POOLING AND SERVICING AGREEMENT

DEUTSCHE ALT-A SECURITIES, INC.

Depositor

and

WELLS FARGO BANK, N.A.

Master Servicer and Securities Administrator

and

HSBC BANK USA, NATIONAL ASSOCIATION

Trustee

_____________________

POOLING AND SERVICING AGREEMENT

Dated as of April 1, 2007

_____________________

PHH Alternative Mortgage Trust, Series 2007-2

Mortgage Pass-Through Certificates

Series 2007-2

TABLE OF CONTENTS

EXHIBITS

This Pooling and Servicing Agreement, dated and effective as of April 1, 2007 (this "Agreement"), is executed by and among Deutsche Alt-A Securities, Inc., as depositor (the "Depositor"), Wells Fargo Bank, N.A., as master servicer (the "Master Servicer") and as securities administrator (the "Securities Administrator"), and HSBC Bank USA, National Association, as trustee (the "Trustee").  Capitalized terms used in this Agreement and not otherwise defined have the meanings ascribed to such terms in Article I hereof.

PRELIMINARY STATEMENT

The Depositor at the Closing Date is the owner of the Loans and the other property being conveyed by it to the Trustee for inclusion in the Trust Fund.  The Trust Fund will consist of a segregated pool of assets comprised of the Loans and certain other assets. On the Closing Date, the Depositor will acquire the Certificates from the Trust Fund as consideration for its transfer to the Trust Fund of the Loans and certain other assets and will be the owner of the Certificates.  The Depositor has duly authorized the execution and delivery of this Agreement to provide for the conveyance to the Trustee of the Loans and the issuance to the Depositor of the Certificates representing in the aggregate the entire beneficial ownership of the Trust Fund.  All covenants and agreements made by the Depositor, the Master Servicer, the Securities Administrator and the Trustee herein with respect to the Loans and the other property constituting the Trust Fund are for the benefit of the Holders from time to time of the Certificates.  The Depositor, the Master Servicer, the Securities Administrator and the Trustee are entering into this Agreement, and the Trustee is accepting the trust created hereby, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged.

The Certificates issued hereunder, other than the Class I-CE, Class I-R, Class II-B-4, Class II-B-5 and Class II-B-6 Certificates, have been offered for sale pursuant to a Prospectus Supplement dated April 25, 2007 to a Prospectus dated May 19, 2006 (together, the "Prospectus").  The Class II-B-4, Class II-B-5 and Class II-B-6 Certificates have been offered for sale pursuant to a Private Placement Memorandum dated April 26, 2007.  The Trust Fund created hereunder is intended to be the "Trust" as described in the Prospectus and the Certificates are intended to be the "Certificates" described therein.

The Trustee shall elect that each of REMIC I, REMIC II, REMIC III, REMIC IV and REMIC V be treated as a REMIC under Section 860D of the Code.  Any inconsistencies or ambiguities in this Agreement or in the administration of this Agreement shall be resolved in a manner that preserves the validity of such REMIC elections.  REMIC I, REMIC II, and REMIC III (each a "Group I REMIC") shall relate to Group I, and REMIC IV and REMIC V (each a "Group II REMIC") shall relate to Group II.  The assets of REMIC I shall include the portion of the Trust Fund related to Group I (other than the Group I Reserve Fund and both Swap Accounts).  The REMIC I Regular Interests shall constitute the assets of REMIC II.  The REMIC II Regular Interests shall constitute the assets of REMIC III (the "Group I Master REMIC").  The Class I-R Certificate shall represent ownership of the sole class of residual interest in each Group I REMIC formed hereby.  The assets of REMIC IV shall include the portion of the Trust Fund related to Group II (other than the Group II Reserve Fund).  The REMIC IV Regular Interests shall constitute the assets of REMIC V (the "Group II Master REMIC").  The Class II-AR Certificate shall represent ownership of the sole class of residual interest in each Group II REMIC formed hereby. For purposes of satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the "latest possible maturity date" for each regular interest created hereby shall be the 36th month following the latest maturity date of any Loan held in the Trust on the Closing Date.

REMIC I:

The following table sets forth the designations, principal balances, and interest rates for each interest in REMIC I, each of which (other than the R-I interest) is hereby designated as a regular interest in REMIC I (the "REMIC I Regular Interests"):

___________________

(1)

The interest rate with respect to any Distribution Date (and the related Interest Accrual Period) for the T1-A Interest is a per annum rate equal to the weighted average of the Net Mortgage Rates of the Group I Loans (the "REMIC I Net WAC Rate").

(2)

The interest rate with respect to any Distribution Date (and the related Interest Accrual Period) for this interest is a per annum rate equal to the lesser of (i) the Certificate REMIC Swap Rate, and (ii) the product of (a) the REMIC I Net WAC Rate and (b) 2.

(3)

For any Distribution Date (and the related Interest Accrual Period) the interest rate for each of these Lower Tier Interests shall be the excess, if any, of (i) the product of (a) the REMIC I Net WAC Rate and (b) 2, over (ii) the Certificate REMIC Swap Rate.

(4)

This interest shall have an initial principal balance equal to the excess of (i) the aggregate initial principal balance of the Group I Loans over (ii) the aggregate initial principal balance of all remaining REMIC I Regular Interests.

(5)

The R-I interest shall not have a principal balance and shall not bear interest.  The R-I interest is hereby designated as the sole class of residual interest in REMIC I.  

On each Distribution Date, interest shall be allocated with respect to the interests in REMIC I based on the above-described interest rates.

On each Distribution Date, all Realized Losses and all payments of principal with respect to the Group I Loans shall be allocated in the following order of priority:

(a)

First, to the T1-A interest until the outstanding principal balance of such interest is reduced to zero, and

(b)

Second, sequentially, to the other REMIC I Regular Interests in ascending order of their numerical designation, and, with respect to each pair of REMIC I Regular Interests having the same numerical designation, in equal amounts to each such REMIC I Regular Interest, until the principal balance of each is reduced to zero.

REMIC II:

The following table sets forth the designations, principal balances, and interest rates for each interest in REMIC II, each of which (other than the R-II interest) is hereby designated as a regular interest in REMIC II (the "REMIC II Regular Interests"):

___________________

(1)

The interest rate for each of these interests (the "REMIC Maximum Rate") with respect to any Distribution Date (and the related Interest Accrual Period) is a per annum rate equal to the weighted average of the interest rates of the regular interests in REMIC I provided , however , that for any Distribution Date on which the Class T2-IO Interest is entitled to a portion of the interest accruals on a REMIC I Regular Interest having an "F" in its class designation, as described in footnote two below, such weighted average shall be computed by first subjecting the rate on such REMIC I interest to a cap equal to the product of the interest rate used to compute the Net Swap Payment for the Certificate Swap Agreement adjusted to reflect the day count convention used for such interest rate for such Distribution Date and 2 ("Swap LIBOR").

(2)

The Class T2-IO is an interest only class that does not have a principal balance.  For only those Distribution Dates listed in the first column in the table below, the Class T2-IO shall be entitled to interest accrued on the REMIC I Regular Interest listed in  the second column in the table below at a per annum rate equal to the excess, if any, of (i) the interest rate for such REMIC I Regular Interest for such Distribution Date over (ii)  Swap LIBOR for such Distribution Date.

(3)

The R-II interest shall not have a principal balance and shall not bear interest.  The R-II interest is hereby designated as the sole class of residual interest in REMIC II.  

(4)

This interest shall have an initial principal balance equal to one-half of the initial Certificate Principal Balance of its Corresponding Class of Certificates.

(5)

This interest shall have an initial principal balance equal to the excess of (i) the aggregate initial principal balance of the REMIC I Regular Interests over (ii) the aggregate initial principal balance of the REMIC II Accretion Directed Classes.

(6)

This interest is a REMIC II Accretion Directed Class.

On each Distribution Date, interest shall be allocated with respect to the interests in REMIC II based on the above-described interest rates, provided however, that interest that accrues on the T2-Accrual Interest shall be deferred to the extent necessary to make the distributions of principal described below.  Any interest so deferred shall itself bear interest at the interest rate for the T2-Accrual Interest.    

On each Distribution Date the principal distributed on the interests in REMIC I (together with an amount equal to the interest deferred on the T2-Accrual Interest for such Distribution Date) shall be distributed, and Realized Losses shall be allocated, among the interests in REMIC II in the following order of priority:

(a)

First, to each interest in REMIC II having a Corresponding Class in REMIC III until the outstanding principal amount of each such interest equals one-half of the outstanding principal amount of such Corresponding Class for such interest immediately after such Distribution Date; and

(b)

Second, to the T2-Accrual Interest, any remaining amounts.

REMIC III:

The following table sets forth the designations, principal balances, and interest rates for each interest in REMIC III, each of which (other than the R-III interest) is hereby designated as a regular interest in REMIC III (the "REMIC III Regular Interests"):

____________________

(1)

This interest shall have an initial principal balance equal to the initial Certificate Principal Balance of its Corresponding Class of Certificates.

(2)

The T3-X interest has a notional balance equal to the aggregate initial principal balance of the REMIC II Regular Interests.  The interest rate of the T3-X interest shall be a rate sufficient to cause all net interest from the Group I Loans to accrue on the T3-X interest that is in excess of the total amount of interest that accrues on each other regular interest in REMIC III.  For any Distribution Date, the interest rate in respect of the T3-X interest shall be the excess of: (i) the weighted average interest rate of all interests in REMIC II (other than any interest-only regular interest) over (ii) the product of: (A) two and (B) the weighted average interest rate of the REMIC II Accretion Directed Classes and the T2-Accrual Interest, where the T2-Accrual Interest is subject to a cap equal to zero and each REMIC II Accretion Directed Class is subject to a cap equal to the Pass-Through Rate on its Corresponding Class of Certificates, provided that, for purposes of determining the Pass-Through Rate, the REMIC Maximum Rate shall be substituted for the Net WAC Pass-Through Rate in the definition thereof.  The T3-X interest shall also be entitled to principal equal to the excess of the sum of the aggregate Principal Balance of the Group I Loans as of the Cut-off Date over the aggregate Initial Certificate Principal Balance of the Group I Certificates (other than the Class I-CE Certificates) as of the Closing Date.  Such principal balance shall not bear interest.  Finally, the T3-X Interest shall be entitled to receive all amounts payable on the T2-IO interest.

(3)

This interest shall bear interest at the Pass-Through Rate for its Corresponding Class of Certificates, provided that, for purposes of determining the Pass-Through Rate, the REMIC Maximum Rate shall be substituted for the Net WAC Pass-Through Rate in the definition thereof.

(4)

REMIC III shall also issue the R-III interest, which shall not have a principal amount and shall not bear interest.  The R-III interest is hereby designated as the sole class of residual interest in REMIC III.

(5)

For purposes of the REMIC Provisions, the Class of Certificates corresponding to an interest in the Group I Master REMIC shall represent beneficial ownership of such interest in the Group I Master REMIC.  Any amount distributed on a Corresponding Class of Certificates on any Distribution Date in excess of the amount distributable on each interest in the Group I Master REMIC corresponding to such Class of Certificates shall be treated as having been paid from the Group I Reserve Fund or the Supplemental Interest Trust, as applicable, and any amount distributable on each interest in the Group I Master REMIC corresponding to such Class of Certificates on such Distribution Date in excess of the amount distributable on that Class of Certificates on such Distribution Date shall be treated as having been paid to the Supplemental Interest Trust, all pursuant to and as further provided in Section 11.1(l) hereof.

On each Distribution Date, interest shall be allocated with respect to the interests in REMIC III based on the above-described interest rates.

On each Distribution Date, the principal distributed on the REMIC II interests  shall be distributed, and Realized Losses shall be allocated, among the interests in REMIC III in an amount equal to the principal distributions and Realized Loss allocations for such Distribution Date with respect to the Corresponding Class of Certificates related to such interests, determined without regard to the Certificate Swap Agreement.

REMIC IV:

The following table sets forth characteristics of the interests in the REMIC IV, each of which, except for the Class R-V interest, is hereby designated as a "regular interest" in REMIC IV (the "REMIC IV Regular Interests"):

____________________

(1)

This interest shall have an initial principal balance equal to the Initial Certificate Principal Balance of its Corresponding Class of Certificates.

(2)

Each of these interests is an interest-only class and shall not have a principal balance.  Each of these interests shall be entitled to accrue interest on a notional balance equal to its Corresponding Class of Certificates.  

(3)

The R-IV interest is hereby designated as the sole class of residual interest in REMIC IV.

On each Distribution Date, the Group II Interest Distribution Amount shall be allocated with respect to the interests in REMIC IV based on the above-described interest rates.

On each Distribution Date, the principal distributed on the Group II Loans shall be distributed, and Realized Losses shall be allocated, among the interests in REMIC IV in an amount equal to the principal distributions and Realized Loss allocations for such Distribution Date with respect to the Corresponding Class of Certificates related to such interests.

REMIC V:

The following table sets forth characteristics of the interests in the Group II Master REMIC, each of which, except for the Class R-V interest, is hereby designated as a "regular interest" in REMIC V (the "REMIC V Regular Interests"):

____________________

(1)

This interest shall have an initial principal balance equal to the Initial Certificate Principal Balance of its Corresponding Class of Certificates.

(2)

This interest shall bear interest at the Pass-Through Rate for its Corresponding Class of Certificates.

(3)

The R-V interest is hereby designated as the sole class of residual interest in REMIC V.  

(4)

For purposes of the REMIC Provisions, the Class of Certificates corresponding to an interest in the Group II Master REMIC shall represent beneficial ownership of such interest in the Group II Master REMIC.

On each Distribution Date, interest shall be allocated with respect to the interests in REMIC V based on the above-described interest rates.

On each Distribution Date, the principal distributed on the REMIC IV interests shall be distributed, and Realized Losses shall be allocated, among the interests in REMIC V in an amount equal to the principal distributions and Realized Loss allocations for such Distribution Date with respect to the Corresponding Class of Certificates related to such interests.

The Certificates:

The following table irrevocably sets forth the designations, initial Certificate Principal Balance or Notional Amount and Pass-Through Rate for each Class of Certificates:  

___________________

(1)

Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations, the Distribution Date in the 36th month following the maturity date for the Loan held in the Trust on the Closing Date with the latest maturity date has been designated as the "latest possible maturity date" for each Class of Certificates.

(2)

The Pass-Through Rate for each Group I Senior Certificate and Group I Mezzanine Certificate are as set forth in the definition of  "Pass-Through Rate" herein.

(3)

Interest will accrue on the Class 2-A-3 Certificates at a per annum rate equal to (i) One-Month LIBOR plus (ii) 0.900%, subject to a maximum rate of 7.000% per annum and a minimum rate of 0.900% per annum.  The per annum Pass-Through Rate on the Class 2-A-3 Certifcates for the first Interest Accrual Period is 6.220%.

(4)

Interest will accrue on the Class 2-A-4 Certificates at a per annum rate equal to (i) 36.600% minus (ii) the product of  (a) One-Month LIBOR and (b) 6.000, subject to a maximum rate of 36.600% per annum and a minimum rate of 0.000% per annum.  The per annum Pass-Through Rate on the Class 2-A-4 Certifcates for the first Interest Accrual Period is 4.680%.

(5)

Interest will accrue on the Class 2-A-5 Certificates at a per annum rate equal to (i) One-Month LIBOR plus (ii) 0.550%, subject to a maximum rate of 6.000% per annum and a minimum rate of 0.550% per annum.  The per annum Pass-Through Rate on the Class 2-A-5 Certifcates for the first Interest Accrual Period is 5.870%.

(6)

The Class 2-A-6 Certificates are Interest Only Certificates, will not be entitled to distributions in respect of principal and will bear interest on the Class 2-A-6 Notional Amount (initially $31,526,000).

(7)

Interest will accrue on the Class 2-A-6 Certificates at a per annum rate equal to the excess of (i) 5.450% over (ii) one-month LIBOR, subject to a minimum rate of 0.000% per annum and a maximum rate of 5.450% per annum.  The per annum Pass-Through Rate on the Class 2-A-6 Certifcates for the first interest accrual period is 0.130%.

(8)

The Class 2-X Certificates are Interest Only Certificates, will not be entitled to distributions in respect of principal and will bear interest on the Class 2-X Notional Amount (initially $11,826,797).

(9)

The Class 4-X Certificates are Interest Only Certificates, will not be entitled to distributions in respect of principal and will bear interest on the Class 4-X Notional Amount (initially $236,185).

(10)

The Class 2PO and Class 4PO Certificates are Principal-Only Certificates and are not entitled to any distributions of interest.

(11)

The Class I-CE Certificates will not accrue interest on its Certificate Principal Balance, but will be entitled to 100% of amounts distributed on the T3-X interest in REMIC III.

(12)

The Class I-R Certificates will not accrue interest.

W I T N E S S E T H

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

ARTICLE I
DEFINITIONS

Section 1.1

General Definitions and Group I Definitions .  

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

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

Account :  The Distribution Account, the Swap Accounts, the Reserve Fund and any Protected Account as the context may require.

Additional Disclosure Notification:   Has the meaning set forth in Section 3.29(a)(ii) of this Agreement.

Additional Form 10-D Disclosure :  Has the meaning set forth in Section 3.29(a)(i) of this Agreement.

Additional Form 10-K Disclosure :  Has the meaning set forth in Section 3.29(d)(i) of this Agreement.  

Adjustment Date : With respect to each Group I Loan, the first day of the month in which the Mortgage Rate of such Group I Loan changes pursuant to the related Mortgage Note. The first Adjustment Date following the Cut-off Date as to each Group I Loan is set forth in the Loan Schedule.

Administration Fee :   With respect to each Loan and any Distribution Date, will be equal to the product of one-twelfth of (x) the Administration Fee Rate for such Loan multiplied by (y) the principal balance of that Loan as of the last day of the immediately preceding Due Period (or as of the Cut-Off Date with respect to the first Distribution Date), after giving effect to principal prepayments received during the related Prepayment Period.

Administration Fee Rate :  With respect to each Loan will be equal to the sum of (i) the Servicing Fee Rate, (ii) the Master Servicing Fee Rate and (iii) the rate at which the premium payable in connection with any lender paid primary mortgage insurance policy is calculated, if applicable.

Advance :  Either (i) a Monthly Advance made by the Servicer as such term is defined in and pursuant to the Mortgage Loan Purchase and Servicing Agreement or (ii) a Monthly Advance made by the Master Servicer or the Trustee pursuant to Section 4.4.

Adverse REMIC Event :  As defined in Section 11.1(f).

Affiliate :  With respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. The Trustee may obtain and rely on an Officer’s Certificate of the Servicer or the Depositor to determine whether any Person is an Affiliate of such party.

Agreement :  This Pooling and Servicing Agreement and all amendments and supplements hereto.

Allocated Realized Loss Amount :  With respect to any Class of Group I Mezzanine Certificates and any Distribution Date, an amount equal to the sum of any Realized Losses allocated to that Class of Group I Mezzanine Certificates on all prior Distribution Dates minus the sum of all reimbursements of Allocated Realized Loss Amounts distributed to that Class in connection with any Net Monthly Excess Cashflow on all previous Distribution Dates.

Anniversary :  Each anniversary of the Cut-Off Date.

Appraised Value :  The amount set forth in an appraisal made by or for the mortgage originator in connection with its origination of each Loan.

Assignment :  An assignment of the Mortgage, notice of transfer or equivalent instrument, in recordable form, sufficient under the laws of the jurisdiction where the related Mortgaged Property is located to reflect of record the sale and assignment of the Loan to the Trustee, which assignment, notice of transfer or equivalent instrument may, if permitted by law, be in the form of one or more blanket assignments covering Mortgages secured by Mortgaged Properties located in the same county.

Assignment Agreement :  Shall mean (i) the Assignment, Assumption and Recognition Agreement, dated as of April 1, 2007, among the Depositor, the Trustee, the Servicer and Bishop’s Gate Residential Mortgage Trust and acknowledged and agreed to by the Master Servicer and Securities Administrator, pursuant to which certain of the Depositor’s rights under the Mortgage Loan Purchase and Servicing Agreement were assigned to the Trust.

Authorized Denomination :  With respect to the Group I Senior Certificates, Group I Mezzanine Certificates, Group II Subordinate Certificates and the Class 2-A-1, Class 2-A-2, Class 2-A-3, Class 2-A-4, Class 2-A-5, Class 3-A-1, Class 3-A-2, Class 4-A-1, Class II-M, Class 2PO and Class 4PO Certificates, minimum initial Certificate Principal Balances of $25,000 and integral multiples of $1.00 in excess thereof.  With respect to the Class 2-A-6, Class 2-X Certificates and Class 4-X Certificates, minimum initial Notional Amounts of $100,000 and integral multiples of $1.00 in excess thereof.  With respect to the Class I-CE Certificates, minimum initial Certificate Principal Balances of $10,000 and integral multiples of $1.00 in excess thereof.  With respect to the Class I-R and Class II-AR Certificates, in each case, a single denomination of 100% Percentage Interest in such Certificate.

Bankruptcy Loss :  With respect to any Group I Loan, a loss on such Group I Loan as reported by the Servicer, arising out of (i) a reduction in the scheduled Monthly Payment for such Group I Loan by a court of competent jurisdiction in a case under the United States Bankruptcy Code, other than any such reduction that arises out of clause (ii) of this definition of "Bankruptcy Loss," including, without limitation, any such reduction that results in a permanent forgiveness of principal, or (ii) with respect to any Group I Loan, a valuation, by a court of competent jurisdiction in a case under such Bankruptcy Code, of the related Mortgaged Property in an amount less than the then outstanding Principal Balance of such Group I Loan.

Beneficial Holder :  A Person holding a beneficial interest in any Book-Entry Certificate as or through a Depository Participant or an Indirect Depository Participant or a Person holding a beneficial interest in any Definitive Certificate.

Book-Entry Certificates :  The Certificates (other than the Class I-CE, Class I-R and Class II-AR Certificates), beneficial ownership and transfers of which shall be made through book entries as described in Section 6.1 and Section 6.3.

Certificate :  Any one of the Certificates issued pursuant to this Agreement, executed and authenticated by or on behalf of the Securities Administrator hereunder in substantially one of the forms set forth in Exhibits A-1, A-2, A-3, A-4, A-5, A-6, A-7, A-8, A-9, A-10, A-11 and A-12 hereto.

Certificate Principal Balance :  The Certificate Principal Balance with respect to a Group I Senior Certificate or Group I Mezzanine Certificate outstanding at any time, represents the then maximum amount that the holder of such Certificate is entitled to receive as distributions allocable to principal from the cash flow on the Group I Loans and the other assets in the Trust Fund.  The Certificate Principal Balance of a Group I Senior Certificate or Group I Mezzanine Certificate as of any date of determination is equal to the initial Certificate Principal Balance of such Certificate reduced by the aggregate of (i) all amounts allocable to principal previously distributed with respect to that Certificate, and (ii) any reductions in the Certificate Principal Balance of such Certificate deemed to have occurred in connection with allocations of Realized Losses, if any, plus any Subsequent Recoveries added to the Certificate Principal Balance of such Certificate pursuant to Section 4.2.  The Certificate Principal Balance of the Class I-CE Certificates as of any date of determination is equal to the excess, if any, of (i) the then aggregate Principal Balance of the Group I Loans over (ii) the then aggregate Certificate Principal Balance of the Group I Senior Certificates and the Group I Mezzanine Certificates.  The initial Certificate Principal Balance of each Class of Group I Certificates is set forth in the Preliminary Statement hereto.  When used in reference to a Class of Group I Certificates, the term Certificate Principal Balance means the aggregate of the Certificate Principal Balances of all Certificates of such Class, and when used in reference to a group of Classes (such as the Group I Senior Certificates and Group I Mezzanine Certificates) shall mean the aggregate Certificate Principal Balances of all Classes of Group I Certificates included in such group.

The Certificate Principal Balance with respect to any Group II Senior Certificate (other than the 2-X and Class 4-X Certificates, which have no Certificate Principal Balance), the Class II-M Certificates and any Group II Subordinate Certificate outstanding at any time, represents the then maximum amount that the holder of such Certificate is entitled to receive as distributions allocable to principal from the cash flow on the Group II Loans in the related Pool and the other assets in the Trust Fund.  The Certificate Principal Balance of a Group II Senior Certificate (other than the Class 2-A-6, Class 2-X and Class 4-X Certificates, which have no Certificate Principal Balance), the Class II-M Certificates and any Group II Subordinate Certificate, as of any date of determination is equal to the initial Certificate Principal Balance of such Certificate reduced by the aggregate of (i) all amounts allocable to principal previously distributed with respect to that Certificate and (ii) any reductions in the Certificate Principal Balance of such Certificate deemed to have occurred in connection with allocations of Realized Losses, if any, plus any Subsequent Recoveries added to the Certificate Principal Balance of such Certificate pursuant to Section 5.2.  The initial Certificate Principal Balance of each Class of Group II Certificates is set forth in the Preliminary Statement hereto. When used in reference to a Class of Group II Certificates, the term Certificate Principal Balance means the aggregate of the Certificate Principal Balances of all Certificates of such Class, and when used in reference to a group of Classes (such as the Group II Senior Certificates, the Class II-M Certificates and Group II Subordinate Certificates) shall mean the aggregate Certificate Principal Balances of all Classes of Certificates included in such group.

Certificate Register :  The register maintained pursuant to Section 6.3.

Certificateholder or Holder :  The person in whose name a Certificate is registered in the Certificate Register, except that solely for the purposes of giving any consent pursuant to this Agreement, any Certificate registered in the name of the Depositor, the Master Servicer, the Securities Administrator, the Trustee or any Affiliate thereof shall be deemed not to be outstanding and the Percentage Interest evidenced thereby shall not be taken into account in determining whether the requisite percentage of Percentage Interests necessary to effect any such consent has been obtained.  The Trustee or the Securities Administrator may conclusively rely upon a certificate of the Depositor or the Master Servicer in determining whether a Certificate is held by an Affiliate thereof. All references herein to "Holders" or "Certificateholders" shall reflect the rights of Certificate Owners as they may indirectly exercise such rights through the Depository and participating members thereof, except as otherwise specified herein; provided, however, that the Trustee or the Securities Administrator shall be required to recognize as a "Holder" or "Certificateholder" only the Person in whose name a Certificate is registered in the Certificate Register.  

Certificate Owner :  With respect to a Book-Entry Certificate, the Person who is the beneficial owner of such Certificate as reflected on the books of the Depository or on the books of a Depository Participant or on the books of an Indirect Depository Participant.

Certificate REMIC Swap Rate:   For each Distribution Date (and the related Interest Accrual Period), a per annum rate equal to the product of: (i) 5.09%, (ii) 2, and (iii) the quotient of (a) the actual number of days in the related Interest Accrual Period divided by (b) 30.

Certificate Swap Account 1: A segregated trust account established and maintained by the Securities Administrator pursuant to Section 4.8 of this Agreement.

Certificate Swap Account 2: A segregated trust account established and maintained by the Securities Administrator pursuant to Section 4.9 of this Agreement.

Certificate Swap Agreement: The Interest Rate Swap Agreement, dated as of April 26, 2007, between HSBC Bank USA, National Association, as trustee on behalf of the Supplemental Interest Trust, and the Certificate Swap Provider, together with any schedules, confirmations or other agreements relating thereto.  A copy of the Certificate Swap Agreement is attached hereto as Exhibit P.

Certificate Swap Provider:  The swap provider under the Certificate Swap Agreement and any successor in interest or assign.  Initially, the Certificate Swap Provider shall be Deutsche Bank AG, New York Branch, a banking institution and a stock corporation incorporated under the laws of Germany.

Certificate Swap Report :  The report to be delivered at least four Business Days prior to each Distribution Date by the Certificate Swap Provider to the Securities Administrator containing the amount of any Net Swap Payment payable by the Supplemental Interest Trust or the Certificate Swap Provider to the other party, as the case may be, with respect to the Certificate Swap Agreement for that Distribution Date.

Class :  All Certificates having the same priority and rights to payments from the Group I Available Distribution Amount or Group II Available Distribution Amount, as applicable, designated as a separate Class under the heading Certificates in the preliminary statement, as set forth in the forms of Certificates attached hereto as Exhibits A-1, A-2, A-3, A-4, A-5, A-6, A-7, A-8, A-9, A-10, A-11 and A-12 as applicable.

Class I-CE Certificates :  The Class I-CE Certificates designated as such on the face thereof in substantially the form attached hereto as Exhibit A-10.

Class 1-M-1 Principal Distribution Amount :  The Class 1-M-1 Principal Distribution Amount for any Distribution Date is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Group I Senior Certificates after taking into account the payment of the Group I Senior Principal Distribution Amount on the Distribution Date and (ii) the Certificate Principal Balance of the Class 1-M-1 Certificates immediately prior to the Distribution Date over (y) the lesser of (A) the product of (i) 92.20% and (ii) the aggregate Scheduled Principal Balance of the Group I Loans 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) and (b) the excess, if any, of the aggregate Scheduled Principal Balance of the Group I Loans 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) over the product of (i) 0.50% and (ii) the aggregate principal balance of the Group I Loans as of the Cut-Off Date.

Class 1-M-2 Principal Distribution Amount :  The Class 1-M-2 Principal Distribution Amount for any Distribution Date is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Group I Senior Certificates after taking into account the payment of the Group I Senior Principal Distribution Amount on the Distribution Date, (ii) the Certificate Principal Balance of the Class 1-M-1 Certificates after taking into account the payment of the Class 1-M-1 Principal Distribution Amount on the Distribution Date and (iii) the Certificate Principal Balance of the Class 1-M-2 Certificates immediately prior to the Distribution Date over (y) the lesser of (A) the product of (i) 95.60% and (ii) the aggregate Scheduled Principal Balance of the Group I Loans 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) and (B) the excess, if any, of the aggregate Scheduled Principal Balance of the Group I Loans 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) over the product of (i) 0.50% and (ii) the aggregate Scheduled Principal Balance of the Group I Loans as of the Cut-Off Date.

Class 1-M-3 Principal Distribution Amount :  The Class 1-M-3 Principal Distribution Amount for any Distribution Date is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Group I Senior Certificates after taking into account the payment of the Group I Senior Principal Distribution Amount on the Distribution Date, (ii) the Certificate Principal Balance of the Class 1-M-1 Certificates after taking into account the payment of the Class 1-M-1 Principal Distribution Amount on the Distribution Date, (iii) the Certificate Principal Balance of the Class 1-M-2 Certificates after taking into account the payment of the Class 1-M-2 Principal Distribution Amount on the Distribution Date and (iv) the Certificate Principal Balance of the Class 1-M-3 Certificates immediately prior to the Distribution Date over (y) the lesser of (A) the product of (i) 97.70% and (ii) the aggregate Scheduled Principal Balance of the Group I Loans 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) and (b) excess, if any, of the aggregate Scheduled Principal Balance of the Group I Loans 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) over the product of (i) 0.50% and (ii) the aggregate Scheduled Principal Balance of the Group I Loans as of the Cut-Off Date.

Class 1-M-4 Principal Distribution Amount :   The Class 1-M-4 Principal Distribution Amount for any Distribution Date is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Group I Senior Certificates after taking into account the payment of the Group I Senior Principal Distribution Amount on the Distribution Date, (ii) the Certificate Principal Balance of the Class 1-M-1 Certificates after taking into account the payment of the Class 1-M-1 Principal Distribution Amount on the Distribution Date, (iii) the Certificate Principal Balance of the Class 1-M-2 Certificates after taking into account the payment of the Class 1-M-2 Principal Distribution Amount on the Distribution Date, (iv) the Certificate Principal Balance of the Class 1-M-3 Certificates after taking into account the payment of the Class 1-M-3 Principal Distribution Amount on the Distribution Date and (v) the Certificate Principal Balance of the Class 1-M-4 Certificates immediately prior to the Distribution Date over (y) the lesser of (A) the product of (i) 98.80% and (ii) the aggregate Scheduled Principal Balance of the Group I Loans 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) and (b) the excess, if any, of the aggregate Scheduled Principal Balance of the Group I Loans 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) over the product of (i) 0.50% and (ii) the aggregate Scheduled Principal Balance of the Group I Loans as of the Cut-Off Date.

Class I-R Certificate :  The Certificate designated as "Class I-R" on the face thereof in substantially the form attached hereto as Exhibit A-10, which has been designated as the sole Class of "residual interests" in each Group I REMIC.

Class I-R Certificateholder :  The registered Holder of the Class I-R Certificate.

Clearing Agency :  An organization registered as a "clearing agency" pursuant to Section 17A of the Securities and Exchange Act of 1934, as amended, which initially shall be the Depository.

Closing Date :  April 26, 2007.

Code :  The Internal Revenue Code of 1986, as amended.

Commission :  Means the United States Securities and Exchange Commission.

Compensating Interest :  For any Distribution Date and (i) the Servicer, as set forth in the Mortgage Loan Purchase and Servicing Agreement and (ii) the Master Servicer, the amount described in Section 3.21.

Controlling Person :  Means, with respect to any Person, any other Person who "controls" such Person within the meaning of the Securities Act.

Corporate Trust Office :  The principal corporate trust office of the Trustee or the Securities Administrator, as the case may be, at which at any particular time its corporate trust business in connection with this Agreement shall be administered, which office at the date of the execution of this instrument is located at (i) with respect to the Trustee, HSBC Bank USA, National Association, 452 Fifth Avenue, New York, New York 10018, or at such other address as the Trustee may designate from time to time by notice to the Certificateholders, the Depositor, the Master Servicer and the Securities Administrator, or (ii) with respect to the Securities Administrator, (A) for Certificate transfer and surrender purposes, Wells Fargo Bank, N.A., Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479, Attention:  PHHAM 2007-2 and (B) for all other purposes, Wells Fargo Bank, N.A., 9062 Old Annapolis Road, Columbia, Maryland 21045, Attention: PHHAM 2007-2, or at such other address as the Securities Administrator may designate from time to time by notice to the Certificateholders, the Depositor, the Master Servicer and the Trustee.

Corresponding Class of Certificate :  With respect to each REMIC II, REMIC III, REMIC IV and REMIC V Regular Interest, the Class of Certificate with the corresponding designation.

Credit Enhancement Percentage :  for any Distribution Date is the percentage obtained by dividing (x) the aggregate Certificate Principal Balance of the Group I Subordinate Certificates (which includes the Overcollateralization Amount) by (y) the aggregate Principal Balance of the Group I Loans during the related Due Period, calculated after taking into account payments of principal on the Group I Loans and distribution of the Group I Principal Distribution Amount to the holders of the Certificates then entitled to distributions of principal on such Distribution Date.

Curtailment :  Any voluntary payment of principal on a Loan, made by or on behalf of the related Mortgagor, other than a Monthly Payment, a Prepaid Monthly Payment or a Payoff, which is applied to reduce the outstanding Principal Balance of the Loan.

Curtailment Shortfall :  With respect to any Distribution Date and any Curtailment received during the related Prepayment Period, an amount equal to one month’s interest on such Curtailment at the applicable Mortgage Interest Rate on such Loan, net of the Servicing Fee Rate.

Custodial Agreement :  The Custodial Agreement, dated as of April 1, 2007, among Wells Fargo, as custodian, the Trustee and the Servicer.

Custodian :  Wells Fargo or any other custodian appointed under any custodial agreement entered into after the date of this Agreement.

Cut-Off Date :  April 1, 2007.

Definitive Certificates :  As defined in Section 6.3.

Deleted Loan :  A Loan replaced or to be replaced by a Substitute Loan.

Delinquency Percentage:   As of the last day of the related Due Period, the percentage equivalent of a fraction, the numerator of which is the Principal Balance of all Loans that, as of the last day of the previous calendar month, are 60 or more days delinquent, are in foreclosure, have been converted to REO Properties or have been discharged by reason of bankruptcy, and the denominator of which is the aggregate Principal Balance of the Loans and REO Properties as of the last day of the previous calendar month.

Depositor :  Deutsche Alt-A Securities, Inc., a Delaware corporation, or its successor-in-interest.

Depository :  The Depository Trust Company, or any successor Depository hereafter named. The nominee of the initial Depository, for purposes of registering those Certificates that are to be Book-Entry Certificates, is CEDE & Co. The Depository shall at all times be a "clearing corporation" as defined in Section 8-102(3) of the Uniform Commercial Code of the State of New York and a Clearing Agency.

Depository Agreement :  The Letter of Representations, dated April 26, 2007 by and among the Depository, the Depositor and the Trustee.

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

Determination Date :  With respect to the Servicer, the day of the month set forth as the Determination Date in the Mortgage Loan Purchase and Servicing Agreement. With respect to Article XI hereto, the fifteenth (15th) day of the month or if such day is not a Business Day, the Business Day immediately following such fifteenth (15th) day.

Disqualified Organization:   A "disqualified organization" as defined in Section 860E(e)(5) of the Code, and, for purposes of Article VI herein, any Person which is not a Permitted Transferee; provided, that a Disqualified Organization does not include any Pass-Through Entity which owns or holds a Class I-R Certificate and if which a Disqualified Organization, directly or indirectly, may be a stockholder, partner or beneficiary.

Distribution Account :  The trust account or accounts created and maintained by the Securities Administrator pursuant to Section 3.23 for the benefit of the Certificateholders and designated "Wells Fargo Bank, N.A., as Securities Administrator, in trust for registered holders of PHH Alternative Mortgage Trust, Series 2007-2".  Funds in the Distribution Account shall be held in trust for the Certificateholders for the uses and purposes set forth in this Agreement. The Distribution Account must be an Eligible Account.

Distribution Account Deposit Date :  With respect to any Distribution Date, the Business Day prior to such Distribution Date.

Distribution Date :  The 25th day (or, if such 25th day is not a Business Day, the Business Day immediately succeeding such 25th day) of each month, beginning in May 2007.

Due Date :  The day on which the Monthly Payment for each Loan is due, exclusive of any days of grace.  The "related Due Date" for any Distribution Date is the Due Date immediately preceding such Distribution Date.

Due Period:   With respect to any Distribution Date and the Loans, the period commencing on the second day of the month immediately preceding the month in which such Distribution Date occurs and ending on the first day of the month in which such Distribution Date occurs.

Eligible Account :  Any account or accounts (1) maintained by the Securities Administrator with a federal or state chartered depository institution or trust company that complies with the definition of "Eligible Institution," or (2) maintained with the corporate trust department of a federal depository institution or state-chartered depository institution subject to regulations regarding fiduciary funds on deposit similar to Title 12 of the U.S. Code of Federal Regulation Section 10.10(b), which, in either case, has corporate trust powers and is acting in its fiduciary capacity.

Eligible Institution :  An institution having both (a) (i) the highest short-term debt rating, and one of the two highest long-term debt ratings of Fitch and Moody’s, (ii) with respect to the Distribution Account, an unsecured long-term debt rating of at least one of the two highest unsecured long-term debt ratings of Fitch and Moody’s, or (iii) the approval of Fitch and S&P and (b) (i) commercial paper, short-term debt obligations, or other short-term deposits rated at least ‘A-1+’ or long-term unsecured debt obligations rated at least ‘AA-’ by S&P, if the amounts on deposit are to be held in the account for no more than 365 days; or (ii) commercial paper, short-term debt obligations, or other short-term deposits rated at least ‘A-1’ by S&P, if the amounts on deposit represent less than 20% of the initial par value of the securities, are not intended to be used as credit enhancement, and are to be held in the account for less than 30 days.

Eligible Investments :  Any one or more of the following obligations or securities payable on demand or having a scheduled maturity on or before the Business Day preceding the following Distribution Date (or, with respect to the Distribution Account maintained with the Securities Administrator, having a scheduled maturity on or before the following Distribution Date; provided that, such Eligible Investments shall be managed by, or an obligation of, the institution that maintains the Distribution Account if such Eligible Investments mature on the Distribution Date), regardless of whether any such obligation is issued by the Depositor, the Servicer, the Trustee, the Master Servicer, the Securities Administrator or any of their respective Affiliates and having at the time of purchase, or at such other time as may be specified, the required ratings, if any, provided for in this definition:

(a)

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

(b)

direct obligations of, or guaranteed as to timely payment of principal and interest by, Freddie Mac, Fannie Mae or the Federal Farm Credit System, provided, that any such obligation, at the time of purchase or contractual commitment providing for the purchase thereof, is qualified by each Rating Agency as an investment of funds backing securities rated "AAA" in the case of S&P and "Aaa" in the case of Moody’s (the initial rating of the Group I Senior Certificates);

(c)

demand and time deposits in or certificates of deposit of, or bankers’ acceptances issued by, any bank or trust company, savings and loan association or savings bank, provided, that the short-term deposit ratings and/or long-term unsecured debt obligations of such depository institution or trust company (or in the case of the principal depository institutions in a holding company system, the commercial paper or long-term unsecured debt obligations of such holding company) have, in the case of commercial paper, the highest rating available for such securities by each Rating Agency and, in the case of long-term unsecured debt obligations, one of the two highest ratings available for such securities by each Rating Agency, or in each case such lower rating as will not result in the downgrading or withdrawal of the rating or ratings then assigned to any Class of Certificates by any Rating Agency but in no event less than the initial rating of the Group I Senior Certificates;

(d)

commercial or finance company paper (including both non-interest-bearing discount obligations and interest-bearing obligations payable on demand or on a specified date not more than one year after the date of issuance thereof) that is rated by each Rating Agency in its highest short-term unsecured rating category at the time of such investment or contractual commitment providing for such investment, and is issued by a corporation the outstanding senior long-term debt obligations of which are then rated by each Rating Agency in one of its two highest long-term unsecured rating categories, or such lower rating as will not result in the downgrading or withdrawal of the rating or ratings then assigned to any Class of Certificates by any Rating Agency but in no event less than the initial rating of the Group I Senior Certificates;

(e)

guaranteed reinvestment agreements issued by any bank, insurance company or other corporation rated in one of the two highest rating levels available to such issuers by each Rating Agency at the time of such investment, provided, that any such agreement must by its terms provide that it is terminable by the purchaser without penalty in the event any such rating is at any time lower than such level;

(f)

repurchase obligations with respect to any security described in clause (a) or (b) above entered into with a depository institution or trust company (acting as principal) meeting the rating standards described in (c) above;

(g)

securities bearing interest or sold at a discount that are issued by any corporation incorporated under the laws of the United States of America or any State thereof and rated by each Rating Agency in one of its two highest long-term unsecured rating categories at the time of such investment or contractual commitment providing for such investment; provided, however, that securities issued by any such corporation will not be Eligible Investments to the extent that investment therein would cause the outstanding principal amount of securities issued by such corporation that are then held as part of the Distribution Account to exceed 20% of the aggregate principal amount of all Eligible Investments then held in the Distribution Account;

(h)

units of taxable money market funds (including those for which the Trustee, the Securities Administrator, the Master Servicer or any affiliate thereof receives compensation with respect to such investment) which funds have been rated by each Rating Agency rating such fund in its highest rating category or which have been designated in writing by each Rating Agency as Eligible Investments with respect to this definition;

(i)

if previously confirmed in writing to the Trustee and the Securities Administrator, any other demand, money market or time deposit, or any other obligation, security or investment, as may be acceptable to each Rating Agency as a permitted investment of funds backing securities having ratings equivalent to the initial rating of the Group I Senior Certificates; and

(j)

such other obligations as are acceptable as Eligible Investments to each Rating Agency;

provided, however, that such instrument continues to qualify as a "cash flow investment" pursuant to Code Section 860G(a)(6) and that no instrument or security shall be an Eligible Investment if (i) such instrument or security evidences a right to receive only interest payments or (ii) the right to receive principal and interest payments derived from the underlying investment provides a yield to maturity in excess of 120% of the yield to maturity at par of such underlying investment.

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

ERISA-Qualifying Underwriting:   With respect to any ERISA-Restricted Certificate, a best efforts or firm commitment underwriting or private placement that meets the requirements of the Underwriters’ Exemption.

ERISA-Restricted Certificate:  The Class I-CE, Class I-R, Class II-B-4, Class II-B-5 and Class II-B-6 Certificates and Certificates of any Class that no longer satisfy the applicable rating requirements of the Underwriters’ Exemption.

ERISA-Restricted Trust Certificate:   Any Group I Senior Certificate or Group I Mezzanine Certificate that is not an ERISA-Restricted Certificate.

Exchange Act :  The Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

Fannie Mae :  Fannie Mae, formerly known as the Federal National Mortgage Association, or any successor thereto.

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

Fitch: Fitch Ratings or any successor thereto.

Form 8-K Disclosure Information :  Has the meaning set forth in Section 3.29(b) of this Agreement.

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

Gross Margin : With respect to each Group I Loan, the fixed percentage set forth in the related Mortgage Note that is added to the Index on each Adjustment Date in accordance with the terms of the related Mortgage Note used to determine the Mortgage Rate for such Loan.

Group I Adjustable Rate Certificates :  The Group I Senior Certificates and the Group I Mezzanine Certificates.

Group I Available Distribution Amount :  With respect to a Distribution Date, the sum of the following amounts:

(1)

the total amount of all cash received by or on behalf of the Servicer with respect to the Group I Loans during the related Due Period (including Liquidation Proceeds, Insurance Proceeds and Subsequent Recoveries), except:

(a)

all Prepaid Monthly Payments with respect to Group I Loans;

(b)

all Curtailments with respect to Group I Loans received after the applicable Prepayment Period, together with all interest paid by the related Mortgagor in connection with such Curtailments;

(c)

all Payoffs with respect to Group I Loans received after the applicable Prepayment Period, together with all interest paid by the related Mortgagor in connection with such Payoffs;

(d)

Insurance Proceeds, Liquidation Proceeds and Subsequent Recoveries on the Group I Loans received after the applicable Prepayment Period;

(e)

all amounts with respect to any Group I Loan which are due and reimbursable to the Servicer pursuant to the terms of the Mortgage Loan Purchase and Servicing Agreement or to the Master Servicer, the Securities Administrator, the Trustee or the Custodian pursuant to the terms of this Agreement or the Custodial Agreement;

(f)

the Servicing Fee and the Master Servicing Fee for each such Group I Loan for such Distribution Date;

(g)

all investment earnings, if any, on amounts on deposit in the Distribution Account and each Protected Account with respect to the Group I Loans; and

(h)

any premiums payable in connection with any lender paid primary mortgage insurance policies with respect to the Group I Loans.

(2)

to the extent advanced by the Servicer and/or the Master Servicer and not previously distributed, the amount of any Advance made by the Servicer and/or the Master Servicer or Trustee with respect to such Distribution Date relating to the Group I Loans;

(3)

to the extent advanced by the Servicer and/or the Master Servicer and not previously distributed, any amount payable as Compensating Interest by the Servicer and/or the Master Servicer on such Distribution Date relating to the Group I Loans; and

(4)

the total amount, to the extent not previously distributed, of all cash received by the Distribution Date by the Trustee or the Master Servicer, in respect of a Purchase Obligation under Section 2.3 with respect to any Group I Loan or any permitted repurchase of a Group I Loan or a purchase by the Servicer of a Group I Loan pursuant to Section 3.31.

Group I Certificates:  The Group I Senior Certificates, Group I Subordinate Certificates and Class I-R Certificates.

Group I Interest Distribution Amount :  On any Distribution Date, for any Class of Group I Certificates (other than the Class I-CE Certificates and the Class I-R Certificates), the amount of interest accrued during the related Interest Accrual Period on the Certificate Principal Balance of that Class which shall be an amount, not less than zero, equal to (a) the product of (1) the product of (i) a fraction, the numerator of which is the actual number of days in the related Interest Accrual Period and the denominator of which is 360 and (ii) the Pass-Through Rate for such Class and (2) the Certificate Principal Balance for such Class before giving effect to allocations of Realized Losses in connection with such Distribution Date or distributions to be made on such Distribution Date, reduced by (b) Uncompensated Interest Shortfalls allocated to such Class pursuant to Section 1.2 and the interest portion of Realized Losses allocated to such Class pursuant to Section 1.2.  On any Distribution Date, for the Class I-CE Certificates, the amount of interest accrued during the related Interest Accrual Period with respect to the T3-X interest in REMIC III, reduced by Uncompensated Interest Shortfalls allocated to the Class I-CE Certificates pursuant to Section 1.2 and the interest portion of Realized Losses allocated to the Class I-CE Certificates pursuant to Section 1.2.

Group I Interest Remittance Amount :  For any Distribution Date, the sum of the following amounts:

(1)

all interest received by or on behalf of the Servicer with respect to the Group I Loans during the related Due Period;

(2)

all Advances in respect of interest made by the Servicer and/or the Master Servicer with respect to Group I Loans for that Distribution Date;

(3)

any amounts paid as Compensating Interest on the Group I Loans by the Servicer and/or the Master Servicer for that Distribution Date;

(4)

the interest portions of the total amount deposited in the Distribution Account in connection with a Purchase Obligation with respect to any Group I Loan under Section 2.3, any permitted purchase of a Group I Loan pursuant to Section  3.31 or any permitted repurchase of a Group I Loan;

(5)

the interest portion of the Group I Termination Price;

minus the sum of the following amounts:

(1)

the interest portion of all Prepaid Monthly Payments with respect to Group I Loans;

(2)

the interest portion of all Curtailments with respect to Group I Loans received after the related Prepayment Period, together with all interest paid by the related Mortgagor in connection with such Curtailments;

(3)

the interest portion of all Payoffs with respect to Group I Loans received after the related Prepayment Period, together with all interest paid by the related Mortgagor in connection with such Payoffs;

(4)

all amounts (other than Advances in respect of principal) with respect to any Group I Loan reimbursable to the Servicer pursuant to the terms of the Mortgage Loan Purchase and Servicing Agreement or to the Master Servicer, the Securities Administrator, the Trustee or the Custodian pursuant to this Agreement or the Custodial Agreement; and

(5)

the Servicing Fee and the Master Servicing Fee for each Group I Loan and any premiums payable in connection with any lender paid primary mortgage insurance policies with respect to any Group I Loans for the related Due Period.

Group I Last Scheduled Distribution Date :  The Distribution Date in May 2037, which is the Distribution Date immediately following the maturity date for the Group I Loan with the latest maturity date.  

Group  I Loan Schedule :  The schedule, as amended from time to time, of Group I Loans, attached hereto as Schedule One, which shall set forth as to each Group I Loan the following, among other things:

(i)

the loan number of the Loan and name of the related Mortgagor;

(ii)

the street address of the Mortgaged Property including city, state and zip code;

(iii)

the Mortgage Interest Rate as of the Cut-Off Date;

(iv)

the original term and maturity date of the related Mortgage Note;

(v)

the original Principal Balance;

(vi)

the first payment date;

(vii)

the Monthly Payment in effect as of the Cut-Off Date;

(viii)

the date of the last paid installment of interest;

(ix)

the unpaid Principal Balance as of the close of business on the Cut-Off Date;

(x)

the Original Loan-to-Value ratio at origination;

(xi)

the type of property and the Original Value of the Mortgaged Property;

(xii)

whether a primary mortgage insurance policy is in effect as of the Cut-Off Date;

(xiii)

the nature of occupancy at origination;

(xiv)

the first Adjustment Date;

(xv)

the Gross Margin;

(xvi)

the Maximum Mortgage Rate under the terms of the Mortgage Note;

(xvii)

the Minimum Mortgage Rate under the terms of the Mortgage Note;

(xviii)

the Periodic Rate Cap;

(xix)

the first Adjustment Date immediately following the Cut-off Date;

(xx)

the Index;

(xxi)

[reserved];

(xxii)

the Servicer;

(xxiii)

the Servicing Fee Rate; and

(xxiv)

the Custodian.

Group I Loans :  The Mortgages and the related Mortgage Notes, each transferred and assigned to the Trustee pursuant to the provisions hereof as from time to time are held as part of the Trust Fund, as so identified in the Group I Loan Schedule. Each of the Group I Loans is referred to individually in this Agreement as a "Group I Loan".  

Group I Mezzanine Certificates :  The Class 1-M-1, Class 1-M-2, Class 1-M-3 and Class 1-M-4 Certificates, collectively, and designated as such on the face thereof in substantially the form attached hereto as Exhibit A-6.

Group I Optional Termination Date :  The Distribution Date on which the aggregate Scheduled Principal Balance of the Group I Loans (and REO Properties acquired in respect thereof)  remaining in the Trust Fund as of the last day of the related Due Period is reduced to less than or equal to 10% of the aggregate Scheduled Principal Balance of the Group I Loans as of the Cut-Off Date.

Group I Principal Distribution Amount :  For any Distribution Date is the sum of (i) the Group I Principal Remittance Amount for such Distribution Date plus (ii) any Overcollateralization Increase Amount minus (iii) the amount of any Overcollateralization Reduction Amount for such Distribution Date.  In no event will the Principal Distribution Amount with respect to any Distribution Date be (x) less than zero or (y) greater than the then outstanding aggregate Certificate Principal Balance of the Group I Certificates.

Group I Principal Remittance Amount:   With respect to any Distribution Date, the sum of the following amounts:

(1)

the total amount of all principal received by or on behalf of the Servicer with respect to the Group I Loans during the related Due Period (including Liquidation Proceeds, Insurance Proceeds and Subsequent Recoveries);

(2)

all Advances in respect of principal made by the Servicer and/or the Master Servicer with respect to Group I Loans for that Distribution Date;

(3)

the principal portions of the total amount deposited in the Distribution Account in connection with a Purchase Obligation with respect to any Group I Loan under Section 2.3, any permitted repurchase of a Group I Loan or purchase of a Group I Loan pursuant to Section 3.31; and

(4)

the principal portion of the Group I Termination Price;

minus, the sum of the following amounts:

(1)

the principal portion of all Prepaid Monthly Payments with respect to any Group I Loans;

(2)

the principal portion of all Curtailments with respect to any Group I Loans received after the related Prepayment Period;

(3)

the principal portion of all Payoffs with respect to any Group I Loans received after the related Prepayment Period;

(4)

the principal portion of Liquidation Proceeds, Insurance Proceeds, and Subsequent Recoveries received on the Group I Loans after the related Prepayment Period;

(5)

all Advances with respect to the Group I Loans in respect of principal reimbursed to the Servicer pursuant to the terms of the Mortgage Loan Purchase and Servicing Agreement or to the Master Servicer, the Securities Administrator, the Trustee or the Custodian pursuant to the terms of this Agreement or the Custodial Agreement; and

(6) all other amounts with respect to the Group I Loans reimbursable to the Servicer pursuant to the terms of the Mortgage Loan Purchase and Servicing Agreement or to the Master Servicer, the Securities Administrator, the Trustee or the Custodian pursuant to the terms of this Agreement or the Custodial Agreement for the related Due Period to the extent not reimbursed from the Group I Interest Remittance Amount for the related Due Period.

Group I Reserve Fund :  Shall mean the separate trust account created and maintained by the Securities Administrator pursuant to Section 3.25 hereof.

Group I Senior Certificates :  The Class 1-A-1, Class 1-A-2, Class 1-A-3, Class 1-A-4 and Class 1-A-5 Certificates, collectively, and designated as such on the face thereof in substantially the form attached hereto as Exhibit A-1.

Group I Senior Interest Distribution Amount :   With respect to any Distribution Date and each class of Group I Senior Certificates, an amount equal to the sum of (i) the Group I Interest Distribution Amount for such class and Distribution Date and (ii) the Interest Carry Forward Amount, if any, for such class and Distribution Date for the Group I Senior Certificates.

Group I Senior Principal Distribution Amount :   With respect to any Distribution Date is an amount equal to the excess of (x) the aggregate Certificate Principal Balance of the Group I Senior Certificates immediately prior to the Distribution Date over (y) the lesser of (A) the product of (i) 86.70% on or after the Stepdown Date and (ii) the aggregate Scheduled Principal Balance of the Group I Loans 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) and (B) the excess, if any of the aggregate Scheduled Principal Balance of the Group I Loans 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) minus the product of (i) 0.50% and (ii) the aggregate Scheduled Principal Balance of the Group I Loans as of the Cut-Off Date.

Group I Subordinate Certificates :  The Group I Mezzanine Certificates and the Class I-CE Certificates.

Group   I Termination Price :  As defined in Section 10.1(a).

Group   I Terminator :  As defined in Section 10.1(a).

Independent :  When used with respect to any specified Person, any such Person who (i) is in fact independent of the Depositor, the Servicer, the Master Servicer and the Securities Administrator, (ii) does not have any direct financial interest or any material indirect financial interest in the Depositor, the Servicer, the Master Servicer, the Securities Administrator or any Affiliate of any such party and (iii) is not connected with the Depositor, the Servicer, the Master Servicer or the Securities Administrator as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions.  When used with respect to any accountants, a Person who is "independent" within the meaning of Rule 2-01(B) of the Securities and Exchange Commission’s Regulation S-X.  Independent means, when used with respect to any other Person, a Person who (A) is in fact independent of another specified Person and any affiliate of such other Person, (B) does not have any material direct or indirect financial interest in such other Person or any affiliate of such other Person, (C) is not connected with such other Person or any affiliate of such other Person as an officer, employee, promoter, underwriter, Securities Administrator, partner, director or Person performing similar functions and (D) is not a member of the immediate family of a Person defined in clause (B) or (C) above.

Index : As of any Adjustment Date, the index applicable to the determination of the Mortgage Rate on each Group I Loan.

Indirect Depository Participants :  Entities such as banks, brokers, dealers or trust companies that clear through or maintain a custodial relationship with a Depository Participant, either directly or indirectly.

Insurance Proceeds :  Proceeds of any title policy, hazard policy, mortgage guaranty policy or other insurance policy covering a Loan, to the extent such proceeds are not to be applied to the restoration of the related Mortgaged Property or released to the Mortgagor in accordance with the Mortgage Loan Purchase and Servicing Agreement.

Interest Accrual Period :  With respect to the Group I Senior Certificates and the Group I Mezzanine Certificates, (i) with respect to the first Distribution Date, the period commencing on the Closing Date and ending on the day preceding that Distribution Date and (ii) with respect to any Distribution Date thereafter, the period commencing on the Distribution Date in the month immediately preceding the month in which that Distribution Date occurs and ending on the day preceding that Distribution Date. Interest on each such Class of Group I Certificates will be calculated based on a 360-day year and the actual number of days elapsed in the related Interest Accrual Period.  With respect to any Distribution Date and the Group II Certificates and each REMIC Regular Interest, the one-month period ending on the last day of the calendar month immediately preceding the month in which such Distribution Date occurs.  Interest on such class of Group II Certificates will be calculated based on a 360-day year consisting of twelve 30-day months regardless of the actual number of days in the related Interest Accrual Period.

Interest Carry Forward Amount :  With respect to any Distribution Date and any Class of Group I Senior Certificates or Group I Mezzanine Certificates, the sum of (i) the amount, if any, by which (a) the Group I Interest Distribution Amount for such Class of Group I Certificates as of the immediately preceding Distribution Date exceeded (b) the actual amount distributed on such Class of Group I Certificates in respect of interest on such immediately preceding Distribution Date and (ii) the amount of any Interest Carry Forward Amount for such Class of Group I Certificates remaining unpaid from the previous Distribution Date, plus accrued interest on such sum calculated at the related Pass-Through Rate for the most recently ended Interest Accrual Period.

Investment Withdrawal Distribution Date :  As defined in Section 3.23(c).

Issuing Entity :  PHH Alternative Mortgage Trust, Series 2007-2.

LIBOR Business Day :  Any day on which dealings in United States dollars are transacted in the London interbank market.

LIBOR Determination Date :  With respect to each Interest Accrual Period (other than the initial Interest Accrual Period) and the Group I Adjustable Rate Certificates, the second LIBOR Business Day preceding such Interest Accrual Period on which the Securities Administrator will determine One-Month LIBOR for such Interest Accrual Period.

Liquidated Loan :  A Loan as to which the Servicer has determined in accordance with its customary servicing practices that all amounts which it expects to recover from or on account of such Loan, whether from Insurance Proceeds, Liquidation Proceeds or otherwise, have been recovered. For purposes of this definition, acquisition of a Mortgaged Property by the Trust Fund shall not constitute final liquidation of the related Loan.

Liquidation Proceeds :  The amount (other than Insurance Proceeds or amounts received in respect of the rental of any REO Property prior to REO Disposition) received by the Servicer pursuant to the Mortgage Loan Purchase and Servicing Agreement or the Master Servicer in connection with (i) the taking of all or a part of a Mortgaged Property by exercise of the power of eminent domain or condemnation, (ii) the liquidation of a defaulted Loan through a trustee’s sale, foreclosure sale or otherwise, or (iii) the repurchase, substitution or sale of a Loan or an REO Property pursuant to or as contemplated by Section 2.3, Section 10.1 or Section 10.2.

Loan Documents :  The documents evidencing or relating to each Loan delivered to the Custodian under the Custodial Agreement on behalf of the Trustee.

Loans :  The Group I Loans and the Group II Loans, as applicable.  

Loan-to-Value Ratio :  The original principal amount of a Loan divided by the Original Value; however, references to "current Loan-to-Value Ratio" shall mean the then current Principal Balance of a Loan divided by the Original Value.

Majority Class I-CE Certificateholder :  The Holder of a 50.01% or greater Percentage Interest in the Class I-CE Certificates.

Master Servicer :  As of the Closing Date, Wells Fargo Bank, N.A., and thereafter, its respective successors in interest who meet the qualifications of this Agreement. The Master Servicer and the Securities Administrator shall at all times be the same Person.

Master Servicer Event of Default :  One or more of the events described in Section 8.1 hereof.

Master Servicing Compensation:   As defined in Section 3.14(a).

Master Servicing Fee:   As to each Loan and any Distribution Date, an amount equal to one twelfth of the product of the Master Servicing Fee Rate multiplied by the Scheduled Principal Balance of such Loan as of the Due Date in the month preceding the month of such Distribution Date.

Master Servicing Fee Rate:  0.005% per annum.

Maximum Mortgage Rate : With respect to each adjustable-rate Group I Loan, the percentage set forth in the related Mortgage Note as the maximum Mortgage Rate thereunder.

Minimum Mortgage Rate : With respect to each adjustable-rate Group I Loan, the percentage set forth in the related Mortgage Note as the minimum Mortgage Rate thereunder.

Monthly Advance :  As to any Loan or REO Property, any advance made by the Servicer in respect of any Determination Date or in respect of any Distribution Date by a successor Servicer (including the Master Servicer) or by the Master Servicer or Trustee pursuant to Section 4.4 of this Agreement (which advances shall not include principal or interest shortfalls due to bankruptcy proceedings or application of the Relief Act or similar state or local laws).

Monthly Payment :  The scheduled payment of principal and interest on a Loan which is due on any Due Date for such Loan after giving effect to any reduction in the amount of interest collectible from any Mortgagor pursuant to the Relief Act.

Moody’s :  Moody’s Investors Service, Inc. or its successor in interest.

Mortgage :  The mortgage, deed of trust or other instrument creating a first lien on, or first priority security interest in, a Mortgaged Property securing a Mortgage Note.

Mortgage File :  The Loan Documents pertaining to a particular Loan.

Mortgage Interest Rate :  For any Loan, the per annum rate at which interest accrues on such Loan pursuant to the terms of the related Mortgage Note without regard to any reduction thereof as a result of the Relief Act.

Mortgage Loan Purchase and Servicing Agreement :  The Mortgage Loan Purchase and Servicing Agreement dated as of April 1, 2007, among the Depositor, PHH Mortgage and Bishop’s Gate Residential Mortgage Trust, a copy of which is attached hereto as Exhibit J hereto.

Mortgage Note :  The note or other evidence of indebtedness evidencing the indebtedness of a Mortgagor under a Loan.

Mortgage Pool :  All of the Loans.

Mortgaged Property :  With respect to any Loan, the real property, together with improvements thereto, securing the indebtedness of the Mortgagor under the related Loan.

Mortgagor :  The obligor on a Mortgage Note.

Net Monthly Excess Cashflow:   With respect to any Distribution Date, the sum of (i) any Overcollateralization Reduction Amount and (ii) the excess of (x) the Group I Available Distribution Amount for the Distribution Date over (y) the sum for the Distribution Date of the aggregate of the Group I Senior Interest Distribution Amounts payable to the Holders of the Group I Senior Certificates, the aggregate of the Group I Interest Distribution Amounts payable to the Holders of the Group I Mezzanine Certificates, the Group I Principal Remittance Amount and any Net Swap Payment or Swap Termination Payment (not caused by the occurrence of a Swap Provider Trigger Event) owed to the Certificate Swap Provider.

Net Mortgage Rate:   For each Loan and for any date of determination, a per annum rate equal to the Mortgage Interest Rate for such Loan less the Administration Fee Rate.

Net Swap Payment :  With respect to each Distribution Date and the Certificate Swap Agreement, the net payment required to be made pursuant to the terms of the Certificate Swap Agreement by either the Certificate Swap Provider or the Supplemental Interest Trust, which net payment shall not take into account any related Swap Termination Payment.

Net WAC Pass-Through Rate :  For any Distribution Date and the Group I Senior Certificates and Group I Mezzanine Certificates is a rate per annum equal to a fraction, expressed as a percentage, the numerator of which is the product of (A) 12 and (B) the amount of interest which accrued on the Group I Loans during the related Due Period minus (x) the aggregate Administration Fee for each Group I Loan and (y) the sum of any Net Swap Payments payable to the Certificate Swap Provider or Swap Termination Payments payable to the Certificate Swap Provider which was not caused by the occurrence of a Swap Provider Trigger Event for such Distribution Date times 12, and the denominator of which is the aggregate Scheduled Principal Balance of the Group I Loans as of the last day of the immediately preceding Due Period (or as of the Cut-Off Date with respect to the first Distribution Date), after giving effect to Payoffs and Curtailments, in each case with respect to Group I Loans, received during the related Prepayment Period.

Net WAC Rate Carryover Amount:   With respect to any Class of the Group I Senior Certificates or any Class of the Group I Mezzanine Certificates and any Distribution Date on which the related Pass-Through Rate is limited to the Net WAC Pass-Through Rate, an amount equal to the sum of (i) the excess of (x) the amount of interest such Group I Senior Certificates or Group I Mezzanine Certificates would have been entitled to receive on such Distribution Date if the Net WAC Pass-Through Rate had not been applicable to such Class of Certificates on such Distribution Date over (y) the amount of interest accrued on such Class of Certificates for Distribution Date at the Net WAC Pass-Through Rate 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 related Pass-Through Rate for such Class of Certificates for the most recently ended Interest Accrual Period determined without taking into account the Net WAC Pass-Through Rate.

Nonrecoverable Advance :  With respect to any Loan, any Advance or Servicing Advance which the Servicer shall have determined to be a Nonrecoverable Advance as defined in and pursuant to the Mortgage Loan Purchase and Servicing Agreement, or which the Master Servicer (including the Trustee as successor Master Servicer) shall have determined to be nonrecoverable pursuant to Section 4.4, respectively, and which was or is proposed to be made by the Servicer or the Master Servicer (including the Trustee as successor Master Servicer).

Non-U.S. Person :  A Person that is not a U.S. Person.

Officer’s Certificate :  With respect to any Person, a certificate signed by the Chairman of the Board, the President or a Vice-President, however denominated, of such Person (or, in the case of a Person which is not a corporation, signed by the person or persons having like responsibilities), and delivered to the Trustee.

One-Month LIBOR : For the initial Interest Accrual Period, the Securities Administrator will determine One-Month LIBOR for such Interest Accrual Period based on information available on the second LIBOR Business Day preceding the Closing Date with respect to the Group I Adjustable Rate Certificates, and for any Interest Accrual Period thereafter, on the second LIBOR Business Day preceding the related Interest Accrual Period, the one month rate which appears on the Dow Jones Telerate System, page 3750, as of 11:00 a.m., London time on the LIBOR Determination Date. If such rate is not provided, One-Month LIBOR shall mean the rate determined by the Securities Administrator (or a calculation agent on its behalf) in accordance with the following procedure:

(i) 

The Securities Administrator on the LIBOR Determination Date will request the principal London offices of each of four major Reference Banks in the London interbank market, as selected by the Securities Administrator, to provide the Securities Administrator with its offered quotation for deposits in United States dollars for the upcoming one-month period, commencing on the second LIBOR Business Day immediately following such LIBOR Determination Date, to prime banks in the London interbank market at approximately 11:00 a.m. London time on such LIBOR Determination Date and in a principal amount that is representative for a single transaction in United States dollars in such market at such time. If at least two such quotations are provided, One-Month LIBOR determined on such LIBOR Determination Date will be the arithmetic mean of such quotations.

(ii) 

If fewer than two quotations are provided, One-Month LIBOR determined on such LIBOR Determination Date will be the arithmetic mean of the rates quoted at approximately 11:00 a.m. in New York City on such LIBOR Determination Date by three major banks in New York City selected by the Securities Administrator for one-month United States dollar loans to lending European banks, in a principal amount that is representative for a single transaction in United States dollars in such market at such time; provided, however, that if the banks so selected by the Securities Administrator are not quoting as mentioned in this sentence, One-Month LIBOR determined on such LIBOR Determination Date will continue to be One-Month LIBOR as then currently in effect on such LIBOR Determination Date.

(iii)

The establishment of One-Month LIBOR and each Pass-Through Rate for the Certificates by the Securities Administrator shall (in the absence of manifest error) be final, conclusive and binding upon each Holder of an Adjustable Rate Certificate and the Securities Administrator.

Opinion of Counsel :  A written opinion of counsel, who may, without limitation, be salaried counsel for the Depositor, the Servicer, the Securities Administrator or the Master Servicer acceptable to the Trustee, except that any opinion of counsel relating to (a) the qualification of any REMIC as a REMIC or (b) compliance with the REMIC Provisions must be an opinion of Independent counsel.

Original Value :  With respect to any Loan other than a Loan originated for the purpose of refinancing an existing mortgage debt, the lesser of (a) the Appraised Value (if any) of the Mortgaged Property at the time the Loan was originated or (b) the purchase price paid for the Mortgaged Property by the Mortgagor. With respect to a Loan originated for the purpose of refinancing existing mortgage debt, the Original Value shall be equal to the lesser of (a) the Appraised Value of the Mortgaged Property at the time the Loan was originated or (b) the appraised value at the time the refinanced mortgage debt was incurred.

OTS :  The Office of Thrift Supervision, or any successor thereto.

Overcollateralization Amount:   With respect to any Distribution Date following the Closing Date will be an amount by which the aggregate Scheduled Principal Balance of the Group I Loans immediately following the Distribution Date exceeds the sum of the Certificate Principal Balances of the Group I Senior Certificates and the Group I Mezzanine Certificates after taking into account distribution of the Principal Distribution Amount on such Distribution Date.

Overcollateralization Increase Amount :  With respect to any Distribution Date, the lesser of (i) the sum of (x) the Net Monthly Excess Cashflow for such Distribution Date and (y) any amounts on deposit in the Certificate Interest Swap Accounts and (ii) the amount, if any, by which the Required Overcollateralization Amount exceeds the Overcollateralization Amount for such Distribution Date (calculated for this purpose after assuming that only 100% of the Group I Principal Remittance Amount on such Distribution Date has been distributed).

Overcollateralization Reduction Amount:   With respect to any Distribution Date, the lesser of (i) the Group I Principal Remittance Amount and (ii) excess, if any, of (a) the Overcollateralization Amount for such Distribution Date (calculated for this purpose after assuming that only 100% of the Group I Principal Remittance Amount on such Distribution Date has been distributed) over (b)  the Required Overcollateralization Amount; provided however that on any Distribution Date on which a Trigger Event is in effect, the Overcollateralization Reduction Amount shall equal zero.

Ownership Interest :  With respect to any Residual Certificate, any ownership or security interest in such Residual Certificate, including any interest in a Residual Certificate as the Holder thereof and any other interest therein whether direct or indirect, legal or beneficial, as owner or as pledgor.

Pass-Through Entity :  Any regulated investment company, real estate investment trust, common trust fund, partnership, trust or estate, and any organization to which Section 1381 of the Code applies.

Pass-Through Rate :  The Pass-Through Rate with respect to each Class of Group I Adjustable Rate Certificates for each Distribution Date will be equal to the lesser of (i) One-Month LIBOR plus the applicable margin set forth below for such Class and (ii) the related Net WAC Pass-Through Rate; provided, however, that the margins applicable to each of the Group I Senior Certificates will increase by 100% and the margins applicable to each of the Group I Mezzanine Certificates will increase by 50% on the Distribution Date following the first possible Group I Optional Termination Date.  The margin for each such Class for any Distribution Date prior to the first Group I Optional Termination Date will be as set forth below:

With respect to each class of Group II Certificates (other than the Class 2-A-3, Class 2-A-4, Class 2-A-5 and Class 2-A-6 and the Principal-Only Certificates) and any Distribution Date, 6.000% per annum.  With respect to the Class 2-A-3, Class 2-A-4, Class 2-A-5 and Class 2-A-6 Certificates and any Distribution Date, the interest rate in the table beginning on page 13 of this Agreement.  The Principal-Only Certificates are not entitled to any distributions of interest.

Payoff :  Any voluntary payment of principal on a Loan by a Mortgagor equal to the entire outstanding Principal Balance of such Loan, if received in advance of the last scheduled Due Date for such Loan and is not accompanied by scheduled interest due on any date or dates in any month or months subsequent to the month of such payment-in-full.

PCAOB :  Means the Public Company Accounting Oversight Board.

Percentage Interest:   With respect to any Class of Certificates (other than the Residual Certificates) and any date of determination, the undivided percentage ownership in such Class evidenced by such Certificate, expressed as a percentage, the numerator of which is the initial Certificate Principal Balance represented by such Certificate and the denominator of which is the aggregate initial Certificate Principal Balance of all of the Certificates of such Class. Each Certificate is issuable only in minimum Percentage Interests corresponding to the Authorized Denomination of the related Class of Certificates; provided, however, that a single Certificate of each such Class of Certificates may be issued having a Percentage Interest corresponding to the remainder of the aggregate initial Certificate Principal Balance of such Class or to an otherwise Authorized Denomination for such Class plus such remainder. With respect to any Residual Certificate, the undivided percentage ownership in such Class evidenced by such Certificate, is as set forth on the face of such Certificate.

Periodic Rate Cap : With respect to each adjustable-rate Group I Loan and any Adjustment Date therefor, the fixed percentage set forth in the related Mortgage Note, which is the maximum amount by which the Mortgage Rate for such Loan may increase or decrease (without regard to the Maximum Mortgage Rate or the Minimum Mortgage Rate) on such Adjustment Date from the Mortgage Rate in effect immediately prior to such Adjustment Date.

Permitted Transferee :  With respect to the holding or ownership of any Residual Certificate, any Person other than (i) the United States, a State or any political subdivision thereof, or any agency or instrumentality of any of the foregoing, (ii) a foreign government or International Organization, or any agency or instrumentality of either of the foregoing, (iii) an organization (except certain farmers’ cooperatives described in Code Section 521) which is exempt from the taxes imposed by Chapter 1 of the Code (unless such organization is subject to the tax imposed by Section 511 of the Code on unrelated business taxable income), (iv) rural electric and telephone cooperatives described in Code Section 1381(a)(2)(C), (v) any electing large partnership under Section 775 of the Code, (vi) any Person from whom the Securities Administrator has not received an affidavit to the effect that it is not a "disqualified organization" within the meaning of Section 860E(e)(5) of the Code, and (vii) any other Person so designated by the Depositor based upon an Opinion of Counsel that the transfer of an Ownership Interest in a Residual Certificate to such Person may cause any REMIC created hereunder to fail to qualify as a REMIC at any time that the Certificates are outstanding. The terms "United States," "State" and "International Organization" shall have the meanings set forth in Code Section 7701 or successor provisions. A corporation shall not be treated as an instrumentality of the United States or of any State or political subdivision thereof 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 governmental unit.

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

PHH Mortgage :  PHH Mortgage Corporation, or any successor thereto.

Plan :  An employee benefit plan or arrangement which is subject to Section 406 of ERISA and/or Section 4975 of the Code or an entity whose underlying assets include such plan’s or arrangement’s assets by reason of their investment in the entity.

Prepaid Monthly Payment :  Any Monthly Payment received prior to its scheduled Due Date, which is intended to be applied to a Loan on its scheduled Due Date and held in the related Protected Account until the Servicer Remittance Date following its scheduled Due Date.

Prepayment Interest Shortfall :  For any Distribution Date and any Loan on which a Payoff was made by a Mortgagor during the related Prepayment Period, an amount equal to one month’s interest at the applicable Net Mortgage Rate on such Loan less the amount of interest actually paid by the Mortgagor with respect to such Payoff.

Prepayment Period :  With respect to the Servicer, as set forth in the Mortgage Loan Purchase and Servicing Agreement.

Principal Balance :  For any Loan and at the time of any determination, the principal balance of such Loan remaining to be paid at the close of business on the Cut-Off Date, after deduction of all principal payments due on or before the Cut-Off Date, whether or not received, reduced by the principal portion of all amounts received with respect to such Loan after the Cut-Off Date, and distributed or to be distributed to Certificateholders through the Distribution Date in the month of such determination. In the case of a Substitute Loan, "Principal Balance" shall mean, at the time of any determination, the principal balance of such Substitute Loan on the related Cut-Off Date, reduced by the principal portion of all amounts received with respect to such Loan after the Cut-Off Date, and distributed or to be distributed to Certificateholders through the Distribution Date in the month of determination.  The Principal Balance of a Liquidated Loan shall be zero.

Principal Prepayment :  Any payment of principal on a Loan which constitutes a Payoff or a Curtailment.

Protected Account :  An account or accounts established and maintained for the benefit of the Certificateholders by the Servicer with respect to the Loans and with respect to REO Property pursuant to the Mortgage Loan Purchase and Servicing Agreement and which are Eligible Accounts.

Purchase Obligation :  An obligation of the Depositor to repurchase Loans under the circumstances and in the manner provided in Section 2.3.

Purchase Price :  With respect to any Loan to be purchased pursuant to a Purchase Obligation, any Loan to be purchased pursuant to Section 3.31, or any Loan to be purchased or repurchased relating to an REO Property, and as confirmed by an Officers’ Certificate from the Master Servicer to the Trustee and the Securities Administrator, an amount equal to the sum of (i) 100% of the Principal Balance thereof as of the date of purchase (or in the case of an REO Property being purchased as provided in Section 10.1 or Section 10.2, 100% of the fair market value of such REO Property, such valuation to be conducted by an appraiser mutually agreed upon between the Group I Terminator or Group II Terminator, as applicable, and the Securities Administrator, in their reasonable discretion), (ii) in the case of (x) a Loan, accrued interest on such Principal Balance at the applicable Net Mortgage Rate from the date interest was last paid by the related Mortgagor or the date an Advance was last made by the Servicer or the Master Servicer, which payment or Advance had as of the date of purchase been distributed pursuant to Section 4.1, through the end of the calendar month in which the purchase is to be effected and (y) an REO Property, the sum of (1) accrued interest on such Principal Balance at the applicable Net Mortgage Rate from the date interest was last paid by the related Mortgagor or the date an Advance was last made by the Servicer or the Master Servicer through the end of the calendar month immediately preceding the calendar month in which such REO Property was acquired, plus (2) 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 purchase is to be effected, net of the total of all net rental income, Insurance Proceeds, Liquidation Proceeds and Advances that as of the date of purchase had been distributed as or to cover REO Imputed Interest in accordance with the Mortgage Loan Purchase and Servicing Agreement, (iii) any unreimbursed Servicing Advances and Advances (including Nonrecoverable Advances) and any unpaid Servicing Fees or Master Servicing Fees allocable to such Loan or REO Property, any amounts due and owing to the Trustee, the Custodian, the Servicer, the Master Servicer and the Securities Administrator as of the related Optional Termination Date and either Swap Termination Payments payable to the Certificate Swap Provider not due to a Swap Provider Trigger Event which remain unpaid or which is due to the exercise of the optional termination right and (iv) in the case of a Loan required to be purchased pursuant to Section 2.3, expenses reasonably incurred or to be incurred by the Master Servicer, the Servicer, the Trustee or the Securities Administrator in respect of the breach or defect giving rise to a Purchase Obligation and any costs and damages incurred by the Trust Fund in connection with any violation by any such Loan of any predatory or abusive lending law.  

Rating Agency :  Initially, each of S&P, Fitch and Moody’s; thereafter, each nationally recognized statistical rating organization that has rated the Certificates at the request of the Depositor, or their respective successors in interest.

Ratings :  As of any date of determination, the ratings, if any, of the Certificates as assigned by each Rating Agency.

Realized Loss :  For any Distribution Date and any Group I Loan which became a Liquidated Loan during the related Prepayment Period, the sum of (i) the Principal Balance of such Group I Loan remaining outstanding (after all recoveries of principal, including net Liquidation Proceeds, have been applied thereto) and the principal portion of Advances which have been reimbursed with respect to such Group I Loan, and (ii) the accrued interest on such Group I Loan remaining unpaid and the interest portion of Advances which have been reimbursed from Liquidation Proceeds with respect to such Group I Loan. The amounts described in clause (i) shall be the principal portion of Realized Losses and the amounts described in clause (ii) shall be the interest portion of Realized Losses.  For any Distribution Date and any Group I Loan which is not a Liquidated Loan, the amount of any Bankruptcy Loss incurred with respect to such Group I Loan as of the related Due Date shall be treated as a Realized Loss.

Record Date :  With respect to the Group I Certificates (other than the Class I-CE Certificates and the Class I-R Certificates), the Business Day prior to the related Distribution Date.  With respect to the Group II Certificates, the last Business Day of the month immediately preceding the month in which the related Distribution Date occurs.

Reference Banks :  Barclays Bank PLC, The Tokyo Mitsubishi Bank and National Westminster Bank PLC and their successors in interest; provided, however, that if any of the foregoing banks are not suitable to serve as a Reference Bank, then any leading banks selected by the Securities Administrator which are engaged in transactions in Eurodollar deposits in the International Eurocurrency market (i) with an established place of business in London, (ii) not controlling, under the control of or under common control with the Depositor or any Affiliate thereof and (iii) which have been designated as such by the Securities Administrator.

Regular Interest Certificates:   The Certificates (other than the Residual Certificates).

Regulation AB :  Means 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.

Relevant Servicing Criteria :  Means the Servicing Criteria applicable to the various parties, as set forth on Exhibit M attached hereto.  For clarification purposes, multiple parties can have responsibility for the same Relevant Servicing Criteria.  With respect to a Servicing Function Participant engaged by the Master Servicer, the Securities Administrator, the Custodian or the Servicer, the term "Relevant Servicing Criteria" may refer to a portion of the Relevant Servicing Criteria applicable to such parties.

Relief Act :  The Servicemembers Civil Relief Act, or similar state or local laws.

Relief Act Interest Shortfall :  With respect to any Distribution Date and a Loan, the reduction in the amount of interest collectible on such Loan for the most recently ended calendar month immediately preceding such Distribution Date as a result of the application of the Relief Act.

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

REMIC Provisions :  Provisions of the United States federal income tax law relating to real estate mortgage investment conduits, which appear at Section 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.

REMIC Regular Interest :  A REMIC I Regular Interest, REMIC II Regular Interest, REMIC III Regular Interest, REMIC IV Regular Interest, or a REMIC V Regular Interest.

Remittance Report :  With respect to the Group I Certificates, a report by the Securities Administrator pursuant to Section 4.3 and with respect to the Group II Certificates, a report by the Securities Administrator pursuant to Section 5.3.

REO Disposition :  The sale or other disposition of an REO Property on behalf of  any REMIC created hereby.

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

REO Property :  A Mortgaged Property, title to which has been acquired by the Servicer on behalf of the Trust Fund through foreclosure, deed in lieu of foreclosure or otherwise.

Required Overcollateralization Amount: With respect to any Distribution Date, (a) if such Distribution Date is prior to the Stepdown Date, 0.60% of the sum of the aggregate Scheduled Principal Balance of the Group I Loans as of the Cut-Off Date, or (b)  if such Distribution Date is on or after the Stepdown Date, the greater of (i) 1.00% of the aggregate Scheduled Principal Balance of the Group I Loans 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, and after reduction for Realized Losses on the Loans incurred during the related Prepayment Period), and (ii) 0.50% of the sum of the aggregate Scheduled Principal Balance of the Group I Loans as of the Cut-Off Date. If a Trigger Event is in effect on any Distribution Date, the Required Overcollateralization Amount will be the same as the Required Overcollateralization Amount for the previous Distribution Date.

Reportable Event :  Has the meaning set forth in Section 3.29(b) of this Agreement.

Residual Certificate :  The Class I-R and Class II-AR Certificates, each of which is being issued in a single Class. The R-I, R-II, R-III, R-IV and R-V interests are hereby each designated the sole Class of "residual interests" in REMIC I, REMIC II, REMIC III, REMIC IV and REMIC V, respectively, for purposes of Section 860G(a)(2) of the Code.

Reserve Interest Rate :  The rate per annum that the Securities Administrator determines to be either (i) the arithmetic mean of the one-month U.S. dollar lending rates which New York City banks selected by the Securities Administrator are quoting on the relevant LIBOR Determination Date to the principal London offices of leading banks in the London interbank market or (ii) in the event that the Securities Administrator can determine no such arithmetic mean, the lowest one-month U.S. dollar lending rate which New York City banks selected by the Securities Administrator are quoting on such Interest Determination Date to leading European banks.

Responsible Officer :  When used with respect to the Trustee, any officer in the corporate trust department or similar group of the Trustee with direct responsibility for the administration of this Agreement and also, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his or her knowledge of and familiarity with the particular subject. When used with respect to the Master Servicer or the Securities Administrator, the Chairman or Vice-Chairman of the Board of Directors or Trustees, the Chairman or Vice-Chairman of the Executive or Standing Committee of the Board of Directors or Trustees, the President, the Chairman of the Committee on Trust Matters, any Vice-President, any Assistant Vice-President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, the Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer, the Controller, any Assistant Controller or any other officer customarily performing functions similar to those performed by any of the above-designated officers and in each case having direct responsibility for the administration of this Agreement, and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject.  When used with respect to the Depositor or any other Person, the Chairman or Vice-Chairman of the Board of Directors, the Chairman or Vice-Chairman of any executive committee of the Board of Directors, the President, any Vice-President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, or any other officer of the Depositor customarily performing functions similar to those performed by any of the above-designated officers and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject.

S&P :  Standard & Poor’s Ratings Services, a division of The McGraw Hill Companies, Inc. provided, that at any time it is a Rating Agency.

Sarbanes-Oxley Act :  Means the Sarbanes-Oxley Act of 2002 and the rules and regulations of the Commission promulgated thereunder (including any interpretations thereof by the Commission’s staff).

Sarbanes-Oxley Certification :  A written certification signed by an officer of the Master Servicer that complies with (i) the Sarbanes-Oxley Act of 2002, as amended from time to time, and (ii) Exchange Act Rules 13a-14(d) and 15d-14(d), as in effect from time to time; provided that if, after the Closing Date (a) the Sarbanes-Oxley Act of 2002 is amended, (b)  the Rules referred to in clause (ii) are modified or superseded by any subsequent statement, rule or regulation of the Commission or any statement of a division thereof, or (c) any future releases, rules and regulations are published by the Commission from time to time pursuant to the Sarbanes-Oxley Act of 2002, which in any such case affects the form or substance of the required certification and results in the required certification being, in the reasonable judgment of the Master Servicer, materially more onerous than the form of the required certification as of the Closing Date, the Sarbanes-Oxley Certification shall be as agreed to by the Master Servicer, the Depositor following a negotiation in good faith to determine how to comply with any such new requirements.

Scheduled Principal Balance :  With respect to any Loan and a Due Date, the unpaid principal balance of such Loan as specified in the amortization schedule (before any adjustment to such schedule by reason of bankruptcy or similar proceeding or any moratorium or similar waiver or grace period) for such Due Date, after giving effect to any previously applied Curtailments, the payment of principal on such Due Date and any reduction of the principal balance of such Loan by a bankruptcy court, irrespective of any delinquency in payment by the related Mortgagor.

Securities Act :  The Securities Act of 1933, as amended, and the rules and regulations thereunder.

Securities Administrator :  As of the Closing Date, Wells Fargo Bank, N.A., and thereafter, its respective successors in interest who meet the qualifications of this Agreement. The Securities Administrator and the Master Servicer shall at all times be the same Person.

Sellers:   PHH Mortgage and Bishop’s Gate Residential Mortgage Trust, as sellers under the Mortgage Loan Purchase and Servicing Agreement.

Senior Certificates:  The Group I Senior Certificates and Group II Senior Certificates as applicable.

Servicer :  PHH Mortgage, or any successor appointed under the Mortgage Loan Purchase and Servicing Agreement.

Servicer Remittance Date :  As set forth in the Mortgage Loan Purchase and Servicing Agreement.

Servicing Advances :  The customary reasonable and necessary "out-of-pocket" costs and expenses incurred by the Servicer in connection with a default, delinquency or other unanticipated event by the Servicer in the performance of its servicing obligations, 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, in respect of a particular Loan and (iii) the management (including reasonable fees in connection therewith) and liquidation of any REO Property. The Servicer shall not be required to make any Servicing Advance in respect of a Loan or REO Property that, in the good faith business judgment of the Servicer, would not be ultimately recoverable from related Insurance Proceeds or Liquidation Proceeds on such Loan or REO Property as provided herein.

Servicing Criteria :  The "servicing criteria set forth in Item 1122(d) of Regulation AB, as such may be amended from time to time.

Servicing Fee :  With respect to each Loan and for any Distribution Date, an amount equal to one twelfth of the product of the Servicing Fee Rate multiplied by the Scheduled Principal Balance of such Loan as of the Due Date in the month preceding the month of such Distribution Date. The Servicing Fee is payable solely from collections of interest on the Loans or as otherwise provided in the Mortgage Loan Purchase and Servicing Agreement.

Servicing Fee Rate :  With respect to each Loan, the related per annum rate for such Loan, as set forth on the Loan Schedule.

Servicing Function Participant :  Means any Sub-Servicer, Subcontractor, the Servicer, the Master Servicer, the Custodian, the Securities Administrator and any other Person that is deemed to be ‘participating in the servicing function" within the meaning of Item 1122 of Regulation AB.

Servicing Officer :  Any individual involved in, or responsible for, the administration and servicing of the Loans whose name and specimen signature appear on a list of servicing officers furnished to the Trustee, the Depositor and the Securities Administrator on the Closing Date by the Servicer and the Master Servicer, as such lists may from time to time be amended.

Startup Day :  With respect to each REMIC, the day designated as such pursuant to Section 11.1(b) hereof.

Stepdown Date:    The earlier to occur of (1) the Distribution Date on which the aggregate Certificate Principal Balance of the Group I Senior Certificates has been reduced to zero and (2) the later to occur of (x) the Distribution Date in May 2010 and (y) the first Distribution Date on which the Credit Enhancement Percentage of the Group I Senior Certificates (calculated for this purpose only after taking into account distributions of principal on the Group I Loans, but prior to any distribution of the Group I Principal Distribution Amount to the Certificateholders then entitled to distributions of principal on such Distribution Date) is greater than or equal to 13.30%.

Subcontractor :  Means any vendor, subcontractor or other Person that is not responsible for the overall servicing of Mortgage Loans but performs one or more discrete functions identified in Item 1122(d) of Regulation AB with respect to Mortgage Loans under the direction or authority of the Servicer (or a Sub-Servicer of the Servicer), the Master Servicer, the Trustee, the Custodian or the Securities Administrator.

Subordinate Certificates:  The Group I Subordinate Certificates and Group II Subordinate Certificates.

Subsequent Recoveries :  With respect to any Distribution Date, all amounts received during the related Prepayment Period by the Servicer specifically related to a defaulted 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 defaulted Loan.

Sub-Servicer :  Means any Person that (i) services Mortgage Loans on behalf of the Servicer or any party hereto, and (ii) is responsible for the performance (whether directly or through Sub-Servicers or Subcontractors) of servicing functions required to be performed under this Agreement, the Mortgage Loan Purchase and Servicing Agreement or any sub-servicing agreement that are identified in Item 1122(d) of Regulation AB.

Substitute Loan:   A mortgage loan substituted for a Deleted Loan pursuant to the terms of this Agreement which must, on the date of such substitution, (i) have an outstanding principal balance, after application of all scheduled payments of principal and interest due during or prior to the month of substitution, not in excess of the Scheduled Principal Balance of the Deleted Loan as of the Due Date in the calendar month during which the substitution occurs, (ii) have a Mortgage Interest Rate not less than (and not more than one percentage point in excess of) the Mortgage Interest Rate of the Deleted Loan, (iii) have a remaining term to maturity not greater than (and not more than one year less than) that of the Deleted Loan, (iv) have the same Due Date as the Due Date on the Deleted Loan, (v) have a Loan-to-Value Ratio as of the date of substitution equal to or lower than the Loan-to-Value Ratio of the Deleted Loan as of such date, (vi) have a risk grading at least equal to the risk grading assigned on the Deleted Loan, (vii) is a "qualified mortgage" as defined in the REMIC Provisions and (viii) conform to each representation and warranty set forth in Section 6 of the Mortgage Loan Purchase Agreement applicable to the Deleted Loan.  In the event that one or more mortgage loans are substituted for one or more Deleted Loans, the amounts described in clause (i) hereof shall be determined on the basis of aggregate principal balances, the Mortgage Interest Rates described in clause (ii) hereof shall be determined on the basis of weighted average Mortgage Interest  Rates, the terms described in clause (iii) hereof shall be determined on the basis of weighted average remaining term to maturity, the Loan-to-Value Ratios described in clause (v) hereof shall be satisfied as to each such Substitute Loan, the risk gradings described in clause (vi) hereof shall be satisfied as to each such Substitute Loan and, except to the extent otherwise provided in this sentence, the representations and warranties described in clauses (vii) and (viii) hereof must be satisfied as to each Substitute Loan or in the aggregate, as the case may be.  

Substitution Shortfall Amount :  Has the meaning set forth in Section 2.3(b) of this Agreement.

Supplemental Interest Trust : Has the meaning set forth in Section 4.11 of this Agreement.

Swap Account: Either Certificate Swap Account 1 or Certificate Swap Account 2, as applicable.

Swap Provider Trigger Event:  With respect to the Certificate Swap Provider and the Certificate Swap Agreement, a Swap Provider Trigger Event shall have occurred if any of the following has occurred: (i) an Event of Default under the Certificate Swap Agreement with respect to which the Certificate Swap Provider is a Defaulting Party (as defined in the Certificate Swap Agreement), (ii) a Termination Event under the Certificate Swap Agreement with respect to which the Certificate Swap Provider is the sole Affected Party (as defined in the Certificate Swap Agreement) or (iii) an Additional Termination Event under the Certificate Swap Agreement with respect to which the Certificate Swap Provider is the sole Affected Party.

Swap Termination Payment:  With respect to the Certificate Swap Agreement, upon the designation of an "Early Termination Date" as defined in the Certificate Swap Agreement, the payment to be made by the Supplemental Interest Trust to the Certificate Swap Provider, or by the the Certificate Swap Provider to the Supplemental Interest Trust, as applicable, pursuant to the terms of the Certificate Swap Agreement.

Tax Matters Person :  The Holders of the Class I-R and Class II-AR Certificates issued hereunder or any Permitted Transferee of such Class I-R and Class II-AR Certificateholder shall be the initial "tax matters person" for each Group I or Group II REMIC, respectively within the meaning of Section 6231(a)(7) of the Code. For tax years commencing after any transfer of such Residual  Certificate, the holder of the greatest Percentage Interest in the applicable Residual Certificate at year end shall be designated as the Tax Matters Person with respect to that year. If the Tax Matters Person becomes a Disqualified Organization, the last preceding Holder of such Authorized Denomination of the applicable Residual Certificate that is not a Disqualified Organization shall be Tax Matters Person pursuant to Section 6.3(e). If any Person is appointed as tax matters person by the Internal Revenue Service pursuant to the Code, such Person shall be Tax Matters Person.

Transfer :  Any direct or indirect transfer, sale, pledge or other disposition of, or directly or indirectly transferring, selling or pledging, any Ownership Interest in a Class I-CE Certificate or a Residual Certificate.

Transferee :  Any Person who is acquiring by Transfer any Ownership Interest in a Group II Junior Subordinate Certificate, Class I-CE Certificate or Residual Certificate.

Trigger Event:   With respect to any Distribution Date, a Trigger Event is in effect if (x) the percentage obtained by dividing (i) the aggregate Scheduled Principal Balance of Loans delinquent 60 days or more (including Group I Loans in foreclosure, bankruptcy and REO) by (ii) the aggregate Scheduled Principal Balance of the Group I Loans, in each case, as of the last day of the previous calendar month, exceeds 42.99% of the Credit Enhancement Percentage with respect to the prior Distribution Date or (y) the aggregate amount of Realized Losses with respect to Group I Loans incurred since the Cut-Off Date through the last day of the related Due Period divided by the aggregate Scheduled Principal Balance of the Group I Loans as of the Cut-Off Date exceeds the applicable percentages set forth below with respect to such Distribution Date:

Trust Fund :  Collectively, all of the assets of each REMIC created hereby, the Group I Reserve Fund and any amounts on deposit therein and any proceeds thereof.  For avoidance of doubt, the Trust Fund does not include the Supplemental Interest Trust.

Trustee :  HSBC Bank USA, National Association, a national banking association, or its successor in interest, or any successor trustee appointed as herein provided.

Uncollected Interest :  With respect to any Distribution Date, the sum of (i) the aggregate Prepayment Interest Shortfalls with respect to the Loans for such Distribution Date and (ii) the aggregate Curtailment Shortfalls with respect to the Loans for such Distribution Date.

Uncompensated Interest Shortfall :  For any Distribution Date, the excess, if any, of (i) the sum of (a) the related Uncollected Interest for such Distribution Date, and (b) any shortfall in interest collections for the Loans in the calendar month immediately preceding such Distribution Date resulting from a Relief Act Interest Shortfall over (ii) the aggregate Compensating Interest paid by the Servicer and the Master Servicer with respect to the Loans for such Distribution Date, which excess shall be allocated to each Class of Certificates, pro rata, according to the amount of interest accrued thereon in reduction thereof.

Underwriter :  Deutsche Bank Securities Inc.

Underwriters’ Exemption:  Prohibited Transaction Exemption 2007-5, 72 Fed. Reg. 13130 (or any successor thereto), or any substantially similar administrative exemption granted by the U.S. Department of Labor.

Uninsured Cause :  Any cause of damage to a Mortgaged Property such that the complete restoration of such property is not fully reimbursable by the hazard insurance policies required to be maintained pursuant to Section 3.9.

U.S. Person :  A citizen or resident of the United States, a corporation or partnership (including an entity treated as a corporation or partnership for United States federal income tax purposes) created or organized in, or under the laws of, the United States or any state thereof or the District of Columbia (except, in the case of a partnership, to the extent provided in regulations) or an estate whose income is subject to United States federal income tax regardless of its source, 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 such U.S. Persons have the authority to control all substantial decisions of the trust. To the extent prescribed in regulations by the Secretary of the Treasury, which have not yet been issued, a trust which was in existence on August 20, 1996 (other than a trust treated as owned by the grantor under subpart E of part 1 of subchapter J of chapter 1 of the Code), and which was treated as a U.S. Person on August 20, 1996 may elect to continue to be treated as a U.S. Person notwithstanding the previous sentence.

Verification Agent :  As defined in Section 3.28.

Verification Report :  As defined in Section 3.28.

Voting Rights :  The portion of the voting rights of all of the Certificates which is allocated to any such Certificate.  With respect to any date of determination, 98% of all Voting Rights will be allocated among the Holders of the Senior Certificates (other than the Class II-AR Certificates) and the Subordinate Certificates in proportion to the then outstanding Certificate Principal Balances of their respective Group I Certificates, 1% of all Voting Rights will be allocated among the Holders of the Class I-R Certificates and 1% of all Voting Rights will be allocated among the Holders of the Class II-AR Certificates. The Voting Rights allocated to each Class of Certificates shall be allocated among Holders of each such Class in accordance with their respective Percentage Interests as of the most recent Record Date.

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

Section 1.2

Group II Definitions .

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

Aggregate Senior Percentage : With respect to any Distribution Date, the percentage equivalent of a fraction, the numerator of which is the aggregate Certificate Principal Balance of the Group II Senior Certificates (other than the Interest Only Certificates and Principal Only Certificates) immediately prior to that Distribution Date, and the denominator of which is the sum of the Scheduled Principal Balances of the Group II Loans as of the first day of the related Due Period (exclusive of the related Discount Fraction of the Scheduled Principal Balance of each Discount Loan).

Aggregate Subordinate Amount : With respect to any date of determination, an amount equal to the excess of the aggregate Scheduled Principal Balance of the Group II Loans (exclusive of the related Discount Fraction of the Scheduled Principal Balance of each Discount Loan) over the aggregate Certificate Principal Balance of the Group II Senior Certificates (other than the Interest Only Certificates and Principal Only Certificates) then outstanding.

Aggregate Subordinate Percentage : With respect to any Distribution Date, 100% minus the Aggregate Senior Percentage for that Distribution Date.

Anniversary : Each anniversary of the Cut-Off Date.

Bankruptcy Coverage : As of the Cut-Off Date, $150,000. Bankruptcy Coverage will be reduced, from time to time, by the amount of Bankruptcy Losses allocated to the Group II Certificates.

Bankruptcy Loss : With respect to any Group II Loan, any Debt Service Reduction or Deficient Valuation.

Basis Risk Shortfall Carryover Amount :  With respect to the Class 2-A-5 Certificates and any Distribution Date on or prior to the Yield Maintenance Agreement Termination Date on which its Pass-Through Rate is limited to its maximum Pass-Through Rate of 6.000% per annum, an amount equal to the sum of (i) the excess of (x) the amount of interest the Class 2-A-5 Certificates would have been entitled to receive on such Distribution Date if the 6.000% maximum Pass-Through Rate had not been applicable to such class on such Distribution Date over (y) the amount of interest accrued on the Class 2-A-5 Certificates on such Distribution Date at its Pass-Through Rate plus (ii) the Basis Risk Shortfall Carryover Amount for the previous Distribution Date not previously distributed, together with interest thereon at a rate equal to the Pass-Through Rate for the Class 2-A-5 Certificates for the most recently ended Interest Accrual Period determined without taking into account its maximum Pass-Through Rate of 6.000% per annum.

Cap Strike Rate :  With respect to any Distribution Date and the Yield Maintenance Agreement, the applicable percentage in the schedule set forth in Exhibit Q for such Distribution Date.

Class 2-A-6 Notional Amount : With respect to any Distribution Date will be equal to the Certificate Principal Balance of the Class 2-A-5 Certificates for such Distribution Date.

Class 2-X Notional Amount: With respect to any Distribution Date will be the product of: (x) the aggregate Principal Balance of the Pool 2 and Pool 3 Non-Discount Loans as of the last day of the related Due Period, or for the initial Distribution Date, as of the Cut-off Date (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); and (y) a fraction, the numerator of which is the weighted average of the related Stripped Interest Rates for the Pool 2 and Pool 3 Non-Discount Loans and the denominator of which is 6.000%.  

Class 4-X Notional Amount: With respect to any Distribution Date will be the product of: (x) the aggregate Principal Balance of the Pool 4 Non-Discount Loans as of the last day of the related Due Period, or for the initial Distribution Date, as of the Cut-off Date (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); and (y) a fraction, the numerator of which is the weighted average of the related Stripped Interest Rates for the Pool 4 Non-Discount Loans and the denominator of which is 6.000%.  

Collateral Deficiency Amount: With respect to a Pool and any Distribution Date prior to the Credit Support Depletion Date, the amount by which (i) the aggregate Certificate Principal Balance of the related Group II Senior Certificates (other than the  Interest Only Certificates), after giving effect to payments of principal (other than the related Collateral Deficiency Amount) on that Distribution Date exceeds (ii) the Scheduled Principal Balance of the Group II Loans in the related Pool as of the last day of the related Due Period.

Counterparty: Bear Stearns Financial Products Inc., or any successor in interest under the Yield Mantenance Agreement.

Credit Support Depletion Date : The Distribution Date on which the aggregate Certificate Principal Balance of the Group II Subordinate Certificates has been reduced to zero, prior to giving effect to principal distributions thereon and the allocation of Realized Losses on such Distribution Date.

Cross Payment Trigger Date : Any Distribution Date on which (i) the aggregate Certificate Principal Balance of the Group II Senior Certificates related to a Pool (other than the Interest Only Certificates) has been reduced to zero and (ii) either (a) the Subordinate Percentage of a Pool is less than 200% times the related Subordinate Percentage as of the Closing Date, or (b) the aggregate Principal Balance of the Loans (including Loans in bankruptcy, foreclosure and REO) which are 60 or more days delinquent (averaged over the preceding six-month period), as a percentage of the Group Subordinate Amount of a Pool, is equal to or greater than 50% as of such Distribution Date.

Debt Service Reduction : Any reduction of the amount of the monthly payment on a Group II Loan made by a bankruptcy court in connection with a personal bankruptcy of a Mortgagor.

Deficient Valuation: In connection with a personal bankruptcy of a Mortgagor on a Group II Loan, the positive difference, if any, resulting from the outstanding principal balance on a Group II Loan less a bankruptcy court’s valuation of the related Mortgaged Property.

Discount Fraction: With respect to any Pool 2 Discount Loan, the Pool 2 Discount Fraction for such Pool 2 Discount Loan; with respect to any Pool 3 Discount Loan, the Pool 3 Discount Fraction for such Pool 3 Discount Loan; and with respect to any Pool 4 Discount Loan, the Pool 4 Discount Fraction for such Pool 4 Discount Loan.

Discount Fractional Principal Amount: With respect to Loan Pool 2, the Pool 2 Discount Fractional Principal Amount; with respect to Pool 3, the Pool 3 Discount Fractional Principal Amount; and with respect to Pool 4, the Pool 4 Discount Fractional Principal Amount.

Discount Loan :  Any Pool 2 Discount Loan, Pool 3 Discount Loan or Pool 4 Discount Loan, as applicable.

Excess Loss : A Special Hazard Loss incurred on a Group II Loan in excess of the Special Hazard Coverage, a Fraud Loss incurred on a Group II in excess of the Fraud Coverage and a Bankruptcy Loss incurred on a Group II Loan in excess of the Bankruptcy Coverage.

Fraud Coverage:   As of the Cut-Off Date, $5,430,609. As of any date of determination after the Cut-Off Date, the Fraud Coverage will be equal to:

(1)

on and after the first Anniversary, an amount equal to:

(a)

2.00% of the aggregate Principal Balance of the Group II Loans as of the Cut-Off Date, minus

(b)

the aggregate amounts allocated to the Certificates with respect to Fraud Losses on the Group II Loans up to such date of determination;

(2)

from the second to and including the fifth Anniversary, an amount equal to:

(a)

1.00% of the aggregate Principal Balance of the Group II Loans as of the Cut-Off Date, minus

(b)

the aggregate amounts allocated to the Certificates with respect to Fraud Losses on the Group II Loans up to such date of determination;

(3)

after the fifth Anniversary, the Fraud Coverage will be zero.

Fraud Loss : The occurrence of a loss on a Group II Loan, as reported by the Servicer, arising from any action, event or state of facts with respect to such Group II Loan which, because it involved or arose out of any dishonest, fraudulent, criminal, negligent or knowingly wrongful act, error or omission by the Mortgagor, originator (or assignee thereof) of such Loan, or the Servicer, would result in an exclusion from, denial of, or defense to coverage which otherwise would be provided by an insurance policy previously issued with respect to such Loan.

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

Group II Certificates:  The Group II Senior Certificates, Group II Mezzanine Certificates and Group II Subordinate Certificates.

Group II Interest Distribution Amount: On any Distribution Date, the sum of (i) interest accrued on the Group II Certificates (other than the Principal Only Certificates) which shall be equal to the product of (1) 1/12th of the Pass-Through Rate for such Class and (2) the aggregate Certificate Principal Balance or Notional Amount, as applicable, for such Class before giving effect to allocations of Realized Losses in connection with such Distribution Date or distributions to be made on such Distribution Date, reduced by Group II Net Interest Shortfalls allocated to such Class pursuant to Section 1.3 and the interest portion of Realized Losses allocated to such Class pursuant to Section 5.2 and (ii) the amount of interest accrued but unpaid to such Class from prior Distribution Dates.

Group II Junior Subordinate Certificates : The Class II-B-4, Class II-B-5 and Class II-B-6 Certificates, collectively.

Group II Last Scheduled Distribution Date : The Distribution Date in May 2037, which is the Distribution Date immediately following the maturity date for the Group II Loan with the latest maturity date.

Group II Loan Schedule :  The schedule, as amended from time to time, of Group II Loans, attached hereto as Schedule Two, which shall set forth as to each Group II Loan the following, among other things:

(i)

the loan number of the Loan and name of the related Mortgagor;

(ii)

the street address of the Mortgaged Property including city, state and zip code;

(iii)

the Mortgage Interest Rate as of the Cut-Off Date;

(iv)

the original term and maturity date of the related Mortgage Note;

(v)

the original Principal Balance;

(vi)

the first payment date;

(vii)

the Monthly Payment in effect as of the Cut-Off Date;

(viii)

the date of the last paid installment of interest;

(ix)

the unpaid Principal Balance as of the close of business on the Cut-Off Date;

(x)

the Loan-to-Value ratio at origination;

(xi)

the type of property and the Original Value of the Mortgaged Property;

(xii)

whether a primary mortgage insurance policy is in effect as of the Cut-Off Date;

(xiii)

the nature of occupancy at origination;

(xiv)

[reserved];

(xv)

the Servicer;

(xvi)

the Servicing Fee Rate; and

(xvii)

the Custodian.

Group II Loans: With respect to the Pool 2 Loans, the Pool 3 Loans, the Pool 4 Loans, the Mortgages and the related Mortgage Notes, each transferred and assigned to the Trustee pursuant to the provisions hereof as from time to time are held as part of the Trust Fund, as so identified in the Group II Loan Schedule. Each of the Group II Loans is referred to individually in this Agreement as a " Group II Loan".

Group II Mezzanine Certificates : The Class II-M Certificates.

Group II Net Interest Shortfall : For any Distribution Date and the Group II Certificates, the sum of (i) any Prepayment Interest Shortfall for such Distribution Date with respect to the Group II Certificates and (ii) any Relief Act Interest Shortfall for such Distribution Date with respect to the Group II Certificates.

Group II Optional Termination Date:   The Distribution Date on which the aggregate Scheduled Principal Balance of the Group II Loans (and REO Properties acquired in respect thereof)  remaining in the Trust Fund as of the last day of the related Due Period is reduced to less than or equal to 10% of the aggregate Scheduled Principal Balance of the Group II Loans as of the Cut-Off Date.

Group II Principal Distribution Amount: With respect to any Distribution Date and a Pool 2, Pool 3 and Pool 4, the sum of:

(1)

scheduled principal payments on the Group II Loans in the related Pool due during the related Due Period;

(2)

the principal portion of repurchase proceeds received with respect to the Group II Loans in the related Pool which were repurchased as permitted or required by this Agreement during the related Prepayment Period; and

(3)

any other unscheduled payments of principal which were received on the Group II Loans in the related Pool during the related Prepayment Period, other than Payoffs, Curtailments or Liquidation Principal.

Group II Reserve Fund :  Shall mean the separate trust account created and maintained by the Securities Administrator pursuant to Section 3.26 hereof.

Group II Senior Certificates : The Class 2-A-1, Class 2-A-2, Class 2-A-3, Class 2-A-4, Class 2-A-5, Class 2-A-6, Class 3-A-1, Class 3-A-2, Class 4-A-1, Class 2PO, Class 4PO, Class 2-X, Class 4-X and Class II-AR Certificates.

Group II Senior Principal Distribution Amount : With respect to any Distribution Date and Pool 2, Pool 3 and Pool 4, the sum of the following for that Distribution Date:

(1)

the related Senior Percentage of the related Group II Principal Distribution Amount (exclusive of the portion thereof attributable to the related Discount Fractional Principal Amount, as applicable);

(2)

the related Senior Prepayment Percentage of the related Principal Prepayment Amount (exclusive of the portion thereof attributable to the related Discount Fractional Principal Amount, as applicable); and

(3)

the related Senior Liquidation Amount.

Group II Subordinate Certificates : 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 Termination Price :  As defined in Section 10.2(a).

Group II Terminator :  As defined in Section 10.2(a).

Group Subordinate Amount :  With respect to any date of determination and Pool 2, Pool 3 and Pool 4, an amount equal to the excess of the aggregate Scheduled Principal Balance of the related Group II Loans in such Pool (exclusive of the related Discount Fraction of the Scheduled Principal Balance of each Discount Loan in such Pool) over the aggregate Certificate Principal Balance of the Group II Senior Certificates related to such Pool (other than the Interest Only Certificates and the Principal Only Certificates) then outstanding.

Interest Only Certificates:  The Class 2-A-6, Class 2-X and Class 4-X Certificates, as applicable.

Liquidation Principal : With respect to any Distribution Date and any Group II Loan, the principal portion of net Liquidation Proceeds received with respect to each such Group II Loan which became a Liquidated Loan (but not in excess of the Principal Balance thereof) during the related Prepayment Period.

Notional Amount: The Class 2-X Notional Amount and Class 4-X Notional Amount, as applicable.

Pool: Pool 2, Pool 3 or Pool 4, as applicable.

Pool Available Distribution Amount: Any of the Pool 2 Available Distribution Amount, Pool 3 Available Distribution Amount and Pool 4 Available Distribution Amount, as applicable.

Pool 2 Available Distribution Amount : With respect to any Distribution Date, the sum of the following amounts that are related to the Pool 2 Loans:

(1)

the total amount of all cash received by or on behalf of the Servicer with respect to the Pool 2 Loans during the related Due Period (including Liquidation Proceeds, Insurance Proceeds, condemnation proceeds and Subsequent Recoveries), except:

(a)

all scheduled payments of principal and interest collected on the Pool 2 Loans but due on a date after the related Due Date;

(b)

all Curtailments received with respect to the Pool 2 Loans after the related Prepayment Period, together with all interest paid by the Mortgagors in connection with such Curtailments;

(c)

all Payoffs received with respect to the Pool 2 Loans after the related Prepayment Period, together with all interest paid by the Mortgagors in connection with such Payoffs;

(d)

Liquidation Proceeds, Insurance Proceeds, condemnation proceeds and Subsequent Recoveries received on the Pool 2 Loans after the related Prepayment Period;

(e)

all amounts reimbursable to the Servicer with respect to the Pool 2 Loans pursuant to the terms of the Mortgage Loan Purchase and Servicing Agreement or to the Master Servicer, the Securities Administrator, the Trustee or the Custodian pursuant to the terms of this Agreement or the Custodial Agreement;

(f)

reinvestment income with respect to the Pool 2 Loans on the balance of funds, if any, in the Protected Accounts or the Distribution Account; and

(g)

any fees payable to the Master Servicer (including any Master Servicing Fees), the Servicer with respect to the Pool 2 Loans, and any premiums payable in connection with any lender paid primary mortgage insurance policies maintained on the Pool 2 Loans;

(2)

all Advances made by the Servicer and/or the Master Servicer or the Trustee with respect to the Pool 2 Loans for that Distribution Date;

(3)

any amounts paid as Compensating Interest on the Pool 2 Loans by the Servicer and/or the Master Servicer for that Distribution Date;

(4)

the total amount of any cash related to the Pool 2 Loans deposited in the Distribution Account in connection with the repurchase of any Pool 2 Loan by the Depositor; and

(5)

the total amount of any cash related to the Pool 2 Loans deposited in the Distribution Account in connection with an optional termination of REMIC IV pursuant to Section 10.2.

Pool 2 Discount Fraction : With respect to any Distribution Date and a Pool 2 Discount Loan, a fraction, the numerator of which is 6.000% minus the Net Mortgage Rate as of the Cut-Off Date of such Pool 2 Discount Loan, and the denominator of which is 6.000%.

Pool 2 Discount Fractional Principal Amount : For any Distribution Date and the Pool 2 Loans, the aggregate of the following with respect to each Pool 2 Discount Loan: the Pool 2 Discount Fraction of the amounts described in the definition of Group II Principal Distribution Amount, Principal Prepayment Amount and Liquidation Principal.

Pool 2 Discount Fractional Principal Shortfall : For any Distribution Date (i) prior to the Credit Support Depletion Date, an amount generally equal to the sum of:

(1)

the aggregate of the following with respect to each Pool 2 Discount Loan: the Pool 2 Discount Fraction of any loss (meaning a Fraud Loss, Special Hazard Loss, Bankruptcy Loss or the amount by which the outstanding Principal Balance thereof exceeded the Liquidation Principal and Insurance Proceeds received in respect thereof) on such Pool 2 Discount Loan, other than a Special Hazard Loss in excess of the Special Hazard Coverage, a Fraud Loss in excess of the Fraud Coverage or a Bankruptcy Loss in excess of the Bankruptcy Coverage; and

(2)

the amounts described in clause (1) above for all prior Distribution Dates to the extent not previously distributed, and

(ii)

for any Distribution Date on or after the Credit Support Depletion Date, zero.

Pool 2 Discount Loan : Any Pool 2 Loan with a Net Mortgage Rate as of the Cut-Off Date of less than 6.000% per annum.

Pool 2 Loan : Any Group II Loan identified on the Group II Loan Schedule as a Pool 2 Loan.

Pool 2 Non-Discount Loan : Any Pool 2 Loan with a Net Mortgage Rate as of the Cut-Off Date greater than or equal to 6.000% per annum.

Pool 3 Available Distribution Amount : With respect to any Distribution Date, the sum of the following amounts that are related to the Pool 3 Loans:

(1)

the total amount of all cash received by or on behalf of the Servicer with respect to the Pool 3 Loans during the related Due Period (including Liquidation Proceeds, Insurance Proceeds, condemnation proceeds and Subsequent Recoveries), except:

(a)

all scheduled payments of principal and interest collected on the Pool 3 Loans but due on a date after the related Due Date;

(b)

all Curtailments received with respect to the Pool 3 Loans after the related Prepayment Period, together with all interest paid by the Mortgagors in connection with such Curtailments;

(c)

all Payoffs received with respect to the Pool 3 Loans after the related Prepayment Period, together with all interest paid by the Mortgagors in connection with such Payoffs;

(d)

Liquidation Proceeds, Insurance Proceeds, condemnation proceeds and Subsequent Recoveries received on the Pool 3 Loans after the related Prepayment Period;

(e)

all amounts reimbursable to the Servicer with respect to the Pool 3 Loans pursuant to the terms of the Mortgage Loan Purchase and Servicing Agreement or to the Master Servicer, the Securities Administrator, the Trustee or the Custodian pursuant to the terms of this Agreement or the Custodial Agreement;

(f)

reinvestment income with respect to the Pool 3 Loans on the balance of funds, if any, in the Protected Accounts or the Distribution Account; and

(g)

any fees payable to the Master Servicer (including any Master Servicing Fees), the Servicer with respect to the Pool 3 Loans, and any premiums payable in connection with any lender paid primary mortgage insurance policies maintained on the Pool 3 Loans;

(2)

all Advances made by the Servicer and/or the Master Servicer or the Trustee with respect to the Pool 3 Loans for that Distribution Date;

(3)

any amounts paid as Compensating Interest on the Pool 3 Loans by the Servicer and/or the Master Servicer for that Distribution Date;

(4)

the total amount of any cash related to the Pool 3 Loans deposited in the Distribution Account in connection with the repurchase of any Pool 3 Loan by the Depositor; and

(5)

the total amount of any cash related to the Pool 3 Loans deposited in the Distribution Account in connection with an optional termination of REMIC IV pursuant to Section 10.2.

Pool 3 Discount Fraction : With respect to any Distribution Date and a Pool 3 Discount Loan, a fraction, the numerator of which is 6.000% minus the Net Mortgage Rate as of the Cut-Off Date of such Pool 2 Discount Loan, and the denominator of which is 6.000%.

Pool 3 Discount Fractional Principal Amount : For any Distribution Date and the Pool 3 Loans, the aggregate of the following with respect to each Pool 3 Discount Loan: the Pool 3 Discount Fraction of the amounts described in the definition of Group II Principal Distribution Amount, Principal Prepayment Amount and Liquidation Principal.

Pool 3 Discount Fractional Principal Shortfall : For any Distribution Date (i) prior to the Credit Support Depletion Date, an amount generally equal to the sum of:

(1)

the aggregate of the following with respect to each Pool 3 Discount Loan: the Pool 3 Discount Fraction of any loss (meaning a Fraud Loss, Special Hazard Loss, Bankruptcy Loss or the amount by which the outstanding Principal Balance thereof exceeded the Liquidation Principal and Insurance Proceeds received in respect thereof) on such Pool 3 Discount Loan, other than a Special Hazard Loss in excess of the Special Hazard Coverage, a Fraud Loss in excess of the Fraud Coverage or a Bankruptcy Loss in excess of the Bankruptcy Coverage; and

(2)

the amounts described in clause (1) above for all prior Distribution Dates to the extent not previously distributed, and

(ii)

for any Distribution Date on or after the Credit Support Depletion Date, zero.

Pool 3 Discount Loan : Any Pool 3 Loan with a Net Mortgage Rate as of the Cut-Off Date of less than 6.000% per annum.

Pool 3 Loan : Any Group II Loan identified on the Group II Loan Schedule as a Pool 3 Loan.

Pool 3 Non-Discount Loan : Any Pool 3 Loan with a Net Mortgage Rate as of the Cut-Off Date greater than or equal to 6.000% per annum.

Pool 4 Available Distribution Amount : With respect to any Distribution Date, the sum of the following amounts that are related to the Pool 4 Loans:

(1)

the total amount of all cash received by or on behalf of the Servicer with respect to the Pool 4 Loans during the related Due Period (including Liquidation Proceeds, Insurance Proceeds, condemnation proceeds and Subsequent Recoveries), except:

(a)

all scheduled payments of principal and interest collected on the Pool 4 Loans but due on a date after the related Due Date;

(b)

all Curtailments received with respect to the Pool 4 Loans after the related Prepayment Period, together with all interest paid by the Mortgagors in connection with such Curtailments;

(c)

all Payoffs received with respect to the Pool 4 Loans after the related Prepayment Period, together with interest paid by the Mortgagors in connection with such Payoffs;

(d)

Liquidation Proceeds, Insurance Proceeds, condemnation proceeds and Subsequent Recoveries received on the Pool 4 Loans after the related Prepayment Period;

(e)

all amounts reimbursable to the Servicer pursuant to the terms of the Mortgage Loan Purchase and Servicing Agreement or to the Master Servicer, the Securities Administrator, the Trustee or the Custodian pursuant to the terms of this Agreement or the Custodial Agreement;

(f)

reinvestment income with respect to the Pool 4 Loans on the balance of funds, if any, in the Protected Accounts or the Distribution Account; and

(g)

any fees payable to the Master Servicer (including any Master Servicing Fees), the Servicer with respect to the Pool 4 Loans, and any premiums payable in connection with any lender paid primary mortgage insurance policies maintained on the Pool 4 Loans;

(2)

All Advances made by the Servicer and/or the Master Servicer or the Trustee with respect to the Pool 4 Loans for that Distribution Date;

(3)

Any amounts paid as Compensating Interest on the Pool 4 Loans by the Servicer and/or the Master Servicer for that Distribution Date;

(4)

The total amount of any cash related to the Pool 4 Loans deposited in the Distribution Account in connection with the repurchase of any Pool 4 Loan by the Depositor; and

(5)

the total amount of any cash related to the Pool 4 Loans deposited in the Distribution Account in connection with an optional termination of REMIC IV pursuant to Section 10.2.

Pool 4 Discount Fraction : With respect to any Distribution Date and a Pool 4 Discount Loan, a fraction, the numerator of which is 6.000% minus the Net Mortgage Rate as of the Cut-Off Date of such Pool 4 Discount Loan, and the denominator of which is 6.000%.

Pool 4 Discount Fractional Principal Amount : For any Distribution Date and the Pool 4 Loans, the aggregate of the following with respect to each Pool 4 Discount Loan: the Pool 4 Discount Fraction of the amounts described in the definition of Principal Distribution Amount, Principal Prepayment Amount and Liquidation Principal.

Pool 4 Discount Fractional Principal Shortfall : For any Distribution Date (i) prior to the Credit Support Depletion Date, an amount generally equal to the sum of:

(1)

the aggregate of the following with respect to each Pool 4 Discount Loan: the Pool 4 Discount Fraction of any loss (meaning a Fraud Loss, Special Hazard Loss, Bankruptcy Loss or the amount by which the outstanding Principal Balance thereof exceeded the Liquidation Principal and Insurance Proceeds received in respect thereof) on such Pool 4 Discount Loan, other than a Special Hazard Loss in excess of the Special Hazard Coverage, a Fraud Loss in excess of the Fraud Coverage or a Bankruptcy Loss in excess of the Bankruptcy Coverage; and

(2)

the amounts described in clause (1) above for all prior Distribution Dates to the extent not previously distributed, and

(ii)

for any Distribution Date on or after the Credit Support Depletion Date, zero.

Pool 4 Discount Loan :  Any Pool 4 Loan with a Net Mortgage Rate as of the Cut-Off Date of less than 6.000% per annum.

Pool 4 Loans: Any Group II Loans identified on the Group II Loan Schedule as Pool 4 Loans.

Pool 4 Non-Discount Loan : Any Pool 4 Loan with a Net Mortgage Rate as of the Cut-Off Date greater than or equal to 6.000% per annum.

Principal Prepayment Amount : On any Distribution Date and for Pool 2, Pool 3 and Pool 4, the sum of (i) Curtailments with respect to Group II Loans in such Pool received during the related Prepayment Period, (ii) Payoffs with respect to Group II Loans in such Pool received during the related Prepayment Period and (iii) Liquidation Proceeds, Insurance Proceeds and Subsequent Recoveries with respect to Group II Loans in such Pool received during the related Prepayment Period.

Pro Rata Allocation : On any Distribution Date with respect to (a) the allocation of the principal portion of certain losses relating to a Group II Loan to the related Group II Senior Certificates (other than the Interest Only Certificates and the Principal Only Certificates) and/or to the Group II Subordinate Certificates, as applicable, pro rata according to their respective aggregate Certificate Principal Balances on such date of allocation (except that if the loss is incurred with respect to a Discount Loan in Pool 2, Pool 3 or Pool 4, the related Discount Fraction of such loss will be allocated to the Class 2PO Certificates and Class 4PO Certificates, respectively, and the remainder of such loss will be allocated as described above in this definition without regard to this parenthetical), and (b) the allocation of the interest portion of certain losses relating to a Group II Loan to the related Group II Senior Certificates (other than the Principal Only Certificates) and/or to the Group II Subordinate Certificates, as applicable, pro rata, first according to the Group II Interest Distribution Amounts due to such Classes on such date of allocation, in reduction thereof until the amount of interest accrued but unpaid on such Distribution Date has been reduced to zero and then pro rata, according to their outstanding Certificate Principal Balances in reduction thereof until the Certificate Principal Balances thereof have been reduced to zero.

Realized Loss : With respect to any Distribution Date and any Group II Loan which became a Liquidated Loan during the related Prepayment Period, the sum of (i) the Principal Balance of such Group II Loan remaining outstanding (after all recoveries of principal, including net Liquidation Proceeds, have been applied thereto) and the principal portion of Nonrecoverable Advances with respect to such Group II Loan which have been reimbursed from amounts received in respect of the Group II Loans in such Pool other than the related Group II Loan, and (ii) the accrued interest on such Group II Loan remaining unpaid and the interest portion of Nonrecoverable Advances with respect to such Group II Loan which have been reimbursed from amounts received in respect of the Group II Loans in such Pool other than the related Group II Loan. The amounts described in clause (i) shall be the principal portion of Realized Losses and the amounts described in clause (ii) shall be the interest portion of Realized Losses. In addition, to the extent the Servicer receives Subsequent Recoveries with respect to any defaulted Group II Loan, the amount of the Realized Loss with respect to that defaulted Group II Loan will be reduced to the extent such recoveries are applied to increase the Certificate Principal Balance of any Class of Certificates on any Distribution Date.

Senior Interest Shortfall Amount: For any Distribution Date and the Group II Senior Certificates related to Pool 2, Pool 3 and Pool 4 (other than the Class 2PO Certificates and Class 4PO Certificates) will be equal to that amount by which the Group II Interest Distribution Amount payable to the related Group II Senior Certificates (other than the Class 2PO Certificates and Class 4PO Certificates) on such Distribution Date exceeds the related Pool Available Distribution Amount.

Senior Liquidation Amount : For any Distribution Date and Pool 2, Pool 3 and Pool 4, the aggregate with respect to each related Group II Loan which became a Liquidated Loan during the related Prepayment Period, of the lesser of: (i) the related Senior Percentage of the Principal Balance of such Group II Loan (exclusive of the related Discount Fraction thereof, if such Group II Loan is a Discount Loan), and (ii) the related Senior Prepayment Percentage of the Liquidation Principal with respect to such Group II Loan (exclusive of the related Discount Fraction thereof, if such Group II Loan is a Discount Loan).

Senior Percentage : As of the Closing Date, 93.37%, with respect to the Pool 2 Loans, 93.39%, with respect to the Pool 3 Loans and 93.30% with respect to the Pool 4 Loans; thereafter, for any Distribution Date, the percentage equivalent of a fraction, the numerator of which is the aggregate Certificate Principal Balance of the related Group II Senior Certificates (other than the Interest Only Certificates and the Class 2PO Certificates and Class 4PO Certificates), immediately preceding such Distribution Date, and the denominator of which is the aggregate Scheduled Principal Balance of the Group II Loans in such Loan Group, in each case as of the first day of the related Due Period (exclusive of the related Discount Fraction of any such Group II Loan, if such Group II Loan is a Discount Loan).

Senior Prepayment Percentage : For Pool 2, Pool 3 and Pool 4 and any Distribution Date, the percentage indicated in the following table:

Notwithstanding the foregoing, no decrease in the Senior Prepayment Percentage with respect to each Group II Loan below the level in effect for the most recent prior period set forth in the paragraph above shall be effective on any Distribution Date as to which any such decrease applies and will be equal to 100% on any Distribution Date on which (i) the Aggregate Senior Percentage for that Distribution Date exceeds the Aggregate Senior Percentage as of the Closing Date or (ii) the aggregate Scheduled Principal Balance of the Group II Loans (including Group II Loans in bankruptcy, foreclosure and related REO Property) which are 60 or more days delinquent (averaged over the preceding six-month period), as a percentage of the Aggregate Subordinate Amount, is equal to or greater than 50% as of such Distribution Date, or cumulative Realized Losses on the Group II Loans allocated to the Group II Subordinate Certificates are greater than the following amounts:

If on any Distribution Date the allocation to the Group II Senior Certificates of a Pool (other than the Interest Only Certificates and Principal Only Certificates) of Principal Prepayments in the percentage required would reduce the sum of the aggregate Certificate Principal Balances of the related Group II Senior Certificates (other than the Interest Only Certificates and Principal Only Certificates) below zero, the Senior Prepayment Percentage for such Distribution Date shall be limited to the percentage necessary to reduce such sum to zero.

Special Hazard Coverage: As of the Cut-Off Date $1,574,877. On each Anniversary, the Special Hazard Coverage will be reduced to an amount equal to the lesser of:

(1)

the greatest of:

(a)

the aggregate Principal Balance of the Group II Loans located in the California zip code containing the largest aggregate Principal Balance of the Group II Loans;

(b)

1.0% of the aggregate Principal Balance of the Group II Loans; and

(c)

twice the Principal Balance of the largest Group II Loan, calculated as of the Due Date in the immediately preceding month (after giving effect to all scheduled payments whether or not received); and

(2)

the Special Hazard Coverage as of the Cut-Off Date as reduced by the Special Hazard Losses allocated to the Group II Certificates since the Cut-Off Date.

Special Hazard Loss : The occurrence of any direct physical loss or damage to a Mortgaged Property relating to a Liquidated Loan, as reported by the Servicer, not covered by a standard hazard maintenance policy with extended coverage which is caused by or results from any cause except: (i) fire, lightning, windstorm, hail, explosion, riot, riot attending a strike, civil commotion, vandalism, aircraft, vehicles, smoke, sprinkler leakage, except to the extent of that portion of the loss which was uninsured because of the application of a co-insurance clause of any insurance policy covering these perils; (ii) normal wear and tear, gradual deterioration, inherent vice or inadequate maintenance of all or part thereof; (iii) errors in design, faulty workmanship or materials, unless the collapse of the property or a part thereof ensues and then only for the ensuing loss; (iv) nuclear reaction or nuclear radiation or radioactive contamination, all whether controlled or uncontrolled and whether such loss be direct or indirect, proximate or remote or be in whole or in part caused by, contributed to or aggravated by a peril covered by this definition of Special Hazard Loss; (v) hostile or warlike action in time of peace or war, including action in hindering, combating or defending against an actual, impending or expected attack (a) by any government or sovereign power (dejure or defacto), or by an authority maintaining or using military, naval or air forces, (b) by military, naval or air forces, or (c) by an agent of any such government, power, authority or forces; (vi) any weapon of war employing atomic fission or radioactive force whether in time of peace or war; (vii) insurrection, rebellion, revolution, civil war, usurped power or action taken by governmental authority in hindering, combating or defending against such occurrence; or (viii) seizure or destruction under quarantine or customs regulations, or confiscation by order of any government or public authority.

Stripped Interest Rate:   For each Pool 2 Non-Discount Loan, the excess of the Net Mortgage Rate for that Loan over 6.000%, for each Pool 3 Non-Discount Loan, the excess of the Net Mortgage Rate for that Loan over 6.000%,and for each Pool 4 Non-Discount Loan, the excess of the Net Mortgage Rate for that Loan over 6.000%.

Subordinate Liquidation Amount : For a Distribution Date and Pool 2, Pool 3 and Pool 4, the excess, if any, of (i) the aggregate Liquidation Principal for all Group II Loans in such Pool which became Liquidated Loans during the related Prepayment Period, over (ii) the related Senior Liquidation Amount for such Distribution Date and the related Discount Fraction of Liquidation Principal with respect to each Discount Loan in such Pool, as applicable, received during the related Prepayment Period.

Subordinate Percentage : For any Distribution Date and Pool 2, Pool 3 and Pool 4, 100% minus the related Senior Percentage for such date. As of the Closing Date, the Subordinate Percentage will be 6.63% with respect to the Pool 2 Loans, 6.61% with respect to the Pool 3 Loans and 6.70% with respect to the Pool 4 Loans.

Subordinate Prepayment Percentage : For any Distribution Date and a Pool 2, Pool 3 and Pool 4, 100% minus the related Senior Prepayment Percentage. As of the Closing Date, the Subordinate Prepayment Percentage will be 0% for Pool 2, Pool 3 and Pool 4.

Subordinate Principal Distribution Amount : With respect to any Distribution Date and Pool 2, Pool 3 and Pool 4, an amount equal to the sum of the following for that Distribution Date:

(1)

the related Subordinate Percentage of the related Group II Principal Distribution Amount (exclusive of the portion thereof attributable to the related Discount Fractional Principal Amount for such Pool, as applicable);

(2)

the related Subordinate Principal Prepayment Amount (exclusive of the portion thereof attributable to the related Discount Fractional Principal Amount for such Pool, as applicable); and

(3)

the related Subordinate Liquidation Amount.

provided, however, that the Subordinate Principal Distribution Amount for each Pool shall be reduced by the amounts required to be distributed to the Principal Only Certificates with respect to the related Discount Fractional Principal Shortfall for such Pool on such Distribution Date and the amounts required to be distributed to the Senior Certificates of a Pool in connection with any Collateral Deficiency Amount; provided further that the Subordinate Principal Distribution Amount for each Pool shall be reduced by the amounts required to be distributed to the Class 2PO Certificates and Class 4PO Certificates with respect to the related Discount Fractional Principal Shortfall for such Pool on such Distribution Date and the amounts required to be distributed to the Group II Senior Certificates of a Pool in connection with any Collateral Deficiency Amount. Any reduction in the Subordinate Principal Distribution Amount pursuant to the foregoing provision shall offset the amount calculated pursuant to clause (1), clause (3) and clause (2) above, in that order.

Subordinate Principal Prepayment Amount : For any Distribution Date and Pool 2, Pool 3 and Pool 4, the related Subordinate Prepayment Percentage of the Principal Prepayment Amount for such Distribution Date (exclusive of the portion thereof attributable to the related Discount Fractional Principal Amount for such Pool for that Distribution Date, as applicable).

Subordination Level : On any specified date with respect to any Class of Group II Subordinate Certificates, the percentage obtained by dividing: (1) the sum of the aggregate Certificate Principal Balances of all Classes of Group II Subordinate Certificates which are subordinate in right of payment to such Class as of such date, before giving effect to distributions of principal or allocations of related Realized Losses on such date; by (2) the sum of the aggregate Certificate Principal Balances of all Classes of Group II Certificates (other than the Interest Only Certificates) as of such date, before giving effect to distributions of principal or allocations of related Realized Losses on such date.

Yield Maintenance Agreement: The yield maintenance agreement between the Trust Fund and the Counterparty documented pursuant to an ISDA Master Agreement (Multicurrency-Cross Border), together with a schedule and a confirmation for the benefit of the Class 2-A-5 Certificates.

Yield Maintenance Agreement Notional Amount: With respect to the Yield Maintenance Agreement and any Distribution Date, the notional amount indicated for such Distribution Date on Schedule I to the Yield Maintenance Agreement.

Yield Maintenance Agreement Termination Date:  The Distribution Date in July 2010.

Section 1.3

Allocation of Certain Interest Shortfalls .  

(a)

For purposes of calculating the Group I Interest Distribution Amount for the Group I Senior Certificates and the Group I Mezzanine Certificates for any Distribution Date, (1) the aggregate amount of any Prepayment Interest Shortfalls and Curtailment Interest Shortfalls with respect to any Group I Loans to the extent not covered by payment by the Servicer pursuant to the Mortgage Loan Purchase and Servicing Agreement or the Master Servicer pursuant to Section 3.21 shall first, reduce the Net Monthly Excess Cashflow for such Distribution Date, second, reduce the Overcollateralization Amount on the related Distribution Date, third, reduce the Group I Interest Distribution Amount payable to each Class of Group I Mezzanine Certificates in reverse order of payment priority and fourth, reduce the Group I Interest Distribution Amount payable to the Group I Senior Certificates (on a pro rata basis based on their respective Group I Senior Interest Distribution Amounts before such reduction), (2) any Relief Act Interest Shortfalls on the Group I Loans shall be allocated to the Group I Certificates on a pro rata basis based on their respective Group I Interest Distribution Amounts before such reduction, and (3) the aggregate amount of the interest portion of Realized Losses allocated to the Group I Mezzanine Certificates and Net WAC Rate Carryover Amounts paid to the Group I Senior Certificates and the Group I Mezzanine Certificates on any Distribution Date shall be allocated to the Class I-CE Certificates to the extent of the related Group I Interest Distribution Amount for such Distribution Date.

(b)

On each Distribution Date, the amount referred to in clause (i) of the definition of Group II Interest Distribution Amount for each Class of Group II Certificates (other than the Principal Only Certificates) shall be reduced by the related Class’s pro rata share of Group II Net Interest Shortfalls with respect to the Group II Loans in the related Pool, based on such Class’s Group II Interest Distribution Amount for such Distribution Date without taking into account such Group II Net Interest Shortfalls.  

ARTICLE II
CONVEYANCE OF TRUST FUND;
ORIGINAL ISSUANCE OF CERTIFICATES

Section 2.1

Conveyance of Trust Fund .  

The Depositor, concurrently with the execution and delivery hereof, does hereby transfer, assign, set over and otherwise convey to the Trustee, on behalf of the Trust, without recourse, for the benefit of the Certificateholders, all the right, title and interest of the Depositor, including any security interest therein for the benefit of the Depositor, in and to the Loans identified on the Loan Schedule, the rights of the Depositor under the Mortgage Loan Purchase and Servicing Agreement, the Assignment Agreement and such assets as shall from time to time be credited or required by the terms of this Agreement to be credited to the Swap Accounts (including, without limitation the right to enforce the obligations of the other parties thereto thereunder), and all other assets included or to be included in the Trust Fund.  Such assignment includes all interest and principal received by the Depositor or the Servicer on or with respect to the Loans (other than payments of principal and interest due on such Loans on or before the Cut-Off Date). The Depositor herewith delivers to the Trustee executed copies of the Mortgage Loan Purchase and Servicing Agreement and the Assignment Agreement.

In connection with such transfer and assignment, the Depositor does hereby deliver to, and deposit with the Custodian pursuant to the Custodial Agreement the documents with respect to each Loan as described under Section 2 of the Custodial Agreement (the "Loan Documents"). In connection with such delivery and as further described in the related Custodial Agreement, the Custodian will be required to review such Loan Documents and deliver to the Trustee, the Depositor and the Master Servicer certifications (in the forms attached to the related Custodial Agreement) with respect to such review with exceptions noted thereon.  In addition, the Depositor under the Custodial Agreements will have to cure certain defects with respect to the Loan Documents for the related Loans after the delivery thereof by the Depositor to the Custodian as more particularly set forth therein.

Notwithstanding anything to the contrary contained herein, the parties hereto acknowledge that the functions of the Trustee with respect to the custody, acceptance, inspection and release of the Mortgage Files, including, but not limited to certain insurance policies and documents contemplated by Section 3.12, and preparation and delivery of the certifications shall be performed by the Custodian pursuant to the terms and conditions of the Custodial Agreement.

The Depositor shall deliver or cause the related originator to deliver to the Servicer copies of all trailing documents required to be included in the related Mortgage File at the same time the originals or certified copies thereof are delivered to the Trustee or Custodian, such documents including the mortgagee policy of title insurance and any Loan Documents upon return from the recording office. The Servicer shall not be responsible for any custodian fees or other costs incurred in obtaining such documents and the Depositor shall cause the Servicer to be reimbursed for any such costs the Servicer may incur in connection with performing its obligations under this Agreement.

The Loans permitted by the terms of this Agreement to be included in the Trust are limited to (i) Loans (which the Depositor acquired pursuant to the Mortgage Loan Purchase and Servicing Agreement, which contains, among other representations and warranties, a representation and warranty of each Seller that no Loan sold by the Sellers to the Depositor is a "High-Cost Home Loan" as defined in the New Jersey Home Ownership Act effective November 27, 2003, as defined in the New Mexico Home Loan Protection Act effective March 1, 2004, as defined in the Massachusetts Predatory Home Loan Practices Act, effective November 7, 2004 (Mass. Ann. Laws Ch. 183C) or as defined in the Indiana Home Loan Practices Act, effective March 1, 2005 (Ind. Code Ann. Sections 24-9-1 through 24-9-9)) and (ii) Substitute Loans (which, by definition as set forth herein and referred to in the Mortgage Loan Purchase and Servicing Agreement, are required to conform to, among other representations and warranties, the representation and warranty of each Seller that no Substitute Loan sold by the Sellers to the Depositor is a "High-Cost Home Loan" as defined in the New Jersey Home Ownership Act effective November 27, 2003, as defined in the New Mexico Home Loan Protection Act effective March 1, 2004, as defined in the Massachusetts Predatory Home Loan Practices Act, effective November 7, 2004 (Mass. Ann. Laws Ch. 183C) or as defined in the Indiana Home Loan Practices Act, effective March 1, 2005 (Ind. Code Ann. Sections 24-9-1 through 24-9-9)). The Depositor and the Trustee on behalf of the Trust agree and understand that it is not intended that any Loan be included in the Trust Fund that is (i) a "High Cost Home Loan" as defined in the New Jersey Home Ownership Act effective November 27, 2003, (ii) a "High Cost Home Loan" as defined in the New Mexico Home Loan Protection Act effective January 1, 2004, (iii) a "High Cost Home Mortgage Loan" as defined in the Massachusetts Predatory Home Loan Practices Act effective November 7, 2004, (iv) a "high risk home loan" under the Illinois High Risk Home Loan Act, effective as of January 1, 2004, or (v) a "high cost home loan" under the Indiana High Cost Home Loan Law, effective January 1, 2005.  The Trustee shall be entitled to indemnification from the Depositor and the Trust Fund for any loss, liability or expense arising out of, or in connection with, the provisions of the preceding sentence, including, without limitation, all costs, liabilities and expenses (including reasonable legal fees and expenses) of investigating and defending itself against any claim, action or proceeding, pending or threatened, relating to such provisions.

In addition, on or prior to the Closing Date, the Securities Administrator or the Trustee shall execute the Yield Maintenance Agreement and the Depositor hereby directs the Securities Administrator or the Trustee to do so.

Section 2.2

Acceptance by Trustee .

The Trustee acknowledges receipt, subject to the provisions of Section 2.1 hereof and Section 2 of the Custodial Agreement, of the Loan Documents and all other assets included in the definition of "Trust Fund" and declares that it holds (or the Custodian on its behalf holds) and will hold such documents and the other documents delivered to it constituting a Loan Document, and that it holds (or the Custodian on its behalf holds) or will hold all such assets and such other assets included in the definition of  "Trust Fund" in trust for the exclusive use and benefit of all present and future Certificateholders.

Section 2.3

Repurchase or Substitution of Loans .  

(a)

Upon discovery or receipt of notice of any materially defective document in, or that a document is missing from, a Mortgage File or of a breach by PHH Mortgage or Bishop’s Gate of any representation, warranty or covenant under the Mortgage Loan Purchase and Servicing Agreement in respect of any Loan that materially and adversely affects the value of such Loan or the interest therein of the Certificateholders, the Trustee shall promptly notify PHH Mortgage (or Bishop’s Gate, with respect to any breach of a representation, warranty or covenant related to title made by Bishop’s Gate) of such defect, missing document or breach and request that PHH Mortgage (or Bishop’s Gate, with respect to any breach of a representation, warranty or covenant related to title made by Bishop’s Gate) deliver such missing document, cure such defect or breach within 60 days from the date PHH Mortgage or Bishop’s Gate, as applicable, was notified of such missing document, defect or breach, and if PHH Mortgage or Bishop’s Gate, as applicable, does not deliver such missing document or cure such defect or breach in all material respects during such period, the Trustee shall enforce the obligations of PHH Mortgage or Bishop’s Gate, as applicable, under the Mortgage Loan Purchase and Servicing Agreement to repurchase such Loan from the Trust Fund at the Purchase Price within 90 days after the date on which PHH Mortgage or Bishop’s Gate, as applicable, was notified of such missing document, defect or breach, if and to the extent that PHH Mortgage or Bishop’s Gate, as applicable, is obligated to do so under the Mortgage Loan Purchase and Servicing Agreement. The Purchase Price for the repurchased Loan shall be deposited in the Distribution Account and the Trustee, upon receipt of written certification from the Securities Administrator of such deposit and receipt by the Custodian of a properly completed request for release for such Loan in the form of Exhibit 3 to the related Custodial Agreement, shall release or cause the Custodian to release to PHH Mortgage or Bishop’s Gate, as applicable, the related Mortgage File and the Trustee shall execute and deliver such instruments of transfer or assignment, in each case without recourse, representation or warranty, as PHH Mortgage or Bishop’s Gate, as applicable, shall furnish to it and as shall be necessary to vest in PHH Mortgage or Bishop’s Gate, as applicable, any Loan released pursuant hereto, and the Trustee shall not have any further responsibility with regard to such Mortgage File. In lieu of repurchasing any such Loan as provided above, if so provided in the Mortgage Loan Purchase and Servicing Agreement, PHH Mortgage (or Bishop’s Gate, with respect to any breach of a representation, warranty or covenant related to title made by Bishop’s Gate) may cause such Loan to be removed from the Trust Fund (in which case it shall become a Deleted Loan) and substitute one or more Substitute Loans in the manner and subject to the limitations set forth in Section 2.3(b). It is understood and agreed that the obligation of PHH Mortgage or Bishop’s Gate, as applicable, to cure or to repurchase (or to substitute for) any Loan as to which a document is missing, a material defect in a constituent document exists or as to which such a breach has occurred and is continuing shall constitute the sole remedy respecting such omission, defect or breach available to the Trustee and the Certificateholders.  Notwithstanding the foregoing, if any of the representations made by PHH Mortgage or Bishop’s Gate, as applicable, in Sections 3.03(9), 3.03(41) or 3.03(65) of the Mortgage Loan Purchase and Servicing Agreement is breached, the Trustee shall enforce the obligation of PHH Mortgage to repurchase such Loan at the Purchase Price, or to provide a Substitute Loan (plus any costs and damages incurred by the Trust Fund in connection with any violation by any such Loan of any predatory or abusive lending law) within 90 days after the date on which PHH Mortgage was notified of such breach.

(b)

Any substitution of Substitute Loans for Deleted Loans made pursuant to Section 2.3(a) must be effected prior to the date which is two years after the Startup Day for any REMIC created hereby.

As to any Deleted Loan for which PHH Mortgage or Bishop’s Gate, as applicable, substitutes a Substitute Loan or Loans, such substitution shall be effected by PHH Mortgage or Bishop’s Gate, as applicable, delivering to the Trustee or the Custodian on behalf of the Trustee, for such Substitute Loan or Loans, the Mortgage Note, the Mortgage, the Assignment to the Trustee, and such other documents and agreements, with all necessary endorsements thereon, as are required by Section 3.04 of the Mortgage Loan Purchase and Servicing Agreement, together with an Officers’ Certificate providing that each such Substitute Loan satisfies the definition thereof and specifying the Substitution Shortfall Amount (as described below), if any, in connection with such substitution. The Custodian on behalf of the Trustee shall acknowledge receipt of such Substitute Loan or Loans and, within ten Business Days thereafter, review such documents and deliver to the Depositor, the Trustee and the Master Servicer, with respect to such Substitute Loan or Loans, an initial certification pursuant to the Custodial Agreement, with any applicable exceptions noted thereon. Within one year of the date of substitution, the Custodian on behalf of the Trustee shall deliver to the Depositor, the Trustee and the Master Servicer a final certification pursuant to the Custodial Agreement, with any applicable exceptions noted thereon. Monthly Payments due with respect to Substitute Loans in the month of substitution are not part of any REMIC and shall be retained by PHH Mortgage or Bishop’s Gate, as applicable.  For the month of substitution, distributions to Certificateholders shall reflect the Monthly Payment due on such Deleted Loan on or before the Due Date in the month of substitution, and PHH Mortgage or Bishop’s Gate, as applicable, shall thereafter be entitled to retain all amounts subsequently received in respect of such Deleted Loan. The Depositor shall give or cause to be given written notice to the Certificateholders that such substitution has taken place, shall amend the Loan Schedule to reflect the removal of such Deleted Loan from the terms of this Agreement and the substitution of the Substitute Loan or Loans and shall deliver a copy of such amended Loan Schedule to the Trustee and the Master Servicer. Upon such substitution, such Substitute Loan or Loans shall constitute part of the Trust Fund and shall be subject in all respects to the terms of this Agreement and the Assignment Agreement including all applicable representations and warranties thereof included herein or in the Assignment Agreement.

For any month in which PHH Mortgage or Bishop’s Gate, as applicable, substitutes one or more Substitute Loans for one or more Deleted Loans, the Master Servicer shall determine the amount (the "Substitution Shortfall Amount"), if any, by which the aggregate Purchase Price of all such Deleted Loans exceeds the aggregate of, as to each such Substitute Loan, the Scheduled Principal Balance thereof as of the Due Date in the month of substitution, together with one month’s interest on such Scheduled Principal Balance at the applicable Net Mortgage Rate, plus all outstanding Advances and Servicing Advances (including Nonrecoverable Advances) related thereto. On the date of such substitution, PHH Mortgage or Bishop’s Gate, as applicable, shall deliver or cause to be delivered to the Securities Administrator for deposit in the Distribution Account an amount equal to the Substitution Shortfall Amount, if any, and the Trustee or the Custodian on behalf of the Trustee, upon receipt of the related Substitute Loan or Loans and certification by the Securities Administrator of such deposit and receipt by the Custodian of a properly completed request for release for such Loan in the form of Exhibit 3 to the related Custodial Agreement, shall release to PHH Mortgage or Bishop’s Gate, as applicable, the related Mortgage File or Files and the Trustee shall execute and deliver such instruments of transfer or assignment, in each case without recourse, representation or warranty, as PHH Mortgage or Bishop’s Gate, as applicable, shall deliver to it and as shall be necessary to vest therein any Deleted Loan released pursuant hereto.

In addition, PHH Mortgage or Bishop’s Gate, as applicable, shall obtain at its own expense and deliver to the Trustee an Opinion of Counsel to the effect that such substitution will not cause (a) any federal tax to be imposed on any REMIC, including without limitation, any federal tax imposed on "prohibited transactions" under Section 860F(a)(1) of the Code or on "contributions after the startup date" under Section 860G(d)(1) of the Code, or (b) any REMIC to fail to qualify as a REMIC at any time that any Certificate is outstanding.

(c)

Upon discovery by the Depositor, PHH Mortgage, Bishop’s Gate, the Master Servicer or the Trustee that any Loan does not constitute a "qualified mortgage" within the meaning of Section 860G(a)(3) of the Code, the party discovering such fact shall within two Business Days give written notice thereof to the other parties. In connection therewith, PHH Mortgage shall repurchase or substitute one or more Substitute Loans for the affected Loan within 90 days of the earlier of discovery or receipt of such notice with respect to such affected Loan. Such repurchase or substitution shall be made by (i) PHH Mortgage, if the affected Loan’s status as a non-qualified mortgage is or results from a breach of any representation, warranty or covenant made by PHH Mortgage or Bishop’s Gate under the Mortgage Loan Purchase and Servicing Agreement or (ii) the Depositor, if the affected Loan’s status as a non-qualified mortgage does not result from a breach of representation or warranty. Any such repurchase or substitution shall be made in the same manner as set forth in Section 2.3(a). The Trustee shall reconvey to PHH Mortgage or the Depositor the Loan to be released pursuant hereto in the same manner, and on the same terms and conditions, as it would a Loan repurchased for breach of a representation or warranty.

(d)

Within 90 days of the earlier of discovery by the Master Servicer or receipt of notice by the Master Servicer of the breach of any representation, warranty or covenant of the Master Servicer set forth in Section 2.5 which materially and adversely affects the interests of the Certificateholders in any Loan, the Master Servicer shall cure such breach in all material respects.

Section 2.4

Authentication and Delivery of Certificates; Designation of Certificates as REMIC Regular and Residual Interests .  

(a)

The Trustee acknowledges the transfer to the extent provided herein and assignment to it of the Trust Fund and, concurrently with such transfer and assignment, has caused the Securities Administrator to execute and authenticate and has delivered to or upon the order of the Depositor, in exchange for the Trust Fund, Certificates evidencing the entire ownership of the Trust Fund.

(b)

This Agreement shall be construed so as to carry out the intention of the parties that each REMIC created hereby be treated as a REMIC at all times prior to the date on which the Trust Fund is terminated.

Section 2.5

Representations and Warranties of the Master Servicer .  

The Master Servicer hereby represents, warrants and covenants to the Trustee, for the benefit of each of the Trustee, the Certificateholders and the Depositor that as of the Closing Date or as of such date specifically provided herein:

(i)

The Master Servicer 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;

(ii)

The Master Servicer has the full power and authority to conduct its business as presently conducted by it and to execute, deliver and perform, and to enter into and consummate, all transactions contemplated by this Agreement. The Master Servicer has duly authorized the execution, delivery and performance of this Agreement, has duly executed and delivered this Agreement, and this Agreement, assuming due authorization, execution and delivery by the Depositor and the Trustee, constitutes a legal, valid and binding obligation of the Master Servicer, enforceable against it in accordance with its terms except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity;

(iii)

The execution and delivery of this Agreement by the Master Servicer,