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SECURITY AGREEMENT

SECURITY AGREEMENT (the “Security Agreement”), dated as of December 19, 2006, between ST. ANDREW FUNDING TRUST, a Delaware statutory trust (the “Issuer”), and DEUTSCHE BANK TRUST COMPANY AMERICAS, as Collateral Agent (the “Collateral Agent”).

W I T N E S S E T H:

WHEREAS, the Issuer is entering into this Security Agreement with the Collateral Agent for the purpose of, among other things, providing for the issuance of Secured Liquidity Notes and securing and providing for the repayment of all amounts at any time and from time to time owing by the Issuer to the Collateral Agent, the Indenture Trustee, any Swap Counterparty, the holders of the Secured Liquidity Notes (including the Depositary as provided in Section 2(b)(ii) of the Depositary Agreement), the holders of the Extended Notes and the holders of the Subordinated Notes (such Persons, collectively, the “Secured Parties” and each, a “Secured Party”);

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants expressed herein, it is hereby agreed by and between the Issuer and the Collateral Agent as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Definitions. For all purposes of this Security Agreement, except as otherwise expressly provided herein or unless the context otherwise requires, capitalized terms not otherwise defined herein shall have the meanings assigned to such terms in the Definitions List attached hereto as Schedule I (the “Definitions List”). All other capitalized terms used herein shall have the meanings specified herein.

ARTICLE II

OBLIGATIONS SECURED

Section 2.01 Obligations Secured Hereby. (a) This Security Agreement is made to provide for and secure repayment and performance of the indebtedness, obligations and liabilities of the Issuer whether now existing or hereinafter incurred (such indebtedness and liabilities being herein called the “Obligations”) specified in paragraph (b).

(b) Following an Event of Default and acceleration of the Notes or exercise of remedies pursuant to Section 9 of the Indenture, all payments or proceeds with respect to the Assigned Collateral and any amounts on deposit in the Collateral Account shall be applied by the Collateral Agent in the following order:

First, the repayment of amounts advanced, incurred or expended (including fees and expenses of agents and counsel) by (a) the Collateral Agent, the Indenture Trustee, or the Custodian, up to an aggregate amount of $25,000, and (b) the Owner Trustee, up to a maximum of $5,000;

Second, the payment, in accordance with the allocation set forth in Section 2.02 below, of all amounts due and owing to each Swap Counterparty under the Interest Rate Swaps (other than (x) termination payments in connection with the early termination of each such Interest Rate Swap as provided for in Part 6 of the Confirmation, (y) Party B Third Floating Amounts and (z) the Party B Fixed Amount; if any);

Third, pro rata, (x) to the Depositary for repayment of any unreimbursed advances and (y) to the payment of all indebtedness (including principal and all interest thereon), whether absolute, fixed or contingent, at any time and from time to time due and owing by the Issuer to the holders from time to time of the outstanding Secured Liquidity Notes and Extended Notes;

Fourth, the payment of all Reimbursable Expenses, subject to the Maximum Indemnity Amount, provided, that no Reimbursable Expenses shall be paid with funds withdrawn from the Reserve Fund;

Fifth, the payment, in accordance with the allocation set forth in Section 2.02 below, of all amounts due and owing to each Swap Counterparty under the Interest Rate Swaps in connection with the early termination of each such Interest Rate Swap as provided for in Part 6 of the Confirmation in circumstances where the Issuer is the sole Defaulting Party or sole Affected Party under such Interest Rate Swap (which amounts shall not, for the avoidance of doubt, include the Party B Fixed Amount; if any);

Sixth, the payment (pro rata, in accordance with the allocations set forth in Section 2.03 hereof, to each Series of Subordinated Notes) of all amounts due and owing (including all principal and interest) under all outstanding Series of Subordinated Notes including the aggregate amount, if any, of Principal Amount Charge-Offs which have not been reinstated and interest thereon;

Seventh, the payment, in accordance with the allocation set forth in Section 2.02 below, of all amounts due and owing to each Swap Counterparty under the Interest Rate Swaps in connection with the early termination of each such Interest Rate Swap as provided for in Part 6 of the Confirmation to the extent not paid pursuant to clause Fifth above (which amounts shall not, for the avoidance of doubt, include the Party B Fixed Amount; if any);

Eighth, the payment of all Reimbursable Expenses and all unpaid Allocated Expenses without giving effect to any Maximum Indemnity Amount or the Budget Expense Limit;

Ninth, the payment of any unreimbursed Monthly Advances and Servicing Advances with respect to any Mortgage Loan which has been sold, up to a maximum amount of the sale proceeds;

Tenth, the payment, in accordance with the allocation set forth in Section 2.02 below, of (x) the Party B Fixed Amount, if any, due and owing to each Swap Counterparty under the Interest Rate Swaps, and (y) to the extent a Swap Default shall have occurred, an amount equal to the lesser of (i) the amount necessary to cure such Swap Default and (ii) the sum of all amounts remaining from amounts previously on deposit in the Reserve Fund, plus all amounts otherwise available for distribution pursuant to this clause Tenth; and

Eleventh, any amounts remaining shall be paid to the Issuer.

Section 2.02 Allocations among Swap Counterparties. Amounts payable under Second, Fifth, Seventh and Tenth of Section 2.01(b) and amounts payable under Section 6.03(a)(i), 6.03(b)(i) and 6.03(b)(xiii) shall be allocated to each Swap Counterparty in accordance with such Swap Counterparty’s Sharing Percentage.

The Issuer shall cause the Servicer to provide the Collateral Agent in writing with determinations of amounts due and payable, and such other information as the Collateral Agent may require in order to make the allocations specified in this Section 2.02.

Section 2.03 Allocations among the Subordinated Noteholders. Amounts payable under Sixth of Section 2.01(b) and amounts payable under Sections 6.03(b)(v), 6.03(b)(vi) and 6.03(b)(x) shall be allocated pro rata to each Subordinated Noteholder of all Series of Subordinated Notes.

The Issuer shall cause the Servicer to provide the Collateral Agent in writing with determinations of amounts due and payable, and such other information as the Collateral Agent may require in order to make the allocations specified in this Section 2.03.

ARTICLE III

REPRESENTATIONS AND WARRANTIES;

COMPANY AGENTS AND DEPOSITARY AGENTS; COVENANTS

Section 3.01 Representations and Warranties of the Issuer. The Issuer hereby represents and warrants, for the benefit of the Collateral Agent and the other Secured Parties, as follows as of the date hereof, and with respect to any of the following representations and warranties which refers to another date, as of such date also in the terms of such representation and warranty:

(a) Existence and Power. The Issuer (a) is a statutory trust duly formed, validly existing and in good standing under the laws of the State of Delaware, (b) prior to the initial issuance of any Secured Liquidity Notes hereunder, will be duly qualified to do business as a foreign trust and in good standing under the laws of each jurisdiction where the character of its property, the nature of its business or the performance of its obligations make such qualification necessary, and (c) has all trust powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted and for purposes of the transactions contemplated by this Security Agreement and the other Program Documents.

(b) Trust and Governmental Authorization. The execution, delivery and performance by the Issuer of this Security Agreement and the other Program Documents to which it is a party (a) are within the Issuer’s trust powers, (b) have been duly authorized by all necessary trust action, (c) require no action by or in respect of, or filing with, any governmental body, agency or official which has not been obtained and (d) do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of trust or the Trust Agreement of the Issuer or of any law or governmental regulation, rule, contract, agreement, judgment, injunction, order, decree or other instrument binding upon the Issuer or any of its Assets or result in the creation or imposition of any Lien on any Asset of the Issuer, except for Liens created by this Security Agreement or the other Program Documents. This Security Agreement and each of the other Program Documents to which the Issuer is a party have been executed and delivered by a duly authorized signatory of the Issuer.

(c) Binding Effect. This Security Agreement and each other Program Document, and each Secured Liquidity Note when executed and delivered in accordance with the Depositary Agreement, is a legal, valid and binding obligation of the Issuer enforceable against the Issuer in accordance with its terms (except as such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors’ rights generally or by general equitable principles, whether considered in a proceeding at law or in equity, including without limitation (i) the possible unavailability of specific performance, injunctive relief or any other equitable remedy, (ii) concepts of materiality, reasonableness, good faith and fair dealing, and (iii) that certain remedial or procedural provisions contained in this Security Agreement may be limited or rendered unenforceable by applicable law, but such limitations do not make the remedies and procedures that are afforded to the Collateral Agent inadequate for the practical realization of the substantive benefits purported to be provided by this Security Agreement).

(d) Financial Information; Financial Condition. All balance sheets, all statements of operations, of shareholders’ equity and of cash flow, and other financial data (other than projections) which have been or shall hereafter be furnished by the Issuer to the Collateral Agent and the Rating Agencies pursuant to Section 3.05(c) have been and will be prepared in accordance with GAAP (to the extent applicable) and do and will present fairly the financial condition of the entities involved as of the dates thereof and the results of their operations for the periods covered thereby, subject, in the case of all unaudited statements, to normal year-end adjustments and lack of footnotes and presentation items.

(e) Litigation. Other than as disclosed in the most recent 10-K and 10-Q filings with the Securities Exchange Commission by New Century Financial Corporation prior to the date hereof, there is no action, suit or proceeding pending against or, to the knowledge of the Issuer, threatened against or affecting the Issuer or its Assets before any court or arbitrator or any Governmental Authority which (x) is reasonably likely to be adversely determined, and (y), if adversely determined, would be reasonably likely, either in any one instance or in the aggregate, to (i) materially adversely affect the financial position, results of operations, business, properties, performance, prospects or condition (financial or otherwise) of the Issuer or (ii) in any manner draw into question the validity or enforceability of this Security Agreement or any other Program Document or the ability of the Issuer to perform its obligations hereunder or thereunder.

(f) Compliance with ERISA. Each member of the ERISA Group has fulfilled its obligations under the minimum funding standards of ERISA and the Internal Revenue Code with respect to each Benefit Plan and is in compliance in all material respects with the presently applicable provisions of ERISA and the Internal Revenue Code with respect to each Benefit Plan. No member of the ERISA Group has (i) sought a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code in respect of any Benefit Plan, (ii) failed to make any contribution or payment to any Benefit Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or made any amendment to any Benefit Plan or Benefit Arrangement, which in any such case has resulted or could reasonably be expected to result in the imposition of a Lien or the posting of a bond or other security under ERISA or the Internal Revenue Code or (iii) incurred any liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA.

(g) Tax Filings and Expenses. The Issuer has filed all Federal, state and local tax returns and all other tax returns which, to the knowledge of the Issuer, are required to be filed (whether informational returns or not), and has paid all taxes due, if any, pursuant to said returns or pursuant to any assessment received by the Issuer, except such taxes, if any, as are being contested in good faith and for which adequate reserves have been set aside on its books. The Issuer has paid all fees and expenses required to be paid by it in connection with the conduct of its business, the maintenance of its existence and its qualification as a foreign trust authorized to do business in each State and jurisdiction in which it is required to so qualify, except where the failure to pay any such fees and expenses is not reasonably likely to have a material adverse effect.

(h) Full Disclosure. All certificates, reports, statements, documents and other information furnished to the Collateral Agent by or on behalf of the Issuer pursuant to any provision of this Security Agreement or any Program Document, or in connection with or pursuant to any amendment or modification of, or waiver under, this Security Agreement or any Program Document, shall, at the time the same are so furnished, be complete and correct to the extent necessary to give the Collateral Agent true and accurate knowledge of the subject matter thereof in all material respects, and the furnishing of the same to the Collateral Agent shall constitute a representation and warranty by the Issuer made on the date the same are furnished to the Collateral Agent to the effect specified herein.

(i) Investment Company Act; Trust Indenture Act; Securities Act. The Issuer is not, and is not controlled by, an “investment company” within the meaning of, and is not required to register as an “investment company” under, the Investment Company Act. It is not necessary in connection with the offer, issuance and sale of the Senior Notes under the circumstances contemplated in this Security Agreement to register any security under the Securities Act or to qualify any indenture under the Trust Indenture Act.

(j) Regulations T, U and X. The proceeds of the Senior Notes will not be used to purchase or carry any “margin stock” (as defined or used in the regulations of the Board of Governors of the Federal Reserve System, including Regulations T, U and X thereof). The Issuer is not engaged in the business of extending credit for the purpose of purchasing or carrying any margin stock.

(k) No Consent. No consent, action by or in respect of, approval or other authorization of, or registration, declaration or filing with, any Governmental Authority or other Person is required for the valid execution and delivery of this Security Agreement or for the performance of any of the Issuer’s obligations hereunder or under any other Program Document other than such consents, approvals, authorizations, registrations, declarations or filings as shall have been obtained by the Issuer prior to the date hereof or as contemplated in Section 3.01(n).

(l) Solvency. Both before and after giving effect to the transactions contemplated by this Security Agreement and the other Program Documents, the Issuer is solvent within the meaning of the Bankruptcy Code and the Issuer is not the subject of any voluntary or involuntary case or proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy or insolvency law and no Event of Bankruptcy has occurred with respect to the Issuer.

(m) Subsidiary. The Issuer has no subsidiaries and owns no capital stock of, or other interest in, any other Person, and during the term of this Security Agreement, the Issuer shall not acquire or otherwise come to have one or more subsidiaries without the prior consent of the Collateral Agent (on behalf of the holders of the Senior Notes).

(n) Security Interests.

(i) All action necessary (including the filing of UCC-1 financing statements for the Collateral Agent’s Lien for the benefit of the Secured Parties) to protect, perfect, and maintain the first-priority status of, the Collateral Agent’s security interest in the Collateral now in existence and hereafter acquired or created hereby has been duly and effectively taken.

(ii) No security agreement, financing statement, equivalent security or lien instrument or continuation statement listing the Issuer as debtor covering all or any part of the Collateral is on file or of record in any jurisdiction, except such as may have been filed, recorded or made by the Issuer in favor of the Collateral Agent on behalf of the Secured Parties in connection with this Security Agreement.

(iii) This Security Agreement creates a valid and continuing Lien on the Collateral in favor of the Collateral Agent on behalf of the Secured Parties, which Lien is prior to all other Liens (other than Permitted Liens), and is enforceable as such as against creditors of and purchasers from the Issuer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors’ rights generally or by general equitable principles, whether considered in a proceeding at law or in equity and by an implied covenant of good faith and fair dealing. All action necessary to perfect such prior security interest has been duly taken.

(iv) The Issuer’s principal place of business and chief executive office shall be at: 18400 Von Karman, Suite 1000, Irvine, CA 92612-1514. The Issuer does not transact, and has not transacted, business under any other name. The Issuer’s exact legal name is the name set forth for it on the signature page below.

(v) All authorizations in this Security Agreement for the Collateral Agent to endorse checks, instruments and securities and to execute, deliver and file financing statements, continuation statements, security agreements and other instruments with respect to the Collateral are powers coupled with an interest and are irrevocable.

(vi) The representations and warranties contained in Schedule III hereof are incorporated herein by reference as though they were fully stated herein.

(vii) The Issuer is, and at all times has been, a statutory trust organized exclusively under the laws of the State of Delaware, with its principal place of business being in the State of California.

(viii) The Issuer is not bound under Section 9-203(d) of the Uniform Commercial Code by a Security Agreement previously entered into by another person or entity.

(o) Offering Memorandum. No offering memorandum or information circular used by the Issuer in connection with the offer or sale of the Senior Notes contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading.

(p) Non-Existence of Other Agreements. As of the date of the issuance of the first Secured Liquidity Notes, other than as permitted by Section 3.05(w) hereof (i) the Issuer is not a party to any contract or agreement of any kind or nature and (ii) the Issuer is not subject to any obligations or liabilities of any kind or nature in favor of any third party, including, without limitation, Contingent Obligations.

(q) Eligible Mortgage Loans. Based upon the representations of each Seller in the Mortgage Loan Purchase and Servicing Agreement, each Mortgage Loan purchased by the Issuer is an Eligible Loan.

(r) Other Representations. All representations and warranties of the Issuer made in each Program Document to which it is a party are true and correct and are repeated herein as though fully set forth herein.

(s) Special Purpose Entity. The Issuer is a special purpose entity formed exclusively to enter into the Program Documents and the transactions contemplated thereby or incident thereto.

Section 3.02 Additional Representations and Warranties of the Issuer. The Issuer represents and warrants to the Collateral Agent and the other Secured Parties that:

(a) (i) At the date of each deposit of Deposited Funds in the Collateral Account, the Issuer was, is or will then be the lawful owner of, and had, has or will then have good title to, such Deposited Funds free and clear of all Liens except the lien and security interest granted pursuant to this Security Agreement in favor of the Collateral Agent; and (ii) the Issuer is and will be the lawful owner of, and has and will have beneficial ownership of, all Collateral, free and clear of all Liens except the lien and security interest granted pursuant to this Security Agreement in favor of the Collateral Agent.

(b) The Issuer will warrant and defend the Collateral Agent’s right, title and interest in and to the Collateral, for the benefit of the Collateral Agent and the Secured Parties and the income, distributions and proceeds thereof against the claims and demands of all Persons whomsoever.

Section 3.03 Issuer Agents and Depositary Agents. (a) With the delivery of this Security Agreement, the Issuer is furnishing to the Collateral Agent, and from time to time thereafter may furnish to the Collateral Agent, a certificate (hereinafter called an “Issuer Incumbency Certificate”) of an authorized signatory of the Issuer certifying the incumbency and specimen signatures of officers and agents (such officers and agents being hereinafter called the “Issuer Agents”) of the Issuer authorized to act, and to give instructions and notices, on behalf of the Issuer hereunder. Until the Collateral Agent receives a subsequent Issuer Incumbency Certificate, or unless a Trust Officer of the Collateral Agent shall have actual knowledge of the lack of authority of any individual, the Collateral Agent shall be entitled conclusively to rely on the last such Issuer Incumbency Certificate delivered to it for purposes of determining the authorized Issuer Agents.

(b) The Collateral Agent acknowledges that each of the Persons specified in Section 3(e) of the Depositary Agreement shall be deemed to be an authorized “Authenticating Representative” and “Designated Representative” for purposes hereof.

Section 3.04 Representations and Warranties of the Collateral Agent. The Collateral Agent represents and warrants to the Issuer and the Secured Parties that it has been duly organized and is validly existing and in good standing under the laws of the State of New York and that this Security Agreement has been duly authorized, executed and delivered by it.

Section 3.05 Covenants of the Issuer.

(a) Payment of Senior Notes. The Issuer shall pay the principal of (and premium, if any) and interest on the Senior Notes pursuant to the provisions of this Security Agreement. Principal and interest shall be considered paid on the date due to the extent that the Collateral Agent holds on that date money designated for and sufficient to pay the principal and interest then due.

(b) Maintenance of Office or Agency. The Issuer will maintain an office or agency (which may be an office of the Collateral Agent or Depositary) where Senior Notes may be surrendered for registration of transfer or exchange, where notices and demands to or upon the Issuer in respect of the Senior Notes and this Security Agreement may be served, and where, at any time when the Issuer is obligated to make a payment of principal and premium upon the Senior Notes, the Senior Notes may be surrendered for payment. The Issuer will give prompt written notice to the Collateral Agent of the location, and any change in the location, of such office or agency. If at any time the Issuer shall fail to maintain any such required office or agency or shall fail to furnish the Collateral Agent with the address thereof, such presentations and surrenders may be made or served at the offices of the Collateral Agent’s agent, C/O DB Services Tennessee, 648 Grassmere Park Road, Nashville, TN 37211-3658.

The Issuer may also from time to time designate one or more other offices or agencies where the Senior Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations. The Issuer will give prompt written notice to the Collateral Agent of any such designation or rescission and of any change in the location of any such other office or agency.

(c) Information. The Issuer will:

(i) promptly provide the Collateral Agent, each Swap Counterparty and the Rating Agencies with all financial and operational information with respect to the Program Documents or the Issuer as the Collateral Agent may reasonably request; and will promptly provide the Rating Agencies, the Collateral Agent, each Swap Counterparty, the Indenture Trustee (on behalf of the holders of Subordinated Notes), the SLN Placement Agents and the Depositary with all statements delivered under the Interest Rate Swaps, this Security Agreement and the Mortgage Loan Purchase and Servicing Agreement;

(ii) deliver to the Collateral Agent and each Swap Counterparty, if and when any member of the ERISA Group (i) gives or is required to give notice to the PBGC of any “reportable event” (as defined in Section 4043 of ERISA) with respect to any Benefit Plan which might constitute grounds for a termination of such Benefit Plan under Title IV of ERISA, or knows that the plan administrator of any Benefit Plan has given or is required to give notice of any such reportable event, a copy of the notice of such reportable event given or required to be given to the PBGC; (ii) receives notice of complete or partial withdrawal liability under Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is insolvent or has been terminated, a copy of such notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent to terminate, impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to administer any Benefit Plan, a copy of such notice; (iv) applies for a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code, a copy of such application; (v) gives notice of intent to terminate any Benefit Plan under Section 4041(c) of ERISA, a copy of such notice and other information filed with the PBGC; (vi) gives notice of withdrawal from any Benefit Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails to make any payment or contribution to any Benefit Plan or Multiemployer Plan or in respect of any Benefit Arrangement or makes any amendment to any Benefit Plan or Benefit Arrangement which has resulted or could result in the imposition of a Lien or the posting of a bond or other security, a certificate of the Administrator setting forth details as to such occurrence and action, if any, which the Issuer or applicable member of the ERISA Group is required or proposes to take;

(iii) provide the Collateral Agent (on behalf of the holders of the Senior Notes), the Indenture Trustee (on behalf of the Subordinated Noteholders), and each Swap Counterparty with access to the books and records of the Issuer, and the books and records of the Servicer, the Custodian, the Depositary and the Collateral Agent relating to the assets of the Issuer, without charge, but only (i) upon the reasonable request of any requesting Swap Counterparty or the Collateral Agent (acting at the direction of the Required Senior Noteholders (or, if the Senior Notes have been paid in full, the Indenture Trustee on behalf of the Required Subordinated Noteholders)) (for which purpose one Business Day shall be deemed reasonable during the occurrence and continuation of an Event of Default), (ii) during normal business hours, (iii) subject to the relevant party’s normal security and confidentiality procedures and (iv) at offices designated by the relevant party;

(iv) provide the Rating Agencies, the Collateral Agent, each Swap Counterparty, the SLN Placement Agents, the Depositary, the Indenture Trustee (on behalf of the holders of the Subordinated Notes) and the Collateral Agent with any information that it may have with respect to an Event of Default hereunder or provide notice to the Collateral Agent of any default or event of default under any other agreement between the Issuer and any of the Sellers, the Servicer, the Depositary, each Swap Counterparty or the Collateral Agent as promptly as practicable after the Issuer becomes aware of the occurrence of any Event of Default or other default or event of default;

(v) promptly furnish to the Collateral Agent (on behalf of the holders of the Senior Notes), each Swap Counterparty, the Indenture Trustee (on behalf of the holders of the Subordinated Notes) and the SLN Placement Agents after receipt thereof copies of all written communications received from the Rating Agencies with respect to the Senior Notes;

(vi) promptly upon its knowledge thereof give notice to the Collateral Agent (on behalf of the holders of the Senior Notes), the Indenture Trustee (on behalf of the holders of the Subordinated Notes), the SLN Placement Agents, each Swap Counterparty and the Rating Agencies of the existence of any litigation against the Issuer;

(vii) give prompt notice to the Collateral Agent (on behalf of the holders of the Senior Notes), each Swap Counterparty, the Rating Agencies, the Indenture Trustee (on behalf of the holders of the Subordinated Notes) and the SLN Placement Agents of any material change to the articles of incorporation or by-laws of the Sellers; and

(viii) provide, on or prior to June 30 of each year beginning in 2007, to the Collateral Agent, the Indenture Trustee, the SLN Placement Agents and each Swap Counterparty a certificate of the Issuer certifying that the ratings assigned by the Rating Agencies in respect of any outstanding Notes have not been withdrawn or downgraded since the date hereof.

Delivery of such reports, information and documents to the Collateral Agent, the Custodian or the Depositary under this section is for informational purposes only and each recipient’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Issuer’s compliance with any of its covenants.

(d) Payment of Obligations. The Issuer will pay and discharge in a timely manner in accordance with the terms of the Program Documents, at or before maturity, all of its respective material obligations and liabilities, including, without limitation, tax liabilities and other governmental claims, except where the same may be contested in good faith by appropriate proceedings, will maintain, in accordance with GAAP, reserves as appropriate for the accrual of any of the same, and will comply in all material respects with its obligations in the Program Documents.

(e) Conduct of Business and Maintenance of Existence. The Issuer will maintain its existence as a statutory trust validly existing and in good standing under the laws of the State of Delaware and duly qualified as a foreign trust licensed under the laws of each state in which the failure to so qualify would have a material adverse effect on the business and operations of the Issuer.

(f) Compliance with Laws. The Issuer will comply in all respects with all Requirements of Law and all applicable laws, ordinances, rules, regulations, and requirements of Governmental Authorities except where the necessity of compliance therewith is contested in good faith by appropriate proceedings and where such noncompliance would not materially and adversely affect the condition, financial or otherwise, operations, performance, properties or prospects of the Issuer or its ability to carry out the transactions contemplated in this Security Agreement and each other Program Document; provided, however, such noncompliance will not result in a Lien (other than a Permitted Lien) on any Assets of the Issuer.

(g) Inspection of Property, Books and Records. The Issuer will keep proper books of record and account in which full, true and correct entries shall be made of all dealings and transactions in relation to its Assets, business and activities in accordance with GAAP; and will permit the Collateral Agent and its agents and representatives to visit and inspect any of its properties, to examine and make abstracts from any of its books and records and to discuss its affairs, finances and accounts with its representatives, employees and independent public accountants, all at such reasonable times upon reasonable notice and as often as may reasonably be requested.

(h) Compliance with Program Documents. The Issuer will perform and comply with each and every obligation, covenant and agreement required to be performed or observed by it in or pursuant to this Security Agreement and each other Program Document to which it is a party and will not take any action which would permit any party to have the right to refuse to perform any of its respective obligations under any Program Document.

(i) Notice of Defaults.

(i) Promptly upon becoming aware of any Potential Event of Default or Event of Default under this Security Agreement, the Issuer shall give the Collateral Agent (on behalf of the holders of the Senior Notes), each Swap Counterparty, any SLN Placement Agent, the Depositary, the Indenture Trustee (on behalf of the holders of the Subordinated Notes) and the Rating Agencies notice thereof, together with a certificate of the Issuer setting forth the details thereof and any action with respect thereto taken or contemplated to be taken by the Issuer.

(ii) Promptly upon becoming aware of any default under any Program Document other than this Security Agreement, the Issuer shall give the Collateral Agent, any SLN Placement Agent, each Swap Counterparty, the Depositary, the Indenture Trustee (on behalf of the holders of the Subordinated Notes) and the Rating Agencies notice thereof.

(j) Notice of Material Proceedings. Promptly upon becoming aware thereof, the Issuer shall give the Indenture Trustee, the Collateral Agent, the SLN Placement Agents, each Swap Counterparty and the Rating Agencies written notice of the commencement or existence of any proceeding by or before any Governmental Authority against or affecting the Issuer which is reasonably likely to have a material adverse effect on the business, condition (financial or otherwise), results of operations, properties or performance of the Issuer or the ability of the Issuer to perform its obligations under this Security Agreement or under any other Program Document to which it is a party.

(k) Further Requests. The Issuer will promptly furnish to the Depositary, the Indenture Trustee, the Collateral Agent, any Swap Counterparty and the Rating Agencies such other information as, and in such form as such Swap Counterparty, the Depositary, the Collateral Agent or the Rating Agencies may reasonably request in connection with the transactions contemplated hereby.

(l) Further Assurances.

(i) The Issuer shall do such further acts and things, and execute and deliver to the Depositary, the Collateral Agent, any Swap Counterparty and the Secured Parties such additional assignments, agreements, powers and instruments, as the Depositary, the Collateral Agent, such Swap Counterparty or the Required Senior Noteholders (or, if the Senior Notes have been paid in full, the Required Subordinated Noteholders) reasonably determine to be necessary to carry into effect the purposes of this Security Agreement or the other Program Documents or to better assure and confirm unto the Depositary, the Collateral Agent or the Secured Parties their rights, powers and remedies hereunder including, without limitation, the filing of any financing statement, amendment statement or continuation statement under the UCC in effect in any jurisdiction with respect to the liens and security interests granted hereby. The Issuer also hereby acknowledges that the Collateral Agent has the right but not the obligation to file any such financing statement, amendment statement or continuation statement without further authorization of the Issuer to the extent permitted by applicable law. If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any promissory note, chattel paper or other instrument, such note, chattel paper or instrument shall be deemed to be held in trust and immediately pledged and physically delivered to the Collateral Agent hereunder, and shall, subject to the rights of any Person in whose favor a prior Lien has been perfected, be duly endorsed in a manner satisfactory to the Collateral Agent and delivered to the Collateral Agent promptly. Without limiting the generality of the foregoing provisions of this Section 3.05(1), the Issuer shall take all actions that are required to maintain the security interest of the Collateral Agent on behalf of the Secured Parties in the Collateral pledged pursuant to this Security Agreement as a perfected security interest subject to no prior Liens, including, without limitation, filing all UCC financing statements, continuation statements and amendments thereto necessary to achieve the foregoing. The Issuer further agrees that it will not, without Rating Agency Confirmation and the prior written consent of the Collateral Agent and each Swap Counterparty, exercise any right, remedy, power or privilege available to it with respect to any obligor under the Collateral, take any action to compel or secure performance or observance by any obligor of its obligations to the Issuer, or give any consent, request, notice, direction, approval, extension or waiver with respect to any obligor, except as otherwise expressly permitted by the Program Documents. Notwithstanding anything herein to the contrary, the Collateral Agent shall be under no obligation to file or prepare any financing statement or continuation statement or to take any action or to execute any further documents or instruments in order to create, preserve, or perfect the security interest granted herein, such obligations being solely the obligations of the Issuer.

(ii) The Issuer will warrant and defend the Collateral Agent’s right, title and interest in and to the Collateral and the income, distributions and proceeds thereof, for the benefit of the Collateral Agent on behalf of the Secured Parties, against the claims and demands of all Persons whomsoever.

(iii) The Issuer will provide to the Collateral Agent and the Swap Counterparties, no more frequently than on June 30 of each year beginning 2007, an Opinion of Counsel to the effect that no UCC financing or continuation statements are required to be filed with respect to any of the Collateral in which a security interest may be perfected by the filing of UCC financing statements.

(m) Certain Documents. The Issuer will not take any action that would permit (i) the Sellers or the Servicer to refuse to perform any of their respective obligations under the Program Documents or (ii) the Depositary to refuse to perform its obligations under any Program Documents to which it is a party. The Issuer will not terminate the SLN Placement Agent Agreement or the Depositary Agreement before entering into a secured liquidity note placement agreement or depositary agreement, as the case may be, which is substantially similar to the SLN Placement Agent Agreement or the Depositary Agreement, as the case may be.

(n) Liens. The Issuer will not create, incur, assume or permit to exist any Lien upon any of its Assets (including the Collateral), other than (i) Liens in favor of the Collateral Agent for the benefit of the Secured Parties, (ii) Permitted Liens, (iii) Liens permitted under the Program Documents and (iv) liabilities for services supplied or furnished to the Issuer (including reasonable accountants’ and attorneys’ fees); provided, that the aggregate amount of the liabilities described in subpart (iv) shall not exceed $500,000 at any one time outstanding.

(o) Other Indebtedness. The Issuer will not (A) issue or sell any securities other than the Notes in accordance with the Program Documents, or (B) create, assume, incur, suffer to exist or otherwise become or remain liable in respect of any Indebtedness other than (i) Indebtedness hereunder and (ii) Indebtedness permitted under any other Program Document.

(p) Mergers. The Issuer will not merge or consolidate with or into any other Person.

(q) Sales of Assets. The Issuer will not sell, lease, transfer, liquidate or otherwise dispose of any Assets, except as contemplated by the Program Documents.

(r) Capital Expenditures. The Issuer will not make any expenditure (by long-term or operating lease or otherwise) for, or otherwise own, capital assets (both realty and personalty).

(s) Dividends. The Issuer shall not make any distributions to any holders of its securities without the consent of each Swap Counterparty and the Collateral Agent, acting at the direction of the Required Senior Noteholders (or, if the Senior Notes have been paid in full, the Required Subordinated Noteholders) except as provided under the Program Documents.

(t) Name; Principal Office. The Issuer will neither (a) change the location of its organization, chief executive office or principal place of business (within the meaning of the applicable UCC) without sixty (60) days’ prior written notice to the Depositary and the Collateral Agent, (b) change its name, (c) change its identity or jurisdiction of organization, nor (d) become bound as a debtor under Section 9-203(d) of the Uniform Commercial Code by a security agreement previously entered into by another person or entity without prior written notice to the Depositary and the Collateral Agent sufficient to allow it to make all filings (including filings of financing statements on form UCC-1) and recordings necessary to maintain the perfection of the interest of the Collateral Agent on behalf of the Secured Parties in the Collateral pursuant to this Security Agreement. In the event that the Issuer desires to so change its office or change its name, the Issuer will make any required filings and prior to actually changing its office or its name, the Issuer will deliver to the Collateral Agent, each Swap Counterparty and the Depositary (i) an Officer’s Certificate and (except with respect to a change of the location of the Issuer’s chief executive office or principal place of business to a new location in the same county) an Opinion of Counsel confirming that all required filings have been made to continue the perfected interest of the Collateral Agent on behalf of the Secured Parties in the Collateral in respect of the new office or new name of the Issuer and (ii) copies of all such required filings with the filing information duly noted thereon by the office in which such filings were made.

(u) Organizational Documents. The Issuer will not amend any of its organizational documents, including its certificate of trust or Trust Agreement, unless, prior to such amendment, Rating Agency Confirmation shall have been obtained and the Collateral Agent and each Swap Counterparty consent to such amendment.

(v) Investments. The Issuer will not make, incur, or suffer to exist any loan, advance, guarantee, extension of credit or other investment in any Person other than pursuant to the Program Documents and with respect to Eligible Investments and, in addition, without limiting the generality of the foregoing, the Issuer will not direct the Collateral Agent to make any Eligible Investments on the Issuer’s behalf that would have the effect of causing the Issuer to be an “investment company” within the meaning of the Investment Company Act.

(w) No Other Agreements. The Issuer will not (a) enter into or be a party to any agreement or instrument other than any Program Document, agreements entered into in the ordinary course of its business or documents and agreements incidental thereto or (b) except as provided for in Section 10.01, amend, modify or waive any provision of any Program Document to which it is a party, or (c) give any approval or consent or permission not provided for in any Program Document.

(x) Other Business. The Issuer will not engage in any business or enterprise or enter into any transaction other than (i) as contemplated by the Program Documents or (ii) activities related to or incidental to any of the foregoing.

(y) Secured Liquidity Notes. The Issuer shall not issue Secured Liquidity Notes to the Sellers, any Affiliate of the Sellers or any trust or other entity to which the Sellers or any Affiliate of the Sellers is a depositor or servicer bearing interest (or at a discount) in excess of a commercially reasonable rate.

(z) Rule 144A Information Requirement. For so long as any of the Notes remain outstanding and are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, the Issuer covenants and agrees that it shall, during any period in which it is not subject to Section 13 or 15(d) under the Exchange Act, make available to any holder of Notes in connection with any sale thereof and any prospective purchaser of Notes from such holder of Notes in each case upon request, the information specified in, and meeting the requirements of, Rule 144A(d)(4) under the Securities Act.

(aa) Use of Proceeds of Notes. The Issuer shall use the proceeds of Notes solely for one or more of the following purposes: (a) to pay the Issuer’s Obligations when due, in accordance with this Security Agreement; and (b) to acquire Eligible Loans from the Sellers.

(bb) Program Document Information. The Issuer shall, or shall cause the Sellers or the Servicer to, provide the Collateral Agent and each Swap Counterparty with copies of all reports, notices, statements and certificates delivered under the Program Documents, and any other information that the Collateral Agent or each Swap Counterparty shall reasonably request. Delivery of such reports, notices, information and documents to the Collateral Agent under this section and Section 3.05(z) is for informational purposes only and the Collateral Agent’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Issuer’s compliance with any of its covenants.

(cc) Non-Petition Agreement. The Issuer shall cause each party to the Program Documents and each party to any other document incidental or related to any Program Document, to covenant and agree that it shall not, prior to the date which is one year and one day (or if longer, the applicable preference period then in effect) after the payment in full of the latest maturing Note, acquiesce, petition or otherwise, directly or indirectly, invoke or cause the Issuer to invoke the process of any governmental authority for the purpose of commencing or sustaining a case against the Issuer under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or any substantial part of its property or ordering the winding up or liquidation of the affairs of the Issuer.

ARTICLE IV

SECURED LIQUIDITY NOTES

Section 4.01 Conditions to Effectiveness. The ability of the Issuer to issue Secured Liquidity Notes shall commence on the first day (the “Effective Date”) on which all of the following conditions have been satisfied (or waived in accordance with this Security Agreement):

(a) Depositary Agreement. The Issuer and the Depositary shall have executed and delivered the Depositary Agreement, which shall be in full force and effect, and the Collateral Agent shall have received a fully executed counterpart thereof.

(b) Mortgage Loan Purchase and Servicing Agreement. The Sellers, the Servicer, the Performance Guarantor and the Issuer shall have executed and delivered the Mortgage Loan Purchase and Servicing Agreement, which shall be in full force and effect, and the Collateral Agent shall have received a fully executed counterpart thereof.

(c) Indenture and Subordinated Note Purchase Agreement. The Issuer and the Indenture Trustee shall have executed and delivered the Indenture, and the Collateral Agent shall have received a fully executed copy thereof, which shall be in full force and effect. The Issuer and the Initial Purchaser of the Subordinated Notes shall have executed and delivered the Subordinated Note Purchase Agreement, and the Collateral Agent shall have received a fully executed copy thereof, which shall be in full force and effect, and the closing thereunder shall have occurred (including the purchase of the Subordinated Notes by such purchaser). The Subordinated Notes shall have been issued in an aggregate Principal Amount of not less than $27,295,000.

(d) Trust Agreement. The Owner Trustee, the Depositor and the Administrator shall have executed and delivered the Trust Agreement, and the Collateral Agent shall have received a fully executed copy thereof, which shall be in full force and effect.

(e) Security Agreement. The Issuer and the Collateral Agent shall have executed and delivered this Security Agreement, which shall be in full force and effect, and the Collateral Agent shall have received a fully executed counterpart thereof.

(f) Custodial Agreement. The Issuer, the Sellers, the Servicer, the Collateral Agent and the Custodian shall have executed and delivered the Custodial Agreement, which shall be in full force and effect, and the Collateral Agent shall have received a fully executed counterpart thereof.

(g) SLN Placement Agent Agreement. The Issuer and the SLN Placement Agents shall have executed and delivered the SLN Placement Agent Agreement in respect of the Secured Liquidity Notes, which shall be in full force and effect, and the Collateral Agent shall have received a fully executed counterpart thereof.

(h) No Event of Default or Servicer Event of Default. No Event of Default or Servicer Event of Default shall have occurred and be continuing on the Effective Date nor will any Event of Default or Servicer Event of Default result from the consummation of the initial issuance of Secured Liquidity Notes on such date.

(i) Representations and Warranties. All representations and warranties of (i) the Issuer contained in this Security Agreement and in the other Program Documents or in any document, certificate or financial or other statement delivered in connection herewith or therewith, (ii) the Servicer contained in the Servicer Documents, (iii) the Sellers contained in the Seller Documents and (iv) the Performance Guarantor contained in the Mortgage Loan and Purchasing Agreement shall be true and correct in all material respects and with the same force and effect as though such representations and warranties had been made as of the Effective Date.

(j) Opinions of Counsel. The Collateral Agent shall have received signed opinions, addressed to the Collateral Agent from Mayer, Brown, Rowe & Maw LLP, special counsel to the Sellers, the Servicer, the Performance Guarantor and the Issuer, an opinion of counsel for each Swap Counterparty (which may be an opinion from in-house counsel to such Swap Counterparty), as to such matters as the Collateral Agent may reasonably request, and an opinion of counsel for each of the Collateral Agent, the Indenture Trustee, the Owner Trustee and the Custodian (which may be an opinion from in-house counsel to such party), as to such matters as the Collateral Agent may reasonably request. The Collateral Agent shall have also received a copy, addressed to the Collateral Agent or if not addressed to the Collateral Agent, then the Collateral Agent shall have received a letter stating that the Collateral Agent shall be entitled to rely thereon, of each opinion delivered to the Rating Agencies in connection with the rating of the Secured Liquidity Notes.

(k) Closing Certificates. The Collateral Agent shall have received a certificate dated the date hereof and executed by the chairman of the board, vice chairman of the board, president, the Administrator, any vice president, secretary, treasurer, assistant secretary or any assistant treasurer (or a Person with a delegation of authority from any such officer) of (i) the Issuer stating that all of the conditions with respect to the Issuer specified in this Section 4.01 are then satisfied, (ii) the Servicer stating that the conditions with respect to the Servicer specified in this Section 4.01 are then satisfied, (iii) each Seller stating that the conditions with respect to such Seller specified in this Section 4.01 are then satisfied and (iv) the Performance Guarantor stating that the conditions with respect to the Performance Guarantor are then satisfied.

(l) Filings, etc. All filings (including, without limitation, pursuant to the UCC) and recordings shall have been accomplished with respect to this Security Agreement in such jurisdictions as may be required by law to establish, perfect, protect and preserve the rights, titles, interests, remedies, powers, privileges, first priority liens and security interests of the Collateral Agent in the Collateral covered by this Security Agreement and any giving of notice or the taking of any other action to such end (whether similar or dissimilar) required by law shall have been given or taken (it being understood that no filings of Assignments of Mortgages relating to the Mortgage Loans purchased by the Issuer will be required except as provided in the Program Documents). On or prior to the Effective Date, the Collateral Agent shall have received satisfactory evidence as to any such filing, recording, registration, giving of notice or other action so taken or made.

(m) Authorizations, etc. The Collateral Agent shall have received certificates of good standing and copies of the organizational documents of the Issuer, the Sellers, the Servicer and the Performance Guarantor, Board of Directors resolutions or similar authorizing resolutions of the Sellers, the Servicer and the Performance Guarantor in respect of the Program Documents to which each is a party, as applicable, and incumbency certificates of the Issuer, the Sellers, the Servicer and the Performance Guarantor, all certified by appropriate authorities.

(n) Bank Accounts. The Collateral Account, the Collection Account, the Allocated Expense Account, the Extended Note Distribution Account and the Secured Liquidity Note Account shall have been established.

(o) Secured Liquidity Notes Ratings. The Secured Liquidity Notes shall have been rated “A-l+” by S&P and “P-1” by Moody’s, the Collateral Agent shall have received a copy of each letter evidencing any such rating and such ratings shall continue in full force and effect on the Effective Date.

(p) Other Instruments and Documents. The Collateral Agent shall have received such other instruments and documents as the Collateral Agent may have reasonably requested, and all instruments and documents delivered pursuant to this Section 4.01 shall be reasonably satisfactory in form and substance to the Collateral Agent.

(q) Fees. The invoiced fees and expenses of the Depositary, the Custodian, the Owner Trustee, the Indenture Trustee and the Collateral Agent, and the fees and expenses of their counsel, and the up-front invoiced fees payable to the Rating Agencies and the SLN Placement Agents, shall have been paid on or prior to the Effective Date.

(r) Effective Date. The Issuer shall have given notice to the Collateral Agent and the Depositary of the Effective Date, in the form of a certificate in the form of Exhibit A hereto.

(s) Interest Rate Swaps. The Issuer and each Swap Counterparty shall have executed and delivered the applicable Interest Rate Swap, which shall be in full force and effect, and the Collateral Agent shall have received a fully executed counterpart thereof. No Event of Default or Additional Termination Event (each as defined in the Interest Rate Swaps) shall have occurred and be continuing.

(t) Reserve Fund. The Collateral Agent shall have received evidence not later than the date on which the Issuer first purchases a Mortgage Loan under the Mortgage Loan Purchase and Servicing Agreement that the Reserve Fund has been established and funded in an amount equal to the Required Reserve Fund Amount.

(u) Disbursement Account Agreement. The Owner Trustee and the Custodian shall have executed and delivered the Disbursement Account Agreement, which shall be in full force and effect, and the Collateral Agent shall have received a fully executed counterpart thereof.

(v) Rated Bidder Letter. The Issuer, the Servicer, the Collateral Agent and Deutsche Bank AG, New York Branch, shall have executed and delivered the Rated Bidder Letter, which shall be in full force and effect, and the Collateral Agent shall have received a fully executed counterpart thereof.

Section 4.02 Issuance of Secured Liquidity Notes. The issuance and payment provisions of the Secured Liquidity Notes, to the extent not covered in this Security Agreement, will be as set forth in the Depositary Agreement.

(a) The Issuer shall have the right to issue or deliver Classes of Secured Liquidity Notes from time to time on and after the Effective Date, unless (i) any condition precedent specified in Section 4.03 with respect to the issuance of Classes of Secured Liquidity Notes has not been satisfied or waived or (ii) the issuance of Classes of Secured Liquidity Notes is prohibited by the provisions of Section 4.02(c) hereof. If any of the events described in clauses (i) and (ii) of the immediately preceding sentence has occurred, then the Issuer shall not direct the Collateral Agent or the Depositary to issue or deliver Classes of Secured Liquidity Notes.

(b) The Issuer agrees that each note constituting Secured Liquidity Notes shall (i) be in the form attached to the Depositary Agreement and be completed in accordance with this Security Agreement and the Depositary Agreement, (ii) be dated the date of issuance thereof, (iii) be made payable to the order of a named payee or bearer, (iv) be in a face amount (if issued on a discount basis) or a principal amount (if issued on an interest-bearing basis) of $250,000 or an integral multiple of $1,000 in excess thereof and (v) be exempt from or sold in a transaction exempt from the registration requirements of the Securities Act. Subject to the provisions of the Depositary Agreement, all Secured Liquidity Notes shall be delivered and issued against payment therefor in collected funds which are immediately available on the date of issuance, and otherwise in accordance with the terms of this Security Agreement and the Depositary Agreement.

(c) (i) After their initial sale, any Class of Secured Liquidity Notes or Extended Notes, or any portion of any such Class, may be resold only (1) to the Issuer (upon redemption thereof or otherwise), (2) in a transaction meeting the requirements of Rule 144A to a person whom the transferor reasonably believes is a qualified institutional buyer (as defined in Rule 144A) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that the transfer is being made in reliance on Rule 144A, (3) pursuant to an exemption from the registration requirements of the Securities Act to an “accredited investor” within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 of Regulation D under the Securities Act (each, an “Institutional Accredited Investor” that is acquiring such Note for its own account, or for the account of such an Institutional Accredited Investor; or (4) in a transaction complying with or exempt from the registration requirements of the Securities Act (subject in the case of this clause (4) to receipt of an opinion of counsel, in form and substance acceptable to the Issuer, the Collateral Agent, the Depositary and each SLN Placement Agent, to the effect that such reoffer, resale, pledge or other transfer has been made in compliance with or pursuant to an exemption from registration under the Securities Act), in each case in accordance with any applicable securities laws of any state of the United States or any other jurisdiction. The holder will, and each subsequent holder is required to, notify any purchaser from it of the resale restrictions set forth above.

(ii) In furtherance of the foregoing, each purchaser of any Class of Secured Liquidity Notes, Extended Notes, or any portion of any such Class, sold to an Institutional Accredited Investor shall be deemed to have represented and agreed that:

(A) It understands that the Notes purchased by it will be offered, and may be transferred, only in a transaction not involving any public offering within the meaning of the Securities Act, and that, if in the future it decides to resell, pledge or otherwise transfer any such Notes, such Notes may be resold, pledged or transferred only in accordance with the transfer restrictions set forth in this Security Agreement, the Depositary Agreement and such Notes;

(B) the purchaser is (A) an “accredited investor” as that term is defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act or is a fiduciary or agent (other than a U.S. bank or savings and loan association) that is purchasing such Secured Liquidity Note or Extended Note either for its own account or for the account of one or more Institutional Accredited Investors, (B) has such knowledge and experience (or is a fiduciary or agent with sole investment discretion having such knowledge and experience) in financial and business matters that it (or such fiduciary or agent) is capable of evaluating the merits and risks of investing in such Secured Liquidity Note or Extended Note, (C) has had access to such information (including without limitation information with respect to the Mortgage Loans and the Swap Counterparties) as the purchaser deems necessary in order to make an informed investment decision, (D) is purchasing such Secured Liquidity Note or Extended Note for investment and not with a view to distribution; and (E) the purchaser understands that, although the Issuer and the SLN Placement Agents may repurchase Secured Liquidity Notes or Extended Notes, the Issuer and the SLN Placement Agents are not obligated to do so, and accordingly the purchaser (or any such other investor) should be prepared to hold such Notes until their Final Maturity;

(C) Either (i) no part of the assets used by it to acquire such Notes constitutes assets of any Benefit Plan, or (ii) its acquisition and holding of such Notes will not result in a non-exempt prohibited transaction under ERISA or Section  4975 of the Code (or, in the case of a governmental plan, non-U.S. plan, or church plan, will not violate any law substantially similar to the fiduciary responsibility provisions of ERISA or Section 4975 of the Code);

(D) It acknowledges that the Collateral Agent, the Depositary, the Issuer, each SLN Placement Agent, and their Affiliates, and others will rely exclusively upon the truth and accuracy of the foregoing acknowledgements, representations and agreements and shall be under no duty or obligation to verify the accuracy of the same; and

(E) If it is acquiring any such Notes for the account of one or more Institutional Accredited Investors, it represents that it has sole investment discretion with respect to each such account and that it has full power to make the foregoing acknowledgements, representations and agreements on behalf of each such account.

(iii) In furtherance of the foregoing, each purchaser of any Class of Secured Liquidity Notes, Extended Notes, or any portion of any such Class, sold in the United States to a qualified institutional buyer within the meaning of, and in reliance on, Rule 144A, shall be deemed to have represented and agreed that:

(A) It is a qualified institutional buyer as that term is defined in Rule 144A and is acquiring such Notes for its own institutional account or for the account of a qualified institutional buyer;

(B) It understands that the Notes purchased by it will be offered, and may be transferred, only in a transaction not involving any public offering within the meaning of the Securities Act, and that, if in the future it decides to resell, pledge or otherwise transfer any such Notes, such Notes may be resold, pledged or transferred only in accordance with the transfer restrictions set forth in this Security Agreement, the Depositary Agreement and such Notes;

(C) Either (i) no part of the assets used by it to acquire such Notes constitutes assets of any Benefit Plan, or (ii) its acquisition and holding of such Notes will not result in a non-exempt prohibited transaction under ERISA or Section 4975 of the Code (or, in the case of a governmental plan, non-U.S. plan or church plan, will not violate any law substantially similar to the fiduciary responsibility provisions of ERISA or Section 4975 of the Code);

(D) It acknowledges that the Collateral Agent, the Depositary, the Issuer, each SLN Placement Agent, and their Affiliates, and others will rely exclusively upon the truth and accuracy of the foregoing acknowledgements, representations and agreements and shall be under no duty or obligation to verify the accuracy of the same; and

(E) If it is acquiring any such Notes for the account of one or more qualified institutional buyers, it represents that it has sole investment discretion with respect to each such account and that it has full power to make the foregoing acknowledgements, representations and agreements on behalf of each such account.

(d) In the event that (i) an injunction suspending the issuance of Secured Liquidity Notes shall have been issued or proceedings therefor shall have been initiated by the Securities and Exchange Commission, (ii) the Issuer or any other Person shall have been found in a judicial or administrative proceeding to have violated the Securities Act in connection with the issuance of the Secured Liquidity Notes, or (iii) the Issuer or the SLN Placement Agents shall have filed a registration statement with the Securities and Exchange Commission seeking to register the Secured Liquidity Notes under the Securities Act, then, in any such event, the Issuer shall not thereafter issue or sell any Secured Liquidity Notes. The Issuer shall give the Collateral Agent, the SLN Placement Agents, the Depositary, each Swap Counterparty and the Rating Agencies notice of any of the events described in this Section 4.02(d).

Section 4.03 Conditions Precedent to Issuance of Secured Liquidity Notes. The right of the Issuer to issue Secured Liquidity Notes is subject to the conditions that at the time of each such issuance and after giving effect thereto:

(a) Ratings. The Secured Liquidity Notes shall be rated “A-1+” by S&P, and “P-1” by Moody’s.

(b) No Event of Default. No event of default under any Program Document and no Event of Default and no Termination Event shall have occurred and be continuing and the Issuer shall have made a determination that no event of default under any Program Document and no Event of Default and no Termination Event will result from the issuance of such Secured Liquidity Notes.

(c) Representations and Warranties. All representations and warranties of the Issuer contained in this Security Agreement and in the other Program Documents or in any document, certificate or financial or other statement delivered in connection herewith or therewith shall be true and correct in all material respects with the same force and effect as though such representations and warranties had been made on and as of the day of such issuance.

(d) Accounts. The Reserve Fund, the Collateral Account, the Collection Account, the Extended Notes Distribution Account and the Secured Liquidity Note Account, and any funds on deposit in, or otherwise to the credit of, the Reserve Fund, Collateral Account, the Collection Account, the Extended Notes Distribution Account and the Secured Liquidity Note Account shall not be subject to any writ, order, stay, judgment, warrant of attachment or execution or similar process.

(e) Borrowing Base Test. After giving effect to such issuance of Secured Liquidity Notes on such day, the payment of Secured Liquidity Notes maturing or matured on such day, the payment of outstanding Extended Notes on such day, the issuance of the Subordinated Notes on such day, the payment of outstanding Subordinated Notes maturing or matured on such day and the purchase of additional Mortgage Loans on such day, the Borrowing Base Test shall be satisfied.

(f) Authorized Amount of Secured Liquidity Notes. After giving effect to such issuance of Secured Liquidity Notes on such day, the payment of Secured Liquidity Notes maturing or matured on such day, and the payment of outstanding Extended Notes on such day, the Credits Outstanding on such day plus the aggregate outstanding Principal Amount of the Subordinated Notes are not greater than the Program Size.

(g) Downgrade. No downgrade, qualification or withdrawal of the long-term unsecured debt rating of any Swap Counterparty below “AA-” by S&P, “Aa3” by Moody’s or, if rated by Fitch, “AA-” by Fitch or of its short-term unsecured debt rating below “A-1+” by S&P, “P-1” by Moody’s or, if rated by Fitch, “F1+” by Fitch shall have occurred and be continuing.

(h) Mortgage Loans Purchased. The aggregate amount of all Mortgage Loans purchased and held by the Issuer at any given time does not, and will not, exceed the maximum amount set forth in the Mortgage Loan Purchase and Servicing Agreement.

(i) Mortgage Loans Sold. The Issuer shall be in compliance with the Portfolio Aging Limitations and the Portfolio Criteria.

(j) SLN Maturity. Each Secured Liquidity Note has an Expected Maturity that is not more than one hundred and eighty (180) calendar days after its issuance date and a Final Maturity that is one hundred and twenty (120) calendar days after its Expected Maturity.

(k) No Extended Notes. No Extended Notes are outstanding unless after giving effect to such new issuance of Secured Liquidity Notes, sufficient funds will be available to fully repay (x) all outstanding Extended Notes and (y) all Secured Liquidity Notes maturing on such date.

The Issuer hereby agrees that each issuance of Secured Liquidity Notes constitutes a representation and warranty by the Issuer that the conditions specified above are then satisfied and will be satisfied immediately after giving effect thereto.

Section 4.04 Conversion to Extended Notes. (a) Upon the failure of any Class of Secured Liquidity Notes to be fully paid on its Expected Maturity, without any notice or other further action by any Person, the Issuer shall be deemed to have advised the Clearing Agency that such Class of Secured Liquidity Notes has been converted, as of such Expected Maturity, to a Class of Extended Notes.

(b) Upon any such conversion with respect to any Class of Secured Liquidity Notes, the Collateral Agent shall notify the Depositary of such conversion to a Class of Extended Notes. The initial aggregate principal amount of each Class of Extended Notes deemed issued upon conversion of the related Class of Secured Liquidity Notes shall be equal to the aggregate face amount of such Class of Secured Liquidity Notes (or, in the case of Secured Liquidity Notes issued on an interest bearing basis, the aggregate principal and accrued interest of such Class of Secured Liquidity Notes). The Issuer shall provide written notice to the Rating Agencies, the SLN Placement Agents and each Swap Counterparty of any conversion of a Class of Secured Liquidity Notes to a Class of Extended Notes.

Section 4.05 Proceeds. The proceeds of Secured Liquidity Notes shall be used by the Issuer only to (i) acquire Mortgage Loans, (ii) pay matured and maturing Secured Liquidity Notes, including interest and/or discount thereon, (iii) pay outstanding Extended Notes, including interest thereon, in accordance with the terms of the Program Documents, and (iv) make payments in accordance with Sections 2.01 and 6.03 hereof.

Section 4.06 Calculation of Extended Note Interest. (a) For purposes of calculating the Extended Note Rate for each Class of Extended Notes, the Issuer hereby appoints the Collateral Agent as the Extended Note Calculation Agent. The Extended Note Calculation Agent may be removed by the Issuer at any time. If the Extended Note Calculation Agent is unable or unwilling to act as such or is removed by the Issuer, or if the Extended Note Calculation Agent fails to determine the Extended Note Rate for each Class of Extended Notes and the Aggregate Extended Note Monthly Interest for any Interest Period, the Issuer will promptly appoint as a replacement Extended Note Calculation Agent a leading bank which is engaged in transactions in Eurodollar deposits in the international Eurodollar market. The Extended Note Calculation Agent may not resign its duties without a successor having been duly appointed by the Issuer.

(b) LIBOR shall be determined by the Extended Note Calculation Agent in accordance with the following provisions:

(i) On the second Business Day prior to the commencement of the applicable Interest Period (or, in the case of the initial Interest Period, on the related Expected Maturity) (each such day, a “LIBOR Determination Date”), “LIBOR” shall equal the rate, as obtained by the Extended Note Calculation Agent, for one-month Eurodollar deposits which appears on Telerate Page 3750 (as defined in the publication “2000 ISDA Definitions” published by the International Swaps and Derivatives Association, Inc.) or such other page as may replace Telerate Page 3750, as it relates to U.S. dollars, as of 11:00 a.m. (London time) on such LIBOR Determination Date.

(ii) If, on any LIBOR Determination Date, such rate does not appear on Telerate Page 3750, the Extended Note Calculation Agent shall determine the arithmetic mean of the offered quotations of the Reference Banks to leading banks in the London interbank market for one-month Eurodollar deposits in an amount determined by the Extended Note Calculation Agent by reference to requests for quotations as of approximately 11:00 a.m. (London time) on the LIBOR Determination Date made by the Extended Note Calculation Agent to the Reference Banks. If, on any LIBOR Determination Date, at least two of the Reference Banks provide such quotations, LIBOR shall equal the arithmetic mean of such quotations. If, on any LIBOR Determination Date, only one or none of the Reference Banks provide such quotations, LIBOR shall be deemed to be the arithmetic mean of the offered quotations that leading banks in The City of New York selected by the Extended Note Calculation Agent are quoting on the relevant LIBOR Determination Date for one-month Eurodollar deposits in an amount determined by the Extended Note Calculation Agent by reference to the principal London offices of leading banks in the London interbank market; provided, however, that if the Extended Note Calculation Agent is required but is unable to determine a rate in accordance with at least one of the procedures provided above, “LIBOR” shall be LIBOR as determined on the previous LIBOR Determination Date. As used herein, “Reference Banks” means four major banks in the London interbank market selected by the Extended Note Calculation Agent.

As soon as possible after 11:00 a.m. (London time) on each LIBOR Determination Date, but in no event later than 11:00 a.m. (London time) on the Business Day immediately following each LIBOR Determination Date, the Extended Note Calculation Agent will cause the Extended Note Rate for the next Interest Period and the applicable Aggregate Extended Note Monthly Interest for such Interest Period payable in respect of the Extended Notes on the related Distribution Date to be given to the Issuer, the Depositary and any paying agent. The Extended Note Calculation Agent will also specify to the Issuer and the Depositary the quotations upon which the Extended Note Rate is based, and in any event the Extended Note Calculation Agent shall notify the Issuer before 5:00 p.m. (London time) on each LIBOR Determination Date that either: (i) it has determined or is in the process of determining the Extended Note Rate and the applicable Aggregate Extended Note Monthly Interest or (ii) it has not determined and is not in the process of determining the Extended Note Rate and the applicable Aggregate Extended Note Monthly Interest, together with its reasons therefor. For the sole purpose of calculating the Extended Note Rate, “Business Day” shall be any day on which dealings in deposits in U.S. dollars are transacted in the London interbank market.

Section 4.07 Payment of Extended Note Interest. (a) The discount representing interest on each Secured Liquidity Note will be payable pursuant to the terms of the Depositary Agreement on the related Expected Maturity or redemption date (if such Secured Liquidity Note is redeemed prior to such Expected Maturity in accordance with Section 7.02 hereof) with funds provided therefor pursuant to Section 6.03 of this Security Agreement; provided, however, that if such funds provided under this Security Agreement are insufficient to repay the face amount of all outstanding Secured Liquidity Notes having the same Expected Maturity on such Expected Maturity, then no interest will be paid in respect of such Classes on such date and such Classes shall thereupon be converted into Extended Notes pursuant to Section 4.04 hereof. With respect to the payment of interest on the Extended Notes, on each Distribution Date commencing with the second Distribution Date following such Expected Maturity, the Collateral Agent, in accordance with a certificate or other statement based upon the Servicer Report, shall withdraw the amounts required to be withdrawn from the Collateral Account and deposit such amounts in the Extended Notes Distribution Account, maintained with the Depositary, pursuant to this Section 4.07 in respect of all funds available for such Interest Period and allocated to the holders of the Extended Notes pursuant to Section 6.03(b) of this Security Agreement.

On each Determination Date, the Collateral Agent shall notify the Depositary and the Servicer in writing as to the amount to be withdrawn and paid pursuant to this Section 4.07 from the Collateral Account to the extent funds are anticipated to be available and allocable to the Extended Notes in respect of (x) first, an amount equal to Extended Note Monthly Interest for the related Interest Period and (y) second, an amount equal to the amount of any unpaid Extended Note Shortfall as of the preceding Distribution Date (together with any accrued interest on such Extended Note Shortfall). If the amounts described in this Section 4.07 are not sufficient to pay Extended Note Monthly Interest on any Distribution Date, payments of interest to the holders of Extended Notes will be reduced on a pro rata basis by the amount of such deficiency. The aggregate amount, if any, of such deficiency on any Distribution Date shall be referred to as the “Extended Note Shortfall.” Interest shall accrue on the Extended Note Shortfall at the Extended Note Rate. On each Distribution Date, the Collateral Agent shall withdraw the amounts described in this Section 4.07 from the Collateral Account and deposit such amounts in the Extended Notes Distribution Account.

Section 4.08 Payment of Senior Note Principal. The principal in respect of each Secured Liquidity Note will be payable pursuant to the terms of the Depositary Agreement on the related Expected Maturity or redemption date (if such Secured Liquidity Note is redeemed prior to such Expected Maturity in accordance with Section 7.02 hereof) with funds provided therefor pursuant to Section 6.03 of this Security Agreement; provided, however, that if such funds provided under this Security Agreement are insufficient to repay the face amount of all outstanding Secured Liquidity Notes having the same Expected Maturity on such Expected Maturity, then no principal will be paid in respect of such Classes on such date and such Classes shall thereupon be converted into Extended Notes pursuant to Section 4.04 hereof; provided, further, the principal in respect of the Secured Liquidity Notes may only be paid if no Extended Notes would be outstanding after giving effect to all payments made on such date. The principal in respect of any Extended Note (x) upon at least five (5) Business Days’ notice to DTC, the Depositary and the Collateral Agent, may be paid in whole, but not in part, on any day at the option of the Issuer to the extent of available principal payments on the Mortgage Loans, sale proceeds in respect of the Mortgage Loans, payments to the Issuer under the Interest Rate Swaps in respect of the Mortgage Loans and proceeds from the issuance of new Classes of Secured Liquidity Notes, provided that after giving effect to all payments made on such date, no outstanding Class of Extended Notes has the same or an earlier Final Maturity and (y) unless earlier redeemed, will be repaid in full on the Final Maturity of such Extended Note. With respect to each Class of Extended Notes, on the applicable principal payment date, in accordance with a certificate or other statement based upon the related report generated by the Servicer, the Collateral Agent shall withdraw the amount set forth therein as principal payable in respect of the applicable Class of Extended Notes from the Collateral Account and deposit such amount in the Extended Notes Distribution Account maintained with the Depositary, to be paid to the holders of the applicable Class of Extended Notes on such date. On the Determination Date prior to the related Final Maturity, the Collateral Agent shall notify the Servicer in writing as to the amount of remaining principal outstanding in respect of the applicable Class of Extended Notes. On each Final Maturity, in accordance with the related Servicer Report, the Collateral Agent shall withdraw such amount of remaining principal in respect of the applicable Class of Extended Notes from the Collateral Account and deposit such amount in the Extended Notes Distribution Account maintained with the Depositary, to be paid to the holders of the applicable Class of Extended Notes.

Section 4.09 Series Program Size of the Secured Liquidity Notes and Extended Notes. The “Series Program Size” with respect to the Secured Liquidity Notes and Extended Notes, collectively, as of the date hereof, shall be $1,030,000,000 (as such Series Program Size may be increased or decreased following the Effective Date in accordance with the Program Documents). The Issuer may, with the consent of each Swap Counterparty and the Collateral Agent, increase or decrease the Series Program Size; provided, however, that no increase or decrease in the Series Program Size may be made unless (i) after giving effect to such increase or decrease, the aggregate maximum notional amount of the Interest Rate Swaps shall be at least equal to the Facility Size and (ii) in the case of an increase, the Issuer shall obtain written confirmation from each of the Rating Agencies that such increase shall not cause the reduction or withdrawal of any rating on any Series of Senior Notes or Subordinated Notes.

ARTICLE V

ASSIGNMENT

Section 5.01 Assignment. In order to secure and to provide for the repayment of the Obligations, each of the Issuer and the Owner Trustee hereby assigns, conveys, transfers, delivers and sets over unto the Collateral Agent for the benefit of the Secured Parties and hereby grants to the Collateral Agent for the benefit of each Secured Party a security interest in, control over, and lien on all of the following, including, without limitation, all accounts, money, chattel paper, securities, investment property, instruments, documents, deposit accounts, certificates of deposit, letters of credit, letter of credit rights, advices of credit, banker’s acceptances, uncertificated securities, securities accounts, security entitlements, investment property, general intangibles, contract rights, goods and other property consisting of, arising from or relating to the following whether currently existing or hereafter acquired (all of the following indicated in (i) through (v) being referred to as the “Assigned Collateral”):

(i) all right, title and interest of the Issuer in, to and under the Mortgage Loans (including the contents of the Mortgage Loan Files) purchased by the Issuer from time to time pursuant to the Mortgage Loan Purchase and Servicing Agreement, including without limitation, all monies due and to become due to the Issuer under or in connection with such Mortgage Loans, all dividends, earnings, income, rents, issues, profits or other distributions of cash or other property in respect of such Mortgage Loans and all rights, remedies, powers, privileges and claims of the Issuer, as holder of such Mortgage Loans, against (i) the Sellers under or with respect to the Mortgage Loan Purchase and Servicing Agreement (whether arising pursuant to the terms of the Mortgage Loan Purchase and Servicing Agreement or otherwise available to the Issuer at law or in equity), and (ii) the Servicer under or with respect to the Mortgage Loan Purchase and Servicing Agreement (whether arising pursuant to the terms of the Mortgage Loan Purchase and Servicing Agreement or otherwise available to the Issuer at law or in equity), including, without limitation, the rights of the Issuer to enforce the Mortgage Loan Purchase and Servicing Agreement and the respective obligations of the Sellers, the Servicer and the Performance Guarantor thereunder and to give or withhold any and all consents, requests, notices, directions, approvals, extensions or waivers under or with respect to the Mortgage Loan Purchase and Servicing Agreement or the respective obligations of the Sellers, the Servicer or the Performance Guarantor thereunder to the same extent as the Issuer could but for the assignment and security interest granted to the Collateral Agent in this Section 5.01;

(ii) all right, title and interest of the Issuer in, to and under the Program Documents, including, without limitation, all monies due and to become due to the Issuer thereunder or in connection therewith, whether payable as fees, expenses, costs, indemnities, insurance recoveries, damages for the breach of any of the Program Documents or otherwise, and all rights, remedies, powers, privileges and claims of the Issuer under or with respect to the Program Documents (whether arising pursuant to the terms of the Program Documents or otherwise available to the Issuer at law or in equity), including, without limitation, the rights of the Issuer to enforce the Program Documents and to give or withhold any and all consents, requests, notices, directions, approvals, extensions or waivers under or with respect to the Program Documents to the same extent as the Issuer could but for the assignment and security interest granted to the Collateral Agent in this Section 5.01;

(iii) all right, title and interest of the Issuer in and to (x) monies on deposit in, or securities, financial assets, investment property or other assets credited to, (A) the Reserve Fund, (B) the Allocated Expenses Account, (C) any account maintained pursuant to the Depositary Agreement and (D) the Collection Account (other than interest earned on amounts deposited therein) and any other accounts maintained pursuant to the Mortgage Loan Purchase and Servicing Agreement (excluding any escrow accounts maintained for obligors under the Mortgage Loans), the Indenture, or this Security Agreement, (y) all Eligible Investments held by the Issuer and (z) all cash held by the Issuer;

(iv) all additional property that may from time to time hereafter be subjected to the grant and pledge hereof by the Issuer or by anyone on its behalf, including the deposit with the Collateral Agent of additional monies by the Issuer; and

(v) all proceeds of any of the foregoing.

Notwithstanding the assignment and security interest so granted to the Collateral Agent, the Issuer shall nevertheless be permitted, subject to the provisions of Sections 5.03 and 5.04 and of Article VII hereof, to give all consents, requests, notices, directions, approvals, extensions or waivers, if any, which are required to be given by the Issuer by the specific terms of the Mortgage Loan Purchase and Servicing Agreement and the Program Documents and the assignment and security interest so granted to the Collateral Agent shall not relieve the Issuer from the performance of any term, covenant, condition or agreement on the Issuer’s part to be performed or observed under or in connection with the Program Documents, or from any liability to the Sellers or the Servicer, or impose any obligation on the Collateral Agent or the Secured Parties to perform or observe any such term, covenant, condition or agreement on the Issuer’s part to be so performed or observed or impose any liability on the Collateral Agent or the Secured Parties for any act or omission on the part of the Issuer relative thereto or from any breach of any representation or warranty on the part of the Issuer contained in the Program Documents, or made in connection therewith.

Section 5.02 Application of Assigned Collateral. The Issuer hereby acknowledges and agrees that, until this Security Agreement is terminated, all monies and other cash proceeds due and to become due to the Issuer under or in connection with the Assigned Collateral shall be paid directly to the Collateral Agent for deposit into the Collateral Account and that the Issuer agrees if any such monies or other cash proceeds shall be received by the Issuer, such monies and other cash proceeds will not be commingled by the Issuer with any of its other funds or property, but will be held separate and apart therefrom and shall be held in trust by the Issuer for, and promptly paid over to, the Collateral Agent. Unless and until an Event of Default shall have occurred and be continuing, and provided the Collateral Account or any funds on deposit in, or otherwise to the credit of, the Collateral Account are not then subject to any writ, order, judgment, warrant of attachment, execution or similar process, all monies and other cash proceeds received by the Collateral Agent pursuant to this Article shall be deposited in the Collateral Account for application as provided in Section 6.03 hereof. All monies and other cash proceeds held or deposited in the Collateral Account after the occurrence and during the continuance of an Event of Default and all monies and other cash proceeds received by the Collateral Agent pursuant to this Article V while the Collateral Account or any funds on deposit in, or otherwise to the credit of, the Collateral Account are subject to any writ, order, judgment, warrant of attachment, execution or similar process, shall be applied by the Collateral Agent to the payment or repayment in full of all outstanding Obligations, whether or not then due, in the order of priority specified in Section 2.01 hereof; provided, however, that any monies or other cash proceeds remaining after the payment or repayment in full of all outstanding Obligations shall be paid to the Issuer.

For purposes of determining the application to be made of such monies and other cash proceeds to the Servicer pursuant to clause Ninth of Section 2.01(b) hereof, the Collateral Agent may rely exclusively upon a certificate or other statement (a copy of which shall also be provided to the Issuer) of the Servicer as to the amount then owing to the Servicer. For purposes of determining the application to be made of such monies and other cash proceeds to any holder of any Secured Liquidity Notes pursuant to clause Third of Section 2.01(b) hereof, the Collateral Agent may rely exclusively upon a certificate or other statement (a copy of which shall also be provided to the Issuer) of the Depositary as to the amount then owing to such holder. For purposes of determining the application to be made of such monies and other cash proceeds to any holder of any Extended Notes pursuant to clause Third of Section 2.01(b) hereof, the Collateral Agent may rely exclusively on a certificate or other statement (a copy of which shall also be provided to the Issuer) of the Depositary as to the amount then owing to such holder. For purposes of determining the application to be made of such monies and other cash proceeds to the Subordinated Noteholders pursuant to clause Sixth of Section 2.01(b) hereof, the Collateral Agent may rely exclusively upon a certificate or other statement (a copy of which shall also be provided to the Issuer) of the Indenture Trustee as to the amount then owing to such holder. For purposes of determining the application to be made of such monies and other cash proceeds to each Swap Counterparty pursuant to clauses Second, Fifth, Seventh and Tenth of Section 2.01(b) hereof, the Collateral Agent may rely exclusively upon a certificate or other statement (a copy of which shall also be provided to the Issuer) of the Servicer, acting as Calculation Agent under the related Interest Rate Swap, as to the amount then owing to each Swap Counterparty. Any application to be made by the Collateral Agent of such monies and other cash proceeds pursuant to clauses First, Third, Fourth or Eighth of Section 2.01(b) hereof may be made upon the Collateral Agent’s, the Depositary’s, the Indenture Trustee’s or the Custodian’s certificate or statement delivered to the Issuer setting forth in reasonable detail the nature of the Collateral Agent’s, the Depositary’s, the Indenture Trustee’s or the Custodian’s claim and the amount owing to the Collateral Agent, the Indenture Trustee, the Depositary’s or the Custodian on account thereof.

The Collateral Agent shall not be liable for any application of the monies and other cash proceeds received by the Collateral Agent pursuant to this Article V made in accordance with any certificate or direction delivered pursuant to this Section 5.02; provided, however, that no application of the monies and other cash proceeds received by the Collateral Agent pursuant to this Article V in accordance with any certificate delivered pursuant to this Section 5.02 shall be deemed to restrict or limit the right of the Issuer to contest with the purported obligee its respective liability in respect of the amount set forth in such certificate.

Section 5.03 Performance of Agreements. Promptly, whether or not following a request from the Collateral Agent to do so, and in any event at the Issuer’s own expense, the Issuer agrees (a) to take all such lawful action as the Collateral Agent may reasonably request to compel or secure the performance and observance by (i) the Sellers, the Servicer or the Performance Guarantor of their respective obligations to the Issuer under or in connection with the Mortgage Loan Purchase and Servicing Agreement in accordance with the terms thereof, and (ii) any party to any Program Document in accordance with the terms thereof, and (b) to exercise any and all rights, remedies, powers and privileges lawfully available to the Issuer (i) under or in connection with the Mortgage Loan Purchase and Servicing Agreement and (ii) under or in connection with any Program Document, in every case to the extent and in the manner directed by the Collateral Agent, including, without limitation, the transmission of notices of default on the part of the Sellers or the Servicer or any party to any Program Document and the institution of legal or administrative actions or proceedings to compel or secure performance by the Sellers, the Servicer or the Performance Guarantor or any party to any Program Document of their respective obligations. Subject to Section 7.02, the Issuer further agrees that it will not, without the prior written consent of the Collateral Agent (on behalf of the holders of the Senior Notes) and each Swap Counterparty, (a) exercise any right, remedy, power or privilege available to it under or in connection with the Mortgage Loan Purchase and Servicing Agreement, (b) take any action to compel or secure performance or observance by (i) the Sellers, the Servicer or the Performance Guarantor of its obligations to the Issuer under or in connection with the Mortgage Loan Purchase and Servicing Agreement or (ii) any party to any Program Document, or (c) give any consent, request, notice, direction, approval, extension or waiver to the Sellers, the Servicer or the Performance Guarantor under the Mortgage Loan Purchase and Servicing Agreement not required to be exercised, taken, observed or given by the Issuer pursuant to the terms of the Mortgage Loan Purchase and Servicing Agreement.

Section 5.04 Amendments; Waivers. Without intending in any manner to derogate from the absolute nature of the assignment granted to the Collateral Agent by this Security Agreement or the rights of the Collateral Agent hereunder, the Issuer agrees that it will not, without Rating Agency Confirmation and the prior written consent of the Collateral Agent and each Swap Counterparty (such consent not to be unreasonably withheld), agree to amend, modify, supplement, terminate, waive or surrender (x) the terms of the Custodial Agreement or (y) the definition of “Assigned Collateral”, or assign its rights under any of the Program Documents or agree to any amendment, modification, supplement, termination, except as provided in Section 8.02 or 10.01 hereof, or surrender which would result in the release of any security interest granted in the Assigned Collateral, the Collateral Account or the Deposited Funds. If any such amendment, modification, supplement or waiver, as applicable, shall be so consented to by the required consenting parties, the Issuer agrees, promptly following a request by the required consenting parties to do so, to prepare, execute and deliver, in its own name and at its own expense, such agreements, instruments, consents and other documents as the required consenting parties may deem necessary or appropriate in the circumstances. Upon provision of such direction by the required consenting parties, the Collateral Agent shall also execute and deliver any such agreements, instruments, consents and other documents. The Issuer shall give prior notice of any amendment to each of the Rating Agencies.

Section 5.05 Location of Records. The Issuer hereby covenants and agrees that its chief place of business and chief executive office, and the place where its records pertaining to the Assigned Collateral will be kept, shall at all times be located in the offices of St. Andrew Funding Trust, whose address is: 18400 Von Karman, Suite 1000, Irvine, CA 92612-1514.

Section 5.06 Notice of Default under Program Documents. The Issuer agrees, at its own expense, to give the Collateral Agent, the Depositary, the SLN Placement Agents, each Swap Counterparty and the Rating Agencies as soon as practicable (and in no event more than two Business Days thereafter) written notice of each default coming to the Issuer’s attention on the part of any Person, and of such Person’s obligations under or in respect of the Program Documents.

Section 5.07 Custody of Program Documents. Simultaneously with the execution and delivery by the Issuer of this Security Agreement, the Issuer is delivering to the Collateral Agent a counterpart of each Program Document currently in effect, which at all times shall be retained in the custody and possession of the Collateral Agent until the termination of this Security Agreement.

Section 5.08 Delivery of Assigned Collateral Including Eligible Investments. All certificates representing or evidencing the Assigned Collateral (other than Mortgage Loans), including, without limitation, Eligible Investments, from time to time shall be delivered to and held by or on behalf of the Collateral Agent pursuant hereto and shall, in the case of Assigned Collateral (other than Mortgage Loans), be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to the Collateral Agent. The Collateral Agent may appoint agents for the purpose of holding Eligible Investments.

Section 5.09 Deliveries of Mortgage Loans. Each Mortgage Note, Mortgage and Assignment of Mortgage in respect of each Mortgage Loan purchased by the Issuer from time to time shall be delivered to and held by the Custodian in accordance with Sections 2 and 4 of the Custodial Agreement.

Section 5.10 No Liability. Neither the Collateral Agent, nor any director, officer, employee, agent or stockholder of the Collateral Agent, shall be liable for any action taken or omitted to be taken by it or them relative to any of the Collateral, except for its or their own gross negligence, fraud, bad faith or willful misconduct, and the Collateral Agent shall not be liable for any action or omission to act with respect to the Collateral (or any part thereof) on the part of any agent, nominee, custodian or attorney of the Collateral Agent appointed and selected by the Collateral Agent with reasonable care.

ARTICLE VI

COLLATERAL ACCOUNT;

RESERVE FUND; PAYMENT OF ALLOCATED EXPENSES

Section 6.01 Establishment of Collateral Account. For purposes of this Security Agreement and the Depositary Agreement, the Collateral Agent shall at all times during the term of this Security Agreement maintain in the State of New York, a special purpose, segregated, non-interest bearing trust account in the name of and under the control of the Collateral Agent on behalf of the Secured Parties as a general collateral account (said account being herein called the “Collateral Account” and being identified as Account No. [     ]). The operation of the Collateral Account shall be governed by this Article VI.

It is understood and agreed by the Issuer, the Collateral Agent and the Depositary that there shall be deposited in the Collateral Account the following monies, cash and proceeds: (a) the net proceeds from the sale of Secured Liquidity Notes payable to the Issuer pursuant to the Depositary Agreement, to the extent not required to repay advances made by the Depositary in accordance with the Depositary Agreement, maturing Secured Liquidity Notes or outstanding Extended Notes on the date of issuance of such Secured Liquidity Notes, whether or not presented to the Depositary for payment, and to the extent not maintained in the Secured Liquidity Note Account pursuant to the terms of the Depositary Agreement, (b) all monies received by the Collateral Agent pursuant to this Security Agreement and required by the terms hereof to be deposited by or on behalf of the Issuer in the Collateral Account (including, without limitation, interest on the Eligible Investments), (c) all monies received by or on behalf of the Issuer under the Mortgage Loan Purchase and Servicing Agreement, (d) all monies received by or on behalf of the Issuer as proceeds from the sale of Mortgage Loans and payments of the Repurchase Price of any Mortgage Loan, and all Principal Prepayments in full, (e) all monies required to be transferred to the Collateral Account from the Collection Account, including principal and interest payments on Mortgage Loans, (f) all monies received by or on behalf of the Issuer under the Interest Rate Swaps, (g) all monies received by or on behalf of the Issuer from the sale of Subordinated Notes, and (h) any and all monies at any time and from time to time received by or on behalf of the Issuer, and required by the terms of this Security Agreement, or any related document to be deposited in the Collateral Account.

The Collateral Agent shall have complete dominion and control over the Collateral Account, and the Issuer hereby agrees that only the Collateral Agent may make withdrawals from the Collateral Account; provided, however, that the Issuer and the Depositary may request withdrawals from the Collateral Account in accordance with the terms of Section 6.03 hereof.

Except for the Collateral Account, the Reserve Fund, the Collection Account, the Allocated Expenses Account, the Secured Liquidity Note Account, the Extended Notes Distribution Account and the accounts established pursuant to the Indenture, the Issuer agrees that it will not open or maintain a bank account with any Person. The Collateral Agent shall give the Issuer, each Swap Counterparty, the Indenture Trustee, and the Depositary immediate notice if the Collateral Account, the Reserve Fund, the Collection Account, the Allocated Expenses Account, the Secured Liquidity Note Account, the Extended Notes Distribution Account and any account established pursuant to the Indenture, or any Deposited Funds become subject to any writ, order, judgment, warrant of attachment, execution or similar process to which it has notice. The Collateral Agent shall have no right of set-off against amounts on deposit in the Collateral Account, the Reserve Fund, any account established pursuant to the Indenture, or the Allocated Expenses Account, and shall have no right to impose a lien on any such account other than on behalf of the Secured Parties.

Section 6.02 Assignment of Collateral Account. In order to secure and to provide for the repayment of the Obligations, the Issuer hereby assigns, pledges, transfers and sets over unto the Collateral Agent for the benefit of the Secured Parties, and hereby grants the Collateral Agent for the benefit of the Secured Parties a security interest in the Collateral Account, and all checks, instruments, notes, documents, securities, securities entitlements, other investment property or funds at any time and from time to time on deposit in or otherwise to the credit of such account or otherwise held by the Collateral Agent and all dividends, earnings, income, rents, issues, profits or other distributions of cash or other property in respect of such checks, instruments, documents, notes, securities, security entitlements, other investment property or funds and all proceeds thereof (all such checks, instruments, documents, notes, securities, security entitlements, other investment property, funds and dividends, earnings, income, rents, issues, profits or other distributions of cash or other property in respect of such checks, instruments, documents, notes, securities, security entitlements, other investment property or funds and all proceeds being herein called the “Deposited Funds”) and all claims of the Issuer in and to the Deposited Funds. Throughout the term of this Security Agreement, the Collateral Agent shall be a pledgee in possession and control of the Deposited Funds and shall have the sole and exclusive right to endorse any check or any other instrument or security presented for deposit in the Collateral Account and to withdraw or order a transfer of Deposited Funds from the Collateral Account, subject to the provisions of Section 6.03, and the Issuer hereby appoints the Collateral Agent the true and lawful attorney of the Issuer, with full power of substitution, for the purpose of such endorsement or making any such withdrawal or ordering any such transfer of Deposited Funds from such account, which appointment is coupled with an interest and is irrevocable.

Section 6.03 Withdrawals and Transfers from the Collateral Account, Reserve Fund. (a) It is understood that so long as no Event of Default shall have occurred and then be continuing, the Issuer (by an Issuer Agent) with respect to each clause below, and the Depositary (by a Designated Representative) with respect to clauses (ii) and (iii) below, shall