AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT

AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT, dated as of August 24, 2006, among BEAR STEARNS ASSET BACKED SECURITIES I LLC, a Delaware limited liability company, as depositor (the “Depositor”), EMC MORTGAGE CORPORATION, a Delaware corporation, as seller (in such capacity, the “Sponsor”) and as company (in such capacity, the “Company”), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as master servicer (in such capacity, the “Master Servicer”) and as securities administrator (in such capacity, the “Securities Administrator”) and U.S. BANK NATIONAL ASSOCIATION, a national banking association, as trustee (the “Trustee”).

The Depositor is the owner of the Trust Fund that is hereby conveyed to the Trustee in return for the Certificates.

As provided herein, the Trustee will make an election to treat the segregated pool of assets consisting of Loan Group I and certain other related assets subject to this Agreement (other than the Net WAC Reserve Fund and any Prepayment Charge Waiver Amounts) as a REMIC (as defined herein) for federal income tax purposes, and such segregated pool of assets will be designated as “REMIC I.” The Class I-R-1 Certificates will represent the sole class of Residual Interests in REMIC I for purposes of the REMIC Provisions (as defined herein) under federal income tax law. The following table irrevocably sets forth the designation, the Uncertificated REMIC I Pass-Through Rate, the initial Uncertificated Principal Balance and, for purposes of satisfying Treasury Regulation Section 1.860G-1(a)(4)(iii), the “latest possible maturity date” for each of the REMIC I Regular Interests (as defined herein). None of the REMIC I Regular Interests will be certificated.

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

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

As provided herein, the Trustee will make an election to treat the segregated pool of assets consisting of Loan Group II and certain other related assets subject to this Agreement (other than any Prepayment Charge Waiver Amounts) as a REMIC for federal income tax purposes, and such segregated pool of assets will be designated as “REMIC II.” The Class II-1R-1 Certificates will represent the sole class of Residual Interests in REMIC II for purposes of the REMIC Provisions under federal income tax law. The following table irrevocably sets forth the designation, the Uncertificated REMIC II Pass-Through Rate, the initial Uncertificated Principal Balance and, for purposes of satisfying Treasury Regulation Section 1.860G-1(a)(4)(iii), the “latest possible maturity date” for each of the REMIC II Regular Interests (as defined herein). None of the REMIC II Regular Interests will be certificated.

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

(2)    REMIC II Regular Interest I-X and REMIC II Regular Interest II-X will not have Uncertificated Principal Balances but will accrue interest on their respective uncertificated notional amounts calculated in accordance with the related definition of “Uncertificated Notional Amount” herein.

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

As provided herein, the Trustee will make an election to treat the segregated pool of assets consisting of the REMIC I Regular Interests and REMIC II Regular Interests as a REMIC for federal income tax purposes, and such segregated pool of assets will be designated as “REMIC III.” The Class II-1R-2 Certificates will represent the sole class of Residual Interests in REMIC III for purposes of the REMIC Provisions.

The following table irrevocably sets forth the Class designation, Pass-Through Rate, Initial Certificate Principal Balance and, for purposes of satisfying Treasury Regulation Section 1.860G-1(a)(4)(iii), the “latest possible maturity date” for each Class of Certificates that represents one or more of the Regular Interests in REMIC III created hereunder and the Class I-R-1, Class II-1R-1 and Class II-1R-2 Certificates.

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The Trust Fund shall be named, and may be referred to as, the “Bear Stearns Asset Backed Securities I Trust 2006-AC1.” The Certificates issued hereunder may be referred to as “Asset-Backed Certificates Series 2006-AC1” (including for purposes of any endorsement or assignment of a Mortgage Note or Mortgage).

In consideration of the mutual agreements herein contained, the Depositor, the Master Servicer, the Securities Administrator, the Sponsor, the Company and the Trustee agree as follows:

Section 1.01    Defined Terms. 

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

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

Accepted Servicing Practices : With respect to each EMC Mortgage Loan, those mortgage servicing practices (including collection procedures) that are in accordance with all applicable statutes, regulations and prudent mortgage banking practices for similar mortgage loans.

Account : The Distribution Account, the Net WAC Reserve Fund, the Policy Payments Account and any Protected Account.

Accrued Certificate Interest : With respect to any Group II-1 Certificate or Group II-2 Certificate (other than the Class II-1PO, Class II-2PO, Class II-1P, Class II-2P, Class II-1R-1 and Class II-1R-2 Certificates) for any Distribution Date, means an amount equal to the interest accrued during the related Interest Accrual Period at the applicable Pass-Through Rate on the Certificate Principal Balance or Notional Amount of such Certificate immediately prior to such Distribution Date less (i) in the case of a Group II-1 Senior Certificate or Group II-2 Senior Certificate (other than the Class II-1PO Certificates and Class II-2PO Certificates), such Certificate’s share of any Net Interest Shortfalls from the related Mortgage Loans and, after the Cross-Over Date, the interest portion of any Realized Losses on the related Mortgage Loans and (ii) in the case of a Group II Subordinate Certificate, such Certificate’s share of any Net Interest Shortfalls and the interest portion of any Realized Losses on the related Mortgage Loans. Such Net Interest Shortfalls will be allocated among the Group II-1 Certificates and Group II-2 Certificates (other than the Class II-1PO, Class II-2PO, Class II-1P, Class II-2P, Class II-1R-1 and Class II-1R-2 Certificates) in proportion to the amount of Accrued Certificate Interest that would have been allocated thereto in the absence of such shortfalls. Accrued Certificate Interest with respect to the Class II-1A, Class II-2A, Class II-X and Class II-B Certificates will be based on a 360-day year that consists of twelve 30-day months. No Accrued Certificate Interest will be payable with respect to any Class of Group II Certificates after the Distribution Date on which the outstanding Certificate Principal Balance of such Certificate has been reduced to zero. The Class II-1PO, Class II-2PO, Class II-1P, Class II-2P, Class II-1R-1 and Class II-1R-2 Certificates are not entitled to Accrued Certificate Interest.

Additional Disclosure : As defined in Section 4.18.  

Additional Form 10-D Disclosure : As defined in Section 4.18.  

Additional Form 10-K Disclosure : As defined in Section 4.18.  

Advance : An advance of delinquent payments of principal or interest in respect of a Mortgage Loan required to be made by the Company as provided in Section 6.01(a) hereof, by the related Servicer in accordance with the related Servicing Agreement or by the Master Servicer as provided in Section 6.01(b) hereof.

Agreement : This Pooling and Servicing Agreement and any and all amendments or supplements hereto made in accordance with the terms herein.

Allocable Share : With respect to any Class of Group II Subordinate Certificates on any Distribution Date will generally equal such Class’s pro rata share (based on the Certificate Principal Balance of each Class entitled thereto) of the sum of each of the components of the definition of Subordinate Optimal Principal Amount; provided, that, except as described in the second succeeding sentence, no Class of Group II Subordinate Certificates (other than the Class of Group II Subordinate Certificates outstanding with the lowest numerical designation) shall be entitled on any Distribution Date to receive distributions pursuant to clauses (ii), (iii) and (v) of the definition of Subordinate Optimal Principal Amount unless the Class Prepayment Distribution Trigger for the related Class is satisfied for such Distribution Date. The “Class Prepayment Distribution Trigger” for a Class of Group II Subordinate Certificates for any Distribution Date is satisfied if the fraction (expressed as a percentage), the numerator of which is the aggregate Certificate Principal Balance of such Class and each Class subordinated thereto, if any, and the denominator of which is the aggregate Stated Principal Balance of all of the Mortgage Loans in Loan Group II-1 and Loan Group II-2 as of the related Due Date, equals or exceeds such percentage calculated as of the Closing Date. If on any Distribution Date the Certificate Principal Balance of any Class of Group II Subordinate Certificates for which the related Class Prepayment Distribution Trigger was satisfied on such Distribution Date is reduced to zero, any amounts distributable to such Class pursuant to clauses (ii), (iii) and (v) of the definitions of Subordinate Optimal Principal Amount, to the extent of such Class’s remaining Allocable Share, shall be distributed to the remaining Classes of Group II Subordinate Certificates in reduction of their respective Certificate Principal Balances, sequentially, in the order of their numerical class designations. If the Class Prepayment Distribution Trigger is not satisfied for any Class of Group II Subordinate Certificates on any Distribution Date, this may have the effect of accelerating the amortization of more senior Classes of Group II Subordinate Certificates.

Amount Held for Future Distribution : As to any Distribution Date, the aggregate amount held in the Company’s or the related Servicer’s Protected Accounts at the close of business on the immediately preceding Determination Date on account of (i) all Scheduled Payments or portions thereof received in respect of the Mortgage Loans due after the related Due Period and (ii) Principal Prepayments, Liquidation Proceeds and Insurance Proceeds received in respect of such Mortgage Loans after the last day of the related Prepayment Period.

Annual Statement of Compliance : As defined in Section 4.16.

Applied Realized Loss Amount : With respect to any Class of Group I Subordinate Certificates and as to any Distribution Date, the Realized Losses with respect to the Mortgage Loans in Loan Group I which have been applied in reduction of the Certificate Principal Balance of that Class of Certificates pursuant to Section 6.05 of this Agreement, which have not previously been reimbursed reduced by any Subsequent Recoveries applied to such Applied Realized Loss Amount.

Appraised Value : With respect to any Mortgage Loan originated in connection with a refinancing, the appraised value of the Mortgaged Property based upon the appraisal made at the time of such refinancing or, with respect to any other Mortgage Loan, the lesser of (x) the appraised value of the Mortgaged Property based upon the appraisal made by a fee appraiser at the time of the origination of the related Mortgage Loan, and (y) the sales price of the Mortgaged Property at the time of such origination.

Assignment Agreement : Shall mean any of the GreenPoint Assignment Agreement, the Harbourside Assignment Agreement, the HSBC Assignment Agreement, the PHH Assignment Agreement, Union Federal Assignment Agreement or the Wells Fargo Assignment Agreement.

Assessment of Compliance : As defined in Section 4.17.

Attesting Party : As defined in Section 4.17.

Attestation Report : As defined in Section 4.17.

Avoided Payment : As defined in the Policy.

Bankruptcy Code : Title 11 of the United States Code.

Bishop’s Gate : Bishop’s Gate Residential Mortgage Trust, and any successor thereto.

Book-Entry Certificates : Any of the Certificates that shall be registered in the name of the Depository or its nominee, the ownership of which is reflected on the books of the Depository or on the books of a person maintaining an account with the Depository (directly, as a “Depository Participant”, or indirectly, as an indirect participant in accordance with the rules of the Depository and as described in Section 7.06). As of the Closing Date, each Class of Offered Certificates constitutes a Class of Book-Entry Certificates.

Business Day : Any day other than (i) a Saturday or a Sunday, or (ii) a day on which banking institutions in The City of New York, New York, Minneapolis, Minnesota, Columbia, Maryland or the city in which the Corporate Trust Office of the Trustee or the principal office of the Company or the Master Servicer is located are authorized or obligated by law or executive order to be closed.

Certificate : Any one of the certificates of any Class executed and authenticated by the Securities Administrator in substantially the forms attached hereto as Exhibits A-1 through A-7.

Certificate Insurer : Financial Guaranty Insurance Company.

Certificateholder or Holder : The person in whose name a Certificate is registered in the Certificate Register (initially, Cede & Co., as nominee for the Depository, in the case of any Book-Entry Certificates).

Certificate Owner : With respect to a Book-Entry Certificate, the Person that is the beneficial owner of such Book-Entry Certificate.

Certificate Principal Balance : With respect to any Class of Certificates (other than the Class I-C, Class I-R-1, Class II-1X and Class II-2X Certificates) and any Distribution Date, is the original Certificate Principal Balance of such Class, less the sum of (i) all amounts in respect of principal distributed to such Class on previous Distribution Dates and (ii) any Applied Realized Loss Amounts allocated to such Class on previous Distribution Dates; provided that, the Certificate Principal Balance of any Class of Certificates with the highest payment priority to which Realized Losses have been allocated shall be increased by the amount of any Subsequent Recoveries on the related Mortgage Loans received by the Master Servicer, but not by more than the amount of Realized Losses previously allocated to reduce the Certificate Principal Balance of that Certificate and, in the case of Loan Group I, not previously reimbursed to such Certificate as an Applied Realized Loss Amount. As to the Class I-C Certificates and as of any Distribution Date, an amount equal to the excess, if any, of (A) the then aggregate Stated Principal Balance of the Mortgage Loans in Loan Group I over (B) the then aggregate Certificate Principal Balance of the Class I-A, Class I-M and Class I-B Certificates then outstanding.

Certificate Register : The register maintained pursuant to Section 7.02 hereof.

Class : All Certificates bearing the same Class designation as set forth in Section 7.01 hereof.

Class A Certificate : Any of the Class I-A-1, Class I-A-2, Class II-1A-1, Class II-1A-2, Class II-2A-1 and Class II-2A-2 Certificates.

Class B Certificates : Any of the Class I-B-1, Class I-B-2, Class I-B-3, Class I-B-4, Class II-B-1, Class II-B-2, Class II-B-3, Class II-B-4, Class II-B-5 and Class II-B-6 Certificates.

Class M Certificate : Any of the Class I-M-1, Class I-M-2 and Class I-M-3 Certificates.

Class P Certificate : Any of the Class I-P, Class II-1P and Class II-2P Certificates.

Class P Certificate Account : Each account established and maintained by the Securities Administrator pursuant to Section 6.09 hereof.

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

Class I-A Certificates: Any of the Class I-A-1 Certificates and Class I-A-2 Certificates.

Class I-A-1 Certificate : Any Certificate designated as a “Class I-A-1 Certificate” on the face thereof, in the form of Exhibit A-1 hereto, representing the right to the Percentage Interest of distributions provided for the Class I-A-1 Certificates as set forth herein and evidencing (i) a Regular Interest in REMIC III and (ii) the right to receive Net WAC Rate Carryover Amounts.

Class I-A-1 Pass-Through Rate : With regard to any Distribution Date which occurs on or prior to the Group I 20% Clean-up Call Date, a fixed rate equal to 5.75% per annum, subject to a cap equal to the related Interest Rate Cap for such Distribution Date, and with regard to any Distribution Date which occurs after the Group I 20% Clean-up Call Date, a fixed rate equal to 6.25% per annum, subject to a cap equal to the related Interest Rate Cap for such Distribution Date.

Class I-A-2 Certificate : Any Certificate designated as a “Class I-A-2 Certificate” on the face thereof, in the form of Exhibit A-1 hereto, representing the right to the Percentage Interest of distributions provided for the Class I-A-2 Certificates as set forth herein and evidencing (i) a Regular Interest in REMIC III and (ii) the right to receive Net WAC Rate Carryover Amounts.

Class I-A-2 Pass-Through Rate : With regard to any Distribution Date which occurs on or prior to the Group I 20% Clean-up Call Date, a fixed rate equal to 5.75% per annum, subject to a cap equal to the related Interest Rate Cap for such Distribution Date, and with regard to any Distribution Date which occurs after the Group I 20% Clean-up Call Date, a fixed rate equal to 6.25% per annum, subject to a cap equal to the related Interest Rate Cap for such Distribution Date.

Class I-B Certificates : Any of the Class I-B-1, Class I-B-2, Class I-B-3 and Class I-B-4 Certificates.

Class I-B-1 Certificate : Any Certificate designated as a “Class I-B-1 Certificate” on the face thereof, in the form of Exhibit A-3 hereto, representing the right to the Percentage Interest of distributions provided for the Class I-B-1 Certificates as set forth herein and evidencing (i) a Regular Interest in REMIC III and (ii) the right to receive Net WAC Rate Carryover Amounts.

Class I-B-1 Pass-Through Rate : Shall mean (i) on any Distribution Date which occurs on or prior to the Group I 20% Clean-up Call Date, One-Month LIBOR plus 1.350% per annum and (ii) for each Distribution Date thereafter, One-Month LIBOR plus 2.025% per annum, in each case subject to a cap equal to the related Interest Rate Cap for such Distribution Date.

Class I-B-2 Certificate : Any Certificate designated as a “Class I-B-2 Certificate” on the face thereof, in the form of Exhibit A-3 hereto, representing the right to the Percentage Interest of distributions provided for the Class I-B-2 Certificates as set forth herein and evidencing (i) a Regular Interest in REMIC III and (ii) the right to receive Net WAC Rate Carryover Amounts.

Class I-B-2 Pass-Through Rate : Shall mean (i) on any Distribution Date which occurs on or prior to the Group I 20% Clean-up Call Date, One-Month LIBOR plus 1.550% per annum and (ii) for each Distribution Date thereafter, One-Month LIBOR plus 2.325% per annum, in each case subject to a cap equal to the related Interest Rate Cap for such Distribution Date.

Class I-B-3 Certificate : Any Certificate designated as a “Class I-B-3 Certificate” on the face thereof, in the form of Exhibit A-3 hereto, representing the right to the Percentage Interest of distributions provided for the Class I-B-3 Certificates as set forth herein and evidencing (i) a Regular Interest in REMIC III and (ii) the right to receive Net WAC Rate Carryover Amounts.

Class I-B-3 Pass-Through Rate : Shall mean (i) on any Distribution Date which occurs on or prior to the Group I 20% Clean-up Call Date, One-Month LIBOR plus 2.650% per annum and (ii) for each Distribution Date thereafter, One-Month LIBOR plus 3.975% per annum, in each case subject to a cap equal to the related Interest Rate Cap for such Distribution Date.

Class I-B-4 Certificate : Any Certificate designated as a “Class I-B-4 Certificate” on the face thereof, in the form of Exhibit A-3 hereto, representing the right to the Percentage Interest of distributions provided for the Class I-B-4 Certificates as set forth herein and evidencing (i) a Regular Interest in REMIC III and (ii) the right to receive Net WAC Rate Carryover Amounts.

Class I-B-4 Pass-Through Rate : Shall mean (i) on any Distribution Date which occurs on or prior to the Group I 20% Clean-up Call Date, One-Month LIBOR plus 3.000% per annum and (ii) for each Distribution Date thereafter, One-Month LIBOR plus 4.500% per annum, in each case subject to a cap equal to the related Interest Rate Cap for such Distribution Date.

Class I-C Certificate : Any Certificate designated as a “Class I-C Certificate” on the face thereof, in the form of Exhibit A-4 hereto, representing the right to its Percentage Interest of distributions provided for the Class I-C Certificates herein and evidencing (i) a Regular Interest in REMIC III and (ii) the obligation to pay Net WAC Rate Carryover Amounts.

Class I-C Distribution Amount : With respect to any Distribution Date, the sum of (i) the related Monthly Interest Distributable Amount for the Class I-C Certificates for such Distribution Date, (ii) any Group I Overcollateralization Release Amount for such Distribution Date and (iii) without duplication, any Subsequent Recoveries for Loan Group I not distributed to the Group I Offered Certificates on such Distribution Date; provided, however, that on and after the Distribution Date on which the Certificate Principal Balances of the Class I-A, Class I-M and Class I-B Certificates have been reduced to zero, the Class I-C Distribution Amount shall include the Group I Overcollateralized Amount.

Class I-C Pass-Through Rate : On any Distribution Date, shall mean a rate per annum equal to the percentage equivalent of a fraction, the numerator of which is the (x) sum of the amount determined for each REMIC I Regular Interest (other than REMIC I Regular Interest I-P) equal to the product of (a) the excess, if any, of the Uncertificated REMIC I Pass-Through Rate for such REMIC I Regular Interest over the REMIC I Marker Rate and (b) a notional amount equal to the Uncertificated Principal Balance of such REMIC I Regular Interest, and the denominator of which is (y) the aggregate Uncertificated Principal Balance of such REMIC I Regular Interests.

Class I-M Certificates : Any of the Class I-M-1, Class I-M-2 and Class I-M-3 Certificates.

Class I-M-1 Certificate : Any Certificate designated as a “Class I-M-1 Certificate” on the face thereof, in the form of Exhibit A-2 hereto, representing the right to the Percentage Interest of distributions provided for the Class I-M-1 Certificates as set forth herein and evidencing (i) a Regular Interest in REMIC III and (ii) the right to receive Net WAC Rate Carryover Amounts.

Class I-M-1 Pass-Through Rate : Shall mean (i) on any Distribution Date which occurs on or prior to the Group I 20% Clean-up Call Date, One-Month LIBOR plus 0.450% per annum and (ii) for each Distribution Date thereafter, One-Month LIBOR plus 0.675% per annum, in each case subject to a cap equal to the related Interest Rate Cap for such Distribution Date.

Class I-M-2 Certificate : Any Certificate designated as a “Class I-M-2 Certificate” on the face thereof, in the form of Exhibit A-2 hereto, representing the right to the Percentage Interest of distributions provided for the Class I-M-2 Certificates as set forth herein and evidencing (i) a Regular Interest in REMIC III and (ii) the right to receive Net WAC Rate Carryover Amounts.

Class I-M-2 Pass-Through Rate : Shall mean (i) on any Distribution Date which occurs on or prior to the Group I 20% Clean-up Call Date, One-Month LIBOR plus 0.630% per annum and (ii) for each Distribution Date thereafter, One-Month LIBOR plus 0.945% per annum, in each case subject to a cap equal to the related Interest Rate Cap for such Distribution Date.

Class I-M-3 Certificate : Any Certificate designated as a “Class I-M-3 Certificate” on the face thereof, in the form of Exhibit A-2 hereto, representing the right to the Percentage Interest of distributions provided for the Class I-M-3 Certificates as set forth herein and evidencing (i) a Regular Interest in REMIC III and (ii) the right to receive Net WAC Rate Carryover Amounts.

Class I-M-3 Pass-Through Rate : Shall mean (i) on any Distribution Date which occurs on or prior to the Group I 20% Clean-up Call Date, One-Month LIBOR plus 0.720% per annum and (ii) for each Distribution Date thereafter, One-Month LIBOR plus 1.080% per annum, in each case subject to a cap equal to the related Interest Rate Cap for such Distribution Date.

Class I-P Certificate : Any Certificate designated as a “Class I-P Certificate” on the face thereof, in the form of Exhibit A-5 hereto, representing the right to its Percentage Interest of distributions provided for the Class I-P Certificates as set forth herein and evidencing a Regular Interest in REMIC III and (ii) the right to receive any Prepayment Charge Waiver Amounts related to Loan Group I.

Class I-R-1 Certificate : Any Certificate designated as a “Class I-R-1 Certificate” on the face thereof, in the form set forth in Exhibit A-6 hereto, evidencing the Residual Interest in REMIC I and representing the right to the Percentage Interest of distributions provided for the Class I-R-1 Certificates as set forth herein.

Class II-1A Certificate : Any of the Class II-1A-1 Certificates and Class II-1A-2 Certificates.

Class II-1A-1 Certificate : Any Certificate designated as a “Class II-1A-1 Certificate” on the face thereof, in the form of Exhibit A-1 hereto, representing the right to the Percentage Interest of distributions provided for the Class II-1A-1 Certificates as set forth herein and evidencing a Regular Interest in REMIC III.

Class II-1A-1 Pass-Through Rate : With regard to any Distribution Date, a fixed rate equal to 5.50% per annum.

Class II-1A-2 Certificate : Any Certificate designated as a “Class II-1A-2 Certificate” on the face thereof, in the form of Exhibit A-1 hereto, representing the right to the Percentage Interest of distributions provided for the Class II-1A-2 Certificates as set forth herein and evidencing a Regular Interest in REMIC III.

Class II-1A-2 Pass-Through Rate : With regard to any Distribution Date, a fixed rate equal to 5.50% per annum.

Class II-2A Certificate : Any of the Class II-2A-1 Certificates and Class II-2A-2 Certificates.

Class II-2A-1 Certificate : Any Certificate designated as a “Class II-2A-1 Certificate” on the face thereof, in the form of Exhibit A-1 hereto, representing the right to the Percentage Interest of distributions provided for the Class II-2A-1 Certificates as set forth herein and evidencing a Regular Interest in REMIC III.

Class II-2A-1 Pass-Through Rate : With regard to any Distribution Date, a fixed rate equal to 6.00% per annum.

Class II-2A-2 Certificate : Any Certificate designated as a “Class II-2A-2 Certificate” on the face thereof, in the form of Exhibit A-1 hereto, representing the right to the Percentage Interest of distributions provided for the Class II-2A-2 Certificates as set forth herein and evidencing a Regular Interest in REMIC III.

Class II-2A-2 Pass-Through Rate : With regard to any Distribution Date, a fixed rate equal to 6.00% per annum.

Class II-B Certificate : Any of the Class II-B-1, Class II-B-2, Class II-B-3, Class II-B-4, Class II-B-5, and Class II-B-6 Certificates.

Class II-B Pass-Through Rate : With regard to any Distribution Date, the weighted average of (i) 5.50% per annum and (ii) 6.00% per annum, weighted in proportion to the results of subtracting from the aggregate Stated Principal Balance of the Mortgage Loans in Loan Group II-1 and Loan Group II-2 (other than the portion of the Mortgage Loans attributable to the related Class II-PO Certificates), respectively, the aggregate Certificate Principal Balance of the related Class or Classes of Group II Senior Certificates, other than the related Class II-PO Certificates.

Class II-B-1 Certificate : Any Certificate designated as a “Class II-B-1 Certificate” on the face thereof, in the form of Exhibit A-3 hereto, representing the right to the Percentage Interest of distributions provided for the Class II-B-1 Certificates as set forth herein and evidencing a Regular Interest in REMIC III.

Class II-B-2 Certificate : Any Certificate designated as a “Class II-B-2 Certificate” on the face thereof, in the form of Exhibit A-3 hereto, representing the right to the Percentage Interest of distributions provided for the Class II-B-2 Certificates as set forth herein and evidencing a Regular Interest in REMIC III.

Class II-B-3 Certificate : Any Certificate designated as a “Class II-B-3 Certificate” on the face thereof, in the form of Exhibit A-3 hereto, representing the right to the Percentage Interest of distributions provided for the Class II-B-3 Certificates as set forth herein and evidencing a Regular Interest in REMIC III.

Class II-B-4 Certificate : Any Certificate designated as a “Class II-B-4 Certificate” on the face thereof, in the form of Exhibit A-3 hereto, representing the right to the Percentage Interest of distributions provided for the Class II-B-4 Certificates as set forth herein and evidencing a Regular Interest in REMIC III.

Class II-B-5 Certificate : Any Certificate designated as a “Class II-B-5 Certificate” on the face thereof, in the form of Exhibit A-3 hereto, representing the right to the Percentage Interest of distributions provided for the Class II-B-5 Certificates as set forth herein and evidencing a Regular Interest in REMIC III.

Class II-B-6 Certificate : Any Certificate designated as a “Class II-B-6 Certificate” on the face thereof, in the form of Exhibit A-3 hereto, representing the right to the Percentage Interest of distributions provided for the Class II-B-6 Certificates as set forth herein and evidencing a Regular Interest in REMIC III.

Class II-P Certificates : The Class II-1P Certificates and Class II-2P Certificates.

Class II-1P Certificate : Any Certificate designated as a “Class II-1P Certificate” on the face thereof, in the form of Exhibit A-5 hereto, representing the right to its Percentage Interest of distributions provided for the Class II-2P Certificates as set forth herein and evidencing a Regular Interest in REMIC III and (ii) the right to receive any Prepayment Charge Waiver Amounts related to Loan Group II-1.

Class II-2P Certificate : Any Certificate designated as a “Class II-2P Certificate” on the face thereof, in the form of Exhibit A-5 hereto, representing the right to its Percentage Interest of distributions provided for the Class II-2P Certificates as set forth herein and evidencing a Regular Interest in REMIC III and (ii) the right to receive any Prepayment Charge Waiver Amounts related to Loan Group II-2.

Class II-PO Certificates : The Class II-1PO Certificates and Class II-2PO Certificates.

Class II-1PO Certificate : Any Certificate designated as a “Class II-1PO Certificate” on the face thereof, in the form of Exhibit A-1 hereto, representing the right to the Percentage Interest of distributions provided for the Class II-1PO Certificates as set forth herein and evidencing a Regular Interest in REMIC III.

Class II-1PO Certificate Cash Shortfall : For any Distribution Date, the difference between (i) principal distributable to the Class II-1PO Certificates in accordance with priority fifth under Section 6.04(b), and (ii) principal actually distributed to the Class II-1PO Certificates after giving effect to Section 6.04(d).  

Class II-1PO Certificate Deferred Amount : As to each Distribution Date through the Cross-Over Date, the aggregate of all amounts allocable on such dates to the Class II-1PO Certificates in respect of the principal portion of Realized Losses in respect of Discount Mortgage Loans in Loan Group II-1 and the Class II-1PO Certificate Cash Shortfall and all amounts previously allocated in respect of such losses and such shortfalls to the Class II-1PO Certificates, and not distributed on prior Distribution Dates.

Class II-1PO Certificate Principal Distribution Amount : The Class II-1PO Certificates shall be entitled to distributions from Loan Group II-1. For each Class of Class II-1PO Certificates with respect to each Distribution Date will be an amount equal to the sum of:

(i)   the related PO Percentage of all scheduled payments of principal due on each Discount Mortgage Loan in Loan Group II-1 on the related Due Date as specified in the amortization schedule at the time applicable thereto (after adjustment for previous principal prepayments but before any adjustment to such amortization schedule by reason of any bankruptcy or similar proceeding or any moratorium or similar waiver or grace period);

(ii)   the related PO Percentage of the Stated Principal Balance of each Discount Mortgage Loan in Loan Group II-1 which was the subject of a prepayment in full received by the related Servicer during the applicable Prepayment Period;

(iii)   the related PO Percentage of all partial prepayments of principal of each Discount Mortgage Loan in the Loan Group II-1 received during the applicable Prepayment Period;

(iv)   the lesser of (a) the related PO Percentage of the sum of (A) all Net Liquidation Proceeds and Subsequent Recoveries allocable to principal on each Discount Mortgage Loan in Loan Group II-1 which became a Liquidated Mortgage Loan during the related Prepayment Period (other than a Discount Mortgage Loan described in the immediately following clause (B)) and (B) the Stated Principal Balance of each such Discount Mortgage Loan in Loan Group II-1 purchased by an insurer from the Trustee during the related Prepayment Period pursuant to the related Primary Mortgage Insurance Policy, if any, or otherwise; and (b) the related PO Percentage of the sum of (A) the Stated Principal Balance of each Discount Mortgage Loan in Loan Group II-1 which became a Liquidated Mortgage Loan during the related Prepayment Period (other than a Discount Mortgage Loan described in the immediately following clause (B)) and (B) the Stated Principal Balance of each such Discount Mortgage Loan in Loan Group II-1 that was purchased by an insurer from the Trustee during the related Prepayment Period pursuant to the related Primary Mortgage Insurance Policy, if any, or otherwise; and

(v)   the related PO Percentage of the sum of (a) the Stated Principal Balance of each Discount Mortgage Loan in Loan Group II-1 which was repurchased by the Sponsor in connection with such Distribution Date and (b) the difference, if any, between the Stated Principal Balance of a Discount Mortgage Loan in Loan Group II-1 that has been replaced by the Sponsor with a substitute Discount Mortgage Loan pursuant to this Agreement in connection with such Distribution Date and the Stated Principal Balance of such substitute Discount Mortgage Loan.

Class II-2PO Certificate : Any Certificate designated as a “Class II-2PO Certificate” on the face thereof, in the form of Exhibit A-1 hereto, representing the right to the Percentage Interest of distributions provided for the Class II-2PO Certificates as set forth herein and evidencing a Regular Interest in REMIC III.

Class II-2PO Certificate Cash Shortfall : For any Distribution Date, the difference between (i) principal distributable to the Class II-2PO Certificates in accordance with priority fifth under Section 6.04(c), and (ii) principal actually distributed to the Class II-2PO Certificates after giving effect to Section 6.04(d).  

Class II-2PO Certificate Deferred Amount : As to each Distribution Date through the Cross-Over Date, the aggregate of all amounts allocable on such dates to the Class II-2PO Certificates in respect of the principal portion of Realized Losses in respect of Discount Mortgage Loans in Loan Group II-2 and the Class II-2PO Certificate Cash Shortfall and all amounts previously allocated in respect of such losses and such shortfalls to the Class II-2PO Certificates, and not distributed on prior Distribution Dates.

Class II-2PO Certificate Principal Distribution Amount : The Class II-2PO Certificates shall be entitled to distributions from Loan Group II-2. For each Class of Class II-2PO Certificates with respect to each Distribution Date will be an amount equal to the sum of:

(i)   the related PO Percentage of all scheduled payments of principal due on each Discount Mortgage Loan in Loan Group II-2 on the related Due Date as specified in the amortization schedule at the time applicable thereto (after adjustment for previous principal prepayments but before any adjustment to such amortization schedule by reason of any bankruptcy or similar proceeding or any moratorium or similar waiver or grace period);

(ii)   the related PO Percentage of the Stated Principal Balance of each Discount Mortgage Loan in Loan Group II-2 which was the subject of a prepayment in full received by the related Servicer during the applicable Prepayment Period;

(iii)   the related PO Percentage of all partial prepayments of principal of each Discount Mortgage Loan in the Loan Group II-2 received during the applicable Prepayment Period;

(iv)   the lesser of (a) the related PO Percentage of the sum of (A) all Net Liquidation Proceeds and Subsequent Recoveries allocable to principal on each Discount Mortgage Loan in Loan Group II-2 which became a Liquidated Mortgage Loan during the related Prepayment Period (other than a Discount Mortgage Loan described in the immediately following clause (B)) and (B) the Stated Principal Balance of each such Discount Mortgage Loan in Loan Group II-2 purchased by an insurer from the Trustee during the related Prepayment Period pursuant to the related Primary Mortgage Insurance Policy, if any, or otherwise; and (b) the related PO Percentage of the sum of (A) the Stated Principal Balance of each Discount Mortgage Loan in Loan Group II-2 which became a Liquidated Mortgage Loan during the related Prepayment Period (other than a Discount Mortgage Loan described in the immediately following clause (B)) and (B) the Stated Principal Balance of each such Discount Mortgage Loan in Loan Group II-2 that was purchased by an insurer from the Trustee during the related Prepayment Period pursuant to the related Primary Mortgage Insurance Policy, if any, or otherwise; and

(v)   the related PO Percentage of the sum of (a) the Stated Principal Balance of each Discount Mortgage Loan in Loan Group II-2 which was repurchased by the Sponsor in connection with such Distribution Date and (b) the difference, if any, between the Stated Principal Balance of a Discount Mortgage Loan in Loan Group II-2 that has been replaced by the Sponsor with a substitute Discount Mortgage Loan pursuant to this Agreement in connection with such Distribution Date and the Stated Principal Balance of such substitute Discount Mortgage Loan

Class II-R Certificates : The Class II-1R-1 Certificates and Class II-1R-2 Certificates.

Class II-R Deposit : An amount equal to $100, which shall be included as part of the Group II Available Funds attributable to Loan Group II and distributed as principal to the Class II-R Certificates on the first Distribution Date.

Class II-1R-1 Certificate : Any Certificate designated a “Class II-1R-1 Certificate” on the face thereof, in substantially the form set forth in Exhibit A-6 hereto, evidencing the Residual Interest in REMIC II and representing the right to the Percentage Interest of distributions provided for the Class II-1R-1 Certificates as set forth herein.

Class II-1R-2 Certificate : Any Certificate designated a “Class II-1R-2 Certificate” on the face thereof, in substantially the form set forth in Exhibit A-6 hereto, evidencing the Residual Interest in REMIC III and representing the right to the Percentage Interest of distributions provided for the Class II-1R-2 Certificates as set forth herein.

Class II-1X Certificate : Any Certificate designated as a “Class II-1X Certificate” on the face thereof, in the form of Exhibit A-1 hereto, representing the right to its Percentage Interest of distributions provided for the Class II-1X Certificates as set forth herein and evidencing a Regular Interest in REMIC III.

Class II-1X Pass-Through Rate : With respect to the Class II-1X Certificates, the weighted average of the excess, if any, of (a) the Net Mortgage Rate on each Mortgage Loan in Loan Group II-1, over (b) 5.50% per annum. For federal income tax purposes, the Class II-1X Certificates will not have a Pass-Through Rate, but will be entitled to receive 100% of the interest payable with respect to REMIC II Regular Interest I-X.

Class II-2X Certificate : Any Certificate designated as a “Class II-2X Certificate” on the face thereof, in the form of Exhibit A-1 hereto, representing the right to its Percentage Interest of distributions provided for the Class II-2X Certificates as set forth herein and evidencing a Regular Interest in REMIC III.

Class II-2X Pass-Through Rate : With respect to the Class II-2X Certificates, the weighted average of the excess, if any, of (a) the Net Mortgage Rate on each Mortgage Loan in Loan Group II-2, over (b) 6.00% per annum. For federal income tax purposes, the Class II-2X Certificates will not have a Pass-Through Rate, but will be entitled to receive 100% of the interest payable with respect to REMIC II Regular Interest II-X.

Closing Date : January 31, 2006.

Code : The Internal Revenue Code of 1986, including any successor or amendatory provisions.

Company : EMC.

Company Information : As defined in Section 4.18(b).

Compensating Interest : An amount, not to exceed the Servicing Fee, to be deposited in the Distribution Account by the Company or the related Servicer to the payment of a Prepayment Interest Shortfall on a Mortgage Loan subject to this Agreement; provided that in the event the Company or the related Servicer fails to make such payment, the Master Servicer shall be obligated to do so to the extent provided in Section 6.02(c) hereof.

Corporate Trust Office : The designated office of the Trustee where at any particular time its corporate trust business with respect to this Agreement shall be administered, which office at the date of the execution of this Agreement is located at US Bank Corporate Trust Services, One Federal Street, 3rd Floor, Boston, Massachusetts 02110, Attention: Corporate Trust Services/BSABS I 2006-AC1, or at such other address as the Trustee may designate from time to time and (ii) with respect to the Securities Administrator, the designated office of the Securities Administrator at which at any particular time its corporate trust business with respect to this Agreement shall be administered, which office at the date of the execution of this Agreement is located at 9062 Old Annapolis Road, Columbia, MD 21045, Attention: Corporate Trust Services, BSABS 2006-AC1 except for purposes of certificate transfer purposes, such term shall mean the office or agency of the Securities Administrator located at Wells Fargo Bank, N.A., Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479, Attention: Corporate Trust Services, BSABS 2006-AC1.

Corresponding Certificate : With respect to each REMIC I Regular Interest, the Certificate with the corresponding designation.

Cross-Over Date : The first Distribution Date on which the aggregate Certificate Principal Balance of the related Subordinate Certificates has been reduced to zero (giving effect to all related distributions on such Distribution Date).

Current Report : The Current Report pursuant to Section 13 or 15(d) of the Exchange Act.

Custodial Agreement : An agreement, dated as of January 31, 2006, among the Depositor, the Sponsor, the Trustee, the Master Servicer and the Custodian in substantially the form of Exhibit J hereto.

Custodian : Wells Fargo Bank, National Association, or any successor custodian appointed pursuant to the provisions hereof and the Custodial Agreement.

Cut-off Date : The close of business on January 1, 2006.

Cut-off Date Principal Balance : As to any Mortgage Loan, the unpaid principal balance thereof as of the close of business on the Cut-off Date after application of all Principal Prepayments received prior to the Cut-off Date and scheduled payments of principal due on or before the Cut-off Date, whether or not received, but without giving effect to any installments of principal received in respect of Due Dates after the Cut-off Date.

Debt Service Reduction : With respect to any Mortgage Loan, a reduction by a court of competent jurisdiction in a proceeding under the Bankruptcy Code in the Scheduled Payment for such Mortgage Loan that became final and non-appealable, except such a reduction resulting from a Deficient Valuation or any other reduction that results in a permanent forgiveness of principal.

Deficiency Amount : With respect to any Distribution Date and the Class I-A-2 Certificates, an amount, if any, equal to the sum of: (i) the excess of (x) the Monthly Interest Distributable Amount for the Class I-A-2 Certificates on such Distribution Date, over (y) the Interest Funds from the Mortgage Loans in Loan Group I on such Distribution Date allocated to pay the Monthly Interest Distributable Amount on the Class I-A-2 Certificates on such Distribution Date as provided in Section 6.04(a) of this Agreement, and (ii) the Certificate Principal Balance of the Class I-A-2 Certificates to the extent unpaid on the Final Scheduled Distribution Date or earlier termination of the Group I Sub-Trust pursuant to the terms of this Agreement, in each case after giving effect to distributions made on such date from sources other than the Policy.

Deficient Valuation : With respect to any Mortgage Loan, a valuation by a court of competent jurisdiction of the Mortgaged Property in an amount less than the then outstanding indebtedness under such Mortgage Loan, or any reduction in the amount of principal to be paid in connection with any Scheduled Payment that results in a permanent forgiveness of principal, which valuation or reduction results from an order of such court that is final and non-appealable in a proceeding under the Bankruptcy Code.

Definitive Certificates : As defined in Section 7.06.

Deleted Mortgage Loan : A Mortgage Loan replaced or to be replaced by a Replacement Mortgage Loan.

Delinquent : A Mortgage Loan is “delinquent” if any payment due thereon is not made pursuant to the terms of such Mortgage Loan by the close of business on the day such payment is scheduled to be due. A Mortgage Loan is “30 days delinquent” if such payment has not been received by the close of business on the corresponding day of the month immediately succeeding the month in which such payment was due, or, if there is no such corresponding day (e.g., as when a 30-day month follows a 31-day month in which a payment was due on the 31st day of such month), then on the last day of such immediately succeeding month. Similarly for “60 days delinquent,” “90 days delinquent” and so on. This method of determining delinquencies is also referred to as the OTS method.

Denomination : With respect to each Certificate, the amount set forth on the face thereof as the “Initial Principal Balance or initial notional amount of this Certificate”.

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

Depositor Information : As defined in Section 4.18(b).

Depository : The initial Depository shall be The Depository Trust Company (“DTC”), the nominee of which is Cede & Co., or any other organization registered as a “clearing agency” pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. The Depository shall initially be the registered Holder of the Book-Entry Certificates. The Depository shall at all times be a “clearing corporation” as defined in Section 8-102(a)(5) of the Uniform Commercial Code of the State of New York.

Depository Agreement : With respect to the Class of Book-Entry Certificates, the agreement among the Depositor signing on behalf of the Issuing Entity and the initial Depository, dated as of the Closing Date, substantially in the form of Exhibit H.

Depository Participant : A broker, dealer, bank or other financial institution or other Person for whom from time to time a Depository effects book-entry transfers and pledges of securities deposited with the Depository.

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

Discount Mortgage Loan : With respect to Loan Group II-1, any Mortgage Loan in such group with a Net Mortgage Rate less than 5.50% per annum, and with respect to Loan Group II-2, any Mortgage Loan with a Net Mortgage Rate less than 6.00% per annum.

Distribution Account : The separate Eligible Account created and maintained by the Securities Administrator pursuant to Section 5.08 in the name of the Trustee for the benefit of the Certificateholders and the Insurer and designated “U.S. Bank National Association, in trust for registered Holders of Bear Stearns Asset Backed Securities I LLC, Asset-Backed Certificates, Series 2006-AC1” shall be held in trust for the Certificateholders for the uses and purposes set forth in this Agreement.

Distribution Date : The 25th day of each calendar month after the initial issuance of the Certificates, or if such 25th day is not a Business Day, the next succeeding Business Day, commencing in February 2006.

Distribution Report : The Asset-Backed Issuer Distribution Report pursuant to Section 13 or 15(d) of the Exchange Act.

Due Date : As to any Mortgage Loan, the date in each month on which the related Scheduled Payment is due, as set forth in the related Mortgage Note.

Due Period : With respect to any Distribution Date, the period from the second day of the calendar month preceding the calendar month in which such Distribution Date occurs through close of business on the first day of the calendar month in which such Distribution Date occurs.

Early Turbo Payment Date : The Distribution Date in January 2016.

EDGAR : As defined in Section 4.18.

Eligible Account : Any of (i) an account or accounts maintained with a federal or state chartered depository institution or trust company, the long-term unsecured debt obligations and short-term unsecured debt obligations of which (or, in the case of a depository institution or trust company that is the principal subsidiary of a holding company, the debt obligations of such holding company, so long as Moody’s is not a Rating Agency) are rated by each Rating Agency in one of its two highest long-term and its highest short-term rating categories respectively, at the time any amounts are held on deposit therein, or (ii) an account or accounts in a depository institution or trust company in which such accounts are insured by the FDIC (to the limits established by the FDIC) and the uninsured deposits in which accounts are otherwise secured such that, as evidenced by an Opinion of Counsel delivered to the Trustee and to each Rating Agency, the Certificateholders have a claim with respect to the funds in such account or a perfected first priority security interest against any collateral (which shall be limited to Permitted Investments) securing such funds that is superior to claims of any other depositors or creditors of the depository institution or trust company in which such account is maintained, or (iii) a trust account or accounts maintained with the corporate trust department of a federal or state chartered depository institution or trust company having capital and surplus of not less than $50,000,000, acting in its fiduciary capacity or (iv) any other account acceptable to the Rating Agencies. Eligible Accounts may bear interest, and may include, if otherwise qualified under this definition, accounts maintained with the Trustee.

EMC : EMC Mortgage Corporation, a Delaware corporation.

EMC Mortgage Loans : Those Mortgage Loans serviced by the Company pursuant to the terms of this Agreement.

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

ERISA Restricted Certificates : Any of the Class I-B-4, Class II-B-4, Class II-B-5, Class II-B-6, Class I-C, Class P and Residual Certificates.

Event of Default : As defined in Section 9.01 hereof.

Excess Liquidation Proceeds : To the extent not required by law to be paid to the related Mortgagor, the excess, if any, of any Liquidation Proceeds with respect to a Mortgage Loan over the Stated Principal Balance of such Mortgage Loan and accrued and unpaid interest at the related Mortgage Rate through the last day of the month in which the Mortgage Loan has been liquidated.

Excess Spread : With respect to any Distribution Date and Loan Group I, the excess, if any, of (i) the Interest Funds for such Loan Group for such Distribution Date, over (ii) the sum of (a) the Insurer Premium Amount payable to the Insurer for such Distribution Date, (b) the related Monthly Interest Distributable Amounts payable to the Group I Offered Certificates and the Class I-B-4 Certificates on such Distribution Date and (c) any Reimbursement Amounts paid to the Insurer relating to the interest draws on the Policy pursuant to item (3) of Section 6.04(a).

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

Exchange Act Reports : Any reports required to be filed pursuant to Section 4.18 of this Agreement.

Exemption : Prohibited Transaction Exemption 90-30, as amended from time to time.

Fannie Mae : Fannie Mae (formally, Federal National Mortgage Association), or any successor thereto.

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

Final Recovery Determination : With respect to any defaulted Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property purchased by the Sponsor or the Class I-C Certificateholder pursuant to or as contemplated by Section 2.03(c) or Section 11.01), a determination made by the Company pursuant to this Agreement or the applicable Servicer pursuant to the related Servicing Agreement that all Insurance Proceeds, Liquidation Proceeds and other payments or recoveries which the Company or such Servicer, in its reasonable good faith judgment, expects to be finally recoverable in respect thereof have been so recovered. The Master Servicer shall maintain records, based solely on information provided by each Servicer, of each Final Recovery Determination made thereby.

Final Scheduled Distribution Date : With respect to the Group I Certificates, February 2036, and with respect to the Group II Certificates, December 2035.

Fiscal Quarter : December 1 to February 29 (or the last day in such month), March 1 to May 31, June 1 to August 31, or September to November 30, as applicable.

Form 8-K Disclosure Information : As defined in Section 4.18(a)(ii)(A).

Freddie Mac : Freddie Mac (formally, The Federal Home Loan Mortgage Corporation), or any successor thereto.

GreenPoint : GreenPoint Mortgage Funding, Inc.

GreenPoint Assignment Agreement : The Assignment, Assumption and Recognition Agreement, dated as of January 31, 2006, by and among the Sponsor, GreenPoint and the Trustee evidencing the assignment of the GreenPoint Servicing Agreement to the Trust, attached hereto as Exhibit R-1.

GreenPoint Loans : Those Mortgage Loans subject to this Agreement which were purchased by the Sponsor from GreenPoint pursuant to the GreenPoint Servicing Agreement.

GreenPoint Servicing Agreement : The Purchase, Warranties and Servicing Agreement, dated as of September 1, 2003, between the Sponsor and GreenPoint, as amended, attached hereto as Exhibit Q-1, as modified by the GreenPoint Assignment Agreement.

Global Certificate : Any Private Certificate registered in the name of the Depository or its nominee, beneficial interests in which are reflected on the books of the Depository or on the books of a Person maintaining an account with such Depository (directly or as an indirect participant in accordance with the rules of such depository).

Group I 20% Clean-up Call Date : With respect to Loan Group I, the first Distribution Date upon which the aggregate Stated Principal Balance of the Mortgage Loans in Loan Group I as of the end of the related Due Period is less than or equal to 20% of the aggregate Cut-off Date Principal Balance of the Mortgage Loans in Loan Group I.

Group I Available Funds : The sum of Interest Funds and Principal Funds with respect to the Mortgage Loans in Loan Group I.

Group I Basic Principal Distribution Amount : Shall mean, with respect to any Distribution Date and Group I Certificates, the lesser of (a) the excess of (i) the Group I Available Funds for such Distribution Date over (ii) the aggregate Monthly Interest Distributable Amount for the Group I Offered Certificates and the Class I-B-4 Certificates for such Distribution Date and (b) the excess of (i) the related Principal Remittance Amount for such Distribution Date over (ii) the Group I Overcollateralization Release Amount, if any, for such Distribution Date.

Group I Certificates : Any of the Class I-A, Class I-M, Class I-B, Class I-C, Class I-P and Class I-R-1 Certificates.

Group I Extra Principal Distribution Amount : With respect to any Distribution Date and the Mortgage Loans in Loan Group I (a) on or prior to the earlier of (1) the Group I 20% Clean-Up Call Date and (2) the Early Turbo Payment Date, the lesser of (x) the Excess Spread for Loan Group I for such Distribution Date and (y) the Group I Overcollateralization Increase Amount for such Distribution Date; and (b) thereafter, the Excess Spread for Loan Group I for such Distribution Date; provided that the Excess Spread described in clause (b) will be used first to pay any Group I Overcollateralization Increase Amount, any Net Interest Shortfalls related to Loan Group I and any Net WAC Rate Carryover Amounts on such Distribution Date, and the remainder will be applied as part of the Group I Extra Principal Distribution Amount.

Group I Non-Offered Certificate : Any of the Class I-B-4, Class I-R-1, Class I-P and Class I-C Certificates.

Group I Offered Certificate : Any of the Class I-A-1, Class I-A-2, Class I-M-1, Class I-M-2, Class I-M-3, Class I-B-1, Class I-B-2 and Class I-B-3 Certificates.

Group I Optional Termination : The termination of the Group I Sub-Trust created hereunder as a result of the purchase of all of the assets related to Loan Group I and any related REO Property pursuant to the last sentence of Section 11.01 hereof.

Group I Optional Termination Date : With respect to Loan Group I, the first Distribution Date upon which the aggregate Stated Principal Balance of the Mortgage Loans in Loan Group I as of the end of the related Due Period is less than or equal to 10% of the aggregate Cut-off Date Principal Balance of the Mortgage Loans in Loan Group I.

Group I Overcollateralized Amount : With respect to any Distribution Date, is the excess, if any, of (a) the aggregate Stated Principal Balance of the Mortgage Loans in Loan Group I as of the last day of the related Due Period (after giving effect to Scheduled Payments of principal due during the related Due Period to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period, including any reduction due to Realized Losses) over (b) the aggregate Certificate Principal Balance of the Group I Offered Certificates and Class I-B-4 Certificates on such Distribution Date (after taking into account the payment of principal other than any Group I Extra Principal Distribution Amount on such Certificates).

Group I Overcollateralization Increase Amount : As of any Distribution Date, the lesser of (a) the excess, if any, of (i) the Group I Overcollateralization Target Amount over (ii) the Group I Overcollateralized Amount on such Distribution Date (after taking into account payments to the Group I Offered Certificates and Class I-B-4 Certificates of the Group I Basic Principal Distribution Amount on such Distribution Date) and (b) Excess Spread for Loan Group I for such Distribution Date.

Group I Overcollateralization Release Amount : With respect to any Distribution Date, the lesser of (x) the related Principal Remittance Amount for such Distribution Date and (y) the excess, if any, of (i) the Group I Overcollateralized Amount for such Distribution Date (assuming that 100% of the related Principal Remittance Amount is applied as a principal payment on such Distribution Date) over (ii) the Group I Overcollateralization Target Amount for such Distribution Date (with the amount pursuant to clause (y) deemed to be $0 if the Group I Overcollateralized Amount is less than or equal to the Group I Overcollateralization Target Amount on that Distribution Date).

Group I Overcollateralization Target Amount : With respect to any Distribution Date, 0.90% of the aggregate Stated Principal Balance of the Mortgage Loan in Loan Group I as of the Cut-off Date.

Group I Senior Certificates : The Class I-A-1 Certificates and Class I-A-2 Certificates.

Group I Subordinate Certificates : Any of the Class I-M-1, Class I-M-2, Class I-M-3, Class I-B-1, Class I-B-2, Class I-B-3 and Class I-B-4 Certificates.

Group I Sub-Trust : The portion of the Trust Fund allocated to Loan Group I.

Group II Available Funds : The sum of Interest Funds and Principal Funds with respect to the Mortgage Loans in Loan Group II, and with respect to the first Distribution Date, the Class II-R Deposit which shall be allocable to Loan Group II-1.

Group II Certificates : Any of the Class II-1A, Class II-2A, Class II-1X, Class II-2X, Class II-1PO, Class II-2PO, Class II-B, Class II-P or Class II-R Certificates.

Group II Non-Offered Certificate : Any of the Class II-B-4, Class II-B-5, Class II-B-6, Class II-1P and Class II-2P Certificates.

Group II Offered Certificates : Any of the Class II-1A-1, Class II-1A-2, Class II-1PO, Class II-1X, Class II-1R-1, Class II-1R-2, Class II-2A-1, Class II-2A-2, Class II-2PO, Class II-2X, Class II-B-1, Class II-B-2 and Class II-B-3 Certificates.

Group II Optional Termination : The termination of the Group II Sub-Trust created hereunder as a result of the purchase of all Loan Group II and any related REO Property pursuant to the last sentence of Section 11.01 hereof.

Group II Optional Termination Date : With respect to Loan Group II, the first Distribution Date upon which the aggregate Stated Principal Balance of the Mortgage Loans in Loan Group II as of the end of the related Due Period is less than or equal to 10% of the aggregate Cut-off Date Principal Balance of the Mortgage Loans in Loan Group II.

Group II Principal Distribution Amount : With respect to each of Group II-1 Senior Certificates and Group II-2 Senior Certificates (other than the related Class II-PO Certificates), respectively, and each Distribution Date, an amount equal to the sum of the following (but in no event greater than the aggregate Certificate Principal Balances of each of the Group II-1 Senior Certificates and Group II-2 Senior Certificates (other than the related Class II-PO Certificates), as applicable, immediately prior to such Distribution Date):

(1)   the applicable Senior Percentage of the related Non-PO Percentage of the principal portion of all Monthly Payments due on the Mortgage Loans in the related Loan Group on the related Due Date, as specified in the amortization schedule at the time applicable thereto (after adjustment for previous principal prepayments but before any adjustment to such amortization schedule by reason of any bankruptcy or similar proceeding or any moratorium or similar waiver or grace period);

(2)   the applicable Senior Prepayment Percentage of the related Non-PO Percentage of the Stated Principal Balance of each Mortgage Loan in the related Loan Group which was the subject of a prepayment in full received by the Master Servicer during the applicable Prepayment Period with respect to each Mortgage Loan in the related Loan Group;

(3)   the applicable Senior Prepayment Percentage of the related Non-PO Percentage of all partial prepayments allocated to principal of each Mortgage Loan in the related Loan Group received during the applicable Prepayment Period;

(4)   the lesser of (a) the applicable Senior Prepayment Percentage of the related Non-PO Percentage of the sum of (i) all Net Liquidation Proceeds allocable to principal received in respect of each Mortgage Loan in the related Loan Group which became a Liquidated Mortgage Loan during the related Prepayment Period (other than Mortgage Loans described in the immediately following clause (ii)) and all Subsequent Recoveries received in respect of each Liquidated Mortgage Loan in the related Loan Group during the related Due Period and (ii) the Stated Principal Balance of each such Mortgage Loan in the related Loan Group purchased by an insurer from the Trustee during the related Prepayment Period pursuant to the related Primary Mortgage Insurance Policy, if any, or otherwise; and (b) the applicable Senior Percentage of the related Non-PO Percentage of the sum of (i) the Stated Principal Balance of each Mortgage Loan in the related Loan Group which became a Liquidated Mortgage Loan during the related Prepayment Period (other than the Mortgage Loans described in the immediately following clause (ii)) and (ii) the Stated Principal Balance of each such Mortgage Loan in the related Loan Group that was purchased by an insurer from the Trustee during the related Prepayment Period pursuant to the related Primary Mortgage Insurance Policy, if any or otherwise; and

(5)   the applicable Senior Prepayment Percentage of the related Non-PO Percentage of the sum of (a) the Stated Principal Balance of each Mortgage Loan in the related Loan Group which was repurchased by EMC or its designee in connection with such Distribution Date and (b) the excess, if any, of the Stated Principal Balance of each Mortgage Loan in the related Loan Group that has been replaced by the EMC or its designee with a substitute Mortgage Loan pursuant to the Mortgage Loan Purchase Agreement in connection with such Distribution Date over the Stated Principal Balance of each such substitute Mortgage Loan.

Group II Senior Certificates : The Group II-1 Senior Certificates and Group II-2 Senior Certificates.

Group II Subordinate Certificates : Any of the Class II-B-1, Class II-B-2, Class II-B-3, Class II-B-4, Class II-B-5 and Class II-B-6 Certificates.

Group II Sub-Trust : The portion of the Trust Fund allocated to Loan Group II.

Group II-1 Senior Certificates : The Class II-1A-1, Class II-1A-2, Class II-1X and Class II-1PO Certificates.

Group II-2 Senior Certificates : The Class II-2A-1, Class II-2A-2, Class II-2X and Class II-2PO Certificates.

Harbourside : Savannah Bank, NA dba Harbourside Mortgage Corporation.

Harbourside Assignment Agreement : The Assignment, Assumption and Recognition Agreement, dated as of January 31, 2006, by and among the Sponsor, Harbourside and the Trustee evidencing the assignment of the Harbourside Servicing Agreement to the Trust, attached hereto as Exhibit R-2.

Harbourside Servicing Agreement : The Purchase, Warranties and Servicing Agreement, dated as of April 1, 2005, between the Sponsor and Harbourside, as amended, attached hereto as Exhibit Q-2, as modified by the Harbourside Assignment Agreement.

HSBC : HSBC Mortgage Corporation (USA).

HSBC Assignment Agreement : The Assignment, Assumption and Recognition Agreement, dated as of January 31, 2006, by and among the Sponsor, HSBC and the Trustee evidencing the assignment of the HSBC Servicing Agreement to the Trust, attached hereto as Exhibit R-3.

HSBC Servicing Agreement : The Amended and Restated Purchase, Warranties and Servicing Agreement, dated as of September 1, 2005, between the Sponsor and HSBC, as amended, attached hereto as Exhibit Q-3, as modified by the HSBC Assignment Agreement.

Indemnified Persons : The Trustee, the Master Servicer, the Company, the Trust Fund and the Securities Administrator and their officers, directors, agents and employees and, with respect to the Trustee, any separate co-trustee and its officers, directors, agents and employees.

Individual Certificate : Any Private Certificate registered in the name of the Holder other than the Depository or its nominee.

Initial Certificate Principal Balance : With respect to any Certificate, the Certificate Principal Balance of such Certificate or any predecessor Certificate on the Closing Date.

Insurance Agreement : The Insurance and Indemnity Agreement dated as of January 31, 2006 among the Insurer, the Sponsor, the Depositor and the Trustee.

Insurance Policy : With respect to any Mortgage Loan included in the Trust Fund, any insurance policy or LPMI Policy, including all riders and endorsements thereto in effect with respect to such Mortgage Loan, including any replacement policy or policies for any Insurance Policies.

Insurance Proceeds : Proceeds paid in respect of the Mortgage Loans pursuant to any Insurance Policy or any other insurance policy covering a Mortgage Loan, to the extent such proceeds are payable to the mortgagee under the Mortgage, the Company, the related Servicer or the trustee under the deed of trust and are not applied to the restoration of the related Mortgaged Property or released to the Mortgagor in accordance with the procedures that the Company or the related Servicer would follow in servicing mortgage loans held for its own account, in each case other than any amount included in such Insurance Proceeds in respect of Insured Expenses.

Insured Amounts : With respect to the Class I-A-2 Certificates (1) any Deficiency Amount and (2) any Preference Amount.

Insured Expenses : Expenses covered by an Insurance Policy or any other insurance policy with respect to the Mortgage Loans.

Insurer : Financial Guaranty Insurance Company, a stock insurance corporation organized and created under the laws of the State of New York, or any successor thereto.

Insurer Default : The existence and continuance of any of the following: (a) The Insurer fails to make a payment required under the Policy in accordance with its terms; or (b)(i) the Insurer (A) files any petition or commences any case or proceeding under any provision or chapter of the Bankruptcy Code, the New York Insurance Law or any other similar federal or state law relating to insolvency, bankruptcy, rehabilitation, liquidation or reorganization, (B) makes a general assignment for the benefit of its creditors, or (C) has an order for relief entered against it under the Bankruptcy Code, the New York Insurance Law or any other similar federal or state law relating to insolvency, bankruptcy, rehabilitation, liquidation or reorganization that is final and nonappealable; or (ii) a court of competent jurisdiction, the New York Department of Insurance or other competent regulatory authority enters a final and nonappealable order, judgment or decree (A) appointing a custodian, trustee, agent or receiver for the Insurer or for all or any material portion of its property or (B) authorizing the taking of possession by a custodian, trustee, agent or receiver of the Insurer (or the taking of possession of all or any material portion of the property of the Insurer).

Insurer Premium Amount : With respect to the Policy and each Distribution Date, an amount equal to the product of the applicable Insurer Premium Rate and the related Certificate Principal Balance of the Class I-A-2 Certificates immediately prior to such Distribution Date.

Insurer Premium Rate : A percentage equal to one-twelfth (1/12) of 0.07% per annum.

Interest Accrual Period : With respect to any Distribution Date and the Class I-A-1, Class I-A-2, Class II-1A-1, Class II-1A-2, Class II-2A-1, Class II-2A-2, Class II-1X and Class II-B Certificates, the calendar month immediately preceding the calendar month in which such Distribution Date occurs. With respect to any Distribution Date and the Class I-M and Class I-B Certificates, the period from and including the 25 ^th day of the calendar month preceding the month in which such Distribution Date occurs (or, with respect to the first Interest Accrual Period for the Class I-M and Class I-B Certificates, the Closing Date) to and including the 24 ^th day of the calendar month in which such Distribution Date occurs. The Class R, Class P and Class II-PO Certificates are not entitled to distributions of interest and do not have an Interest Accrual Period.

Interest Determination Date : Shall mean the second LIBOR Business Day preceding the commencement of each Interest Accrual Period.

Interest Funds : For any Distribution Date and each Loan Group, (i) the sum, without duplication, of (a) all scheduled interest during the related Due Period with respect to the related Mortgage Loans less the Servicing Fee and the LPMI Fee, if any, (b) all Advances relating to interest with respect to the related Mortgage Loans remitted by the related Servicer or Master Servicer, as applicable, on or prior to the related Remittance Date, (c) all Compensating Interest with respect to the related Mortgage Loans required to be remitted by the Company or the Master Servicer pursuant to this Agreement or the related Servicer pursuant to the related Servicing Agreement with respect to such Distribution Date, (d) Liquidation Proceeds and Subsequent Recoveries with respect to the related Mortgage Loans collected during the related Prepayment Period (to the extent such Liquidation Proceeds and Subsequent Recoveries relate to interest), (e) all amounts relating to interest with respect to each Mortgage Loan in the related Loan Group repurchased by the Sponsor pursuant to Sections 2.02 and 2.03 and by EMC pursuant to Section 4.21 and (f) all amounts in respect of interest in respect of the related Loan Group paid by the Master Servicer pursuant to Section 11.01, in each case to the extent remitted by the Company or the related Servicer, as applicable, to the Distribution Account pursuant to this Agreement or the related Servicing Agreement and (g) the interest portion of any proceeds received from the exercise of an Optional Termination pursuant to Section 11.01 minus (ii) all amounts in respect of the related Loan Group required to be reimbursed pursuant to Sections 5.02, 5.05 and 5.09 or as otherwise set forth in this Agreement.

Interest Only Certificates : The Class II-1X Certificates and Class II-2X Certificates.

Interest Rate Cap : With respect to the Class I-A-1 Certificates and Class I-A-2 Certificates, the weighted average of the Net Mortgage Rates of the Mortgage Loans in Loan Group I, and in the case of the Class I-A-2 Certificates, minus the Premium Rate payable to the Insurer for the Policy. The Interest Rate Cap with respect to the Class I-M Certificates and Class I-B Certificates will be equal to the lesser of (a) 10.00% per annum and (b) the weighted average of the Net Mortgage Rates of the Mortgage Loans in Loan Group I, in each case, adjusted for the actual number of days elapsed in the related Interest Accrual Period.

For federal income tax purposes, the Interest Rate Cap shall equal (i) with respect to each of the Class I-M Certificates and Class I-B Certificates, a rate equivalent to the foregoing for each such Certificate, expressed as the lesser of (a) 10.00% per annum and (b) the weighted average of the Uncertificated REMIC I Pass-Through Rates on the REMIC I Regular Interests (other than REMIC I Regular Interest I-P) (adjusted for the actual number of days elapsed in the related Interest Accrual Period), and (ii) with respect to each of the Class I-A Certificates, a rate equivalent to the foregoing for each such Certificate, calculated using the weighted average of the Uncertificated REMIC I Pass-Through Rates on the REMIC I Regular Interests (other than REMIC I Regular Interest I-P) in place of the weighted average of the Net Mortgage Rates of the Mortgage Loans in Loan Group I.

Interest Shortfall : With respect to any Distribution Date, the aggregate shortfall, if any, in collections of interest (adjusted to the related Net Mortgage Rates) on the related Mortgage Loans resulting from (a) Principal Prepayments with respect to the related Loan Group in full received during the related Prepayment Period, (b) the partial Principal Prepayments with respect to the related Loan Group received during the related Prepayment Period to the extent applied prior to the Due Date in the month of the Distribution Date and (c) interest payments on the related Loan Group being limited pursuant to the provisions of the Relief Act or similar state laws.

Issuing Entity : Bear Stearns Asset Backed Securities I Trust 2006-AC1.

Latest Possible Maturity Date : With respect to the Group I Certificates (other than the Class I-R-1 Certificates), the Distribution Date following the final scheduled maturity date of the Mortgage Loan in the portion of the Trust Fund consisting of Loan Group I having the latest scheduled maturity date as of the Cut-off Date, and with respect to the Group II Certificates (other than the Class II-R Certificates), the Distribution Date following the final scheduled maturity date of the Mortgage Loan in the portion of the Trust Fund consisting of Loan Group II having the latest scheduled maturity date as of the Cut-off Date. For purposes of the Treasury regulations under Sections 860A through 860G of the Code, the latest possible maturity date of each Regular Interest issued by REMIC I, REMIC II and REMIC III shall be the Latest Possible Maturity Date applicable to the Certificates for the related portion of the Trust Fund.

LIBOR Business Day : Shall mean a day on which banks are open for dealing in foreign currency and exchange in London and New York City.

LIBOR Certificates : Any of the Class I-M and Class I-B Certificates.

Liquidated Loan : With respect to any Distribution Date, a defaulted Mortgage Loan that has been liquidated through deed-in-lieu of foreclosure, foreclosure sale, trustee’s sale or other realization as provided by applicable law governing the real property subject to the related Mortgage and any security agreements and as to which the Company or the related Servicer has made a Final Recovery Determination with respect thereto.

Liquidation Proceeds : Amounts, other than Insurance Proceeds, received in connection with the partial or complete liquidation of a Mortgage Loan, whether through trustee’s sale, foreclosure sale or otherwise, or in connection with any condemnation or partial release of a Mortgaged Property and any other proceeds received with respect to an REO Property, less the sum of related unreimbursed Advances, Servicing Fees and Servicing Advances and all expenses of liquidation, including property protection expenses and foreclosure and sale costs, including court and reasonable attorneys fees.

Loan Group : Any of Loan Group I or Loan Group II.

Loan Group I : The Mortgage Loans included as part of Loan Group I on the Mortgage Loan Schedule.

Loan Group II : The Mortgage Loans included as part of Loan Group II on the Mortgage Loan Schedule.

Loan Group II-1 : The Mortgage Loans included as part of Loan Group II-1 on the Mortgage Loan Schedule.

Loan Group II-2 : The Mortgage Loans included as part of Loan Group II-2 on the Mortgage Loan Schedule.

Loan-to-Value Ratio : The fraction, expressed as a percentage, the numerator of which is the original principal balance of the related Mortgage Loan and the denominator of which is the Appraised Value of the related Mortgaged Property.

Loss Allocation Limitation : The meaning specified in Section 6.05(c) hereof.

LPMI Fee : Shall mean the fee payable to the insurer for each Mortgage Loan subject to an LPMI Policy as set forth in such LPMI Policy and on the Mortgage Loan Schedule.

LPMI Policy : A policy of mortgage guaranty insurance issued by an insurer meeting the requirements of Fannie Mae and Freddie Mac in which the Company or the related Servicer of the related Mortgage Loan is responsible for the payment of the LPMI Fee thereunder from collections on the related Mortgage Loan.

Majority Class I-C Certificateholder : Shall mean the Holder of a 50.01% or greater Percentage Interest in the Class I-C Certificates.

Master Servicer : Wells Fargo Bank, National Association, in its capacity as master servicer, and its successors and assigns.

Master Servicing Compensation : For any Distribution Date, the Master Servicing Fee for such Distribution Date and any amounts earned on permitted investments in the Distribution Account.

Master Servicing Fee : As to each Mortgage Loan and any Distribution Date, an amount equal to 1/12th of the Master Servicing Fee Rate multiplied by the Stated Principal Balance of such Mortgage Loan as of the Due Date in the month preceding the month in which such Distribution Date occurs.

Master Servicing Fee Rate : 0.001% per annum.

Master Servicer Information : As defined in Section 4.18(b).

MERS : Mortgage Electronic Registration Systems, Inc., a corporation organized and existing under the laws of the State of Delaware, or any successor thereto.

MERS® System : The system of recording transfers of Mortgages electronically maintained by MERS.

MIN : The Mortgage Identification Number for Mortgage Loans registered with MERS on the MERS® System.

MOM Loan : With respect to any Mortgage Loan, MERS acting as the mortgagee of such Mortgage Loan, solely as nominee for the originator of such Mortgage Loan and its successors and assigns, at the origination thereof.

Monthly Interest Distributable Amount : With respect to the Group I Certificates (other than the Class I-P Certificates and Class I-R-1 Certificates) for any Distribution Date, means an amount equal to the interest accrued during the related Interest Accrual Period at the applicable Pass-Through Rate on the Certificate Principal Balance (or Notional Amount) of such Certificate immediately prior to such Distribution Date less such Certificate’s share of any Net Interest Shortfalls. The interest portion of Realized Losses for the Mortgage Loans in Loan Group I shall be allocated to such Certificate pursuant to Section 1.02. The Monthly Interest Distributable Amount with respect to the Class I-A Certificates and Class I-C Certificates is calculated on the basis of a 360-day year consisting of twelve 30-day months. The Monthly Interest Distributable Amount with respect to the Class I-M Certificates and Class I-B Certificates is calculated on the basis of a 360-day year and the actual number of days elapsed during the related Interest Accrual Period. No Monthly Interest Distributable Amount shall be payable with respect to any Class of Certificates after the Distribution Date on which the outstanding Certificate Principal Balance (or Notional Amount) of such Certificate has been reduced to zero.

Monthly Statement : The statement delivered pursuant to Section 6.06.

Moody’s : Moody’s Investors Service, Inc.

Mortgage : The mortgage, deed of trust or other instrument creating a first lien on or first priority ownership interest in an estate in fee simple in real property securing a Mortgage Note.

Mortgage File : The mortgage documents listed in Section 2.01 hereof pertaining to a particular Mortgage Loan and any additional documents delivered to the Trustee or Custodian on its behalf to be added to the Mortgage File pursuant to this Agreement.

Mortgage Loans : Such of the Mortgage Loans transferred and assigned to the Trustee pursuant to the provisions hereof, as from time to time are held as a part of the Trust Fund (including any REO Property), the mortgage loans so held being identified in the Mortgage Loan Schedule, notwithstanding foreclosure or other acquisition of title of the related Mortgaged Property. Any mortgage loan that was intended by the parties hereto to be transferred to the Trust Fund as indicated by such Mortgage Loan Schedule which is in fact not so transferred for any reason including, without limitation, a breach of the representation contained in Section 2.03(b)(v) hereof, shall continue to be a Mortgage Loan hereunder until the Purchase Price with respect thereto has been paid to the Trust Fund.

Mortgage Loan Purchase Agreement : Shall mean the Mortgage Loan Purchase Agreement, dated as of January 31, 2006, between the Sponsor, as seller and the Depositor, as purchaser.

Mortgage Loan Purchase Price : The price, calculated as set forth in Section 11.01, to be paid in connection with the repurchase of the Mortgage Loans pursuant to Section 11.01.

Mortgage Loan Schedule : The list of Mortgage Loans (as from time to time amended by the Seller to reflect the deletion of Deleted Mortgage Loans and the addition of Replacement Mortgage Loans pursuant to the provisions of this Agreement) transferred to the Trustee as part of the Trust Fund and from time to time subject to this Agreement, the initial Mortgage Loan Schedule being attached hereto as Exhibit B, setting forth the following information with respect to each Mortgage Loan:

Such schedule shall also set forth the aggregate Cut-off Date Principal Balance for all of the Mortgage Loans in each Loan Group.

Mortgage Note : The original executed note or other evidence of indebtedness of a Mortgagor under a Mortgage Loan.

Mortgage Rate : The annual rate of interest borne by a Mortgage Note.

Mortgaged Property : The underlying property securing a Mortgage Loan.

Mortgagor : The obligors on a Mortgage Note.

Net Interest Shortfalls : The Interest Shortfalls net of payments by the related Servicer or the Master Servicer in respect of Compensating Interest.

Net Monthly Excess Cashflow : With respect to any Distribution Date and Loan Group I, the sum of (a) any Group I Overcollateralization Release Amount for such Distribution Date and (b) the Remaining Excess Spread for Loan Group I for such Distribution Date.  

Net Mortgage Rate : As to each Mortgage Loan, and at any time, the per annum rate equal to the related Mortgage Rate less the sum of (i) the Servicing Fee Rate, (ii) the Master Servicing Fee Rate and (iii) the rate at which the LPMI Fee is calculated, if any.

Net WAC Rate Carryover Amount : With respect to each Class of Group I Offered Certificates and Class I-B-4 Certificates and any Distribution Date, an amount equal to the sum of (i) the excess, if any, of (x) the amount of interest such Class would have been entitled to receive on such Distribution Date if the Pass-Through Rate applicable to such Class would not have been reduced by the related Interest Rate Cap on such Distribution Date over (y) the amount of interest paid on such Distribution Date if the Pass-Through Rate is limited by the related Interest Rate Cap plus (ii) the related Net WAC Rate Carryover Amount for the previous Distribution Date not previously distributed together with interest thereon at a rate equal to the Pass-Through Rate for such Class for the most recently ended Interest Accrual Period.

Net WAC Reserve Fund : Shall mean the separate trust account created and maintained by the Securities Administrator pursuant to Section 6.08 hereof.

Net WAC Reserve Fund Deposit : With respect to the Net WAC Reserve Fund, an amount equal to $5,000, which the Depositor shall deposit into the Net WAC Reserve Fund pursuant to Section 6.08 hereof.

Non-Book-Entry Certificate : Any Certificate other than a Book-Entry Certificate.

Non-Discount Mortgage Loan : With respect to Loan Group II-1 or Loan Group II-2, any Mortgage Loan in such Loan Group with a Net Mortgage Rate greater than or equal to 5.50% or 6.00% per annum, respectively.

Non-PO Percentage : With respect to any Mortgage Loan in Loan Group II-1 or Loan Group II-2 with a Net Mortgage Rate less than 5.50% or 6.00% per annum, respectively, a fraction, expressed as a percentage, (x) the numerator of which is equal to the related Net Mortgage Rate, and (y) the denominator of which is equal to 5.50% or 6.00% per annum, respectively. With respect to Non-Discount Mortgage Loans, 100%.

Nonrecoverable Advance : Any portion of an Advance previously made or proposed to be made by the Company or the Master Servicer pursuant to this Agreement or the related Servicer pursuant to the related Servicing Agreement, that, in the good faith judgment of the Company, the Master Servicer or the related Servicer, will not or, in the case of a proposed advance, would not, be ultimately recoverable by it from the related Mortgagor, related Liquidation Proceeds, Insurance Proceeds or otherwise.

Notice of Nonpayment : Written notice in the form of Exhibit A to the Policy.

Notional Amount : (i) With respect to the Class II-1X Certificates, the aggregate Stated Principal Balance of the Mortgage Loans in Loan Group II-1 and (ii) with respect to the Class II-2X Certificates, the aggregate Stated Principal Balance of the Mortgage Loans in Loan Group II-2. For federal income tax purposes, however, the Notional Amount of the Class II-1X Certificates is an amount equal to the Uncertificated Notional Amount of REMIC II Regular Interest I-X, and the Notional Amount of the Class II-2X Certificates is an amount equal to the Uncertificated Notional Amount of REMIC II Regular Interest II-X.

With respect to the Class I-C Certificates and any Distribution Date, an amount equal to the aggregate Stated Principal Balance of the Mortgage Loans in Loan Group I. The initial Notional Amount of the Class I-C Certificates shall be $479,487,431.01. For federal income tax purposes, however, the Class I-C Certificates will have a Notional Amount equal to the aggregate Uncertificated Principal Balance of the REMIC I Regular Interests (other than REMIC I Regular Interest I-P).

Offered Certificates : Any of the Class I-A-1, Class I-A-2, Class I-M-1, Class I-M-2, Class I-M-3, Class I-B-1, Class I-B-2, Class I-B-3, Class II-1A-1, Class II-1A-2, Class II-2A-1, Class II-2A-2, Class II-1X, Class II-1PO, Class II-1R-1, Class II-1R-2, Class II-2PO, Class II-2X, Class II-B-1, Class II-B-2 and Class II-B-3.

Officer’s Certificate : A certificate (i) signed by the Chairman of the Board, the Vice Chairman of the Board, the President, a Vice President (however denominated), an Assistant Vice President, the Treasurer, the Secretary, or one of the assistant treasurers or assistant secretaries of the Depositor, the Seller, any Servicer or the Master Servicer (or any other officer customarily performing functions similar to those performed by any of the above designated officers and also to whom, with respect to a particular matter, such matter is referred because of such officer’s knowledge of and familiarity with a particular subject) or (ii), if provided for in this Agreement, signed by a Servicing Officer, as the case may be, and delivered to the Depositor, the Sponsor, the Securities Administrator, the Master Servicer and/or the Trustee, as the case may be, as required by this Agreement.

One-Month LIBOR : With respect to any Interest Accrual Period and the LIBOR Certificates, the rate determined by the Securities Administrator on the related Interest Determination Date on the basis of the rate for U.S. dollar deposits for one month that appears on Telerate Screen Page 3750 as of 11:00 a.m. (London time) on such Interest Determination Date. If such rate does not appear on such page (or such other page as may replace that page on that service, or if such service is no longer offered, such other service for displaying One-Month LIBOR or comparable rates as may be reasonably selected by the Securities Administrator), One-Month LIBOR for the applicable Interest Accrual Period will be the Reference Bank Rate. If no such quotations can be obtained by the Securities Administrator and no Reference Bank Rate is available, One-Month LIBOR shall be One-Month LIBOR applicable to the preceding Interest Accrual Period. The establishment of One-Month LIBOR on each Interest Determination Date by the Securities Administrator and the Securities Administrator’s calculation of the rate of interest applicable to the LIBOR Certificates for the related Interest Accrual Period shall, in the absence of manifest error, be final and binding.

Opinion of Counsel : A written opinion of counsel, who may be counsel for the Sponsor, the Depositor, the Company or the Master Servicer, reasonably acceptable to each addressee of such opinion; provided that with respect to Section 2.05, 8.05, 8.07 or 12.01, or the interpretation or application of the REMIC Provisions, such counsel must (i) in fact be independent of the Sponsor, Depositor, the Company and the Master Servicer, (ii) not have any direct financial interest in the Sponsor, Depositor, the Company or the Master Servicer or in any affiliate of either, and (iii) not be connected with the Sponsor, Depositor, the Company or the Master Servicer as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions.

Original Subordinate Principal Balance : As of any Distribution Date, shall mean the aggregate Certificate Principal Balance of the Group II Subordinate Certificates as of the Closing Date.

Original Value : The value of the property underlying a Mortgage Loan based, in the case of the purchase of the underlying Mortgaged Property, on the lower of an appraisal or the sales price of such property or, in the case of a refinancing, on an appraisal.

Originator : With respect to each Mortgage Loan, shall mean the originator set forth in the Mortgage Loan Schedule for such Mortgage Loan.

OTS : The Office of Thrift Supervision.

Outstanding : With respect to the Certificates as of any date of determination, all Certificates theretofore executed and authenticated under this Agreement except:

Outstanding Mortgage Loan : As of any date of determination, a Mortgage Loan with a Stated Principal Balance greater than zero that was not the subject of a Principal Prepayment in full, and that did not become a Liquidated Loan, prior to the end of the related Prepayment Period.

Ownership Interest : As to any Certificate, any ownership interest in such Certificate including any interest in such Certificate as the Holder thereof and any other interest therein, whether direct or indirect, legal or beneficial.

Pass-Through Rate : With respect to each Class of Certificates (other than the Class II-1PO, Class II-2PO, Class I-P, Class II-P and Class R Certificates), the Class I-A-1 Pass-Through Rate, Class I-A-2 Pass-Through Rate, Class I-M-1 Pass-Through Rate, Class I-M-2 Pass-Through Rate, Class I-M-3 Pass-Through Rate, Class I-B-1 Pass-Through Rate, Class I-B-2 Pass-Through Rate, Class I-B-3 Pass-Through Rate, Class I-B-4 Pass-Through Rate, Class I-C Pass-Through Rate, Class II-1A-1 Pass-Through Rate, Class II-1A-2 Pass-Through Rate, Class II-2A-1 Pass-Through Rate, Class II-2A-2 Pass-Through Rate, Class II-1X Pass-Through Rate, Class II-2X Pass-Through Rate or Class II-B Pass-Through Rate, as applicable.

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

Paying Agent : The Securities Administrator, in its capacity as paying agent, and its successors and assigns.

Percentage Interest : With respect to any Certificate of a specified Class, the Percentage Interest set forth on the face thereof or the percentage obtained by dividing the Denomination of such Certificate by the aggregate of the Denominations of all Certificates of the such Class.

Permitted Investments : At any time, any one or more of the following obligations and securities:

(i)   obligations of the United States or any agency thereof, provided such obligations are backed by the full faith and credit of the United States;

(ii)   general obligations of or obligations guaranteed by any state of the United States or the District of Columbia receiving the highest long-term debt rating of each Rating Agency, or such lower rating as will not result in the downgrading or withdrawal of the ratings then assigned to the Certificates by each Rating Agency;

(iii)   commercial or finance company paper which is then receiving the highest commercial or finance company paper rating of each Rating Agency, or such lower rating as will not result in the downgrading or withdrawal of the ratings then assigned to the Certificates by each Rating Agency;

(iv)   certificates of deposit, demand or time deposits, or bankers’ acceptances issued by any depository institution or trust company incorporated under the laws of the United States or of any state thereof and subject to supervision and examination by federal and/or state banking authorities (including the Trustee in its commercial banking capacity), provided that the commercial paper and/or long term unsecured debt obligations of such depository institution or trust company are then rated one of the two highest long-term and the highest short-term ratings of each such Rating Agency for such securities, or such lower ratings as will not result in the downgrading or withdrawal of the rating then assigned to the Certificates by any Rating Agency;

(v)   demand or time deposits or certificates of deposit issued by any bank or trust company or savings institution to the extent that such deposits are fully insured by the FDIC;

(vi)   guaranteed reinvestment agreements issued by any bank, insurance company or other corporation containing, at the time of the issuance of such agreements, such terms and conditions as will not result in the downgrading or withdrawal of the rating then assigned to the Certificates by any such Rating Agency;

(vii)   repurchase obligations with respect to any security described in clauses (i) and (ii) above, in either case entered into with a depository institution or trust company (acting as principal) described in clause (iv) above;

(viii)   securities (other than stripped bonds, stripped coupons or instruments sold at a purchase price in excess of 115% of the face amount thereof) bearing interest or sold at a discount issued by any corporation incorporated under the laws of the United States or any state thereof which, at the time of such investment, have one of the two highest long term ratings of each Rating Agency (except if the Rating Agency is Moody’s, such rating shall be the highest commercial paper rating of Moody’s for any such securities), or such lower rating as will not result in the downgrading or withdrawal of the rating then assigned to the Certificates by any Rating Agency, as evidenced by a signed writing delivered by each Rating Agency;

(ix)   interests in any money market fund (including any such fund managed or advised by the Trustee or Master Servicer or any affiliate thereof) which at the date of acquisition of the interests in such fund and throughout the time such interests are held in such fund has the highest applicable long term rating by each Rating Agency rating such fund or such lower rating as will not result in the downgrading or withdrawal of the ratings then assigned to the Certificates by each Rating Agency;

(x)   short term investment funds sponsored by any trust company or banking association incorporated under the laws of the United States or any state thereof (including any such fund managed or advised by the Trustee or any affiliate thereof) which on the date of acquisition has been rated by each Rating Agency in their respective highest applicable rating category or such lower rating as will not result in the downgrading or withdrawal of the ratings then assigned to the Certificates by each Rating Agency; and

(xi)   such other investments having a specified stated maturity and bearing interest or sold at a discount acceptable to each Rating Agency as will not result in the downgrading or withdrawal of the rating then assigned to the Certificates by any Rating Agency, as evidenced by a signed writing delivered by each Rating Agency;

provided, that no such instrument shall be a Permitted Investment if such instrument (i) evidences the right to receive interest only payments with respect to the obligations underlying such instrument, (ii) is purchased at a premium or (iii) is purchased at a deep discount; provided further that no such instrument shall be a Permitted Investment (A) if such instrument evidences principal and interest payments derived from obligations underlying such instrument and the interest payments with respect to such instrument provide a yield to maturity of greater than 120% of the yield to maturity at par of such underlying obligations, or (B) if it may be redeemed at a price below the purchase price (the foregoing clause (B) not to apply to investments in units of money market funds pursuant to clause (vi) above); provided further that no amount beneficially owned by any REMIC may be invested in investments (other than money market funds) treated as equity interests for federal income tax purposes, unless the Master Servicer shall receive an Opinion of Counsel, at the expense of the Master Servicer, to the effect that such investment will not adversely affect the status of any such REMIC as a REMIC under the Code or result in imposition of a tax on any such REMIC. Permitted Investments that are subject to prepayment or call may not be purchased at a price in excess of par.

Permitted Transferee : Any Person (x) other than (i) the United States, any State or political subdivision thereof, any possession of the United States or any agency or instrumentality of any of the foregoing, (ii) a foreign government, International Organization or any agency or instrumentality of either of the foregoing, (iii) an organization (except certain farmers’ cooperatives described in section 521 of the Code) that is exempt from tax imposed by Chapter 1 of the Code (including the tax imposed by section 511 of the Code on unrelated business taxable income) on any excess inclusions (as defined in section 860E(c)(1) of the Code) with respect to any Residual Certificate, (iv) rural electric and telephone cooperatives described in section 1381(a)(2)(C) of the Code or (v) an electing large partnership within the meaning of Section 775(a) of the Code, (y) that is a citizen or resident of the United States, a corporation, partnership (other than a partnership that has any direct or indirect foreign partners) or other entity (treated as a corporation or a partnership for federal income tax purposes), created or organized in or under the laws of the United States, any State thereof or the District of Columbia, an estate whose income from sources without the United States is includible in gross income for United States federal income tax purposes regardless of its connection with the conduct of a trade or business within the United States, or a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have authority to control all substantial decisions of the trust or if it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a United States person and (z) other than any other Person so designated by the Trustee or Securities Administrator based upon an Opinion of Counsel addressed to the Trustee or Securities Administrator (which shall not be an expense of the Trustee or Securities Administrator) that states that the Transfer of an Ownership Interest in a Residual Certificate to such Person may cause REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC at any time that any Certificates are Outstanding. The terms “United States,” “State” and “International Organization” shall have the meanings set forth in section 7701 of the Code or successor provisions. A corporation will not be treated as an instrumentality of the United States or of any State or political subdivision thereof for these purposes if all of its activities are subject to tax and, with the exception of Freddie Mac, a majority of its board of directors is not selected by such government unit.

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

PHH : PHH Mortgage Corporation, and any successor thereto.

PHH Assignment Agreement : The Assignment, Assumption and Recognition Agreement, dated as of January 31, 2006, by and among the Sponsor, PHH, Bishop’s Gate and the Trustee evidencing the assignment of the PHH Servicing Agreement to the Trust, attached hereto as Exhibit R-4.

PHH Loans : Those Mortgage Loans subject to this Agreement which were purchased by the Sponsor from PHH and Bishop’s Gate pursuant to the PHH Servicing Agreement.

PHH Servicing Agreement : The Purchase, Warranties and Servicing Agreement, dated as of October 23, 2001, by and among the Seller, PHH, as successor to Cendant Mortgage Corporation, and Bishop’s Gate, as amended, attached hereto as Exhibit Q-4, as modified by the PHH Assignment Agreement.

Policy : The Financial Guaranty Insurance Policy, policy number 06030015, including any endorsements thereto, issued by the Insurer with respect to the Class I-A-2 Certificates, in the form attached hereto as Exhibit M.

Policy Payments Account : The separate Eligible Account created and maintained by the Securities Administrator pursuant to Section 6.10(c) in the name of the Trustee for the benefit of the Class I-A-2 Certificateholders and designated “U.S. Bank National Association, in trust for registered holders of Bear Stearns Asset Backed Securities I Trust 2006-AC1, Asset-Backed Certificates, Series 2006-AC1, Class I-A-2.” Funds in the Policy Payments Account shall be held in trust for the Class I-A-2 Certificateholders for the uses and purposes set forth in this Agreement.

PO Percentage : With respect to Loan Group II-1 and any related Discount Mortgage Loan a fraction, expressed as a percentage, equal to 5.50% per annum minus the Net Mortgage Rate thereof divided by 5.50% per annum, and with respect to Loan Group II-2 and any related Discount Mortgage Loan a fraction, expressed as a percentage, equal to 6.00% per annum minus the Net Mortgage Rate thereof divided by 6.00% per annum.

Preference Amount : The portion or all of any amount that is insured under the Policy that was previously distributed to a Class I-A-2 Certificateholder and is recoverable and recovered from such Class I-A-2 Certificateholder as a voidable preference by a trustee in bankruptcy pursuant to the U.S. Bankruptcy Code, pursuant to a final non-appealable order of a court exercising proper jurisdiction in an insolvency proceeding.

Prepayment Assumption : The applicable rate of prepayment, as described in the Prospectus Supplement relating to each Class of Offered Certificates.

Prepayment Charge : Any prepayment premium, penalty or charge payable by a Mortgagor in connection with any Principal Prepayment on a Mortgage Loan pursuant to the terms of the related Mortgage Note.

Prepayment Charge Waiver Amount : Any amount paid by the Company or related Servicer to the Master Servicer in respect of waived Prepayment Charges pursuant to Section 5.01(a).

Prepayment Interest Excess : With respect to any Distribution Date, for each EMC Mortgage Loan that was the subject of a Principal Prepayment in full or in part during the portion of the related Prepayment Period occurring between the first day of the calendar month in which such Distribution Date occurs and the Determination Date of the calendar month in which such Distribution Date occurs, an amount equal to interest (to the extent received) at the applicable Net Mortgage Rate on the amount of such Principal Prepayment for the number of days commencing on the first day of the calendar month in which such Distribution Date occurs and ending on the last date through which interest is collected from the related Mortgagor.

Prepayment Interest Shortfall : With respect to any Distribution Date, for each Mortgage Loan that was the subject of a partial Principal Prepayment, a Principal Prepayment in full, or that became a Liquidated Loan during the related Prepayment Period, (other than a Principal Prepayment in full resulting from the purchase of a Mortgage Loan pursuant to Section 2.02, 2.03, 4.21 or 11.01 hereof), the amount, if any, by which (i) one month’s interest at the applicable Net Mortgage Rate on the Stated Principal Balance of such Mortgage Loan immediately prior to such prepayment (or liquidation) or in the case of a partial Principal Prepayment on the amount of such prepayment (or liquidation proceeds) exceeds (ii) the amount of interest paid or collected in connection with such Principal Prepayment or such liquidation proceeds less the sum of (a) the related Servicing Fee and (b) the LPMI Fee, if any.

Prepayment Period : As to any Distribution Date and (i) each EMC Mortgage Loan, the period commencing on the 16 ^th day of the month prior to the month in which the related Distribution Date occurs and ending on the 15 ^th day of the month in which such Distribution Date occurs and (ii) any other Mortgage Loan, the period set forth in the related Servicing Agreement.

Primary Mortgage Insurance Policy : Any primary mortgage guaranty insurance policy issued in connection with a Mortgage Loan which provides compensation to a Mortgage Note holder in the event of default by the obligor under such Mortgage Note or the related security instrument, if any or any replacement policy therefor through the related Interest Accrual Period for such Class relating to a Distribution Date.

Principal Distribution Amount : With respect to Loan Group I and any Distribution Date, the sum of (a) the Group I Basic Principal Distribution Amount for such Distribution Date and (b) any Group I Extra Principal Distribution Amount for such Distribution Date.

Principal Funds : With respect to any Distribution Date and each Loan Group, (i) the sum, without duplication, of (a) all scheduled principal collected on the related Mortgage Loans during the related Due Period, (b) all Advances relating to principal made with respect to the Mortgage Loans in the related Loan Group remitted by the related Servicer or Master Servicer, as applicable, on or prior to the Remittance Date, (c) Principal Prepayments with respect to the Mortgage Loans in the related Loan Group exclusive of Prepayment Charges or penalties collected during the related Prepayment Period, (d) the Stated Principal Balance of each Mortgage Loan in the related Loan Group that was repurchased by the Sponsor pursuant to Sections 2.02 or 2.03 or by EMC pursuant to Section 4.21, (e) the aggregate of all Substitution Adjustment Amounts with respect to the related Mortgage Loans for the related Determination Date in connection with the substitution of related Mortgage Loans pursuant to Section 2.03(d), (e) all Liquidation Proceeds and Subsequent Recoveries with respect to the Mortgage Loans in the related Loan Group collected during the related Prepayment Period (to the extent such Liquidation Proceeds and Subsequent Recoveries relate to principal) and remitted by the Company or the related Servicer to the Distribution Account pursuant to this Agreement or the related Servicing Agreement and (f) amounts in respect of principal paid by the Majority Class I-C Certificateholder or EMC and its designee, as applicable, pursuant to Section 11.01 minus (ii) all related amounts required to be reimbursed pursuant to Sections 5.02, 5.05 and 5.09 or as otherwise set forth in this Agreement.

Principal Remittance Amount : With respect to each Distribution Date and Loan Group I, the sum of the amounts listed in clauses (a) through (e) of the definition of Principal Funds.

Principal Prepayment : Any Mortgagor payment or other recovery of (or proceeds with respect to) principal on a Mortgage Loan (including loans purchased or repurchased under Sections 2.02, 2.03, 4.21 and 11.01 hereof) that is received in advance of its scheduled Due Date and is not accompanied by an amount as to interest representing scheduled interest due on any date or dates in any month or months subsequent to the month of prepayment. Partial Principal Prepayments shall be applied by the Company or the related Servicer, as appropriate, in accordance with the terms of the related Mortgage Note.

Private Certificates : Any of the Class I-B-4, Class II-B-4, Class II-B-5, Class II-B-6, Class I-C, Class II-P and Class I-R-1 Certificates.

Prospectus Supplement : The Prospectus Supplement dated January 31, 2006 relating to the public offering of the Offered Certificates.

Protected Account : Each account established and maintained by the Company with respect to receipts on the Mortgage Loans and REO Property in accordance with Section 5.01 hereof or by the related Servicer in accordance with the related Servicing Agreement.

PUD : A Planned Unit Development.

Purchase Price : With respect to any Mortgage Loan required to be repurchased by the Sponsor pursuant to Section 2.02 or 2.03 hereof, an amount equal to the sum of (i) 100% of the outstanding principal balance of the Mortgage Loan as of the date of such purchase plus (ii) accrued interest thereon at the applicable Mortgage Rate through the first day of the month in which the Purchase Price is to be distributed to Certificateholders, reduced by any portion of the Servicing Fee, Servicing Advances and Advances payable to the purchaser of the Mortgage Loan plus and (iii) any costs and damages (if any) incurred by the Trust in connection with any violation of such Mortgage Loan of any predatory lending laws.

Rating Agency : Each of Moody’s and S&P. If any such organization or its successor is no longer in existence, “Rating Agency” shall be a nationally recognized statistical rating organization, or other comparable Person, designated by the Depositor, notice of which designation shall be given to the Trustee. References herein to a given rating category of a Rating Agency shall mean such rating category without giving effect to any modifiers.

Realized Loss : With respect to each Mortgage Loan as to which a Final Recovery Determination has been made, an amount (not less than zero) equal to (i) the unpaid principal balance of such Mortgage Loan as of the commencement of the calendar month in which the Final Recovery Determination was made, plus (ii) accrued interest from the Due Date as to which interest was last paid by the Mortgagor through the end of the calendar month in which such Final Recovery Determination was made, calculated in the case of each calendar month during such period (A) at an annual rate equal to the annual rate at which interest was then accruing on such Mortgage Loan and (B) on a principal amount equal to the Stated Principal Balance of such Mortgage Loan as of the close of business on the Distribution Date during such calendar month, minus (v) the proceeds, if any, received in respect of such Mortgage Loan during the calendar month in which such Final Recovery Determination was made, net of amounts that are payable therefrom to the Company pursuant to this Agreement or the applicable Servicer pursuant to the related Servicing Agreement. In addition, to the extent the Master Servicer receives Subsequent Recoveries with respect to any Mortgage Loan, the amount of the Realized Loss with respect to that Mortgage Loan will be reduced to the extent such recoveries are distributed to any Class of related Subordinate Certificates or applied to increase Excess Spread on the related Loan Group on any Distribution Date.

With respect to any REO Property as to which a Final Recovery Determination has been made, an amount (not less than zero) equal to (i) the unpaid principal balance of the related Mortgage Loan as of the date of acquisition of such REO Property on behalf of REMIC I or REMIC II, as applicable, plus (ii) accrued interest from the Due Date as to which interest was last paid by the Mortgagor in respect of the related Mortgage Loan through the end of the calendar month immediately preceding the calendar month in which such REO Property was acquired, calculated in the case of each calendar month during such period (A) at an annual rate equal to the annual rate at which interest was then accruing on the related Mortgage Loan and (B) on a principal amount equal to the Stated Principal Balance of the related Mortgage Loan as of the close of business on the Distribution Date during such calendar month, plus (iii) REO Imputed Interest for such REO Property for each calendar month commencing with the calendar month in which such REO Property was acquired and ending with the calendar month in which such Final Recovery Determination was made, minus (iv) the aggregate of all unreimbursed Advances and Servicing Advances.

With respect to each Mortgage Loan which has become the subject of a Deficient Valuation, the difference between the principal balance of the Mortgage Loan outstanding immediately prior to such Deficient Valuation and the principal balance of the Mortgage Loan as reduced by the Deficient Valuation.

With respect to each Mortgage Loan which has become the subject of a Debt Service Reduction, the portion, if any, of the reduction in each affected Monthly Payment attributable to a reduction in the Mortgage Rate imposed by a court of competent jurisdiction. Each such Realized Loss shall be deemed to have been incurred on the Due Date for each affected Monthly Payment.

Record Date : With respect to all of the Certificates (other than the Class I-M Certificates and the Class I-B Certificates) and any Distribution Date, the close of business on the last Business Day of the month preceding the month in which such Distribution Date occurs. With respect to any Distribution Date and the Class I-M Certificates and Class I-B Certificates, so long as such Certificates are Book-Entry Certificates, the Business Day preceding such Distribution Date, and otherwise, the close of business on the last Business Day of the month preceding the month in which such Distribution Date occurs.

Reference Banks : Shall mean leading banks selected by the Securities Administrator and engaged in transactions in Eurodollar deposits in the international Eurocurrency market (i) with an established place of business in London, (ii) which have been designated as such by the Securities Administrator and (iii) which are not controlling, controlled by, or under common control with, the Depositor, the Sponsor or the Master Servicer.

Reference Bank Rate : With respect to any Interest Accrual Period shall mean the arithmetic mean, rounded upwards, if necessary, to the nearest whole multiple of 0.03125%, of the offered rates for United States dollar deposits for one month that are quoted by the Reference Banks as of 11:00 a.m., New York City time, on the related Interest Determination Date to prime banks in the London interbank market for a period of one month in an amount approximately equal to the aggregate Certificate Principal Balance of the LIBOR Certificates for such Interest Accrual Period, provided that at least two such Reference Banks provide such rate. If fewer than two offered rates appear, the Reference Bank Rate will be the arithmetic mean, rounded upwards, if necessary, to the nearest whole multiple of 0.03125%, of the rates quoted by one or more major banks in New York City, selected by the Securities Administrator, as of 11:00 a.m., New York City time, on such date for loans in United States dollars to leading European banks for a period of one month in amounts approximately equal to the aggregate Certificate Principal Balance of the LIBOR Certificates for such Interest Accrual Period.

Regular Certificate : Any Certificate other than a Residual Certificate.

Regulation AB : Subpart 229.1100 - Asset Backed Securities (Regulation AB), 17 C.F.R. §§229.1100-229.1123, as such may be amended from time to time, and subject to such clarification and interpretation as have been provided by the Commission in the adopting release (Asset-Backed Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff of the Commission, or as may be provided by the Commission or its staff from time to time.

Reimbursement Amount : The sum of (a) the aggregate unreimbursed amount of any payments made by the Insurer under the Policy, together with interest on such amount from the date of payment by the Insurer until paid in full at the Late Payment Rate (as defined in the Insurance Agreement) and (b) any other amounts owed to the Insurer under the Insurance Agreement or pursuant to Section 6.10 of this Agreement.

Relief Act : The Servicemembers Civil Relief Act, as amended, or any similar state or local law.

Remaining Excess Spread : With respect to Loan Group I and any Distribution Date, the Excess Spread for Loan Group I, less the sum of (i) any Group I Overcollateralization Increase Amount, in each case, for such Distribution Date and (ii) any unpaid Reimbursement Amount related to interest or principal draws not previously paid to the Insurer other than pursuant to Section 6.10.

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

REMIC I : The segregated pool of assets described in Section 6.07(a).

REMIC I Interest Loss Allocation Amount : With respect to any Distribution Date, an amount equal to (a) the product of (i) the aggregate Stated Principal Balance of Loan Group I and related REO Properties then outstanding and (ii) the Uncertificated REMIC I Pass-Through Rate for REMIC I Regular Interest AA minus the REMIC I Marker Rate, divided by (b) 12.

REMIC I Marker Rate : With respect to the Class I-C Certificates and any Distribution Date, a per annum rate equal to two (2) times the weighted average of the Uncertificated REMIC I Pass-Through Rates for the REMIC I Regular Interests (other than REMIC I Regular Interests AA and I-P), with the rate on each such REMIC I Regular Interest (other than REMIC I Regular Interest ZZ) subject to a cap equal to the Pass-Through Rate for the Corresponding Certificate and with the rate on REMIC I Regular Interest ZZ subject to a cap of zero for the purpose of this calculation; provided, however, that solely for this purpose, the related cap with respect to each REMIC I Regular Interest (other than REMIC I Regular Interests AA, ZZ and I-P) shall be multiplied by a fraction, the numerator of which is 30 and the denominator of which is the actual number of days in the Interest Accrual Period.

REMIC I Maximum Interest Deferral Amount : With respect to any Distribution Date, the excess of (i) accrued interest at the Uncertificated REMIC I Pass-Through Rate applicable to REMIC I Regular Interest ZZ for such Distribution Date on a balance equal to the Uncertificated Principal Balance of REMIC I Regular Interest ZZ minus the REMIC I Overcollateralization Amount, in each case for such Distribution Date, over (ii) the Uncertificated Accrued Interest on each REMIC I Regular Interest for which a Class I-A, Class I-M or Class I-B Certificate is a Corresponding Certificate for such Distribution Date, with the rate on each such REMIC I Regular Interest subject to a cap equal to the Pass-Through Rate for the Corresponding Certificate; provided, however, that solely for this purpose, the related cap with respect to each REMIC I Regular Interest (other than REMIC I Regular Interests AA, ZZ and I-P) shall be multiplied by a fraction, the numerator of which is 30 and the denominator of which is the actual number of days in the Interest Accrual Period.

REMIC I Overcollateralization Amount : With respect to any date of determination, (i) 1% of the aggregate Uncertificated Principal Balance of the REMIC I Regular Interests (other than REMIC I Regular Interest I-P) minus (ii) the aggregate Uncertificated Principal Balance of each REMIC I Regular Interest for which a Class I-A, Class I-M or Class I-B Certificate is a Corresponding Certificate, in each case as of such date of determination.

REMIC I Overcollateralization Target Amount : 1% of the Group I Overcollateralization Target Amount.

REMIC I Principal Loss Allocation Amount : With respect to any Distribution Date, an amount equal to the product of (i) the aggregate Stated Principal Balance of Loan Group I and related REO Properties then outstanding and (ii) 1 minus a fraction, the numerator of which is two (2) times the aggregate Uncertificated Principal Balance of each REMIC I Regular Interest for which a Class I-A, Class I-M or Class I-B Certificate is a Corresponding Certificate, and the denominator of which is the aggregate Uncertificated Principal Balance of each REMIC I Regular Interest for which a Class I-A, Class I-M or Class I-B Certificate is a Corresponding Certificate and REMIC I Regular Interest ZZ.

REMIC I Regular Interests : REMIC I Regular Interest AA, REMIC I Regular Interest I-A-1, REMIC I Regular Interest I-A-2, REMIC I Regular Interest I-M-1, REMIC I Regular Interest I-M-2, REMIC I Regular Interest I-M-3, REMIC I Regular Interest I-B-1, REMIC I Regular Interest I-B-2, REMIC I Regular Interest I-B-3, REMIC I Regular Interest I-B-4, REMIC I Regular Interest ZZ and REMIC I Regular Interest I-P.

REMIC I Regular Interest AA: One of the separate non-certificated beneficial ownership interests in REMIC I issued hereunder and designated as a Regular Interest in REMIC I. REMIC I Regular Interest AA shall accrue interest at the related Uncertificated REMIC I Pass-Through Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Principal Balance as set forth in the Preliminary Statement hereto.

REMIC I Regular Interest I-A-1 : One of the separate non-certificated beneficial ownership interests in REMIC I issued hereunder and designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-A-1 shall accrue interest at the related Uncertificated REMIC I Pass-Through Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Principal Balance as set forth in the Preliminary Statement hereto.

REMIC I Regular Interest I-A-2 : One of the separate non-certificated beneficial ownership interests in REMIC I issued hereunder and designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-A-2 shall accrue interest at the related Uncertificated REMIC I Pass-Through Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Principal Balance as set forth in the Preliminary Statement hereto.

REMIC I Regular Interest I-B-1 : One of the separate non-certificated beneficial ownership interests in REMIC I issued hereunder and designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-B-1 shall accrue interest at the related Uncertificated REMIC I Pass-Through Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Principal Balance as set forth in the Preliminary Statement hereto.

REMIC I Regular Interest I-B-2 : One of the separate non-certificated beneficial ownership interests in REMIC I issued hereunder and designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-B-2 shall accrue interest at the related Uncertificated REMIC I Pass-Through Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Principal Balance as set forth in the Preliminary Statement hereto.

REMIC I Regular Interest I-B-3 : One of the separate non-certificated beneficial ownership interests in REMIC I issued hereunder and designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-B-3 shall accrue interest at the related Uncertificated REMIC I Pass-Through Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Principal Balance as set forth in the Preliminary Statement hereto.

REMIC I Regular Interest I-B-4 : One of the separate non-certificated beneficial ownership interests in REMIC I issued hereunder and designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-B-4 shall accrue interest at the related Uncertificated REMIC I Pass-Through Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Principal Balance as set forth in the Preliminary Statement hereto.

REMIC I Regular Interest I-M-1 : One of the separate non-certificated beneficial ownership interests in REMIC I issued hereunder and designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-M-1 shall accrue interest at the related Uncertificated REMIC I Pass-Through Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Principal Balance as set forth in the Preliminary Statement hereto.

REMIC I Regular Interest I-M-2 : One of the separate non-certificated beneficial ownership interests in REMIC I issued hereunder and designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-M-2 shall accrue interest at the related Uncertificated REMIC I Pass-Through Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Principal Balance as set forth in the Preliminary Statement hereto.

REMIC I Regular Interest I-M-3 : One of the separate non-certificated beneficial ownership interests in REMIC I issued hereunder and designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-M-3 shall accrue interest at the related Uncertificated REMIC I Pass-Through Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Principal Balance as set forth in the Preliminary Statement hereto.

REMIC I Regular Interest I-P : One of the separate non-certificated beneficial ownership interests in REMIC I issued hereunder and designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-P will not accrue interest and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Principal Balance as set forth in the Preliminary Statement hereto.

REMIC I Regular Interest ZZ : One of the separate non-certificated beneficial ownership interests in REMIC I issued hereunder and designated as a Regular Interest in REMIC I. REMIC I Regular Interest ZZ shall accrue interest at the related Uncertificated REMIC I Pass-Through Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Principal Balance as set forth in the Preliminary Statement hereto.

REMIC II : The segregated pool of assets described in Section 6.07(a).

REMIC II Regular Interests : REMIC II Regular Interest I-X, REMIC II Regular Interest II-X, REMIC II Regular Interest I-PO, REMIC II Regular Interest II-PO, REMIC II Regular Interest I-P, REMIC II Regular Interest II-P, REMIC II Regular Interest 1-ZZZ, REMIC II Regular Interest 2-ZZZ, REMIC II Regular Interest 1-Sub, REMIC II Regular Interest 2-Sub and REMIC II Regular Interest II-1R-2.

REMIC II Regular Interest 1-Sub : One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a Regular Interest in REMIC II. REMIC II Regular Interest 1-Sub shall accrue interest at the related Uncertificated REMIC II Pass-Through Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Principal Balance as set forth in the Preliminary Statement hereto.

REMIC II Regular Interest 2-Sub : One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a Regular Interest in REMIC II. REMIC II Regular Interest 2-Sub shall accrue interest at the related Uncertificated REMIC II Pass-Through Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Principal Balance as set forth in the Preliminary Statement hereto.

REMIC II Regular Interest 1-ZZZ : One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a Regular Interest in REMIC II. REMIC II Regular Interest 1-ZZZ shall accrue interest at the related Uncertificated REMIC II Pass-Through Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Principal Balance as set forth in the Preliminary Statement hereto.

REMIC II Regular Interest 2-ZZZ : One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a Regular Interest in REMIC II. REMIC II Regular Interest 2-ZZZ shall accrue interest at the related Uncertificated REMIC II Pass-Through Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Principal Balance as set forth in the Preliminary Statement hereto.

REMIC II Regular Interest II-1R-2 : One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-1R-2 will not accrue interest and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Principal Balance as set forth in the Preliminary Statement hereto.

REMIC II Regular Interest I-P : One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a Regular Interest in REMIC II. REMIC II Regular Interest I-P will not accrue interest and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Principal Balance as set forth in the Preliminary Statement hereto.

REMIC II Regular Interest II-P : One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-P will not accrue interest and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Principal Balance as set forth in the Preliminary Statement hereto.

REMIC II Regular Interest I-PO : One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a Regular Interest in REMIC II. REMIC II Regular Interest I-PO will not accrue interest and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Principal Balance as set forth in the Preliminary Statement hereto.

REMIC II Regular Interest II-PO : One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-PO will not accrue interest and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Principal Balance as set forth in the Preliminary Statement hereto.

REMIC II Regular Interest I-X : One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a Regular Interest in REMIC II. REMIC II Regular Interest I-X shall accrue interest at the related Uncertificated REMIC II Pass-Through Rate in effect from time to time and shall not be entitled to distributions of principal.

REMIC II Regular Interest II-X : One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-X shall accrue interest at the related Uncertificated REMIC II Pass-Through Rate in effect from time to time and shall not be entitled to distributions of principal.

REMIC II Subordinated Balance Ratio : The ratio among the Uncertificated Principal Balances of each of the REMIC II Regular Interests ending with the designation “Sub,” equal to the ratio among, with respect to each such REMIC II Regular Interest, the excess of (x) the aggregate Stated Principal Balance of the Mortgage Loans in Loan Group II-1 and Loan Group II-2 (other than any principal balance attributable to the Class II-1PO Certificates and Class II-2PO Certificates), as applicable, over (y) the aggregate Certificate Principal Balance of the related Group II Senior Certificates (other than the Class II-1PO Certificates and Class II-2PO Certificates) .

REMIC III : The segregated pool of assets described in the Preliminary Statement consisting of the REMIC I Regular Interests and the REMIC II Regular Interests.

REMIC III Certificates : The Regular Certificates and the Class II-1R-2 Certificates.

REMIC Opinion : Shall mean an Opinion of Counsel to the effect that the proposed action will not have an adverse affect on any REMIC created hereunder.

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

REMIC Regular Interest : A REMIC I Regular Interest, REMIC II Regular Interest or Regular Certificate.

Remittance Date : Shall mean (i) with respect to the Company, the 23 ^rd calendar day of each month or, if such day is not a Business Day, the Business Day immediately preceding the 23 ^rd day of each month, and (ii) with respect to the related Servicer, the date specified in the related Servicing Agreement.

Remittance Report : As defined in Section 6.04(g).

REO Imputed Interest : As to any REO Property, for any calendar month during which such REO Property was at any time part of REMIC I or REMIC II, one month’s interest at the applicable Net Mortgage Rate on the Stated Principal Balance of such REO Property (or, in the case of the first such calendar month, of the related Mortgage Loan, if appropriate) as of the close of business on the Distribution Date in such calendar month.

REO Property : A Mortgaged Property acquired by the Company or the related Servicer through foreclosure or deed-in-lieu of foreclosure in connection with a defaulted Mortgage Loan.

Replacement Mortgage Loan : A Mortgage Loan or Mortgage Loans in the aggregate substituted by the Sponsor for a Deleted Mortgage Loan, which must, on the date of such substitution, as confirmed in a Request for Release, (i) have a Stated Principal Balance, after deduction of the principal portion of the Scheduled Payment due in the month of substitution, not in excess of, and not less than 90% of, the Stated Principal Balance of the Deleted Mortgage Loan; (ii) have a fixed Mortgage Rate not less than or more than 1% per annum higher than the Mortgage Rate of the Deleted Mortgage Loan; (iii) have the same or higher credit quality characteristics than that of the Deleted Mortgage Loan; (iv) have a Loan-to-Value Ratio no higher than that of the Deleted Mortgage Loan; (v) have a remaining term to maturity no greater than (and not more than one year less than) that of the Deleted Mortgage Loan; (vi) not permit conversion of the Mortgage Rate from a fixed rate to a variable rate; (vii) have the same lien priority as the Deleted Mortgage Loan; (viii) constitute the same occupancy type as the Deleted Mortgage Loan or be owner occupied; and (ix) comply with each representation and warranty set forth in Section 2.03 hereof.

Reportable Event : As defined in Section 4.18.

Repurchase Price : With respect to each Mortgage Loan, a price equal to (i) the outstanding principal balance of such Mortgage Loan, plus (ii) interest on such outstanding principal balance at the Mortgage Rate (net of the Servicing Fee Rate) from the last date through which interest has been paid to the end of the month of repurchase, less (iii) amounts advanced by the Company or the related Servicer in respect of such repurchased Mortgage Loan which are being held in the Distribution Account for remittance to the Securities Administrator plus (iv) any costs and damages (if any) incurred by the Trust in connection with any violation of such Mortgage Loan of any anti-predatory lending laws.

Request for Release : The Request for Release to be submitted by the Sponsor, the Company, the related Servicer or the Master Servicer to the Custodian substantially in the form of Exhibit G. Each Request for Release furnished to the Custodian by the Sponsor, the Company, the related Servicer or the Master Servicer shall be in duplicate and shall be executed by an officer of such Person or a Servicing Officer (or, if furnished electronically to the Custodian, shall be deemed to have been sent and executed by an officer of such Person or a Servicing Officer) of the Company or the related Servicer, as applicable.

Required Insurance Policy : With respect to any Mortgage Loan, any insurance policy that is required to be maintained from time to time under this Agreement or the related Servicing Agreement.

Residual Certificates : Any of the Class I-R-1, Class II-1R-1 and Class II-1R-2 Certificates, each evidencing the sole class of Residual Interests in the related REMIC.

Responsible Officer : With respect to the Trustee, any Vice President, any Assistant Vice President, the Secretary, any Assistant Secretary, or any Trust Officer with specific responsibility for the transactions contemplated hereby, any other officer customarily performing functions similar to those performed by any of the above designated officers or other officers of the Trustee specified by the Trustee, as to whom, with respect to a particular matter, such matter is referred because of such officer’s knowledge of and familiarity with the particular subject.

S&P : Standard & Poor’s, a division of The McGraw-Hill Companies, Inc.

Scheduled Payment : The scheduled monthly payment on a Mortgage Loan due on any Due Date allocable to principal and/or interest on such Mortgage Loan.

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

Securities Administrator : Wells Fargo Bank, National Association, in its capacity as securities administrator, transfer agent and paying agent hereunder, and its successors and assigns.

Securities Administrator Information : As defined in Section 4.18(b).

Seller : EMC in its capacity as seller of the Mortgage Loans to the Depositor.

Senior Certificates : Any of the Group I Senior Certificates and Group II Senior Certificates.

Senior Percentage : With respect to Loan Group II-1 and Loan Group II-2, the lesser of (a) 100% and (b) the percentage obtained by dividing the aggregate Certificate Principal Balance of the related Senior Certificates (other than the Class II-PO Certificates and Class II-X Certificates) immediately prior to such Distribution Date, by the aggregate Stated Principal Balance of the Mortgage Loans in the related Loan Group (other than the PO Percentage thereof with respect to the related Discount Mortgage Loans) as of the beginning of the related Due Period.

Senior Prepayment Percentage : With respect to the Class II-1A Certificates and Class II-2A Certificates, on any Distribution Date occurring during the periods set forth below will be as follows:

Any scheduled reduction to the Senior Prepayment Percentage for the Class II-1A Certificates and Class II-2A Certificates shall not be made as of any Distribution Date unless, as of the last day of the month preceding such Distribution Date (1) the aggregate Stated Principal Balance of the Group II Mortgage Loans delinquent 60 days or more (including for this purpose any such Mortgage Loans in foreclosure and such Mortgage Loans with respect to which the related mortgaged property has been acquired by the Trust) averaged over the last six months, as a percentage of the aggregate Certificate Principal Balance of the Group II Subordinate Certificates does not exceed 50% and (2) cumulative Realized Losses on the Group II Mortgage Loans do not exceed (a) 30% of the aggregate Certificate Principal Balance of the Group II Subordinate Certificates as of the Closing Date (“Original Subordinate Principal Balance”) if such Distribution Date occurs between and including February 2011 and January 2012, (b) 35% of the Original Subordinate Principal Balance if such Distribution Date occurs between and including February 2012 and January 2013, (c) 40% of the Original Subordinate Principal Balance if such Distribution Date occurs between and including February 2013 and January 2014, (d) 45% of the Original Subordinate Principal Balance if such Distribution Date occurs between and including February 2014 and January 2015, and (e) 50% of the Original Subordinate Principal Balance if such Distribution Date occurs during or after February 2015.

Notwithstanding the foregoing, if on any Distribution Date, the percentage for Loan Group II-1 or Loan Group II-2, the numerator of which is the aggregate Certificate Principal Balance of the related Group II Senior Certificates (other than the Class II-PO Certificates and Class II-X Certificates) immediately preceding such Distribution Date, and the denominator of which is the aggregate Stated Principal Balance of the Mortgage Loans in such Loan Group (other than the PO Percentage thereof with respect to the related Discount Mortgage Loans) as of the beginning of the related Due Period, exceeds such percentage as of the Cut-off Date, then the Senior Prepayment Percentage with respect to the Group II Senior Certificates for such Distribution Date will equal 100%.

Servicer : Any of EMC, GreenPoint, Harbourside, HSBC, PHH, Union Federal or Wells Fargo and their successors and assigns.

Servicing Advances : All customary, reasonable and necessary “out of pocket” costs and expenses (including reasonable legal fees) incurred in the performance by the Company or the related Servicer of its servicing obligations hereunder or under the related Servicing Agreement, including, but not limited to, the cost of (i) the preservation, restoration and protection of a Mortgaged Property, (ii) any enforcement or judicial proceedings, including foreclosures, and including any expenses incurred in relation to any such proceedings that result from the Mortgage Loan being registered in the MERS® System, (iii) the management and liquidation of any REO Property (including, without limitation, realtor’s commissions) and (iv) compliance with any obligations under Section 3.07 hereof to cause insurance to be maintained.

Servicing Agreement : Any of the GreenPoint Servicing Agreement, the Harbourside Servicing Agreement, the HSBC Servicing Agreement, the PHH Servicing Agreement, the Union Federal Servicing Agreement or the Wells Fargo Servicing Agreement.

Servicing Criteria : The “servicing criteria” set forth in Item 1122(d) of Regulation AB, as such may be amended from time to time, or those Servicing Criteria otherwise mutually agreed to by EMC, the Master Servicer, the Trustee and the applicable Servicer in response to evolving interpretations of Regulation AB and incorporated into a revised Exhibit N.

Servicing Fee : As to each Mortgage Loan and any Distribution Date, an amount equal to 1/12th of the Servicing Fee Rate multiplied by the Stated Principal Balance of such Mortgage Loan as of the Due Date in the month preceding the month in which Distribution Date occurs.

Servicing Fee Rate : 0.250% per annum.

Servicing Modification : With respect to any Mortgage Loan that is in default or, in the reasonable judgment of the Company or the related Servicer, as to which default is reasonably foreseeable, any modification which is effected by the Company or the related Servicer in accordance with the terms of this Agreement or the related Servicing Agreement which results in any change in the outstanding Stated Principal Balance, any change in the Mortgage Rate or any extension of the term of such Mortgage Loan.

Servicing Officer : Any officer of the Company or the related Servicer involved in, or responsible for, the administration and servicing of the Mortgage Loans (i) in the case of the Company, whose name and facsimile signature appear on a list of servicing officers furnished to the Trustee and the Insurer by the Company on the Closing Date pursuant to this Agreement, as such list may from time to time be amended and (ii) in the case of the related Servicer, as to which evidence reasonably acceptable to the Trustee, as applicable, of due authorization, by such party has been furnished from time to time to the Trustee.

Sponsor : EMC Mortgage Corporation, a Delaware corporation, and its successors and assigns, in its capacity as seller of the Mortgage Loans to the Depositor.

Startup Day : The Startup Day for each REMIC formed hereunder shall be the Closing Date.

Stated Principal Balance : With respect to any Mortgage Loan or related REO Property and any Distribution Date, the Cut-off Date Principal Balance thereof minus the sum of (i) the principal portion of the Scheduled Payments due with respect to such Mortgage Loan during each Due Period ending prior to such Distribution Date (and irrespective of any delinquency in their payment), (ii) all Principal Prepayments with respect to such Mortgage Loan received prior to or during the related Prepayment Period, and all Liquidation Proceeds to the extent applied by the Company or the related Servicer as recoveries of principal in accordance with Section 3.09 or the related Servicing Agreement with respect to such Mortgage Loan, that were received by the Company or the related Servicer as of the close of business on the last day of the Prepayment Period related to such Distribution Date and (iii) any Realized Losses on such Mortgage Loan incurred during the related Prepayment Period. The Stated Principal Balance of a Liquidated Loan equals zero.

Subordinate Certificates : Any of the Group I Subordinate Certificates and Group II Subordinate Certificates.

Subordinate Certificate Writedown Amount : With respect to the Group II Subordinate Certificates, the amount by which (x) the sum of the Certificate Principal Balances of the Group II Certificates (other than the Class II-1R Certificates) (after giving effect to the distribution of principal and the allocation of Realized Losses in reduction of the Certificate Principal Balances of such Group II Certificates on such Distribution Date) exceeds (y) the Stated Principal Balances of the Mortgage Loans in Loan Group II on the Due Date related to such Distribution Date.

Subordinate Optimal Principal Amount : With respect to the Group II Subordinate Certificates and each Distribution Date will be an amount equal to the sum of the following from the related Loan Group (but in no event greater than the aggregate Certificate Principal Balance of the Group II Subordinate Certificates immediately prior to such Distribution Date):

(1)   the applicable Subordinate Percentage of the related Non-PO Percentage of the principal portion of all Monthly Payments due on each Mortgage Loan in the related Loan Group on the related Due Date, as specified in the amortization schedule at the time applicable thereto (after adjustment for previous principal prepayments but before any adjustment to such amortization schedule by reason of any bankruptcy or similar proceeding or any moratorium or similar waiver or grace period);

(2)   the applicable Subordinate Prepayment Percentage of the related Non-PO Percentage of the Stated Principal Balance of each Mortgage Loan in the related Loan Group which was the subject of a prepayment in full received by the Master Servicer during the applicable Prepayment Period;

(3)   the applicable Subordinate Prepayment Percentage of the related Non-PO Percentage of all partial prepayments of principal received during the applicable Prepayment Period for each Mortgage Loan in the related Loan Group;

(4)   the excess, if any, of (a) the Net Liquidation Proceeds allocable to principal received during the related Prepayment Period in respect of each Liquidated Mortgage Loan in the related Loan Group over (b) the sum of the amounts distributable to the Holders of the related Senior Certificates pursuant to clause (4) of the definition of “Group II Principal Distribution Amount” and clause (iv) of the definition of “Class II-1PO Certificate Principal Distribution Amount” or “Class II-2PO Certificate Principal Distribution Amount,” as applicable, on such Distribution Date;

(5)   the applicable Subordinate Prepayment Percentage of the related Non-PO Percentage of the sum of (a) the Stated Principal Balance of each Mortgage Loan in the related Loan Group which was repurchased by EMC or its designee in connection with such Distribution Date and (b) the difference, if any, between the Stated Principal Balance of a Mortgage Loan in the related Loan Group that has been replaced by the EMC or its designee with a substitute Mortgage Loan pursuant to the Mortgage Loan Purchase Agreement in connection with such Distribution Date and the Stated Principal Balance of such substitute Mortgage Loan; and

(6)   on the Distribution Date on which the Certificate Principal Balances of the related Senior Certificates (other than the Interest Only Certificates, Class II-1PO Certificates and Class II-2PO Certificates) have all been reduced to zero, 100% of any applicable Group II Principal Distribution Amount.

Subordinate Percentage : As of any Distribution Date and with respect to each of Loan Group II-1 and Loan Group II-2, 100% minus the related Senior Percentage for the Senior Certificates related to such Loan Group.

Subordinate Prepayment Percentage : As of any Distribution Date and with respect to each of Loan Group II-1 and Loan Group II-2, 100% minus the related Senior Prepayment Percentage for such Loan Group, except that on any Distribution Date after the Certificate Principal Balance of each Class of Group II Senior Certificates have each been reduced to zero, the Subordinate Prepayment Percentage for the Group II Subordinate Certificates with respect to such Loan Group will equal 100%.

Subsequent Recoveries : As of any Distribution Date, amounts received by any Servicer or the Master Servicer during the related Due Period or surplus amounts held by the Master Servicer to cover estimated expenses (including, but not limited to, recoveries in respect of the representations and warranties made by the Sponsor pursuant to the Mortgage Loan Purchase Agreement) specifically related to a Liquidated Mortgage Loan or disposition of an REO Property prior to the related Prepayment Period that resulted in a Realized Loss, after the liquidation or disposition of such Mortgage Loan.

Subservicing Agreement : Any agreement entered into between the Company and a subservicer with respect to the subservicing of any Mortgage Loan hereunder by such subservicer.

Substitution Adjustment Amount : The meaning ascribed to such term pursuant to Section 2.03(d).

Sub-Trust : Each of Loan Group I and Loan Group II.

Successor Master Servicer : The meaning ascribed to such term pursuant to Section 9.01.

Tax Matters Person : The person designated as “tax matters person” in the manner provided under Treasury Regulation Sections 1.860F-4(d) and 301.6231(a)(7)-1T. The Holder of the greatest Percentage Interest in a Class of Residual Certificates shall be the Tax Matters Person for the related REMIC. The Securities Administrator or any successor thereto or assignee thereof shall serve as tax administrator hereunder and as agent for the related Tax Matters Person.

Transaction Documents : This Agreement, the Mortgage Loan Purchase Agreement, the Custodial Agreement, the Insurance Agreement, the Indemnification Agreement (as defined in the Insurance Agreement) and the Underwriting Agreement.

Transfer Affidavit : As defined in Section 7.02(c).

Transfer : Any direct or indirect transfer or sale of any Ownership Interest in a Certificate.

Trust or Trust Fund : The corpus of the trust created hereunder consisting of (i) the Mortgage Loans and all interest accruing and principal due with respect thereto after the Cut-off Date to the extent not applied in computing the Cut-off Date Principal Balance thereof; (ii) the Class P Certificate Accounts, the Net WAC Reserve Fund, the Distribution Account, the Distribution Account maintained by the Securities Administrator and the Protected Accounts maintained by the Company and the Servicers and all amounts deposited therein pursuant to the applicable provisions of this Agreement and the Servicing Agreements; (iii) property that secured a Mortgage Loan and has been acquired by foreclosure, deed in lieu of foreclosure or otherwise; (iv) the mortgagee’s rights under the Insurance Policies with respect to the Mortgage Loans; (v) the Servicing Agreements and the Assignment Agreements; (vi) the rights under the Mortgage Loan Purchase Agreement; (vii) for the benefit of the Class I-A-2 Certificates only, the Policy; and (viii) all proceeds of the foregoing, including proceeds of conversion, voluntary or involuntary, of any of the foregoing into cash or other liquid property. The Net WAC Reserve Fund and Prepayment Charge Waiver Amounts shall not be included in REMIC I, REMIC II or REMIC III.

Trustee : U.S. Bank National Association, a national banking association, for the benefit of the Certificateholders under this Agreement, and any successor thereto, and any corporation or national banking association resulting from or surviving any consolidation or merger to which it or its successors may be a party and any successor trustee as may from time to time be serving as successor trustee hereunder.

Uncertificated Accrued Interest : With respect to each REMIC I Regular Interest or REMIC II Regular Interest, as applicable, on each Distribution Date, an amount equal to one month’s interest at the related Uncertificated REMIC I Pass-Through Rate or Uncertificated REMIC II Pass-Through Rate, as applicable, on the Uncertificated Principal Balance or Uncertificated Notional Amount of such REMIC Regular Interest. In each case, Uncertificated Accrued Interest will be reduced by any Net Interest Shortfalls in respect of Loan Group I or Loan Group II, as applicable (allocated to such REMIC Regular Interests as set forth in Section 1.02).

Uncertificated Notional Amount : With respect to REMIC II Regular Interest I-X, the aggregate Stated Principal Balance of the Mortgage Loans in Loan Group II-1. With respect to REMIC II Regular Interest II-X, the aggregate Stated Principal Balance of the Mortgage Loans in Loan Group II-2.

Uncertificated Principal Balance : With respect to each REMIC I Regular Interest or REMIC II Regular Interest, as applicable, the principal amount of such REMIC Regular Interest outstanding as of any date of determination. As of the Closing Date, the Uncertificated Principal Balance of each REMIC I Regular Interest and REMIC II Regular Interest, as applicable, shall equal the amount set forth in the Preliminary Statement hereto as its initial Uncertificated Principal Balance. On each Distribution Date, the Uncertificated Principal Balance of each REMIC I Regular Interest and REMIC II Regular Interest, as applicable, shall be reduced by all distributions of principal made on such REMIC Regular Interest on such Distribution Date pursuant to Section 6.07 and, if and to the extent necessary and appropriate, shall be further reduced on such Distribution Date by Realized Losses as provided in Section 6.05, and the Uncertificated Principal Balance of REMIC I Regular Interest ZZ shall be increased by interest deferrals as provided in Section 6.07(b)(i). The Uncertificated Principal Balance of each REMIC I Regular Interest and REMIC II Regular Interest, as applicable, shall never be less than zero.

Uncertificated REMIC I Pass-Through Rate : With respect to any REMIC I Regular Interest other than REMIC I Regular Interest I-P and any Distribution Date, a per annum rate equal to the weighted average of the Net Mortgage Rates of all of the Mortgage Loans in Loan Group I as of the first day of the related Due Period, weighted on the basis of the Stated Principal Balances of the Mortgage Loans in Loan Group I as of the first day of the related Due Period. With respect to REMIC I Regular Interest I-P and any Distribution Date, 0.00%.

Uncertificated REMIC II Pass-Through Rate :

With respect to the REMIC II Regular Interests other than REMIC II Regular Interests I-X and II-X, the applicable Uncertificated REMIC II Pass-Through Rate for each such REMIC II Regular Interest as set forth in the Preliminary Statement.

With respect to REMIC II Regular Interest I-X, a rate per annum equal to the weighted average of the excess, if any, of (a) the Net Mortgage Rates on the Mortgage Loans in Loan Group II-1 over (b) 5.500% per annum.

With respect to REMIC II Regular Interest II-X, a rate per annum equal to the weighted average of the excess, if any, of (a) the Net Mortgage Rates on the Mortgage Loans in Loan Group II-2 over (b) 6.000% per annum.

Voting Rights : The portion of the voting rights of all the Group I Certificates that is allocated to any Group I Certificate for purposes of the voting provisions hereunder shall be allocated as follows: (i) to the Group I Certificates (other than the Class I-P, Class I-C and Class I-R-1 Certificates), 95.50% of all voting rights with respect to matters relating to Loan Group I, and 47.75% of all voting rights with respect to matters relating to both Loan Groups, allocated among such Certificates in proportion to their respective outstanding Certificate Principal Balances, (ii) to the Class I-P Certificates, 1% with respect to matters relating to Loan Group I, and 0.50% with respect to matters relating to both Loan Groups, (iii) to the Class I-C Certificates, 3% with respect to matters relating to Loan Group I, and 1.50% with respect to matters relating to both Loan Groups, and (iv) to the Class I-R-1 Certificates, 0.50% with respect to matters relating to Loan Group I, and 0.25% with respect to matters relating to both Loan Groups. The portion of the voting rights of all the Group II Certificates that is allocated to any Group II Certificate for purposes of the voting provisions hereunder shall be allocated as follows: (i) to the Group II Certificates (other than the Class II-1X, Class II-2X, Class II-1P, Class II-2P, Class II-1R-1 and Class II-1R-2 Certificates), 95.00% with respect to matters relating to Loan Group II, and 47.50% with respect to matters relating to both Loan Groups, (ii) to each of the Class II-1X, Class II-2X, Class II-1P and Class II-2P Certificates, 1% with respect to matters relating to Loan Group II, and 0.50% with respect to matters relating to both Loan Groups, and (iii) to each of the Class II-1R-1 Certificates and Class II-1R-2 Certificates, 0.50% with respect to matters relating to Loan Group II, and 0.25% with respect to matters relating to both Loan Groups. The allocation among the Certificates, other than the Class I-P, Class I-C, Class I-R-1, Class II-1X, Class II-2X, Class II-1P and Class II-2P Certificates will be in proportion to the Certificate Principal Balance of each such Class relative to the Certificate Principal Balance of all other such Classes. Voting Rights will be allocated among the Certificates of each such Class in accordance with their respective Percentage Interests. For so long as there is no Insurer Default, each Holder of a Class I-A-2 Certificate agrees that the Insurer shall be treated by the Depositor, the Master Servicer and the Trustee as if the Insurer were the Holder of all Class I-A-2 Certificates for the purpose (and solely for the purpose) of the giving of any consent, the making of any direction or the exercise of any voting or other control rights otherwise given the Holders of the Class I-A-2 Certificates hereunder without any further consent of the Holders of the Class I-A-2 Certificates and such holders shall not exercise such rights without the prior written consent of the Insurer. Matters which solely affect the Group I Certificates or Group II Certificates will be voted on solely by the related Classes.

Wells Fargo : Wells Fargo Bank, N.A., and any successor thereto.

Wells Fargo Assignment Agreement : The Assignment, Assumption and Recognition Agreement, dated as of January 31, 2006, by and among the Sponsor, Wells Fargo and the Trustee evidencing the assignment of the Wells Fargo Servicing Agreement to the Trust, attached hereto as Exhibit R-4.

Wells Fargo Loans : Those Mortgage Loans subject to this Agreement which were purchased by the Sponsor from Wells Fargo pursuant to the Wells Fargo Servicing Agreement.

Wells Fargo Servicing Agreement : The Purchase, Warranties and Servicing Agreement, dated as of October 1, 2004, by and between the Sponsor and Wells Fargo, as amended, attached hereto as Exhibit Q-4, as modified by the Wells Fargo Assignment Agreement.

Section 1.02    Allocation of Certain Interest Shortfalls. For purposes of calculating the amount of the Monthly Interest Distributable Amount for the Class I-A-1, Class I-A-2, Class I-M-1, Class I-M-2, Class I-M-3, Class I-B-1, Class I-B-2, Class I-B-3, Class I-B-4 and Class I-C Certificates for any Distribution Date, (1) the aggregate amount of any Net Interest Shortfalls in respect of Loan Group I for any Distribution Date shall be allocated first, in reduction of amounts otherwise distributable to the Class I-C Certificates and Class I-R-1 Certificates, and   thereafter, among the Group I Offered Certificates and Class I-B-4 Certificates in proportion to the amount of the Monthly Interest Distributable Amount that would have been allocated to such Certificates in the absence of such Net Interest Shortfalls, and (2) the interest portion of Realized Losses for Loan Group I will be allocated first, to the Class I-C Certificates based on, and to the extent of, one month’s interest distributable to such Certificates, second to the Class I-B-4 Certificates, third to the Class I-B-3 Certificates, fourth to the Class I-B-2 Certificates, fifth to the Class I-B-1 Certificates, sixth to the Class I-M-3 Certificates, seventh to the Class I-M-2 Certificates, eighth to the Class I-M-1 Certificates, and following the Cross-Over Date, ninth to the Group I Senior Certificates, on a pro rata basis, in each case, based on, and to the extent of, one month’s interest at the then applicable respective Pass-Through Rates on the respective Certificate Principal Balances of each such Certificate.

For purposes of calculating the amount of Uncertificated Accrued Interest for the REMIC I Regular Interests (other than REMIC I Regular Interest I-P) for any Distribution Date, the aggregate amount of any Net Interest Shortfalls incurred in respect of Loan Group I for any Distribution Date shall be allocated   first, to Uncertificated Accrued Interest payable to REMIC I Regular Interest AA and REMIC I Regular Interest ZZ up to an aggregate amount equal to the REMIC I Interest Loss Allocation Amount, 98% and 2%, respectively, and thereafter among REMIC I Regular Interest AA, each REMIC I Regular Interest for which a Class I-A, Class I-M or Class I-B Certificate is a Corresponding Certificate and REMIC I Regular Interest ZZ, pro rata, in each case based on, and to the extent of, one month’s interest at the then applicable respective Uncertificated REMIC I Pass-Through Rates on the respective Uncertificated Principal Balances of each such REMIC I Regular Interest.

For purposes of calculating the amount of the Accrued Certificate Interest for the Class II-A, Class II-X and Class II-B Certificates for any Distribution Date, (1) the aggregate amount of any Net Interest Shortfalls in respect of Loan Group II for any Distribution Date shall be allocated first, among the Group II Offered Certificates and the Class II-B-4, Class II-B-5 and Class II-B-6 Certificates in proportion to the amount of the Accrued Certificate Interest that would have been allocated to such Certificates in the absence of such Net Interest Shortfalls, and (2) the interest portion of Realized Losses for Loan Group II shall be allocated first, to the Class II-B-6 Certificates, second to the Class II-B-5 Certificates, third to the Class II-B-4 Certificates, fourth to the Class II-B-3 Certificates, fifth to the Class II-B-2 Certificates and sixth to the Class II-B-1 Certificates, and following the Cross-Over Date, fourth to the Group II Senior Certificates (other than the Class II-PO Certificates), on a pro rata basis.

For purposes of calculating the amount of Uncertificated Accrued Interest for the REMIC II Regular Interests (other than REMIC II Regular Interest I-P, II-P, I-PO, II-PO and II-1R-2) for any Distribution Date, the aggregate amount of any Net Interest Shortfalls incurred in respect of Loan Group II for any Distribution Date shall be allocated, among REMIC II Regular Interest 1-Sub, REMIC II Regular Interest 1-ZZZ, REMIC II Regular Interest 2-Sub, REMIC II Regular Interest 2-ZZZ, REMIC II Regular Interest I-X and REMIC II Regular Interest II-X, pro rata, based on, and to the extent of, one month’s interest at the then applicable respective Uncertificated REMIC II Pass-Through Rates on the respective Uncertificated Principal Balances of each such REMIC II Regular Interest.

Section 2.01    Conveyance of Trust Fund. Pursuant to the Mortgage Loan Purchase Agreement, the Sponsor sold, transferred, assigned, set over and otherwise conveyed to the Depositor, without recourse, all the right, title and interest of the Sponsor in and to the assets in the Trust Fund.

The Sponsor has entered into this Agreement in consideration for the purchase of the Mortgage Loans by the Depositor pursuant to the Mortgage Loan Purchase Agreement and has agreed to take the actions specified herein.

The Depositor, concurrently with the execution and delivery hereof, hereby sells, transfers, assigns, sets over and otherwise conveys to the Trustee for the use and benefit of the Certificateholders and the Insurer without recourse, all the right, title and interest of the Depositor in and to the Trust Fund. In addition, on or prior to the Closing Date, the Depositor shall cause the Insurer to deliver the Policy to the Trustee with a copy to the Securities Administrator.

In connection with such sale, the Depositor has delivered to, and deposited with, the Trustee or the Custodian, as its agent, the following documents or instruments with respect to each Mortgage Loan so assigned: (i) the original Mortgage Note, including any riders thereto, endorsed without recourse (A) to the order of “U.S. Bank National Association, as Trustee for Certificateholders of Bear Stearns Asset Backed Securities I LLC, Asset Backed Certificates, Series 2006-AC1,” or (B) in the case of a loan registered on the MERS system, in blank, and in each case showing to the extent available to the Sponsor an unbroken chain of endorsements from the original payee thereof to the Person endorsing it to the Trustee, (ii) the original Mortgage and, if the related Mortgage Loan is a MOM Loan, noting the presence of the MIN and language indicating that such Mortgage Loan is a MOM Loan, which shall have been recorded (or if the original is not available, a copy), with evidence of such recording indicated thereon (or if clause (x) in the proviso below applies, shall be in recordable form), (iii) unless the Mortgage Loan is a MOM Loan, the assignment (either an original or a copy, which may be in the form of a blanket assignment if permitted in the jurisdiction in which the Mortgaged Property is located) to the Trustee of the Mortgage with respect to each Mortgage Loan in the name of “U.S. Bank National Association, as Trustee for Certificateholders of Bear Stearns Asset Backed Securities I LLC, Asset Backed Certificates, Series 2006-AC1,” which shall have been recorded (or if clause (x) in the proviso below applies, shall be in recordable form) (iv) an original or a copy of all intervening assignments of the Mortgage, if any, to the extent available to the Sponsor, with evidence of recording thereon, (v) the original policy of title insurance or mortgagee’s certificate of title insurance or commitment or binder for title insurance, if available, or a copy thereof, or, in the event that such original title insurance policy is unavailable, a photocopy thereof, or in lieu thereof, a current lien search on the related Mortgaged Property and (vi) originals or copies of all available assumption, modification or substitution agreements, if any; provided, however, that in lieu of the foregoing, the Sponsor may deliver the following documents, under the circumstances set forth below: (x) if any Mortgage, assignment thereof to the Trustee or intervening assignments thereof have been delivered or are being delivered to recording offices for recording and have not been returned in time to permit their delivery as specified above, the Depositor may deliver a true copy thereof with a certification by the Sponsor or the title company issuing the commitment for title insurance, on the face of such copy, substantially as follows: “Certified to be a true and correct copy of the original, which has been transmitted for recording”; and (y) in lieu of the Mortgage Notes relating to the Mortgage Loans identified in the list set forth in Exhibit I, the Depositor may deliver a lost note affidavit and indemnity and a copy of the original note, if available; and provided, further, however, that in the case of Mortgage Loans which have been prepaid in full after the Cut-off Date and prior to the Closing Date, the Depositor, in lieu of delivering the above documents, may deliver to the Trustee and its Custodian a certification of a Servicing Officer to such effect and in such case shall deposit all amounts paid in respect of such Mortgage Loans, in the Distribution Account on the Closing Date. In the case of the documents referred to in clause (x) above, the Depositor shall deliver such documents to the Trustee or its Custodian promptly after they are received. The Sponsor shall cause, at its expense, the Mortgage and intervening assignments, if any, and to the extent required in accordance with the foregoing, the assignment of the Mortgage to the Trustee to be submitted for recording promptly after the Closing Date provided that the Sponsor need not cause to be recorded any assignment (a) in any jurisdiction under the laws of which, as evidenced by an Opinion of Counsel addressed to the Trustee and the Insurer delivered by the Sponsor to the Trustee and the Rating Agencies, the recordation of such assignment is not necessary to protect the Trustee’s interest in the related Mortgage Loan or (b) if MERS is identified on the Mortgage or on a properly recorded assignment of the Mortgage as mortgagee of record solely as nominee for Sponsor and its successors and assigns. In the event that the Sponsor, the Depositor or the Master Servicer gives written notice to the Trustee that a court has recharacterized the sale of the Mortgage Loans as a financing, the Sponsor shall submit or cause to be submitted for recording as specified above or, should the Sponsor fail to perform such obligations, the Master Servicer shall cause each such previously unrecorded assignment to be submitted for recording as specified above at the expense of the Trust. In the event a Mortgage File is released to the Company or the Servicer as a result of such Person having completed a Request for Release, the Custodian shall, if not so completed, complete the assignment of the related Mortgage in the manner specified in clause (iii) above.

In connection with the assignment of any Mortgage Loan registered on the MERS® System, the Sponsor further agrees that it will cause, at the Sponsor’s own expense, within 30 days after the Closing Date, the MERS® System to indicate that such Mortgage Loans have been assigned by the Sponsor to the Depositor and by the Depositor to the Trustee in accordance with this Agreement for the benefit of the Certificateholders and the Certificate Insurer by including (or deleting, in the case of Mortgage Loans which are repurchased in accordance with this Agreement) in such computer files (a) the code in the field which identifies the specific Trustee and (b) the code in the field “Pool Field” which identifies the series of the Certificates issued in connection with such Mortgage Loans. The Sponsor further agrees that it will not, and will not permit the Company, any Servicer or the Master Servicer to, and the Master Servicer agrees that it will not, alter the codes referenced in this paragraph with respect to any Mortgage Loan during the term of this Agreement unless and until such Mortgage Loan is repurchased in accordance with the terms of this Agreement or the Mortgage Loan Purchase Agreement.

Section 2.02    Acceptance of the Mortgage Loans. 

(a)    Based on the Initial Certification received by it from the Custodian, the Trustee acknowledges receipt of, subject to the further review and exceptions reported by the Custodian pursuant to the procedures described below, the documents (or certified copies thereof) delivered to the Trustee or the Custodian on its behalf pursuant to Section 2.01 and declares that it holds and will continue to hold directly or through a custodian those documents and any amendments, replacements or supplements thereto and all other assets of the Trust Fund delivered to it in trust for the use and benefit of all present and future Holders of the Certificates and the Insurer. On the Closing Date, the Trustee or the Custodian on its behalf will deliver the Sponsor, the Trustee and the Insurer an Initial Certification confirming whether or not it has received the Mortgage File for each Mortgage Loan, but without review of such Mortgage File, except to the extent necessary to confirm whether such Mortgage File contains the original Mortgage Note or a lost note affidavit and indemnity in lieu thereof. No later than 90 days after the Closing Date, the Trustee or the Custodian on its behalf shall, for the benefit of the Certificateholders and the Insurer, review each Mortgage File delivered to it and execute and deliver to the Sponsor and the Insurer and, if reviewed by the Custodian, the Trustee, an Interim Certification. In conducting such review, the Trustee or the Custodian on its behalf will ascertain whether all required documents have been executed and received and whether those documents relate, determined on the basis of the Mortgagor name, original principal balance and loan number, to the Mortgage Loans identified in Exhibit B to this Agreement, as supplemented (provided, however, that with respect to those documents described in subclauses (iv) and (vi) of Section 2.01, such obligations shall extend only to documents actually delivered pursuant to such subclauses). In performing any such review, the Trustee and the Custodian may conclusively rely on the purported due execution and genuineness of any such document and on the purported genuineness of any signature thereon. If the Trustee or the Custodian on its behalf finds any document constituting part of the Mortgage File not to have been executed or received, or to be unrelated to the Mortgage Loans identified in Exhibit B or to appear to be defective on its face, the Trustee or the Custodian on its behalf shall include such information in the exception report. The Sponsor shall correct or cure any such defect or, if prior to the end of the second anniversary of the Closing Date, the Sponsor may substitute for the related Mortgage Loan a Replacement Mortgage Loan, which substitution shall be accomplished in the manner and subject to the conditions set forth in Section 2.03 or shall deliver to the Trustee and the Insurer an Opinion of Counsel addressed to the Trustee to the effect that such defect does not materially or adversely affect the interests of the Certificateholders or the Insurer in such Mortgage Loan (such determination to be made without regard to the Policy) within 60 days from the date of notice from the Trustee of the defect and if the Sponsor fails to correct or cure the defect or deliver such opinion within such period, the Sponsor will, subject to Section 2.03, within 90 days from the notification of the Trustee purchase such Mortgage Loan at the Purchase Price; provided, however, that if such defect relates solely to the inability of the Sponsor to deliver the Mortgage, assignment thereof to the Trustee, or intervening assignments thereof with evidence of recording thereon because such documents have been submitted for recording and have not been returned by the applicable jurisdiction, the Sponsor shall not be required to purchase such Mortgage Loan if the Sponsor delivers such documents promptly upon receipt, but in no event later than 360 days after the Closing Date.

(b)    No later than 180 days after the Closing Date, the Trustee or the Custodian on its behalf will review, for the benefit of the Certificateholders and the Insurer, the Mortgage Files and will execute and deliver or cause to be executed and delivered to the Sponsor and the Insurer and, if reviewed by the Custodian, the Trustee, a Final Certification. In conducting such review, the Trustee or the Custodian on its behalf will ascertain whether each document required to be recorded has been returned from the recording office with evidence of recording thereon and the Trustee or the Custodian on its behalf has received either an original or a copy thereof, as required in Section 2.01 (provided, however, that with respect to those documents described in subclauses (iv) and (vi) of Section 2.01, such obligations shall extend only to documents actually delivered pursuant to such subclauses). If the Trustee or the Custodian on its behalf finds any document with respect to a Mortgage Loan has not been received, or to be unrelated, determined on the basis of the Mortgagor name, original principal balance and loan number, to the Mortgage Loans identified in Exhibit B or to appear defective on its face, the Trustee or the Custodian on its behalf shall note such defect in the exception report attached to the Final Certification and shall promptly notify the Sponsor and the Insurer. The Sponsor shall correct or cure any such defect or, if prior to the end of the second anniversary of the Closing Date, the Sponsor may substitute for the related Mortgage Loan a Replacement Mortgage Loan, which substitution shall be accomplished in the manner and subject to the conditions set forth in Section 2.03 or shall deliver to the Trustee and the Insurer an Opinion of Counsel addressed to the Trustee to the effect that such defect does not materially or adversely affect the interests of Certificateholders or the Insurer in such Mortgage Loan (such determination to be made without regard to the Policy within 60 days from the date of notice from the Trustee of the defect and if the Sponsor is unable within such period to correct or cure such defect, or to substitute the related Mortgage Loan with a Replacement Mortgage Loan or to deliver such opinion, the Sponsor shall, subject to Section 2.03, within 90 days from the notification of the Trustee, purchase such Mortgage Loan at the Purchase Price; provided, however, that if such defect relates solely to the inability of the Sponsor to deliver the Mortgage, assignment thereof to the Trustee or intervening assignments thereof with evidence of recording thereon, because such documents have not been returned by the applicable jurisdiction, the Sponsor shall not be required to purchase such Mortgage Loan, if the Sponsor delivers such documents promptly upon receipt, but in no event later than 360 days after the Closing Date.

(c)    In the event that a Mortgage Loan is purchased by the Sponsor in accordance with subsections 2.02(a) or (b) above or Section 2.03, the Sponsor shall remit the applicable Purchase Price to the Securities Administrator, for deposit in the Distribution Account and shall provide written notice to the Trustee and the Insurer detailing the components of the Purchase Price, signed by a Servicing Officer. Upon deposit of the Purchase Price in the Distribution Account and upon receipt of a Request for Release with respect to such Mortgage Loan, the Trustee or the Custodian will release to the Sponsor the related Mortgage File and the Trustee shall execute and deliver all instruments of transfer or assignment, without recourse, representation or warranty furnished to it by the Sponsor, as are necessary to vest in the Sponsor title to and rights under the Mortgage Loan. Such purchase shall be deemed to have occurred on the date on which the deposit into the Distribution Account was made. The Trustee shall promptly notify the Rating Agencies and the Insurer of such repurchase. The obligation of the Sponsor to cure, repurchase or substitute for any Mortgage Loan as to which a defect in a constituent document exists shall be the sole remedies respecting such defect available to the Certificateholders and the Insurer or to the Trustee on their behalf.

(d)    The Sponsor shall deliver to the Trustee or the Custodian on its behalf, and Trustee agrees to accept the Mortgage Note and other documents constituting the Mortgage File with respect to any Replacement Mortgage Loan, which the Trustee or the Custodian will review as provided in subsections 2.02(a) and 2.02(b), provided, that the Closing Date referred to therein shall instead be the date of delivery of the Mortgage File with respect to each Replacement Mortgage Loan.

Section 2.03    Representations, Warranties and Covenants of the Company, the Master Servicer and the Sponsor. 

(a)    The Company hereby represents and warrants to the Master Servicer, the Depositor, the Securities Administrator, the Trustee and the Insurer as follows, as of the Closing Date:

(i)    It is duly organized and is validly existing and in good standing under the laws of the State of Delaware and is duly authorized and qualified to transact any and all business contemplated by this Agreement to be conducted by it in any state in which a Mortgaged Property related to an EMC Mortgage Loan is located or is otherwise not required under applicable law to effect such qualification and, in any event, is in compliance with the doing business laws of any such state, to the extent necessary to ensure its ability to enforce each EMC Mortgage Loan, to service the EMC Mortgage Loans in accordance with the terms of this Agreement and to perform any of its other obligations under this Agreement and any other Transaction Documents to which it is a party in accordance with the terms hereof.

(ii)    It has the full corporate power and authority to service each EMC Mortgage Loan, and to execute, deliver and perform, and to enter into and consummate the transactions contemplated by this Agreement and any other Transaction Documents to which it is a party and has duly authorized by all necessary corporate action on its part the execution, delivery and performance of this Agreement and any other Transaction Documents to which it is a party; and this Agreement and any other Transaction Documents to which it is a party, assuming the due authorization, execution and delivery hereof by the other parties hereto, constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except that (a) the enforceability hereof may be limited by bankruptcy, insolvency, moratorium, receivership and other similar laws relating to creditors’ rights generally and (b) 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.

(iii)    The execution and delivery of this Agreement and any other Transaction Documents to which it is a party by it, the servicing of the EMC Mortgage Loans by it under this Agreement, the consummation of any other of the transactions contemplated by this Agreement and any other Transaction Documents to which it is a party, and the fulfillment of or compliance with the terms hereof are in its ordinary course of business and will not (A) result in a breach of any term or provision of its charter or by-laws or (B) conflict with, result in a breach, violation or acceleration of, or result in a default under, the terms of any other material agreement or instrument to which it is a party or by which it may be bound, or (C) constitute a violation of any statute, order or regulation applicable to it of any court, regulatory body, administrative agency or governmental body having jurisdiction over it; and it is not in breach or violation of any material indenture or other material agreement or instrument, or in violation of any statute, order or regulation of any court, regulatory body, administrative agency or governmental body having jurisdiction over it which breach or violation may materially impair its ability to perform or meet any of its obligations under this Agreement and any other Transaction Documents to which it is a party.

(iv)    It is an approved servicer of conventional mortgage loans for Fannie Mae or Freddie Mac and is a mortgagee approved by the Secretary of Housing and Urban Development pursuant to sections 203 and 211 of the National Housing Act.

(v)    No litigation is pending or, to the best of its knowledge, threatened, against it that would materially and adversely affect the execution, delivery or enforceability of this Agreement and any other Transaction Documents to which it is a party or its ability to service the EMC Mortgage Loans or to perform any of its other obligations under this Agreement and any other Transaction Documents to which it is a party in accordance with the terms hereof.

(vi)    No consent, approval, authorization or order of any court or governmental agency or body is required for its execution, delivery and performance of, or compliance with, this Agreement and any other Transaction Documents to which it is a party or the consummation of the transactions contemplated hereby, or if any such consent, approval, authorization or order is required, it has obtained the same.

(vii)    The Company has delivered to the Depositor and the Master Servicer financial statements of its parent, for its last two complete fiscal years. All such financial information fairly presents the pertinent results of operations and financial position for the period identified and has been prepared in accordance with GAAP consistently applied throughout the periods involved, except as set forth in the notes thereto. There has been no change in the servicing policies and procedures (outside of the normal changes warranted by regulatory and product type changes in the portfolio), business, operations, financial condition, properties or assets of the Company since the date of the Company’s financial information that would have a material adverse effect on its ability to perform its obligations under this Agreement.

(b)    The Company hereby covenants to the Master Servicer, the Depositor, the Securities Administrator and the Trustee as follows, as of the Closing Date:

(i)    As of the Closing Date and except as has been otherwise disclosed to the Master Servicer and the Depositor, or disclosed in any public filing: (1) no default or servicing related performance trigger has occurred as to any other Pass-Through Transfer due to any act or failure to act of the Company; (2) no material noncompliance with applicable servicing criteria as to any other Pass-Through Transfer has occurred, been disclosed or reported by the Company; (3) the Company has not been terminated as servicer in a residential mortgage loan Pass-Through Transfer, either due to a servicing default or to application of a servicing performance test or trigger; (4) no material changes to the Company’s servicing policies and procedures for similar loans have occurred in the preceding three years; (5) there are no aspects of the Company’s financial condition that could have a material adverse impact on the performance by the Company of its obligations hereunder; (6) there are no legal proceedings pending, or known to be contemplated by governmental authorities, against the Company that could be material to investors in the securities issued in such Pass-Through Transfer; and (7) there are no affiliations, relationships or transactions relating to the Company of a type that are described under Item 1119 of Regulation AB.

(ii)    If so requested by the Depositor or the Master Servicer on any date, the Company shall, within five Business Days following such request, confirm in writing the accuracy of the representations and warranties set forth in clause (b)(i) of this Section or, if any such representation and warranty is not accurate as of the date of such request, provide reasonably adequate disclosure of the pertinent facts, in writing, to the requesting party.

(iii)    As a condition to the succession to the Company or any subservicer as servicer or subservicer under this Agreement by any Person (i) into which the Company or such subservicer may be merged or consolidated, or (ii) which may be appointed as a successor to the Company or any subservicer, the Company shall provide to the Master Servicer and the Depositor, at least 15 calendar days prior to the effective date of such succession or appointment, (x) written notice to the Master Servicer, the Depositor and the Insurer of such succession or appointment and (y) in writing and in form and substance reasonably satisfactory to the Master Servicer and the Depositor, all information reasonably requested by the Master Servicer or the Depositor in order to comply with its reporting obligation under Item 6.02 of Form 8-K with respect to any class of asset-backed securities.

(c)    Wells Fargo Bank, National Association, in its capacity as Master Servicer and Securities Administrator hereby represents and warrants to the Sponsor, the Depositor, the Trustee and the Insurer as follows, as of the Closing Date:

(i)    It is a national banking association duly formed, validly existing and in good standing under the laws of the United States of America and is duly authorized and qualified to transact any and all business contemplated by this Agreement to be conducted by the Master Servicer and the Securities Administrator in any state in which a Mortgaged Property is located or is otherwise not required under applicable law to effect such qualification and, in any event, is in compliance with the doing business laws of any such state, to the extent necessary to ensure its ability to enforce each Mortgage Loan, to master service the Mortgage Loans in accordance with the terms of this Agreement and any other Transaction Documents to which it is a party and to perform any of its other obligations under this Agreement in accordance with the terms hereof or thereof;

(ii)    It has the full corporate power and authority to execute, deliver and perform, and to enter into and consummate the transactions contemplated by this Agreement and any other Transaction Documents to which it is a party and has duly authorized by all necessary corporate action on its part the execution, delivery and performance of this Agreement and any other Transaction Documents to which it is a party; and this Agreement and any other Transaction Documents to which it is a party, assuming the due authorization, execution and delivery hereof by the other parties hereto, constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except that (a) the enforceability hereof may be limited by bankruptcy, insolvency, moratorium, receivership and other similar laws relating to creditors’ rights generally and (b) 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.

(iii)    The execution and delivery of this Agreement and any other Transaction Documents to which it is a party by it, the consummation of any other of the transactions contemplated by this Agreement, and any other Transaction Documents to which it is a party and the fulfillment of or compliance with the terms hereof are in its ordinary course of business and will not (A) result in a material breach of any term or provision of its charter or by-laws or (B) materially conflict with, result in a material breach, violation or acceleration of, or result in a material default under, the terms of any other material agreement or instrument to which it is a party or by which it may be bound, or (C) constitute a material violation of any statute, order or regulation applicable to it of any court, regulatory body, administrative agency or governmental body having jurisdiction over it; and it is not in breach or violation of any material indenture or other material agreement or instrument, or in violation of any statute, order or regulation of any court, regulatory body, administrative agency or governmental body having jurisdiction over it which breach or violation may materially impair its ability to perform or meet any of its obligations under this Agreement and any other Transaction Documents to which it is a party.

(iv)    No litigation is pending or, to the best of its knowledge, threatened, against it that would materially and adversely affect the execution, delivery or enforceability of this Agreement and any other Transaction Documents to which it is a party or its ability to perform any of its other obligations under this Agreement and any other Transaction Documents to which it is a party in accordance with the terms hereof.

(v)    No consent, approval, authorization or order of any court or governmental agency or body is required for its execution, delivery and performance of, or compliance with, this Agreement and any other Transaction Documents to which it is a party or the consummation of the transactions contemplated hereby or thereby, or if any such consent, approval, authorization or order is required, it has obtained the same.

(d)    The Sponsor hereby represents and warrants to the Depositor, the Securities Administrator, the Master Servicer, the Trustee and the Insurer as follows, as of the Closing Date:

(i)    The Sponsor is duly organized as a Delaware corporation and is validly existing and in good standing under the laws of the State of Delaware and is duly authorized and qualified to transact any and all business contemplated by this Agreement and any other Transaction Documents to which it is a party to be conducted by the Sponsor in any state in which a Mortgaged Property is located or is otherwise not required under applicable law to effect such qualification and, in any event, is in compliance with the doing business laws of any such state, to the extent necessary to ensure its ability to enforce each Mortgage Loan, to sell the Mortgage Loans in accordance with the terms of this Agreement and to perform any of its other obligations under this Agreement and any other Transaction Documents to which it is a party in accordance with the terms hereof or thereof.

(ii)    The Sponsor has the full corporate power and authority to sell each Mortgage Loan, and to execute, deliver and perform, and to enter into and consummate the transactions contemplated by this Agreement and any other Transaction Documents to which it is a party and has duly authorized by all necessary corporate action on the part of the Sponsor the execution, delivery and performance of this Agreement and any other Transaction Documents to which it is a party; and this Agreement and any other Transaction Documents to which it is a party, assuming the due authorization, execution and delivery hereof by the other parties hereto or thereto, as applicable, constitutes a legal, valid and binding obligation of the Sponsor, enforceable against the Sponsor in accordance with its terms, except that (a) the enforceability hereof may be limited by bankruptcy, insolvency, moratorium, receivership and other similar laws relating to creditors’ rights generally and (b) 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.

(iii)    The execution and delivery of this Agreement and any other Transaction Documents to which it is a party by the Sponsor, the sale of the Mortgage Loans by the Sponsor under the Mortgage Loan Purchase Agreement, the consummation of any other of the transactions contemplated by this Agreement and any other Transaction Documents to which it is a party, and the fulfillment of or compliance with the terms hereof and thereof are in the ordinary course of business of the Sponsor and will not (A) result in a breach of any term or provision of the charter or by-laws of the Sponsor or (B) conflict with, result in a breach, violation or acceleration of, or result in a default under, the terms of any other material agreement or instrument to which the Sponsor is a party or by which it may be bound, or (C) constitute a violation of any statute, order or regulation applicable to the Sponsor of any court, regulatory body, administrative agency or governmental body having jurisdiction over the Sponsor; and the Sponsor is not in breach or violation of any material indenture or other material agreement or instrument, or in violation of any statute, order or regulation of any court, regulatory body, administrative agency or governmental body having jurisdiction over it which breach or violation may materially impair the Sponsor’s ability to perform or meet any of its obligations under this Agreement and any other Transaction Documents to which it is a party.

(iv)    The Sponsor is an approved seller of conventional mortgage loans for Fannie Mae or Freddie Mac and is a mortgagee approved by the Secretary of Housing and Urban Development pursuant to sections 203 and 211 of the National Housing Act.

(v)    No litigation is pending or, to the best of the Sponsor’s knowledge, threatened, against the Sponsor that would materially and adversely affect the execution, delivery or enforceability of this Agreement and any other Transaction Documents to which it is a party or the ability of the Sponsor to sell the Mortgage Loans or to perform any of its other obligations under this Agreement and any other Transaction Documents to which it is a party in accordance with the terms hereof or thereof.

(vi)    No consent, approval, authorization or order of any court or governmental agency or body is required for the execution, delivery and performance by the Sponsor of, or compliance by the Sponsor with, this Agreement and any other Transaction Documents to which it is a party or the consummation of the transactions contemplated hereby or thereby, or if any such consent, approval, authorization or order is required, the Sponsor has obtained the same.

(vii)    As of the Closing Date, the representations and warranties concerning the Mortgage Loans set forth in Section 7 of the Mortgage Loan Purchase Agreement are true and correct in all material respects.

(e)    Upon discovery by any of the parties hereto or a Certificates Insurer of a breach of a representation or warranty set forth in Section 7 of the Mortgage Loan Purchase Agreement that materially and adversely affects the interests of the Certificateholders or a Certificate Insurer in any Mortgage Loan (such determination to be made without regard to the Policy), the party discovering such breach shall give prompt written notice thereof to the other parties to this Agreement and the Insurer. The Sponsor hereby covenants with respect to the representations and warranties set forth in Section 7 of the Mortgage Loan Purchase Agreement, that within 90 days of the discovery of a breach of any representation or warranty set forth therein that materially and adversely affects the interests of the Certificateholders (such determination to be made without regard to the Policy) or the Insurer in any Mortgage Loan, it shall cure such breach in all material respects and, if such breach is not so cured, (i) if such 90-day period expires prior to the second anniversary of the Closing Date, remove such Mortgage Loan (a “Deleted Mortgage Loan”) from the Trust Fund and substitute in its place a Replacement Mortgage Loan, in the manner and subject to the conditions set forth in this Section; or (ii) repurchase the affected Mortgage Loan or Mortgage Loans from the Trustee at the Purchase Price in the manner set forth below; provided that, any such substitution pursuant to (i) above or repurchase pursuant to (ii) above shall not be effected prior to the delivery to the Trustee, the Securities Administrator and the Insurer of an Opinion of Counsel if required by Section 2.05 hereof and any such substitution pursuant to (i) above shall not be effected prior to the additional delivery to the Custodian of a Request for Release. The Sponsor shall, or cause the related Servicer to, furnish to the Securities Administrator and the Trustee the Officer’s Certificate required under Section 2.03(e) relating to such cure. If the Trustee has received (or has given, as the case may be) written notice of such a breach of a representation or warranty, the Trustee shall give prompt written notice to the Insurer, the Master Servicer, the Securities Administrator and the Sponsor, if within 90 days of its receipt (or giving, as the case may be) of such notice of breach, the Trustee does not receive an Officer’s Certificate as described in the preceding sentence certifying as to the cure of such breached representation or warranty. The Sponsor shall promptly reimburse the Trustee for any expenses reasonably incurred by the Trustee in respect of enforcing the remedies for such breach. To enable the Sponsor to amend the Mortgage Loan Schedule, the Sponsor shall, unless it cures such breach in a timely fashion pursuant to this Section 2.03, promptly notify the Trustee whether it intends either to repurchase, or to substitute for, the Mortgage Loan affected by such breach. With respect to the representations and warranties in Section 7 of the Mortgage Loan Purchase Agreement that are made to the best of the Sponsor’s knowledge, if it is discovered by any of the Depositor, the Master Servicer, the Sponsor, the Securities Administrator, the Trustee or the Insurer that the substance of such representation and warranty is inaccurate and such inaccuracy materially and adversely affects the value of the related Mortgage Loan, notwithstanding the Sponsor’s lack of knowledge with respect to the substance of such representation or warranty, the Sponsor shall nevertheless be required to cure, substitute for or repurchase the affected Mortgage Loan in accordance with the foregoing.

With respect to any Replacement Mortgage Loan or Loans, the Sponsor shall deliver to the Trustee for the benefit of the Certificateholders and the Insurer such documents and agreements as are required by Section 2.01. No substitution shall be made in any calendar month after the Determination Date for such month. Scheduled Payments due with respect to Replacement Mortgage Loans in the Due Period related to the Distribution Date on which such proceeds are to be distributed shall not be part of the Trust Fund and shall be retained by the Sponsor. For the month of substitution, distributions to Certificateholders will include the Scheduled Payment due on any Deleted Mortgage Loan for the related Due Period and thereafter the Sponsor shall be entitled to retain all amounts received in respect of such Deleted Mortgage Loan. The Sponsor shall amend the Mortgage Loan Schedule for the benefit of the Certificateholders and the Insurer to reflect the removal of such Deleted Mortgage Loan and the substitution of the Replacement Mortgage Loan or Loans and the Sponsor shall deliver the amended Mortgage Loan Schedule to the Trustee, the Master Servicer, the Securities Administrator, the Custodian and the Insurer. Upon such substitution, the Replacement Mortgage Loan or Loans shall be subject to the terms of this Agreement in all respects, and the Sponsor shall be deemed to have made with respect to such Replacement Mortgage Loan or Loans, as of the date of substitution, the representations and warranties set forth in Section 7 of the Mortgage Loan Purchase Agreement with respect to such Mortgage Loan. Upon any such substitution and the deposit into the Distribution Account of the amount required to be deposited therein in connection with such substitution as described in the following paragraph and receipt by the Securities Administrator and the Trustee of a Request for Release for such Mortgage Loan, the Trustee or the Custodian shall release to the Sponsor the Mortgage File relating to such Deleted Mortgage Loan and held for the benefit of the Certificateholders and the Insurer and the Trustee shall execute and deliver at the Sponsor’s direction such instruments of transfer or assignment as have been prepared by the Sponsor, in each case without recourse, representation or warranty as shall be necessary to vest in the Sponsor, or its respective designee, title to the Trustee’s interest in any Deleted Mortgage Loan substituted for pursuant to this Section 2.03.

For any month in which the Sponsor substitutes one or more Replacement Mortgage Loans for a Deleted Mortgage Loan, the Master Servicer will determine the amount (if any) by which the aggregate principal balance of all the Replacement Mortgage Loans as of the date of substitution is less than the Stated Principal Balance (after application of the principal portion of the Scheduled Payment due in the month of substitution) of such Deleted Mortgage Loan. An amount equal to the aggregate of such deficiencies, described in the preceding sentence for any Distribution Date (such amount, the “Substitution Adjustment Amount”) shall be deposited into the Distribution Account by the Securities Administrator upon receipt from the Sponsor delivering such Replacement Mortgage Loan on the Determination Date for the Distribution Date relating to the Prepayment Period during which the related Mortgage Loan became required to be purchased or replaced hereunder.

In the event that the Sponsor shall have repurchased a Mortgage Loan, the Purchase Price therefor shall be deposited into the Distribution Account maintained by the Securities Administrator, on the Determination Date for the Distribution Date in the month following the month during which the Sponsor became obligated to repurchase or replace such Mortgage Loan and upon such deposit of the Purchase Price, the delivery of an Opinion of Counsel if required by Section 2.05 and the receipt of a Request for Release, the Trustee or the Custodian shall release the related Mortgage File held for the benefit of the Certificateholders and the Insurer to the Sponsor, and the Trustee shall execute and deliver at such Person’s direction the related instruments of transfer or assignment prepared by the Sponsor, in each case without recourse, representation or warranty as shall be necessary to transfer title from the Trustee for the benefit of the Certificateholders and the Insurer and transfer the Trustee’s interest to the Sponsor to any Mortgage Loan purchased pursuant to this Section 2.03. In connection with any repurchase or substitution of a Mortgage Loan or the cure of a breach of a representation or warranty set forth in Section 7 of the Mortgage Loan Purchase Agreement pursuant to this Section 2.03, the Seller shall promptly furnish to the Securities Administrator and the Trustee an officer’s certificate, signed by a duly authorized officer of the Seller to the effect that such repurchase, substitution or cure has been made in accordance with the terms and conditions of this Agreement and that all conditions precedent to such repurchase, substitution or cure have been satisfied, including the delivery to the Securities Administrator of the Purchase Price or Substitution Adjustment Amount, as applicable, for deposit into the Distribution Account, together with copies of any Opinion of Counsel required to be delivered pursuant to this Agreement and the related Request for Release, in which the Securities Administrator and the Trustee may rely. Solely for purposes of the Securities Administrator providing an Assessment of Compliance, upon receipt of such documentation, the Securities Administrator shall approve such repurchase, substitution or cure, as applicable, and which approval shall consist solely of the Securities Administrator’s receipt of such documentation and deposits. It is understood and agreed that the obligation under this Agreement of the Sponsor to cure the breach of a representation or warranty set forth in Section 7 of the Mortgage Loan Purchase Agreement or to repurchase or replace any Mortgage Loan as to which a breach has occurred and is continuing shall constitute the sole remedies against the Sponsor respecting such breach available to Certificateholders, the Depositor or the Trustee.

(f)    The representations and warranties set forth in Section 2.03 hereof shall survive delivery of the respective Mortgage Loans and Mortgage Files to the Trustee or the Custodian for the benefit of the Certificateholders and the Insurer.

Section 2.04    Representations and Warranties of the Depositor. The Depositor hereby represents and warrants to the Master Servicer, the Securities Administrator, the Trustee and the Insurer as follows, as of the date hereof and as of the Closing Date:

(i)    The Depositor is duly organized and is validly existing as limited liability company in good standing under the laws of the State of Delaware and has full power and authority necessary to own or hold its properties and to conduct its business as now conducted by it and to enter into and perform its obligations under this Agreement and any other Transaction Documents to which it is a party.

(ii)    The Depositor has the full power and authority to execute, deliver and perform, and to enter into and consummate the transactions contemplated by, this Agreement and any other Transaction Documents to which it is a party and has duly authorized, by all necessary action on its part, the execution, delivery and performance of this Agreement and any other Transaction Documents to which it is a party; and this Agreement and any other Transaction Documents to which it is a party, assuming the due authorization, execution and delivery hereof and thereof by the other parties hereto and thereto, constitutes a legal, valid and binding obligation of the Depositor, enforceable against the Depositor in accordance with its terms, subject, as to enforceability, to (i) bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights generally and (ii) general principles of equity, regardless of whether enforcement is sought in a proceeding in equity or at law.

(iii)    The execution and delivery of this Agreement and any other Transaction Documents to which it is a party by the Depositor, the consummation of the transactions contemplated by this Agreement and any other Transaction Documents to which it is a party, and the fulfillment of or compliance with the terms hereof are in the ordinary course of business of the Depositor and will not (A) result in a breach of any term or provision of the organizational documents of the Depositor or (B) conflict with, result in a breach, violation or acceleration of, or result in a default under, the terms of any other material agreement or instrument to which the Depositor is a party or by which it may be bound or (C) constitute a violation of any statute, order or regulation applicable to the Depositor of any court, regulatory body, administrative agency or governmental body having jurisdiction over the Depositor; and the Depositor is not in breach or violation of any material indenture or other material agreement or instrument, or in violation of any statute, order or regulation of any court, regulatory body, administrative agency or governmental body having jurisdiction over it which breach or violation may materially impair the Depositor’s ability to perform or meet any of its obligations under this Agreement and any other Transaction Documents to which it is a party.

(iv)    No litigation is pending, or, to the best of the Depositor’s knowledge, threatened, against the Depositor that would materially and adversely affect the execution, delivery or enforceability of this Agreement and any other Transaction Documents to which it is a party or the ability of the Depositor to perform its obligations under this Agreement and any other Transaction Documents to which it is a party in accordance with the terms hereof.

(v)    No consent, approval, authorization or order of any court or governmental agency or body is required for the execution, delivery and performance by the Depositor of, or compliance by the Depositor with, this Agreement and any other Transaction Documents to which it is a party or the consummation of the transactions contemplated hereby, or if any such consent, approval, authorization or order is required, the Depositor has obtained the same; and

(vi)    The Depositor has filed all reports required to be filed by Section 13 or Section 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Depositor was required to file such reports) and it has been subject to such filing requirements for the past 90 days.

The Depositor hereby represents and warrants to the Trustee and the Insurer as of the Closing Date, following the transfer of the Mortgage Loans to it by the Sponsor, the Depositor had good title to the Mortgage Loans and the related Mortgage Notes were subject to no offsets, claims, defenses or counterclaims.

It is understood and agreed that the representations and warranties set forth in the immediately preceding paragraph shall survive delivery of the Mortgage Files to the Trustee or the Custodian for the benefit of the Certificateholders and the Insurer. Upon discovery by the Depositor, the Trustee or the Insurer of a breach of such representations and warranties, the party discovering such breach shall give prompt written notice to the others and to each Rating Agency and to the Insurer.

Section 2.05    Delivery of Opinion of Counsel in Connection with Substitutions and Repurchases. 

(a)    Notwithstanding any contrary provision of this Agreement, with respect to any Mortgage Loan that is not in default or as to which default is not imminent, no repurchase or substitution pursuant to Sections 2.02 or 2.03 shall be made unless the Sponsor delivers to the Trustee and the Insurer an Opinion of Counsel, addressed to the Trustee and the Insurer, to the effect that such repurchase or substitution would not (i) result in the imposition of the tax on “prohibited transactions” of REMIC I, REMIC II or REMIC III or contributions after the Closing Date, as defined in Sections 860F(a)(2) and 860G(d) of the Code, respectively, or (ii) cause any of REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC at any time that any Certificates are outstanding. Any Mortgage Loan as to which repurchase or substitution was delayed pursuant to this paragraph shall be repurchased or the substitution therefor shall occur (subject to compliance with Sections 2.02 or 2.03) upon the earlier of (a) the occurrence of a default or a default becoming reasonably foreseeable with respect to such Mortgage Loan and (b) receipt by the Trustee and the Insurer of an Opinion of Counsel addressed to the Trustee to the effect that such repurchase or substitution, as applicable, will not result in the events described in clause (i) or clause (ii) of the preceding sentence.

(b)    Upon discovery by the Depositor, the Sponsor, the Custodian, the Insurer or the Master Servicer that any Mortgage Loan does not constitute a “qualified mortgage” within the meaning of Section 860G(a)(3) of the Code, the party discovering such fact shall promptly (and in any event within 5 Business Days of discovery) give written notice thereof to the other parties and the Trustee. In connection therewith, the Trustee, or the Custodian on its behalf, shall require the Sponsor, at the Sponsor’s option, to either (i) substitute, if the conditions in Section 2.03(d) with respect to substitutions are satisfied, a Replacement Mortgage Loan for the affected Mortgage Loan, or (ii) repurchase the affected Mortgage Loan within 90 days of such discovery in the same manner as it would a Mortgage Loan for a breach of representation or warranty contained in Section 2.03. The Trustee, or the Custodian on its behalf, shall reconvey to the Sponsor the Mortgage Loan to be released pursuant hereto (and the Custodian shall deliver the related Mortgage File) in the same manner, and on the same terms and conditions, as it would a Mortgage Loan repurchased for breach of a representation or warranty contained in Section 2.03.

Section 2.06    Countersignature and Delivery of Certificates. 

(a)    The Trustee acknowledges the sale, transfer and assignment to it of the Trust Fund and, concurrently with such transfer and assignment, the Securities Administrator has executed, countersigned and delivered, to or upon the order of the Depositor, the Certificates in authorized denominations evidencing the entire ownership of the Trust Fund. The Trustee agrees to hold the Trust Fund and exercise the rights referred to above for the benefit of all present and future Holders of the Certificates and the Insurer and to perform the duties set forth in this Agreement in accordance with its terms.

(b)    The Depositor, concurrently with the execution and delivery hereof, does hereby transfer, assign, set over and otherwise convey in trust to the Trustee without recourse all the right, title and interest of the Depositor in and to the REMIC I Regular Interests, REMIC II Regular Interests and the other assets of REMIC III for the benefit of the Holders of the REMIC III Certificates. The Trustee acknowledges receipt of the REMIC I Regular Interests (all of which are uncertificated), REMIC II Regular Interests (all of which are uncertificated) and the other assets of REMIC III and declares that it holds and will hold the same in trust for the exclusive use and benefit of the Holders of the REMIC III Certificates.

Section 2.07    Purposes and Powers of the Trust. 

The purpose of the common law trust, as created hereunder, is to engage in the following activities:

(a)    acquire and hold the Mortgage Loans and the other assets of the Trust Fund and the proceeds therefrom;

(b)    to issue the Certificates sold to the Depositor in exchange for the Mortgage Loans;

(c)    to make payments on the Certificates;

(d)    to engage in those activities that are necessary, suitable or convenient to accomplish the foregoing or are incidental thereto or connected therewith; and

(e)    subject to compliance with this Agreement, to engage in such other activities as may be required in connection with conservation of the Trust Fund and the making of distributions to the Certificateholders.

The trust is hereby authorized to engage in the foregoing activities. The trust shall not engage in any activity other than in connection with the foregoing or other than as required or authorized by the terms of this Agreement while any Certificate is outstanding, and this Section 2.07 may not be amended, without the consent of the Certificateholders evidencing 51% or more of the aggregate voting rights of the Certificates.

Section 3.01    The Company. The Company shall service and administer the EMC Mortgage Loans in accordance with customary and usual standards of practice of prudent mortgage loan servicers in the respective states in which the related Mortgaged Properties are located. In connection with such servicing and administration, the Company shall have full power and authority, acting alone and/or through subservicers as provided in Section 3.03, to do or cause to be done any and all things that it may deem necessary or desirable in connection with such servicing and administration, including but not limited to, the power and authority, subject to the terms hereof (i) to execute and deliver, on behalf of the Certificateholders, the Trustee and the Insurer, customary consents or waivers and other instruments and documents, (ii) to consent to transfers of any related Mortgaged Property and assumptions of the Mortgage Notes and related Mortgages (but only in the manner provided herein), (iii) to collect any Insurance Proceeds and other Liquidation Proceeds or Subsequent Recoveries, and (iv) subject to Section 3.09, to effectuate foreclosure or other conversion of the ownership of the Mortgaged Property securing any EMC Mortgage Loan; provided that the Company shall take no action that is inconsistent with or prejudices the interests of the Trust Fund, the Insurer or the Certificateholders in any EMC Mortgage Loan or the rights and interests of the Depositor, the Trustee or the Insurer under this Agreement and any other Transaction Documents to which it is a party.

Without limiting the generality of the foregoing, the Company, in its own name or in the name of the Trust, the Depositor or the Trustee, is hereby authorized and empowered by the Trust, the Depositor and the Trustee, when the Company believes it appropriate in its reasonable judgment, to execute and deliver, on behalf of the Trustee, the Depositor, the Certificateholders or any of them, any and all instruments of satisfaction or cancellation, or of partial or full release or discharge and all other comparable instruments, with respect to the EMC Mortgage Loans, and with respect to the related Mortgaged Properties held for the benefit of the Certificateholders and the Insurer. The Company shall prepare and deliver to the Depositor and/or the Trustee such documents requiring execution and delivery by any or all of them as are necessary or appropriate to enable the Company to service and administer the EMC Mortgage Loans. Upon receipt of such documents, the Depositor and/or the Trustee shall execute such documents and deliver them to the Company.

In accordance with the standards of the first paragraph of this Section 3.01, the Company shall advance or cause to be advanced funds as necessary for the purpose of effecting the payment of taxes and assessments on the Mortgaged Properties relating to the EMC Mortgage Loans, which advances shall be reimbursable in the first instance from related collections from the Mortgagors pursuant to Section 5.04, and further as provided in Section 5.02. All costs incurred by the Company, if any, in effecting the timely payments of taxes and assessments on the Mortgaged Properties relating to the EMC Mortgage Loans and related insurance premiums shall not, for the purpose of calculating monthly distributions to the Certificateholders, be added to the Stated Principal Balance under the related EMC Mortgage Loans, notwithstanding that the terms of such Mortgage Loans so permit.

Section 3.02    Due-on-Sale Clauses; Assumption Agreements. 

(a)    Except as otherwise provided in this Section 3.02, when any property subject to a Mortgage has been or is about to be conveyed by the Mortgagor, the Company shall to the extent that it has knowledge of such conveyance, enforce any due-on-sale clause contained in any Mortgage Note or Mortgage, to the extent permitted under applicable law and governmental regulations, but only to the extent that such enforcement will not adversely affect or jeopardize coverage under any Required Insurance Policy. Notwithstanding the foregoing, the Company is not required to exercise such rights with respect to an EMC Mortgage Loan if the Person to whom the related Mortgaged Property has been conveyed or is proposed to be conveyed satisfies the terms and conditions contained in the Mortgage Note and Mortgage related thereto and the consent of the mortgagee under such Mortgage Note or Mortgage is not otherwise so required under such Mortgage Note or Mortgage as a condition to such transfer. In the event that the Company is prohibited by law from enforcing any such due-on-sale clause, or if coverage under any Required Insurance Policy would be adversely affected, or if nonenforcement is otherwise permitted hereunder, the Company is authorized, subject to Section 3.02(b), to take or enter into an assumption and modification agreement from or with the person to whom such property has been or is about to be conveyed, pursuant to which such person becomes liable under the Mortgage Note and, unless prohibited by applicable state law, the Mortgagor remains liable thereon, provided that the Mortgage Loan shall continue to be covered (if so covered before the Company enters such agreement) by the applicable Required Insurance Policies. The Company, subject to Section 3.02(b), is also authorized with the prior approval of the insurers under any Required Insurance Policies to enter into a substitution of liability agreement with such Person, pursuant to which the original Mortgagor is released from liability and such Person is substituted as Mortgagor and becomes liable under the Mortgage Note. Notwithstanding the foregoing, the Company shall not be deemed to be in default under this Section 3.02(a) by reason of any transfer or assumption that the Company reasonably believes it is restricted by law from preventing.

(b)    Subject to the Company’s duty to enforce any due-on-sale clause to the extent set forth in Section 3.02(a), in any case in which a Mortgaged Property has been conveyed to a Person by a Mortgagor, and such Person is to enter into an assumption agreement or modification agreement or supplement to the Mortgage Note or Mortgage that requires the signature of the Trustee, or if an instrument of release signed by the Trustee is required releasing the Mortgagor from liability on the related EMC Mortgage Loan, the Company shall prepare and deliver or cause to be prepared and delivered to the Trustee for signature and shall direct, in writing, the Trustee to execute the assumption agreement with the Person to whom the Mortgaged Property is to be conveyed and such modification agreement or supplement to the Mortgage Note or Mortgage or other instruments as are reasonable or necessary to carry out the terms of the Mortgage Note or Mortgage or otherwise to comply with any applicable laws regarding assumptions or the transfer of the Mortgaged Property to such Person. In connection with any such assumption, no material term of the Mortgage Note (including, but not limited to, the Mortgage Rate, the amount of the Scheduled Payment and any other term affecting the amount or timing of payment on the EMC Mortgage Loan) may be changed. In addition, the substitute Mortgagor and the Mortgaged Property must be acceptable to the Company in accordance with its servicing standards as then in effect. The Company shall notify the Trustee that any such substitution or assumption agreement has been completed by forwarding to the Trustee the original of such substitution or assumption agreement, which in the case of the original shall be added to the related Mortgage File and shall, for all purposes, be considered a part of such Mortgage File to the same extent as all other documents and instruments constituting a part thereof. Any fee collected by the Company for entering into an assumption or substitution of liability agreement shall be retained by the Company as additional servicing compensation.

Section 3.03    Subservicers. The Company shall perform all of its servicing responsibilities hereunder or may cause a subservicer to perform any such servicing responsibilities on its behalf, but the use by the Company of a subservicer shall not release the Company from any of its obligations hereunder and the Company shall remain responsible hereunder for all acts and omissions of each subservicer as fully as if such acts and omissions were those of the Company. The Company shall pay all fees of each subservicer from its own funds, and a subservicer’s fee shall not exceed the Servicing Fee payable to the Company hereunder.

At the cost and expense of the Company, without any right of reimbursement from its Protected Account, the Company shall be entitled to terminate the rights and responsibilities of a subservicer and arrange for any servicing responsibilities to be performed by a successor subservicer; provided, however, that nothing contained herein shall be deemed to prevent or prohibit the Company, at the Company’s option, from electing to service the related EMC Mortgage Loans itself. In the event that the Company’s responsibilities and duties under this Agreement are terminated pursuant to Section 9.05, the Company shall at its own cost and expense terminate the rights and responsibilities of each subservicer effective as of the date of termination of the Company. The Company shall pay all fees, expenses or penalties necessary in order to terminate the rights and resp