SECOND AMENDED AND RESTATED MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT

TABLE OF CONTENTS

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ARTICLE I
DEFINITIONS					2
ARTICLE II
SALE OF ELIGIBLE LOANS; POSSESSION OF MORTGAGE FILES; BOOKS AND RECORDS; CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS
Section 2.1		Sale of Eligible Loans; Possession of Mortgage Loan Files; Maintenance of Mortgage Loan Files			22
Section 2.2		Determination of Purchase Price; Deposit by Seller and the Additional Seller			26
Section 2.3		Purchase Commitment Term			27
Section 2.4		Books and Records; Transfers of Eligible Loans			27
Section 2.5		Custodial Agreement			28
ARTICLE III
REPRESENTATIONS AND WARRANTIES; COVENANTS; REMEDIES AND BREACH
Section 3.1		Representations and Warranties of the Company and the Additional Seller			28
Section 3.2		Representations and Warranties Regarding Individual Mortgage Loans; Eligibility Representations			34
Section 3.3		Remedies for Breach of Representations and Warranties			43
Section 3.4		Conditions to Closing			44
Section 3.5		Covenants of the Purchaser, the Company and the Additional Seller			45
ARTICLE IV
ADMINISTRATION AND SERVICING OF ELIGIBLE LOANS

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Section 4.1		The Company to Act as Servicer; Servicing and Administration of the Eligible Loans			46
Section 4.2		Sales and Securitizations			48
Section 4.3		Liquidation of Eligible Loans			50
Section 4.4		Collection of Eligible Loan Payments			51
Section 4.5		Establishment of, and Deposits to, Collection Account			51
Section 4.6		Permitted Withdrawals From Collection Account; Deposit into the Collateral Account			52
Section 4.7		Establishment of, and Deposits to, Escrow Account			53
Section 4.8		Permitted Withdrawals From Escrow Account			54
Section 4.9		Payment of Taxes, Insurance and Other Charges			54
Section 4.10		Protection of Accounts			55
Section 4.11		Maintenance of Hazard Insurance			55
Section 4.12		Maintenance of Mortgage Impairment Insurance			56
Section 4.13		Maintenance of Fidelity Bond and Errors and Omissions Insurance			57
Section 4.14		Inspections			57
Section 4.15		Restoration of Mortgaged Property			57
Section 4.16		Maintenance of PMI Policy; Claims			58
Section 4.17		Title, Management and Disposition of REO Property			59
Section 4.18		Servicer Reports			60
Section 4.19		Real Estate Owned Reports			60
Section 4.20		Liquidation Reports			60
Section 4.21		Reports of Foreclosures and Abandonments of Mortgaged Property			60
Section 4.22		Servicer Advance Report			60
Section 4.23		Secondary Market Trading Report			60
ARTICLE V
SERVICER ADVANCES
Section 5.1		Servicer Monthly Advances			61

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ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.1		Transfers of Mortgaged Property			61
Section 6.2		Satisfaction of Mortgages and Release of Mortgage Loan Files			62
Section 6.3		Servicing Compensation			62
Section 6.4		Annual Statement as to Compliance			63
Section 6.5		Annual Independent Public Accountants’ Servicing Report			63
Section 6.6		Right to Examine Servicer Records			63
ARTICLE VII
REPURCHASE OBLIGATION
Section 7.1		Servicer’s Repurchase Obligations			64
ARTICLE VIII
SERVICER TO COOPERATE
Section 8.1		Provision of Information			64
ARTICLE IX
THE SERVICER
Section 9.1		Indemnification of Third-Party Claims			65
Section 9.2		Corporate Existence of the Servicer			65
Section 9.3		Limitation on Liability of Servicer and Others			66
Section 9.4		Limitation on Resignation and Assignment by the Servicer			66
Section 9.5		Limitation on Assignment of Right			66
ARTICLE X
DEFAULT

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Section 10.1		Servicer Events of Default			67
Section 10.2		Waiver of Defaults			69
ARTICLE XI
TERMINATION
Section 11.1		Termination of Agreement			69
Section 11.2		Termination of Purchase Obligations			69
Section 11.3		Termination of Servicing With Respect to Any Eligible Loan			72
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.1		Successor to Servicer			73
Section 12.2		Amendment			74
Section 12.3		Governing Law			74
Section 12.4		Duration of Agreement			74
Section 12.5		Notices			74
Section 12.6		Severability of Provisions			75
Section 12.7		Relationship of Parties			75
Section 12.8		Execution; Successors and Assigns			75
Section 12.9		Recordation of Assignments of Mortgage			76
Section 12.10		Assignment by Purchaser			76
Section 12.11		Non-Petition Agreement			76
Section 12.12		Waiver of Offset			76
Section 12.13		Limited Recourse			76
Section 12.14		Limitation of Liability			77
Section 12.15		Binding Effect on Voting Group			77
ARTICLE XIII
PHH CORPORATION GUARANTEE
Section 13.1		Guarantee of Servicer’s Performance and Payment Obligations			77

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ARTICLE XIV
ASSIGNMENT
Section 14.1		Assignment			79
ARTICLE XV
COMMITMENT FEE
Section 15.1		Commitment Fee			80
ARTICLE XVI
ADDITIONAL SELLER
Section 16.1		Criteria for Additional Seller			80
EXHIBITS
EXHIBIT A-1		TRANSFER SUPPLEMENT			A-1-1
EXHIBIT A-2		TRANSFER SUPPLEMENT			A-2-1
EXHIBIT B		RATED BIDDER LETTER			B-1
EXHIBIT C		FORM OF MONTHLY REPORT			C-1
EXHIBIT D		FORM OF MONTHLY SERVICER ADVANCE REPORT			D-1
EXHIBIT E		FORM OF ADDITIONAL SELLER OFFICER’S CERTIFICATE			E-1
EXHIBIT F		FORM OF SERVICING RIGHTS PURCHASE AND SALE AGREEMENT			F-1
EXHIBIT G		FORM OF ADDITIONAL SELLER AGREEMENT			G-1
EXHIBIT H		FORM OF INSOLVENCY OPINION			H-1

          SECOND AMENDED AND RESTATED MORTGAGE LOAN PURCHASE AND SERVICING AGREEMENT, dated as of October 31, 2000 (as amended, supplemented or otherwise modified and in effect from time to time, the “ Agreement ” or the “ Purchase Agreement ”), between Bishop’s Gate Residential Mortgage Trust, a Delaware business trust, as Purchaser (the “ Purchaser ” or the “Trust”), Cendant Mortgage Corporation, a New Jersey corporation (the “ Company ”), as Seller and Servicer (in its capacity as Seller hereunder, the “Seller,” and in its capacity as Servicer hereunder, the “ Servicer ”), any additional seller of Eligible Loans pursuant to the terms hereof (collectively, the “ Additional Seller ”), and PHH Corporation, a Maryland corporation, as Guarantor (the “ Guarantor ”) of the Servicer’s obligations.

WITNESSETH

          WHEREAS, the Purchaser and the Seller have entered into that certain Amended and Restated Mortgage Loan Purchase and Servicing Agreement, dated as of December 11, 1998 (the “ Amended and Restated Purchase Agreement ”), and pursuant thereto the Purchaser has agreed to purchase from the Seller and the Seller has agreed to sell to the Purchaser from time to time mortgage loans constituting Eligible Loans;

          WHEREAS, pursuant to the Amended and Restated Purchase Agreement, the Purchaser and the Company, as Seller and Servicer, have prescribed the manner of purchase of each Eligible Loan and the management, control and servicing of the Eligible Loans, including the method and manner by which the Servicer will arrange for the sale and Securitization of each Eligible Loan;

          WHEREAS, the Purchaser, the Seller and the Servicer desire to amend and restate the Amended and Restated Purchase Agreement in its entirety for the purpose of, among other things, adding the Additional Seller meeting the criteria described herein as a seller of Mortgage Loans to the Trust pursuant to this Purchase Agreement; and

          WHEREAS, pursuant to Section 12.2 of the Amended and Restated Purchase Agreement, the Purchaser, the Seller, the Controlling Majority, the Required Banks, the Swap Counterparties, the holders of a majority of the principal amount of all Series of Certificates and the Servicer have provided their written consent to the amendment and restatement of the Amended and Restated Purchase Agreement, and written notice of such amendment has been provided to each Rating Agency. In connection with the execution of this Purchase Agreement, the Purchaser has received Rating Agency Confirmation.

          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 Purchaser, the Seller, the Additional Seller, the Servicer and the Guarantor agree as follows:

ARTICLE I

DEFINITIONS

          Whenever used herein, the following words and phrases, unless the context otherwise requires, shall have the following meanings:

           Accepted Servicing Practices : The Servicer’s Customary Servicing Procedures and the servicing practices required by the Guidelines.

           Acquisition Date Accrued Interest : With respect to any Eligible Loan, the amount of interest, if any, accrued and unpaid on the date of acquisition of such Eligible Loan by the Purchaser.

           Additional Seller : Collectively, any Affiliate of the Company meeting the criteria specified in Article XVI herein.

           Administration Agreement : The Amended and Restated Administration Agreement, dated as of December 11, 1998, between the Trust and the Administrator, as the same may at any time be amended, modified or supplemented.

           Administrator : Cendant Mortgage Corporation, in its capacity as Administrator under the Administration Agreement, or any successor Administrator under the Administration Agreement.

           Affiliate : With respect to the origination and sale of Eligible Loans pursuant to this Purchase Agreement, Affiliate means any entity controlled by or under common control of Cendant Mortgage Corporation. With respect to any specified Person, Affiliate means any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities (including, without limitation, partnership interests), by contract or otherwise and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

           Agency : Any of GNMA, FNMA or FHLMC, as applicable.

           Agency Custodial Agreement : The custodial agreement entered into with GNMA, FNMA or FHLMC, as applicable, pursuant to which the Custodian will act as document custodian for a pool or pools of mortgage loans to be formed to back Agency Securities.

           Agency Securities : Securities backed by a pool or pools of mortgage loans owned by the Trust, which are issued and guaranteed by the applicable Agency.

           Agent : The Chase Manhattan Bank, in its capacity as Agent for the Liquidity Banks under the Liquidity Agreement, or any successor Agent under the Liquidity Agreement.

           Agreement or Purchase Agreement : This Second Amended and Restated Mortgage Loan Purchase and Servicing Agreement and all amendments hereof and supplements hereto, including as the context requires, any Transfer Supplement.

           Appraised Value : The value set forth in an appraisal made in connection with the origination of the related Eligible Loan as the value of the Mortgaged Property.

           Approved Seller/Servicer : An approved seller and servicer under the Guidelines.

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

           Base Indenture : The Base Indenture, dated as of December 11, 1998, between the Purchaser and the Indenture Trustee, as the same may be at any time amended, modified or supplemented, exclusive of Supplements creating a new Series of Notes.

           Base Trust Agreement : The Third Amended and Restated Trust Agreement, dated as of December 11, 1998, between the Depositor and the Owner Trustee, as the same may at any time be amended, modified or supplemented.

           Best’s : The meaning specified in Section 4.11 of this Agreement.

           BIF : The Bank Insurance Fund or any successor thereto.

           Business Day : Any day other than (i) Saturday and Sunday, or (ii) a day on which banking institutions or foreign exchange markets in New York City are authorized or required by law, regulation or executive order to be closed for business.

           Calculation Agent : The Servicer.

           Certificate Purchase Agreement : The certificate purchase agreements, dated as of December 4, 1998 and November 4, 1999, respectively, by and among Lehman Brothers Inc., the Purchaser and the Company, for the Variable Rate Residential Mortgage Loan Extendible Trust Certificates, Series 1998-1 and Series 1998-2, and the Variable Rate Extendible Trust Certificates, Series 1999-1, respectively, and each certificate purchase agreement, if any, entered into by the

Purchaser, the Company and the purchasers thereof in connection with the issuance of any Series of Certificates.

           Certificates : The Variable Rate Residential Mortgage Loan Extendible Trust Certificates, Series 1998-1, Variable Rate Residential Mortgage Loan Extendible Trust Certificates, Series 1998-2, Variable Rate Extendible Trust Certificates, Series 1999-1, and any additional Series of certificates that may be issued from time to time pursuant to the Base Trust Agreement and any supplement thereto.

           Closing Date : The Closing Date specified in any Transfer Supplement, which is the date as to which the sale of any Portfolio is designated to occur.

           Code : The Internal Revenue Code of 1986, as it may be amended from time to time or any successor statute thereto, and applicable U.S. Department of the Treasury regulations issued pursuant thereto.

           Collateral Account : A single, segregated trust account established and maintained by the Collateral Agent pursuant to the terms of the Security Agreement for the purposes described in Section 4.6 hereof.

           Collateral Agent : Bank One, National Association (formerly The First National Bank of Chicago), as Collateral Agent for the Secured Parties under the Security Agreement, or any successor Collateral Agent under the Security Agreement.

           Collection Account : As to any Eligible Loan, any separate account or accounts created and maintained pursuant to Section 4.5 of this Agreement for the collection of all payments made on such Eligible Loan.

           Commercial Paper or Commercial Paper Notes : The short-term promissory notes of the Trust issued pursuant to the Depositary Agreement.

           Commercial Paper Dealer Agreement : The commercial paper dealer agreement, dated as of July 21, 2000, among the Trust and the CP Dealers.

           Commitment Fee : The meaning assigned to such term in Section 15.1 hereof.

           Company : Cendant Mortgage Corporation, a New Jersey corporation, as Seller and Servicer of the Eligible Loans purchased by the Purchaser pursuant to the terms of this Agreement.

           Company Employees : The meaning specified in Section 4.13 hereof.

           Condemnation Proceeds : As to any Eligible Loan, all awards or settlements in respect of a Mortgaged Property, whether permanent or temporary, partial or entire, by exercise of the power of eminent domain or condemnation, to the extent not required to be released to a Mortgagor in accordance with the terms of the related Loan Documents.

           Conforming Loan : An Eligible Loan which conforms to the Guidelines of GNMA, FNMA or FHLMC, as amended for the Seller.

           Controlling Majority : The Liquidity Banks and holders of the Notes holding 51% of the sum of the (i) the aggregate principal amount of all Series of Notes outstanding, and (ii) Credits Outstanding (for purposes of this calculation, (i) the Liquidity Banks percentage of the Controlling Majority shall equal the Credits Outstanding divided by the sum of the (x) the aggregate principal amount of all Series of Notes outstanding, and (y) the Credits Outstanding, and (ii) the Noteholders’ percentage of the Controlling Majority shall equal the aggregate principal amount of all Series of Notes outstanding divided by the sum of (x) the aggregate principal amount of all Series of Notes outstanding, and (y) the Credits Outstanding). For the purposes of determining the Controlling Majority, “Credits Outstanding” shall be determined without reference to clause (3) of the definition thereof.

           CP Dealer : Lehman Commercial Paper Inc., Banc of America Securities LLC and Goldman, Sachs & Co., each as a Commercial Paper dealer pursuant to the Program Documents.

           Credit-Adjusted Price : The hypothetical sales price (expressed as a percentage of par), as determined in good faith by the Calculation Agent, as of each date of a Partial Termination occurring with respect to a Delinquent or Defaulted Loan equal to the price that a Reference Mortgage Loan would be sold to a Qualified Purchaser.

           Credits Outstanding : As of the close of business on any day, (i) the aggregate principal amount of outstanding Commercial Paper, plus (ii) the aggregate principal amount of outstanding Loans, minus (iii) funds allocable to Commercial Paper and Loans outstanding then on deposit in the Collateral Account, except to the extent that such funds are then subject to any writ, order, stay, judgment, warrant of attachment or execution or similar process.

           Custodial Agreement : The Amended and Restated Custodial Agreement, dated as of December 11, 1998, among the Trust, the Custodian and the Collateral Agent, as the same may at any time be amended, modified or supplemented.

           Custodian : Bank One, National Association (formerly The First National Bank of Chicago), in its capacity as Custodian under the Custodial Agreement, or any successor Custodian under the Custodial Agreement.

           Customary Servicing Procedures : Procedures (including collection procedures) that the Servicer customarily employs and exercises in servicing and administering mortgage loans for its own account and arranging for the sale and Securitization of mortgage loans and which are in accordance with accepted mortgage servicing practices of prudent lending institutions in the jurisdiction in which the Mortgaged Property is situated for properties of a similar type.

           Defaulted Loan : Any Eligible Loan where (i) the obligor thereon has failed to make a required payment for 90 days or more after the Due Date of such required payment, (ii) such Eligible Loan is a Delinquent Loan for which the Servicer has not made a Servicer Monthly Advance and the Servicer has delivered a certificate pursuant to Section 5.1 hereof, or (iii) any other event has occurred which gives the holder the right to accelerate payment and/or take steps to foreclose on the mortgage securing the Eligible Loan under the Eligible Loan documentation.

           Delinquent Loan : Any Eligible Loan which has a payment which is 30 days or more past its Due Date without giving effect to any Servicer Monthly Advance.

           Depositary : First Chicago Trust Company of New York, in its capacity as Depositary under the Depositary Agreement, or any successor Depositary under the Depositary Agreement.

           Depositary Agreement : The Amended and Restated Depositary Agreement, dated as of December 11, 1998, entered into by the Trust and the Depositary, as the same may at any time be amended, modified or supplemented.

           Depositor : Cendant Mortgage Corporation, in its capacity as Depositor, or any successor Depositor.

           Determination Date : With respect to a Due Period, the 16th day (or if such day is not a Business Day, the Business Day immediately succeeding such day) of the calendar month following such Due Period.

           Due Date : The first day of the month in which the related Monthly Payment is due on an Eligible Loan, exclusive of any days of grace.

           Due Period : With respect to each Payment Date, the period commencing on the first day of the month preceding the month of the Payment Date and ending on the last day of the month preceding the month in which the Payment Date occurred.

           Early Amortization Event : With respect to each Series, if any of the following shall have occurred prior to the applicable Final Scheduled Distribution Date: (i) a Termination Event, (ii) the Trust’s commitment to purchase Mortgage Loans has terminated prior to the Final Scheduled

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Distribution Date of any Series of Certificates, (iii) an Indenture Event of Default, (iv) a Liquidity Agreement Event of Default (v) an Interest Rate Swap Termination Event, (vi) an Interest Rate Swap Event of Default.

           Eligible Investments : Investments which mature no later than the next following Payment Date in the following:(i) obligations issued by, or the full and timely payment of principal of and interest on which is fully guaranteed by, the United States of America or any agency or instrumentality thereof (which agency or instrumentality is backed by the full faith and credit of the United States of America), (ii) commercial paper (other than the Commercial Paper) rated (at the time of purchase) at least “A-l” by S&P, “P-1” by Moody’s and, if rated by Fitch, “F1,” (iii) certificates of deposit, other deposits or bankers’ acceptances issued by or established with commercial banks having short-term deposit ratings (at the time of purchase) of at least “A-l” by S&P, “P-1” by Moody’s and, if rated by Fitch, “F1,” (iv) repurchase agreements involving any of the Eligible Investments described in clauses (i) through (iii) hereof so long as the other party to the repurchase agreement has short-term unsecured debt obligations or short-term deposits rated (at the time of purchase) at least “A-l” by S&P, “P-1” by Moody’s and, if rated by Fitch, “F1,” and (v) if approved in writing by Moody’s, direct obligations of any money market fund or other similar investment company all of whose investments consist of obligations described in the foregoing clauses of this definition and that is rated “AAm” by S&P, “Aam” by Moody’s and, if rated by Fitch, “AA/V-1+” or higher. In addition, any such Eligible Investment shall not have an “r” highlighter affixed to its rating, and its term shall have a predeter-mined fixed dollar amount of principal due at maturity that cannot vary or change. Interest on any Eligible Investment shall be tied to a single interest rate index plus a single fixed spread, if any, and move proportionately with that index.

           Eligible Loan : Conforming Loans and Jumbo Loans that satisfy the Eligibility Criteria and the Portfolio Criteria. An Eligible Loan includes, without limitation, the Mortgage Loan File, the Monthly Payments, Principal Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds, VA Guaranty Proceeds, REO Disposition Proceeds and all other rights, benefits, proceeds and obligations arising from or in connection with such Eligible Loan.

           Eligibility Criteria : In connection with the Purchaser’s purchase of mortgage loans on any day, the mortgage loans acquired on such day must satisfy the following criteria: (i) each mortgage loan must be either a Conforming Loan or a Jumbo Loan, (ii) each mortgage loan must have been originated or purchased by the Seller or the Additional Seller, as applicable, in accordance with its then-current origination or acquisition underwriting practices within 60 days prior to the acquisition thereof by the Purchaser, (iii) the aggregate Initial Purchase Price of all mortgage loans secured by properties located in California and acquired on such day may not exceed 30% of the aggregate Initial Purchase Price of all mortgage loans acquired on such day, (iv) the aggregate Initial Purchase Price of all mortgage loans secured by properties located in any state other than California and acquired on such day may not exceed 15% of the aggregate Initial Purchase Price of all mortgage loans acquired

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on such day, (v) the aggregate Initial Purchase Price of all mortgage loans guaranteed by either the Federal Housing Authority or the Veterans Administration and acquired on such day may not exceed 30% of the aggregate Initial Purchase Price of all mortgage loans acquired on such day, (vi) the aggregate Initial Purchase Price of all Jumbo Loans acquired on such day may not exceed 35% of the aggregate Initial Purchase Price of all mortgage loans acquired on such day and (vii) each mortgage loan may not be made to a borrower that is generally referred to as “sub-prime borrower.” In addition, the representations and warranties made by the Seller and the Servicer (in its own capacity and on behalf of the Additional Seller) in this Agreement must be true and correct in all material respects on such day.

           Eligibility Representations : The representations and warranties made by the Seller and the Servicer (on behalf of the Additional Seller) with respect to each mortgage loan, set forth in Section 3.2 herein.

           Equivalent Security : With respect to a mortgage loan, a mortgage-backed security issued by FHLMC, FNMA or GNMA having a term to final maturity equal to the remaining term to maturity of such mortgage loan and an interest or pass-through rate equal to the interest rate on such mortgage loan (net of servicing fees).

           Equivalent Security Price : With respect to a mortgage loan, the price (expressed as a percentage of the principal amount) of the Equivalent Security for such mortgage loan. The price of an Equivalent Security shall be determined by the Servicer on any date by reference to an independent market price reference such as Telerate.

           Errors and Omissions Insurance Policy : An errors and omissions insurance policy or policies to be maintained by the Servicer pursuant to Section 4.13 hereof.

           Escrow Account : As to any Eligible Loan, any separate account or accounts created and maintained pursuant to Section 4.7 hereof.

           Escrow Payments : With respect to any Eligible Loan, the amounts constituting ground rents, taxes, assessments, water rates, sewer rents, municipal charges, mortgage insurance premiums, fire and hazard insurance premiums, and any other payments required by the Mortgagee to be escrowed by the Mortgagee pursuant to the Mortgage or any other related document.

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

           FHA : The Federal Housing Administration, an agency within the United States Department of Housing and Urban Development, or any successor thereto and including the Federal

Housing Commissioner and the Secretary of Housing and Urban Development where appropriate under the FHA Regulations.

           FHA Approved Mortgagee : A corporation or institution approved as a mortgagee by the FHA under the Act and applicable FHA Regulations, and eligible to own and service mortgage loans such as the FHA Loans.

           FHA Loan : An Eligible Loan which is the subject of an FHA Mortgage Insurance Contract.

           FHA Mortgage Insurance : Mortgage insurance authorized under Sections 203(b), 213, 221(d)(2), 222, and 235 of the Act and provided by the FHA.

           FHA Mortgage Insurance Contract : The contractual obligation of the FHA respecting the insurance of an Eligible Loan.

           FHA Regulations : Regulations promulgated by HUD under the Federal Housing Administration Act, codified in 24 Code of Federal Regulations, and other HUD issuances relating to FHA Loans, including the related handbooks, circulars, notices and mortgagee letters.

           FHLMC : The Federal Home Loan Mortgage Corporation, or any successor thereto.

           FHLMC Guides : The Federal Home Loan Mortgage Corporation Sellers’ Guide and the Federal Home Loan Mortgage Corporation Servicers’ Guide and all amendments or additions thereto.

           FICO Score : A statistical credit score obtained by many mortgage lenders in connection with a loan application to help assess a borrower’s creditworthiness. A FICO score is generated by models developed by a third party and made available to lenders through three national credit bureaus. The FICO score is based on a borrower’s historical credit data, including, among other things, payment history, delinquencies on accounts, levels of outstanding indebtedness, length of credit history, types of credit and bankruptcy experience.

           Fidelity Bond : A fidelity bond to be maintained by the Servicer pursuant to Section 4.13 hereof.

           Final Scheduled Distribution Date : With respect to any Series of Certificates, the final scheduled distribution date set forth in the applicable Series Trust Agreement Supplement, as modified in the manner set forth in Section 3.4(b) , 3.4(c) or 3.4(d) of the Base Trust Agreement.

           Fitch : Fitch IBCA Inc., or any successor thereto.

           FNMA : The Federal National Mortgage Association, or any successor thereto.

           FNMA Guides : The FNMA Selling and Servicing Guides and all amendments or additions thereto.

           GNMA : The Government National Mortgage Association, or any successor thereto.

           GNMA Guides : The GNMA Handbooks 5500.1 and 5500.2 and all amendments or additions thereto.

           Guarante e: The full, unconditional and irrevocable guarantee of the Servicer’s performance and payment obligations, set forth in Article XIII hereof.

           Guarantor : PHH Corporation, a Maryland corporation, in its capacity as Guarantor, or any successor Guarantor.

           Guidelines : The GNMA Guides, the FNMA Guides and the FHLMC Guides, as such Guides have been amended from time to time with respect to the Seller.

           HUD : The Department of Housing and Urban Development, or any federal agency or official thereof which may from time to time succeed to the functions thereof with regard to FHA Mortgage Insurance. The term “HUD,” for purposes of this Agreement, is also deemed to include subdivisions thereof such as the FHA and GNMA.

           Indenture : The Base Indenture, together with all Supplements thereto, as the same may at any time be amended, modified or supplemented.

           Indenture Event of Default : An event of default under the Indenture.

           Indenture Trustee : The Bank of New York, not in its individual capacity, but solely as Indenture Trustee under the Indenture, or any successor Indenture Trustee as provided in the Indenture.

           Initial Purchase Price : The sum of the Original Principal Purchase Price of an Eligible Loan plus the Acquisition Date Accrued Interest.

           Insurance Proceeds : With respect to any Eligible Loan, proceeds of insurance policies insuring the Eligible Loan or the related Mortgaged Property.

           Insured Amount : The meaning specified in Section 4.10 of this Agreement.

           Interest Rate Swaps : The amended and restated interest rate swap agreements, each dated as of December 11, 1998, and any other interest rate swap agreement entered into, between the Trust and each Swap Counterparty separately or any substitute interest rate swaps entered into pursuant to the provisions of the Interest Rate Swaps, as any of the same may at any time be amended, modified or supplemented.

           Interest Rate Swap Event of Default : An event of default under an Interest Rate Swap.

           Interest Rate Swap Termination Event : A termination event under an Interest Rate Swap.

           Jumbo Loan : A mortgage loan which substantially conforms to the Guidelines except (i) the principal amount thereof may exceed the principal amount of a loan which conforms to the Guidelines, and (ii) for other specified exceptions to the Guidelines which are consistent with the Seller’s Jumbo Loan underwriting standards. Jumbo Loans will not include mortgage loans made to borrowers that are generally referred to as “sub-prime” borrowers.

           Jumbo Price Spread : With respect to Jumbo Loans, the reduction in Equivalent Security Price, as agreed to by the Seller, the Purchaser and the Agent.

           Liquidation Proceeds : All amounts received and retained in connection with the liquidation of Defaulted Loans.

           Liquidity Agreement : The Amended and Restated Liquidity Agreement, dated as of December 11, 1998, among the Purchaser, the Liquidity Banks and the Agent, as the same may at any time be amended, modified or supplemented.

           Liquidity Agreement Event of Default : An event of default under the Liquidity Agreement, as set forth in Section 9.01 of the Liquidity Agreement.

           Liquidity Banks : The banks or other financial institutions which are parties to the Liquidity Agreement.

           Loan : A loan made by Liquidity Banks pursuant to the Liquidity Agreement.

           Loan Documents : The documents listed in Section 2.1 of this Agreement.

           Loan Termination Date : Each day on which a deposit is made into the Collateral Account in respect of Terminated Loans.

           Loan-to-Value Ratio or LTV : With respect to any Eligible Loan, the ratio expressed as a percentage of the Scheduled Principal Balance of the Eligible Loan as of the date of origination (unless otherwise indicated) to the lesser of (i) the Appraised Value of the Mortgaged Property, and (ii) if the Eligible Loan was made to finance the acquisition of the related Mortgaged Property, the purchase price of the Mortgaged Property.

           Mark to Market Price : With respect to a mortgage loan, (i) the Mark to Market Price of a Conforming Loan shall be the Equivalent Security Price multiplied by the unpaid principal amount of such Conforming Loan and (ii) the Mark to Market Price of a Jumbo Loan shall be the Equivalent Security Price reduced by the Jumbo Price Spread multiplied by the unpaid principal amount of such Jumbo Loan.

           Material Adverse Effect : A material adverse effect on (a) the business, assets, operations, prospects or condition, financial or otherwise, of the Purchaser, (b) the ability of any of the Purchaser, the Seller, the Additional Seller, the Servicer or the Guarantor to perform any of its obligations under this Mortgage Loan Purchase and Servicing Agreement or any of the other Program Documents.

           Monthly Payment : The scheduled monthly payment of principal and interest on an Eligible Loan.

           Monthly Servicer Advance Report : The meaning specified in Section 4.22 hereof.

           Moody’s : Moody’s Investors Service, Inc., and any successors thereto.

           Mortgage : The mortgage, deed of trust or other instrument securing a Mortgage Note, which creates a lien on an estate in fee simple in real property securing the Mortgage Note.

           Mortgage Impairment Insurance Policy : A mortgage impairment or blanket hazard insurance policy as described in Section 4.12 hereof.

           Mortgage Interest Rate : The annualized regular rate of interest borne on a Mortgage Note.

           Mortgage Loan File : The items pertaining to each Eligible Loan referred to in Section 2.1 hereof, and any additional documents required to be added to the Mortgage Loan File pursuant to this Agreement.

           Mortgage Loan Schedule : A schedule of Eligible Loans annexed to the Transfer Supplement and delivered to the Purchaser on the related Closing Date, such schedule setting forth the following information with respect to each Eligible Loan: (1) the identifying number for the Eligible Loan; (2) the Mortgagor’s name; (3) the street address of the Mortgaged Property including the state code; (4) a code indicating whether the Mortgaged Property is a one family residence or a 2-4 family residence; (5) the months to maturity from the Closing Date based on the amortization schedule for such Eligible Loan; (6) the Loan-to-Value Ratio at the Closing Date; (7) the Mortgage Interest Rate; (8) the stated maturity date; (9) the amount of the Monthly Payment; (10) the original principal balance; (11) the PMI Policy certificate number, if any; (12) the Qualified Insurer, if any; (13) the type of loan (FHA, VA, Conforming, Jumbo); (14) payment type (fixed rate or adjustable rate); and (15) purchase price. With respect to any Portfolio in the aggregate, the Mortgage Loan Schedule shall set forth the following information, as of the related Closing Date: (1) the number of Eligible Loans; (2) the current aggregate outstanding principal balance of the Eligible Loans; (3) the weighted average Mortgage Interest Rate of the Eligible Loans; and (4) the weighted average maturity of the Eligible Loans.

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

           Mortgagee : The lender on a Mortgage Note.

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

           Mortgagor : The obligor on a Mortgage Note.

           MERS : Mortgage Electronic Registration Systems, Inc.

           Note Purchase Agreement : The note purchase agreements, dated as of December 4, 1998 and November 4, 1999, respectively, by and among the Purchaser, the Company, the Seller, the Indenture Trustee and Lehman Brothers Inc., as representative of the initial purchasers, for the Variable Rate Residential Mortgage Loan Medium-Term Notes, Series 1998-2 and the Variable Rate Term Notes, Series 1999-1, respectively, and each note purchase agreement, if any, entered into by the Purchaser, the Company, the Indenture Trustee and the purchasers thereof in connection with the issuance of any Series of Notes.

           Notes : The Variable Rate Residential Mortgage Loan Medium-Term Notes, Series 1998-2, the Variable Rate Term Notes, Series 1999-1 and any additional Series of notes issued pursuant to the Base Indenture and any Supplement.

           Officer’s Certificate : A certificate signed by the Chairman of the Board and Chief Executive Officer, the President, any Executive Vice President or any Senior Vice President or of the Seller, the Additional Seller, the Servicer or the Guarantor, as applicable, and delivered to the Purchaser as required by this Agreement.

           Opinion of Counsel : A written opinion of counsel, who may be an employee of the Seller, the Additional Seller, the Servicer or the Guarantor, as applicable, in a form reasonably acceptable to the Purchaser.

           Original Principal Purchase Price : With respect to each mortgage loan, the Mark to Market Price at the close of business on the second Business Day immediately preceding the Closing Date of the sale of such mortgage loan by the Seller or the Additional Seller to the Purchaser.

           Outstanding Purchase Price : With respect to any Eligible Loan and any date of determination, (i) the Initial Purchase Price of such mortgage loan less (ii) the amount of any payments received by the Purchaser and deposited in the Collateral Account in respect of Acquisition Date Accrued Interest, less (iii) the product of (x) the aggregate of all previous principal payments made on such mortgage loan and deposited into the Collateral Account on or prior to such date of determina-tion, and (y) the related Purchase Price Adjustment Factor; provided, however , the Outstanding Purchase Price of a mortgage loan (other than a Terminated Loan) shall only be reduced on a Payment Date and the Outstanding Purchase Price of a Terminated Loan shall be reduced on the related Loan Termination Date; provided, further , that solely for calculating a Partial Termination Payment with respect to a Terminated Loan which is sold by the Servicer on behalf of the Purchaser to a third party, the Outstanding Purchase Price shall be deemed to exclude the product of (i) Retained Payment with respect to such Terminated Loan, and (ii) the Purchase Price Adjustment Factor; provided, further , that after any Loan Termination Date the Outstanding Purchase Price of a Terminated Loan shall be zero except that the Outstanding Purchase Price of a Terminated Loan which is sold by the Servicer on behalf of the Purchaser to a third party shall be the amount of the Retained Payment.

           Owner Trustee : First Union Trust Company, National Association, acting not in its individual capacity, but solely on behalf of the Purchaser as owner trustee under the Base Trust Agreement.

           Partial Termination Payment : An amount, which may be positive or negative, calculated with respect to each Terminated Loan (I) which is sold by the Trust to a third party or securitized equal to the product of (i) the unpaid principal balance of the Eligible Loan to which the loan termination relates and (ii) the difference between (x) the Purchase Price Adjustment Factor for such Eligible Loan and (y) (A) if the loan termination occurs with respect to a non-Delinquent or non-Defaulted Loan, the sales price (expressed as a percentage of par) of the Eligible Loan to which the loan termination relates (which sales price in the case of a bundled whole loan sale or a Securitization shall equal the sales

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price for the related bundle of loans or Securitization) or (B) if the loan termination occurs with respect to a Delinquent or Defaulted Loan, the Credit-Adjusted Price or (II) which results from a prepayment in full of such Eligible Loan equal to the product of (x) the related Purchase Price Adjustment Factor less 100% and (y) the principal payments that were deposited in the Collateral Account on such date.

           Payment Date : The 20 ^th day (or if such day is not a Business Day, the immediately succeeding Business Day) of any month.

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

           PHH Corporation : A Maryland corporation.

           PMI Policy : A policy of primary mortgage guaranty insurance issued by a Qualified Insurer, as required by this Agreement with respect to certain Eligible Loans.

           Pooling Date : With respect to any Terminated Loan sold by the Servicer on behalf of the Purchaser to a third party, the date on which the pool in which such Terminated Loan is included is cut by the Servicer.

           Portfolio : An Eligible Loan or pool of Eligible Loans sold to the Purchaser on a given day pursuant to the terms hereof and the applicable Transfer Supplement.

           Portfolio Aging Limitations : With respect to the age of the Eligible Loans owned by the Purchaser on any day, the following limitations shall apply:

          (i) the aggregate Outstanding Purchase Price of Eligible Loans acquired by the Purchaser more than three (3) months prior to such day may not exceed 30% of the then-current Program Size; (ii) the aggregate Outstanding Purchase Price of Eligible Loans acquired by the Purchaser more than six (6) months prior to such day may not exceed 5% of the then-current Program Size; and (iii) the Purchaser must securitize or sell each Eligible Loan acquired by it within one (1) year of the date of acquisition; provided, however , that, subject to Rating Agency Confirmation, the Controlling Majority with the consent of the Required Banks and the Required Certificateholders may waive any of the requirements of clauses (i) and (ii) above.

           Portfolio Criteria : On any day, after giving effect to the Purchaser’s purchase and sale of mortgage loans on such day, the mortgage loans owned by the Purchaser in the aggregate must satisfy the following criteria: (i) the aggregate Outstanding Purchase Price of mortgage loans secured by property in California may not on such date exceed 30% of the then-current Program Size; (ii) the

aggregate Outstanding Purchase Price of mortgage loans secured by property in a single state other than California may not on such date exceed 15% of the then current Program Size; (iii) the aggregate Outstanding Purchase Price of mortgage loans insured or guaranteed by either the FHA or VA may not on such date exceed 30% of the then-current Program Size; (iv) the aggregate Outstanding Purchase Price of Jumbo Loans may not on such date exceed 35% of the then-current Program Size; (v) the mortgage loans owned by the Trust must have a weighted average FICO Score of at least 675 (excluding loans insured or guaranteed by the FHA or VA); and (vi) the weighted average loan to value ratio of the mortgage loans owned by the Trust must not on such date exceed 85% (excluding loans insured or guaranteed by the FHA or VA).

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

           Program Documents : The Liquidity Agreement, the Indenture, the Security Agreement, the Custodial Agreement, this Purchase Agreement, the Guarantee, the Trust Agreement, the Depositary Agreement, the Interest Rate Swaps, the Commercial Paper Dealer Agreement, the Administration Agreement and the Note Purchase Agreement and the Certificate Purchase Agreement.

           Program Size : The sum of the Series Program Sizes, as such limit may be increased or decreased in accordance with the Program Documents.

           Purchase Price Adjustment Factor : With respect to any Eligible Loan, the Original Principal Purchase Price of such Eligible Loan expressed as a percentage of par.

           Purchaser or Trust : Bishop’s Gate Residential Mortgage Trust, a Delaware business trust.

           Qualified Depository : Any depository the accounts of which are insured by the FDIC through the BIF or the SAIF and the debt obligations of which are rated “A2” and “A” or better by Moody’s and S&P, respectively, or such depository as shall be acceptable to Moody’s and S&P, as applicable.

           Qualified Insurer : A mortgage guaranty insurance company duly authorized and licensed where required by law to transact mortgage guaranty insurance business and approved as an insurer by FHLMC, FNMA or GNMA.

           Qualified Purchaser : A leading purchaser in the market for mortgage loans having the highest credit standing which satisfy all the criteria that the Calculation Agent would apply generally at such time in determining whether to offer or make an extension of credit thereto.

           Rated Bidder : Shall have the meaning set forth in Section 11.3 .

           Rating Agency : S&P, Moody’s and Fitch.

           Rating Agency Confirmation : A written confirmation from each Rating Agency that the proposed action will not cause the reduction or withdrawal of their respective then current ratings on any outstanding Series of Certificates, any outstanding Series of Notes or any outstanding Commercial Paper.

           Reconciliation Date : The first and fifteenth day of each calendar month (or, if such day is not a Business Day, the next following Business Day).

           Reference Mortgage Loan : A hypothetical mortgage loan used by the Calculation Agent for the purposes of determining the Credit-Adjusted Price which is otherwise identical to the Delinquent or Defaulted Loan in all respects, including interest rate, principal balance, cash flows and all other payment characteristics except that such mortgage loan is not a Delinquent or Defaulted Loan.

           Remarketing Agent : Lehman Brothers Inc., in its capacity as Remarketing Agent, or any successor Remarketing Agent for all Series of Certificates, pursuant to a mutually acceptable remarketing agent agreement.

           REO Disposition : The final sale by the Servicer of any REO Property.

           REO Disposition Proceeds : All amounts received with respect to an REO Disposition (net of costs related thereto) pursuant to Section 4.17 hereof.

           REO Property : A Mortgaged Property acquired by the Servicer on behalf of the Purchaser through foreclosure or by deed in lieu of foreclosure, as described in Section 4.17 hereof.

           Repurchase Price : With respect to any mortgage loan that is repurchased by the Seller or Servicer in accordance with Sections 3.3 , 6.2 and 7.1 hereof, the Outstanding Purchase Price of such loan plus accrued interest through the date of repurchase.

           Required Banks : Liquidity Banks having an aggregate principal amount of outstanding Liquidity Loans and available commitments under the Liquidity Agreement equal to 51% of the

aggregate principal amount of outstanding Liquidity Loans and available commitments for all Liquidity Banks.

           Required Certificateholders : A majority in principal amount of all Series of Certificates, voting together as a class.

           Required Noteholders : A majority in principal amount of all Series of Notes, voting together as a single class.

           Reserve Fund : The segregated trust account established and maintained by the Collateral Agent for the benefit of the Secured Parties and the holders of all Series of Certificates, as set forth in Section 5.05 of the Security Agreement.

           Reserve Fund Available Amount : On any day, the amount on deposit in the Reserve Fund as of such day.

           Retained Payment : With respect to any Terminated Loan sold by the Servicer on behalf of the Purchaser to a third party or securitized, the sum of (A) with respect to any such Terminated Loan which has a Pooling Date prior to the 15th day of the month, the amount of principal payments which are scheduled to be received by the Purchaser in the month in which the Loan Termination Date for such Terminated Loan occurs and (B) the amount of Principal Prepayments not deposited into the Collateral Account and received by the Purchaser prior to the Pooling Date where the next Reconciliation Date occurs prior to such Pooling Date.

           SAIF : The Savings Association Insurance Fund, or any successor thereto.

           Scheduled Principal Balance : With respect to any Eligible Loan, as of any date of determination, the original principal balance thereof, reduced by the principal portion of all Monthly Payments then due on or before such date of determination, whether or not received.

           Secured Parties : The Swap Counterparties, the Liquidity Banks, the Agent, the holders of all Series of Notes, the Indenture Trustee and the holders of the Commercial Paper.

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

           Securities or Securitization Securities : Any note, bond or pass-through certificate that is, directly or indirectly, secured by or represents an interest in any Eligible Loan or pool of Eligible Loans.

           Securitization or Securitized : A transaction in which any Eligible Loan or pool of Eligible Loans designated by the Purchaser is financed through or sold to a Securitization Vehicle, which vehicle issues Securities in the capital markets.

           Securitization Vehicle : FHLMC, FNMA, GNMA or any trust, partnership, corporation, limited liability corporation, limited liability partnership or other state law entity that is created for the principal purpose of owning or holding an Eligible Loan or Eligible Loans which are the subject of a Securitization.

           Security Agreement : The Amended and Restated Security Agreement, dated as of December 11, 1998, among the Purchaser, the Agent, the Indenture Trustee and the Collateral Agent, as the same may at any time be amended, modified or supplemented.

           Seller : Cendant Mortgage Corporation, a New Jersey corporation.

           Series : Shall mean (x) any Series of Notes, (y) the Commercial Paper and Liquidity Loans (such Commercial Paper and Liquidity Loans taken together as one Series), or (z) any Series of Certificates, as the context may require.

           Series Program Size : Shall mean, with respect to each Series of Notes, the amount set forth in the Series Supplement for such Series of Notes (including, without limitation, the amount of Certificates required to be issued in connection therewith) and, with respect to the Series of Liquidity Loans and Commercial Paper, $1,546,400,000 (as such size may be increased or decreased in accordance with the Program Documents).

           Series Trust Agreement Supplement : With respect to each Series of Certificates, the related supplement to the Base Trust Agreement.

           Servicer : Cendant Mortgage Corporation, a New Jersey corporation, or any successor Servicer as provided herein.

           Servicer Event of Default : Any one of the conditions or circumstances enumerated in Section 10.1 hereof.

           Servicer Monthly Advance : Amounts advanced by the Servicer in respect of Delinquent Loans pursuant to Section 5.1 hereof.

           Servicer Report : The meaning specified in Section 4.18 hereof.

           Servicing Advances : All customary, reasonable and necessary “out of pocket” costs and expenses other than Servicer Monthly Advances (including reasonable attorneys’ fees and disbursements) incurred in the performance by the Servicer in connection with a default or other unanticipated occurrence with respect to an Eligible Loan owned by the Purchaser (and not including the performance of its ordinary and customary activities as Servicer), including, but not limited to, the cost of (a) the preservation, restoration and protection of the Mortgaged Property, (b) any enforcement or judicial proceedings, including foreclosures, (c) the management and liquidation of any REO Property and (d) any advances of taxes and insurance premiums made pursuant to Section 4.9 hereof as a consequence of the default by the Mortgagor on its obligation to pay such amounts.

           Servicing Fee : With respect to the services provided by the Servicer pursuant to this Agreement, an annual servicing fee of 3/8 of 1% on the average monthly balance of Eligible Loans held by the Purchaser during such month plus the excess fee, if any, pursuant to Section 5.03(b)(xi) of the Security Agreement.

           S&P : Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, or any successor thereto.

           Supplement : A supplement to the Base Indenture with respect to any Series of Notes.

           Swap Counterparty : Each of The Bank of Nova Scotia, Bank of America, N.A. (formerly NationsBank, N.A.), Barclay’s Bank or any other swap counterparty which is a commercial bank or financial institutions having short-term credit ratings of “A-1+” and “P-1” from S&P and Moody’s and “F1+,” if rated by Fitch, and long-term credit ratings of at least “AA-” and “Aa3” from S&P and Moody’s and “AA-,” if rated by Fitch.

           Terminated Loan : Each Eligible Loan which is (1) sold or Securitized or (2) prepaid in full.

           Termination Event : The meaning specified in Section 11.2 hereof.

           Termination Event Auction : Shall have the meaning set forth in Section 11.2 hereof.

           Transfer Supplement : The document pursuant to which each Eligible Loan or Eligible Loans are sold by the Seller or the Additional Seller to the Purchaser, a form of which is attached hereto as Exhibit A-1 and Exhibit A-2 , respectively.

           Trust Agreement : The Base Trust Agreement, together with all Series Trust Agreement Supplements thereto, as the same may at any time be amended, modified or supplemented.

           VA : The U.S. Department of Veterans Affairs, an agency of the United States of America, or any successor thereto including the Secretary of Veterans Affairs.

           VA Approved Lender : Those lenders which are approved by the VA to act as a lender in connection with the origination of VA Loans.

           VA Guaranty Proceeds : The proceeds of any payment of a VA Loan Guaranty Certificate.

           VA Loan : An Eligible Loan which is the subject of a VA Loan Guaranty Certificate as evidenced by a VA Loan Guaranty Certificate, or an Eligible Loan which is a vendee loan sold by the VA.

           VA Loan Guaranty Certificate : The obligation of the United States to pay a specific percentage of an Eligible Loan (subject to a maximum amount) upon default of the Mortgagor pursuant to the Servicemen’s Readjustment Act, as amended.

           VA Regulations : Regulations promulgated by the U.S. Department of Veterans Affairs pursuant to the Servicemen’s Readjustment Act, as amended, codified in 38 Code of Federal Regulations, and other VA issuances relating to VA Loans, including related handbooks, circulars and notices.

           Voting Group : The meaning specified in Section 12.4 hereof.

           Wet Funded Loan : A mortgage loan that is originated by the Seller or the Additional Seller and purchased by the Purchaser, prior to the delivery of the Mortgage Note to the Custodian.

           Wet Funded Loan Limitation : On any day, if the ratings of PHH Corporation are below “BBB+” or “Baa1”, the aggregate Outstanding Purchase Price of Wet Funded Loans may not exceed 30% of the then-current Program Size.

ARTICLE II

SALE OF ELIGIBLE LOANS; POSSESSION OF MORTGAGE FILES;
BOOKS AND RECORDS; CUSTODIAL AGREEMENT;
DELIVERY OF DOCUMENTS

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

          (a) (i) From time to time, pursuant to any Transfer Supplement, the Seller or the Additional Seller, as applicable, may sell, transfer, assign, set over and convey to the Purchaser, without recourse, but subject to the terms of this Agreement, all the right, title and interest (not including servicing rights with respect to the Eligible Loans, which shall be retained by the Seller or the Servicer, as applicable, subject to and in accordance with this Agreement) of the Seller or the Additional Seller, as applicable, in and to any Eligible Loans, including Wet Funded Loans, originated by the Seller or the Additional Seller, as applicable; provided, however , that the Purchaser shall not at any time be required to purchase Eligible Loans having an aggregate Outstanding Purchase Price greater than the then-current Program Size; provided, further , that mortgage loans transferred on each Closing Date must satisfy the Eligibility Criteria. The Seller or the Servicer (on behalf of the Additional Seller), as applicable, shall provide a notice to the Purchaser, the Indenture Trustee, the Agent, the Collateral Agent and the Swap Counterparties not later then 4:00 p.m., New York City time, one Business Day prior to the execution of any Transfer Supplement of its intention to sell a Portfolio to the Purchaser pursuant to a Transfer Supplement. In such notice, the Seller or the Servicer (on behalf of the Additional Seller), as applicable, shall inform the Purchaser of the aggregate principal balance of the Eligible Loans that it intends to sell on such date. The subject Portfolio shall be sold by the Seller or the Additional Seller, as applicable, to the Purchaser as described in Section 2.2 hereof. Each Transfer Supplement shall be executed by the Seller or the Servicer (on behalf of the Additional Seller), as applicable, and the Purchaser at the time of the sale of the subject Portfolio. Notwithstand-ing the foregoing, the Purchaser, the Seller, the Additional Seller and the Servicer, each acknowledge and agree that, subject to and in accordance with this Agreement, the Seller or the Servicer, as applicable, is the owner of the servicing rights with respect to the Eligible Loans sold to the Purchaser by the Seller or the Additional Seller, as applicable, and the Seller or the Servicer, as applicable, is responsible for all servicing duties.

     (ii) Upon execution of any Transfer Supplement by the Seller or the Servicer (on behalf of the Additional Seller), as applicable, and the Trust and receipt of the purchase price therefor, the Seller or the Additional Seller, as applicable, hereby sells, assigns, transfers, sets over and conveys to the Trust all right, title and interest of the Seller or the Additional Seller, as applicable, in, to and under each mortgage loan identified on the such Transfer Supplement. It is intended that the transfer, assignment and conveyance herein contemplated constitute a sale of the mortgage loans, conveying

good title thereto free and clear of any Liens, by the Seller or the Additional Seller, as applicable, to the Trust and that the mortgage loans not be part of the Seller’s or the Additional Seller’s, as applicable, estate in the event of insolvency. In the event that the mortgage loans are held to be property of the Seller or the Additional Seller, as applicable, or if for any other reason the Transfer Supplement is held or deemed to create a security interest in the mortgage loans, the parties intend that the Seller or the Additional Seller, as applicable, shall be deemed to have granted, and shall have granted, to the Trust a first-priority perfected security interest in the mortgage loans and all Collateral related thereto now existing or hereafter arising for the purpose of securing the rights of the Trust under this Agreement, and that this Agreement and the Transfer Supplement shall each constitute a security agreement under applicable law.

          (b) Pursuant to Section 2.5 , as soon as practicable, but in any event on or before the date which is 21 days after any sale of Eligible Loans to the Purchaser, the Seller or the Servicer (on behalf of the Additional Seller), as applicable, shall deliver each Mortgage Note, including Mortgage Notes on Wet Funded Loans (subject to the Wet Funded Loan Limitation), to the Custodian as agent of the Collateral Agent. The Seller or the Servicer (on behalf of the Additional Seller), as applicable, shall deliver the related Loan Documents to the Servicer and the contents of each Mortgage Loan File shall be held in trust by the Servicer for the benefit of the Purchaser. The possession of each Mortgage Loan File by the Servicer is at the will of the Purchaser for the sole purpose of servicing the related Eligible Loan and such retention and possession by the Servicer is in a custodial capacity only. Upon the sale of the Eligible Loans, the ownership of each Mortgage Note, the related Mortgage and the related Mortgage Loan File shall vest immediately in the Purchaser, and the ownership of all records and documents with respect to the related Eligible Loan prepared by or which come into the possession of the Servicer shall vest immediately in the Purchaser and shall be retained and maintained by the Servicer, in trust, at the will of the Purchaser and the Collateral Agent and only in such custodial capacity. Each Mortgage Loan File and the Servicer’s books and records shall each be marked appropriately to reflect clearly the sale of the related Eligible Loans to the Purchaser. The Custodian shall only release its custody of the contents of any Mortgage Loan File in its possession 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 Purchaser may require from time to time:

               (i) 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 any Eligible Loan, the Seller or the Servicer (on behalf of the Additional Seller), as applicable, 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, the Seller or the Servicer (on behalf of the Additional Seller), as applicable, shall deliver or cause to be delivered to the Servicer, a photocopy of such Mortgage, together with (i) in the case of a delay caused by the public recording office, an officer’s certificate of the Seller or the Servicer (on behalf of the Additional Seller), as applicable, 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 Servicer upon receipt thereof by the Seller or the Servicer (on behalf of the Additional Seller), as applicable; or (ii) 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 copy 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) unless the original Mortgage was recorded in the name of MERS, an Assignment of Mortgage for each Eligible Loan, in form and substance acceptable for recording, and all interim assignments with evidence of recording thereon, if any; if the Eligible Loan was acquired by the Seller or the Additional Seller, as applicable, in a merger, any Assignment of Mortgage (other than an original Mortgage recorded in the name of MERS) must be made by “[Seller] [Additional Seller], successor by merger to [name of predecessor].” If the Eligible Loan was acquired or originated by the Seller or the Additional Seller, as applicable, while doing business under another name, any Assignment of Mortgage (other than an original Mortgage recorded in the name of MERS) must be by “[Seller] [Additional Seller], formerly known as [previous name].” If the Eligible Loan was acquired by the Seller or the Additional Seller, as applicable, as receiver for another entity, any Assignment of Mortgage (other than an original Mortgage recorded in the name of MERS) must be by “[Seller] [Additional Seller], receiver for [name of entity in receivership].” Any Assignment of Mortgage must be duly recorded only if recordation is either necessary under applicable law to perfect or on direction of the Purchaser as provided in this Agreement. If any Assignment of Mortgage is to be recorded, the Mortgage shall be assigned to the Servicer, as Custodian. If any Assignment of Mortgage is not to be recorded, such Assignment of Mortgage shall be delivered in blank;

               (v) the originals of all intervening assignments of mortgage with evidence of recording thereon, 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 assignments of mortgage, the Seller or the Servicer (on behalf of the Additional Seller), as applicable, shall deliver or cause to be delivered to the Servicer, a photocopy of such intervening assignment, together with (i) in the case of a delay caused by the public recording office, an officer’s certificate of the Seller or the Servicer (on behalf of the Additional Seller), as applicable, 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 the Seller or the Servicer (on behalf of the Additional Seller), as applicable; or (ii) 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, the original mortgagee title insurance policy or attorney’s opinion of title and abstract of title, or if the policy has not yet been issued, (a) 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 Eligible Loan was funded, or (b) a copy of the applicable escrow instructions indicating the name of the title company with, in either case, a statement by the title insurance company or closing attorney on such binder or commitment or escrow instructions that the priority of the lien on the related Mortgage during the period between the date of the funding of the related Eligible Loan and the date of the related title policy is insured;

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

               (viii) the original of any primary mortgage insurance policy (if any); and

               (ix) if the Eligible Loans are sold to the Agencies, the originals of other documents, forms, releases, certifications and papers required by the applicable Agency Custodial Agreement.

          (c) On the date hereof and on the date of each other increase in the then-current Program Size, the Seller or the Servicer (on behalf of the Additional Seller) shall deposit an amount into the Reserve Fund from the proceeds of the sale of the Eligible Loans to the Purchaser so that the amount on deposit in the Reserve Fund equals 0.60% of the then-current Program Size.

          (d) It is the intention of this Agreement that each conveyance of the Seller’s or the Additional Seller’s, as applicable, right, title and interest in and to the Eligible Loans (not including servicing rights with respect to the Eligible Loans, which shall be retained by the Seller or the Servicer, as applicable) pursuant to this Agreement shall constitute a purchase and sale and not a loan.

          Section 2.2 Determination of Purchase Price; Deposit by Seller and the Additional Seller .

          (a) Upon notice from the Seller or the Servicer (on behalf of the Additional Seller), as applicable, to the Purchaser of the prospective sale of a Portfolio by the Seller or the Additional Seller, as applicable, to the Purchaser under Section 2.1 hereof, the Seller or the Servicer (on behalf of the Additional Seller), as applicable, shall submit to the Purchaser (i) a Mortgage Loan Schedule and (ii) the Closing Date for the sale of the Portfolio. The Seller or the Servicer (on behalf of the Additional Seller), as applicable, shall not choose a preliminary Closing Date which is less than one Business Day from the date that the Purchaser receives the items specified in the preceding sentence. Not later than 8 a.m. on the Closing Date, the Seller or the Servicer (on behalf of the Additional Seller), as applicable, shall notify the Purchaser of its calculation of the Original Principal Purchase Price and the Initial Purchase Price for the Portfolio. If the Purchaser does not agree with such calculation or the sale does not close for any other reason, the Closing Date for the Portfolio shall be rescheduled to a later date, at its option, by the Seller or the Servicer (on behalf of the Additional Seller), as applicable. The Purchaser and the Seller or the Servicer (on behalf of the Additional Seller), as applicable, shall use their best efforts to close the sale of any Portfolio on any such Closing Date. The Purchaser shall pay to the Seller or the Servicer (on behalf of the Additional Seller), as applicable, the Initial Purchase Price of any Eligible Loans purchased by it hereunder in immediately available funds not later than 2:00 p.m., New York City time, on the Closing Date. Each mortgage loan must satisfy the Eligibility Criteria and the Eligibility Representations.

          (b) With respect to any Eligible Loan which will not have a scheduled interest payment due on the first day of the month following the month in which the Closing Date occurs for the purchase of such Eligible Loan (the “ Closing Month ”), the Seller or the Servicer (on behalf of the Additional Seller), as applicable, will deposit in the Collateral Account on the Closing Date an amount equal to interest on the principal amount of such Eligible Loan for the number of days remaining from and including the Closing Date to and including the last day of the Closing Month at the contract rate for such Eligible Loan.

          Section 2.3 Purchase Commitment Term .

          Subject to the terms and conditions of the Program Documents, the commitment of the Purchaser under this Agreement shall expire on the termination of this agreement, in accordance with Section 11.1 or 11.2 herein.

          Section 2.4 Books and Records; Transfers of Eligible Loans .

          From and after each related Closing Date, all rights arising with respect to the Eligible Loans sold (not including servicing rights with respect to the Eligible Loans, which shall be retained by the Seller or the Servicer, as applicable, subject to and in accordance with this Agreement) pursuant to any Transfer Supplement including but not limited to all funds received on or in connection with the Eligible Loans, shall be received and held by the Servicer in trust for the benefit of the Purchaser. Pursuant to the Custodial Agreement, the Custodian shall hold all of the Mortgage Notes as described in such Custodial Agreement.

          The sale of each Eligible Loan shall be reflected on the Seller’s or the Additional Seller’s, as applicable, balance sheet and other financial statements as a sale of assets by the Seller or the Additional Seller, as applicable. The Seller or the Additional Seller, as applicable, intends to treat the transfer of any Eligible Loans to the Purchaser pursuant to this Agreement as a sale for accounting and tax purposes with respect to the Seller or the Additional Seller, as applicable. The Servicer shall be responsible for maintaining, and shall maintain, a complete set of books and records for each Eligible Loan which shall be marked clearly to reflect the ownership of each Eligible Loan by the Purchaser. In particular, the Servicer shall maintain in its possession, available for inspection by the Purchaser, the Collateral Agent, the Indenture Trustee (acting at the written direction of the Required Noteholders), the Agent or their respective designees, evidence of compliance with applicable laws, rules and regulations. To the extent that original documents are not required for purposes of realization of Liquidation Proceeds, Insurance Proceeds, VA Guaranty Proceeds, FHA Proceeds or Securitization 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 the requirements of the Guidelines.

          The Servicer shall maintain with respect to each Eligible Loan and shall make available for inspection, upon reasonable advance notice, at the offices of the Servicer during normal business hours by the Purchaser, the Collateral Agent, the Indenture Trustee (acting at the written direction of the Required Noteholders), the Agent, the Remarketing Agent, any CP Dealer or their respective designees the related Mortgage Loan File during the time the Purchaser retains ownership of an Eligible Loan and thereafter in accordance with applicable laws and regulations.

          Section 2.5 Custodial Agreement .

          Pursuant to the Custodial Agreement delivered to the Purchaser in connection with the Amended and Restated Purchase Agreement, the Seller or the Servicer (on behalf of the Additional Seller), as applicable, shall, from time to time in connection with each purchase of Eligible Loans pursuant to the terms of this Agreement, deliver to the Custodian, on or before the date which is 21 days after the related Closing Date, the Mortgage Note with respect to each Eligible Loan transferred. The Custodian shall hold all Mortgage Notes in trust for the Purchaser as agent for the Collateral Agent.

ARTICLE III

REPRESENTATIONS AND WARRANTIES;
COVENANTS; REMEDIES AND BREACH

          Section 3.1 Representations and Warranties of the Company and the Additional Seller .

          (a) The Company, as Seller and Servicer, represents and warrants to the Purchaser (and for the benefit of the Collateral Agent) that as of each applicable Closing Date and as of the date of the sale or Securitization of each Eligible Loan:

               (i) Due Organization and Authority . The Company is duly organized, validly existing and in good standing under the laws of New Jersey and has all licenses necessary to carry on its business as now being conducted and is licensed, qualified and in good standing in each state where a Mortgaged Property is located if required to conduct business of the type conducted by it, and in any event the Company is in compliance with the laws of any such state to the extent necessary to ensure the enforceability of any Eligible Loan sold hereunder and the servicing of any such Eligible Loan in accordance with the terms of this Agreement and any Transfer Supplement; the Company 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 the Company and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by the Company; all requisite corporate action has been taken by the Company to make this Agreement and any Transfer Supplement valid and binding upon the Company in accordance with its terms; this Agreement and any Transfer Supplement each evidences the valid, binding and enforceable obligation of the Company, 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.

               (ii) Ordinary Course of Business . The consummation of the transactions contemplated by this Agreement are in the ordinary course of business of the Company, and the transfer, assignment and conveyance of the Mortgage Notes and the Mortgages by the Company 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 . Neither the execution and delivery of this Agreement or any Transfer Supplement, the acquisition of Eligible Loans by the Company, the sale of Eligible Loans to the Purchaser or the transactions contemplated hereby or thereby, nor 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 the Company’s charter or by-laws or any material agreement or instrument to which the Company 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 Company or its property is subject, or impair the ability of the Purchaser to realize on the Eligible Loans in any material respect, or impair the value of the Eligible Loans in any material respect, or impair in any material respect the ability of the Purchaser to realize the full mortgage insurance benefits (i) of the FHA Mortgage Insurance Contract with respect to FHA Loans; (ii) of the VA Loan Guaranty Certificate with respect to VA Loans; or (iii) other insurance benefits accruing pursuant to this Agreement, including but not limited to any PMI Policy.

               (iv) Ability to Service . The Company is an Approved Seller/Servicer of Eligible Loans for at least two of FNMA, FHLMC and GNMA with the facilities, procedures, and experienced personnel necessary for the servicing of Eligible Loans. The Company is in good standing to sell mortgage loans to and service mortgage loans for at least two of FNMA, FHLMC and GNMA, and no event has occurred, including but not limited to a change in insurance coverage, which would make the Company unable to comply with the eligibility requirements in all material respects of at least of two of FNMA, FHLMC and GNMA or which would require notification to FNMA, FHLMC or GNMA. As of the Closing Date the Company is an FHA Approved Mortgagee and a VA Approved Lender and has the facilities, procedures, and experienced personnel necessary for the servicing of mortgage loans of the same type

as the Eligible Loans. As of the Closing Date, the Company is in good standing to service mortgage loans for FHA and VA, and no event has occurred, including but not limited to a change in insurance coverage, which would make the Company unable to comply with FHA or VA eligibility requirements in all material respects, or which would require notification to either the FHA or VA.

               (v) Reasonable Servicing Fee . The Servicer acknowledges and agrees that the Servicing Fee represents reasonable compensation for performing such services as compensation for the servicing and administration and arranging for the sale or Securitization of the Eligible 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 Eligible Loans pursuant to this Agreement.

               (vi) No Litigation Pending . There is no action, suit, proceeding or investigation pending or to its knowledge threatened against the Company which, either in any one instance or in the aggregate, may result in any material adverse change in the business, operations, financial condition, properties or assets of the Company, or in any material impairment of the right or ability of the Company to carry on its business substantially as now conducted, or in any material liability on the part of the Company, or which would draw into question the validity of this Agreement or any Transfer Supplement or the Eligible Loans or of any action taken or to be taken in connection with the obligations of the Company contemplated herein, or which would be likely to impair materially the ability of the Company to perform under the terms of this Agreement or any Transfer Supplement.

               (vii) No Consent Required . No consent, approval, authorization or order of any court or governmental agency or body including, without limitation, HUD, FHA or VA, is required for the execution, delivery and performance by the Company of or compliance by it with this Agreement or any Transfer Supplement or the sale of the Eligible Loans, or if required, such approval has been obtained.

               (viii) Selection Process . Any Portfolio of mortgage loans sold pursuant to a Transfer Supplement was selected from mortgage loans originated by the Seller or purchased by the Seller from third parties and are Eligible Loans which satisfy the Eligibility Representations and any selection process employed by it was not made in a manner so as to materially adversely affect the interest of the Purchaser.

               (ix) No Untrue Information . Neither this Agreement, any Transfer Supplement nor any statement, report or other document prepared by the Seller or to be prepared by the Seller pursuant to this Agreement or in connection with the

transactions contemplated hereby contains any untrue statement of a material fact relating to the Seller or the Eligible Loans or omits to state a fact necessary to make the statements herein or therein not materially misleading.

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

               (xi) No Brokers’ Fees . The 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 any Eligible Loans to the Purchaser.

               (xii) Fair Consideration . The consideration received by the Seller upon the sale of the Eligible Loans under this Agreement constitutes fair consideration and reasonably equivalent value for the Eligible Loans.

               (xiii) Ability to Perform . The Company does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in this Agreement in all material respects. The Company is solvent and the sale of the Eligible Loans is not undertaken to hinder, delay or defraud any of the Company’s creditors.

               (xiv) Sale Treatment . The Seller has determined that the disposition of the Eligible Loans pursuant to this Agreement will be afforded sale treatment for accounting and tax purposes.

          (b) The Additional Seller represents and warrants to the Purchaser (and for the benefit of the Collateral Agent) that as of each applicable Closing Date and as of the date of the sale or Securitization of each Eligible Loan:

               (i) Due Organization and Authority . The Additional Seller is duly formed, validly existing and in good standing under the laws of the jurisdiction where

it was duly formed and has as all licenses necessary to carry on its business as now being conducted 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 Additional Seller is in compliance with the laws of any such state to the extent necessary to ensure the enforceability of any Eligible Loan sold hereunder and any Transfer Supplement; the Additional 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 the Additional Seller and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by the Additional Seller; all requisite corporate action and/or limited liability company action has been taken by the Additional Seller to make this Agreement and any Transfer Supplement valid and binding upon the Additional Seller in accordance with its terms; this Agreement and any Transfer Supplement each evidences the valid, binding and enforceable obligation of the Additional Seller, except that (i) the enforceability thereof may be limited by bankruptcy, insolvency, morato-rium, 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.

               (ii) Ordinary Course of Business . The consummation of the transactions contemplated by this Agreement are in the ordinary course of business of the Additional Seller, and the transfer, assignment and conveyance of the Mortgage Notes and the Mortgages by the Additional 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 . Neither the execution and delivery of this Agreement or any Transfer Supplement, the acquisition of Eligible Loans by the Additional Seller, the sale of Eligible Loans to the Purchaser or the transactions contemplated hereby or thereby, nor 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 the Additional Seller’s charter and/or limited liability company agreement or any material agreement or instrument to which the Additional 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 the Additional Seller or its property is subject, or impair the ability of the Purchaser to realize on the Eligible Loans in any material respect, or

impair the value of the Eligible Loans in any material respect, or impair in any material respect the ability of the Purchaser to realize the full mortgage insurance benefits (i) of the FHA Mortgage Insurance Contract with respect to FHA Loans; (ii) of the VA Loan Guaranty Certificate with respect to VA Loans; or (iii) other insurance benefits accruing pursuant to this Agreement, including but not limited to any PMI Policy.

               (iv) No Litigation Pending . There is no action, suit, proceeding or investigation pending or to its knowledge threatened against the Additional Seller which, either in any one instance or in the aggregate, may result in any material adverse change in the business, operations, financial condition, properties or assets of the Additional Seller, or in any material impairment of the right or ability of the Additional Seller to carry on its business substantially as now conducted, or in any material liability on the part of the Additional Seller, or which would draw into question the validity of this Agreement or any Transfer Supplement or the Eligible Loans or of any action taken or to be taken in connection with the obligations of the Additional Seller contemplated herein, or which would be likely to impair materially the ability of the Additional 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 including, without limitation, HUD, FHA or VA, is required for the execution, delivery and performance by the Additional Seller of or compliance by it with this Agreement or any Transfer Supplement or the sale of the Eligible Loans, or if required, such approval has been obtained.

               (vi) Selection Process . Any Portfolio of mortgage loans sold pursuant to a Transfer Supplement was selected from mortgage loans originated by the Additional Seller or purchased by the Additional Seller from third parties and are Eligible Loans which satisfy the Eligibility Representations and any selection process employed by it was not made in a manner so as to materially adversely affect the interest of the Purchaser.

               (vii) No Untrue Information . Neither this Agreement, any Transfer Supplement nor any statement, report or other document prepared by the Additional Seller or to be prepared by the Additional Seller pursuant to this Agreement or in connection with the transactions contemplated hereby contains any untrue statement of a material fact relating to the Additional Seller or the Eligible Loans or omits to state a fact necessary to make the statements herein or therein not materially misleading.

               (viii) No Brokers’ Fees . The Additional 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 any Eligible Loans to the Purchaser.

               (ix) Fair Consideration . The consideration received by the Additional Seller upon the sale of the Eligible Loans under this Agreement constitutes fair consideration and reasonably equivalent value for the Eligible Loans.

               (x) Ability to Perform . The Additional Seller does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in this Agreement in all material respects. The Additional Seller is solvent and the sale of the Eligible Loans is not undertaken to hinder, delay or defraud any of the Additional Seller’s creditors.

               (xi) Sale Treatment . The Additional Seller has determined that the disposition of the Eligible Loans pursuant to this Agreement will be afforded sale treatment for accounting and tax purposes.

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

          As to each Eligible Loan sold in each Portfolio, the Seller and the Servicer (on behalf of the Additional Seller) hereby represents and warrants to the Purchaser that as of each applicable Closing Date and (excluding Section 3.2(d) hereof) as of the date of the Securitization or sale of each Eligible Loan:

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

          (b) Eligible 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 Lien . The Mortgage is a valid first lien on the Mortgaged Property. The Mortgaged Property is free and clear of all prior liens and encumbrances and no rights or condition may exist that could give rise to such liens, except for liens for real estate taxes and special assessments not yet due and payable. The Mortgage is a legal, valid and binding obligation of the related borrower, enforceable according to its terms and conditions, 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, and free from any right of set-off, counterclaim or other claim or defense. No part of the Mortgaged Property has been released from the Mortgage. The terms of the Mortgage have not in any material manner been modified, amended or in any way waived or changed, except as stated in a written modification agreement that is acceptable to and delivered to the Seller and Servicer (in its own capacity and on behalf of the Additional Seller).

     Any security agreement, chattel mortgage or equivalent document related to and delivered in connection with the Eligible Loan establishes and creates a valid, subsisting and enforceable first lien and first priority security interest on the property described therein and the Seller or the Additional Seller, as applicable, has full right to sell and assign the same to the Purchaser. The Mortgaged Property was not, as of the date of origination of the Eligible 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.

          (d) Ownership . The Seller or the Additional Seller, as applicable, is the sole owner of record and holder of the Eligible Loan. The Eligible Loan is not assigned or pledged, and the Seller or the Additional Seller, as applicable, has good and marketable title thereto, and has full right to transfer and sell the Eligible Loan to the Purchaser free and clear of any encumbrance, equity, participation interest, lien, pledge, charge, claim or security interest, and has full right and authority subject to no interest or participation of, or agreement with, any other party, to sell and assign each Eligible 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) above.

          (f) Conformance with Underwriting Standards . The Eligible Loan was underwritten in accordance with (i) the Seller’s underwriting standards in effect on the date of origination of such Eligible Loan, and (ii) the Guidelines.

          (g) Payments Current . As of the Closing Date, no payments due with respect to the Eligible Loan are 30 days or more past their contractual due date.

          (h) No Mortgagor Bankruptcy; Delinquencies . To the best of the Seller’s and the Servicer’s (on behalf of the Additional Seller) knowledge and belief, no Mortgagor is the subject of a bankruptcy or similar proceeding. All payments required to be made up to the Closing Date for each Eligible Loan under the terms of the related Mortgage Note have been made. As of the Closing date,

no payment required under any such purchased Eligible Loan has ever been delinquent more than 30 days.

          (i) No Outstanding Charges . There are no defaults in complying with the terms of the Mortgages, and all taxes, governmental assessments, insurance premiums, water, sewer and municipal charges, leasehold payments or ground rents which previously became due and owing have been paid, or an escrow of funds has been established in an amount sufficient to pay for every such item which remains unpaid and which has been assessed but is not yet due and payable. Neither the Seller nor the Servicer (on behalf of the Additional Seller) 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 Eligible Loan, except for interest accruing from the date of the Mortgage Note or date of disbursement of the Eligible Loan proceeds, whichever is greater, to the day which precedes by one 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 (i) from the date of final endorsement of the Mortgage Note by HUD with respect to FHA Loans, and (ii) from the date of origination with respect to VA Loans, except by a written instrument which has been recorded, if necessary to protect the interest of the Purchaser and which has been delivered to the Custodian. 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 policy, and by the FHA for the related FHA Loans, and the VA for the related VA Loans, and its terms are reflected on the related Mortgage Loan Schedule. No Mortgagor has been released, in whole or in 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 policy, and by the FHA for the related FHA Loans, and the VA for the related VA Loans, and which assumption agreement is part of the Mortgage Loan File delivered to the Custodian and the terms of which are reflected in the related Mortgage Loan Schedule.

          (k) No Defenses . The Eligible Loan is not subject to any right of rescission, set-off, counterclaim or defense, including without limitation the defense of usury, nor will the operation of any of the terms of the Mortgage Note or the Mortgage, or the exercise of any right thereunder, render either the Mortgage Note or the Mortgage unenforceable, in whole or in part, or, with respect to FHA Loans, impair the Purchaser’s ability to collect full insurance benefits under the FHA Mortgage Insurance Contract, without indemnity to HUD, or, with respect to VA Loans, impair the Purchaser’s ability to collect full value under the VA Loan Guaranty Certificate upon the Mortgagor’s default, or subject to any right of rescission, set-off, counterclaim or defense, including without limitation the defense of usury, and no such right of rescission, set-off, counterclaim or defense has been asserted with respect thereto, and no Mortgagor was a debtor in any state or federal bankruptcy or insolvency proceeding at the time the Eligible 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 extended coverage and coverage for such other hazards as are customary in the area where the Mortgaged Property is located 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 Eligible 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 has been made 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 the Seller or the Additional Seller, as applicable, and its respective successors and assigns as mortgagee, and 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 the policy is not a “master” or “blanket” hazard insurance policy covering the common facilities of a planned unit development. The hazard insurance policy is the valid and binding obligation of the insurer and is in full force and effect. Neither the Seller nor the Additional Seller 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 Eligible Loan have been complied with in all material respects.

          (n) No Satisfaction of Mortgage . The Mortgage has not been satisfied, cancelled, subordinated or rescinded, in whole or in part, and the Mortgaged Property has not been released from the lien of the Mortgage, in whole or in part, nor has any instrument been executed that would effect any such release, cancellation, subordination or rescission. Neither the Seller nor the Servicer (on behalf of the Additional Seller) has waived the performance by the Mortgagor of any action, if the Mortgagor’s failure to perform such action would cause the Eligible Loan to be in default, nor has the Seller or the Servicer (on behalf of the Additional Seller) waived any default resulting from any action or inaction by the Mortgagor.

          (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 an individual unit in a planned unit development; provided, however , that any condominium unit or planned unit development shall conform with the applicable FHA and VA requirements regarding such dwellings, if applicable, and no residence or dwelling is a mobile home or a manufactured dwelling. To the best of the Seller’s and the Servicer’s (on behalf of the Additional Seller) 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 in accordance with 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 Eligible 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 and the Servicer’s (on behalf of the Additional Seller) knowledge and belief, the documents, instruments and agreements submitted for loan underwriting were not falsified and contain no untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the information and statements therein not materially misleading. No fraud was committed in connection with the origination of the Eligible Loan.

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

          (r) Doing Business . All parties which have had any interest in the Eligible Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period in which they held and disposed of such interest, were) (1) in compliance with any applicable licensing requirements of the laws of the state wherein the Mortgaged Property is located, and (2) organized under the laws of such state, or (3) qualified to do business in such state, or (4) not required to qualify to do business in such state.

          (s) LTV, PMI Policy . The original LTV of the Eligible Loan other than an FHA Loan or a VA Loan either was not more than 80% or the excess over 80% is and will be insured as to

payment defaults by a PMI Policy until the LTV of such Eligible Loan is reduced to 80%. 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. 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 Eligible Loan subject to a PMI Policy obligates the Mortgagor thereunder to maintain the PMI Policy and to pay all premiums and charges in connection therewith. The Mortgage Interest Rate for the Eligible Loan as set forth on the Mortgage Loan Schedule is net of any such insurance premium.

          (t) Title Insurance . The Eligible Loan is covered by (i) an attorney’s opinion of title and abstract of title, the form and substance of which is acceptable to mortgage lending institutions making mortgage loans in the area where the Mortgaged Property is located; or (ii) an ALTA lender’s title insurance policy or other generally acceptable form of policy of insurance acceptable to FNMA or FHLMC, issued by a title insurer acceptable to FNMA or FHLMC and qualified to do business in the jurisdiction where the Mortgaged Property is located or if applicable; (iii) an attorney’s opinion of title and abstract of title, the form and substance of which is acceptable to the FHA with respect to FHA Loans and the VA with respect to VA Loans; or (iv) an ALTA lender’s title insurance policy or other generally acceptable form of policy of insurance acceptable to (a) the FHA with respect to the FHA Loans; and (b) the VA with respect to the VA Loans, and each such title insurance policy is issued by a title insurer acceptable to FHA or VA, as the case may be, and qualified to do business in the jurisdiction where the Mortgaged Property is located, insuring the Seller or the Additional Seller, as applicable, its successors and assigns, as to the first priority lien of the Mortgage in the original principal amount of the Eligible Loan, and against any loss by reason of the invalidity or unenforceability of the lien. 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 the Additional Seller, as applicable, is the sole insured of such lender’s title insurance policy, and such lender’s title insurance policy is in full force and effect and will be in force and effect upon the consummation of the transactions contemplated by this Agreement. No claims have been made under such lender’s title insurance policy, and no prior holder of the Mortgage, including the Seller or the Additional Seller, as applicable, 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 and the Servicer’s (on behalf of the Additional Seller) knowledge and belief, there is no default, breach, violation or event of acceleration existing under the Mortgage or the Mortgage Note and no event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration, and neither the Seller nor the Servicer (on behalf of the Additional Seller) nor their respective predecessors have waived any default, breach, violation or event of acceleration.

          (v) No Mechanics’ Liens . 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.

          (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 and the Servicer’s (on behalf of the Additional Seller) knowledge and belief, no improvements on adjoining properties encroach upon the Mortgaged Property. No improvement located on or being part of the Mortgaged Property is in violation of any applicable zoning law or regulation.

          (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. Upon default by a Mortgagor on an Eligible Loan and foreclosure on, or trustee’s sale of, the Mortgaged Property pursuant to the proper procedures, the holder of the Eligible Loan will be able to deliver good and marketable title to the Mortgaged Property. There is no homestead or other exemption available to a Mortgagor which would interfere with the right to sell the Mortgaged Property at a trustee’s sale or the right to foreclose the Mortgage.

          (y) Occupancy of the Mortgaged Property . As of the Closing Date, the Mortgaged Property is lawfully occupied under applicable law. All inspections, licenses and certificates required to be made or issued with respect to all occupied portions of the Mortgaged Property and, with respect to the use and occupancy of the Eligible Loan, including but not limited to certificates of occupancy and fire underwriting certificates, have been made or obtained from the appropriate authorities. All of the Mortgagors represented at the time of origination of the related Eligible Loan that any such Mortgagor would occupy the Mortgaged Property as the Mortgagor’s primary residence.

          (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 Purchaser 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 and the Servicer (on behalf of the Additional Seller) have 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 Eligible Loan as an unacceptable investment or cause the Eligible Loan to become delinquent or materially adversely affect the value or the marketability of the Eligible Loan.

          (bb) Delivery of Mortgage Notes . With the exception of Wet Funded Loans, the Mortgage Note endorsed in blank or to the Purchaser required to be delivered for the Eligible Loan by the Seller or the Servicer (on behalf of the Additional Seller), as applicable, under the Custodial Agreement has been delivered to the Custodian on or prior to Closing Date. With respect to Wet Funded Loans, the Mortgage Note will be delivered as soon as practicable, but in no event later than 21 days from the Closing Date.

          (cc) Transfer of Eligible Loans . The Assignment of Mortgage (other than an original Mortgage recorded in the name of MERS) is in recordable form and is acceptable for recording under the laws of the jurisdiction in which the 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 Eligible 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 or Contingent Interests . The Eligible Loan is not a graduated payment mortgage loan and does not have a shared appreciation or other contingent interest feature.

          (ff) Mortgaged Property Undamaged . There is no proceeding pending or, to the best of the Seller’s and the Servicer’s (on behalf of the Additional Seller) knowledge and belief, threatened for the total or partial condemnation of the Mortgaged Property. 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 Eligible Loan or the use for which the premises were intended.

          (gg) Collection Practices; Escrow Deposits; Interest Rate Adjustments . The origination and collection practices used with respect to the Eligible Loan have been in accordance with Accepted Servicing Practices, and have been in compliance in all material respects with applicable laws and regulations. With respect to escrow deposits and Escrow Payments, all such payments are in the possession of the Seller or the Servicer (on behalf of the Additional Seller), as applicable, and there exist no deficiencies in connection therewith for which customary arrangements for repayment thereof have not been made or for which repayment is not provided for in the Mortgage. All Escrow Payments have been collected in compliance with applicable state and federal law. An escrow of funds is not prohibited by applicable law and has been established in an amount sufficient

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to pay for each applicable item which remains unpaid and which has been assessed but is not yet due and payable. No escrow deposits or Escrow Payments or other charges or payments due the Seller or the Servicer (on behalf of the Additional Seller), as applicable, have been capitalized under the Mortgage or the Mortgage Note. All interest rate adjustments in respect of Eligible Loans have been made in strict compliance with state and federal law and the terms of the related Mortgage and Mortgage Note.

          (hh) Appraisal . The Mortgage Loan File contains an appraisal of the related Mortgaged Property signed prior to the approval of the Eligible Loan application by a qualified appraiser, duly appointed by or acceptable to the Seller or the Servicer (on behalf of the Additional Seller), as applicable, who had no interest, direct or indirect in the Mortgaged Property or in any loan made on the security thereof; and whose compensation is not affected by the approval or disapproval of the Eligible Loan, and the appraisal and appraiser both satisfy the requirements of Title XI of the Federal Institutions Reform, Recovery, and Enforcement Act of 1989 and the regulations promulgated thereunder, all as in effect on the date that the Eligible Loan was originated and the appraiser and appraisal both satisfy requirements of the FHA or VA, if applicable.

          (ii) Soldiers’ and Sailors’ Relief Act . The Mortgagor has not notified the Seller or the Servicer (on behalf of the Additional Seller), as applicable, and the Seller and the Servicer (on behalf of the Additional Seller) have no knowledge of any relief requested by the Mortgagor under the Soldiers’ and Sailors’ Civil Relief Act of 1940.

          (jj) Environmental Matters . To the best of the Seller’s and the Servicer’s (on behalf of the Additional Seller) 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. There is no pending action or proceeding directly involving any Mortgaged Property of which the Seller or the Servicer (on behalf of the Additional Seller), as applicable, is aware in which compliance with any environmental law, rule or regulation is an issue; and, to the best of the Seller’s and the Servicer’s (on behalf of the Additional Seller) knowledge, 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 . No Eligible Loan (i) was made in connection with the construction or rehabilitation of a Mortgaged Property which has not been completed or (ii) provides for future advances of funds by the Seller or the Additional Seller, as applicable, which have not yet been advanced or (iii) facilitates the trade-in or exchange of a Mortgaged Property.

          (ll) No Denial of Insurance . 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

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such failure of coverage. In connection with the placement of any such insurance, no commission, fee, or other compensation has been or will be received by the Seller or the Servicer (on behalf of the Additional Seller), as applicable, or any designee of the Seller or the Servicer (on behalf of the Additional Seller), as applicable, or any corporation in which the Seller or the Servicer (on behalf of the Additional Seller), as applicable, or any officer, director, or employee had a financial interest at the time of placement of such insurance.

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

          (nn) Condominiums/Planned Unit Developments . If the Mortgaged Property is a condominium unit or a planned unit development (other than a de minimus planned unit development) such condominium or planned unit development project meets FHA, VA and GNMA eligibility requirements for sale to GNMA or is located in a condominium or planned unit development project which has received FHA, VA and GNMA project approval and the representations and warranties required by FHA, VA and GNMA with respect to such condominium or planned unit development have been made and remain true and correct in all material respects.

          (oo) FHA Mortgage Insurance; VA Loan Guaranty . With respect to the FHA Loans, the FHA Mortgage Insurance Contract 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. With respect to the VA Loans, the VA Loan Guaranty Certificate is in full force and effect to the maximum extent stated therein. All necessary steps have been taken to keep such guaranty or insurance valid, binding and enforceable as of the Closing Date and each of such 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.

          (pp) HUD Form 92080 . With respect to each FHA Loan, a HUD Form 92080 has been duly executed and delivered to HUD.

          Section 3.3 Remedies for Breach of Representations and Warranties .

          It is understood and agreed that the representations and warranties set forth in Sections 3.1(a) , 3.1(b) , and 3.2 hereof shall survive the sale of the Eligible Loans to the Purchaser and the delivery of the Loan Documents to the Servicer and delivery of the Mortgage Notes to the Custodian and shall inure to the benefit of the Purchaser notwithstanding any restrictive or qualified endorsement on any Mortgage Note or Assignment of Mortgage or the examination or failure to examine any Mortgage Loan File. Upon discovery by either the Seller, the Servicer (in its own capacity and on behalf of the Additional Seller) or the Purchaser of a breach of any of the foregoing representations and warranties which materially and adversely affects the value of the Eligible Loans or the interest of the Purchaser (or which materially and adversely affects the interest of the Purchaser in the related

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Eligible Loan in the case of a representation and warranty relating to a particular Eligible Loan), the party discovering such breach shall give prompt written notice to the other, the Agent, the Indenture Trustee, the Collateral Agent and the Swap Counterparties.

          Within 60 days of the earlier of either discovery by or notice to the Seller or the Servicer (on behalf of the Additional Seller), as applicable, of any breach of a representation or warranty set forth in Section 3.2 hereof which materially and adversely affects the value of any Eligible Loan, the Seller or the Servicer (on behalf of the Additional Seller), as applicable, shall use its best efforts promptly to cure such breach in all material respects and, if such breach cannot be cured, or is not cured, within such 60 day time period, the Seller or the Servicer (on behalf of the Additional Seller), as applicable, shall repurchase such Eligible Loan at the Repurchase Price. In the event that a breach shall involve any representation or warranty set forth in Section 3.1 (a) and (b) hereof, and such breach cannot be cured, or is not cured, within 60 days of the earlier of either discovery by or notice to the Seller or the Servicer (on behalf of the Additional Seller), as applicable, of such breach, all of the Eligible Loans shall, at the Liquidity Banks’ option, be repurchased by the Seller or the Servicer (on behalf of the Additional Seller), as applicable, at the Repurchase Price. Upon receipt of the Repurchase Price by the Collateral Agent, the Purchaser and the Seller or the Servicer (on behalf of the Additional Seller) shall arrange for the reassignment of the Eligible Loan or Eligible Loans to the Seller or the Servicer (on behalf of the Additional Seller), as applicable, and the delivery to the Seller or the Servicer (on behalf of the Additional Seller), as applicable, of any documents held by the Custodian relating to the reassigned Eligible Loan or Eligible Loans.

          In addition to such repurchase obligation, the Seller (with respect to representations and warranties made by the Seller) or the Servicer (on behalf of the Additional Seller with respect to representations and warranties made by the Additional Seller or the Servicer on behalf of the Additional Seller), as applicable, shall indemnify the Purchaser and hold it harmless against any losses, damages, penalties, fines, forfeitures, reasonable and necessary legal fees and related costs, judgments, and other costs and expenses resulting from any claim, demand, defense or assertion based on or grounded upon, or resulting from, a breach of the representations and warranties of the Seller, the Additional Seller or the Servicer (on behalf of the Additional Seller), as applicable, contained in this Agreement. It is understood and agreed that the obligations of the Seller and the Servicer (on behalf of the Additional Seller) set forth in this Section 3.3 to cure or repurchase an Eligible Loan and to indemnify the Purchaser constitute the sole remedies of the Purchaser in respect of a breach of the foregoing representations and warranties.

          Section 3.4 Conditions to Closing .

          The obligation of the Purchaser to purchase the mortgage loans that are the subject of any Transfer Supplement shall be subject to satisfaction of each of the following conditions on or before the related Closing Date:

          (a) To the best of Seller’s, the Additional Seller’s or the Servicer’s (on behalf of the Additional Seller) knowledge and belief, all of the representations and warranties of the Seller, the Additional Seller (with respect to Section 3.1(b) hereof) or the Servicer (on behalf of the Additional Seller with respect to Sections 3.2 and 3.3 hereof) contained in this Agreement shall be true and correct in all material respects as of such Closing Date and no event shall have occurred which, with notice or the passage of time, would constitute a Servicer Event of Default under this Agreement;

          (b) The Seller or the Servicer (on behalf of the Additional Seller), as applicable, shall have delivered and released to the Custodian all documents required to be delivered to the Custodian pursuant to the Custodial Agreement;

          (c) No Termination Event shall have occurred and be continuing; and

          (d) All other material terms and conditions of this Agreement shall have been satisfied.

          Section 3.5 Covenants of the Purchaser, the Company and the Additional Seller .

          (a) Licenses . The Company or the Additional Seller, as applicable, shall maintain its qualifications to do business and all licenses necessary to perform its obligations hereunder.

          (b) Servicing Standards/Sales and Securitizations . The Servicer will administer and service Eligible Loans, and arrange for the sale and Securitization of Eligible Loans, in accordance with the terms of this Agreement, the Mortgage Notes and Accepted Servicing Practices.

          (c) Delivery of Mortgage Note . The Seller or the Servicer (on behalf of the Additional Seller), as applicable, shall deliver each Mortgage Note, including Mortgage Notes on Wet Funded Loans, to the Custodian as soon as practicable, but in any event within twenty-one (21) days of the purchase and, if any Mortgage Note is not delivered within twenty-one (21) days of purchase, it shall be repurchased on such twenty-first (21st) day by the Seller or the Servicer (on behalf of the Additional Seller), as applicable, at the Repurchase Price.

          (d) Third Party Beneficiary . The Purchaser agrees that GNMA, FNMA and FHLMC shall have all rights of a third-party beneficiary in respect of this Agreement and restates the representations, warranties and covenants as set forth herein for the benefit of GNMA, FNMA and FHLMC.

          (e) Portfolio Criteria and Limitations . As of any date of determination, the Company and the Servicer (in its own capacity and on behalf of the Additional Seller) covenant that

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the Eligible Loans, in the aggregate shall satisfy the Portfolio Criteria, the Portfolio Aging Limitations and the Wet Funded Loan Limitation.

          (f) Changes in Origination and Underwriting Criteria . The Seller shall inform each rating agency rating any outstanding Commercial Paper, any outstanding Notes or any outstanding Certificates of any material changes (as determined by the Seller) in its origination and underwriting practices and guidelines with respect to the Mortgage Loans.

ARTICLE IV

ADMINISTRATION AND SERVICING OF ELIGIBLE LOANS

          Section 4.1 The Company to Act as Servicer; Servicing and Administration of the Eligible Loans .

          (a) The Company, as an independent contractor and owner of the servicing rights to the Eligible Loans, shall diligently service and administer the Eligible Loans, and shall comply with the Portfolio Criteria, Portfolio Aging Limitations and Wet Funded Loan Limitation, and arrange for the sale and Securitization of the Eligible Loans on behalf of the Purchaser and in the best interest of and for the benefit of the Purchaser in accordance with applicable law, the terms of this Agreement and the terms of the respective Eligible Loans, with a view to the maximization of timely recovery of principal and interest on the Mortgage Notes and in a manner which will realize for the Purchaser the market value of any Securitization Securities with respect to any sales and Securitizations of the Eligible Loans; provided, the Servicer shall arrange for the sale or Securitization of all Eligible Loans (y) on or before the termination of the Indenture and the Liquidity Agreement, and (z) upon the occurrence of a Mortgage Loan Purchase Agreement Termination Event. The Servicer shall arrange for the sale or Securitization of Eligible Loans (y) in an amount such that the proceeds from such sale or Securitization are sufficient to pay amounts due and owing on any outstanding Liquidity Loans, Series of Notes (whether by maturity, optional redemption, or upon an Indenture Event of Default) and Series of Certificates (whether by maturity, optional redemption, or upon the occurrence of an Early Amortization Event) and (z) in an amount equal to the notional amount of any expiring Interest Rate Swap to the extent that a replacement Interest Rate Swap or Interest Rate Swaps have not been obtained and are needed. In furtherance of and to the extent consistent with the sale foregoing, except to the extent that this Agreement provides for a contrary specific course of action, the Servicer will be required to service and administer the Eligible Loans (y) in the same manner in which, and with the same care, skill, prudence and diligence with which it services and administers similar mortgage loans for other third-party portfolios, giving due consideration to customary and usual standards of practice of prudent institutional residential mortgage loan servicers used with respect to loans comparable to the Eligible Loans, or (z) in the same manner in which, and with the same care, skill, prudence and

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diligence with which, it services and administers similar mortgage loans which it owns, whichever standard of care is higher, and taking into account its other obligations under this Agreement, but without regard to (i) any other relationship that Servicer, any sub-servicer or any affiliate of the Servicer or any sub-servicer may have with the borrowers or any affiliate of such borrowers; (ii) the ownership of any Certificate by Servicer or any affiliate of either; (iii) the Servicer’s obligations to make Advances or to incur servicing expenses with respect to the Eligible Loans; (iv) the Servicer’s or any sub-servicer’s right to receive compensation for its services under this Agreement or with respect to any particular transaction; or (v) the ownership, servicing or management for others by the Servicer or any sub-servicer of any other mortgage loans or property. The Servicer shall maintain its qualification to do business and all licences necessary to perform its obligations hereunder.

          (b) During the Purchase Commitment Term, the Servicer shall be obligated to service and administer the Eligible Loans. The Servicer may enter into additional servicing or sub-servicing agreements with third parties with respect to any of its respective obligations hereunder, provided that any such agreement shall be consistent with the provisions of this Agreement and no sub-servicer (or its agent or subcontractors) shall grant any modification, waiver or amendment to any Eligible Loan without the approval of the Servicer. Notwithstanding any servicing or sub-servicing agreement, any of the provisions of this Agreement relating to agreements or arrangements between the Servicer and any Person acting as servicer or sub-servicer (or its agents or subcontractors) or any reference to action taken through any Person acting as servicer or sub-servicer or otherwise, the Servicer shall remain obligated and primarily liable to the Purchaser for the servicing and administering of the Eligible Loans and arranging for the sale and Securitization of the Eligible Loans in accordance with the provisions of this Agreement without diminution of such obligation or liability by virtue of such servicing or sub-servicing agreements or arrangements or by virtue of indemnifica-tion from any Person acting as servicer or sub-servicer (or its agents or subcontractors) to the same extent and under the same terms and conditions as if the Servicer alone were engaging in such activities. In the event the Servicer is a sub-servicer, the Purchaser shall be entitled to proceed directly against the Servicer as sub-servicer to enforce the Servicer’s obligations to the Purchaser.

          (c) Subject to the above-described servicing standards, the further provisions of this Agreement, including but not limited to the Wet Funded Loan Limitation, Portfolio Criteria and Portfolio Aging Limitation, and the terms of the respective Eligible Loans, the Servicer shall have full power and authority, acting alone, to do or cause to be done any and all things in connection with such servicing and administration that it may deem necessary or desirable in connection with the servicing and administration of the Eligible Loans. Without limiting the generality of the foregoing, the Servicer is hereby authorized and empowered to waive, modify or vary any term of any Eligible Loan or consent to the postponement of compliance with any such term or in any manner grant indulgence to any Mortgagor if in the Servicer’s reasonable and prudent determination such waiver, modification, postponement or indulgence is not materially adverse to the Purchaser; provided, however , that the Servicer shall not make any future advances to a Mortgagor with respect to an Eligible Loan and

(unless the Mortgagor is in default with respect to the Eligible Loan or such default is, in the judgment of the Servicer, imminent) the Servicer shall not permit any modification with respect to any Eligible Loan that would change the Mortgage Interest Rate, defer or forgive the payment of principal or interest, reduce or increase the outstanding principal balance (except for actual payments of principal), release any collateral from the Eligible Loan or change the final maturity date on such Eligible Loan. Without limiting the generality of the foregoing, the Servicer shall continue, and is hereby authorized and empowered, to execute and deliver on behalf of itself and the Purchaser all instruments of satisfaction or cancellation, or of partial or full release, discharge and all other comparable instruments, with respect to the Eligible Loans and with respect to the Mortgaged Properties. If reasonably required by the Servicer, the Purchaser shall furnish the Servicer with any powers of attorney, in recordable form, and other documents necessary or appropriate to enable the Servicer to carry out its servicing and administrative duties under this Agreement.

          Section 4.2 Sales and Securitizations .

          (a) Subject to the servicing standards described in Section 4.1 , the Servicer shall have full power and authority, acting alone, to do or cause to be done any and all things in connection with such servic