-K for the Fiscal Year Ended 10-27-2006

Exhibit 10.4

THE VALSPAR CORPORATION
KEY EMPLOYEE ANNUAL BONUS PLAN
as
amended through October 18, 2006

KEY EMPLOYEE - OFFICER

PURPOSE:

The purpose of The Valspar Corporation Key Employee Annual Bonus Plan is to more closely align the
goals and motivation of management with those of other Valspar shareholders and to provide key personnel with a long-term capital
appreciation opportunity. This purpose is accomplished by granting options to acquire Valspar stock based on the performance
of the Participant and Valspar and by encouraging the conversion of performance based cash bonuses to grants of restricted
Valspar stock.

DEFINITIONS:

“Bonus and Election Form” shall mean the form used from time to time by Valspar for Participants
to make elections under the Plan for each Fiscal Year.

“Cash Bonus Amount” shall mean the amount determined for a Participant for a particular
Fiscal Year as set forth in Section 2 below. The amount of the Cash Bonus Amount will not change if all or part is converted
into a restricted stock grant pursuant to the terms of this Plan.

“Change of Control” shall be deemed to have occurred in any of the following circumstances:
(a) Any individual, entity or group becomes a beneficial owner (as defined in Rule 13d-3 of the Securities Exchange Act of
1934), directly or indirectly, of 20% or more of the voting stock of the Company; (b) The persons who were directors of the
Company immediately prior to any contested election or series of contested elections, tender offer, exchange offer, merger,
consolidation, other business combinations, or any combination of the foregoing cease to constitute a majority of the members
of the Board of Directors of the Company immediately following such occurrence; (c) Any merger, consolidation, reorganization
or other business combination where the individuals or entities who constituted the Company’s shareholders immediately
prior to the combination will not immediately after the combination own at least 50% of the voting securities of the business
resulting from the combination; (d) The sale, lease, exchange or other transfer of all or substantially all the assets of the
Company to any individual, entity or group not affiliated with the Company; (e) The liquidation or dissolution of the Company;
or (f) The occurrence of any other event by which the Company no longer operates as an independent public company.

“Committee” shall mean the Compensation Committee of the Board of Directors of Valspar as
constituted from time to time; provided, however, each member of the Committee shall be an outside director within the meaning
of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) and the rules and regulations thereunder.

“Disability” shall mean permanent disability as that term is defined under the long term
disability insurance coverage offered by Valspar to its employees at the time the determination is to be made.

“Eligible Employee” shall mean an Employee that the Committee has determined to permit to
become a Participant.

“Employee” shall mean each person who is an employee of Valspar which term shall include
both full and part-time employees but shall not include independent contractors providing services to Valspar.

 

“Fiscal Year” shall mean the period corresponding with each of the fiscal years of Valspar.

“Option Plan” shall mean The Valspar Corporation 1991 Stock Option Plan, or any other stock
option plan of Valspar designated by the Committee.

“Participant” shall mean an Eligible Employee that has executed a Bonus and Election Form
and who remains a Participant pursuant to the provisions of Section 1 of the Plan.

“Plan” shall mean The Valspar Corporation Key Employee Annual Bonus Plan, as set forth herein
and as amended from time to time.

“Plan Administrator” shall mean the person or persons designated as such from time to time
by the Committee. If no person is designated as the Plan Administrator, the Plan Administrator shall be the Secretary of Valspar.

“Retirement” shall mean the termination of employment with Valspar at any time after the
Employee has attained the age of sixty years (or age fifty-five with an executed non-compete agreement) for any reason other
than Termination for Cause.

“Stock” shall mean the common stock of Valspar, par value $.50 per share.

“Termination for Cause” shall mean the termination of employment with Valspar as a result
of an illegal act, gross insubordination or willful violation of a Valspar policy by an Employee.

“Valspar” shall mean The Valspar Corporation, a Delaware corporation, with its principal
offices in Minneapolis, Minnesota.

PLAN:

        1.   Participants:   From
time to time, the Committee shall determine the Employees who will be Eligible Employees under the Plan. As soon as possible
after the Committee has made its determination, the Plan Administrator will notify each Eligible Employee of his/her eligibility.
An Eligible Employee shall become a participant by executing a Bonus and Election Form and filing it with the Plan Administrator.
A Participant will cease being a Participant upon the earlier of (i) his/her termination of employment with Valspar for any
reason or (ii) a determination by the Committee that he/she shall no longer be an Eligible Employee.

        2.   Cash Bonus Determination and Amount: 
 

        (a)  Each Participant will be eligible to
earn a Cash Bonus Amount calculated as a percentage of that Participant’s base salary for the Fiscal Year based on the
performance of the Participant and/or Valspar for such Fiscal Year as determined pursuant to The Valspar Corporation Incentive
Bonus Plan for Key Employees (the “Incentive Plan”).

        (b)  With respect to any executive officers
designated by the Committee (the “Designated Executive Officers”), who shall always include the Chief Executive Officer,
the Chief Operating Officer, the President and any Executive or Senior Vice Presidents, (i) the Committee will identify specific
performance targets and maximum bonus levels, as a percentage of base salary, for each Designated Executive Officer under the
Incentive Plan within the first 90 days of each Fiscal Year and record these targets and bonus levels in writing; (ii) the
performance targets for Designated Executive Officers shall be limited to one or more of the following categories for the Fiscal
Year, either on an absolute basis or a comparative basis with other Fiscal Years: gross or net sales, expenses as a percentage
of net sales, inventory turns, profits, return on average equity and cash flow; (iii) the Committee will certify in writing
following the end of the Fiscal Year whether the performance targets have been met and the level of the Cash Bonus Amount

 

earned under the Incentive Plan; and (iv) the maximum Cash Bonus Amount for any Designated Executive Officer under the Incentive
Plan for any Fiscal Year shall be $2,000,000.00.

        3.   Restricted Stock Grant: 
 

        (a)  A Participant may elect prior to the
beginning of each Fiscal Year to convert all or any portion of his/her Cash Bonus Amount for that Fiscal Year into a grant
of restricted Stock. The number of shares of Stock contained in the grant of restricted Stock for each Fiscal Year shall be
determined by dividing the Cash Bonus Amount for that Fiscal Year that is converted into a grant of restricted Stock by the
average closing price of one share of Stock on the New York Stock Exchange for the ten business days immediately prior to the
date on which the Cash Bonus Amount for such Fiscal Year was to be paid. The maximum number of shares that may be granted to
any Designated Executive Officer under this Section 3(a) for any Fiscal year shall be 250,000 shares.

        (b)  Each participant who receives a Cash
Bonus Amount (whether or not he/she elects to convert all or any portion of his/her Cash Bonus Amount into a grant of restricted
Stock pursuant to the previous paragraph) will also receive a grant of restricted Stock equal to 150 percent (150%) of his/her
Cash Bonus Amount. The number of shares of Stock contained in the grant of restricted Stock under this paragraph for each Fiscal
Year shall be determined by dividing the 150 percent (150%) Cash Bonus Amount for that Fiscal Year by the average closing price
of one share of Stock on the New York Stock Exchange for the ten business days immediately prior to the date on which the Cash
Bonus Amount for such Fiscal Year was to be paid. In lieu of such restricted Stock grant in respect of any annual Cash Bonus
Amount, the Committee shall have the discretion to award a participant a cash payment equal to 150 percent (150%) of the participant’s
Cash Bonus Amount.

        (c)  Notwithstanding the fact that the number
of shares of Stock contained in any grant of restricted Stock made pursuant to Sections 3(a) or (b) above is not determined
until after the end of each Fiscal Year, a Participant who is a Participant on the last day of a Fiscal Year shall be entitled
to his/her Cash Bonus Amount and/or grant(s) of restricted Stock for such Fiscal Year even if such Participant is not a Participant
on the date the Cash Bonus Amount is determined or paid or when the number of shares of Stock to be contained in the grant(s)
of restricted Stock is determined or the certificate representing those shares is issued.

        (d)  Immediately upon determination of the
number of shares of Stock contained in the grant(s) of restricted Stock made pursuant to Sections 3(a) or (b) above, Valspar
shall cause to be issued a stock certificate representing such shares of Stock in the name of the Participant. All certificates
representing shares of Stock that are subject to the risk of forfeiture set forth in Section 3(e) below shall be held for Valspar
by the Plan Administrator; provided, however, the person in whose name the certificate is issued shall be entitled to vote
the shares represented by such certificate and receive dividends attributable thereto until such time, if ever, the shares
are forfeited pursuant to Section 3(e) below.

        (e)  The shares of Stock contained in each
grant of restricted Stock are forfeitable for three years from the date of the grant if the Participant’s employment with
Valspar terminates for any reason other than death, Disability, Retirement or Change of Control. Such shares of Stock shall
not be forfeitable if (i) the Participant’s employment with Valspar terminates during such three year period as a result
of the Participant’s death, Disability or Retirement, (ii) any Change of Control (see Definitions) occurs during such
three year period, or (iii) the Participant’s employment with Valspar terminates after the end of such three year period.
At such time as the foregoing risk of forfeiture lapses, the certificate representing the shares of Stock shall be distributed
to the person in whose name it was issued, or if appropriate that person’s estate. If the shares of Stock are forfeited,
the certificate representing those shares shall be canceled.

 

Table of Contents

        (f)  A maximum of 2,800,000 shares of Stock
may be issued as restricted Stock under the Plan.

        4.   Nonstatutory Stock Options: 
 

        (a)  For each Fiscal Year, each Participant
will be granted a nonstatutory stock option under the Option Plan. The number of shares of Stock included in the nonstatutory
stock option will be determined by dividing a multiple of the participant’s base salary by the average closing price of
one share of Stock on the New York Stock Exchange for a consecutive twelve-month period preceding the issuance of the option.

        (b)  Each such option shall be evidenced
by an option agreement between the Participant and Valspar which shall be prepared and executed as soon as possible after the
determination of the number of shares of Stock to be covered by the option. The option agreement shall provide for an exercise
price per share equal to the closing price of one share of Stock on the New York Stock Exchange on the day prior to the date
on which the number of shares of Stock included in the nonstatutory stock option is determined, a term of ten years, vesting
at the rate of 33 1/3% per year so that the option will be fully exercisable three years after the date of grant and will permit
the option to be exercised by surrendering other shares of Stock owned by the Participant. The option agreement shall also
provide for full vesting in the event that (i) the Participant’s employment with Valspar terminates as a result of death,
Disability or Retirement or (ii) a Change of Control (see Definitions) occurs. The option agreement shall permit the exercise
in full of the option for the remainder of its term in the event of a Change of Control. Terms for stock option vesting are
stated in the attached Appendix.

        5.   Change of Control: 

        Upon any Change of Control (see Definitions), each outstanding option shall immediately
become exercisable in full for the remainder of its term, without regard to any vesting or installment exercise provisions
theretofore applicable to the option, and all restrictions shall immediately lapse with respect to each grant of restricted
Stock. This section applies to all options and grants of restricted Stock outstanding under this Plan as of June 16, 1999,
as well as to all options and restricted Stock granted under this Plan thereafter.

        6.   Miscellaneous:   

        (a)  The Board of Directors of Valspar or
the Committee may, at any time and without further action on the part of the shareholders of Valspar, terminate this Plan or
make such amendments as it deems advisable and in the best interests of Valspar; provided, however, that no such termination
or amendment shall, without the consent of the Participant, materially adversely affect or impair the right of the Participant
with respect to a Cash Bonus Amount that the Participant has already earned or a grant of restricted Stock or a nonstatutory
stock option that the Participant has already received; and provided, further, that unless the shareholders of Valspar shall
have approved the same, no amendment shall, either directly or indirectly:

	 	 	(1)	Materially increase the total number of shares of Stock that may be awarded under this Plan to all Participants;
	 	 	(2)	Materially increase the benefits accruing to Participants under the Plan; or
	 	 	(3)	Materially modify the requirements as to eligibility for participation in the Plan.

        (b)  Valspar shall be entitled to withhold
and deduct from future wages of a Participant or from the Cash Bonus Amount, or make other arrangements for the collection
of, all legally required amounts necessary to satisfy any and all federal, state and local withholding and

 

employment-related tax requirements attributable to the lapse of restrictions applicable to the grant of restricted Stock pursuant
to the Plan, or shall require the Participant promptly to remit the amount of such withholding tax obligations to Valspar before
issuing any certificate for shares of Stock awarded under a grant of restricted Stock. Subject to such rules as the Committee
may adopt, the Committee may, in its sole discretion, permit a Participant to satisfy such withholding tax obligations, in
whole or in part, with shares of Stock having an equivalent fair market value or by electing to have Valspar withhold shares
of Stock having an equivalent fair market value from the shares that may be issued pursuant to a grant of restricted Stock;
provided, however, that the Participant must comply with any applicable provisions of Rule 16b-3 or its successor, as then
in effect, of the General Rules and Regulations under the Securities and Exchange Act of 1934, as amended.

        (c)  The categories of performance criteria
for Designated Executive Officers under Section 2(b) shall be subject to shareholder approval at the first shareholders meeting
following the Fiscal Year ending October 31, 2003. These categories, or new categories of performance criteria for the
Designated Executive Officers, shall be subject to shareholder approval at the first shareholders meeting following the end
of each fifth Fiscal Year after 2003.

 

APPENDIX

OFFICERS

STOCK OPTION VESTING TERMS AND CONDITIONS

	Option Term	•    	10 years
	Vesting	•    	33 1/3% per year, fully exercisable three years after date of
grant
	Retirement After Age 60	•    	100% vested

		•    	3 years to exercise, not to
exceed original option term
	Retirement After Age 55	•    	per cent vested at time of retirement, 30 days to exercise,
not to exceed original option term
		•    	100% vested, 3 years to exercise, with non-compete agreement executed
at time of retirement, not to exceed original optional term
	Death and Disability	•    	100% vested
		•    	1 year to exercise, not to
exceed original option term
	Change of Control	•    	100% vested for remainder of term
	Termination	•    	per cent vested at time of termination
		•    	30
days to exercise, not to exceed original option term
	Termination For Cause	•    	forfeit unexercised options

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}]]