MORTGAGE LOAN PURCHASE AGREEMENT

Exhibit 99.3

PEOPLE’S CHOICE HOME LOAN SECURITIES CORP.,

as Purchaser,

and

PEOPLE’S CHOICE FUNDING, INC.,

as Seller

MORTGAGE LOAN PURCHASE AGREEMENT

Dated as of October 1, 2005

FIXED AND ADJUSTABLE RATE MORTGAGE LOANS

TABLE OF CONTENTS

EXHIBITS

Exhibit I - Mortgage Loan Schedule

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This MORTGAGE LOAN PURCHASE AGREEMENT (this “Agreement”), dated as of October 1, 2005 (the “Cut-off Date”), is made among People’s Choice Funding, Inc. (the “Seller”) and People’s Choice Home Loan Securities Corp. (the “Purchaser”).

WHEREAS, the Seller owns the Mortgage Loans indicated on the Mortgage Loan Schedule attached as Exhibit I hereto (the “Mortgage Loans”), including rights to (a) any property acquired by foreclosure or deed in lieu of foreclosure or otherwise, and (b) the proceeds of any insurance policies covering the Mortgage Loans;

WHEREAS, the parties hereto desire that the Seller sell the Mortgage Loans to the Purchaser (other than the servicing rights with respect thereto) and that the Seller make certain representations and warranties and undertake certain obligations with respect to the Mortgage Loans;

WHEREAS, pursuant to the terms of an Amended and Restated Trust Agreement, dated as of October 26, 2005 (the “Trust Agreement”), among the Purchaser, as depositor, Wilmington Trust Company, as owner trustee (the “Owner Trustee”), and Wells Fargo Bank, National Association, as securities administrator (in such capacity, the “Securities Administrator”), certificate registrar and certificate paying agent, the Purchaser will convey the Mortgage Loans to the Issuer (as defined below);

WHEREAS, pursuant to the terms of a Sale and Servicing Agreement, dated as of October 1, 2005 (the “Sale and Servicing Agreement”), among the Purchaser, Wells Fargo Bank, National Association, as master servicer (in such capacity, the “Master Servicer”) and as Securities Administrator, People’s Choice Home Loan Securities Trust Series 2005-4, a Delaware statutory trust (the “Issuer”), HSBC Bank USA, National Association, as indenture trustee (the “Indenture Trustee”), the Seller, EMC Mortgage Corporation, as servicer (the “Servicer), and People’s Choice Home Loan, Inc., as subservicer (the “Subservicer”); and

WHEREAS, pursuant to the terms of an Indenture, dated as of October 26, 2005 (the “Indenture”), among the Issuer, the Indenture Trustee and the Securities Administrator, the Issuer will pledge the Mortgage Loans and issue and transfer to the Purchaser the People’s Choice Home Loan Trust Series 2005-4, Mortgage-Backed Notes, Series 2005-4, Class 1A1, Class 1A2, Class 1A3, Class 2Al, Class M1, Class M2, Class M3, Class M4, Class M5, Class M6, Class M7, Class M8, Class M9, Class M10 and Class M 11 Notes (collectively, the “Notes”), representing debt of the Issuer;

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

ARTICLE I

DEFINITIONS

Section 1.1 Definitions.

For all purposes of this Agreement, 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 Appendix A attached to the Indenture. All other capitalized terms used herein shall have the meanings specified herein.

ARTICLE II

SALE OF MORTGAGE LOANS AND RELATED PROVISIONS

Section 2.1 Sale of Mortgage Loans .

(a) The Seller, by the execution and delivery of this Agreement, does hereby sell, assign, set over and otherwise convey to the Purchaser, without recourse but subject to the terms of this Agreement, (i) all of its right, title and interest in the Mortgage Loans, as of the Closing Date, including the related Cut-off Date Principal Balance, all interest accruing thereon on and after the Cut-off Date, and all collections of interest and principal due after the Cut-off Date, other than the servicing rights with respect thereto, (ii) the Seller’s interest in any insurance policies and (iii) all proceeds of the foregoing.

(b) In connection with any transfer pursuant to this Section 2.1, the Seller agrees (i) to cause the books and records of the Seller to indicate that the Mortgage Loans have been sold to the Purchaser pursuant to this Agreement and (ii) to deliver to the Purchaser the Mortgage Loan Schedule, which is attached as Exhibit I to this Agreement, and to the Sale and Servicing Agreement, which is incorporated by reference herein.

(c) In connection with such conveyances by the Seller, the Seller shall, on behalf of the Purchaser, deliver to and deposit with Wells Fargo Bank, National Association, as custodian for the Indenture Trustee, on or before the Closing Date, the following documents or instruments with respect to each Mortgage Loan:

(i) the original Mortgage Note, including any riders thereto, endorsed by the Seller or the originator, as applicable, without recourse, to “HSBC Bank USA, National Association, as Indenture Trustee under the Indenture relating to People’s Choice Home Loan Securities Trust Series 2005-4, Mortgage-Backed Notes, Series 2005-4”, with any intervening endorsements showing an unbroken chain of title from the originator to the Indenture Trustee, or with respect to a Mortgage Loan as to which the Mortgage Note has been lost, a lost note affidavit with indemnity and, if available, a copy of the lost Mortgage Note;

(ii) the original recorded Mortgage, with evidence of recording indicated thereon; provided that if such document is not included because of a delay by the public recording office where such document has been delivered for recordation or such office as a matter of policy does not return the original of such document or if such original Mortgage has been lost, the Seller shall include or cause to be included a copy thereof certified by the appropriate recording office, if available;

(iii) an original duly executed Assignment of the Mortgage in recordable form from the Seller or the originator, as applicable, to “HSBC Bank USA, National Association, as Indenture Trustee under the Indenture relating to People’s Choice Home Loan Securities Trust Series 2005-4, Mortgage-Backed Notes, Series 2005-4”;

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(iv) the original intervening Assignments, if any and if available, with evidence of recording thereon, showing an unbroken chain of title to the Mortgage from the originator thereof to Person assigning it to the Indenture Trustee; provided that if such document is not included because of a delay by the public recording office where such document has been delivered for recordation or such office as a matter of policy does not return the original of such document, the Seller shall include or cause to be included a copy thereof certified by the appropriate recording office, if available;

(v) the originals of each assumption, modification or substitution agreement, if any and if available, relating to the Mortgage Loan; and

(vi) the original title insurance policy, or, if such policy has not been issued, any one of an original or a copy of the preliminary title report, title binder or title commitment on the Mortgaged Property with the original policy of the insurance to be delivered promptly following the receipt thereof.

The Seller need not cause to be recorded any assignment in any jurisdiction under the laws of which, as evidenced by an Opinion of Counsel delivered by the Seller to the Indenture Trustee and the Rating Agencies, the recordation of such assignment is not necessary to protect the Indenture Trustee’s interest in the related Mortgage Loan; provided, however , that notwithstanding the delivery of any Opinion of Counsel, each assignment shall be submitted for recording by the Seller, at no expense to the Trust or the Indenture Trustee, upon the earliest to occur of: (i) reasonable direction by the Holders of Notes evidencing at least 25% of the Note Principal Balance, (ii) the occurrence of a Master Servicer Event of Default or Event of Default under the Indenture, (iii) the occurrence of a bankruptcy, insolvency or foreclosure relating to the Seller, (iv) the occurrence of a master servicing transfer and (v) the occurrence of a bankruptcy, insolvency or foreclosure relating to the Mortgagor under the related Mortgage. Upon receipt of written notice from the Indenture Trustee that recording of the assignments is required pursuant to one or more of the conditions set forth in the preceding sentence, the Seller shall be required to deliver such assignments for recording as provided above, promptly and in any event within 30 days following receipt of such notice. The Seller shall furnish the Indenture Trustee, or its designated agent, with a copy of each assignment submitted for recording. In the event that any such assignment is lost or returned unrecorded because of a defect therein, the Seller shall promptly have a substitute assignment prepared or have such defect cured, as the case may be, and thereafter cause each such assignment to be duly recorded.

To the extent an assignment referred to in clause (c)(iii) above is required to be recorded (including, without limitation, assignments for states that are not covered by the Opinion of Counsel in the prior paragraph), the Seller, at its own expense, shall complete and submit it for recording in the appropriate public office for real property records, with such assignment completed in favor of the Indenture Trustee. While such assignment to be recorded is being recorded, the Indenture Trustee shall retain a photocopy of such assignment. If any assignment is lost or returned unrecorded to the Indenture Trustee because of any defect therein, the Seller is required to prepare a substitute assignment or cure such defect, as the case may be, and the Seller shall cause such substitute assignment to be recorded in accordance with this paragraph.

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Notwithstanding anything to the contrary contained in this Section 2.1, in those instances where the public recording office retains the original Mortgage after it has been recorded, the Seller shall be deemed to have satisfied its obligations hereunder upon delivery to the Indenture Trustee of a copy of such Mortgage, certified by the public recording office to be a true and complete copy of the recorded original thereof.

If any Assignment is lost or returned unrecorded to the Indenture Trustee because of any defect therein, the Seller shall prepare a substitute Assignment or cure such defect, as the case may be, and the Seller shall cause such Assignment to be recorded in accordance with this section.

If a defect in any Mortgage File is discovered which materially and adversely affects the value of the related Mortgage Loan, or the interests of the Noteholders or Certificateholders in such Mortgage Loan, including if any document required to be delivered to the Indenture Trustee has not been delivered ( provided that a Mortgage File will not be deemed to contain a defect for an unrecorded assignment under clause (iii) above if the Seller has submitted such assignment for recording pursuant to the terms of the following paragraph), the Seller shall either (i) purchase such Mortgage Loan from the Trust, at the Purchase Price, within 90 days after the date on which the Seller was notified of such defect or (ii) cure such defect, or (iii) substitute a Substitute Mortgage Loan for the related Mortgage Loan upon the same terms and conditions set forth in Section 3.1 hereof for substitutions.

The Seller shall exercise its best reasonable efforts to deliver or cause to be delivered to the Custodian, on behalf of the Indenture Trustee, within 120 days of the Closing Date, with respect to the Mortgage Loans, the original or a photocopy of the title insurance policy with respect to each such Mortgage Loan assigned to the Purchaser pursuant to this Section 2.1.

The Purchaser hereby acknowledges its acceptance of all right, title and interest to the Mortgage Loans and other property, now existing and hereafter created, conveyed to it pursuant to this Section 2.1, other than with respect to servicing rights with respect to the Mortgage Loans.

(d) The parties hereto intend that the transaction set forth herein constitutes a sale by the Seller to the Purchaser of all the Seller’s right, title and interest in and to the Mortgage Loans (other than with respect to the related servicing rights) and other property as and to the extent described above. In the event the transaction set forth herein is deemed not to be a sale, the Seller hereby grants to the Purchaser a security interest in all of the Seller’s right, title and interest in, to and under the Mortgage Loans (other than with respect to the related servicing rights) and such other property, to secure all of the Seller’s obligations hereunder, and this Agreement shall constitute a security agreement under applicable law. The Seller agrees to take or cause to be taken such actions and to execute such documents, including, without limitation, the filing of all necessary UCC-1 financing statements filed in the State of Delaware (which shall have been submitted for filing as of the Closing Date with respect to the aggregate Stated Principal Balance of the Mortgage Loans), any continuation statements with respect thereto and any amendments thereto required to reflect a change in the name or corporate structure of the Seller or the filing of any additional UCC-1 financing statements due to the change in the

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principal office of the Seller, as are necessary to perfect and protect the Purchaser’s interests in each Mortgage Loan and the proceeds thereof.

Section 2.2 Payment of Purchase Price for the Mortgage Loans.

(a) The purchase price for the Mortgage Loans (other than with respect to the servicing rights thereto) shall be the sum of (i) $1,086,169,663.85 and (ii) the Owner Trust Certificates (the “Certificates”).

(b) In consideration of the sale of the Mortgage Loans from the Seller to the Purchaser on the Closing Date, the Purchaser shall (i) pay to the Seller, on the Closing Date, by wire transfer of immediately available funds to a bank account designated by the Seller, the amount specified above in clauses (a)(i) and (ii) cause the transfer to the Seller (or its designee or nominee) of the Certificates in clause (a)(ii).

ARTICLE III

REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH

Section 3.1 Representations and Warranties of the Seller .

The Seller hereby represents and warrants to the Purchaser, as of the Closing Date (or if otherwise specified below, as of the date so specified), that:

(a) with respect to the Seller:

(i) the Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware;

(ii) the Seller has full corporate power to own its property, carry on its business as presently conducted and enter into and perform its obligations under this Agreement;

(iii) the execution and delivery by the Seller of this Agreement have been duly authorized by all necessary corporate action on the part of the Seller, and neither the execution and delivery of this Agreement, nor the consummation of the transactions herein contemplated hereby, nor compliance with the provisions hereof, will conflict with or result in a breach of, or constitute a default under, any of the provisions of any law, governmental rule, regulation, judgment, decree or order binding on the Seller or its properties or the certificate of incorporation or by-laws of the Seller, except those conflicts, breaches or defaults that would not reasonably be expected to have a material adverse effect on the Seller’s ability to enter into this Agreement and to consummate the transactions contemplated hereby;

(iv) the execution, delivery and performance by the Seller of this Agreement and the consummation of the transactions contemplated hereby do not require the consent or approval of, the giving of notice to, the registration with, or the taking of any other action in respect of, any state, federal or other governmental authority or agency, except those consents, approvals, notices, registrations or other actions as have already been

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obtained, given or made and, in connection with the recordation of the Mortgages, powers of attorney or assignments of Mortgages not yet completed;

(v) this Agreement has been duly executed and delivered by the Seller and, assuming due authorization, execution and delivery by the Purchaser, constitutes a valid and binding obligation of the Seller enforceable against it in accordance with its terms (subject to applicable bankruptcy and insolvency laws and other similar laws affecting the enforcement of the rights of creditors generally);

(vi) there are no actions, litigation, suits or proceedings pending or threatened against the Seller before or by any court, administrative agency, arbitrator or governmental body (A) with respect to any of the transactions contemplated by this Agreement or (B) with respect to any other matter that, in the judgment of the Seller, if determined adversely to the Seller, would reasonably be expected to materially and adversely affect the Seller’s ability to perform its obligations under this Agreement; and the Seller is not in default with respect to any order of any court, administrative agency, arbitrator or governmental body so as to materially and adversely affect the transactions contemplated by this Agreement; and

(vii) the Seller’s chief executive office and principal place of business are located in the County of Orange in the State of California; and

(b) with respect to the Mortgage Loans:

(i) as of the Cut-off Date, the information set forth on the Mortgage Loan Schedule with respect to each Mortgage Loan is true and correct in all material respects;

(ii) immediately prior to the transfer to the Purchaser, the Seller had good title to and is the sole owner of each Mortgage and Mortgage Note relating to the Mortgage Loans and is conveying the same free and clear of any and all liens, claims, encumbrances, pledges, charges or security interests of any nature; the related Mortgage Note and the Mortgage were not subject to any pledge or assignment that has not been released; and the Seller has full legal authority to sell and assign the Mortgage Loans pursuant to this Agreement;

(iii) no default, release or waiver exists under the Mortgage Documents, and no modifications to the Mortgage Documents have been made that have not been disclosed;

(iv) there is no monetary default existing under any Mortgage or the related Mortgage Note; neither the Seller, any of its affiliates nor any servicer of any related Mortgage Loan has taken any action to waive any default, breach or event of acceleration with respect thereto; and no foreclosure action is threatened or has been commenced with respect to such Mortgage Loan;

(v) each Mortgage Loan was underwritten in accordance with the underwriting guidelines of the Seller and its affiliates. The Seller has no knowledge of

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any fact that should have led it to expect at the time of the initial creation of an interest in the Mortgage Loan that such Mortgage Loan would not be paid in full when due;

(vi) no selection procedures reasonably believed by the Seller to be adverse to the interest of the Noteholders or Certificateholders have been used in selecting the Mortgage Loans;

(vii) each Mortgage is a valid and enforceable first lien or second lien on the Mortgaged Property securing the related Mortgage Note, and each Mortgaged Property is owned by the Mortgagor in fee simple (except with respect to common areas in the case of condominiums, PUDs and de minimis PUDs) or by leasehold for a term at least 5 years longer than the term of the related Mortgage, subject only to (A) the lien of nondelinquent current real property taxes and assessments, (B) covenants, conditions and restrictions, rights of way, easements and other matters of public record as of the date of recording of such Mortgage, such exceptions appearing of record being acceptable to mortgage lending institutions generally or specifically reflected in the appraisal made in connection with the origination of the related Mortgage Loan or referred to in the lender’s title insurance policy delivered to the originator of the related Mortgage Loan, and (C) other matters to which like properties are commonly s