ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT

This is an Assignment, Assumption and Recognition Agreement (this “AAR Agreement”) made as of October 1, 2006, among HSBC Bank USA, National Association (the “Assignor”), HSI Asset Securitization Corporation (the “Depositor”), Countrywide Home Loans Servicing LP (the “Servicer”) and Countrywide Home Loans, Inc. (the “Company”) and acknowledged by Wells Fargo Bank, N.A., as master servicer (in such capacity, the “Master Servicer”) and securities administrator (in such capacity, the “Securities Administrator”) and Deutsche Bank National Trust Company, not individually but solely as trustee on behalf of the HSI Asset Securitization Corporation Trust 2006-HE1 (the “Assignee”) .

In consideration of the mutual promises contained herein the parties hereto agree that the residential mortgage loans (the “Assigned Loans”) listed on Exhibit 1 annexed hereto (the “Assigned Loan Schedule”) purchased by Assignor from Company pursuant to (a) the Master Mortgage Loan Purchase Agreement, dated as of August 30, 2006, between Assignor and Company (the “Purchase Agreement”) and (b) that certain Servicing Agreement, dated as of August 30, 2006, between the Assignor and the Company, as amended by that certain Amendment Reg AB dated as of August 30, 2006 (the “Servicing Agreement”) ((a) and (b) shall collectively be referred to herein as the “Purchase and Servicing Agreements”), shall be subject to the terms of this AAR Agreement. Capitalized terms used herein but not defined shall have the meanings ascribed to them in the Purchase Agreement or Servicing Agreement, as applicable.

The Servicer shall service the Assigned Loans in accordance with the Servicing Agreement as modified by this AAR Agreement.

Assignment and Assumption

1.   Assignor hereby grants, transfers and assigns to the Depositor all of the right, title, interest and obligations of Assignor in the Assigned Loans and, as they relate to the Assigned Loans, all of its right, title, interest and obligations in, to and under the Purchase and Servicing Agreements and the Depositor hereby assumes all rights and obligations with respect to the Assigned Loans under the Purchase and Servicing Agreements. Assignor specifically reserves and does not assign to the Depositor any right title and interest in, to or under any Mortgage Loans subject to the Purchase and Servicing Agreements other than those set forth on Exhibit l.

Recognition of the Assignee and Assumption by the Assignee

2.   From and after the date hereof, the Servicer shall and does hereby recognize that the Depositor will transfer the Assigned Loans and assign its rights and obligations under the Purchase and Servicing Agreements (solely to the extent set forth herein) and this AAR Agreement to the Assignee pursuant to a Pooling and Servicing Agreement, dated as of October 1, 2006 (the “Pooling Agreement”), among the Depositor, Deutsche Bank National Trust Company, as trustee (the “Trustee”) (including its successors in interest and any successor trustees under the Pooling Agreement), Clayton Fixed Income Services Inc., as credit risk manager, the Master Servicer, the Securities Administrator and Wells Fargo Bank, N.A., as custodian. The Assignee acknowledges that all such rights and obligations (insofar as such obligations relate to (1) the covenants of the Purchaser under the Purchase and Servicing Agreements with respect to the Assigned Loans and (2) the obligations of the Purchaser under Section 5.01 of the Servicing Agreement with respect to the Assigned Loans) are hereby assumed by the Assignee. The Servicer hereby acknowledges and agrees that from and after the date hereof (i) the Assignee will be the owner of the Assigned Loans, (ii) the Servicer shall look solely to the Assignee for performance of any obligations of the Assignor insofar as they relate to (1) the covenants of the Purchaser under the Purchase and Servicing Agreements with respect to the Assigned Loans and (2) the obligations of the Purchaser under Section 5.01 of the Servicing Agreement with respect to the Assigned Loans, (iii) the Assignee shall have all the rights and remedies available to the Assignor, insofar as they relate to the Assigned Loans, under the Purchase and Servicing Agreements, including, without limitation, the enforcement of the document delivery requirements and remedies with respect to breaches of representations and warranties set forth in the Purchase Agreement or Servicing Agreement, as applicable, and shall be entitled to enforce all of the obligations of the Company and the Servicer thereunder insofar as they relate to the Assigned Loans, and (iv) all references to the Purchaser (insofar as they relate to the rights, title and interest and, with respect to obligations of the Purchaser, only insofar as they relate to (1) the covenants of the Purchaser under the Purchase and Servicing Agreements with respect to the Assigned Loans and (2) the obligations of the Purchaser under Section 5.01 of the Servicing Agreement with respect to the Assigned Loans) under the Purchase and Servicing Agreements insofar as they relate to the Assigned Loans, shall be deemed to refer to the Assignee. None of the Servicer, the Company nor the Assignor shall amend or agree to amend, modify, waiver, or otherwise alter any of the terms or provisions of the Purchase and Servicing Agreements which amendment, modification, waiver or other alteration would in any way affect the Assigned Loans or the Servicer’s performance under the Servicing Agreement with respect to the Assigned Loans without the prior written consent of the Assignee. The Servicer hereby acknowledges that Wells Fargo Bank, N.A. has been appointed as the Master Servicer of the Assigned Loans pursuant to this AAR Agreement and therefore has the right to enforce all obligations of the Servicer, as they relate to the Assigned Loans, under the Servicing Agreement and this AAR Agreement. Notwithstanding the foregoing, i t is understood that the Servicer shall not be obligated to defend, indemnify and hold harmless the Master Servicer, the Securities Administrator, the Assignee, the Assignor and the Depositor against any losses, damages, penalties, fines, forfeitures, judgments and any related costs including, without limitation, reasonable and necessary legal fees, solely and directly resulting from (i) actions or inactions of the Servicer which were taken or omitted upon the instruction or direction of the Master Servicer, the Securities Administrator, the Assignee, as applicable, or (ii) the failure of the Master Servicer, the Securities Administrator or the Trustee, as applicable, to perform the obligations of the Assignee with respect to this AAR Agreement, or as the “Owner” or “Purchaser” with respect to the servicing provisions of the Servicing Agreement.

Representations; Warranties and Covenants  

3.   Assignor warrants and represents to the Depositor, the Servicer, the Company and the Assignee as of the date hereof:

4.   Assignee warrants and represents to, and covenants with, Assignor, the Depositor, the Servicer and the Company as of the date hereof:

5.   Each of the Servicer and the Company, as applicable, warrants and represents to, and covenants with, the Assignor and the Assignee as of the date hereof:

Amendment of the Servicing Agreement  

6.   In connection with the transfer of the Mortgage Loans hereunder, the Servicer agrees that, from and after the date hereof, each Mortgage Loan transferred hereunder will be subject to, and serviced under, the Servicing Agreement, provided that, solely with respect to the Mortgage Loans transferred hereunder, the following modifications shall be made:

Business Day : Any day other than a Saturday or Sunday, or a day on which banks and savings and loan institutions in California, Maryland, Massachusetts, Minnesota, New York or Texas are authorized or obligated by law or executive order to be closed.

Permitted Investments : Any one or more of the following obligations or securities acquired at a purchase price of not greater than par, regardless of whether issued or managed by the Depositor, the Securities Administrator, the Assignee or any of their respective affiliates or for which an affiliate of the any of the foregoing serves as an advisor:

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

(ii)   (A) such depository institution or trust company or its ultimate parent has a short-term uninsured debt rating in one of the two highest available rating categories of the Rating Agency and (B) any other demand or time deposit or deposit which is fully insured by the FDIC;

(iii)   repurchase obligations with respect to any security described in clause (i) above and entered into with a depository institution or trust company (acting as principal) rated A or higher by the Rating Agency;

(iv)   securities bearing interest or sold at a discount that are issued by any corporation incorporated under the laws of the United States of America, the District of Columbia or any State thereof and that are rated by the Rating Agency in its highest long-term unsecured rating categories at the time of such investment or contractual commitment providing for such investment;

(v)   commercial paper (including both non-interest-bearing discount obligations and interest-bearing obligations) that is rated by the Rating Agency in its highest short-term unsecured debt rating available at the time of such investment;

(vi)   units of money market funds (which may be 12b-1 funds, as contemplated by the Commission under the Investment Company Act of 1940) registered under the Investment Company Act of 1940 including funds managed or advised by the Assignee or an affiliate thereof having the highest applicable rating from the Rating Agency; and

(vii)   if previously confirmed in writing to the Securities Administrator, any other demand, money market or time deposit, or any other obligation, security or investment, as may be acceptable to the Rating Agency in writing as a permitted investment of funds backing securities having ratings equivalent to its highest initial ratings of the senior certificates;

(viii)   provided , however , that no instrument described hereunder shall evidence either the right to receive (a) only interest with respect to the obligations underlying such instrument or (b) both principal and interest payments derived from obligations underlying such instrument and the interest and principal payments with respect to such instrument provide a yield to maturity at par greater than 120% of the yield to maturity at par of the underlying obligations.

Rating Agency : Any nationally recognized statistical rating agency rating the securities issued in the applicable Pass-Through Transfer.

“Funds in the Custodial Account shall, if invested, be invested in Permitted Investments; provided, however, that the Servicer shall be under no obligation or duty to invest (or otherwise pay interest on) amounts held in the Custodial Account. All Permitted Investments shall mature or be subject to redemption or withdrawal no later than one Business Day prior to the next succeeding Remittance Date (except that if such Permitted Investment is an obligation of the Servicer, then such Permitted Investment shall mature not later than such applicable Remittance Date). Any and all investment earnings from any such Permitted Investment shall be for the benefit of the Servicer and shall be subject to its withdrawal or order from time to time, and shall not be part of the Trust. The risk of loss of moneys required to be remitted to the Master Servicer resulting from such investments shall be borne by and be the risk of the Servicer. The Servicer shall deposit the amount of any such loss in the Custodial Account immediately as realized, but in no event later than the related Remittance Date.”

; provided, however , that no such compensation shall be in excess of that permitted the Servicer under this Agreement.   

SECTION 7.14. Amendment . This Agreement may be amended, but only to the extent such amendment affects the Mortgage Loans, by written agreement signed by the Seller, the Assignee and the Master Servicer (on behalf of the Trust). In respect of any such amendment, the Assignee and the Master Servicer agree to be bound by the requirements for entering into such amendment provided in Section 12.01(b) of the pooling and servicing agreement, including the delivery of any opinion of counsel required therein.

(vi)   The Master Servicer shall be considered a third-party beneficiary of 2(d), 2(e) and 2(g) of this Amendment Reg AB (with regard to Section 2(g), solely with respect to noncompliance under 2(d) and 2(e) of this Amendment Reg AB), entitled to all the rights and benefits hereof as if it were a direct party to this Agreement.

7.   Pursuant to Section 4.02(a) of the Servicing Agreement, the Servicer shall furnish to the Master Servicer (i)(a) monthly loan data as set forth in Exhibit 3 hereto or in another mutually agreed-upon format, (b) default loan data as set forth in Exhibit 4 hereto (or in such other format mutually agreed upon between the Servicer and the Master Servicer and (c) information regarding the realized losses and gains as set forth in Exhibit 5 hereto (or in such other format mutually agreed upon between the Servicer and the Master Servicer), (ii) all such information required pursuant to clause (i)(a) above on a magnetic tape, electronic mail, or other similar media reasonably acceptable to the Master Servicer and the Servicer, and (iii) all supporting documentation reasonably necessary and available with respect to the information required above. Notwithstanding the foregoing, the Servicer is not required to report data relating to prepayment charges or penalties to the extent such prepayment charges or penalties are retained by the Servicer.

8.   The Company hereby acknowledges and agrees that the remedies available to the Assignor and the Assignee in connection with any breach of the representations and warranties made by the Company set forth in Section 5(f) hereof shall be as set forth in Subsection 3.03 of the Purchase Agreement as if they were set forth herein (including without limitation the repurchase and indemnity obligations set forth therein).

9.   Notwithstanding any term hereof to the contrary, the execution and delivery of this AAR Agreement by the Trustee is solely in its capacity as trustee for the Trust and not individually, and any recourse against the Trustee in respect of any obligations it may have under or pursuant to the terms of this AAR Agreement shall be limited solely to the assets it may hold as trustee of the Trust.

It is expressly understood and agreed by the parties hereto that (i) this AAR Agreement is executed and delivered by the Trustee, not individually or personally but solely as trustee on behalf of HSI Asset Securitization Corporation Trust 2006-HE1, in the exercise of the powers and authority conferred and vested in it, (ii) each of the representations, undertakings and agreements by the Assignee is made and intended for the purpose of binding only the HSI Asset Securitization Corporation Trust 2006-HE1, (iii) nothing herein contained shall be construed as creating any liability on the part of the Trustee, individually or personally, to perform any covenant (either express or implied) contained herein, and all such liability, if any, is hereby expressly waived by the parties hereto, and such waiver shall bind any third party making a claim by or through one of the parties hereto, and (iv) under no circumstances shall the Trustee be personally liable for the payment of any indebtedness or expenses of the HSI Asset Securitization Corporation Trust 2006-HE1 (including, but not limited to, any amounts to be paid under the Purchase and Servicing Agreements), or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the HSI Asset Securitization Corporation Trust 2006-HE1 under this AAR Agreement, the Pooling Agreement or any related document.

Miscellaneous  

10.   All demands, notices and communications related to the Assigned Loans, the Purchase and Servicing Agreements and this AAR Agreement shall be in writing and shall be deemed to have been duly given if personally delivered or mailed by registered mail, postage prepaid, as follows:

Countrywide Home Loans, Inc.

4500 Park Granada

Calabasas, California 91302

Attn:   Darren Bigby

Countrywide Home Loans Servicing LP

400 Countrywide Way

Simi Valley, California 93065

Attn: John Lindberg, Rachel Meza, Eric Varnen and Yuan Li

HSBC Bank USA, National Association

452 Fifth Avenue

New York, New York 10018

Attention: HASCO 2006-HE1

HSI Asset Securitization Corporation

452 Fifth Avenue, 10 ^th Floor

New York, New York 10018

Attention: Head MBS Principal Finance

Deutsche Bank National Trust Company

1761 East St. Andrew Place

Santa Ana, California 92705

Attention:   Trust Administration - HB06H1

Telephone: (714) 247-6000

Facsimile: (714) 247-6329

Wells Fargo Bank, N.A.

P.O. Box 98

Columbia, Maryland 21046

Attention: Client Service Manager, HASCO 2006-HE1

(or in the case of overnight deliveries,

9062 Old Annapolis Road

Columbia, Maryland 21045)

Telephone: (410) 884-2000

Facsimile: (410) 884-2360  

11.   This AAR Agreement shall be construed in accordance with the laws of the State of New York, without regard to conflicts of law principles, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws.

12.   No term or provision of this AAR Agreement may be waived or modified unless such waiver or modification is in writing and signed by the party against whom such waiver or modification is sought to be enforced.

13.   This AAR Agreement shall inure to the benefit of (i) the successors and assigns of the parties hereto and (ii) the Assignee. Any entity into which Assignor, Assignee, Depositor, Servicer or Company may be merged or consolidated shall without the requirement for any further writing, be deemed Assignor, Assignee, Depositor, Servicer or Company, respectively hereunder.

14.   This AAR Agreement shall survive the conveyance of the Assigned Loans as contemplated in this AAR Agreement.

15.   This AAR Agreement may be executed simultaneously in any number of counterparts. Each counterpart shall be deemed to be an original and all such counterparts shall constitute one and the same instrument.

16.   In the event that any provision of this AAR Agreement conflicts with any provision of the Purchase and Servicing Agreements with respect to the Assigned Loans, the terms of this AAR Agreement shall control.

IN WITNESS WHEREOF , the parties hereto have executed this AAR Agreement as of the day and year first above written.

HSBC BANK USA, NATIONAL ASSOCIATION

Assignor

By:   /s/ Jon E Voigtman                        

Name: Jon E Voigtman

Title:   Managing Director #14311

HSI ASSET SECURITIZATION CORPORATION

Depositor

By:   /s/ Andrea Lenox                        

Name: Andrea Lenox

Title: Vice President

COUNTRYWIDE HOME LOANS, INC.

Company

By:   /s/ Kushal Bhakta                        

Name: Kushal Bhakta

Title: Vice President

COUNTRYWIDE HOME LOANS SERVICING LP

By: Countrywide GP, Inc., its General Partner

Servicer

By:   /s/ Kushal Bhakta                        

Name: Kushal Bhakta

Title: Vice President

Agreed to and acknowledged by:

By:      /s/ Martin Reed                          

Name: Martin Reed

Title: Vice President

EXHIBIT l

THIS SERVICING AGREEMENT (this “Agreement”) dated as of August 30, 2006, is by and between COUNTRYWIDE HOME LOANS INC., in its capacity as servicer ( “Countrywide”), and HSBC Bank USA, National Association, and its permitted successors and assigns, as Purchaser (the “Purchaser”).

WHEREAS, the Purchaser and Countrywide Home Loans, Inc. have entered into that certain Master Mortgage Loan Purchase Agreement dated as of August 30, 2006 between the Purchaser and Countrywide, as seller (the “Purchase Agreement”), pursuant to which the Purchaser will purchase and Countrywide will sell from time to time, certain subprime Mortgage Loans (as hereinafter defined) identified in a Purchase Confirmation;

WHEREAS, Countrywide is in the business of providing primary servicing of mortgage loans and owns the right to service the Mortgage Loans listed on the Mortgage Loan Schedule (as hereinafter defined);

WHEREAS, Countrywide has agreed to service the Mortgage Loans for the Purchaser on the terms and conditions set forth herein; and

WHEREAS, Countrywide and the Purchaser desire to prescribe the terms and conditions regarding the management, servicing, and control of such Mortgage Loans.

NOW, THEREFORE, in consideration of the mutual agreements and covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Countrywide and the Purchaser agree as follows:

Unless the context requires otherwise, all capitalized terms used herein shall have the meanings assigned to such terms in this Article I unless defined elsewhere herein. Any capitalized term used but not defined herein shall have the meaning specified in the Purchase Agreement. Any capitalized term used or defined in a Purchase Confirmation that conflicts with the corresponding definition set forth herein shall supersede such term.

Accepted Servicing Practices : With respect to any Mortgage Loan, those mortgage servicing practices (including collection procedures) that (i) Countywide applies to similar mortgage loans serviced for third parties or for its own account, (ii) conform to the customary and usual standards of practice of prudent mortgage banking institutions which service mortgage loans of a similar type as such Mortgage Loan in the jurisdiction where the related Mortgaged Property is located and (iii) are in accordance with Fannie Mae servicing practices and procedures for MBS pool mortgages, as defined in the applicable Fannie Mae Servicing Guide, the terms of the Collateral Documents and all applicable federal, state and local law.

Adjustable Rate Mortgage Loan : Any Mortgage Loan in which the related Mortgage Note contains a provision whereby the Mortgage Interest Rate is adjusted from time to time in accordance with the terms of such Mortgage Note.

Agency : Either Fannie Mae or Freddie Mac.

Agreement : This Servicing Agreement, including all exhibits and supplements hereto, and all amendments hereof.

Assignment of Mortgage : An assignment of the Mortgage, notice of transfer or equivalent instrument in recordable form, sufficient under the laws of the jurisdiction wherein the related Mortgaged Property is located to reflect the sale of the Mortgage to the Purchaser.

Balloon Mortgage Loan : Any Mortgage Loan wherein the Mortgage Note matures prior to full amortization and requires a final and accelerated payment of principal.

Business Day : Any day other than (i) a Saturday or Sunday, or (ii) a day on which banking and savings and loan institutions in the State of California, the State of New York, or the State of Texas are authorized or obligated by law or executive order to be closed.

Cash Liquidation : Recovery of all cash proceeds by Countrywide with respect to the termination of any defaulted Mortgage Loan other than a Mortgage Loan which became an REO Property, including all Other Insurance Proceeds, Liquidation Proceeds, Condemnation Proceeds and other payments or recoveries whether made at one time or over a period of time which Countrywide deems to be finally recoverable, in connection with the sale or assignment of such Mortgage Loan, trustee’s sale, foreclosure sale or otherwise.

Closing : The consummation of the sale and purchase of each Mortgage Loan Package.

Closing Date : The date on which the purchase and sale of the Mortgage Loans constituting a Mortgage Loan Package is consummated, as set forth in the Trade Confirmation or Purchase Confirmation.

Code : The Internal Revenue Code of 1986, or any successor statute thereto.

Collateral Documents : The collateral documents pertaining to each Mortgage Loan as set forth in Exhibit A of the Purchase Agreement.

Collateral File : With respect to each Mortgage Loan, a file containing each of the Collateral Documents.

Condemnation Proceeds : All awards or settlements in respect of a taking of an entire Mortgaged Property by exercise of the power of eminent domain or condemnation.

Countrywide : Countrywide Home Loans, Inc., or any successor or assign to Countrywide under this Agreement as provided herein.

Credit File : The file retained by Countrywide that includes the mortgage loan documents pertaining to a Mortgage Loan including copies of the Collateral Documents together with the credit documentation relating to the origination of such Mortgage Loan, which Credit File may be maintained by Countrywide on microfilm or any other comparable medium.

Custodial Account : The account or accounts created and maintained pursuant to Section 3.04 herein, each of which shall be an Eligible Account.

Custodial Agreement : The agreement governing the retention of the originals of the Collateral Documents, annexed hereto as Exhibit C to the Purchase Agreement.

Custodian : Wells Fargo Bank, National Association, its successor in interest or assign, or such other custodian that may be designated by Countrywide from time to time.

Due Date : The day of the month on which the Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace.

Due Period : With respect to each Remittance Date, the period commencing on the second day of the month preceding the month of the Remittance Date and ending on the first day of the month of the Remittance Date.

Eligible Account : An account or accounts (i) maintained with a depository institution the short term debt obligations of which are rated by a nationally recognized statistical rating agency in one of its two (2) highest rating categories at the time of any deposit therein or, (ii) maintained with an institution and in a manner acceptable to an Agency.

Escrow Account : The separate trust account or accounts created and maintained pursuant to Section 3.06 herein, each of which shall be an Eligible Account.

Escrow Payments : The amounts constituting ground rents, taxes, assessments, water rates, fire and hazard insurance premiums, flood insurance premiums, if applicable, and other payments required to be escrowed by the Mortgagor with the Mortgagee pursuant to any Mortgage Loan.

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

Event of Default : Any one of the conditions or circumstances enumerated in Section 6.01 of this Agreement.

Fannie Mae : The Federal National Mortgage Association or any successor organization.

Fannie Mae Servicing Guide : The Fannie Mae Servicing Guide and all amendments or additions thereto, as applicable.

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

FHA : The Federal Housing Administration.

Final Recovery Determination : With respect to any defaulted Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property purchased by Countrywide pursuant to this Agreement), a determination made by Countrywide that all Insurance Proceeds, Liquidation Proceeds and other payments or recoveries which Countrywide, in its reasonable good faith judgment, expects to be finally recoverable in respect thereof have been so recovered. Countrywide shall maintain records, prepared by a servicing officer of Countrywide, of each Final Recovery Determination. Countrywide shall maintain records, prepared by a servicing officer of Countrywide, of each Final Recovery Determination.

Fidelity Bond : A fidelity bond to be maintained by Countrywide pursuant to Section 3.12 of this Agreement.

First Lien Mortgage Loan : Any Mortgage Loan secured by a first lien on the related Mortgaged Property.

Fixed Rate Mortgage Loan : Any Mortgage Loan wherein the Mortgage Interest Rate set forth in the Mortgage Note is fixed for the term of such Mortgage Loan.

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

Gross Margin: With respect to each Adjustable Rate Mortgage Loan, the fixed percentage amount set forth in the related Mortgage Note, which amount is added to the index in accordance with the terms of the related Mortgage Note to determine on each Interest Adjustment Date, the Mortgage Interest Rate for such Mortgage Loan.

HUD : The Department of Housing and Urban Development or any federal agency or official thereof which may from time to time succeed to the functions thereof.

Interest Adjustment Date : With respect to an Adjustable Rate Mortgage Loan, the date on which an adjustment to the Mortgage Interest Rate on a Mortgage Note becomes effective.

LTV : With respect to any Mortgage Loan, the ratio (expressed as a percentage) of the Stated Principal Balance (or the original principal balance, if so indicated) of such Mortgage Loan as of the date of determination to the Appraised Value of the related Mortgaged Property.

Late Collections : With respect to any Mortgage Loan, all amounts received during any Due Period, whether as late payments of Monthly Payments or as Liquidation Proceeds, Condemnation Proceeds, Other Insurance Proceeds, proceeds of any REO Disposition or otherwise, which represent late payments or collections of Monthly Payments due but delinquent for a previous Due Period and not previously recovered.

Lifetime Rate Cap : With respect to each Adjustable Rate Mortgage Loan, the absolute maximum Mortgage Interest Rate payable, above which the Mortgage Interest Rate shall not be adjusted, as set forth in the related Mortgage Note and Mortgage Loan Schedule.

Liquidation Proceeds : Amounts, other than Condemnation Proceeds and Other Insurance Proceeds, received by Countrywide in connection with the liquidation of a defaulted Mortgage Loan through trustee’s sale, foreclosure sale or otherwise, other than amounts received following the acquisition of an REO Property pursuant to Section 3.13 of this Agreement.

Monthly Advance : The advances made or required to be made.

Monthly Payment : The scheduled monthly payment of principal and interest on a Mortgage Loan.

Mortgage : The mortgage, deed of trust or other instrument securing a Mortgage Note, which creates a first lien, in the case of a First Lien Mortgage Loan, or a second lien, in the case of a Second Lien Mortgage Loan, on an unsubordinated estate in fee simple in real property securing the Mortgage Note.

Mortgage Interest Rate : The annual rate at which interest accrues on any Mortgage Loan and, with respect to an Adjustable Rate Mortgage Loan, as adjusted from time to time in accordance with the provisions of the related Mortgage Note.

Mortgage Loan : Any subprime mortgage loan that is sold pursuant to this Agreement, as evidenced by such mortgage loan’s inclusion on the related Mortgage Loan Schedule, which mortgage loan includes the Monthly Payments, Principal Prepayments (including any Prepayment Charges), Liquidation Proceeds, Condemnation Proceeds, Other Insurance Proceeds, REO Disposition proceeds, and all other rights, benefits, proceeds and obligations arising from or in connection with such Mortgage Loan, excluding the servicing rights relating thereto. Unless the context requires otherwise, any reference to the Mortgage Loans in this Agreement shall refer to the Mortgage Loans constituting a Mortgage Loan Package.

Mortgage Loan Package : The Mortgage Loans sold to the Purchaser pursuant to a Purchase Confirmation.

Mortgage Loan Remittance Rate : With respect to each Mortgage Loan, the interest rate payable to the Purchaser on each Remittance Date which shall equal the Mortgage Interest Rate less the Servicing Fee.

Mortgage Loan Schedule : With respect to each Mortgage Loan Package, the schedule of Mortgage Loans included therein and made a part of the related Purchase Confirmation, which schedule shall include, the following information with respect to each Mortgage Loan: (i) Countrywide’s loan number identifying such Mortgage Loan; (ii) the Mortgage Interest Rate as of the Cut-off Date; (iii) with respect to any Adjustable Rate Mortgage Loan, the Gross Margin, the Periodic Rate Cap, the Lifetime Rate Cap, the next Interest Adjustment Date, the first Interest Adjustment Date, the minimum Mortgage Interest Rate and the Index, (iv) with respect to each First Lien Mortgage Loan, the LTV at origination and, with respect to each Second Lien Mortgage Loan, the Combined LTV at origination; (v) the original term of such Mortgage Loan, (vi) whether such Mortgage Loan is a First Lien Mortgage Loan or a Second Lien Mortgage Loan; (vii) the Mortgagor's first and last name; (viii) the street address of the Mortgaged Property including the city, state and zip code; (ix) a code indicating whether the Mortgaged Property is owner-occupied; (x) the type of Residential Dwelling constituting the Mortgaged Property; (xi) the original months to maturity; (xii) the date on which the first Monthly Payment was due on the Mortgage Loan; (xiiii) the stated maturity date; (xiv) the amount of the Monthly Payment as of the Cut-off Date; (xv) the last Due Date on which a Monthly Payment was actually applied to the unpaid Stated Principal Balance; (xvi) the original principal amount of the Mortgage Loan and, with respect to a Second Lien Mortgage Loan, the CLTV; (xvii) the Stated Principal Balance of the Mortgage Loan; (xviii) a code indicating the purpose of the loan (i.e., purchase financing, Rate/Term Refinancing, Cash-Out Refinancing); (xix) the date on which the first Monthly Payment was due on the Mortgage Loan and, if such date is not consistent with the Due Date currently in effect, such Due Date; (xx) a code indicating the documentation style; (xxi) a code indicating whether the Mortgage Loan is an Adjustable Rate Mortgage Loan or a Fixed Rate Mortgage Loan; (xxii) the Appraised Value of the Mortgaged Property; (xxiii) the sale price of the Mortgaged Property, if applicable; (xxiv) a code indicating whether the Mortgage Loan is subject to a Prepayment Charge or penalty; (xxv) the amount and the term of any Prepayment Charge or penalty; (xxvi) with respect to each MERS Mortgage Loan, the related MIN; (xxvii) a code indicating if the Mortgage Loan is an interest-only Mortgage Loan and, if so, the term of the interest-only period of such Mortgage Loan; (xxix) a code indicating whether the Mortgage Loan is a Balloon Mortgage Loan; and (xxx) the points and fees charged in connection with the origination of such Mortgage Loan as qualified by an Agency flag.

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

Mortgaged Property : The real property securing repayment of the debt evidenced by a Mortgage Note.

Mortgagee : The mortgagee or beneficiary named in the Mortgage and the successors and assigns of such mortgagee or beneficiary.

Mortgagor : The obligor on a Mortgage Note.

Opinion of Counsel : A written opinion of counsel, who may be an employee of the party on behalf of whom the opinion is being given.

Other Insurance Proceeds : Proceeds of any title policy, hazard policy, pool policy or other insurance policy covering a Mortgage Loan, to the extent such proceeds are not to be applied to the restoration of the related Mortgaged Property or released to the Mortgagor in accordance with the procedures that Countrywide would follow in servicing mortgage loans held for its own account.

Pass-Through Transfer : Any transaction involving either (1) a sale or other transfer of some or all of the Mortgage Loans directly or indirectly to an issuing entity in connection with an issuance of publicly offered or privately placed, rated or unrated mortgage-backed securities or (2) an issuance of publicly offered or privately placed, rated or unrated securities, the payments on which are determined primarily by reference to one or more portfolios of residential mortgage loans consisting, in whole or in part, of some or all of the Mortgage Loans.

Payment Adjustment Date : As to each Mortgage Loan, the date on which an adjustment to the Monthly Payment on a Mortgage Note becomes effective.

Periodic Rate Cap : With respect to each Adjustable Rate Mortgage Loan, the provision of each Mortgage Note which provides for an absolute maximum amount by which the Mortgage Interest Rate therein may increase or decrease on an Adjustment Date above or below the Mortgage Interest Rate previously in effect, equal to the rate set forth on the Mortgage Loan Schedule per adjustment.

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

Prepayment Charge : With respect to each Mortgage Loan, the fee, if any, payable upon the prepayment of principal, in whole or in part, of such Mortgage Loan, as set forth in the related Mortgage Note.

Prepayment Interest Excess : With respect to any Remittance Date, for each Mortgage Loan that was the subject of a Principal Prepayment during the period from the first day of the related calendar month to the end of the related Principal Prepayment Period, any payment of interest received in connection therewith (net of any applicable Servicing Fee) representing interest accrued for any portion of such month of receipt.

Prepayment Interest Shortfall Amount : With respect to any Remittance Date and Mortgage Loan that was subject to a Principal Prepayment in full or in part during the related Principal Prepayment Period, which Principal Prepayment was applied to such Mortgage Loan prior to such Mortgage Loan’s Due Date in such calendar month, the amount of interest (at the Mortgage Loan Remittance Rate) that would have accrued on the amount of such Principal Prepayment during the period commencing on the date as of which such Principal Prepayment was applied to such Mortgage Loan and ending on the day immediately preceding such Due Date, inclusive, which shall not include any Prepayment Interest Excess.

Principal Prepayment : Any payment or other recovery of principal on a Mortgage Loan which is received in advance of its scheduled Due Date, including any Prepayment Charge, which is not accompanied by an amount of interest representing scheduled interest due on any date or dates in any month or months subsequent to the month of prepayment.

Principal Prepayment Period : As to any Remittance Date, the period beginning with the opening of business on the sixteenth day of the calendar month preceding the month in which such Remittance Date occurs (or, with respect to the first Remittance Date, the period beginning with the opening of business on the day immediately following the Initial Cut-off Date) and ending on the close of business on the fifteenth day of the month in which such Remittance Date occurs.

Purchase Agreement : The Master Mortgage Loan Purchase Agreement, dated as of August 30, 2006, by and between the Purchaser and Countrywide.

Purchase Confirmation : A letter agreement, substantially in the form of an exhibit to the Purchase Agreement, executed by Countrywide and the Purchaser in connection with the purchase and sale of each Mortgage Loan Package, which sets forth the terms relating thereto including a description of the related Mortgage Loans (including the Mortgage Loan Schedule), the purchase price for such Mortgage Loans, the Closing Date and the Servicing Fee Rate.

Purchaser : The Person identified as the “Purchaser” in the preamble to this Agreement or its successor in interest or any successor or assign to the Purchaser under this Agreement as herein provided. Any reference to “Purchaser” as used herein shall be deemed to include any designee of the Purchaser, so long as such designation was made in accordance with the limitations set forth in Section 7.06 of this Agreement.

Qualified Insurer : An insurance company duly qualified as such under the laws of the states in which the Mortgaged Properties are located, duly authorized and licensed in such states to transact the applicable insurance business and to write the insurance provided with a rating category as set forth in the applicable Underwriting Guidelines.

Qualified Substitute Mortgage Loan : A mortgage loan that must, on the date of such substitution, (i) have an unpaid principal balance, after deduction of all scheduled payments due in the month of substitution (or if more than one (1) mortgage loan is being substituted, an aggregate principal balance), not in excess of the unpaid principal balance of the repurchased Mortgage Loan (the amount of any shortfall will be deposited in the Custodial Account by Countrywide in the month of substitution); (ii) have a Mortgage Interest Rate not less than, and not more than 1% greater than, the Mortgage Interest Rate of the repurchased Mortgage Loan; (iii) have a remaining term to maturity not greater than, and not more than one year less than, the maturity date of the repurchased Mortgage Loan; (iv) comply with each representation and warranty (respecting individual Mortgage Loans) set forth in Section 3.02 hereof; (v) shall be the same type of Mortgage Loan (i.e., a Convertible Mortgage Loan or a Fixed Rate Mortgage Loan); (vi) have the same Due Date as the Due Date on the substituted Mortgage Loan; and (vii) have a LTV, and in the case of a Second Lien Mortgage Loan, a Combined LTV Ratio as of the date of substitution equal to or lower than the LTV or Combined LTV Ratio of the related substituted Mortgage Loan as of such date. In the event that one or more mortgage loans are substituted for one or more substituted Mortgage Loans, the amounts described in clause (i) hereof shall be determined on the basis of aggregate principal balances, the Mortgage Interest Rates described in clause (ii) hereof shall be determined on the basis of weighted average Mortgage Interest Rates and shall be satisfied as to each such mortgage loan, the terms described in clause (iii) shall be determined on the basis of weighted average remaining terms to maturity, the LTV, and in the case of Second Lien Mortgage Loans the Combined LTV Ratios described in clause (v) hereof shall be satisfied as to each such Qualified Substitute Mortgage Loan and, except to the extent otherwise provided in this sentence, the representations and warranties described in clause (iv) hereof must be satisfied as to each Qualified Substitute Mortgage Loan or in the aggregate, as the case may be.

Reconstitution Date : The date or dates on which any or all of the Mortgage Loans serviced under this Agreement shall be removed from this Agreement and reconstituted as part of a Pass-Through Transfer or Whole Loan Transaction pursuant to Section 7.06 hereof. The Reconstitution Date shall be such date which the Purchaser shall designate. On such date, the Mortgage Loans transferred shall cease to be covered by this Agreement and Countrywide’s servicing responsibilities shall cease under this Agreement with respect to the related transferred Mortgage Loans.

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

REMIC Provisions : Provisions of the federal income tax law relating to REMICs, which appear in Sections 860A through 860G of the Code, and related provisions, and proposed, temporary and final regulations and published rulings, notices and announcements promulgated thereunder, as applicable, as the foregoing may be in effect from time to time.

Remittance Date : The twenty-fourth (24th) day of any month], beginning with the month next following the month in which the related Cut-off Date occurs, or if such twenty-fourth (24th) day is not a Business Day, the first Business Day immediately preceding.

REO Disposition : The final sale by Countrywide of any REO Property or the transfer of the management of such REO Property to the Purchaser as set forth in Section 3.13 of this Agreement.

REO Property : A Mortgaged Property acquired by Countrywide on behalf of the Purchaser as described in Section 3.13 of this Agreement.

Repurchase Price : For the first twelve (12) months following the related Closing Date, the price equal to the sum of the (i) Stated Principal Balance of such Mortgage Loan as of the date of repurchase, plus (ii) accrued interest on such Mortgage Loan at the Mortgage Loan Remittance Rate from the date on which interest had last been paid through the date of such repurchase, plus (iii) the product of (a) the purchase price percentage (as set forth in the related Purchase Confirmation) less par (the “ Premium ”) and (b) the Repurchase Premium Percentage, plus (iv) any costs and expenses incurred by the Purchaser in respect of a material breach of Section 3.01 or 3.02 of this Agreement including, without limitation, any costs and damages incurred by the Purchaser, the servicer, master servicer or any trustee in connection with any violation by any such Mortgage Loan of any applicable anti-predatory or abusive lending law, less (v) any interest amounts actually remitted to the Purchaser through the date of repurchase on such Mortgage Loan. For months thirteen (13) and beyond, the price for such repurchase shall be equal to the sum of (i) the Stated Principal Balance of the Mortgage Loan as of the date of repurchase plus (ii) accrued interest on such Mortgage Loan at the Mortgage Loan Remittance Rate from the date on which interest had last been paid through the date of such repurchase, plus (iii) any costs and expenses incurred by the Purchaser in respect of a material breach of Section 3.01 or 3.02 of this Agreement including, without limitation, any costs and damages incurred by the Purchaser, the servicer, master servicer, or any trustee for any costs and damages incurred by any such party in connection with any violation by any such Mortgage Loan of any applicable anti-predatory or abusive lending law.

Second Lien Mortgage Loan : A Mortgage Loan secured by a second lien on the related Mortgaged Property.

Securities Act : The Securities Act of 1933, as amended.

Seller : Countrywide Home Loans, Inc.

Servicing Advances : All customary, reasonable and necessary “out of pocket” costs and expenses incurred in the performance by Countrywide of its servicing obligations, including the cost of (i) the preservation, restoration and protection of the Mortgaged Property, (ii) any enforcement or judicial proceedings, including foreclosures, (iii) the management and liquidation of the REO Property and (iv) compliance with the obligations under this Agreement including Section 3.09 hereof.

Servicing Fee : With respect to each Mortgage Loan, the amount of the annual fee the Purchaser shall pay to Countrywide, which shall, for a period of one full month, be equal to one-twelfth of the product of (i) the Servicing Fee Rate and (ii) the Stated Principal Balance of such Mortgage Loan. Such fee shall be payable monthly, computed on the basis of the same principal amount and period respecting which any related interest payment on a Mortgage Loan is computed. The obligation of the Purchaser to pay the Servicing Fee is limited to, and the Servicing Fee is payable solely from, the interest portion (including recoveries with respect to interest from Liquidation Proceeds and other proceeds) of such Monthly Payment collected by Countrywide, or as otherwise provided herein. Subject to the foregoing, and with respect to each Mortgage Loan, Countrywide shall be entitled to receive its Servicing Fee through the disposition of any related REO Property and the Servicing Fee payable with respect to any REO Property shall be based on the Stated Principal Balance of the related Mortgage Loan at the time of foreclosure.

Servicing Fee Rate : With respect to any Mortgage Loan, the rate per annum set forth in the applicable Trade Confirmation or Purchase Confirmation.

Servicing LP : Countrywide Home Loans Servicing LP, a Texas limited partnership, and its successors and assigns.

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

Stated Principal Balance : With respect to each Mortgage Loan as of any date of determination: (i) the unpaid principal balance of the Mortgage Loan at the Cut-off Date after giving effect to payments of principal due on or before such date, whether or not received, minus (ii) all amounts previously distributed to the Purchaser with respect to the related Mortgage Loan representing payments or recoveries of principal or advances in lieu thereof.

Trade Confirmation : A letter agreement substantially in the form of an exhibit attached to the Purchase Agreement executed by Countrywide and the Purchaser prior to the applicable Closing Date confirming the terms of a prospective purchase and sale of a Mortgage Loan Package.

Transaction Documents : With respect to any Mortgage Loan, the related Trade Confirmation, the related Purchase Confirmation, this Agreement and the Purchase Agreement.

Updated LTV : With respect to any Mortgage Loan, the outstanding principal balance of such Mortgage Loan as of the date of determination divided by the value of the related Mortgaged Property as determined by a recent appraisal of the Mortgaged Property.

VA : The Department of Veterans Affairs.

Whole Loan Transfer : The sale or transfer by the Purchaser of some or all of the Mortgage Loans, other than in a Pass-Through Transfer.

Section 6.01   Representations and Warranties Respecting Countrywide.

Countrywide represents, warrants and covenants to the Purchaser that, as of each Closing Date:

(a)   Countrywide is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized and is qualified and licensed to transact business in and is in good standing under the laws of each state where each Mortgaged Property is located to the extent necessary to ensure the enforceability of each Mortgage Loan and the servicing of the Mortgage Loan in accordance with the terms of this Agreement and no demand for such licensing or qualification has been made upon Countrywide by any such state.

(b)   Countrywide has the full power and authority to (i) perform and enter into and consummate all transactions contemplated by this Agreement and (ii) to service each Mortgage Loan. Countrywide has duly authorized the execution, delivery and performance of this Agreement, has duly executed and delivered this Agreement, and this Agreement, assuming due authorization, execution and delivery by the Purchaser, constitutes a legal, valid and binding obligation of Countrywide, enforceable against it in accordance with its terms except as the enforceability thereof may be limited by bankruptcy, insolvency or reorganization;

(c)   Neither the servicing of the Mortgage Loans for the Purchaser, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement, will conflict with or result in a breach of any of the terms, conditions or provisions of Countrywide’s organizational documents or result in a material breach of any legal restriction or any material agreement or instrument to which Countrywide is now a party or by which it is bound, or constitute a material default or result in an acceleration under any of the foregoing, or result in the violation of any material law, rule, regulation, order, judgment or decree to which Countrywide or its property is subject;

(d)   Countrywide is an approved servicer for each Agency in good standing. No event has occurred, including a change in insurance coverage, which would make Countrywide unable to comply with Fannie Mae or Freddie Mac eligibility requirements;

(e)   There is no action, suit, proceeding, investigation or litigation pending or, to Countrywide’s knowledge, threatened, which either in any one instance or in the aggregate, if determined adversely to Countrywide would materially and adversely affect the servicing of the Mortgage Loans to the Purchaser or Countrywide’s ability to perform its obligations under this Agreement;

(f)   No consent, approval, authorization or order of any court or governmental agency or body is required for the execution, delivery and performance by Countrywide of, or compliance by Countrywide, with this Agreement or the consummation of the transactions contemplated by this Agreement, or if required, such consent, approval, authorization or order has been obtained prior to the related Closing Date;

(g)   The execution and delivery of this Agreement by Countrywide and its performance and compliance with the terms of this Agreement will not constitute a violation with respect to, any order or decree of any court or any order or regulation of any federal, state, municipal or governmental agency having jurisdiction over Countrywide or its assets, which violation would materially and adversely affect the performance of its obligations and duties hereunder;

(h)   Countrywide does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in this Agreement;

(i)   The consummation of the transactions contemplated by this Agreement are in the ordinary course of business of Countrywide;

(j)   Countrywide acknowledges and agrees that the Servicing Fee represents reasonable compensation for performing such services and that the entire Servicing Fee shall be treated by Countrywide, for accounting and tax purposes, as compensation for the servicing and administration of the Mortgage Loans pursuant to this Agreement;

(k)   Neither this Agreement nor any written statement, report or other document prepared and furnished by Countrywide pursuant to this Agreement or in connection with the transactions contemplated hereby contains any untrue statement of material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading; and

(l)   Countrywide is a member of MERS, and is current in payment of all fees and assessments imposed by MERS.

Section 7.01   Countrywide to Act as Servicer.

Countrywide, as an independent contract servicer, shall service and administer Mortgage Loans sold pursuant to this Agreement in accordance with the terms of this Agreement and shall have full power and authority, acting alone, to do or cause to be done any and all things, in connection with such servicing and administration, that Countrywide may deem necessary or desirable and consistent with the terms of this Agreement. In servicing and administering the Mortgage Loans, Countrywide shall employ procedures in accordance with Accepted Servicing Practices. Countrywide shall be responsible for any and all acts of a subservicer and a subcontractor, and the utilization of a subservicer or a subcontractor contracted by Countrywide shall in no way relieve the liability of Countrywide under this Agreement.

Consistent with the terms of this Agreement, Countrywide may waive, modify or vary any term of any Mortgage Loan or consent to the postponement of strict compliance with any such term or in any manner grant indulgence to any Mortgagor if in Countrywide’s reasonable and prudent determination such waiver, modification, postponement or indulgence is not materially adverse to the Purchaser; provided, however, that Countrywide shall not permit any modification with respect to any Mortgage Loan that would decrease the Mortgage Interest Rate (other than by adjustments required by the terms of the Mortgage Note), forgive the payment thereof or of any principal or interest payments, reduce the outstanding principal amount (except for actual payments of principal) or extend the final maturity date on such Mortgage Loan without the Purchaser’s consent. Countrywide may permit forbearance or allow for suspension of Monthly Payments for up to one hundred and eighty (180) days if the Mortgagor is in default or Countrywide determines in its reasonable discretion, that default is imminent and if Countrywide determines that granting such forbearance or suspension is in the best interest of the Purchaser. If any modification, forbearance or suspension permitted hereunder allows the deferral of interest or principal payments on any Mortgage Loan, Countrywide shall include in each remittance for any month in which any such principal or interest payment has been deferred (without giving effect to such modification, forbearance or suspension) an amount equal to such month’s principal and one (1) month’s interest at the Mortgage Loan Remittance Rate on the then unpaid principal balance of the Mortgage Loan and shall be entitled to reimbursement for such advances only to the same extent as for Monthly Advances made pursuant to Section 4.03 of this Agreement. Without limiting the generality of the foregoing, Countrywide shall continue, and is hereby authorized and empowered to execute and deliver on behalf of itself and the Purchaser, all instruments of satisfaction or cancellation, or of partial or full release, discharge and all other comparable instruments, with respect to the Mortgage Loans and with respect to the Mortgaged Property. If reasonably required by Countrywide, the Purchaser shall furnish Countrywide with any powers of attorney and other documents necessary or appropriate to enable Countrywide to carry out its servicing and administrative duties under this Agreement.

Countrywide or its designee will furnish, with respect to each Mortgage Loan, in accordance with the Fair Credit Reporting Act and its implementing regulations, accurate and requisite information on its borrower credit files to Equifax Credit Information Service, Inc., Experian Information Solution, Inc., and Trans Union, LLC, on a monthly basis.

If the Mortgage Loans or any REO Properties are included in a Pass-Through Transfer or transferred to an Agency (an “Agency Transfer”), that is a REMIC, Countrywide shall not take any action or fail to take any action that could materially and adversely affect the status of any REMIC related to the Mortgage Loans, or impose upon the REMIC a tax on prohibited transactions or contributions, unless Countrywide has received an Opinion of Counsel (at the expense of the party seeking to take such action) to the effect that the contemplated action will not materially and adversely affect such REMIC status or result in the imposition of any tax on the REMIC.

Countrywide shall monitor the Mortgage Loans on an ongoing basis, in compliance with the regulations promulgated by the Office of Foreign Assets Control of the United States Department of the Treasury (the “OFAC Regulations”).

Section 7.02   Collection of Mortgage Loan Payments.

Countrywide shall collect all payments due under each Mortgage Loan in accordance with Accepted Servicing Practices. Further, Countrywide shall take care in ascertaining and estimating annual ground rents, taxes, assessments, water rates, fire and hazard insurance premiums, and all other charges that are required to be escrowed in accordance with Accepted Servicing Practices.

Countrywide shall not waive any Prepayment Charge with respect to any Mortgage Loan which contains a Prepayment Charge which prepays during the term of the charge. If Countrywide fails to collect the Prepayment Charge upon any prepayment of any Mortgage Loan which contains a Prepayment Charge, Countrywide shall pay the Purchaser at such time (by deposit to the Custodial Account) an amount equal to amount of the Prepayment Charge which was not collected. Notwithstanding the above, Countrywide may waive a Prepayment Charge without paying the Purchaser the amount of the Prepayment Charge (i) if the Mortgage Loan is in default and such waiver would maximize recovery of total proceeds taking into account the value of such Prepayment Charge and the related Mortgage Loan, and the waiver of such Prepayment Charge is standard and customary in servicing similar Mortgage Loans (including the waiver of a Prepayment Charge in connection with a refinancing of the Mortgage Loan related to a default or a reasonably foreseeable default), (ii) if the collection of the Prepayment Charge would be in violation of applicable laws, (iii) if the collection of such Prepayment Charge would be considered “predatory” pursuant to written guidance published or issued by any applicable federal, state or local regulatory authority acting in its official capacity and having jurisdiction over such matters and (iv) notwithstanding any state or federal law to the contrary, any instance when a Mortgage Loan is in foreclosure.

Section 7.03   Realization Upon Defaulted Mortgage Loans.

(a)   Foreclosure. Countrywide shall act in accordance with Accepted Servicing Practices, to foreclose upon or otherwise comparably convert the ownership of properties securing such of the Mortgage Loans as come into and continue in default and as to which no satisfactory arrangements can be made for collection of delinquent payments. Countrywide shall use reasonable efforts to realize upon defaulted Mortgage Loans, in such manner as will maximize the receipt of principal and interest by the Purchaser, taking into account, among other things, the timing of foreclosure proceedings. The foregoing is subject to the provisions that, in any case in which Mortgaged Property shall have suffered damage, Countrywide shall not be required to expend its own funds toward the restoration of such Mortgaged Property unless it shall determine in its discretion (i) that such restoration will increase the proceeds of liquidation of the related Mortgage Loan to the Purchaser after reimbursement to itself for such expenses, and (ii) that such expenses will be recoverable by Countrywide through Other Insurance Proceeds or Liquidation Proceeds from the related Mortgaged Property. Countrywide shall notify the Purchaser in writing of the commencement of foreclosure proceedings. Such notice may be contained in the reports prepared by Countrywide and delivered to the Purchaser pursuant to the terms and conditions of this Agreement. Countrywide shall be responsible for all costs and expenses incurred by it in any foreclosure proceedings; provided, however, that it shall be entitled to reimbursement thereof from proceeds from the related Mortgaged Property.

(b)   Notwithstanding the foregoing provisions of this Section 3.03 or any other provision of this Agreement, with respect to any Mortgage Loan as to which Countrywide has received actual notice of, or has actual knowledge of, the presence of any toxic or hazardous substance on the related Mortgaged Property, Countrywide shall not, on behalf of the Purchaser, either (i) obtain title to such Mortgaged Property as a result of or in lieu of foreclosure or otherwise, or (ii) otherwise acquire possession of, or take any other action, with respect to, such Mortgaged Property if, as a result of any such action, the Purchaser would be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such Mortgaged Property within the meaning of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time, or any comparable law, unless Countrywide has also previously determined, based on its reasonable judgment and a report prepared by a Person who regularly conducts environmental audits using customary industry standards, that:

(1)   such Mortgaged Property is in compliance with applicable environmental laws or, if not, that it would be in the best economic interest of the Purchaser to take such actions as are necessary to bring the Mortgaged Property into compliance therewith; and

(2)   there are no circumstances present at such Mortgaged Property relating to the use, management or disposal of any hazardous substances, hazardous materials, hazardous wastes, or petroleum-based materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any federal, state or local law or regulation, or that if any such materials are present for which such action could be required, that it would be in the best economic interest of the Purchaser to take such actions with respect to the affected Mortgaged Property.

The cost of the environmental audit report contemplated by this Section 3.03 shall be advanced by Countrywide, subject to Countrywide’s right to be reimbursed therefor from the Custodial Account.

If Countrywide determines, as described above, that it is in the best economic interest of the Purchaser to take such actions as are necessary to bring any such Mortgaged Property into compliance with applicable environmental laws, or to take such action with respect to the containment, clean-up or remediation of hazardous substances, hazardous materials, hazardous wastes, or petroleum-based materials affecting any such Mortgaged Property, then Countrywide shall take such action as it deems to be in the best economic interest of the Purchaser, provided, however, that Countrywide shall not proceed with foreclosure or acceptance of a deed in lieu of foreclosure if the estimated costs of the environmental clean up, as estimated in the environmental audit report, together with the Servicing Advances and Monthly Advances made by Countrywide and the estimated costs of foreclosure or acceptance of a deed in lieu of foreclosure exceeds the estimated value of the Mortgaged Property. The cost of any such compliance, containment, cleanup or remediation shall be advanced by Countrywide, subject to Countrywide’s right to be reimbursed therefor from the Custodial Account.

(c)   Proceeds received in connection with any Final Recovery Determination, as well as any recovery resulting from a partial collection of Insurance Proceeds or Liquidation Proceeds in respect of any Mortgage Loan, will be applied in the following order of priority: first, to reimburse Countrywide for any related unreimbursed Servicing Advances, pursuant to Section 3.05(c); second, to accrued and unpaid interest on the Mortgage Loan, to the date of the Final Recovery Determination, or to the Due Date prior to the Remittance Date on which such amounts are to be distributed if not in connection with a Final Recovery Determination; and third, as a recovery of principal of the Mortgage Loan. If the amount of the recovery so allocated to interest is less than the full amount of accrued and unpaid interest due on such Mortgage Loan, the amount of such recovery will be allocated by Countrywide as follows: first, to unpaid Servicing Fees; and second, to the balance of the interest then due and owing. The portion of the recovery so allocated to unpaid Servicing Fees shall be reimbursed to Countrywide pursuant to Section 3.05(c).

Section 7.04   Establishment of Custodial Accounts; Deposits in Custodial Accounts.

Countrywide shall segregate and hold all funds collected and received pursuant to each Mortgage Loan separate and apart from any of its own funds and general assets and shall establish and maintain one (1) or more Custodial Accounts, in the form of time deposit or demand accounts. Countrywide shall provide the Purchaser with written evidence of the creation of the Custodial Account upon request.

Countrywide shall deposit in the Custodial Account within two (2) Business Days, and retain therein, the following payments and collections received or made by it subsequent to the Cut-off Date, or received by it prior to the Cut-off Date but allocable to a period subsequent thereto, other than in respect of principal and interest on the Mortgage Loans due on or before the Cut-off Date:

(a)   all payments on account of principal, including Principal Prepayments, on the Mortgage Loans;

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

(c)   all proceeds from a Cash Liquidation;

(d)   all Other Insurance Proceeds, including amounts required to be deposited pursuant to Sections 3.08 and 3.10 of this Agreement, other than proceeds to be held in Escrow Account and applied to the restoration or repair of the Mortgaged Property or released to the Mortgagor in accordance with Countrywide’s normal servicing procedures, the loan documents or applicable law;

(e)   all Condemnation Proceeds affecting any Mortgaged Property that are not released to the Mortgagor in accordance with Countrywide’s normal servicing procedures, the loan documents or applicable law;

(f)   all Monthly Advances;

(g)   all proceeds of any Mortgage Loan repurchased in accordance with Section 3.03 or 3.04 of the Purchase Agreement, and any amount required to be deposited by Countrywide in connection with any shortfall in principal amount of the Qualified Substitute Mortgage Loans and the repurchased Mortgage Loans as required pursuant to Section 3.03 of the Purchase Agreement;

(h)   any amounts required to be deposited by Countrywide pursuant to Section 3.10 of this Agreement in connection with the deductible clause in any blanket hazard insurance policy (such deposit shall be made from Countrywide’s own funds, without reimbursement therefor);

(i)   the Prepayment Interest Shortfall Amount, if any, for the month of distribution (such deposit shall be made from Countrywide’s own funds, without reimbursement therefor up to a maximum amount per month equal to the lesser of one half of (a) one-twelfth of the product of (i) the Servicing Fee Rate and (ii) the Stated Principal Balance of such Mortgage Loans, or (b) the aggregate Servicing Fee actually received for such month for the Mortgage Loans);

(j)   any amounts required to be deposited by Countrywide in connection with any REO Property pursuant to Section 3.13 of this Agreement; and

(k)   any amounts required to be deposited in the Custodial Account pursuant to Sections 3.17.

The foregoing requirements for deposit in the Custodial Account are exclusive. The Purchaser understands and agrees that, without limiting the generality of the foregoing, payments in the nature of late payment charges and assumption fees (to the extent permitted by Section 3.16 of this Agreement) and any Prepayment Interest Excess shall not be deposited by Countrywide in the Custodial Account. Any interest or earnings paid by the depository institution on funds deposited in the Custodial Account shall accrue to the benefit of Countrywide and Countrywide shall be entitled to retain and withdraw such interest from the Custodial Account pursuant to Section 3.05(d) of this Agreement.

Section 7.05   Permitted Withdrawals From the Custodial Account.

Countrywide may, from time to time, withdraw funds from the Custodial Account for the following purposes:

(a)   to make payments to the Purchaser in the amounts and in the manner provided for in Sections 4.01 and 4.03 of this Agreement;

(b)   to reimburse itself for Monthly Advances (Countrywide’s reimbursement for Monthly Advances shall be limited to amounts received on the related Mortgage Loan (or to amounts received on the Mortgage Loans as a whole if the Monthly Advance is made due to a shortfall in a Monthly Payment made by a Mortgagor entitled to relief under the Soldiers’ and Sailors’ Civil Relief Act of 1940) which represent Late Collections, net of the related Servicing Fee. Countrywide’s right to reimbursement hereunder shall be prior to the rights of the Purchaser, except that, where Countrywide is required to repurchase a Mortgage Loan pursuant to Section 3.03 or 3.04 of the Purchase Agreement, Countrywide’s right to such reimbursement shall be subsequent to the payment to the Purchaser of the Repurchase Price and all other amounts required to be paid to the Purchaser with respect to such Mortgage Loans. Notwithstanding the foregoing, Countrywide may reimburse itself for Monthly Advances from any funds in the Custodial Account if it has determined that such funds are nonrecoverable advances or if all funds, with respect to the related Mortgage Loan, have previously been remitted to the Purchaser).

(c)   to reimburse itself for unreimbursed Servicing Advances and any unpaid Servicing Fees (Countrywide’s reimbursement for Servicing Advances and/or Servicing Fees hereunder with respect to any Mortgage Loan shall be limited to proceeds from Cash Liquidation, Liquidation Proceeds, Condemnation Proceeds, and Other Insurance Proceeds; provided, however, that Countrywide may reimburse itself for Servicing Advances and Servicing Fees from any funds in the Custodial Account if all funds, with respect to the related Mortgage Loan, have previously been remitted to the Purchaser;

(d)   to pay to itself as servicing compensation (i) any interest earned on funds in the Custodial Account (all such interest to be withdrawn monthly not later than each Remittance Date), and (ii) the Servicing Fee, from that portion of any payment or recovery of interest on a particular Mortgage Loan;

(e)   to pay to itself, with respect to each Mortgage Loan that has been repurchased pursuant to Section 3.03 or 3.04 of the Purchase Agreement, all amounts received but not distributed as of the date on which the related Repurchase Price is determined;

(f)   to reimburse itself for any amounts deposited in the Custodial Account in error;

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

(h)   to the extent not retained pursuant to Section 3.04, to pay itself any Prepayment Interest Excess amounts.

Section 7.06   Establishment of Escrow Accounts; Deposits in Escrow Accounts.

Countrywide shall segregate and hold all funds collected and received pursuant to each Mortgage Loan which constitute Escrow Payments separate and apart from any of its own funds and general assets and shall establish and maintain one (1) or more Escrow Accounts in the form of time deposit or demand accounts, which accounts shall be Eligible Accounts. Countrywide shall provide the Purchaser with written evidence of the creation of such Escrow Account(s) upon request.

Countrywide shall deposit in the Escrow Account(s) within two (2) Business Days, and retain therein, (a) all Escrow Payments collected on account of the Mortgage Loans, for the purpose of effecting timely payment of any such items as required under the terms of this Agreement, and (b) all Other Insurance Proceeds that are to be applied to the restoration or repair of any Mortgaged Property. Countrywide shall make withdrawals therefrom only to effect such payments as are required under this Agreement, and for such other purposes in accordance with Section 3.07 of this Agreement. Countrywide shall be entitled to retain any interest paid by the depository institution on funds deposited in the Escrow Account except interest on escrowed funds required by law to be paid to the Mortgagor. Countrywide shall pay Mortgagor interest on the escrowed funds at the rate required by law notwithstanding that the Escrow Account is non-interest bearing or the interest paid by the depository institution thereon is insufficient to pay the Mortgagor interest at the rate required by law.

Section 7.07   Permitted Withdrawals From Escrow Account.

Countrywide may, from time to time, withdraw funds from the Escrow Account(s) for the following purposes: (a) to effect timely payments of ground rents, taxes, assessments, water rates and comparable items; (b) to reimburse Countrywide for any Servicing Advance made by Countrywide with respect to a related Mortgage Loan; provided, however, that such reimbursement shall only be made from amounts received on the related Mortgage Loan that represent late payments or collections of Escrow Payments thereunder; (c) to refund to the Mortgagor any funds as may be determined to be overages; (d) for transfer to the Custodial Account in accordance with the terms of this Agreement; (e) for application to restoration or repair of the Mortgaged Property; (f) to pay to Countrywide, or to the Mortgagors to the extent required by law, any interest paid on the funds deposited in the Escrow Account; (g) to reimburse itself for any amounts deposited in the Escrow Account in error; or (h) to clear and terminate the Escrow Account on the termination of this Agreement. As part of its servicing duties, Countrywide shall pay to the Mortgagors interest on funds in Escrow Account, to the extent required by law, and to the extent that interest earned on funds in the Escrow Account is insufficient, shall pay such interest from its own funds, without any reimbursement therefor.

Section 7.08   Transfer of Accounts.

Countrywide may transfer the Custodial Account or the Escrow Account to a different depository institution from time to time provided that such Custodial Account and Escrow Account shall be Eligible Accounts and Countrywide shall notify the Purchaser in writing within a reasonable period of time after such transfer has taken place.

Section 7.09   Payment of Taxes, Insurance and Other Charges.

With respect to each Mortgage Loan, Countrywide shall maintain accurate records reflecting the status of (a) ground rents, taxes, assessments, water rates and other charges that are or may become a lien upon the Mortgaged Property and (b) fire and hazard insurance premiums. Countrywide shall obtain, from time to time, all bills for the payment of such charges, including renewal premiums, and shall effect payment thereof prior to the applicable penalty or termination date and at a time appropriate for securing maximum discounts allowable using Escrow Payments which shall have been estimated and accumulated by Countrywide in amounts sufficient for such purposes. To the extent that the Mortgage does not provide for Escrow Payments, Countrywide shall determine that any such payments are made by the Mortgagor at the time they first become due. Countrywide assumes full responsibility for the timely payment of all such bills and shall effect timely payments of all such bills, irrespective of the Mortgagor’s faithful performance in the payment of same or the ma