MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT

Exhibit 10.1

MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT, dated as of December 19, 2006 (as amended, supplemented or otherwise modified and in effect from time to time, this " Agreement "), among ST. ANDREW FUNDING TRUST, a Delaware statutory trust, as purchaser (the " Issuer "), HOME123 CORPORATION, a California corporation, as a seller (" Home123 " or a " Seller "), NEW CENTURY MORTGAGE CORPORATION, a California corporation, as a seller (a " Seller " and, together with Home123, the " Sellers ") and as servicer (the " Servicer ", in its capacity as servicer hereunder, and also the " Company "), and NEW CENTURY FINANCIAL CORPORATION, a Maryland corporation, as performance guarantor (the " Performance Guarantor ").

W I T N E S S E T H

WHEREAS, pursuant to this Agreement, the Issuer has agreed to purchase from the Sellers and the Sellers have agreed to sell to the Issuer from time to time Mortgage Loans constituting Eligible Loans until the termination of this Agreement in accordance with Section 11.1 hereof. The Company wishes to service each Mortgage Loan on behalf of the Issuer after the sale and purchase thereof.

WHEREAS, the Issuer, the Sellers, and the Servicer, wish to prescribe the manner of purchase of the Mortgage Loans and the management, servicing and control of the Mortgage Loans.

WHEREAS, the Issuer intends to sell the Mortgage Loans, with the assistance of the Servicer in its capacity as a Mortgage Transfer Agent, and the Servicer will arrange for the sale of the Mortgage Loans on behalf of the Issuer to Mortgage Loan Buyers.

WHEREAS, the Performance Guarantor has agreed to guarantee certain obligations of the Sellers in connection with this Agreement.

NOW, THEREFORE, in consideration of the mutual agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Issuer, the Sellers, the Servicer, and the Performance Guarantor, agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.1 Definitions .

Certain capitalized terms used herein (including the preamble and the recitals hereto) shall have the meanings assigned to such terms in the Definitions List attached to the Security Agreement, dated as of December 19, 2006, between the Issuer and Deutsche Bank Trust Company Americas, as Collateral Agent, as Schedule I thereto (the " Definitions List "), as such Definitions List may be amended or modified from time to time in accordance with the provisions thereof.

Section 1.2 Cross-References .

Unless otherwise specified, references in this Agreement and in each other Program Document to any Article or Section are references to such Article or Section of this Agreement or such other Program Document, as the case may be and, unless otherwise specified, references in any Article, Section or definition to any clause are references to such clause of such Article, Section or definition.

Section 1.3 Accounting and Financial Determinations; No Duplication .

Where the character or amount of any asset or liability or item of income or expense is required to be determined, or any accounting computation is required to be made, for the purpose of this Agreement, such determination or calculation shall be made, to the extent applicable and except as otherwise specified in this Agreement, in accordance with GAAP. When used herein, the term "financial statement" shall include the notes and schedules thereto. All accounting determinations and computations hereunder or under any other Program Documents shall be made without duplication.

Section 1.4 Rules of Construction .

In this Agreement, unless the context otherwise requires:

(a) the singular includes the plural and vice versa;

(b) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and reference to any Person in a particular capacity only refers to such Person in such capacity;

(c) reference to any gender includes the other gender;

(d) reference to any Requirement of Law means such Requirement of Law as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time;

(e) "including" (and with correlative meaning "include") means including without limiting the generality of any description preceding such term; and

(f) with respect to the determination of any period of time, "from" means "from and including" and "to" means "to but excluding".

ARTICLE 2

SALE OF MORTGAGE LOANS; POSSESSION OF

MORTGAGE FILES; BOOKS AND RECORDS;

CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS

Section 2.1 Sale of Mortgage Loans; Possession of Mortgage Loan Files; Maintenance of Mortgage Loan Files .

(a) (i) From time to time, pursuant to any Transfer Supplement, each Seller may sell, transfer, assign, set over and convey to the Issuer, without recourse, but subject to the terms hereof, all the right, title and interest of such Seller in and to each Mortgage Loan and any Additional Balance related to any HELOC purchased by the Issuer on a prior Closing Date identified on such Transfer Supplement; provided , however , that the Issuer shall not at any time be required to purchase Mortgage Loans or any Additional Balances having an aggregate Outstanding Purchase Price greater than the sum of (i) the then-current Facility Size, less (ii) the aggregate Outstanding Purchase Price of all Mortgage Loans (including any Additional Balance previously purchased by the Issuer with respect thereto) owned by the Issuer at such time; provided further , that each Mortgage Loan transferred on each Closing Date must be an Eligible Loan; provided, further , that mortgage loans originated by NCMC may only be sold to the Issuer after the NCMC Effective Date; provided, further, that any transfer of a HELOC on a Closing Date shall include all right, title and interest of such Seller in, to and under such Mortgage Loan including its unpaid principal balance on such Closing Date, but shall not include any future Draws on such HELOC, which such Seller may elect to sell to the Issuer as an Additional Balance on a subsequent Closing Date; provided , finally , that the Issuer shall not purchase Mortgage Loans on any day unless, after giving effect to any issuance of Secured Liquidity Notes on such day, the payment of Secured Liquidity Notes maturing or matured on such day, the payment of outstanding Extended Notes on such day, the issuance of the Subordinated Notes on such day, the payment of outstanding Subordinated Notes maturing or matured on such day and the purchase and sale of Mortgage Loans on such day, the Borrowing Base Test is satisfied. In connection with the sale of Mortgage Loans to the Issuer, each Seller shall sell, transfer, assign, set over and convey to the Issuer all right, title and interest of such Seller in and to the servicing rights related to such Mortgage Loans. The applicable Seller shall provide a notice to the Issuer, the Servicer, the Indenture Trustee, the Collateral Agent and each Swap Counterparty as required by Section 2.2 hereof. In such notice, the applicable Seller shall inform the Issuer of the aggregate principal balance of the Mortgage Loans and Additional Balances that it intends to sell on such date. The subject Portfolio and related servicing rights shall be sold by such Seller to the Issuer as described in Section 2.2 hereof. Each Transfer Supplement shall be executed by the applicable Seller and the Issuer at the time of the sale of the subject Portfolio and related servicing rights. Notwithstanding the foregoing, the Issuer may not purchase any (i) Mortgage Loans or Additional Balances during the continuation of an Extended Note Amortization Event, or a Termination Event, or (ii) any Junior Loans or Additional Balances during the continuation of a Junior Loan Exposure Trigger Event.

(ii) Upon execution of any Transfer Supplement by the applicable Seller and the Issuer and receipt of the Initial Purchase Price therefor, such Seller hereby sells, assigns, transfers, sets over and conveys to the Issuer all right, title and interest of such Seller in, to and under each Mortgage Loan, Additional Balances and any related servicing rights identified on such Transfer Supplement (but excluding any Excluded Amounts with respect to any HELOCs). It is intended that the transfer, assignment and conveyance herein contemplated constitute a sale of the Mortgage Loans and Additional Balances, conveying good title thereto free and clear of any liens, by such Seller to the Issuer and that the Mortgage Loans, Additional Balances and related servicing rights not be part of such Seller’s estate in the event of insolvency. In the event that the Mortgage Loans, Additional Balances and related servicing rights are held to be property of such Seller or if for any other reason any Transfer Supplement is held or deemed not to absolutely sell and assign the Mortgage Loans, Additional Balances and related servicing rights, the parties intend that such Seller shall be deemed to have granted, and does hereby grant, to the Issuer a valid security interest, free and clear of any lien, claim or interest of any other Person, in such Seller’s right, title and interest in the Mortgage Loans, Additional Balances, all related servicing rights and all collateral related thereto now existing or hereafter arising for the purpose of securing the rights of the Issuer under this Agreement (but excluding any Excluded Amounts with respect to any HELOCs), and that this Agreement and the Transfer Supplement shall each constitute a security agreement under applicable law.

(iii) Although Additional Balances may be sold by a Seller to the Issuer on any Closing Date pursuant to this Section 2.1 , none of the Issuer, the Indenture Trustee, the Collateral Agent or any other Secured Party assumes the obligation under any HELOC that provides for the funding of future Draws by the Mortgagor thereunder.

(b) Pursuant to Section 2.5 hereof, on or prior to the Closing Date, the applicable Seller shall deliver and release each related Mortgage Note, Mortgage and Assignment of Mortgage, to the Custodian, as bailee, initially for the Issuer and then for the Collateral Agent pursuant to the Custodial Agreement. The applicable Seller shall deliver the related Loan Documents not delivered to the Custodian (the " Servicing File ") to the Servicer and the contents of each related Servicing File shall be held in trust by the Servicer, as bailee, for the benefit of the Issuer as owner and the Collateral Agent as secured party; provided, however, that the failure of such Seller to deliver any such Loan Document, which failure does not have a material and adverse impact on the value of a Mortgage Loan, shall not constitute a breach of this Agreement; provided, further, that all Mortgage Notes, Mortgages and Assignments of Mortgages shall be delivered to the Custodian, as bailee, initially for the Issuer and then for the Collateral Agent, as provided in the first sentence of this Section 2.1(b) . The possession of each Servicing File by the Servicer is at the will of the Issuer or the Collateral Agent, as applicable, for the sole purpose of servicing the related Mortgage Loan and such retention and possession by the Servicer is in a custodial capacity only. Upon the sale of the Mortgage Loans to the Issuer, the ownership of each related Mortgage Note, Mortgage, Assignment of Mortgage and the remainder of the Mortgage Loan File shall vest immediately in the Issuer, and the ownership of all other records and documents with respect to the related Mortgage Loan prepared by or which come into the possession of the Servicer shall vest immediately in the Issuer and the Collateral Agent on behalf of the Secured Parties and shall be retained and maintained by the Servicer, in trust, at the will of the Issuer and the Collateral Agent and only in such custodial capacity. Each Servicing File and the Servicer’s books and records shall be marked appropriately to reflect clearly the sale of the related Mortgage Loans to the Issuer and the Collateral Agent on behalf of the Secured Parties. The Custodian shall only release its custody of the Mortgage Notes, Mortgages, Assignments of Mortgages and other contents of a Mortgage Loan File in its possession in accordance with the Custodial Agreement.

The Mortgage Loan File shall consist of the following documents (constituting, collectively, the " Loan Documents ") and such other documents as the Issuer may reasonably require from time to time:

• (i) the original Mortgage Note or, if such Mortgage Note is lost, a certified copy thereof along with a Lost Note Affidavit and Indemnity substantially in the form attached to the Custodial Agreement as Exhibit H, or a Seller’s Lost Note Affidavit and Indemnity substantially in the form attached hereto as Exhibit E and the original of any guarantee executed in connection with the Mortgage Note (if any);

  (ii) the original Mortgage with evidence of recording thereon. If in connection with each Mortgage Loan, the applicable Seller cannot deliver or cause to be delivered the original Mortgage with evidence of recording thereon on or prior to the Closing Date because of a delay caused by the public recording office where such Mortgage has been delivered for recordation or because such Mortgage has been lost or because such public recording office retains the original recorded Mortgage, such Seller shall deliver or cause to be delivered to the Custodian, (a) in the case of a delay caused by the public recording office, a photocopy of such Mortgage, together with an Officer’s Certificate of such Seller stating that such Mortgage has been dispatched to the appropriate public recording office for recordation and that the original recorded Mortgage or a copy of such Mortgage certified by such public recording office to be a true and complete copy of the original recorded Mortgage will be promptly delivered to the Custodian upon receipt thereof by such Seller or (b) in the case of a Mortgage where a public recording office retains the original recorded Mortgage or in the case where a Mortgage is lost after recordation in a public recording office, a photocopy of such Mortgage certified by such public recording office to be a true and complete copy of the original recorded Mortgage;

  (iii) the originals of all assumption, modification, consolidation or extension agreements, with evidence of recording thereon;

  (iv) except with respect to a MERS Mortgage (which shall not require an Assignment of Mortgage), the original duly executed Assignment of Mortgage for each Mortgage Loan, in form and substance acceptable for recording; if the Mortgage Loan was acquired by the applicable Seller in a merger, any Assignment of Mortgage (other than with respect to a MERS Mortgage, which shall not require an assignment) must be made by "[Seller], successor by merger to [name of predecessor]." If the Mortgage Loan was acquired or originated by the applicable Seller while doing business under another name, any Assignment of Mortgage (other than with respect to a MERS Mortgage, which shall not require an assignment) must be by "[Seller], formerly known as [previous name]." If the Mortgage Loan was acquired by the applicable Seller as receiver for another entity, any Assignment of Mortgage (other than with respect to a MERS Mortgage, which shall not require an assignment) must be by "[Seller], receiver for [name of entity in receivership]." Any Assignment of Mortgage must be duly recorded only if recordation is required as provided in Section 12.9 hereof. If any Assignment of Mortgage is to be recorded, the Mortgage shall be assigned to the Custodian. If any Assignment of Mortgage is not to be recorded but is otherwise required hereunder, such Assignment of Mortgage shall be delivered in blank. If such original Assignment of Mortgage has been sent for recording but has not been returned from the applicable recording office or has been lost or if such public recording office retains the original Assignment of Mortgage, the applicable Seller shall deliver or cause to be delivered to the Servicer, (a) in the case of a delay caused by the public recording office, a photocopy of such Assignment of Mortgage, together with an Officer’s Certificate of such Seller stating that such Assignment of Mortgage has been dispatched to the appropriate public recording office for recordation and that such Assignment of Mortgage or a copy of such Assignment of Mortgage certified by the appropriate public recording office to be a true and complete copy of the original Assignment of Mortgage will be promptly delivered to the Servicer upon receipt thereof by such Seller or (b) in the case of an Assignment of Mortgage where a public recording office retains the original Assignment of Mortgage or in a case where an Assignment of Mortgage is lost after recordation in a public recording office, a copy of such Assignment of Mortgage certified by such public recording office to be a true and complete copy of the original Assignment of Mortgage;

  (v) the originals of all intervening assignments of mortgage from any Person not an Affiliate of the applicable Seller, with evidence of recording thereon (if such recording is necessary as represented in Section 3.2 (cc) hereof), or if any such intervening assignment has not been returned from the applicable recording office or has been lost or if such public recording office retains the original recorded assignment of mortgage, such Seller shall deliver or cause to be delivered to the Servicer, (a) in the case of a delay caused by the public recording office, a photocopy of such intervening assignment, together with an Officer’s Certificate of such Seller stating that such intervening assignment of mortgage has been dispatched to the appropriate public recording office for recordation and that such original recorded intervening assignment of mortgage or a copy of such intervening assignment of mortgage certified by the appropriate public recording office to be a true and complete copy of the original recorded intervening assignment of mortgage will be promptly delivered to the Servicer upon receipt thereof by such Seller or (b) in the case of an intervening assignment where a public recording office retains the original recorded intervening assignment or in a case where an intervening assignment is lost after recordation in a public recording office, a copy of such intervening assignment certified by such public recording office to be a true and complete copy of the original recorded intervening assignment;

  (vi) if available, either (a) the original mortgagee title insurance policy or, if the policy has not yet been issued, the irrevocable written commitment, interim binder or marked up binder for a title insurance policy issued by the title insurance company dated and certified as of the date the Mortgage Loan was funded, or (b) the original attorney’s opinion of title;

  (vii) the original of any security agreement, chattel mortgage or equivalent document executed in connection with the Mortgage; and

  (viii) if any Mortgage Loan is sold to any Agency, the originals of other documents, forms, releases, certifications and papers required by the applicable Agency Custodial Agreement.

(c) It is the intention of this Agreement that each conveyance of the applicable Seller’s right, title and interest in and to each Mortgage Loan pursuant to this Agreement and any Transfer Supplement shall constitute a purchase and sale and not a loan.

Section 2.2 Determination of Initial Purchase Price .

No later than 8:00 p.m. (New York City time) on the Business Day prior to each proposed Closing Date, the applicable Seller shall deliver to the Issuer and each Swap Counterparty a Loan Tape of the Mortgage Loans proposed to be sold to the Issuer (containing the fields set forth in Exhibit G) and shall notify the Issuer and each Swap Counterparty of its calculation of the Initial Purchase Price for the Mortgage Loans and any Additional Balance in the Portfolio (the "Initial Purchase Price Calculation"). The proposed sale and purchase shall proceed at the Initial Purchase Price Calculation unless any Swap Counterparty gives written notice that it considers that the Initial Purchase Price Calculation is overstated in an amount greater than 0.25%, and provided that such written notice of dispute is received by the Issuer and the Seller before 10:00 a.m. (New York City time) on the proposed Closing Date. If such written notice of dispute is received, the Issuer, such Seller and the Swap Counterparties shall each use their best efforts to agree on a revised Initial Purchase Price Calculation. If a revised Initial Purchase Price Calculation is agreed, the sale shall proceed on the Closing Date therefor, as set forth below. If the parties are unable to agree upon a revised Initial Purchase Price Calculation, or the sale does not close for any other reason, such Seller shall, at its option, (x) proceed with the sale at the highest price acceptable to the Swap Counterparties, or (y) abandon the sale or reschedule it to a later date.

The Issuer shall pay to such Seller the Initial Purchase Price of each Mortgage Loan and Additional Balance purchased by it hereunder, in immediately available funds, not later than 5:00 p.m. (New York City time), on the Closing Date.

Section 2.3 Purchase Commitment Term .

Subject to the terms and conditions of the Program Documents, the commitment of the Issuer under this Agreement shall expire on the termination of this Agreement, pursuant to Section 11.1 hereof.

Section 2.4 Books and Records; Transfers of Mortgage Loans .

From and after each related Closing Date, all rights arising with respect to each Mortgage Loan sold pursuant to any Transfer Supplement, including but not limited to all funds received on or in connection with each Mortgage Loan, shall be received and held by the Servicer in trust for the benefit of the Issuer, except as is otherwise set forth in Section 4.27 with respect to Excluded Amounts. Pursuant to the Custodial Agreement, the Custodian shall hold all of the Mortgage Notes, Mortgages and Assignments of Mortgages as described in the Custodial Agreement.

The Servicer shall be responsible for maintaining, and shall maintain, a complete set of books and records for each Mortgage Loan which shall be marked clearly to reflect the ownership of each Mortgage Loan by the Issuer. To the extent that original documents are not required for purposes of realization of Liquidation Proceeds or Insurance Proceeds, documents maintained by the Servicer may be in the form of microfilm or microfiche or such other reliable means of recreating original documents, including but not limited to, optical imagery techniques so long as the Servicer complies with its Customary Servicing Procedures.

The Servicer shall maintain with respect to each Mortgage Loan and shall make available for inspection by the Issuer, the Collateral Agent, any SLN Placement Agent, the Indenture Trustee, the Depositary, any Swap Counterparty or their respective designees, upon reasonable advance notice, at the offices of the Servicer during normal business hours, the related Servicing File during the time the Issuer retains ownership of a Mortgage Loan and thereafter pursuant to applicable laws and regulations.

Section 2.5 Custodial Agreement .

Pursuant to the Custodial Agreement, each Seller shall, from time to time in connection with the purchase of Mortgage Loans pursuant to the terms of this Agreement, deliver to the Custodian, on or prior to the related Closing Date, the Mortgage Note, Mortgage and Assignment of Mortgage with respect to each Mortgage Loan transferred by it. The Custodian shall hold each Mortgage Note, Mortgage and Assignment of Mortgage in trust, as bailee, initially for the Issuer and then for the Collateral Agent pursuant to the Custodial Agreement.

Section 2.6 Capital Contribution .

To the extent that the Market Value of any Portfolio sold by a Seller to the Issuer on the related Closing Date exceeds the cash purchase paid by the Issuer to such Seller for such Portfolio, such excess shall be a capital contribution by such Seller to the Issuer.

Section 2.7 Reserve Fund Deposit . (a) On the Initial Closing Date, the Issuer shall deposit the Required Reserve Fund Amount into the Reserve Fund.

(b) In connection with any increase in the Program Size, the Issuer shall deposit an amount into the Reserve Fund equal to the lesser of (x) the product of (A) such increase in the Program Size, and (B) the Required Reserve Fund Percentage and (y) the amount necessary to cause the amount on deposit in the Reserve Fund to equal the Required Reserve Fund Amount on such date.

(c) Each deposit to the Reserve Fund, to the extent the same shall have been sourced from funds provided by a Seller or the Servicer, shall constitute an absolute and irrevocable capital contribution from such Person to the Issuer.

Section 2.8 Junior Loan Exposure Trigger Event .

Upon the occurrence of a Junior Loan Exposure Trigger Event, the Issuer will no longer be permitted or obligated to purchase additional Junior Loans or Additional Balances. If a Junior Loan Exposure Trigger Event occurs, the Servicer shall, upon providing two (2) Business Days’ prior notice, use its best efforts to obtain bids from at least three (3) Qualified Bidders for the sale of the Junior Loans and to sell all Junior Loans within sixty (60) days of the date on which such Junior Loan Exposure Trigger Event occurred. In the event that all Junior Loans have not been so sold on such sixtieth (60th) day, the Collateral Agent shall hold an auction (a " Junior Loan Exposure Trigger Event Auction ") of the remaining Junior Loans for settlement not later than the seventy-fifth (75th) day following the date on which such Junior Loan Exposure Trigger Event occurred. The Collateral Agent shall notify, with two (2) Business Days’ prior notice, potential bidders, including the Rated Bidder and at least three (3) Qualified Bidders, of the Junior Loan Exposure Trigger Event Auction. Any Swap Counterparty may bid in such auction, and the Collateral Agent shall sell the Junior Loans to the highest bidder. All bids shall be received no later than the seventy-third (73rd) day following the date on which such Junior Loan Exposure Trigger Event occurred.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES;

COVENANTS; REMEDIES AND BREACH

Section 3.1 Representations and Warranties of the Sellers, the Servicer, and the Performance Guarantor .

(a) Each Seller severally and not jointly represents and warrants to the Issuer (and for the benefit of the Collateral Agent and the Secured Parties) and each Swap Counterparty that, with respect to itself only, as of each applicable Closing Date on which such Seller sells Mortgage Loans to the Issuer:

(i)  Due Organization and Authority . Such Seller is duly organized, validly existing and in good standing under the laws of California and has all licenses necessary to carry on its business as it is being conducted on the applicable Closing Date and is duly authorized, licensed, qualified and in good standing in each state where a Mortgaged Property is located if required to conduct business of the type conducted by it, and in any event such Seller is in compliance with the laws of any such state to the extent necessary to ensure the enforceability of any Mortgage Loan or Additional Balance sold hereunder in accordance with the terms of this Agreement and each Transfer Supplement, except where the failure to hold such license or qualification, or be in such good standing or compliance with law, would not have a material adverse effect on its ability to perform its obligations hereunder; such Seller has the full power and authority to execute and deliver this Agreement and any Transfer Supplement and to perform its obligations in accordance herewith and therewith; the execution, delivery and performance of this Agreement and any Transfer Supplement by such Seller and the performance of the transactions contemplated hereby and thereby have been duly and validly authorized by such Seller; all requisite corporate action has been taken by such Seller to make this Agreement and any Transfer Supplement legal, valid and binding upon such Seller pursuant to its terms; this Agreement and any Transfer Supplement each evidences the legal, valid, binding and enforceable obligation of such Seller except that (1) the enforceability thereof may be limited by bankruptcy, insolvency, moratorium, receivership and other similar laws relating to creditors’ rights generally and (2) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

(ii)  Ordinary Course of Business . The performance of the transactions contemplated by this Agreement are in the ordinary course of business of such Seller, and the transfer, assignment and conveyance of the Mortgage Notes and the Mortgages by such Seller pursuant to this Agreement are not subject to the bulk transfer or any similar statutory provisions in effect in any applicable jurisdiction.

(iii)  No Conflicts . None of the execution and delivery of this Agreement or any Transfer Supplement, the origination or acquisition of Mortgage Loans by such Seller, the sale of Mortgage Loans or Additional Balances to the Issuer or the transactions contemplated hereby or thereby, or the fulfillment of or compliance with the terms and conditions of this Agreement or any Transfer Supplement, will conflict with or result in a breach of any of the terms, conditions or provisions of such Seller’s charter or by-laws or any material agreement or instrument to which such Seller is now a party or by which it is bound, or constitute a default or result in an acceleration under any of the foregoing, or result in the violation in any material respect of any applicable law, rule, regulation, order, judgment or decree to which such Seller or its property is subject, or impair the ability of the Issuer to realize on the Mortgage Loans in any material respect, or impair the value of the Mortgage Loans in any material respect.

(iv)  No Litigation Pending . Other than as disclosed on the most recent 10-K and 10-Q filings with the Securities Exchange Commission by New Century Financial Corporation prior to the date hereof, there is no action, suit, proceeding or investigation pending or to its knowledge threatened against such Seller which (x) is reasonably likely to be adversely determined, and (y), if adversely determined, would be reasonably likely, either in any one instance or in the aggregate, to (1) result in any material impairment of the right or ability of such Seller to carry on its business substantially as now conducted, (2) draw into question the validity of this Agreement or any Transfer Supplement or the Mortgage Loans or of any action taken or to be taken in connection with the obligations of such Seller contemplated herein, or (3) impair materially the ability of such Seller to perform under the terms of this Agreement or any Transfer Supplement.

(v)  No Consent Required . No consent, approval, authorization or order of any court or governmental agency or body is required for the execution, delivery and performance by such Seller of or compliance with this Agreement or any Transfer Supplement or the sale of the Mortgage Loans and Additional Balances, or if required, such consent, approval, authorization or order has been obtained.

(vi)  Selection Process . Any Portfolio of Mortgage Loans sold pursuant to a Transfer Supplement was selected from mortgage loans originated by such Seller or acquired by such Seller from third parties and are Mortgage Loans which satisfy the Eligibility Criteria (other than the Eligibility Representations, which are the subject of the representations set forth in Section 3.2 hereof), the Portfolio Criteria, and any selection process employed by it was not made in a manner so as to materially adversely affect the interest of the Issuer.

(vii)  No Untrue Information . None of this Agreement, any Transfer Supplement or any statement, report or other document prepared by such Seller or to be prepared by such Seller pursuant to this Agreement or in connection with the transactions contemplated hereby contains any untrue statement of a material fact relating to such Seller or the Mortgage Loans.

(viii)  Financial Statements . The financial statements of New Century Financial Corporation, copies of which have been furnished to the Issuer, (i) are, as of the dates and for the periods referred to therein, complete and correct in all material respects, (ii) present fairly the financial condition and results of operations of New Century Financial Corporation as of the dates and for the periods indicated and (iii) have been prepared in accordance with GAAP consistently applied, except as noted therein (subject as to interim statements to normal year-end adjustments). Since the date of the most recent financial statements, there has been no change which has had a material adverse effect with respect to New Century Financial Corporation. Except as disclosed in such financial statements, New Century Financial Corporation is not subject to any contingent liabilities or commitments that, individually or in the aggregate, have a reasonable likelihood of having a material adverse effect with respect to New Century Financial Corporation.

(ix)  No Brokers’ Fees . Such Seller has not dealt with any broker, investment banker, agent or other Person that may be entitled to any commission or compensation in connection with the sale of each Mortgage Loan to the Issuer.

(x)  Fair Consideration . The consideration received by such Seller in connection with the sale of the Mortgage Loans and Additional Balances under this Agreement constitutes fair consideration and reasonably equivalent value for the Mortgage Loans and Additional Balances.

(xi)  Ability to Perform . Such Seller does not believe, nor does it have reason or cause to believe, that it cannot perform the covenants contained in this Agreement in all material respects. Such Seller is not insolvent, nor will it be made insolvent by the sale of the Mortgage Loans to the Issuer, nor is such Seller aware of any pending insolvency, and the sale of the Mortgage Loans to the Issuer is not undertaken to hinder, delay or defraud any of such Seller’s creditors.

(xii)  Seller’s Origination . Such Seller’s decision to originate any mortgage loan or to deny any mortgage loan application is an independent decision based upon such Seller’s underwriting standards, and is in no way made as a result of the Issuer’s commitment to purchase Mortgage Loans pursuant to this Agreement.

(xiii)  Chief Executive Office . The principal place of business and chief executive office of such Seller is located and has been located within the state of California for the five year period prior to the date of this Agreement. The "location" of such Seller as defined in the UCC is in the State of California. Such Seller has not changed its jurisdiction of formation during the five year period prior to the date of this Agreement.

(xiv)  No Prior Names . The exact legal name of such Seller is, and during the five-year period prior to this Agreement has been, the name set forth for it on the signature page hereto and such Seller has not had (i) any prior name nor (ii) any trade names.

(xv)  Prior Security Agreements . Such Seller is not bound under Section 9-203(d) of the Uniform Commercial Code by a security agreement that grants a security interest in any Mortgage Loan previously entered into by another person or entity.

(b) The Servicer represents and warrants to the Issuer (and for the benefit of the Collateral Agent and the Secured Parties) and each Swap Counterparty that as of each applicable Closing Date:

(i)  Due Organization and Authority . The Servicer is duly organized, validly existing and in good standing under the laws of California and has all licenses necessary to carry on its business as it is being conducted on the applicable Closing Date and is licensed, qualified and in good standing in each state where a Mortgaged Property is located if required to conduct business of the type conducted by it, and in any event the Servicer is in compliance with the laws of any such state to the extent necessary to ensure the servicing of each Mortgage Loan sold hereunder in accordance with the terms of this Agreement, except where the failure to hold such license or qualification, or be in such good standing or compliance with law, would not have a material adverse effect on its ability to perform its obligations hereunder; the Servicer has the full power and authority to execute and deliver this Agreement and to perform its obligations in accordance herewith; the execution, delivery and performance of this Agreement by the Servicer and the performance of the transactions contemplated hereby have been duly and validly authorized by the Servicer; all requisite corporate action has been taken by the Servicer to make this Agreement valid and binding upon the Servicer pursuant to its terms; this Agreement evidences the legal, valid, binding and enforceable obligation of the Servicer except that (1) the enforceability thereof may be limited by bankruptcy, insolvency, moratorium, receivership and other similar laws relating to creditors’ rights generally and (2) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

(ii)  Ordinary Course of Business . The performance of the transactions contemplated by this Agreement are in the ordinary course of business of the Servicer.

(iii)  No Conflicts . None of the execution and delivery of this Agreement, the servicing of Mortgage Loans by the Servicer, or the fulfillment of or compliance with the terms and conditions of this Agreement, will conflict with or result in a breach of any of the terms, conditions or provisions of the Servicer’s charter or by-laws or any material agreement or instrument to which the Servicer is now a party or by which it is bound, or constitute a default or result in an acceleration under any of the foregoing, or result in the violation in any material respect of any applicable law, rule, regulation, order, judgment or decree to which the Servicer or its property is subject, or impair the ability of the Issuer to realize on the Mortgage Loans in any material respect, or impair the value of the Mortgage Loans in any material respect.

(iv)  Ability to Service . The Servicer services mortgage loans in accordance with its Customary Servicing Procedures. The Servicer has the facilities, procedures and experienced personnel necessary for the servicing of the Mortgage Loans. There are no sub-servicers hereunder as of the date of this Agreement and the Servicer will terminate any sub-servicer hereunder within ninety (90) days after being directed to do so by the Required Senior Noteholders or the Required Subordinated Noteholders.

(v)  Reasonable Servicing Fee . The Servicer acknowledges and agrees that the Servicing Fee represents reasonable compensation for servicing, administering and arranging for the sale of the Mortgage Loans pursuant to this Agreement and shall be treated by the Servicer, for accounting and tax purposes, as compensation for the servicing and administration of the Mortgage Loans pursuant to this Agreement.

(vi)  No Litigation Pending . Other than as disclosed on the most recent 10-K and 10-Q filings with the Securities Exchange Commission by New Century Financial Corporation prior to the date hereof, there is no action, suit, proceeding or investigation pending or to its knowledge threatened against the Servicer which (x) is reasonably likely to be adversely determined, and (y), if adversely determined, would be reasonably likely, either in any one instance or in the aggregate, to (1) result in any material impairment of the right or ability of the Servicer to carry on its business substantially as now conducted, (2) draw into question the validity of this Agreement or of any action taken or to be taken in connection with the obligations of the Servicer contemplated herein, or (3) impair materially the ability of the Servicer to perform under the terms of this Agreement.

(vii)  No Consent Required . No consent, approval, authorization or order of any court or governmental agency or body is required for the execution, delivery and performance by the Servicer of or compliance with this Agreement or the servicing of the Mortgage Loans, or if required, such consent, approval, authorization or order has been obtained.

(viii)  No Untrue Information . None of this Agreement, any Transfer Supplement, or any statement, report or other document prepared by the Servicer or to be prepared by the Servicer pursuant to this Agreement or in connection with the transactions contemplated hereby contains any untrue statement of a material fact relating to the Servicer or the Mortgage Loans.

(ix)  Financial Statements . The financial statements of New Century Financial Corporation, copies of which have been furnished to the Issuer, (i) are, as of the dates and for the periods referred to therein, complete and correct in all material respects, (ii) present fairly the financial condition and results of operations of New Century Financial Corporation as of the dates and for the periods indicated and (iii) have been prepared in accordance with GAAP consistently applied, except as noted therein (subject as to interim statements to normal year-end adjustments). Since the date of the most recent financial statements, there has been no change which has had a material adverse effect with respect to New Century Financial Corporation. Except as disclosed in such financial statements, New Century Financial Corporation is not subject to any contingent liabilities or commitments that, individually or in the aggregate, have a reasonable likelihood of having a material adverse effect with respect to New Century Financial Corporation.

(x)  Ability to Perform . The Servicer does not believe, nor does it have reason or cause to believe, that it cannot perform the covenants contained in this Agreement in all material respects.

(xi)  Furnishing of Information . The Servicer has fully furnished and will continue to fully furnish, in accordance with the Fair Credit Reporting Act and its implementing regulations, accurate and complete information (e.g., favorable and unfavorable) on its borrower credit files to the Credit Repositories on a monthly basis.

(xii)  Proper Approvals . The Servicer is an approved originator/servicer for Fannie Mae or Freddie Mac in good standing and is a HUD approved mortgagee pursuant to Section 203 and Section 211 of the National Housing Act.

(xiii)  Chief Executive Office . The principal place of business and chief executive office of the Servicer is located and has been located within the state of California for the five year period prior to the date of this Agreement. The "location" of the Servicer as defined in the UCC is in the State of California. The Servicer has not changed its jurisdiction of formation during the five year period prior to the date of this Agreement.

(xiv)  No Prior Names . The exact legal name of the Servicer is, and during the five-year period prior to this Agreement has been, the name set forth for it on the signature page hereto and the Servicer has not had (1) any prior name nor (2) any trade names.

(xv)  Prior Security Agreements . The Servicer is not bound under Section 9-203(d) of the Uniform Commercial Code by a security agreement that grants a security interest in any Mortgage Loan previously entered into by another person or entity.

(xvi)  Solvency . The Servicer is solvent and is not aware of any pending insolvency.

(c) The Performance Guarantor represents and warrants to the Issuer (and for the benefit of the Collateral Agent and the Secured Parties) and each Swap Counterparty that as of each applicable Closing Date:

(i)  Due Organization and Authority . The Performance Guarantor is duly organized, validly existing and in good standing under the laws of Maryland and has all licenses necessary to carry on its business as it is being conducted on the applicable Closing Date and is licensed, qualified and in good standing in each state where a Mortgaged Property is located if required to conduct business of the type conducted by it, and in any event the Performance Guarantor is in compliance with the laws of any such state to the extent necessary to ensure the performance of its obligations in accordance with the terms of this Agreement, except where the failure to hold such license or qualification, or be in such good standing or compliance with law, would not have a material adverse effect on its ability to perform its obligations hereunder; the Performance Guarantor has the full power and authority to execute and deliver this Agreement and to perform its obligations in accordance herewith; the execution, delivery and performance of this Agreement by the Performance Guarantor and the performance of the transactions contemplated hereby have been duly and validly authorized by the Performance Guarantor; all requisite corporate action has been taken by the Performance Guarantor to make this Agreement valid and binding upon the Performance Guarantor pursuant to its terms; this Agreement evidences the legal, valid, binding and enforceable obligation of the Performance Guarantor except that (1) the enforceability thereof may be limited by bankruptcy, insolvency, moratorium, receivership and other similar laws relating to creditors’ rights generally and (2) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

(ii)  Ordinary Course of Business . The performance of the transactions contemplated by this Agreement are in the ordinary course of business of the Performance Guarantor.

(iii)  No Conflicts . Neither the execution and delivery of this Agreement, nor the fulfillment of or compliance with the terms and conditions of this Agreement, will conflict with or result in a breach of any of the terms, conditions or provisions of the Performance Guarantor’s charter or by-laws or any material agreement or instrument to which the Performance Guarantor is now a party or by which it is bound, or constitute a default or result in an acceleration under any of the foregoing, or result in the violation in any material respect of any applicable law, rule, regulation, order, judgment or decree to which the Performance Guarantor or its property is subject, or impair the ability of the Issuer to realize on the Mortgage Loans in any material respect, or impair the value of the Mortgage Loans in any material respect.

(iv)  No Litigation Pending . Other than as disclosed on its most recent 10-K and 10-Q filings with the Securities Exchange Commission filed by it prior to the date hereof, there is no action, suit, proceeding or investigation pending or to its knowledge threatened against the Performance Guarantor which (x) is reasonably likely to be adversely determined, and (y), if adversely determined, would be reasonably likely, either in any one instance or in the aggregate, to (1) result in any material impairment of the right or ability of the Performance Guarantor to carry on its business substantially as now conducted, (2) draw into question the validity of this Agreement or of any action taken or to be taken in connection with the obligations of the Performance Guarantor contemplated herein, or (3) impair materially the ability of the Performance Guarantor to perform under the terms of this Agreement.

(v)  No Consent Required . No consent, approval, authorization or order of any court or governmental agency or body is required for the execution, delivery and performance by the Performance Guarantor of or compliance with this Agreement or the servicing of the Mortgage Loans, or if required, such consent, approval, authorization or order has been obtained.

(vi)  No Untrue Information . Neither this Agreement, nor any statement, report or other document prepared by the Performance Guarantor or to be prepared by the Performance Guarantor pursuant to this Agreement or in connection with the transactions contemplated hereby contains any untrue statement of a material fact relating to the Performance Guarantor or the Mortgage Loans.

(vii)  Financial Statements . The financial statements of the Performance Guarantor, copies of which have been furnished to the Issuer, (i) are, as of the dates and for the periods referred to therein, complete and correct in all material respects, (ii) present fairly the financial condition and results of operations of the Performance Guarantor as of the dates and for the periods indicated and (iii) have been prepared in accordance with GAAP consistently applied, except as noted therein (subject as to interim statements to normal year-end adjustments). Since the date of the most recent financial statements, there has been no change which has had a material adverse effect with respect to the Performance Guarantor. Except as disclosed in such financial statements, the Performance Guarantor is not subject to any contingent liabilities or commitments that, individually or in the aggregate, have a reasonable likelihood of having a material adverse effect with respect to the Performance Guarantor.

(viii)  Ability to Perform . The Performance Guarantor does not believe, nor does it have reason or cause to believe, that it cannot perform the covenants contained in this Agreement in all material respects.

(ix)  Solvency . The Performance Guarantor is solvent and is not aware of any pending insolvency.

Section 3.2 Representations and Warranties Regarding Individual Mortgage Loans; Eligibility Representations .

With respect to each Mortgage Loan sold by a Seller to the Issuer, the Seller of such Mortgage Loan hereby represents and warrants to the Issuer (and for the benefit of the Collateral Agent and the Secured Parties) and each Swap Counterparty that as of each applicable Closing Date:

(a)  Eligibility of Mortgage Loans . The Mortgage Loan is an Eligible Loan.

(b)  Mortgage Loans as Described . The information set forth in the Mortgage Loan Schedule attached to the applicable Transfer Supplement is complete, true and correct in all material respects.

(c)  Valid First or Second Lien . The Mortgage is a valid, subsisting and enforceable first or second lien of record (or is in the process of being recorded) on the Mortgaged Property, including all buildings on the Mortgaged Property, and all additions, alterations and replacements made at any time with respect to the foregoing, except that (i) the enforceability thereof may be limited by bankruptcy, insolvency, moratorium, receivership and other similar laws relating to creditors’ rights generally and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. The lien of the Mortgage is subject only to:

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

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

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

  (4) with respect to each Junior Loan, a prior mortgage lien on the related Mortgaged Property.

Any security agreement, chattel mortgage or equivalent document related to and delivered in connection with the Mortgage Loan establishes and creates a valid, subsisting and enforceable (A) first lien and first priority security interest with respect to each First Lien Mortgage Loan, or (B) second lien and second priority security interest with respect to each Second Lien Mortgage Loan, in either case, on the property described therein and the Seller has full right to sell and assign the same to the Issuer. The Mortgaged Property was not, as of the date of the origination of the Mortgage Loan, subject to a mortgage, deed of trust, deed to secure debt or other security instrument creating a lien senior to the lien of the Mortgage, except liens as set forth in this Section 3.2(c) .

(d)  Ownership . The Seller is the sole owner of record and holder of the Mortgage Loan. The Mortgage Loan is not assigned or pledged, and the Seller has good and marketable title thereto, and has full right to transfer and sell the Mortgage Loan to the Issuer free and clear of any encumbrance, equity, participation interest, lien, pledge, charge, claim or security interest, and has full right and authority, subject to no interest or participation of, or agreement with, any other party, to sell and assign the Mortgage Loan pursuant to the related Transfer Supplement.

(e)  No Additional Collateral . The Mortgage Note is not and has not been secured by any collateral except the lien of the corresponding Mortgage and the security interest of any applicable security agreement or chattel mortgage referred to in Section 3.2(c ) hereof.

(f)  Conformance with Underwriting Standards . The Mortgage Loan was originated by the Company, an Affiliate of the Seller or a broker for simultaneous assignment to the Seller or was acquired by the Seller from a correspondent lender. The Mortgage Loan was underwritten (or, if acquired by the Seller from a correspondent lender, re-underwritten) in material compliance with the Guidelines, and in compliance with the Seller’s underwriting standards (including, as applicable, underwriting standards applicable to HELOCs) in effect on the date of origination (or, if acquired by the Seller from a correspondent lender, on the date of acquisition) of such Mortgage Loan.

(g)  Payments Current . The Mortgage Loan is not a Delinquent Loan.

(h)  No Mortgagor Bankruptcy . To the best of the Seller’s knowledge and belief, no Mortgagor is the subject of a bankruptcy or similar proceeding.

(i)  No Outstanding Charges . To the best of the Seller’s knowledge and belief, all taxes, governmental assessments, insurance premiums, water, sewer and municipal charges, leasehold payments or ground rents with respect to the Mortgaged Property which previously became due and owing have been paid, or an escrow of funds has been established in an amount sufficient to pay for every such item which remains unpaid and which has been assessed but is not yet due and payable. Except with respect to Draws under HELOCs, neither the Seller nor the Servicer has advanced funds, or induced, solicited or knowingly received any advance of funds by a party other than the Mortgagor, directly or indirectly, for the payment of any amount required under the Mortgage Loan, except for interest accruing from the date of the Mortgage Note or date of disbursement of the Mortgage Loan proceeds, whichever is greater, to the day which precedes by one (1) month the Due Date of the first installment of principal and interest.

(j)  Original Terms Unmodified . The terms of the Mortgage Note and Mortgage have not been impaired, waived, altered or modified in any material respect from the date of origination except by a written instrument which has been recorded, if necessary, to protect the interests of the Issuer, and which has been delivered to the Custodian or the Servicer, as required hereunder. The substance of any such waiver, alteration or modification has been approved by the issuer of any related PMI Policy and the title insurer, to the extent required by the PMI Policy or title insurer, and FHA for any related FHA Loans, and the VA for any related VA Loans, if applicable. No Mortgagor has been released, in whole or part, except in connection with an assumption agreement approved by the issuer of any related PMI Policy and the title insurer, to the extent required by the PMI Policy or title insurer, and by the FHA for any related FHA Loans, and the VA for any related VA Loans, if applicable, which assumption agreement has been delivered to the Custodian or the Servicer, as required hereunder.

(k)  No Defenses . To the best of the Seller’s knowledge and belief, the Mortgage Loan is not subject to any right of rescission, set-off, counterclaim or defense, including without limitation the defense of usury, and no such right of rescission, set-off, counterclaim or defense has been asserted with respect thereto, nor will the operation of any of the terms of the Mortgage Note or the Mortgage, or the exercise of any right thereunder, render either the Mortgage Note or the Mortgage unenforceable, in whole or in part, or, with respect to FHA Loans, impair the Issuer’s ability to collect full insurance benefits under the FHA Mortgage Insurance Certificate, without indemnity to HUD, or, with respect to VA Loans, impair the Issuer’s ability to collect full value under the VA Loan Guaranty Certificate upon the Mortgagor’s default, or subject the Mortgage Note or the Mortgage to any right of rescission, set-off, counterclaim or defense, including without limitation the defense of usury, and no Mortgagor was a debtor in any state or federal bankruptcy or insolvency proceeding at the time the Mortgage Loan was originated.

(l)  Hazard Insurance . Pursuant to the terms of the Mortgage, all buildings or other improvements upon the Mortgaged Property are insured by (i) an FHA approved insurer with respect to each FHA Loan, (ii) a VA approved insurer with respect to each VA Loan, or (iii) a generally acceptable insurer against loss by fire and hazards of extended coverage pursuant to insurance policies conforming to the requirements of Section 4.11 hereof and of FHA and VA, if applicable. If upon origination of the Mortgage Loan, the Mortgaged Property was in an area identified in the Federal Register by the Federal Emergency Management Agency as having special flood hazards (and such flood insurance is available), a flood insurance policy meeting the requirements of the current guidelines of the Flood Insurance Administration is in effect which policy conforms to the requirements of Section 4.11 hereof and of FHA and VA, if applicable. All individual insurance policies contain a standard mortgagee clause naming (or that will name) the Company and its successors and assigns as mortgagee, and to the best of the Seller’s knowledge and belief, all premiums thereon have been paid. The Mortgage obligates the Mortgagor thereunder to maintain the hazard insurance policy at the Mortgagor’s cost and expense, and on the Mortgagor’s failure to do so, authorizes the holder of the Mortgage to obtain and maintain such insurance at such Mortgagor’s cost and expense, and to seek reimbursement therefor from the Mortgagor. Where required by state law or regulation, the Mortgagor has been given an opportunity to choose the carrier of the required hazard insurance, provided that the policy is not a "master" or "blanket" hazard insurance policy covering the common facilities of a planned unit development. To the best of the Seller’s knowledge and belief, the hazard insurance policy is the valid and binding obligation of the insurer and is in full force and effect. To the best of the Seller’s knowledge and belief, neither the Seller nor the Servicer has engaged in, and has no knowledge of the Mortgagor’s having engaged in, any act or omission which would impair the coverage of any such policy, the benefits of the endorsement provided for herein, or the validity and binding effect of either.

(m)  Compliance with Applicable Laws . Any applicable requirements of federal, state or local law including, without limitation, usury, truth-in-lending, real estate settlement procedures, consumer credit protection, equal credit opportunity or disclosure laws, and FHA Regulations and VA Regulations applicable to the Mortgage Loan, including any origination by the Seller of the Mortgage Loan, to the best of the Seller’s knowledge and belief, have been complied with by the Seller and the Servicer in all material respects.

(n)  No Satisfaction of Mortgage . The Mortgage has not been satisfied, cancelled, subordinated (except in the case of a Second Lien Mortgage Loan, to the prior mortgage lien on the related Mortgaged Property) or rescinded, in whole or in part, and the Mortgaged Property has not been released from the lien of the Mortgage, in whole or in part, nor has any instrument been executed that would effect any such release, cancellation, subordination or rescission. To the best of the Seller’s knowledge and belief, neither the Seller nor the Servicer has waived the performance by the Mortgagor of any action, if the Mortgagor’s failure to perform such action would cause the Mortgage Loan to be in default.

(o)  Location and Type of Mortgaged Property . The Mortgaged Property is located in the state identified in the Mortgage Loan Schedule and consists of a parcel of real property with a detached single family residence erected thereon, or a two-to-four family dwelling, or an individual condominium unit or townhouse, or an individual unit in a planned unit development, or a unit of manufactured housing treated as real estate under applicable state law. To the best of the Seller’s knowledge and belief, no portion of the Mortgaged Property is used for commercial purposes.

(p)  Validity of Mortgage Documents . The Mortgage Note and the Mortgage are genuine and each is the legal, valid and binding obligation of the maker thereof enforceable pursuant to its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles. All parties to the Mortgage Note and the Mortgage and any other related agreement had legal capacity to enter into the Mortgage Loan and to execute and deliver the Mortgage Note and the Mortgage and any other related agreement, and the Mortgage Note and the Mortgage have been duly and properly executed by such parties. To the best of the Seller’s knowledge and belief, the documents, instruments and agreements submitted for loan underwriting were not falsified and contain no untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the information and statements therein not misleading. To the best of the Seller’s knowledge and belief, no fraud was committed in connection with the origination of the Mortgage Loan.

(q)  Consolidation of Future Advances . Any advances made after the date of origination of the Mortgage Loan, but prior to the sale of the Mortgage Loan to the Issuer, have been consolidated with the outstanding principal amount secured by the related Mortgage, and the secured principal amount, as consolidated, bears a single interest rate and single repayment term. The consolidated principal amount does not exceed the original principal amount of the Mortgage Loan. No Mortgage Note relating to a Mortgage Loan permits or obligates the Seller to make future advances to the related Mortgagor at the option of the Mortgagor.

(r)  Doing Business . To the best of the Seller’s knowledge and belief, all parties which have had any interest in the Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period in which they held and disposed of such interest, were) (x) in compliance with any applicable licensing requirements of the laws of the state wherein the Mortgaged Property is located, and (y) either (i) organized under the laws of such state, (ii) qualified to do business in such state, or (iii) not required to qualify to do business in such state.

(s)  LTV, CLTV, PMI Policy . The original LTV of the Mortgage Loan (other than if such Mortgage Loan is an FHA Loan or a VA Loan) either was not more than 80%, or the excess over 80% is insured as to payment defaults by a PMI Policy until the LTV of such Mortgage Loan is reduced to not more than 80%. To the best of the Seller’s knowledge and belief, all material provisions of such PMI Policy have been and are being complied with, such policy is in full force and effect, and all premiums due thereunder have been paid. To the best of the Seller’s knowledge and belief, no action, inaction, or event has occurred and no state of facts exists that has, or will result in the exclusion from, denial of, or defense to, coverage. Any Mortgage Loan subject to a PMI Policy obligates the Mortgagor thereunder to maintain the PMI Policy to the extent required under the related Mortgage Note and Mortgage and to pay all premiums and charges in connection therewith. The CLTV of each Mortgage Loan is not more than 100%.

(t)  Title Insurance . The Mortgage Loan is covered by:

• (i) an attorney’s opinion of title, the form and substance of which are acceptable to the FHA with respect to FHA Loans and the VA with respect to VA Loans;

  (ii) either (A) an ALTA lender’s title insurance policy or other generally acceptable form of policy of insurance acceptable to Fannie Mae or Freddie Mac (or the FHA with respect to FHA Loans and the VA with respect to VA Loans, as the case may be), issued by a title insurer acceptable to Fannie Mae or Freddie Mac (or the FHA with respect to FHA Loans and the VA with respect to VA Loans, as the case may be) qualified to do business in the jurisdiction where the Mortgaged Property is located, insuring the Seller, its successors and assigns, as to the first or second priority lien of the Mortgage in an amount at least equal to the original principal amount of the Mortgage Loan, and against any loss by reason of the invalidity or unenforceability of the lien resulting from the provisions of the Mortgage Note and other Loan Documents providing for adjustment in the Mortgage Interest Rate and Monthly Payment, or (B) a binding commitment from such title insurer to issue the same; or

  (iii) with respect to HELOCs, a title search or guaranty of title customary in the relevant jurisdiction was obtained with respect to a HELOC as to which no title insurance policy or binder was issued;

in each case subject to the exceptions contained in clauses (i) and (ii) , and with respect to each Junior Loan, clause (4) of Section 3.2(c) hereof and in all cases subject to the exceptions to title set forth in the title insurance policy (or commitment) or attorney’s opinion of title, which exceptions are generally acceptable to banking institutions in connection with their regular mortgage lending activities, and to such other exceptions to which similar properties are commonly subject and which do not individually, or in the aggregate, materially and adversely affect the benefits of the security intended to be provided by the Mortgage. Where required by state law or regulation, the Mortgagor has been given the opportunity to choose the carrier of the required lender’s title insurance. Additionally, such lender’s title insurance policy affirmatively insures ingress and egress, and against encroachments by or upon the Mortgaged Property or any interest therein. The Seller or an Affiliate of the Seller is the sole insured of such lender’s title insurance policy (or commitment), and such lender’s title insurance policy is in full force and effect or will be in force and effect upon issuance pursuant to the commitment. To the best of the Seller’s knowledge and belief, no claims have been made under such lender’s title insurance policy, and no prior holder of the Mortgage, including the Seller, has done, by act or omission, anything which would impair the coverage of such lender’s title insurance policy.

(u)  No Defaults . To the best of the Seller’s knowledge and belief, there is no default, breach, violation or event of acceleration existing under the Mortgage or the Mortgage Note, and no event with respect to which the applicable grace or cure period has expired which, with the passage of time or with notice, would constitute a default, breach, violation or event of acceleration, and neither the Seller nor its predecessors have waived any default, breach, violation or event of acceleration. To the best of the Seller’s knowledge and belief, with respect to each Second Lien Mortgage Loan, (i) the prior mortgage is in full force and effect, (ii) there is no default, breach, violation or event of acceleration existing under the prior mortgage or the related mortgage note, (iii) there is no event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration thereunder, (iv) the prior mortgage does not provide for negative amortization, (v) no funds provided to the Mortgagor from the Second Lien Mortgage Loan were concurrently used as a down payment for the prior mortgage, and either (A) the prior mortgage contains a provision which allows or (B) applicable law requires, the Mortgagee under the Second Lien Mortgage Loan to receive notice of, and affords such Mortgagee an opportunity to cure by payment in full or otherwise, any default under the prior mortgage.

(v)  No Mechanics’ Liens . To the best of the Seller’s knowledge and belief, there are no mechanics’ or similar liens or claims which have been filed for work, labor or material (and no rights are outstanding that under the law could give rise to such liens) affecting the related Mortgaged Property which are or may be liens prior to, or equal or coordinate with, the lien of the related Mortgage, which are not insured against or otherwise covered by the applicable title policy.

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

(x)  Customary Provisions . The Mortgage contains customary and enforceable provisions such as to render the rights and remedies of the holder thereof adequate for the realization against the Mortgaged Property of the benefits of the security provided thereby, including, (i) in the case of a Mortgage designated as a deed of trust, by trustee’s sale and (ii) otherwise by judicial foreclosure.

(y)  Occupancy of the Mortgaged Property . To the best of the Seller’s knowledge and belief, the Mortgaged Property is lawfully occupied under applicable law. To the best of the Seller’s knowledge and belief, all inspections, licenses and certificates required to be made or issued with respect to all occupied portions of the Mortgaged Property and with respect to the use and occupancy of the Mortgaged Property, including but not limited to certificates of occupancy and fire underwriting certificates, have been made by or obtained from the appropriate authorities.

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

(aa)  Acceptable Investment . The Seller has no knowledge of any circumstances or conditions with respect to the Mortgage, the Mortgaged Property, the Mortgagor or the Mortgagor’s credit-standing not reflected in the representations set forth herein, or in the documents delivered to the Custodian or in the Mortgage Loan File, that could reasonably be expected to cause private institutional investors to regard the Mortgage Loan as an unacceptable investment or cause the Mortgage Loan to become delinquent or materially adversely affect the value or the marketability of the Mortgage Loan.

(bb)  Delivery of Mortgage Note, Mortgage and Assignment of Mortgage . The Mortgage Note endorsed in blank or to the Issuer, the Mortgage (or a copy of the Mortgage, as permitted under the circumstances described in clause (ii) of the second paragraph of Section 2.1(b) hereof) and the Assignment of Mortgage required to be delivered for the Mortgage Loan by the Seller under the Custodial Agreement, have been delivered to the Custodian on or prior to the Closing Date. The Seller is in possession of a complete Mortgage Loan File with respect to the Mortgage Loan.

(cc)  Recording of Mortgage . The original Mortgage is in recordable form and is acceptable for recording under the laws of the jurisdiction in which the related Mortgaged Property is located. The original Mortgage (in recordable form and acceptable for recording) was recorded or is in the process of being recorded under the laws of the jurisdiction in which the related Mortgaged Property is located. All intervening assignments of the original Mortgage (other than unrecorded warehouse assignments) have been delivered for recordation or have been recorded in the appropriate jurisdictions wherein such recordation is necessary to perfect the lien thereof as against creditors of or purchasers from the Seller. The Assignment of Mortgage (other than with respect to a MERS Mortgage, which shall not require an assignment) is in recordable form and is acceptable for recording under the laws of the jurisdiction in which the related Mortgaged Property is located.

(dd)  Due on Sale . The Mortgage contains an enforceable provision for the acceleration of the payment of the unpaid principal balance of the Mortgage Loan in the event that the Mortgaged Property is sold or transferred without the prior written consent of the Mortgagee thereunder.

(ee)  No Graduated Payments . The Mortgage Loan is not a graduated payment mortgage loan and does not have a shared appreciation feature.

(ff)  Mortgaged Property Undamaged . To the best of the Seller’s knowledge and belief, there is no proceeding pending or threatened for the total or partial condemnation of the Mortgaged Property. To the best of the Seller’s knowledge and belief, the Mortgaged Property is undamaged by waste, fire, earthquake or earth movement, windstorm, flood, tornado or other casualty so as to affect materially adversely the value of the Mortgaged Property as security for the Mortgage Loan or the use for which the premises were intended.

(gg)  Collection Practices; Adjustable Rate Mortgage Loan Adjustments . To the best of the Seller’s knowledge and belief, the collection practices used by the Servicer with respect to the Mortgage Loan have been in accordance with the Servicer’s Customary Servicing Procedures, are in compliance in all material respects with all applicable laws and regulations, and all Mortgage Interest Rate adjustments have been made in strict compliance with state and federal law and the terms of the related Mortgage Note.

(hh)  Appraisal . The Mortgage Loan File contains an appraisal of the related Mortgaged Property signed prior to the approval of the mortgage loan application by a qualified appraiser, duly appointed by or acceptable to the Seller, who, to the best of the Seller’s knowledge and belief, had no interest, direct or indirect, in the Mortgaged Property or in any loan made on the security thereof, and whose compensation is not affected by the approval or disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy the requirements of the FHA or VA, if applicable. In the alternative, the Mortgage Loan File may contain other documentation of property value acceptable to the Agencies in lieu of appraisal, including a Mortgagor’s Statement of Value.

(ii)  Servicemembers’ Civil Relief Act . The Mortgagor has not notified the Seller and the Seller has no knowledge of any relief requested by the Mortgagor under the Servicemembers’ Civil Relief Act of 1940.

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

(kk)  No Construction Loans . To the best of the Seller’s knowledge and belief, no Mortgage Loan (i) was made for the construction or rehabilitation of a Mortgaged Property which has not been completed or (ii) (other than HELOCs) provides for future advances of funds by the Seller which have not yet been advanced or (iii) facilitates the trade-in or exchange of a Mortgaged Property.

(ll)  Regarding the Mortgagor . The Mortgagor is one (1) or more natural persons.

(mm)  Consent . Either (a) no consent for the Second Lien Mortgage Loan is required by the holder of the related first lien mortgage or (b) such consent has been obtained and is contained in the Mortgage Loan File.

(nn)  Mortgagor Acknowledgment . If the Mortgage Loan is an adjustable rate mortgage loan, the Mortgagor has executed a statement to the effect that the Mortgagor has received all disclosure materials required by applicable law with respect to the making of adjustable rate mortgage loans. The Servicer agrees that it shall maintain such statement in the Mortgage Loan File.

(oo)  No Buydown Provisions . The Mortgage Loan does not contain provisions pursuant to which Monthly Payments are paid or partially paid with funds deposited in any separate account established by the Seller, the Mortgagor or anyone on behalf of the Mortgagor, or paid by any source other than the Mortgagor nor does it contain any other similar provisions currently in effect which may constitute a "buydown" provision.

(pp) [ Reserved ].

(qq)  No Denial of Insurance . To the best of the Seller’s knowledge and belief, no action, inaction, or event has occurred and no state of facts exists or has existed that has resulted or would result in the exclusion from, denial of, or defense to, coverage under any applicable PMI Policy or bankruptcy bond, irrespective of the cause of such failure of coverage. In connection with the placement of any such insurance, to the best of the Seller’s knowledge and belief, no commission, fee, or other compensation has been or will be received by the Seller or any designee of the Seller or any corporation in which the Seller or any officer, director or employee had a financial interest at the time of placement of such insurance, unless the receipt of such proceeds is in accordance with applicable law.

(rr)  No Taxes, Fees or Charges . The sale, transfer, assignment and conveyance of the Mortgage Loan by the Seller pursuant to this Agreement are not subject to and will not result in any tax, fee or governmental charge payable by the Seller or the Issuer to any federal, state or local government other than such taxes, fees and governmental charges which have been or will be paid as due by the Seller.

(ss)  Ground Lease . With respect to each Mortgaged Property subject to a ground lease (i) the current ground lessor has been identified and all ground rents which have previously become due and owing have been paid, (ii) the ground lease term extends, or is automatically renewable, for at least five years beyond the maturity date of the related Mortgage Loan, (iii) the ground lease has been duly executed and recorded, (iv) the amount of the ground rent and any increases therein are clearly identified in the lease and are for predetermined amounts at predetermined times, (v) the ground rent payment is included in the Mortgagor’s monthly payment as an expense item in determining the qualification of the Mortgagor for such Mortgage Loan, (vi) the Issuer on behalf of the Collateral Agent has the right to cure defaults on the ground lease, and (vii) the terms and conditions of the leasehold do not prevent the free and absolute marketability of the Mortgaged Property.

(tt)  Mortgage Interest Rate . [The Mortgage Interest Rate on the Mortgage Loan is calculated on the basis of a year of 360 days with twelve 30-day months.]

(uu) [ Reserved ].

(vv)  FHA Mortgage Insurance; VA Loan Guaranty . With respect to the FHA Loans, either (i) the FHA Mortgage Insurance Certificate is in full force and effect and there exist no material impairments to full recovery without indemnity to HUD or the FHA under FHA Mortgage Insurance or (ii) the Mortgage Loan meets all standards for the issuance of an FHA Mortgage Insurance Certificate. With respect to the VA Loans, either (i) the VA Loan Guaranty Certificate is in full force and effect to the maximum extent stated therein or (ii) the Mortgage Loan meets all standards for the issuance of a VA Loan Guaranty Certificate. To the extent such guaranty or insurance has been obtained, all necessary steps have been taken to keep such guaranty or insurance valid, binding and enforceable as of the Closing Date and each is the binding, valid and enforceable obligation of the FHA and the VA, respectively, to the full extent thereof, without surcharge, set-off or defense as of the Closing Date.

(ww)  Rights Under Insurance Policies . The Seller has caused and will cause to be performed any and all acts required to be performed by it to preserve the rights and remedies of the Collateral Agent in any insurance policies applicable to the Mortgage Loan including, without limitation, any necessary notifications of insurers, assignments of policies or interests therein, and establishments of co-insured, joint loss payee and mortgagee rights in favor of the Collateral Agent.

(xx)  Prepayment Penalty . If the Mortgage Loan contains a provision that provides for the payment of a penalty if the related Mortgage Note is paid in full prior to the date such Mortgage Note is scheduled to be paid in full, such provision is enforceable under applicable law.

(yy)  Predatory Lending Regulations; High Cost Loans . None of the Mortgage Loans (i) are classified as (x) "high cost" loans under the Home Ownership and Equity Protection Act of 1994 or (y) "high cost" or "predatory" loans under any applicable federal, state or local law or ordinance (or a similarly classified loan using different terminology under any applicable federal, state or local law or ordinance imposing heightened regulatory scrutiny or additional legal liability for residential mortgage loans having high interest rates and/or points and fees) or (ii) are subject to any similar federal, state or local law or ordinance that would result in such Mortgage Loan being ineligible for inclusion in a rated securitization transaction under the then current criteria and ongoing criteria of any Rating Agency. No Mortgage Loan is a "High Cost Loan" or a "Covered Loan," as applicable, as such terms are defined in the then-current Standard & Poor’s LEVELS® Glossary, Appendix E.

(zz)  Proceeds Fully Disbursed . The proceeds of each Mortgage Loan, other than HELOCs, have been fully disbursed, there is no requirement for future advances thereunder and any and all requirements as to completion of any on-site or off-site improvements and as to disbursements of any escrow funds therefor have been complied with, except any Mortgaged Property or Mortgage Loan subject to an Escrow Withhold as defined in the underwriting guidelines of the Seller. All costs, fees and expenses incurred in making, closing or recording the Mortgage Loans were paid and the Mortgagor is not entitled to any refund of any amounts paid or due under the Mortgage Note or Mortgage (it being understood that the making or funding of a Draw under a HELOC shall not constitute a refund of amounts paid for or due under the Mortgage Loan).

(aaa) No Deficiencies . With respect to escrow deposits and escrow payments (other than with respect to each Mortgage Loan which is indicated by the Seller to be a Second Lien Mortgage Loan and for which the Mortgagee under the first lien is collecting escrow payments), all such payments are in the possession of or under the control of the Seller, its servicer or its agent. There exist no deficiencies with respect to escrow deposits and payments, if such are required, for which customary arrangements for repayment thereof have not been made, and no escrow deposits or payments of other charges or payments due the Seller of such Mortgage Loan have been capitalized under the Mortgage or the related Mortgage Note.

(bbb) No Pledged Account . There is no pledged account or other security other than real estate securing the Mortgagor’s obligations.

(ccc)  Additional Payments . There is no obligation on the part of the Seller or any other party under the terms of the Mortgage or related Mortgage Note to make payments in lieu of or in addition to those made by the Mortgagor or a guarantor of such Mortgagor’s obligations under the terms of a guarantee included in the related Mortgage Loan File.

(ddd) Use of Mortgage Loan Proceeds . No proceeds from any Mortgage Loan were used to finance single-premium credit insurance policies.

(eee) [ Reserved ].

(fff) Furnishing of Information . The Seller or the Servicer has fully furnished, in accordance with the Fair Credit Reporting Act and its implementing regulations, accurate and complete information (e.g., favorable and unfavorable) on the Mortgagor’s credit files to the Credit Repositories on a monthly basis.

(ggg) Origination by Seller Each Mortgage Loan has been originated by the prime loan division of the relev