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Deutsche Alt-A Securities Inc, et al. – ‘424B5’ on 6/30/06

On:  Friday, 6/30/06, at 5:20pm ET   ·   Accession #:  1162318-6-893   ·   File #s:  333-131600, -04

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 6/30/06  Deutsche Alt-A Securities Inc     424B5                  1:2.0M                                   Nelson McKee/FA
          Deutsche Alt-B Securities Mortgage Loan Trust, Series 2006-AB3

Document/Exhibit                   Description                      Pages   Size 

 1: 424B5       Prossup                                             HTML   1.58M 

Prospectus Supplement dated June 29, 2006 (to Prospectus dated May 19, 2006)

$431,983,000 (Approximate)

Mortgage Pass-Through Certificates

Deutsche Alt-B Securities Mortgage Loan Trust, Series 2006-AB3

Issuing Entity

DB Structured Products, Inc.

Sponsor

Deutsche Alt-A Securities, Inc.

Depositor

Wells Fargo Bank, National Association

Master Servicer and Securities Administrator

The issuing entity will hold one pool of conventional, fixed-rate first lien residential mortgage loans and will issue the following classes of certificates that are offered under this prospectus supplement:

Credit enhancement for all of these certificates will be provided by excess interest, overcollateralization and subordination.  The Class A-4, Class A-5A and Class A-6 Certificates will have the benefit of a financial guaranty insurance policy issued by Financial Security Assurance Inc.

You should consider carefully the risk factors beginning on page S-12 in this prospectus supplement.

The certificates will represent an interest in the issuing entity only and will not represent obligations of the depositor, the sponsor or any of their affiliates.  Except for the financial guaranty insurance policy issued for the benefit of the Class A-4, Class A-5A and Class A-6 Certificates, no governmental agency or instrumentality or any other person will insure the certificates or the collateral securing the certificates.

You should consult with your own advisors to determine if the offered certificates are appropriate investments for you and to determine the applicable legal, tax, regulatory and accounting treatment of the offered certificates.

The certificates offered by this prospectus supplement will be purchased by Deutsche Bank Securities Inc. from the Depositor, and are being offered by Deutsche Bank Securities Inc. from time to time for sale to the public in negotiated transactions or otherwise at varying prices to be determined at the time of sale.  From the sale of the offered certificates, the Depositor will receive approximately 99.82% of their initial certificate principal balance, plus any accrued interest, less expenses.  

Neither the SEC nor any state securities commission has approved the offered certificates or determined that this prospectus supplement or the prospectus is accurate or complete.  Any representation to the contrary is a criminal offense.

The Attorney General of the State of New York has not passed on or endorsed the merits of this offering.  Any representation to the contrary is unlawful.

______________________________

(1)

These amounts are approximate.  They are subject to an upward or downward adjustment of no more than 5%, depending on the total principal amount of the mortgage loans delivered at closing.  

(2)

The pass-through rate for each class of offered certificates will be a fixed rate subject to the applicable Net WAC Pass-Through Rate as described in this prospectus supplement under “Description of the Certificates—Glossary—Pass-Through Rate”.  In addition, the pass-through rate on the Class A-4, Class A-5A, Class A-5B, Class A-6, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9, Class M-10  and Class M-11 Certificates will increase by 0.50% per annum on the distribution date following the first optional termination date as described in this prospectus supplement under “Description of the Certificates—Glossary—Pass-Through Rate”.

Table of Contents

SUMMARY

S-1

RISK FACTORS

S-12

DESCRIPTION OF THE MORTGAGE POOL

S-18

THE ORIGINATORS

S-30

ISSUING ENTITY

S-41

THE DEPOSITOR

S-41

THE SPONSOR

S-42

STATIC POOL INFORMATION

S-42

DESCRIPTION OF THE CERTIFICATES

S-42

SERVICING

S-69

THE SECURITIES ADMINISTRATOR, THE MASTER SERVICER AND THE CUSTODIANS

S-76

THE TRUSTEE

S-80

THE CREDIT RISK MANAGER

S-82

POOLING AND SERVICING AGREEMENT

S-82

THE POLICY

S-87

THE INSURER

S-89

PREPAYMENT AND YIELD CONSIDERATIONS

S-91

FEDERAL INCOME TAX CONSEQUENCES

S-117

LEGAL INVESTMENT ASPECTS

S-118

ERISA CONSIDERATIONS

S-119

METHOD OF DISTRIBUTION

S-120

SECONDARY MARKET

S-120

EXPERTS

S-120

LEGAL MATTERS

S-121

CERTIFICATE RATINGS

S-121

ANNEX I

S-1

Important notice about information in this prospectus supplement and the accompanying prospectus.

You should rely only on the information contained in this document. We have not authorized anyone to provide you with different information.

We provide information to you about the offered certificates in two separate documents that progressively provide more detail:

·

the accompanying prospectus, which provides general information, some of which may not apply to this series of certificates; and

·

this prospectus supplement, which describes the specific terms of this series of certificates.

If the information regarding the offered certificates is more specific in this prospectus supplement than in the prospectus, then you should rely on the information in this prospectus supplement.

Deutsche Alt-A Securities, Inc.’s principal offices are located at 60 Wall Street, New York, New York 10005, and its telephone number is 212-250-2500.

European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), the Underwriter has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”) it has not made and will not make an offer of certificates to the public in that Relevant Member State prior to the publication of a prospectus in relation to the certificates which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of certificates to the public in that Relevant Member State at any time:

(a)

to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

(b)

to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; or

(c)

in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of certificates to the public” in relation to any certificates in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the certificates to be offered so as to enable an investor to decide to purchase or subscribe the certificates, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

United Kingdom

The Underwriter has represented and agreed that:

(a)

it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act) received by it in connection with the issue or sale of the certificates  in circumstances in which Section 21(1) of the Financial Services and Markets Act does not apply to the Issuer; and

(b)

it has complied and will comply with all applicable provisions of the Financial Services and Markets Act with respect to anything done by it in relation to the certificates in, from or otherwise involving the United Kingdom.

SUMMARY

The following summary is a very broad overview of the certificates offered by this prospectus supplement and the accompanying prospectus and does not contain all of the information that you should consider in making your investment decision.  To understand the terms of the offered certificates, carefully read this entire prospectus supplement and the entire accompanying prospectus. Capitalized terms used in this summary may be defined elsewhere in this prospectus supplement.  

Transaction Parties

Issuing Entity

Deutsche Alt-B Securities Mortgage Loan Trust, Series 2006-AB3, a New York common law trust.  The issuing entity will be established pursuant to a pooling and servicing agreement dated as of the Cut-Off Date among the Depositor, the Master Servicer, the Securities Administrator and the Trustee.  The issuing entity is also sometimes referred to herein as the “trust” or the “trust fund.”

Sponsor

DB Structured Products, Inc., a Delaware corporation.

Depositor

Deutsche Alt-A Securities, Inc., a Delaware corporation. See “The Depositor” in the prospectus.

Originators

American Home Mortgage Corp. (referred to in this prospectus supplement as “American Home”) and Impac Funding Corporation (referred to in this prospectus supplement as “Impac”), with respect to approximately 59.09% and 36.80%, respectively, of the Mortgage Loans by aggregate principal balance as of the Cut-Off Date.  The remainder of the Mortgage Loans were originated by various originators, each of which have originated less than 10% of the Mortgage Loans by aggregate principal balance as of the Cut-Off Date. See “Description of the Mortgage Pool—The Originators” in this prospectus supplement.

Master Servicer

Wells Fargo Bank, National Association, a national banking association.  See “The Securities Administrator, the Master Servicer and the Custodians” in this prospectus supplement.  

Servicers

American Home Mortgage Servicing, Inc. (referred to in this prospectus supplement as “American Home Servicing”) and Countrywide Home Loans Servicing LP (referred to in this prospectus supplement as “Countrywide Servicing”), with respect to approximately 59.09% and 36.80%, respectively, of the Mortgage Loans by aggregate principal balance as of the Cut-Off Date.  The remainder of the Mortgage Loans are serviced by various servicers, each of which will service less than 10% of the Mortgage Loans by aggregate principal balance as of the Cut-Off Date.  See “Servicing” in this prospectus supplement for information concerning the servicers.

Trustee

HSBC Bank USA, National Association, a national banking association. See “The Trustee” in this prospectus supplement.

Securities Administrator

Wells Fargo Bank, National Association. See “The Securities Administrator, the Master Servicer and the Custodian” in this prospectus supplement.  

Custodians

Wells Fargo Bank, National Association and Deutsche Bank National Trust Company. See “The Securities Administrator, The Master Servicer and The Custodian” in this prospectus supplement.

Credit Risk Manager

Clayton Fixed Income Services Inc. (formerly known as The Murrayhill Company).  See “The Credit Risk Manager” in this prospectus supplement.

Insurer

Financial Security Assurance Inc.

THE MORTGAGE  LOANS

Cut-Off Date

The close of business on June 1, 2006.

Closing Date

On or about June 30, 2006.

The Mortgage Pool.  On the Closing Date, the Depositor will deposit a pool of mortgage loans into the trust. The mortgage pool will consist of conventional fixed-rate mortgage loans with original terms to maturity of not more than thirty (30) years.  On the Closing Date, the trust will contain 1,938 conventional, one-  to four-family, first lien fixed-rate mortgage loans on residential real properties described in this prospectus supplement (the “Initial Mortgage Loans”). During the sixty day period from the Closing Date up to and including August 29, 2006 (the “Pre-Funding Period”), the trust will purchase, from amounts on deposit in the pre-funding account as described in this prospectus supplement, 125 additional conventional, one- to four-family, first lien fixed-rate mortgage loans on residential real properties, referred to herein as subsequent mortgage loans, to be included in the mortgage pool. The Initial Mortgage Loans and the subsequent mortgage loans to be included in the trust are collectively referred to in this prospectus supplement as, the “Mortgage Loans”.

Because some of the Mortgage Loans will not be acquired by the trust fund until after the Closing Date, there may not be sufficient interest collections from Mortgage Loans to pay all the interest due on the certificates  during the Pre-Funding Period.

References to percentages of the Mortgage Loans under this section are calculated based on the aggregate principal balance of the Mortgage Loans as of the Cut-Off Date (including the subsequent mortgage loans that the Depositor expects will be purchased by the trust during the Pre-Funding Period).

On the Closing Date, the Depositor will pay to the Securities Administrator, on behalf of the trust, an amount equal to approximately $18,193,276, which is referred to herein as a pre-funded amount.  The pre-funded amount will be held by the Securities Administrator in an account referred to herein as the pre-funding account. During the Pre-Funding Period, the Depositor may sell and the Trustee will be obligated to purchase, on behalf of the trust, from funds on deposit in the pre-funding account, subsequent mortgage loans to be included in the mortgage pool, provided that such subsequent mortgage loans satisfy the requirements described under “The Mortgage Pool—Conveyance of Subsequent Mortgage Loans and the Pre-Funding Account” in this prospectus supplement.  The amount on deposit in the pre-funding account will be reduced by the amount thereof used to purchase such subsequent mortgage loans during the Pre-Funding Period.  Any amounts remaining in the pre-funding account after August 29, 2006, will be distributed to the holders of the  certificates entitled to distributions of principal in accordance with the priorities set forth herein, as a principal prepayment on the September 2006 Distribution Date.

Required Repurchases or Substitutions of Mortgage Loans.  The Trustee will acknowledge the sale, transfer and assignment of the trust fund to it by the Depositor and receipt of, subject to further review and the exceptions, the Mortgage Loans.  If the Trustee obtains actual knowledge that any Mortgage Loan is defective on its face due to a breach of the representations and warranties with respect to that Mortgage Loan made in the transaction agreements, the Trustee will be required to promptly notify the Sponsor of such defect. The Sponsor will be required to correct or cure any such defect within 90 days from the date the Sponsor has knowledge of such defect or receives notice from the Trustee of the defect and if the Sponsor fails to correct or cure such defect within such period and such defect materially and adversely affects the interests of the Certificateholders or the Insurer in the related Mortgage Loan, the Sponsor will be required to, in accordance with the terms of the pooling and servicing agreement, within 90 days of the date of notice, repurchase such Mortgage Loan or provide the Trustee with a substitute Mortgage Loan (if within two years of the Closing Date); provided that, if such defect would cause the Mortgage Loan to be other than a “qualified mortgage” as defined in Section 860G(a)(3) of the Internal Revenue Code, any such cure or substitution must occur within 90 days from the date such breach was discovered.

Characteristics of the Mortgage Loans.  The Mortgage Loans, including the expected subsequent mortgage loans, will consist of conventional fixed-rate residential mortgage loans secured by first liens on one- to four-family residential properties.  As of the Cut-Off Date, the Mortgage Loans in the aggregate had the following approximate characteristics:

(1) Approximate

(2) Non-weighted average

(3) For Mortgage Loans that are scored

Description of the Certificates

The certificates will represent all of the beneficial ownership interest in the trust.  The Securities Administrator will execute and authenticate and the Trustee will deliver the following certificates under the pooling and servicing agreement in addition to the other classes of certificates not offered hereby.

(1)

These amounts are approximate.  They are subject to an upward or downward adjustment of no more than 5%, depending on the total principal amount of the Mortgage Loans delivered at closing.  

(2)

The pass-through rate for each class of offered certificates will be a fixed rate subject to the applicable Net WAC Pass-Through Rate as described in this prospectus supplement under “Description of the Certificates—Glossary—Pass-Through Rate”. In addition, the pass-through rate on the Class A-4, Class A-5A, Class A-5B, Class A-6, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9, Class M-10 and Class M-11 Certificates will increase by 0.50% per annum on the distribution date following the first optional termination date as described in this prospectus supplement under “Description of the Certificates—Glossary—Pass-Through Rate”.

(3)

See “Certificate Ratings” in this prospectus supplement.

(4)

The actual final payment to any class of certificates could be significantly earlier.

Offered Certificates

Only the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5A, Class A-5B, Class A-6 Class A-7, Class A-8, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9, Class M-10 and Class M-11 Certificates are offered by this prospectus supplement and are referred to herein as the “Offered Certificates”.

Sometimes we refer to the certificates by their principal or interest types.  Since some classes of certificates have the characteristics of more than one category, they appear more than once in the categories presented in the chart below.

Class CE Certificates

The Class CE Certificates are not offered by this prospectus supplement.  The Class CE Certificates will have an initial certificate principal balance of approximately $3,704,943, which is approximately equal to the initial overcollateralization required by the pooling and servicing agreement.  The Class CE Certificates initially evidence an interest of approximately 0.85% of the Cut-Off Date principal balance of the Mortgage Loans in the trust.

Class P Certificates

The Class P Certificates are not offered by this prospectus supplement.  The Class P Certificates will have an initial certificate principal balance of $100 and will not be entitled to distributions in respect of interest.  The Class P Certificates will be entitled to all prepayment charges received in respect of the Mortgage Loans.  

Residual Certificates

The Class R Certificates (the “Residual Certificates”) which are not offered by this prospectus supplement, represent the residual interests in the trust.

Distribution Dates

Distributions on the Offered Certificates will be made on the 25th day of each month, or, if that day is not a business day, on the next succeeding business day, beginning in July 2006.

Book-Entry Registration

The Offered Certificates will be available only in book-entry form through the facilities of The Depository Trust Company, except under limited circumstances.  See “Description of the Certificates—Book-Entry Registration” in this prospectus supplement.

Available Distribution Amount

The available distribution amount on any Distribution Date from which the premium and any reimbursement amounts will be paid to the Insurer and principal and interest distributions will be made to certificateholders, will generally include the following amounts, net of servicing fees, fees payable to the Credit Risk Manager, premiums payable in connection with certain lender paid primary mortgage insurance policies, if applicable, and certain other expenses of the trust:

·

amounts received on the Mortgage Loans during the related due period in respect of scheduled principal and interest payments (including advances received from the Servicers and/or Master Servicer);

·

full and partial prepayments received on the Mortgage Loans during the related prepayment period (including compensating interest received from the Servicers and/or Master Servicer);

·

any other unscheduled amounts received on the Mortgage Loans during the related prepayment period, including liquidation proceeds and proceeds received in connection with the repurchase of a Mortgage Loan; and

·

with respect to the Distribution Date immediately following the termination of the Pre-Funding Period, any remaining pre-funded amount, as described in this prospectus supplement.

Interest Distributions

On each Distribution Date, interest will be distributed to each class of interest bearing certificates in an amount equal to (i) interest accrued during the related interest accrual period on the related certificate principal balance for such certificates at the related pass-through rate provided for in this prospectus supplement, less any interest shortfalls allocated to such certificates as described below, plus (ii) interest accrued but unpaid on prior Distribution Dates, together with interest thereon at the applicable pass-through rate. Interest on the Offered Certificates will be calculated based on a 360-day year consisting of twelve 30-day months.

On each Distribution Date, interest accrued on each class of interest bearing certificates will be reduced by such class’ share of (i) prepayment interest shortfalls on the Mortgage Loans not covered by compensating interest paid by the Master Servicer or the Servicers, (ii) interest shortfalls on the Mortgage Loans as a result of the application of the Servicemembers Civil Relief Act, or similar state or local laws (the “Relief Act”) and (iii) such class’ share of certain realized losses on the Mortgage Loans attributable to interest.  With respect to the Class A-4, Class A-5A and Class A-6 Certificates, no prepayment interest shortfalls or interest shortfalls attributable to application of the Relief Act will be covered by the financial guaranty insurance policy.

The Senior Certificates will be entitled to payments of interest prior to the payment of interest to the Mezzanine Certificates.  Each class of Mezzanine Certificates with a higher payment priority will be entitled to payments of interest prior to the payment of interest to any class of Mezzanine Certificates with lower payment priority.

See “Description of the Certificates—Interest Distributions” in this prospectus supplement.

Principal Distributions

On each Distribution Date, the Securities Administrator will distribute the principal distribution amount for such Distribution Date to the Offered Certificates in the amounts and in the order of priority described in this prospectus supplement, until the certificate principal balance of each such certificate has been reduced to zero.  

See “Description of the Certificates—Principal Distributions” in this prospectus supplement.

Credit Enhancement

The credit enhancement provided for the benefit of the holders of the Offered Certificates consists of excess interest, overcollateralization and subordination, each as described in this section and under “Description of the Certificates—Subordination and Allocation of Losses” and “—Excess Spread and Overcollateralization Provisions” in this prospectus supplement.  In addition, the Class A-4, Class A-5A and Class A-6 Certificates will have the benefit of a financial guaranty insurance policy issued by the Insurer as described under “The Policy” in this prospectus supplement.

Excess Interest.  The Mortgage Loans bear interest each month in an amount that in the aggregate is expected to exceed the amount needed to pay the premium due the Insurer, to distribute monthly interest on the Offered Certificates, to pay reimbursement amounts to the Insurer and to pay certain fees and expenses of the trust.  Any excess interest from the Mortgage Loans each month will be available to absorb realized losses on the Mortgage Loans and to maintain or restore overcollateralization at required levels.

Overcollateralization. The sum of the aggregate principal balance of the Initial Mortgage Loans as of the Cut-Off Date and  amounts on deposit in the pre-funding account on the Closing Date will exceed the aggregate certificate principal balance of the Senior Certificates, the Mezzanine Certificates and the Class P Certificates on the Closing Date by approximately $3,704,943, or approximately 0.85% of the sum of the aggregate principal balance of the Initial Mortgage Loans as of the Cut-Off Date and amounts on deposit in the pre-funding account on the Closing Date, and is approximately equal to the initial amount of overcollateralization required to be provided by the mortgage pool under the pooling and servicing agreement.  See “Description of the Certificates—Excess Spread and Overcollateralization Provisions” in this prospectus supplement.

Subordination. The rights of the holders of the Mezzanine Certificates and Class CE Certificates to receive distributions will be subordinated, to the extent described in this prospectus supplement, to the rights of the holders of the Senior Certificates and the right of the Insurer to receive its premium and reimbursement amounts.

In addition, to the extent described under “Description of the Certificates—Subordination and Allocation of Losses” in this prospectus supplement,

·

the rights of the holders of the Class A-6 Certificates to receive distributions of principal will be subordinated to the rights of the holders of the other Senior Certificates;

·

the rights of the holders of the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9, Class M-10, Class M-11 and Class CE Certificates will be subordinated to the rights of the holders of the Class A-6 Certificates;

·

the rights of the holders of the Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9, Class M-10, Class M-11 and Class CE Certificates will be subordinated to the rights of the holders of the Class M-1 Certificates;

·

the rights of the holders of the Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9, Class M-10, Class M-11 and Class CE Certificates will be subordinated to the rights of the holders of the Class M-2 Certificates;

·

the rights of the holders of the Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9, Class M-10, Class M-11 and Class CE Certificates will be subordinated to the rights of the holders of the Class M-3 Certificates;

·

the rights of the holders of the Class M-5, Class M-6, Class M-7, Class M-8, Class M-9, Class M-10, Class M-11 and Class CE Certificates will be subordinated to the rights of the holders of the Class M-4 Certificates;

·

the rights of the holders of the Class M-6, Class M-7, Class M-8, Class M-9, Class M-10, Class M-11 and Class CE Certificates will be subordinated to the rights of the holders of the Class M-5 Certificates;

·

the rights of the holders of the Class M-7, Class M-8, Class M-9, Class M-10, Class M-11 and Class CE Certificates will be subordinated to the rights of the holders of the Class M-6 Certificates;

·

the rights of the holders of the Class M-8, Class M-9, Class M-10, Class M-11 and Class CE Certificates will be subordinated to the rights of the holders of the Class M-7 Certificates;

·

the rights of the holders of the Class M-9, Class M-10, Class M-11 and Class CE Certificates will be subordinated to the rights of the holders of the Class M-8 Certificates; and

·

the rights of the holders of the Class M-10, Class M-11 and Class CE Certificates will be subordinated to the rights of the holders of the Class M-9 Certificates; and

·

the rights of the holders of the Class M-11 and Class CE Certificates will be subordinated to the rights of the holders of the Class M-10 Certificates; and

·

the rights of the holders of the Class CE Certificates will be subordinated to the rights of the holders of the Class M-11 Certificates.

Subordination is intended to enhance the likelihood of regular distributions on the more senior certificates in respect of interest and principal and to afford the more senior certificates protection against realized losses on the Mortgage Loans, as described under “Description of the Certificates—Subordination and Allocation of Losses” in this prospectus supplement.

The Policy. The Class A-4, Class A-5A and Class A-6 Certificates will have the benefit of a financial guaranty insurance policy (the “Policy”) issued by the Insurer, pursuant to which the Insurer will unconditionally and irrevocably guarantee certain interest shortfalls and certain other payments on the Class A-4, Class A-5A and Class A-6 Certificates on each Distribution Date.  See “Description of the Certificates” and “The Policy” in this prospectus supplement.

Allocation of Losses. If, on any Distribution Date, there is not sufficient excess interest or overcollateralization (represented by the Class CE Certificates) to absorb realized losses on the Mortgage Loans, then realized losses on the Mortgage Loans will be allocated to the Class M-11, Class M-10, Class M-9, Class M-8, Class M-7, Class M-6, Class M-5, Class M-4, Class M-3, Class M-2 and Class M-1 Certificates, in that order, and then to the Senior Certificates on a pro rata basis based on the certificate principal balance of each such class, in reduction of the certificate principal balances of such certificates; provided, however, that realized losses otherwise allocable to the Class A-1, Class A-2, Class A-3, Class A-5B, Class A-7 and Class A-8 Certificates will first be allocated to the Class A-6 Certificates, in addition to losses otherwise allocable to the Class A-6 Certificates, until its certificate principal balance is reduced to zero. However, on each Distribution Date, the Insurer, in accordance with the terms of the policy will be required to make a payment in respect of principal to the holders of the Class A-4, Class A-5A and Class A-6 Certificates in an amount equal to any realized losses allocated to such certificates on such Distribution Date. See “Description of the Certificates—Subordination and Allocation of Losses” in this prospectus supplement.

Once realized losses are allocated to the Offered Certificates, their certificate principal balances will be reduced by the amount so allocated (except, in the case of the Class A-4, Class A-5A and Class A-6 Certificates, such amount so allocated will be reduced by the amount of principal paid by the Insurer in respect thereof).  However, the amount of any realized losses allocated to the Offered Certificates may be distributed to the holders of those certificates to the extent of funds available as described in this prospectus supplement under “—Excess Spread and Overcollateralization Provisions”.

Retention of Certain Servicing Rights

The Sponsor will retain certain rights relating to the servicing of the Mortgage Loans, including the right to sell the servicing rights with respect to approximately 38.72% of the Mortgage Loans, 4.94% of which are serviced by GMAC Mortgage Corporation (referred to in this prospectus supplement as “GMACM”) and 95.06% of which are serviced by Countrywide Servicing, at any time to a successor servicer as further specified in the pooling and servicing agreement.  See “Servicing—Servicing and Other Compensation and Payment of Expenses” in this prospectus supplement.

Advances

Each Servicer will be required to advance delinquent payments of principal and interest on the Mortgage Loans serviced by it, subject to the limitations described under “Description of the Certificates—Advances” in this prospectus supplement. The Master Servicer will be obligated to make any required delinquency advance if the applicable Servicer fails in its obligation to do so, to the extent provided in the pooling and servicing agreement. The applicable Servicer or the Master Servicer, as the case may be, will be entitled to be reimbursed for these advances, and therefore these advances are not a form of credit enhancement.  See “Servicing—Advances” in this prospectus supplement and “Description of the Securities—Advances in Respect of Delinquencies” in the prospectus.

Servicing Fee

With respect to the Mortgage Loans, the weighted average servicing fee that will be paid to the Servicers will be equal to 0.250% per annum. Such fee will be payable monthly, computed on the basis of the same principal amount and period with respect to which any interest payment on such mortgage loan is computed.  The obligation to pay the servicing fee to the related Servicer will be limited to, and the servicing fee will be payable from the interest portion of such monthly payments collected.

Expected Final Distribution Date

The expected final distribution date for each class of Offered Certificates is as set forth in the following table:

The expected final distribution date for each class of Offered Certificates is based upon (i) 120% PPC (as defined under “Prepayment Yield Considerations – Prepayment Assumptions and Modeling Assumptions”) of the Mortgage Loans, (ii) the modeling assumptions used in this prospectus supplement, as described under “Prepayment and Yield Considerations—Prepayment Assumption and Modeling Assumptions” and (iii) assuming the optional termination of the Mortgage Loans is exercised at the earliest possible Distribution Date, as described in this prospectus supplement under “The Pooling and Servicing Agreement—Optional Termination”.  It is possible that the principal balance of these Certificates may be fully paid or reduced to zero, as applicable, prior to the related expected final distribution date, or may not be fully paid or reduced to zero, as applicable, by the related expected final distribution date.

Optional Termination

The Master Servicer may, at its option and subject to certain conditions (including the consent of the Insurer if the exercise of such option would cause a claim under the Policy or any Reimbursement Amounts would remain unpaid after giving effect to the purchase), purchase the Mortgage Loans (and any properties acquired in respect of the Mortgage Loans) when the total outstanding principal balance of the Mortgage Loans (and the fair market value of any properties acquired in respect of the Mortgage Loans) on any Distribution Date is less than or equal to 10% of the sum of the aggregate outstanding principal balance of the Initial Mortgage Loans as of the Cut-Off Date and the amount on deposit in the pre-funding account on the Closing Date. In the event the Master Servicer fails to exercise its optional termination right and any of the Class A-4, Class A-5A or Class A-6 Certificates are outstanding or any reimbursement amounts owed to the Insurer are outstanding, the Insurer may, at its option, direct the Master Servicer to exercise the optional termination right.

See “Pooling and Servicing Agreement—Optional Termination” in this prospectus supplement.

Federal Income Tax Treatment

The Offered Certificates will represent ownership of REMIC regular interests.  For federal income tax purposes, these Offered Certificates will be treated as ownership of debt.  Certificateholders must include in income all interest and any original issue discount on such Offered Certificates in accordance with the accrual method of accounting, even if the certificateholder is otherwise a cash method taxpayer.

See “Federal Income Tax Consequences” in this prospectus supplement.

Legal Investment

Prior to the date on which the balance of the pre-funding account has been reduced to zero, the Offered Certificates will not constitute “mortgage-related securities” for purposes of the Secondary Mortgage Market Enhancement Act of 1984, referred to in this prospectus supplement as SMMEA.  On and after the date on which the balance of the pre-funding account has been reduced to zero, the Offered Certificates (other than the Class M-7, Class M-8 , Class M-9 , Class M-10 and Class M-11 Certificates) will constitute “mortgage-related securities” for purposes of SMMEA.  Investors should consult their own legal counsel in determining the extent to which the Offered Certificates constitute legal investments for them.  See “Legal Investment Aspects” in this prospectus supplement.

ERISA Considerations

The offered certificates may be eligible for purchase by persons investing assets of employee benefit plans or other retirement arrangements that are subject to the Employee Retirement Income Security Act of 1974, as amended, or Section 4975 of the Internal Revenue Code of 1986, as amended, subject to certain considerations described in this prospectus supplement.  See “ERISA Considerations” in this prospectus supplement.

TRANSACTION STRUCTURE

RISK FACTORS

The Offered Certificates may not be suitable investments for you.  In particular, you should not purchase certificates of any class unless you understand and are able to bear the prepayment, credit, liquidity, and market risks associated with that class.

The certificates are complex securities.  You should possess, either alone or together with an investment advisor, the expertise necessary to evaluate the information contained in this prospectus supplement and the prospectus in the context of your financial situation.

The yield of each class of certificates will depend upon, among other things, the price you paid for your certificates and the rate and timing of principal payments on the Mortgage Loans, including prepayments, defaults and liquidations, as well as the actual characteristics of the Mortgage Loans.  Mortgage prepayment rates are likely to fluctuate significantly from time to time.  You should consider the associated risks, including the following:

Prepayments on the Mortgage Loans may affect the yield on your certificates.

·

If the Mortgage Loans are prepaid at a rate faster than assumed, this may reduce the yields of classes of certificates purchased at a premium over their principal balances. However, with respect to approximately 44.80% of the Mortgage Loans, by aggregate principal balance of the Mortgage Loans as of the Cut-Off Date, a prepayment may subject the related mortgagor to a prepayment charge. A prepayment charge may or may not act as a deterrent to prepayment of the related mortgage loan.    All prepayment charges collected will be paid to the holder of the Class P Certificates.

·

If the Mortgage Loans are prepaid at a rate slower than assumed, this may reduce the yields of any related classes of certificates purchased at a discount to their principal balances.  If the Mortgage Loans are prepaid at a rate faster than assumed, this may reduce the yields of any related classes of certificates purchased at a premium to their principal balances.

·

Any time your principal is repaid to you at a time when you did not expect to receive it, you may not be able to reinvest your funds at the same rate or a higher rate of return than the interest rate on your certificates.

·

If the actual characteristics and behavior of the Mortgage Loans differ from what you assumed, it can have a significant effect on the weighted average lives and yields of the certificates.

·

The rate of principal payments on pools of Mortgage Loans varies among pools and from time to time is influenced by a variety of economic, demographic, geographic, social, tax, legal and other factors, including prevailing mortgage market interest rates and the particular terms of the Mortgage Loans.  There is no guarantee as to the actual rate of prepayment on the Mortgage Loans, or that the rate of prepayment will conform to any model described in this prospectus supplement or in the prospectus. See “Prepayment and Yield Considerations” in this prospectus supplement and “Yield Considerations” in the prospectus.  

The pass-through rates on the certificates are subject to a weighted average net rate cap.

·

The pass-through rates on the Offered Certificates are subject to a cap equal to the weighted average of the net mortgage rates of the Mortgage Loans adjusted, with respect to the Class A-4, Class A-5A and Class A-6 Certificates, to account for the premium payable to the Insurer.  Therefore, the prepayment of the Mortgage Loans with higher mortgage rates may result in a lower pass-through rate on the Offered Certificates.

·

In addition, when the pass-through rates applicable to the certificates are limited by the applicable cap, there may be little or no excess cash flow to cover losses and to maintain or restore the required level of overcollateralization. No assurance can be given that the excess cash flow that may be available to cover the shortfalls resulting from the limitation of the pass-through rates on the certificates will be sufficient for that purpose.

Losses and delinquent payments on the Mortgage Loans may affect the return on the certificates.

·

If, as a result of losses on the Mortgage Loans, the certificate principal balance of the Class CE Certificates (which is equal to the overcollateralization amount) is reduced to zero, the yield on each class of Mezzanine Certificates will be extremely sensitive to losses on the Mortgage Loans since such losses will then be allocated to the Class M-11, Class M-10, Class M-9, Class M-8, Class M-7, Class M-6, Class M-5, Class M-4, Class M-3, Class M-2 and Class M-1 Certificates, in that order, until their respective certificate principal balances are reduced to zero.  If, as a result of losses on the Mortgage Loans, the certificate principal balances of the Mezzanine Certificates are reduced to zero, the yield on the Senior Certificates will be extremely sensitive to losses on the Mortgage Loans since such losses will then be allocated to the Senior Certificates on a pro rata basis, based on the certificate principal balance of each such class, until their respective certificate principal balances are reduced to zero; provided, however, that realized losses otherwise allocable to the Class A-1, Class A-2, Class A-3, Class A-5B, Class A-7 and Class A-8 Certificates will first be allocated to the Class A-6 Certificates, in addition to losses otherwise allocable to the Class A-6 Certificates, until its certificate principal balance is reduced to zero.

·

Delinquencies that are not covered by amounts advanced by the Servicers or the Master Servicer, as applicable, because the Servicers or the Master Servicer believe the amounts, if advanced, would not be recoverable, will adversely affect the yield on the Class CE, Class M-11, Class M-10, Class M-9, Class M-8, Class M-7, Class M-6, Class M-5, Class M-4, Class M-3, Class M-2 and Class M-1 and Senior Certificates, in that order, because any resulting realized losses will be borne first by the Class CE Certificates,  second by the Mezzanine Certificates, in the reverse order of their seniority and third by the Senior Certificates on a pro rata basis, except that realized losses otherwise allocable to the Class A-1, Class A-2, Class A-3, Class A-5B, Class A-7 and Class A-8 Certificates will first be allocated to the Class A-6 Certificates. Realized losses will be allocated to a class of certificates by reducing or “writing down” the certificate principal balance thereof by the amount of losses allocated to that class.  Such written down amounts will not accrue interest and, except as otherwise provided in this prospectus supplement under “Description of the Certificates—Subordination and Allocation of Losses”, such amounts will not be reinstated.  However, the amount of realized losses allocated to the Offered Certificates may be distributed to the holders of those certificates to the extent of funds available as described in this prospectus supplement under “Description of the Certificates—Excess Spread and Overcollateralization Provisions”.

·

The yields on the Senior Certificates and on the Mezzanine Certificates, in decreasing order of their seniority, will be progressively more sensitive to the rate and timing of defaults and the severity of losses on the Mortgage Loans.  Losses on the Mortgage Loans resulting in a reduction in the certificate principal balance of the certificates will cause less interest to accrue on such certificates than would otherwise be the case.  The earlier a loss and resulting reduction in certificate principal balance occurs, the greater the effect on an investor’s yields.

·

Unless the aggregate certificate principal balance of the Senior Certificates (other than the Class A-6 Certificates) has been reduced to zero, the Class A-6 Certificates and the Mezzanine Certificates will not be entitled to any principal distributions until at least the distribution date in July 2009 or a later date as provided in this prospectus supplement, or during any period in which delinquencies on the Mortgage Loans exceed the levels set forth under “Description of the Certificates—Glossary—Trigger Event” in this prospectus supplement.   As a result, the weighted average lives of the Class A-6 Certificates and the Mezzanine Certificates will be longer than would be the case if distributions of principal were allocated among all of the certificates at the same time. As a result of the longer weighted average lives of the Class A-6 Certificates and the Mezzanine Certificates, the holders of these certificates have a greater risk of suffering a loss on their investments. Further, because such certificates might not receive any principal if certain delinquency levels are exceeded, it is possible for such certificates to receive no principal distributions on a particular distribution date even if no losses have occurred on the Mortgage Loans.

It may not be possible to find an investor to purchase your certificates.

The underwriter intends to make a market for the purchase and sale of the Offered Certificates after their initial issuance but has no obligation to do so.  There is no assurance that such a secondary market will develop for any class of certificates, or, if it develops, that it will continue.  Consequently, investors may not be able to sell their certificates readily or at prices that will enable them to realize their desired yield.  The market values of the certificates are likely to fluctuate.  These fluctuations may be significant and could result in significant losses to investors. The secondary markets for mortgage-backed securities have experienced periods of illiquidity and can be expected to do so in the future.  Illiquidity means you may not be able to find another investor to buy your certificates, which can have a severely adverse effect on the market value of your certificates. Illiquidity is more likely for classes that are especially sensitive to prepayment, credit, or interest rate risk, or that have been structured to meet the investment requirements of limited categories of investors.  However, any class of certificates may experience illiquidity.

Additional risk is associated with the Class A-6 Certificates.

Investors in the Class A-6 Certificates should be aware that, on any distribution date, certain losses which would otherwise be allocated to the Class A-1, Class A-2, Class A-3, Class A-5B, Class A-7 and Class A-8 Certificates will be allocated to the Class A-6 Certificates, in addition to losses otherwise allocable to the Class A-6 Certificates, until its class principal balance is reduced to zero.

Payments from the Mortgage Loans are the sole source of payments on the certificates, other than the Class A-4, Class A-5A and Class A-6 Certificates, which also have the benefit of the Policy.

The certificates do not represent an interest in or obligation of the Sponsor, the Depositor, the Master Servicer, the Securities Administrator, the Custodians, the Servicers, the Trustee, the underwriter or any of their affiliates.  However, the Depositor does have limited obligations with respect to certain breaches of its representations and warranties.  No governmental agency or instrumentality, the Depositor, the Sponsor, the Master Servicer, the Servicers, the Securities Administrator, the Custodians, the Trustee, the underwriter nor any of their affiliates will guarantee or insure either the certificates or the Mortgage Loans.  Consequently, if payments on the Mortgage Loans are insufficient or otherwise unavailable to make all payments required on the certificates, you will have no recourse to the Depositor, the Sponsor the Master Servicer, the Servicers, the Securities Administrator, the Custodians, the Trustee, the underwriter or any of their affiliates.  The Class A-4, Class A-5A and Class A-6 Certificates do, however, have the benefit of the Policy.

The return on your certificates may be particularly sensitive to changes in the real estate markets in certain geographical areas.

·

As of the Cut-Off Date, mortgaged properties located in the State of California, the State of Florida,  the State of New York and the State of Illinois secure approximately 22.87%, 16.71%, 6.88% and 6.13%, respectively, of the mortgage loan pool.  If the residential real estate market in those states should experience an overall decline in property values, the rates of delinquency, foreclosure, bankruptcy and loss on those Mortgage Loans may be expected to increase, and may increase substantially, as compared to such rates in a stable or improving real estate market.

·

A decline in real estate values or changes in mortgage market interest rates may affect the yield on your certificates.  If the residential real estate market in the locale of properties securing the Mortgage Loans should experience an overall decline in property values so that the outstanding principal balances of the Mortgage Loans, and any secondary financing on the mortgaged properties, become equal to or greater than the value of mortgaged properties, the actual rates of delinquencies, foreclosures and losses could be higher than those now generally experienced in the mortgage lending industry.  To the extent that these losses are not covered by any applicable insurance policies or other credit enhancement, certificateholders will bear all risk of loss resulting from default by mortgagors.  The amount of losses will depend primarily upon the value of the mortgaged properties for recovery of the outstanding principal balance and unpaid interest with respect to the defaulted Mortgage Loans.

Increased risk of loss on the Mortgage Loans as a result of interest-only loans.

Approximately 65.30% of the Mortgage Loans by aggregate principal balance as of the Cut-Off Date, require the mortgagors to make monthly payments of only accrued interest for the first five years or ten years following origination. After such interest-only period, the mortgagor’s monthly payment will be recalculated to cover both interest and principal so that the mortgage loan will amortize fully on or prior to its final payment date. When the mortgagor’s monthly payment increases, the mortgagor may not be able to pay the increased amount and may default or may refinance the related mortgage loan to avoid the higher payment. Because no principal payments are required to be made on such Mortgage Loans for five years or ten years following origination, the certificateholders will receive smaller principal distributions during such period than they would have received if the related mortgagors were required to make monthly payments of interest and principal for the entire lives of such Mortgage Loans. This slower rate of principal distributions may reduce the return on the certificateholders’ investment.

The bankruptcy or insolvency of a Servicer or the Master Servicer could further delay or reduce payments to you.

·

If a Servicer or the Master Servicer becomes the subject of bankruptcy or similar proceedings, the Trustee’s claim to collections in such Servicer’s or the Master Servicer’s possession at the time of the bankruptcy filing or other similar filing may not be perfected.  In this event, funds available to pay principal and interest on your certificates may be delayed or reduced.

·

Additionally, if a Servicer defaults on its obligations under the related servicing agreement or the Master Servicer defaults on its obligations under the pooling and servicing agreement solely because it becomes insolvent, the bankruptcy court or other similar entity might have the power to prevent the appointment of a new servicer or master servicer, as applicable.  In this event, the ability of that Servicer or the Master Servicer to service or master service the Mortgage Loans or to oversee the Servicers, as applicable, could be impaired by its bankruptcy or insolvency, and its actions would be supervised by the bankruptcy court or other similar entity, which could cause delays in payments being made on your certificates.

The transfer of servicing may result in higher delinquencies and defaults which may adversely affect the yield on your certificates.

The Sponsor owns the servicing rights with respect to approximately 38.72% of the Mortgage Loans, 4.94% of which are serviced by GMACM and 95.06% of which are serviced by Countrywide Servicing, and may elect to transfer the servicing of those Mortgage Loans to a qualified successor servicer in accordance with the terms of the pooling and servicing agreement.  In addition, with respect to 24.91% of the subsequent mortgage loans which are expected to be conveyed to the trust during the Pre-Funding Period, the servicing obligations are expected to transfer from the related originator (or other parties that are currently servicing a portion of such Mortgage Loans) to GMACM on or about July 1, 2006, but in any event prior to the transfer of such Mortgage Loans to the trust.  All transfers of servicing involve the risk of disruption in collections due to data input errors, misapplied or misdirected payments, system incompatibilities and other reasons.  As a result, the rate of delinquencies and defaults is likely to increase at least for a period of time. There can be no assurance as to the extent or duration of any disruptions associated with the transfer of servicing or as to the resulting effects on the yield on your certificates.

Attempted recharacterization of the transfer from the Sponsor to the Depositor and from the Depositor to the trust could delay or reduce payments to you.

We expect that the transfer of the Mortgage Loans from the Sponsor to the Depositor, and from the Depositor to the trust will each be characterized as a sale.  Each of the Sponsor and the Depositor has documented its respective transfer as a sale.  However, a bankruptcy trustee or creditor of the Sponsor may take the position that the transfer of the Mortgage Loans to the Depositor should be recharacterized as a pledge of the Mortgage Loans to secure a loan.  If so, the Depositor would be required to participate in or appear in court proceedings to establish its rights to collections on the Mortgage Loans.  Similarly, a bankruptcy trustee or creditor of the Depositor may take the position that the transfer of the Mortgage Loans to the trust should be recharacterized as a pledge of the Mortgage Loans to secure a loan.  If so, the Trustee would be required to participate in or appear in court proceedings to establish its rights to collections on the Mortgage Loans.  If either or both of these events occur, payments on your certificates could be delayed or reduced.

The return on your certificates could be reduced by shortfalls due to the application of the Servicemembers Civil Relief Act and similar state or local laws.

The Servicemembers Civil Relief Act (the “Relief Act”) and similar state or local laws provide relief to mortgagors who enter active military service and to mortgagors in reserve status who are called to active military service after the origination of their mortgage loans. The ongoing military operations of the United States in Iraq and Afghanistan have caused an increase in the number of citizens in active military duty, including those citizens previously in reserve status. Under the Relief Act, the interest rate applicable to a mortgage loan for which the related mortgagor is called to active military service will be reduced from the percentage stated in the related mortgage note to 6.00%. This interest rate reduction and any reduction provided under similar state or local laws could result in an interest shortfall because neither the Master Servicer nor the related Servicer will be able to collect the amount of interest which otherwise would be payable with respect to such mortgage loan if the Relief Act or similar state or local law was not applicable thereto. This shortfall will not be paid by the mortgagor on future due dates or advanced by the Master Servicer or the related Servicer and, therefore, will reduce the amount available to pay interest to the certificateholders on subsequent Distribution Dates. The Policy issued in connection with the Class A-4, Class A-5A and Class A-6 Certificates will not cover such shortfalls.  In addition, the Relief Act and similar state or local laws may affect the ability of the issuing entity to foreclose on a Mortgage Loan the mortgagor of which is in active military service.  We do not know how many Mortgage Loans in the mortgage pool have been or may be affected by the application of the Relief Act or similar state or local law.

To the extent amounts on deposit in the pre-funding account are not used, there may be a mandatory prepayment on the certificates.

To the extent that the pre-funded amount on deposit in the pre-funding account has not been fully applied to the purchase of subsequent mortgage loans on or before August 29, 2006, the holders of the certificates entitled to principal will receive on the September 2006 Distribution Date, the pre-funded amount remaining after the purchase of subsequent mortgage loans as a prepayment of principal in accordance with the priorities set forth in this prospectus supplement. Although no assurance can be given, the Depositor intends that the principal amount of subsequent mortgage loans sold to the Trustee will require the application of substantially all amounts on deposit in the pre-funding account and that there will be no material principal prepayment to the holders of the certificates on such Distribution Date.

Suitability of the Offered Certificates as investments.

The Offered Certificates are not suitable investments for any investor that requires a regular or predictable schedule of monthly payments or payment on any specific date.  The Offered Certificates are complex investments that should be considered only by investors who, either alone or with their financial, tax and legal advisors, have the expertise to analyze the prepayment, reinvestment, default and market risk, the tax consequences of an investment and the interaction of these factors.

FICO scores are not an indicator of future performance of mortgagors.

Investors are encouraged to be aware that FICO scores are based on past payment history of the mortgagor. Investors are encouraged not to rely on FICO scores as an indicator of future mortgagor performance. See “The Mortgage Pool” in this prospectus supplement.

DESCRIPTION OF THE MORTGAGE POOL

General

The pool of mortgage loans (the “Mortgage Pool”) delivered to the trust on the Closing Date will consist of 1,938 conventional one-to four-family, first lien fixed-rate mortgage loans that have an aggregate outstanding principal balance as of the Cut-Off Date, after deducting payments due on or before that date, of approximately $417,494,767 (the “Initial Mortgage Loans”).  None of the Initial Mortgage Loans were delinquent as of the Cut-Off Date.  The delinquency status of a Mortgage Loan is determined as of the due date in the following month in accordance with the OTS method, so that, for example, if a mortgagor failed to make a monthly payment due on February 1, by February 28, that mortgage loan would be considered current in payment.  If the payment were not made on March 1, the mortgage loan would then be considered to be 30 days delinquent.  

During the Pre-Funding Period, the trust will purchase subsequent mortgage loans to be included in the Mortgage Pool (the “Subsequent Mortgage Loans”) with amounts on deposit in the Pre-Funding Account (as defined herein). After the termination of the Pre-Funding Period, the trust will include the Initial Mortgage Loans and the Subsequent Mortgage Loans, which together are expected to have an aggregate principal balance as of the Cut-Off Date of approximately $435,688,043 after application of scheduled payments due on or before the Cut-Off Date whether or not received (the Initial Mortgage Loans and the Subsequent Mortgage Loans collectively, the “Mortgage Loans”).

The description of the Mortgage Pool in this prospectus supplement, which includes the Initial Mortgage Loans and the expected Subsequent Mortgage Loans, and the mortgaged properties related thereto is based upon the principal balance of the Initial Mortgage Loans and the Subsequent Mortgage Loans at the close of business on the Cut-Off Date, after deducting the scheduled principal payments due on or before such date, whether or not received.  References to weighted averages refer, in each case, to weighted averages by principal balance as of the Cut-Off Date of the Mortgage Loans (determined as described in the preceding sentence).  Prior to the issuance of the certificates, Mortgage Loans may be removed from the Mortgage Pool as a result of principal prepayments in full, delinquencies or otherwise.  In such event, other mortgage loans may be included in the Mortgage Pool as of the Closing Date.  Prior to the transfer  to the trust of the Subsequent Mortgage Loans, Subsequent Mortgage Loans may be removed from the pool of Subsequent Mortgage Loans that the Depositor currently expects to transfer to the trust as a result of principal prepayments in full, delinquencies or otherwise.  The Depositor believes that the information set forth herein with respect to the Mortgage Pool is representative of the characteristics of the Mortgage Pool as it will actually be constituted at the time the certificates are issued and after transfer of the Subsequent Mortgage Loans, although the range of mortgage rates and certain other characteristics of the Mortgage Loans in the Mortgage Pool may vary.  See “—Additional Information” in this prospectus supplement.

All percentages with respect to the characteristics of the Mortgage Loans shown in this prospectus supplement are by aggregate Stated Principal Balance of the Mortgage Loans and the aggregate number and aggregate Stated Principal Balance of the Mortgage Loans include information as of the Cut-Off Date pertaining to Subsequent Mortgage Loans identified and expected to be transferred to the trust no later than August 29, 2006.  All dollar amounts, percentages and other numerical information relating to the Mortgage Loans described herein are subject to a permitted variance of plus or minus 10%.

The Mortgage Loans have original terms to maturity of not greater than 30 years.  The Mortgage Loans, other than the Interest Only Loans (as defined below), provide for initial monthly payments in an amount sufficient to fully amortize the Mortgage Loans over their terms.  Approximately 65.30% of the Mortgage Loans, by aggregate principal balance as of the Cut-Off Date, are interest only loans (“Interest Only Loans”) which require the related mortgagors to make monthly payments of only accrued interest for the first five or ten years following origination. After such interest-only period, the mortgagor’s monthly payment will be recalculated to cover both interest and principal so that such Mortgage Loan will amortize fully on or prior to its final payment date.

The Mortgage Loans are secured by first mortgages or deeds of trust or other similar security instruments creating first liens on one-to four-family residential properties (each, a “Mortgaged Property”).  The Mortgaged Properties may include detached homes, townhouses, individual condominium units, modular homes, cooperatives, and individual units in planned unit developments, so long as the property subject to the lien of the related mortgage consists of no more than four units, and has the additional characteristics described below and in the prospectus.

The mortgage rate (the “Mortgage Rate”) on each Mortgage Loan is the per annum rate of interest specified in the related mortgage note as reduced by application of the Relief Act or similar state or local laws and bankruptcy adjustments.  All of the mortgage loans are fixed-rate mortgage loans.  

Mortgage Loan Characteristics

The weighted average FICO Score for the Mortgage Loans that were scored is approximately 695.  “FICO Scores” are statistical credit scores obtained by many mortgage lenders in connection with a loan application to help assess a mortgagor’s creditworthiness as of the time the score is obtained.  FICO Scores are generated by models developed by a third party and are made available to lenders through three national credit bureaus.  The models were derived by analyzing data on consumers to establish patterns which are believed to be indicative of the mortgagor’s probability of default.  The FICO Score is based on a mortgagor’s historical credit data, including, among other things, payment history, delinquencies on accounts, levels of outstanding indebtedness, length of credit history, types of credit, and bankruptcy experience.  FICO Scores range from approximately 250 to approximately 900, with higher scores indicating an individual with a more favorable credit history compared to an individual with a lower score.  However, a FICO Score purports only to be a measurement of the relative degree of risk a mortgagor represents to a lender, meaning that a mortgagor with a higher score is statistically expected to be less likely to default in payment than a mortgagor with a lower score.  In addition, it should be noted that FICO Scores were developed to indicate a level of default probability over a two-year period, which does not correspond to the life of a mortgage loan.  Furthermore, FICO Scores were not developed specifically for use in connection with mortgage loans, but for consumer loans in general.  Therefore, a FICO Score does not take into consideration the effect of mortgage loan characteristics on the probability of repayment by the mortgagor.  The Depositor does not make any representations or warranties as to the actual performance of any Mortgage Loan or that a particular FICO Score will not change over time or should be relied upon as a basis for an expectation that the mortgagor will repay the Mortgage Loan according to its terms.

All of the Mortgage Loans, other than the Interest Only Loans, will have principal and interest payable on the first day of each month, which day is called the due date.  None of the Mortgage Loans will have an original scheduled maturity date later than 30 years.  At origination, the Mortgage Loans had approximate loan-to-value ratios as described in the table below.

The loan to value ratios were based upon (i) with respect to purchase money Mortgage Loans, the lesser of (a) the purchase price paid for the related Mortgaged Property and (b) the appraisal of the Mortgaged Property and (ii) with respect to non-purchase money Mortgage Loans, the appraisal of the Mortgaged Property.  Approximately 97.85% of the Mortgage Loans having loan-to-value ratios greater than approximately 80% at origination are covered by mortgagor paid or lender paid primary mortgage insurance policies.  Approximately 1.02% of the Mortgage Loans are covered by lender paid primary mortgage insurance policies which will cover certain losses on such Mortgage Loans up to specified limits.

Approximately 44.80% of the Mortgage Loans provide for payment by the mortgagor of a prepayment charge (a “Prepayment Charge“) in limited circumstances on certain prepayments as provided in the related mortgage note. Each such Mortgage Loan provides for payment of a Prepayment Charge on certain partial prepayments and all prepayments in full made within a certain period of time from the date of origination of the Mortgage Loan, as provided in the related mortgage note. The amount of the Prepayment Charge is as provided in the related mortgage note, but in most cases is equal to six months’ interest on any amount prepaid in excess of 20% of the original principal balance of the related Mortgage Loan in any 12 month period, as permitted by law.  The holders of the Class P Certificates will be entitled to all Prepayment Charges received on the Mortgage Loan. Under the limited instances described under the terms of the related servicing agreement, the related Servicer may waive the payment of any otherwise applicable Prepayment Charge with respect to the Mortgage Loans.  As of July 1, 2003, the Alternative Mortgage Parity Act of 1982 (the “Parity Act”), which regulates the ability of originators to impose prepayment charges, was amended, and as a result, the Originators will be required to comply with state and local laws in originating mortgage loans with prepayment charge provisions with respect to loans originated on or after July 1, 2003.  The Depositor makes no representations as to the effect that the Prepayment Charges and the amendment of the Parity Act may have on the prepayment performance of the Mortgage Loans.  However, the amendment of the Parity Act does not retroactively affect loans originated before July 1, 2003.   Investors should conduct their own analysis of the effect, if any, that the Prepayment Charges, decisions by the Servicers with respect to the waiver of the Prepayment Charges and the amendment to the Parity Act, may have on the prepayment performance of the Mortgage Loans. The Depositor makes no representation as to the effect that the Prepayment Charges, decisions by the related Servicer with respect to the waiver of the Prepayment Charges and the amendment to the Parity Act, may have on the prepayment performance of the Mortgage Loans.  See “Certain Legal Aspects of the Loans–Enforceability of Prepayment and Late Payment Fees” in the prospectus.

Subject to a permitted variance of plus or minus 10%, as of the Cut-Off Date, the Mortgage Loans (including the Subsequent Mortgage Loans) have the following additional characteristics (the sum in any column may not equal the total indicated due to rounding):

Principal Balances of the Mortgage Loans at Origination

Principal Balances of the Mortgage Loans as of the Cut-Off Date

Geographic Distribution of the Mortgaged Properties of the Mortgage Loans

Mortgage Interest Rates of the Mortgage Loans

Mortgaged Property Types of the Mortgage Loans

Original Loan-to-Value Ratios of the  Mortgage Loans

Loan Programs of the Mortgage Loans

FICO Scores for the  Mortgage Loans

Loan Purpose of the Mortgage Loans

Occupancy Status of the  Mortgage Loans

*The occupancy status of a Mortgaged Property is as represented by the mortgagor in its loan application.

Product Types of the Mortgage Loans

Prepayment Penalty Terms on the  Mortgage Loans at Origination

Originator of the Mortgage Loans

Pool Delinquency and Loss Experience

The following table sets forth certain information regarding delinquency with respect to the Mortgage Loans as of the Cut-Off Date.

No Mortgage Loan has been delinquent 90 days or more since origination.

Additional Information

The description in this prospectus supplement of the characteristics of the Mortgage Pool and the Mortgaged Properties is based upon the Initial Mortgage Loans and the Subsequent Mortgage Loans that the Depositor expects to transfer to the Trustee, on behalf of the trust.  Prior to the issuance of the certificates, the Depositor may add or remove Initial Mortgage Loans from the Mortgage Pool if it deems such addition or removal necessary or appropriate.  Prior to the transfer  to the trust of the Subsequent Mortgage Loans, Subsequent Mortgage Loans may be removed from the pool of Subsequent Mortgage Loans that the Depositor currently expects to transfer to the trust as a result of principal prepayments in full, delinquencies or otherwise.  

Conveyance of Subsequent Mortgage Loans and the Pre-Funding Account

The Trustee, on behalf of the trust, is expected to purchase, using funds on deposit in the pre-funding account, from the Depositor during the period commencing on the Closing Date and ending on August 29, 2006 (the “Pre-Funding Period”), subject to the availability thereof, Subsequent Mortgage Loans secured by conventional, one- to four-family, fixed-rate Mortgage Loans secured by first liens on residential Mortgaged Properties. The Subsequent Mortgage Loans will be transferred to the Trustee, on behalf of the trust, on any date during the Pre-Funding Period (each such date, a “Subsequent Transfer Date”) pursuant to subsequent transfer instruments between the Depositor and the Trustee. In connection with the purchase of Subsequent Mortgage Loans on such Subsequent Transfer Dates, the Securities Administrator, on behalf of the trust, will be required to pay to the Depositor, from amounts on deposit in the Pre-Funding Account, a cash purchase price of 100% of the principal balance thereof. The amount paid from the Pre-Funding Account on each Subsequent Transfer Date will not include accrued interest on the related Subsequent Mortgage Loans. On each Subsequent Transfer Date, the Depositor will transfer to the trust all of its right, title and interest in and to the related Subsequent Mortgage Loans, including all scheduled payments with respect to each such Subsequent Mortgage Loan due after the later of (i) the first day of the month in which such Subsequent Transfer Date occurs and (ii) the date of origination of that Subsequent Mortgage Loan (such later date the “Subsequent Cut-Off Date” with respect to that Subsequent Mortgage Loan).  Following each Subsequent Transfer Date, the aggregate principal balance of the Mortgage Loans which were part of the trust prior to such Subsequent Transfer Date will increase by an amount equal to the aggregate principal balance of the related Subsequent Mortgage Loans so purchased and the amount in the Pre-Funding Account will decrease accordingly. Although it is intended that the principal amount of Subsequent Mortgage Loans sold to the trust will require application of substantially all of the amount deposited into the Pre-Funding Account on the Closing Date and it is not currently anticipated that there will be any material principal payments from amounts remaining on deposit in the Pre-Funding Account, no assurance can be given that such distributions will not occur on the Distribution Date immediately following the termination of the Pre-Funding Period. In any event, it is unlikely that the Depositor will be able to deliver Subsequent Mortgage Loans with an aggregate principal balance that exactly equal the amount deposited into the Pre-Funding Account on the Closing Date. The aggregate characteristics of the Mortgage Loans in the trust will change upon the acquisition of related Subsequent Mortgage Loans.  It is expected that Subsequent Mortgage Loans having an aggregate principal balance as of the Cut-Off Date of approximately $18,193,276 after application of scheduled payments due on or before the Cut-Off Date whether or not received, which have been identified by the Depositor, will be transferred to the trust within sixty days of the Closing Date.  To the extent that the identified Subsequent Mortgage Loans have an aggregate principal balance as of the related Subsequent Cut-off Dates of less than $18,193,276, either additional Subsequent Mortgage Loans will be delivered by the Depositor during the Pre-Funding Period in order to reach that amount or the pre-funded amount remaining after the purchase of all Subsequent Mortgage Loans will be distributed as a payment of principal in accordance with the priorities set forth in this prospectus supplement.

The Pre-Funding Account will be established to provide the trust with sufficient funds to purchase Subsequent Mortgage Loans. During the Pre-Funding Period, the pre-funded amount will be reduced by the amount used to purchase Subsequent Mortgage Loans in accordance with the pooling and servicing agreement.  Any investment income on funds in the Pre-Funding Account will be paid to the Depositor or its designee as provided in the pooling and servicing agreement.

Because the Subsequent Mortgage Loans will not be acquired by the trust fund until after the Closing Date, there may not be sufficient interest collections from the Mortgage Loans to pay all the interest due on the certificates during the Pre-Funding Period.

Any conveyance of Subsequent Mortgage Loans on a Subsequent Transfer Date is subject to certain conditions, including but not limited to the following, and the Subsequent Mortgage Loan criteria set forth below:

(a)

Each such Subsequent Mortgage Loan must satisfy the representations and warranties specified in the related subsequent transfer instrument and the pooling and servicing agreement;

(b)

The Depositor will not select such Subsequent Mortgage Loans in a manner that it believes to be adverse to the interests of the certificateholders or the Insurer;

(c)

The Depositor will deliver certain opinions of counsel with respect to the validity of the conveyance of such Subsequent Mortgage Loans; and

(d)

Each such Subsequent Mortgage Loan may not be 30 or more days delinquent as of the last day of the month preceding the related Subsequent Cut-off Date.

Each Subsequent Mortgage Loan that is sold to the trust on a Subsequent Transfer Date will have the characteristics set forth below as of the related Subsequent Cut-off Date:

(a)

The servicer of each Subsequent Mortgage Loan will be either GMACM or American Home Servicing (or their respective successors);

(b)

Such Subsequent Mortgage Loan will be secured by a first lien;

(c)

The original term to stated maturity of such Subsequent Mortgage Loan will not be less than 360 months;

(d)

The latest maturity date of any Subsequent Mortgage Loan will be no later than June 2036;

(e)

No Subsequent Mortgage Loan will have a first payment date occurring after July 2006;

(f)

Such Subsequent Mortgage Loan will have a credit score of not less than approximately 620; and

(g)

Such Subsequent Mortgage Loan will not have a loan-to-value ratio greater than approximately 100.00%.

The Initial Mortgage Loans together with the Subsequent Mortgage Loans will have, in the aggregate, the characteristics set forth below as of the related Subsequent Cut-off Date:

(a)

Have a weighted average credit score greater than approximately 690;

(b)

Have no less than approximately 60% of the Mortgaged Properties be owner occupied;

(c)

Have no less than approximately 70% of the Mortgaged Properties be single family detached or planned unit developments;

(d)

Have no more than approximately 40% of the Subsequent Mortgage Loans be cash out refinance;

(e)

Have a weighted average remaining term to stated maturity of less than approximately 360 months;

(f)

Have a weighted average loan-to-value ratio of not more than approximately 80%;

(g)

No more than approximately 25% of the Subsequent Mortgage Loans by aggregate principal balance will be concentrated in one state; and

(h)

be acceptable to the rating agencies.

To the extent that the pre-funded amount on deposit in the Pre-Funding Account has not been fully applied to the purchase of Subsequent Mortgage Loans on or before August 29, 2006, the holders of the Certificates then entitled to receive distributions of principal will receive as a principal payment, in accordance with the priorities set forth in this prospectus supplement, on the September 2006 Distribution Date, the remaining pre-funded amount.

Any such amount transferred to the Distribution Account for Mortgage Loans will be included in principal funds for payment to the Senior Certificates.

THE ORIGINATORS

General

The principal originators of the Mortgage Loans are: American Home Mortgage Corp., with respect to approximately 59.09% of the Mortgage Loans and Impac Funding Corporation, with respect to approximately 36.80% of the Mortgage Loans.  The remainder of the Mortgage Loans were originated by various originators, each of which have originated less than 10% of the Mortgage Loans.

American Home Mortgage Corp.

General

American Home Mortgage Corp. (“American Home”) is a New York corporation.  American Home conducts lending through retail and wholesale loan production offices and its correspondent channel as well as its direct-to-consumer channel supported by American Home's call center.  American Home operates more than 600 retail and wholesale loan production offices located in 45 states and the District of Columbia and makes loans throughout all 50 states and the District of Columbia.  American Home has been originating mortgage loans since its incorporation in 1988, and has been originating fixed-rate mortgage loans since such date. The principal executive offices of American Home are located at 538 Broadhollow Road, Melville, New York 11747.

The following table reflects American Home’s originations of first-lien, fixed-rate mortgage loans for the past three years and for the quarter ended March 31, 2006:

American Home is not aware of any material legal proceedings pending against it or against any of its property, including any proceedings known to be contemplated by governmental authorities material to the holders of the Certificates.

Underwriting Criteria

The following information generally describes American Home’s underwriting guidelines with respect to Mortgage Loans originated pursuant to its “conforming” or “prime” underwriting guidelines and its Alt-A underwriting guidelines (the “American Home Mortgage Loans”).

The American Home Mortgage Loans have been purchased or originated, underwritten and documented in accordance with the guidelines of Fannie Mae, Freddie Mac, the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA), the U.S. Department of Agriculture Guaranteed Rural Housing Program (GRH), Ginnie Mae, the underwriting guidelines of specific private investors, and the non-conforming or Alt-A underwriting guidelines established by American Home. Conforming conventional loans must generally be approved by the Desktop Underwriter and Loan Prospector automated underwriting systems of Fannie Mae and Freddie Mac. FHA and VA loans are generally approved by these same automated underwriting systems.

American Home’s non-conforming underwriting guidelines are similar to those of the government sponsored enterprises Fannie Mae and Freddie Mac, but these loans are “non-conforming” in that they may not conform to the maximum loan amounts and in some cases to the underwriting guidelines of Fannie Mae and Freddie Mac. These non-conforming loans do not conform to and are not insurable by the Federal Housing Administration nor can they be guaranteed by the U.S. Department of Veterans Affairs.

American Home’s underwriting philosophy is to weigh all risk factors inherent in the loan file, giving consideration to the individual transaction, borrower profile, the level of documentation provided and the property used to collateralize the debt. These standards are applied in accordance with applicable federal and state laws and regulations.  Exceptions to the underwriting standards may be permitted where compensating factors are present.  In the case of investment properties and two- to four-unit dwellings, income derived from the mortgage property may have been considered for underwriting purposes, in addition to the income of the mortgagor from other sources.  With respect to second homes and vacation properties, no income derived from the property will have been considered for underwriting purposes.  Because each loan is different, American Home expects and encourages underwriters to use professional judgment based on their experience in making a lending decision.

American Home underwrites a borrower’s creditworthiness based solely on information that American Home believes is indicative of the applicant’s willingness and ability to pay the debt they would be incurring.

Non-conforming loans are generally documented to the requirements of Fannie Mae and Freddie Mac, in that the borrower provides the same information on the loan application along with documentation to verify the accuracy of the information on the application such as income, assets, other liabilities, etc. Certain non-conforming stated income or stated asset products allow for less verification documentation than Fannie Mae or Freddie Mac require. Certain non-conforming Alt-A products also allow for less verification documentation than Fannie Mae or Freddie Mac require. For these Alt-A products, the borrower may not be required to verify employment income, assets required to close or both.  For some other Alt-A products, the borrower is not required to provide any information regarding employment income, assets required to close or both.  Alt-A products with less verification documentation generally have other compensating factors such as higher credit score or lower loan-to-value requirements.

American Home obtains a credit report for each borrower that summarizes each borrower’s credit history. The credit report contains information from the three major credit repositories, Equifax, Experian and TransUnion. These companies have developed scoring models to identify the comparative risk of delinquency among applicants based on characteristics within the applicant’s credit report.  A borrower’s credit score represents a comprehensive view of the borrower’s credit history risk factors and is indicative of whether a borrower is likely to default on a loan. Some of the factors used to calculate credit scores are a borrower’s incidents of previous delinquency, the number of credit accounts a borrower has, the amount of available credit that a borrower has utilized, the source of a borrower’s existing credit, and recent attempts by a borrower to obtain additional credit. Applicants who have higher credit scores will, as a group, have fewer defaults than those who have lower credit scores. The minimum credit score allowed by American Home non-conforming loan guidelines for these loans is 620 and the average is typically over 700.  For American Home Alt-A products, the minimum credit score is generally 580. If the borrowers do not have a credit score they must have an alternative credit history showing at least three trade lines with no payments over 60 days past due in the last twelve months.

In addition to reviewing the borrower’s credit history and credit score, American Home underwriters closely review the borrower’s housing payment history. In general, for non-conforming loans the borrower should not have made any mortgage payments over 30 days after the due date for the most recent twelve months. In general, for Alt-A loans, the borrower may have no more than one payment that was made over 30 days after the due date for the most recent twelve months.

In order to determine if a borrower qualifies for a non-conforming loan, the loans have been either approved by Fannie Mae’s Desktop Underwriter, Freddie Mac’s Loan Prospector automated underwriting systems, a customized form of Fannie Mae’s Desktop Underwriter called Custom Desktop Underwriter, or they have been manually underwritten by American Home’s underwriters. American Home’s Alt-A loan products generally have been approved manually by contract underwriters provided by certain mortgage insurance companies or by American Home’s senior underwriters. American Home Solutions products must receive an approval from the Assetwise automated underwriting system. For manually underwritten loans, the underwriter must ensure that the borrower’s income will support the total housing expense on an ongoing basis.  Underwriters may give consideration to borrowers who have demonstrated an ability to carry a similar or greater housing expense for an extended period. In addition to the monthly housing expense, the underwriter must evaluate the borrower’s ability to manage all recurring payments on all debts, including the monthly housing expense. When evaluating the ratio of all monthly debt payments to the borrower’s monthly income (debt-to-income ratio), the underwriter should be aware of the degree and frequency of credit usage and its impact on the borrower’s ability to repay the loan. For example, borrowers who lower their total obligations should receive favorable consideration and borrowers with a history of heavy usage and a pattern of slow or late payments should receive less flexibility.

Every American Home Mortgage Loan is secured by a property that has been appraised by a licensed appraiser in accordance with the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation. The appraisers perform on-site inspections of the property and report on the neighborhood and property condition in factual and specific terms. Each appraisal contains an opinion of value that represents the appraiser’s professional conclusion based on market data of sales of comparable properties and a logical analysis with adjustments for differences between the comparable sales and the subject property and the appraiser’s judgment. In addition, each appraisal is reviewed for accuracy and consistency by American Home’s vendor management company or an underwriter of American Home or a mortgage insurance company contract underwriter.

The appraiser’s value conclusion is used to calculate the ratio (loan-to-value) of the loan amount to the value of the property. For the American Home Mortgage Loans made to purchase a property, this ratio is based on the lower of the sales price of the property and the appraised value. American Home sets various maximum loan-to-value ratios based on the loan amount, property type, loan purpose and occupancy of the subject property securing the loan. In general, American Home requires lower loan-to-value ratios for those loans that are perceived to have a higher risk, such as high loan amounts, loans in which additional cash is being taken out on a refinance transaction, loans on second homes or loans on investment properties. A lower loan-to-value ratio requires a borrower to have more equity in the property, which is a significant additional incentive to the borrower to avoid default on the loan. In addition, for all loans in which the loan-to-value ratio exceeds 80%, American Home requires that the loan be insured by a private mortgage insurance company that is approved by Fannie Mae and Freddie Mac. Loans with higher loan-to-value ratios require higher coverage levels.  For example, non-conforming loans with loan-to-value ratios of 85%, 90% and 95% require mortgage insurance coverage of 12%, 25% and 30%, respectively. Alt-A loans with full or alternative documentation and loan-to-value ratios of 85%, 90%, 95% and 97% require mortgage insurance coverage of 12-20%, 25%, 30% and 35%, respectively. Alt-A loans with loan-to-value ratios up to 100% require 35% coverage.

American Home realizes that there may be some acceptable quality loans that fall outside published guidelines and encourages “common sense” underwriting.  Because a multitude of factors are involved in a loan transaction, no set of guidelines can contemplate every potential situation.   Therefore, each case is weighed individually on its own merits and exceptions to American Home’s underwriting guidelines are allowed if sufficient compensating factors exist to offset any additional risk due to the exception.

American Home is an affiliate of American Home Mortgage Servicing, Inc., one of the Servicers.

Impac Funding Corporation

Impac Funding Corporation, also referred to herein as Impac, is a California corporation.  Impac is a wholly owned subsidiary of Impac Mortgage Holdings, Inc., a publicly traded company which trades on the New York Stock Exchange under the ticker symbol “IMH”.  Impac is a mortgage company that acquires, purchases and sells primarily first-lien non-conforming Alt-A mortgage loans from a network of third party correspondents, mortgage bankers, and brokers.  Impac originated approximately $9.5 billion of mortgage loans in 2003, $22.2 billion of mortgage loans in 2004, and $16.9 billion of mortgage loans during the first nine months of 2005.  Impac has been originating mortgage loans since 1995. The principal executive offices of Impac are located at 1401 Dove Street, Newport Beach, California 92660.

Impac is not aware of any legal proceedings pending against it or against any of its property, including any proceedings known to be contemplated by governmental authorities that are material to holders of the Certificates.

Underwriting Standards

General

Approximately 87.33% of the Mortgage Loans originated by Impac (the “Impac Mortgage Loans”) were underwritten pursuant to, or in accordance with, the standards of Impac’s Progressive Series Program which is described below.  Approximately 11.29% of the Impac Mortgage Loans were underwritten pursuant to, or in accordance with, the standards of the Progressive Express™ Program, each of which is described below. Approximately 1.38% of the Impac Mortgage Loans were acquired by Impac in bulk purchases from third-party originators, the underwriting standards of whom are generally similar to the underwriting standards of Impac as described below.

Details of Specific Programs

The following provisions apply to all of the Impac Mortgage Loans originated under Impac's Progressive Series Program and Progressive Express™ Program.

Eligibility.  Impac generally performs a pre-funding audit on each mortgage loan.  This audit includes a review for compliance with the related program parameters and accuracy of the legal documents.

Variations. Impac uses the following parameters as guidelines only.  On a case-by-case basis, Impac may determine that the prospective mortgagor warrants an exception outside the standard program guidelines.  An exception may be allowed if the loan application reflects certain compensating factors, including instances where the prospective mortgagor:

·

has demonstrated an ability to save and devote a greater portion of income to basic housing needs;

·

may have a potential for increased earnings and advancement because of education or special job training, even if the prospective mortgagor has just entered the job market;

·

has demonstrated an ability to maintain a debt free position;

·

may have short term income that is verifiable but could not be counted as stable income because it does not meet the remaining term requirements; and

·

has net worth substantial enough to suggest that repayment of the loan is within the prospective mortgagor's ability.

Appraisals. Impac does not publish an approved appraiser list for the conduit seller. Each conduit seller maintains its own list of appraisers, provided that each appraiser must:

·

be a state licensed or certified appraiser;

·

meet the independent appraiser requirements for staff appraisers, or, if appropriate, be on a list of appraisers specified by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the FDIC and the Office of Thrift Supervision under their respective real estate appraisal regulations adopted in accordance with Title XI of the Financial Institutions Reform Recovery and Enforcement Act of 1989, regardless of whether the seller is subject to those regulations;

·

be experienced in the appraisal of properties similar to the type being appraised;

·

be actively engaged in appraisal work; and

·

subscribe to a code of ethics that is at least as strict as the code of the American Institute of Real Estate Appraisers or the Society of Real Estate Appraisers.

With respect to Impac's Progressive Series Program or Progressive Express™ Program in general one full appraisal is required on each loan.  In addition, an automated valuation model, or AVM, or a quantitative appraisal report (Fannie Mae Form 2055), or a Hansen Pro, or enhanced desk review is obtained either (a) when the loan-to-value ratio is 90.01% to 95% or (b) when the property has multiple units and the loan-to-value ratio is greater than 80%, or (c) the loan is a Progressive Express™ No Doc Program and the loan-to-value ratio is 80.01% to 90%. In addition, a quantitative appraisal report (Fannie Mae Form 2055), or a Hansen Pro, or enhanced desk review is obtained when the loan is a Progressive Express™ No Doc Program and the loan-to-value ratio is equal to or greater than 90.01%.  An enhanced field review is also required when the loan-to-value ratio is equal to or greater than 95.01% or when the loan amount is above $650,000 to $750,000 or the property is located in Georgia and the loan-to-value ratio is 70.01% and above. Generally, when the loan amount is greater than $750,000 and equal to $1,000,000, a full appraisal with interior photos plus a Fannie Mae Form 2055 or an Enhanced Field Review are required or when the loan amount is greater than $1,500,000, two full appraisals with interior photos are required. At the underwriter's discretion, any one of the above appraisal reviews may be required when program parameters do not require an appraisal review.

The Progressive Series Program

General. The underwriting guidelines utilized in the Progressive Series Program, as developed by Impac, are intended to assess the borrower's ability and willingness to repay the mortgage loan obligation and to assess the adequacy of the mortgaged property as collateral for the mortgage loan. The Progressive Series Program is designed to meet the needs of borrowers with excellent credit, as well as those whose credit has been adversely affected. The Progressive Series Program consists of seven mortgage loan programs. Each program has different credit criteria, reserve requirements, qualifying ratios and loan-to-value ratio restrictions. Series I is designed for credit history and income requirements typical of “A” credit borrowers. In the event a borrower does not fit the Series I criteria, the borrower's mortgage loan is placed into either Series II, III, III+, IV, V or VI, depending on which series' mortgage loan parameters meets the borrower's unique credit profile. Series II, III, III+, IV, V or VI allow for less restrictive standards because of certain compensating or offsetting factors such as a lower loan-to-value ratio, verified liquid assets, job stability, pride of ownership and, in the case of refinanced mortgage loans, length of time owning the mortgaged property. The philosophy of the Progressive Series Program is that no single borrower characteristic should automatically determine whether an application for a mortgage loan should be approved or disapproved. Lending decisions are based on a risk analysis assessment after the review of the entire mortgage loan file. Each mortgage loan is individually underwritten with emphasis placed on the overall quality of the mortgage loan. The Progressive Series I, II, III, III+, IV, V and VI Program borrowers are required to have debt service-to-income ratios within the range of 45% to 60% calculated on the basis of monthly income and depending on the loan-to-value ratio of the mortgage loan.

Under the Progressive Series Program, Impac underwrites one- to four-family mortgage loans with loan-to-value ratios at origination of up to 100%, depending on, among other things, a borrower's credit history, repayment ability and debt service-to-income ratio, as well as the type and use of the mortgaged property. Second lien financing of the mortgaged properties may be provided by lenders other than Impac at origination; however, the combined loan-to-value ratio (“CLTV”) generally may not exceed 100%. Generally, when the loan-to-value ratio is 97.00% to 100.00%, second liens are ineligible. Mortgage loans with a loan-to-value ratio of up to 95.00% on owner-occupied mortgage properties are allowed a CLTV of up to 100%. Generally, second home-owner-occupied and non-owner-occupied mortgage properties are allowed a maximum CLTV of up to 95%.  Under Impac's 80/20 program, which is available to Progressive Series I and II borrowers only, Impac may allow second lien financing at the same time as the origination of the first lien with CLTVs of up to 100%.

The mortgage loans in the Progressive Series Program generally bear rates of interest that are greater than those which are originated in accordance with Freddie Mac and Fannie Mae standards. In general, the maximum amount for mortgage loans originated under the Progressive Series Program is $2 million for owner-occupied, second home and non-owner occupied properties.  Generally, on owner-occupied properties, with a minimum credit score of 620, the maximum loan-to-value is 70% on full and reduced documentation, and the CLTV generally is 90% on full documentation and 80% on reduced documentation. Generally, on second home and non-owner occupied, with a minimum credit score of 681, the maximum loan-to-value is 60% full and reduced documentation, and the CLTV is 80% on full documentation and reduced documentation; on a second home, with a minimum credit score of 620, the maximum loan-to-value is 70%, the CLTV is 90% with a loan amount of $1 million; generally on non-owner occupied properties, with a minimum credit score of 620, the maximum loan-to-value is 70%, and the CLTV is 90% with a loan amount of $1 million.

All of the mortgage loans originated under the Progressive Series I, II and III Programs are prior approved and/or underwritten either by employees of Impac or underwritten by contracted mortgage insurance companies or delegated conduit sellers. Generally all of the mortgage loans originated under the Series III+, IV, V and VI Programs are prior approved and/or underwritten by employees of Impac and underwritten by designated conduit sellers. Generally, all of the Series I, Series II and Series III Program mortgage loans with loan-to-value ratios at origination in excess of 80% have mortgage insurance which may include insurance by Radian, Republic Mortgage Insurance Corporation, General Electric Mortgage Insurance, PMI or United Guaranty Insurance.  The borrower may elect to have primary mortgage insurance covered by their loan payment.  If the borrower makes such election, a loan-to-value ratio between 80.01% and 85.00% requires 22% coverage, a loan-to-value ratio between 85.01% and 90.00% requires 25% coverage, a loan-to-value ratio between 90.01% and 95.00% requires 30% coverage and a loan-to-value ratio between 95.01% and 100% requires 35% coverage.  Generally, when the borrower does not make such an election, the related mortgage loan will be covered by a selective modified primary mortgage insurance policy issued by Radian or PMI based on the borrowers credit grade and documentation type to Impac providing coverage in the amount of (i) 22% coverage for a mortgage loan with a loan-to-value ratio between 80.01% and 85.00%, (ii) 25% coverage for a mortgage loan with a loan-to-value ratio between 85.01% and 90.00%, (iii) 30% coverage for a mortgage loan with a loan-to-value ratio between 90.01% and 95.00% and (iv) 35% coverage for a mortgage loan with a loan-to-value ratio between 95.01% and 100%.  None of the Series III+ Program mortgage loans with loan-to-value ratios at origination in excess of 80% will be insured by a Primary Insurance Policy. All Series IV, V and VI Program mortgage loans have loan-to-value ratios at origination which are less than or equal to 85% and do not require a Primary Insurance Policy. Impac receives verbal verification from the conduit seller of employment prior to funding or acquiring each Progressive Series Program mortgage loan.

Full/Alternative Documentation and Reduced Documentation Progressive Series Programs.  Each prospective borrower completes a mortgage loan application which includes information with respect to the applicant's liabilities, income, credit history, employment history and personal information. Impac requires a credit report on each applicant from a credit reporting company. The report typically contains information relating to credit history with local and national merchants and lenders, installment debt payments and any record of defaults, bankruptcies, repossessions or judgments.

The Progressive Series Program allows for approval of an application pursuant to the (a) Full/Alternative Documentation Program, or (b) the Limited Documentation Program or the “No Income, No Assets” Program or the No Ratio Program (any of the foregoing, a “Reduced Documentation Program”). The Full/Alternative Documentation Program requires the following documents: (i) Uniform Residential Loan Application (Fannie Mae Form 1003 or Freddie Mac Form 65), (ii) Statement of Assets and Liabilities (Fannie Mae Form 1003A or Freddie Mac Form 65A), (iii) In-File Tri-Merged Credit Report or Residential Mortgage Credit Report with records obtained from at least two separate repositories, (iv) Verification of Employment Form providing a complete two year employment history, (v) Verification of Deposit Form for all liquid assets, verifying minimum cash reserves based upon the loan-to-value ratio and borrower's income, and (vi) a Uniform Residential Appraisal Report (Fannie Mae Form 1004 or Freddie Mac Form 70). The Full/Alternative Documentation Program allows for the use of certain alternative documents in lieu of the Verification of Deposit Form and Verification of Employment Form. These include W-2 Statements, tax returns and one paycheck from the most recent full month for verification of income and the most recent one month personal bank statement for verification of liquid assets. In addition, self-employed borrowers must provide federal tax returns for the previous two years, including K-1's, federal business tax returns for two years, year-to-date financial statements and a signed IRS Form 4506 (Request for Copy of Tax Returns).  However, Borrowers with a credit score of 680 and above, the most recent paystub with a minimum 15-day period and most recent 1-year W-2 is required. Self-employed borrowers whose sole income is from Schedule "C" may utilize a processed IRS 4506 to qualify in lieu of providing prior 2-years tax returns.

Under the Full Income Documentation/Stated Assets Program available to borrowers in the Series I, II and III programs, the borrower provides full income and employment documentation information, which Impac is required to verify.  The borrower states assets on the Residential Loan Application (Fannie Mae Form 1003 or Freddie Mac Form 65); however, verification of assets is not required.  With respect to the Full Income Documentation/Stated Assets Program, a mortgage loan is allowed to have a loan-to-value ratio at origination of up to 100%.

Under each Reduced Documentation Program, which is available to borrowers in every Progressive Series Program, Impac obtains from prospective borrowers either a verification of deposits or bank statements for the most recent one-month period preceding the mortgage loan application. Under this program the borrower provides income information on the mortgage loan application, and the debt service-to-income ratio is calculated. However, income is not verified. Permitted maximum loan-to-value ratios (including secondary financing) under the Reduced Documentation Program generally are limited.

Under the “Stated Income Stated Assets” program available to borrowers in the Series I & II program, the borrower provides income and asset information, which Impac is not required to verify, on the mortgage loan application.  However, a debt-to-income ratio is calculated.  Employment information is provided and is verbally verified.  Permitted maximum loan-to-value ratios (including secondary financing) under the Stated Income Stated Asset program generally are limited.

Under the “No Ratio” program available to borrowers in the Series I and II program, the borrower provides no income information, but provides employment and asset information, which Impac is required to verify, on the mortgage loan application.  With respect to the “No Ratio” program, a mortgage loan with a loan-to-value ratio at origination in excess of 80% is generally not eligible.

Under the “No Income, No Assets” Program available to borrowers in the Series I Program, the borrower provides no income information, but provides employment and unverified asset information on the mortgage loan application.  With respect to the “No Income, No Assets” Program, a mortgage loan with a loan-to-value ratio at origination in excess of 80% is generally not eligible.

Under the Lite Income/Stated Assets Program which is available to borrowers for the Series I, II, and III Programs, Impac obtains from prospective salaried borrowers a 30-day pay stub and from prospective self-employed borrowers bank statements for the most recent twelve-month period preceding the mortgage loan application and a year-to-date profit and loss statement. Under this program the borrower provides income information on the mortgage loan application, and the debt service-to-income ratio is provided. The maximum loan-to-value ratio under this program is 97%.

Under the Lite Documentation Program, which is available to Series III+, Series IV, and Series V Program self-employed borrowers, the previous 12 months bank statements are utilized in lieu of tax returns. Under these programs the borrower provides income information on the mortgage loan applicant and the debt-to-service-to income ratio is calculated. However, income is not verified. Permitted maximum loan-to-value ratios (including secondary financing) under the Lite Documentation Program generally are limited.

Under all Progressive Series Programs, Impac or the conduit seller verbally verifies the borrower's employment prior to closing. Credit history, collateral quality and the amount of the down payment are important factors in evaluating a mortgage loan submitted under one of the Reduced Documentation Programs. In addition, in order to qualify for a Reduced Documentation Program, a mortgage loan must conform to certain criteria regarding maximum loan amount, property type and occupancy status. Mortgage loans having a loan-to-value ratio at origination in excess of 95% where the related mortgaged property is used as a second or vacation home or is a non-owner occupied home are not eligible for the Series I, II or III Reduced Documentation Program. In general, the maximum loan amount for mortgage loans underwritten in accordance with Series I, II and III Reduced Documentation Program is $2,000,000 for purchase transactions, rate-term transactions and cash out refinance transactions. The maximum loan amount is $500,000 for mortgage loans underwritten in accordance with Series III+ Reduced Documentation Program, $400,000 for mortgage loans underwritten in accordance with Series IV and V Reduced Documentation Program, and $175,000 for mortgage loans underwritten in accordance with Series VI Reduced Documentation Program, however, exceptions are granted on a case-by-case basis. Secondary financing is allowed in the origination of the Reduced Documentation Program but must meet the CLTV requirements described above and certain other requirements for subordinate financing. In all cases, liquid assets must support the level of income of the borrower as stated in proportion to the type of employment of the borrower. Full Documentation is requested by the underwriter if it is the judgment of the underwriter that the compensating factors are insufficient for loan approval.

Credit History. The Progressive Series Program defines an acceptable credit history in each of the Series I, II and III Programs. The Series I Program defines an acceptable credit history as a borrower who has “A” credit, meaning a minimum of four trade accounts, including a mortgage and/or rental history, along with one non-traditional trade account to satisfy five trades, with 24 months credit history, or at 80% loan-to-value and less 4 trades minimum, 2 trades with 12 months credit history plus 1 trade with a minimum 24 months credit history plus 24 months mortgage or rent history, no 30-day delinquent mortgage payments in the last 12 months, and a maximum of one 30-day delinquent payments on any revolving credit account within the past 12 months and a maximum of one 30-day delinquent payment on installment credit account within the past 12 months. However, if the loan-to-value ratio of the loan is 90% or less, consumer credit is disregarded. Bankruptcies must be at least 24 months old, fully discharged and the borrower must have re-established or re-affirmed satisfactory credit history.  Foreclosures are not allowed in the past 3 years.  No judgments, suits, tax liens, other liens, collections or charge-offs in the past 24 months, generally older items must be paid prior to or at closing; provided that any such judgments, suits, other liens, collections or charge-offs in the past 24 months must not exceed $500 in the aggregate and any such judgments, suits, other liens, collections or charge-offs older than 24 months must not exceed $2,000 in the aggregate, in either case without regard to any medical judgments, suits, tax liens, other liens, collections or charge-offs that are not excessive or impact the borrower’s ability to repay the loan.

With respect to the Series II Program, a borrower must have a minimum of four trade accounts including a mortgage and/or rental history, along with one non-traditional trade account to satisfy five trades, 80% loan-to-value and less 4 trades minimum, 2 trades with 12 months credit history plus 1 trade with a minimum 24 months credit history plus 24 months mortgage or rent history, no 30-day delinquent mortgage payments in the last 12 months, and a maximum of one 30-day delinquent payment within the past 12 months on any installment credit account. However, if the loan-to-value ratio of the loan is 90% or less, consumer credit is disregarded. All bankruptcies must be at least 24 months old, fully discharged and the borrower must have re-established or re-affirmed satisfactory credit history.  Foreclosures are not allowed in the past 3 years.  No judgments, suits, tax liens, other liens, collections or charge-offs in the past 24 months, generally older items must be paid prior to or at closing; provided that any such judgments, suits, other liens, collections or charge-offs in the past 24 months must not exceed $500 in the aggregate and any such judgments, suits, other liens, collections or charge-offs older than 24 months must not exceed $2,000 in the aggregate, in either case without regard to any medical judgments, suits, tax liens, other liens, collections or charge-offs that are not excessive or impact the borrower’s ability to repay the loan.

With respect to the Series III Program, a borrower must have a minimum of four trade accounts including a mortgage and/or rental history, along with one non-traditional trade account to satisfy five trades, with 24-months credit history, a borrower may not have more than two 30-day delinquent mortgage payments within the past 12 months. Bankruptcies must be at least 24 months old, fully discharged and the borrower must have re-established or re-affirmed satisfactory credit history. Foreclosures are not allowed in the past 3 years.  No judgments, suits, tax liens, other liens, collections or charge-offs in the past 24 months, generally older items must be paid prior to or at closing.

With respect to the Series III+ Program, a borrower must have a minimum of two trade accounts including a mortgage and/or rental history, along with one non-traditional trade account to satisfy three trades, with 12 months credit history, a borrower may not have more than two 30-day delinquent mortgage payments within the past 12 months.  Any open judgments, suits, liens, collections and charge-offs not to exceed $500 cumulatively within the past 12 months generally are paid prior to or at closing. Bankruptcies must be at least 24 months old, fully discharged and the borrower must have re-established or re-affirmed satisfactory credit history.  Foreclosures are not allowed during the past 24 months. Tax liens are not allowed within the last 12 months.

With respect to the Series IV Program, a borrower must have a minimum of two trade accounts including a mortgage and/or rental history, along with one non-traditional trade account to satisfy three trades, with 12 months credit history, a borrower may not have more than four 30-day delinquent mortgage payments or three 30-day delinquent mortgage payments and one 60-day delinquent mortgage payment within the past 12 months.  Any open judgments, suits, liens, collections and charge-offs not to exceed $1,000 cumulatively within the past 12 months generally are paid prior to or at closing. Bankruptcies must be at least 18 months old, fully discharged and the borrower must have re-established or re-affirmed satisfactory credit history. Foreclosures are not allowed in the past 18 months.  Tax liens are not allowed within the last 12 months.

With respect to the Series V Program, a borrower must have a minimum of two trade accounts including a mortgage and/or rental history, along with one non-traditional trade account to satisfy three trades, with 12 months credit history, a borrower may not have more than five 30-day delinquent mortgage payments or two 60-day delinquent mortgage payments or one 90-day delinquent mortgage payment within the past 12 months.  Any open judgments, suits, liens, collections and charge-offs not to exceed $4,000 cumulatively within the past 12 months generally are paid prior to or at closing. Bankruptcies must be at least 12 months old, fully discharged and the borrower must have re-established or re-affirmed satisfactory credit history. Foreclosures are not allowed in the past 12 months. Tax liens are not allowed within the last 12 months.

With respect to the Series VI program, a borrower must have a minimum of two trade accounts including a mortgage and/or rental history, along with one non-traditional trade account to satisfy three trades, with 12 months credit history, a borrower may not have more than one 90-day delinquent mortgage payment within the past 12 months.  Any open judgments, suits, liens, collections and charge-offs generally are paid prior to or at closing.  Bankruptcies must be at least 6 months old. Foreclosures are not allowed in the past 6 months.  Tax liens are not allowed within the last 6 months.

The Progressive Express™ Programs

Progressive Express™ Programs with Documentation

General.  In July 1996, Impac developed an additional series to the Progressive Program, the “Progressive Express™ Program.” The concept of the Progressive Express™ Program is to underwrite the loan focusing on the borrower's Credit Score, ability and willingness to repay the mortgage loan obligation, and assess the adequacy of the mortgaged property as collateral for the loan.  The Credit Score is an electronic evaluation of past and present credit accounts on the borrower's credit bureau report.  This includes all reported accounts as well as public records and inquiries.  The Progressive Express™ Program offers six levels of mortgage loan programs.  The Progressive Express™ Program has a minimum Credit Score that must be met by the borrower's primary wage earner and does not allow for exceptions to the Credit Score requirement.  The Credit Score requirement is as follows:  Progressive Express™ I above 680, Progressive Express™ II 680-620, Progressive Express™ III 619-601, Progressive Express™ IV 600-581, Progressive Express™ V 580-551, and Progressive Express™ VI 550-500.  Each Progressive Express™ program has different Credit Score requirements, credit criteria, reserve requirements, and loan-to-value ratio restrictions.  Progressive Express™ I is designed for credit history and income requirements typical of “A+” credit borrowers.  In the event a borrower does not fit the Progressive Express™ I criteria, the borrower's mortgage loan is placed into either Progressive Express™ II, III, IV, V, or VI, depending on which series' mortgage loan parameters meets the borrowers unique credit profile.

All of the mortgage loans originated under the Progressive Express™ program are prior approved and/or underwritten either by employees of Impac or underwritten by contracted mortgage insurance companies or delegated conduit sellers. Under the Progressive Express™ Program, Impac underwrites single family dwellings with loan-to-value ratios at origination of up to 95%.  In general, the maximum amount for mortgage loans originated under the Progressive Express Program is $750,000; however, Impac may approve mortgage loans on a case-by-case basis where generally the maximum loan amount is up to $1 million, owner-occupied, with a minimum credit score of 681. The borrower must disclose employment and assets which both are verified by Impac, the loan-to-value must not be greater than 70%, the CLTV must not be greater than 80% and the property must be single-family residence, excluding condominiums.  Progressive Express™ I & II allow owner-occupied and second home single-family residence property subject to a maximum loan-to-value ratio of 95% and a maximum 100% CLTV on owner-occupied mortgaged properties and 95% on mortgaged properties that are second homes. Express III allows owner-occupied single-family residence property subject to a maximum 90% loan-to-value ratio and a CLTV of 95%. Progressive Express™ I & II allow owner-occupied and non-owner occupied properties to a maximum 90% loan-to-value ratio on 1-2 units and 80% loan-to-value ratio on 3-4 units with a maximum 100% CLTV on owner-occupied and Express II non-owner occupied to 95% CLTV. Express III allow non-owner occupied subject to a maximum 80% loan-to-value ratio on 1-4 units with a maximum 95% CLTV. Express IV, V and VI allow owner-occupied and second homes only and non-owner occupied property is not allowed. Express IV owner-occupied is subject to a maximum 90% loan-to-value ratio, Express V is subject to a maximum of 80% loan-to-value ratio and Express VI is subject to a maximum of 75% loan-to-value ratio and CLTV is not allowed on Express IV, V or VI. Express IV, V or VI loans secured by a second home are subject to a maximum of 70% loan-to-value ratio on Express IV, V and VI and CLTV is not allowed. Progressive Express™ Programs I through IV loans with loan-to-value ratios at origination in excess of 80% are generally insured by MGIC, Radian or RMIC.  The borrower can elect to have primary mortgage insurance covered by their loan payment.  If the borrower makes such election, a loan-to-value ratio between 80.01% and 85.00% requires 22% coverage, a loan-to-value ratio between 85.01% and 90.00% requires 25% coverage, a loan-to-value ratio between 90.00% and 95.00% requires 30% coverage and a loan-to-value ratio between 95.01% and 100% requires 35% coverage.  Generally, when the  borrower does not make such an election, the related mortgage loan will be covered by a modified primary mortgage insurance policy issued by Radian or PMI based on the borrowers credit grade and documentation type to Impac providing coverage in the amount of (i) a loan-to-value ratio between 80.01% and 85.00% requires 22% coverage, (ii) a loan-to-value ratio between 85.01% and 90.00% requires 25% coverage, (iii) 30% for a mortgage loan with a loan-to-value ratio between 90.01% and 95.00% and (iv) 35% for mortgage loan with a loan-to-value ratio between 95.01% and 100%.

Each borrower completes a Residential Loan Application (Fannie Mae Form 1003 or Freddie Mac Form 65). The borrower must disclose employment and assets on the application, however, there is no verification of the information. If the borrower elects to verify assets, Impac obtains from the borrower either verification of deposits or bank statements for the most recent one-month period preceding the mortgage loan application. The conduit seller obtains a verbal verification of employment on each borrower.

Impac uses the foregoing parameters as guidelines only. Impac may include certain provisions in the note that Impac may not enforce. Full documentation is requested by the underwriter if it is the judgment of the underwriter that the compensating factors are insufficient for loan approval under the Progressive Express™ Product Line.

Credit History.  The Progressive Express™ Program defines an acceptable credit history in each of the programs I through VI.  Progressive Express™ I defines an acceptable credit history as a borrower who has “A+” credit, meaning a minimum of four trade accounts including a mortgage and/or rental history, along with one non-traditional trade account to satisfy five trades, no 30-day delinquent mortgage payments in the past 12 months, and a maximum of one 30-day delinquent payments on any revolving credit accounts within the past 12 months and one 30-day delinquent payment on any installment credit accounts within the past 12 months. However, if the loan-to-value ratio of the loan is 90% or less, consumer credit is disregarded. All bankruptcies must be at least 24 months old, fully discharged and the borrower must have re-established or re-affirmed satisfactory credit history.  Foreclosures are not allowed in the past 3 years.  No judgments, suits, tax liens, other liens, collections or charge-offs in the past 24 months, generally older items must be paid prior to or at closing.

With respect to Progressive Express™ II, a borrower must have a minimum of four trade accounts including a mortgage and/or rental history, along with one non-traditional trade account to satisfy five trades, and no late mortgage payments for the past 12 months.  In addition, a borrower must have a maximum of two 30-day delinquent payments on any revolving credit accounts within the past 12 months and one 30-day delinquent payment on any installment credit accounts within the past 12 months.  However, if the loan-to-value ratio of the loan is 90% or less, revolving and installment credit is disregarded.  All bankruptcies must be at least 24 months old, fully discharged and the borrower must have re-established or re-affirmed satisfactory credit history.  Foreclosures are not allowed in the past 3 years.  No judgments, suits, tax liens, other liens, collections or charge-offs allowed within the past 24 months, generally older items must be paid prior to or at closing.

With respect to Progressive Express™ III, a borrower must have a minimum of four trade accounts including a mortgage and/or rental history, along with one non-traditional trade account to satisfy five trades and no more than one 30-day late mortgage payment for the past 12 months.  All bankruptcies must be at least 24 months old, fully discharged and the borrower must have re-established or re-affirmed satisfactory credit history.  Foreclosures are not allowed in the past 3 years.  No judgments, suits, tax liens, other liens, collections or charge-offs allowed within the past 24 months, generally older items must be paid prior to or at closing.

With respect to Progressive Express™ IV, a borrower must have a minimum of four trade accounts including a mortgage and/or rental history, along with one non-traditional trade account to satisfy five trades, no more than two 30-day late mortgage payments for the past 12 months. All bankruptcies must be at least 24 months old, fully discharged and the borrower must have re-established or re-affirmed satisfactory credit history.  Foreclosures are not allowed in the past 3 years. No judgments, suits, tax liens, other liens, collections or charge-offs allowed within the past 24 months, generally older items must be paid prior to or at closing.

With respect to Progressive Express™ V, a borrower must have a minimum of two trade accounts including a mortgage and/or rental history, along with one non-traditional trade account to satisfy three trades, with 12 months credit history, no more than two 30-day late mortgage payments in the past 12 months.  All bankruptcies must be at least 24 months old, fully discharged and the borrower must have re-established or re-affirmed satisfactory credit history.  Foreclosures are not allowed in the past 24 months.  Judgments, suits, liens, collections or charge-offs, may not exceed $500 cumulatively within the past 12 months, and must be paid prior to or at closing.  Tax liens are not allowed within the last 12 months.

With respect to Progressive Express™ VI, a borrower must have a minimum of two trade accounts including a mortgage and/or rental history, along with one non-traditional trade account to satisfy three trades, with 12 months credit history, no more than four 30-day or three 30-day and one 60-day late mortgage payments in the past 12 months.  All bankruptcies must be at least 18 months old and fully discharged.  Foreclosures are not allowed in the past 18 months.  Judgments, suits, liens, collections or charge-offs, may not exceed $1,000 cumulatively within the past 12 months, and must be paid prior to or at closing.  Tax liens are not allowed within the last 12 months.

Progressive Express™ No Doc Program

In May 1999, Impac introduced a Progressive Express™ No Doc Program (the “No Doc program”).  The concept of the No Doc program is to underwrite the loan focusing on the borrower's credit score, ability and willingness to repay the mortgage loan obligation, and assess the adequacy of the mortgaged property as collateral for the loan.  The No Doc program has a minimum credit score and does not allow for exceptions to the credit score.  The credit score requirement is as follows: 681 for Progressive Express™ No Doc I and 620 for Progressive Express™ No Doc II.  Each program has a different credit score requirement and credit criteria.

All of the mortgage loans originated under the Progressive Express™ No Doc program are prior approved and/or underwritten either by employees of Impac or underwritten by contracted mortgage insurance companies or delegated conduit sellers.  Under the Progressive Express™ No Doc program, Impac employees or contracted mortgage insurance companies or delegated conduit sellers underwrite single family dwellings with loan-to-value ratios at origination up to 95% and $500,000.  In order for the property to be eligible for the Progressive Express™ No Doc program, it must be a single family residence (single unit only), condominium and/or planned unit development (PUD) or 2-units to a maximum loan-to-value ratio of 80%.  The borrower can elect to have primary mortgage insurance covered by their loan payment.  If the borrower makes such election, the loan-to-value ratios at origination in excess of 80%, generally are insured by MGIC, Radian or RMIC.  For loan-to-value ratios of 80.01% to 85.00%, mortgage insurance coverage is 22%, for loan-to-value ratios 85.01% to 90.00%, mortgage insurance coverage is 25% and for loan-to-value ratios of 90% to 95%, mortgage insurance coverage is 30%. Generally, when the borrower's credit score is less than 660 or if the borrower does not make such election, the related mortgage loan will be covered by a modified primary insurance policy issued by Radian to Impac providing coverage in the amount of 22% for a mortgage loan with a loan-to-value ratio between 80.01% and 85.00%, 25% for a mortgage loan with a loan-to-value ratio between 85.01% and 90.00% and 30% for a mortgage loan with a loan-to-value ratio of 90.01% to 95.00%.

Each borrower completes a Residential Loan Application (Fannie Mae Form 1003 or Freddie Mac Form 65).  The borrower does not disclose income, employment, or assets and a Verbal Verification of Employment is not provided.  Generally, borrowers provide a daytime telephone number as well as an evening telephone number.  If the prospective borrower elects to state and verify assets on the Residential Loan Application, Originator obtains from prospective borrowers either a verification of deposits or bank statements for the most recent one-month period preceding the mortgage loan application.

Credit History.  The Progressive Express™ No Doc program defines an acceptable credit history as follows: Progressive Express™ No Doc I defines an acceptable credit history as a borrower who has “A+” credit, meaning a minimum of four trade accounts including a mortgage and/or rental history, along with one non-traditional trade account to satisfy five trades, and no 30-day delinquent mortgage payments in the past 12 months and a maximum of one 30-day delinquent payments on any revolving credit accounts within the past 12 months and one 30-day delinquent payment on any installment credit accounts within the past 12 months.  However, if the loan-to-value ratio of the loan is 90% or less, revolving and installment credit is disregarded.  All bankruptcies must be at least 24 months old, fully discharged and the borrower must have re-established or re-affirmed a satisfactory credit history.  Foreclosures are not allowed in the past 3 years.  No judgments, suits, tax liens, other liens, collections or charge-offs are allowed within the past 24 months, generally older items must be paid prior to or at closing.

With respect to Progressive Express™ No Doc II a borrower must have a minimum of four trade accounts including a mortgage and/or rental history, along with one non-traditional trade account to satisfy five trades, and no late mortgage payments for the past 12 months and a maximum of two 30-day delinquent payments on any revolving credit accounts and one 30-day delinquent payment on any installment credit accounts within the past 12 months.  However, if the loan-to-value ratio of the loan is 90% or less, revolving and installment credit is disregarded.  All bankruptcies must be at least 24 months old, fully discharged and the borrower must have re-established or re-affirmed satisfactory credit history.  Foreclosures are not allowed in past 3 years.  No judgments, suits, tax liens, other liens, collections or charge-offs allowed within the past 24 months, generally older items must be paid prior to or at closing.

ISSUING ENTITY

Deutsche Alt-B Securities Mortgage Loan Trust 2006-AB3 is a common law trust formed under the laws of the State of New York pursuant to the pooling and servicing agreement. The Pooling and Servicing Agreement constitutes the “governing instrument” under the laws of the State of New York. After its formation, the Deutsche Alt-B Securities Mortgage Loan Trust 2006-AB3 will not engage in any activity other than (i) acquiring and holding the Mortgage Loans and the other assets of the Trust and proceeds therefrom, (ii) issuing the certificates, (iii) making payments on the certificates and payments to the Insurer in respect of the premium and reimbursement amounts and (iv) engaging in other activities that are necessary, suitable or convenient to accomplish the foregoing or are incidental thereto or connected therewith.  The foregoing restrictions are contained in the pooling and servicing agreement.  These restrictions cannot be amended without the consent of holders of certificates evidencing at least 51% of the voting rights and, in the event such amendment would be adverse to the Insurer, without the consent of the Insurer.  For a description of other provisions relating to amending the Pooling and Servicing Agreement, please see “Description of the Agreements — Amendment” in the prospectus.

The assets of the Deutsche Alt-B Securities Mortgage Loan Trust 2006-AB3 will consist of the Mortgage Loans and certain related assets.

Deutsche Alt-B Securities Mortgage Loan Trust 2006-AB3’s fiscal year end is December 31.

THE DEPOSITOR

Deutsche Alt-A Securities, Inc., the Depositor, is a special purpose corporation incorporated in the State of Delaware on August 29, 2002. The principal executive offices of the Depositor are located at 60 Wall Street, New York, New York 10005. Its telephone number is (212) 250-5000. The Depositor does not have, nor is it expected in the future to have, any significant assets.

The limited purposes of the Depositor are, in general, to acquire, own and sell mortgage loans and financial assets; to issue, acquire, own, hold and sell securities and notes secured by or representing ownership interests in mortgage loans and other financial assets, collections on the mortgage loans and related assets; and to engage in any acts that are incidental to, or necessary, suitable or convenient to accomplish, these purposes.  The Depositor does not have, nor is it expected in the future to have, any significant assets. After issuance and registration of the securities contemplated in this prospectus supplement, the prospectus and any supplement hereto, the Depositor will have no material duties or responsibilities with respect to the pool assets or securities.

All of the shares of capital stock of the Depositor are held by DB Structured Products, Inc., a Delaware corporation.

THE SPONSOR

DB Structured Products, Inc. is the Sponsor.  The Sponsor was incorporated in the State of Delaware on February 4, 1970 under the name “Sharps Pixley Incorporated”.  The name of the Sponsor was changed on January 3, 1994 to Deutsche Bank Sharps Pixley Inc., and subsequently changed on January 2, 2002 to DB Structured Products, Inc. The Sponsor maintains its principal office at 60 Wall Street, New York, New York 10005.  Its telephone number is (212) 250-2500.

Through December 31, 2005, the Sponsor has purchased over $26 billion in residential mortgage loans.  This includes the purchase of newly originated non-agency loans, as well as seasoned, program exception, sub-performing and non-performing loans. The Sponsor is responsible for pooling the mortgage loans to be securitized by the depositor, negotiating the principal securitization transaction documents and participating with the underwriter in the structuring of such transactions.

The Sponsor has been securitizing residential mortgage loans since 2004.  The following table describes size, composition and growth of the Sponsor’s total portfolio of assets it has securitized as of the dates indicated.

STATIC POOL INFORMATION

Static pool information material to this offering may be found at  http://regab.db.com.

Information provided through the Internet address above will not be deemed to be a part of this prospectus or the registration statement for the securities offered hereby if it relates to any prior securities pool formed or vintage before January 1, 2006, or with respect to the Mortgage Pool (if applicable) any period before January 1, 2006.

DESCRIPTION OF THE CERTIFICATES

General

The Deutsche Alt-B Securities Mortgage Loan Trust, Series 2006-AB3, Mortgage Backed Pass-Through Certificates will consist of twenty-three classes of certificates, designated as (i) the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5A, Class A-5B, Class A-6 Class A-7 and Class A-8 Certificates (collectively, the “Senior Certificates”); (ii) the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9, Class M-10 and Class M-11 Certificates (collectively, the “Mezzanine Certificates”); (iii) the Class CE Certificates; (iv) the Class P Certificates; and (v) the Class R Certificates or “Residual Certificates”. Only the Senior Certificates and the Mezzanine Certificates (collectively, the “Offered Certificates”) are offered by this prospectus supplement.  The aggregate initial certificate principal balance of the certificates will be less than the aggregate principal balance of the Initial Mortgage Loans as of the Cut-Off Date plus the amounts on deposit in the Pre-Funding Account on the Closing Date.

Distributions on the Offered Certificates will be made on the 25th day of each month, or, if that day is not a business day, on the next succeeding business day, beginning in July 2006 (each, a “Distribution Date”), to the persons in whose names such certificates are registered at the close of business on the Record Date. The “Record Date” for the Offered Certificates is the last business day of the month immediately preceding the month in which the related Distribution Date occurs.  The “Due Date” related to each Distribution Date will be the first day of the month in which such Distribution Date occurs.  The “Due Period” related to each Distribution Date and the Mortgage Loans will be the period commencing on the second day of the month preceding the month in which such Distribution Date occurs and ending at close of business on the first day of the month in which such Distribution Date occurs.  The “Determination Date” will be a day not later than the 15th day of the month in which such Distribution Date occurs.  The “Prepayment Period” related to each Distribution Date will be (i) with respect to the Mortgage Loans serviced by American Home Mortgage Servicing, Inc. (“American Home Servicing”), the calendar month immediately preceding the month in which such Distribution Date occurs, and (ii) with respect to all of the Mortgage Loans serviced by Countrywide Home Loans Servicing, LP (“Countrywide Servicing”) and certain of the Mortgage Loans serviced by GMAC Mortgage Corporation (“GMACM”), the period commencing on the 16th day of the month preceding the month in which such Distribution Date occurs and ending on the 15th day of the month in which such Distribution Date occurs, and with respect to certain others of the Mortgage Loans serviced by GMACM, the calendar month immediately preceding the month in which such Distribution Date occurs.

The certificates represent in the aggregate the entire beneficial ownership interest in the trust fund established by the Depositor into which the Mortgage Loans will be deposited.  The Securities Administrator will execute and authenticate and the Trustee will deliver the certificates pursuant to a Pooling and Servicing Agreement to be dated as of the Cut-Off Date among the Depositor, the Master Servicer, the Securities Administrator and the Trustee (the “Pooling and Servicing Agreement”), a form of which is filed as an exhibit to the registration statement of which this prospectus supplement is a part.  Reference is made to the prospectus for important additional information regarding the terms and conditions of the Pooling and Servicing Agreement and the certificates.  It is a condition to the issuance of the Offered Certificates that they receive the ratings from Standard & Poor’s Ratings Service, a division of The McGraw-Hill Companies, Inc. (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s”) indicated under “Certificate Ratings” in this prospectus supplement.

The Offered Certificates are offered in minimum denominations equivalent to at least $25,000 initial certificate principal balance each and multiples of $1 in excess thereof.  

Book-Entry Registration

The Offered Certificates will be book-entry certificates (for so long as they are registered in the name of the applicable depository or its nominee, the “Book-Entry Certificates”). Persons acquiring beneficial ownership interests in the Book-Entry Certificates (“Certificate Owners”) will hold such certificates through the Depository Trust Company (“DTC”) in the United States, or Clearstream Banking Luxembourg, formerly known as Cedelbank SA (“Clearstream”), or the Euroclear System (“Euroclear”) in Europe, if they are participants of such systems (“Clearstream Participants“ or “Euroclear Participants”, respectively), or indirectly through organizations which are Clearstream or Euroclear Participants. The Book-Entry Certificates will be issued in one or more certificates which equal the aggregate certificate principal balance of such Certificates and will initially be registered in the name of Cede & Co., the nominee of DTC. Clearstream and Euroclear will hold omnibus positions on behalf of their participants through customers’ securities accounts in Clearstream’s and Euroclear’s names on the books of their respective depositaries which in turn will hold such positions in customers’ securities accounts in the depositaries, names on the books of DTC. Citibank, N.A. will act as depositary for Clearstream, and JPMorgan Chase Bank, N.A. will act as depository for Euroclear (in such capacities, individually the “Relevant Depositary“ and collectively the “European Depositories”). Investors may hold such beneficial interests in the Book-Entry Certificates in minimum dollar denominations of $25,000 and integral multiples of $1.00 in excess thereof.  Except as described below, no Certificate Owner acquiring a Book-Entry Certificate (each, a “beneficial owner”) will be entitled to receive a physical certificate representing such certificate (a “Definitive Certificate”). Unless and until Definitive Certificates are issued, it is anticipated that the only “Certificateholder“ of the Offered Certificates will be Cede & Co., as nominee of DTC. Certificate Owners will not be Certificateholders as that term is used in the Pooling and Servicing Agreement.  Certificate Owners are only permitted to exercise their rights indirectly through DTC and participants of DTC (“DTC Participants”).The Certificate Owner’s ownership of a Book-Entry Certificate will be recorded on the records of the brokerage firm, bank, thrift institution or other financial intermediary (each, a “Financial Intermediary”) that maintains the Certificate Owner’s account for such purpose. In turn, the Financial Intermediary’s ownership of such Book-Entry Certificate will be recorded on the records of DTC (or of a participating firm that acts as agent for the Financial Intermediary, whose interest will in turn be recorded on the records of DTC, if the beneficial owner’s Financial Intermediary is not a DTC Participant and on the records of Clearstream or Euroclear, as appropriate).

Certificate Owners will receive all distributions of principal of and interest on the Book-Entry Certificates from the Securities Administrator through DTC and DTC Participants. While the Book-Entry Certificates are outstanding (except under the circumstances described below), under the rules, regulations and procedures creating and affecting DTC and its operations (the “Rules”), DTC is required to make book-entry transfers among DTC Participants on whose behalf it acts with respect to the Book-Entry Certificates and is required to receive and transmit distributions of principal of, and interest on, the Book-Entry Certificates. DTC Participants and indirect participants with whom Certificate Owners have accounts with respect to Book-Entry Certificates are similarly required to make book-entry transfers and receive and transmit such distributions on behalf of their respective Certificate Owners. Accordingly, although Certificate Owners will not possess certificates representing their respective interests in the Book-Entry Certificates, the Rules provide a mechanism by which Certificate Owners will receive distributions and will be able to transfer their interest.

Certificate Owners will not receive or be entitled to receive certificates representing their respective interests in the Book-Entry Certificates, except under the limited circumstances described below. Unless and until Definitive Certificates are issued, Certificate Owners who are not DTC Participants may transfer ownership of Book-Entry Certificates only through DTC Participants and indirect participants by instructing such DTC Participants and indirect participants to transfer Book-Entry Certificates, by book-entry transfer, through DTC for the account of the purchasers of such Book-Entry Certificates, which account is maintained with their respective DTC Participants. Under the Rules and in accordance with DTC’s normal procedures, transfers of ownership of Book-Entry Certificates will be executed through DTC and the accounts of the respective DTC Participants at DTC will be debited and credited. Similarly, the DTC Participants and indirect participants will make debits or credits, as the case may be, on their records on behalf of the selling and purchasing Certificate Owners.

Because of time zone differences, credits of securities received in Clearstream or Euroclear as a result of a transaction with a DTC Participant will be made during subsequent securities settlement processing and dated the business day following the DTC settlement date. Such credits or any transactions in such securities settled during such processing will be reported to the relevant Euroclear Participants or Clearstream Participants (each as defined below) on such business day. Cash received in Clearstream or Euroclear as a result of sales of securities by or through a Clearstream Participant or Euroclear Participant to a DTC Participant will be received with value on the DTC settlement date but will be available in the relevant Clearstream or Euroclear cash account only as of the business day following the DTC settlement date.  For information with respect to tax documentation procedures relating to the Certificates, see “Global Clearance and Settlement and Tax Documentation Procedures—Certain U.S. Federal Income Tax Documentation Requirements” in Annex I hereto.

Transfers between DTC Participants will occur in accordance with DTC rules. Transfers between Clearstream Participants and Euroclear Participants will occur in accordance with their respective rules and operating procedures.

Cross-market transfers between persons holding directly or indirectly through DTC, on the one hand, and, directly or indirectly through Clearstream Participants or Euroclear Participants, on the other, will be effected in DTC in accordance with DTC rules on behalf of the relevant European international clearing system by the Relevant Depository; however, such cross market transactions will require delivery of instructions to the relevant European international clearing system by the counterparty in such system in accordance with its rules and procedures and within its established deadlines (European time). The relevant European international clearing system, if the transaction meets its settlement requirements, will deliver instructions to the Relevant Depository to take action to effect final settlement on its behalf by delivering or receiving securities in DTC, and making or receiving payment in accordance with normal procedures for same day funds settlement applicable to DTC. Clearstream Participants and Euroclear Participants may not deliver instructions directly to the European Depositaries.

DTC which is a New York-chartered limited purpose trust company, performs services for its DTC Participants, some of which (and/or their representatives) own DTC. In accordance with its normal procedures, DTC is expected to record the positions held by each DTC Participant in the Book-Entry Certificates, whether held for its own account or as a nominee for another person. In general, beneficial ownership of Book-Entry Certificates will be subject to the rules of DTC, as in effect from time to time.

Clearstream, 67 Bd Grande-Duchesse Charlotte, L-1331 Luxembourg, was incorporated in 1970 as a limited company under Luxembourg law. Clearstream is owned by banks, securities dealers and financial institutions, and currently has about 100 shareholders, including U.S. financial institutions or their subsidiaries. No single entity may own more than five percent of Clearstream’s stock.

Clearstream is registered as a bank in Luxembourg, and as such is subject to regulation by the Institute Monetaire Luxembourgeois, the Luxembourg Monetary Authority, which supervises Luxembourg banks.

Clearstream holds securities for its customers and facilitates the clearance and settlement of securities transactions by electronic book-entry transfers between their accounts. Clearstream provides various services, including safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Clearstream also deals with domestic securities markets in several countries through established depository and custodial relationships. Clearstream has established an electronic bridge with the Euroclear Operator (as defined below) in Brussels to facilitate settlement of trades between systems. Clearstream currently accepts over 70,000 securities issues on its books.

Clearstream’s customers are world-wide financial institutions including underwriters, securities brokers and dealers, banks, trust companies and clearing corporations. Clearstream’s United States customers are limited to securities brokers and dealers and banks. Currently, Clearstream has approximately 3,000 customers located in over 60 countries, including all major European countries, Canada, and the United States. Indirect access to Clearstream is available to other institutions which clear through or maintain a custodial relationship with an account holder of Clearstream.

Euroclear was created in 1968 to hold securities for its participants and to clear and settle transactions between Euroclear Participants through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates and any risk from lack of simultaneous transfers of securities and cash. Transactions may be settled in any of 29 currencies, including United States dollars. Euroclear includes various other services, including securities lending and borrowing and interfaces with domestic markets in several countries generally similar to the arrangements for cross-market transfers with DTC described above. Euroclear is operated by the Euroclear Bank S.A/N.V. (the “Euroclear Operator”), under contract with Euroclear Clearance Systems S.C., a Belgian cooperative corporation (the “Cooperative”). All operations are conducted by the Euroclear Operator, and all Euroclear securities clearance accounts and Euroclear cash accounts are accounts with the Euroclear Operator, not the Cooperative. The Cooperative establishes policy for Euroclear on behalf of Euroclear Participants. Euroclear Participants include banks (including central banks), securities brokers and dealers and other professional financial intermediaries. Indirect access to Euroclear is also available to other firms that clear through or maintain a custodial relationship with a Euroclear Participant, either directly or indirectly.

Securities clearance accounts and cash accounts with the Euroclear Operator are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of the Euroclear System and applicable Belgian law (collectively, the “Terms and Conditions”). The Terms and Conditions govern transfers of securities and cash within Euroclear, withdrawals of securities and cash from Euroclear, and receipts of payments with respect to securities in Euroclear. All securities in Euroclear are held on a fungible basis without attribution of specific certificates to specific securities clearance accounts. The Euroclear Operator acts under the Terms and Conditions only on behalf of Euroclear Participants, and has no record of or relationship with persons holding through Euroclear Participants.

Distributions on the Book-Entry Certificates will be made on each Distribution Date by the Securities Administrator to Cede & Co. DTC will be responsible for crediting the amount of such payments to the accounts of the applicable DTC Participants in accordance with DTC’s normal procedures. Each DTC Participant will be responsible for disbursing such payments to the Certificate Owners of the Book-Entry Certificates that it represents and to each Financial Intermediary for which it acts as agent.  Each such Financial Intermediary will be responsible for disbursing funds to the Certificate Owners of the Book-Entry Certificates that it represents.

Under a book-entry format, Certificate Owners of the Book–Entry Certificates may experience some delay in their receipt of payments, since such payments will be forwarded by the Securities Administrator to Cede & Co. Distributions with respect to certificates held through Clearstream or Euroclear will he credited to the cash accounts of Clearstream Participants or Euroclear Participants in accordance with the relevant system’s rules and procedures, to the extent received by the Relevant Depository. Such distributions will be subject to tax reporting in accordance with relevant United States tax laws and regulations. See “Material Federal Income Tax Considerations—REMIC—Taxation of Certain Foreign Investors” in the prospectus.  Because DTC can only act on behalf of Financial Intermediaries, the ability of a Certificate Owner to pledge Book-Entry Certificates to persons or entities that do not participate in the Depository system, or otherwise take actions in respect of such Book-Entry Certificates, may be limited due to the lack of physical certificates for such Book-Entry Certificates. In addition, issuance of the Book-Entry Certificates in book-entry form may reduce the liquidity of such certificates in the secondary market since certain potential investors may be unwilling to purchase certificates for which they cannot obtain physical certificates.

DTC has advised the Securities Administrator that, unless and until Definitive Certificates are issued, DTC will take any action permitted to be taken by the holders of the Book-Entry Certificates under the Pooling and Servicing Agreement only at the direction of one or more Financial Intermediaries to whose DTC accounts the Book-Entry Certificates are credited, to the extent that such actions are taken on behalf of Financial Intermediaries whose holdings include such Book-Entry Certificates. Clearstream or the Euroclear Operator, as the case may be, will take any other action permitted to be taken by a Certificateholder under the Pooling and Servicing Agreement on behalf of a Clearstream Participant or Euroclear Participant only in accordance with its relevant rules and procedures and subject to the ability of the Relevant Depository to effect such actions on its behalf through DTC. DTC may take actions, at the direction of the related DTC Participants, with respect to some Book-Entry Certificates which conflict with actions taken with respect to other Book-Entry Certificates.

Definitive Certificates will be issued to Certificate Owners of the Book-Entry Certificates, or their nominees, rather than to DTC or its nominee, only if (a) DTC or the Depositor advises the Securities Administrator in writing that DTC is no longer willing, qualified or able to discharge properly its responsibilities as nominee and depository with respect to the Book-Entry Certificates and the Depositor is unable to locate a qualified successor, (b) the Depositor, at its sole option, with the consent of the Securities Administrator, elects to terminate a book-entry system through DTC or (c) after the occurrence of an Event of Default (as defined in the Pooling and Servicing Agreement), Certificate Owners having percentage interests aggregating not less than 51% of the Book-Entry Certificates advise the Securities Administrator and DTC through the Financial Intermediaries and the DTC Participants in writing that the continuation of a book-entry system through DTC (or a successor thereto) is no longer in the best interest of Certificate Owners.

Upon the occurrence of any of the events described in the immediately preceding paragraph, the Securities Administrator will be required to cause DTC to notify all Certificate Owners of the occurrence of such event and the availability through DTC of Definitive Certificates. Upon surrender by DTC of the global certificate or certificates representing the Book-Entry Certificates and instructions for re-registration, the Securities Administrator will issue Definitive Certificates, and thereafter the Securities Administrator will recognize the holders of such Definitive Certificates as Certificateholders under the Pooling and Servicing Agreement.

In the event any Definitive Certificates are issued, surrender of such Definitive Certificates shall occur at the office designated from time to time for such purposes by the certificate registrar. As of the Closing Date, the certificate registrar designates its offices located at Sixth Street & Marquette Avenue, Minneapolis, Minnesota 55479 for this purpose.

Although DTC, Clearstream and Euroclear have agreed to the foregoing procedures in order to facilitate transfers of Book-Entry Certificates among DTC Participants of DTC, Clearstream and Euroclear, they are under no obligation to perform or continue to perform such procedures and such procedures may be discontinued at any time.

None of the Depositor, the Master Servicer, the Servicers, the Securities Administrator or the Trustee will have any responsibility for any aspect of the records relating to or payments made on account of beneficial ownership interests of the book-entry certificates held by Cede & Co., as nominee for DTC, or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests or the transfer thereof.

Transfer Restrictions

Transfers of the Offered Certificates will be subject to certain restrictions as described in this prospectus supplement under “ERISA Considerations”.  Any investor in the Class R Certificates will make additional representations as described in the Pooling and Servicing Agreement.

Available Distribution Amount

The Available Distribution Amount (as defined below) for any Distribution Date will be distributed, to the extent of funds available therefor, on each Distribution Date by the Securities Administrator to the Insurer and the certificateholders, as specified in this prospectus supplement.

The “Available Distribution Amount” for any Distribution Date, as more fully described in the Pooling and Servicing Agreement, will equal the sum of the following amounts:

(1)

the total amount of all cash received by or on behalf of each Servicer with respect to the Mortgage Loans by the Determination Date for such Distribution Date and not previously distributed (including liquidation proceeds, condemnation proceeds, insurance proceeds and subsequent recoveries and proceeds received in connection with the repurchase of a Mortgage Loan and, with respect to any Distribution Date during the Pre-Funding Period, and with respect to the Distribution Date immediately following the termination of the Pre-Funding Period, any Remaining Pre-Funded Amount), except:

·

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

·

all partial principal prepayments received with respect to the Mortgage Loans after the related Prepayment Period, together with all interest paid by the mortgagors in connection with such partial principal prepayments;

·

all prepayments in full received with respect to the Mortgage Loans after the related Prepayment Period, together with all interest paid by the mortgagors in connection with such prepayments in full;

·

liquidation proceeds, insurance proceeds, condemnation proceeds and subsequent recoveries and proceeds received in connection with the repurchase of a Mortgage Loan received after the related Prepayment Period;

·

all amounts reimbursable to a Servicer pursuant to the terms of the related servicing agreement or to the Master Servicer, the Securities Administrator, the Trustee or the Custodians pursuant to the terms of the Pooling and Servicing Agreement or the Custodial Agreements;

·

reinvestment income on the balance of funds, if any, in the custodial accounts, the distribution account or the Pre-Funding Account;

·

any fees payable to the Servicers, the Master Servicer and the Credit Risk Manager and any premiums payable in connection with any lender paid primary mortgage insurance policies;

·

all Prepayment Charges received in connection with the Mortgage Loans; and

·

all Subsequent Recoveries that are payable to the Insurer.

(2)

all Advances made by a Servicer and/or the Master Servicer with respect to Mortgage Loans for that Distribution Date;

(3)

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

(4)

the total amount of any cash deposited in the distribution account in connection with the repurchase of any Mortgage Loan by the Depositor or the Sponsor; and

(5)

the total amount of any cash deposited in the distribution account in connection with the optional termination of the trust fund.

Table of Fees and Expenses

The following table indicates the fees and expenses to be paid from the cash flows from the Mortgage Loans and other assets of the trust fund, while the Offered Certificates are outstanding.

All fees are expressed in basis points, at an annualized rate, applied to the outstanding aggregate principal balance of the Mortgage Loans.

Glossary of Definitions Relating to the Priority of Distributions

Certain definitions are necessary to understand the priority of interest and principal distributions to the certificates.  These terms are defined below and highlighted within the various definitions:

“Administration Fee Rate” with respect to each Mortgage Loan will be equal to the sum of (i) the servicing fee rate, (ii) the rate at which the fee payable to the Credit Risk Manager is calculated and (iii) the rate at which the premium payable in connection with any lender paid primary mortgage insurance policy is calculated, if applicable.

“Allocated Realized Loss Amount” with respect to any class of Offered Certificates and any Distribution Date is an amount equal to the sum of any Realized Loss allocated to that class of Offered Certificates on all prior Distribution Dates minus the sum of all payments in respect of Allocated Realized Loss Amounts distributed to that class under “—Excess Spread and Overcollateralization Provisions” on all previous Distribution Dates and, with respect to the Class A-4, Class A-5A and Class A-6 Certificates, minus the sum of all amounts paid in respect of principal by the Insurer to such certificates to cover Realized Losses allocated to those classes.

“Bankruptcy Loss” will be any Debt Service Reduction or Deficient Valuation with respect to a Mortgage Loan.

“Certificate Principal Balance” with respect to a Senior Certificate or Mezzanine Certificate outstanding at any time represents the then maximum amount that the holder of such certificate is entitled to receive as distributions allocable to principal from the cash flow on the Mortgage Loans and the other assets in the trust fund. The Certificate Principal Balance of a Senior Certificate or a Mezzanine Certificate as of any date of determination is equal to the initial Certificate Principal Balance of such certificate reduced by the aggregate of (i) all amounts allocable to principal previously distributed with respect to that certificate and (ii) any reductions in the Certificate Principal Balance of such certificate deemed to have occurred in connection with allocations of Realized Losses in the manner described in this prospectus supplement; provided that, the Certificate Principal Balance of each class of Offered Certificates to which Realized Losses have been allocated (other than the Class A-4, Class A-5A and Class A-6 Certificates to the extent such Realized Loss Amount was paid under the Policy) will be increased by the amount of any Subsequent Recoveries on the Mortgage Loans received by the related Servicer or the Master Servicer as set forth in this prospectus supplement, but not by more than the amount of Realized Losses previously allocated to reduce the Certificate Principal Balances of such certificates and not previously reimbursed to such certificates as an Allocated Realized Loss Amount; provided, further, that to the extent any Realized Loss Amount was paid under the Policy, any Subsequent Recovery otherwise payable to the Class A-4, Class A-5A and/or Class A-6 Certificateholders shall be payable to the Insurer. The Certificate Principal Balance of the Class CE Certificates as of any date of determination is equal to the excess, if any, of (i) the then aggregate principal balance of the Mortgage Loans (which includes the Subsequent Mortgage Loans identified and expected to be purchased by the trust during the Pre-Funding Period) over (ii) the then aggregate Certificate Principal Balance of the Senior Certificates, the Mezzanine Certificates and the Class P Certificates. The initial Certificate Principal Balance of the Class P Certificates is equal to $100.  For the purpose of determining the subrogation rights of the Insurer, the Certificate Principal Balance of the Class A-4, Class A-5A and Class A-6 Certificates will not be reduced by the amount of any payment by the Insurer in respect of principal on such Certificates under the Policy and the Insurer shall be subrogated to such amounts except to the extent such payment has been reimbursed to the Insurer pursuant to the provisions of the Pooling and Servicing Agreement.

“Class A-5 Priority Amount” for any Distribution Date is an amount equal to the least of (a) the Senior Principal Distribution Amount, (b) the aggregate Certificate Principal Balance of the Class A-5A and Class A-5B Certificates and (c)  an amount equal to the product of (i) the Senior Principal Distribution Amount, (ii) the Class A-5 Priority Percentage for such Distribution Date and (iii) the Shift Percentage. 

“Class A-5 Priority Percentage” for any Distribution Date is the percentage equivalent of a fraction, the numerator of which is the aggregate Certificate Principal Balance of the Class A-5A and Class A-5B Certificates and the denominator of which is the Certificate Principal Balance of the Senior Certificates (other than the Class A-6 Certificates). 

“Class A-6 Principal Distribution Amount” for any Distribution Date is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Senior Certificates (other than the Class A-6 Certificates) after taking into account the payment of the Senior Principal Distribution Amount on the Distribution Date and (ii) the Certificate Principal Balance of the Class A-6 Certificates immediately prior to the Distribution Date over (y) the lesser of (A) the product of (i) 82.20% and (ii) the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account and (B) the excess, if any, of the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account over the product of (i) 0.50% and (ii) the aggregate principal balance of the Initial Mortgage Loans as of the Cut-off Date plus amounts on deposit in the Pre-Funding Account as of the Closing Date.

 “Class M-1 Principal Distribution Amount” for any Distribution Date is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Senior Certificates after taking into account the payment of the Senior Principal Distribution Amount and the Class A-6 Principal Distribution Amount on the Distribution Date and (ii) the Certificate Principal Balance of the Class M-1 Certificates immediately prior to the Distribution Date over (y) the lesser of (A) the product of (i) 84.90% and (ii) the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account and (B) the excess, if any, of the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account over the product of (i) 0.50% and (ii) the aggregate principal balance of the Initial Mortgage Loans as of the Cut-off Date plus amounts on deposit in the Pre-Funding Account as of the Closing Date.

“Class M-2 Principal Distribution Amount” for any Distribution Date is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Senior Certificates after taking into account the payment of the Senior Principal Distribution Amount and the Class A-6 Principal Distribution Amount on the Distribution Date, (ii) the Certificate Principal Balance of the Class M-1 Certificates after taking into account the payment of the Class M-1 Principal Distribution Amount on the Distribution Date and (iii) the Certificate Principal Balance of the Class M-2 Certificates immediately prior to the Distribution Date over (y) the lesser of (A) the product of (i) 87.50% and (ii) the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account and (B) the excess, if any, of the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account over the product of (i) 0.50% and (ii) the aggregate principal balance of the Initial Mortgage Loans as of the Cut-off Date plus amounts on deposit in the Pre-Funding Account as of the Closing Date.

“Class M-3 Principal Distribution Amount” for any Distribution Date is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Senior Certificates after taking into account the payment of the Senior Principal Distribution Amount and the Class A-6 Principal Distribution Amount on the Distribution Date, (ii) the Certificate Principal Balance of the Class M-1 Certificates after taking into account the payment of the Class M-1 Principal Distribution Amount on the Distribution Date, (iii) the Certificate Principal Balance of the Class M-2 Certificates after taking into account the payment of the Class M-2 Principal Distribution Amount on the Distribution Date and (iv) the Certificate Principal Balance of the Class M-3 Certificates immediately prior to the Distribution Date over (y) the lesser of (A) the product of (i) 89.20% and (ii) the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account and (B) the excess, if any, of the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account over the product of (i) 0.50% and (ii) the aggregate principal balance of the Initial Mortgage Loans as of the Cut-off Date plus amounts on deposit in the Pre-Funding Account as of the Closing Date.

“Class M-4 Principal Distribution Amount” for any Distribution Date is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Senior Certificates after taking into account the payment of the Senior Principal Distribution Amount and the Class A-6 Principal Distribution Amount on the Distribution Date, (ii) the Certificate Principal Balance of the Class M-1 Certificates after taking into account the payment of the Class M-1 Principal Distribution Amount on the Distribution Date, (iii) the Certificate Principal Balance of the Class M-2 Certificates after taking into account the payment of the Class M-2 Principal Distribution Amount on the Distribution Date, (iv) the Certificate Principal Balance of the Class M-3 Certificates after taking into account the payment of the Class M-3 Principal Distribution Amount on the Distribution Date and (v) the Certificate Principal Balance of the Class M-4 Certificates immediately prior to the Distribution Date over (y) the lesser of (A) the product of (i) 90.60% and the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account and (B) the excess, if any, of the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account over the product of (i) 0.50% and (ii) the aggregate principal balance of the Initial Mortgage Loans as of the Cut-off Date plus amounts on deposit in the Pre-Funding Account as of the Closing Date.

“Class M-5 Principal Distribution Amount” for any Distribution Date is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Senior Certificates after taking into account the payment of the Senior Principal Distribution Amount and the Class A-6 Principal Distribution Amount on the Distribution Date, (ii) the Certificate Principal Balance of the Class M-1 Certificates after taking into account the payment of the Class M-1 Principal Distribution Amount on the Distribution Date, (iii) the Certificate Principal Balance of the Class M-2 Certificates after taking into account the payment of the Class M-2 Principal Distribution Amount on the Distribution Date, (iv) the Certificate Principal Balance of the Class M-3 Certificates after taking into account the payment of the Class M-3 Principal Distribution Amount on the Distribution Date, (v) the Certificate Principal Balance of the Class M-4 Certificates after taking into account the payment of the Class M-4 Principal Distribution Amount on the Distribution Date and (vi) the Certificate Principal Balance of the Class M-5 Certificates immediately prior to the Distribution Date over (y) the lesser of (A) the product of (i) 92.10% and (ii) the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account and (B) the excess, if any, of the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account over the product of (i) 0.50% and (ii) the aggregate principal balance of the Initial Mortgage Loans as of the Cut-off Date plus amounts on deposit in the Pre-Funding Account as of the Closing Date.

“Class M-6 Principal Distribution Amount” for any Distribution Date is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Senior Certificates after taking into account the payment of the Senior Principal Distribution Amount and the Class A-6 Principal Distribution Amount on the Distribution Date, (ii) the Certificate Principal Balance of the Class M-1 Certificates after taking into account the payment of the Class M-1 Principal Distribution Amount on the Distribution Date, (iii) the Certificate Principal Balance of the Class M-2 Certificates after taking into account the payment of the Class M-2 Principal Distribution Amount on the Distribution Date, (iv) the Certificate Principal Balance of the Class M-3 Certificates after taking into account the payment of the Class M-3 Principal Distribution Amount on the Distribution Date, (v) the Certificate Principal Balance of the Class M-4 Certificates after taking into account the payment of the Class M-4 Principal Distribution Amount on the Distribution Date, (vi) the Certificate Principal Balance of the Class M-5 Certificates after taking into account the payment of the Class M-5 Principal Distribution Amount on the Distribution Date and (vii) the Certificate Principal Balance of the Class M-6 Certificates immediately prior to the Distribution Date over (y) the lesser of (A) the product of (i) 93.10% and (ii) the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account and (B) the excess, if any, of the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account over the product of (i) 0.50% and (ii) the aggregate principal balance of the Initial Mortgage Loans as of the Cut-off Date plus amounts on deposit in the Pre-Funding Account as of the Closing Date.

“Class M-7 Principal Distribution Amount” for any Distribution Date is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Senior Certificates after taking into account the payment of the Senior Principal Distribution Amount and the Class A-6 Principal Distribution Amount on the Distribution Date, (ii) the Certificate Principal Balance of the Class M-1 Certificates after taking into account the payment of the Class M-1 Principal Distribution Amount on the Distribution Date, (iii) the Certificate Principal Balance of the Class M-2 Certificates after taking into account the payment of the Class M-2 Principal Distribution Amount on the Distribution Date, (iv) the Certificate Principal Balance of the Class M-3 Certificates after taking into account the payment of the Class M-3 Principal Distribution Amount on the Distribution Date, (v) the Certificate Principal Balance of the Class M-4 Certificates after taking into account the payment of the Class M-4 Principal Distribution Amount on the Distribution Date, (vi) the Certificate Principal Balance of the Class M-5 Certificates after taking into account the payment of the Class M-5 Principal Distribution Amount on the Distribution Date, (vii) the Certificate Principal Balance of the Class M-6 Certificates after taking into account the payment of the Class M-6 Principal Distribution Amount on the Distribution Date and (viii) the Certificate Principal Balance of the Class M-7 Certificates immediately prior to the Distribution Date over (y) the lesser of (A) the product of (i) 94.10% and (ii) the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account and (B) the excess, if any, of the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account over the product of (i) 0.50% and (ii) the aggregate principal balance of the Initial Mortgage Loans as of the Cut-off Date plus amounts on deposit in the Pre-Funding Account as of the Closing Date.

“Class M-8 Principal Distribution Amount” for any Distribution Date is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Senior Certificates after taking into account the payment of the Senior Principal Distribution Amount and the Class A-6 Principal Distribution Amount on the Distribution Date, (ii) the Certificate Principal Balance of the Class M-1 Certificates after taking into account the payment of the Class M-1 Principal Distribution Amount on the Distribution Date, (iii) the Certificate Principal Balance of the Class M-2 Certificates after taking into account the payment of the Class M-2 Principal Distribution Amount on the Distribution Date, (iv) the Certificate Principal Balance of the Class M-3 Certificates after taking into account the payment of the Class M-3 Principal Distribution Amount on the Distribution Date, (v) the Certificate Principal Balance of the Class M-4 Certificates after taking into account the payment of the Class M-4 Principal Distribution Amount on the Distribution Date, (vi) the Certificate Principal Balance of the Class M-5 Certificates after taking into account the payment of the Class M-5 Principal Distribution Amount on the Distribution Date, (vii) the Certificate Principal Balance of the Class M-6 Certificates after taking into account the payment of the Class M-6 Principal Distribution Amount on the Distribution Date, (viii) the Certificate Principal Balance of the Class M-7 Certificates after taking into account the payment of the Class M-7 Principal Distribution Amount on the Distribution Date and (ix) the Certificate Principal Balance of the Class M-8 Certificates immediately prior to the Distribution Date over (y) the lesser of (A) the product of (i) 95.10% and (ii) the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account and (B) the excess, if any, of the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account over the product of (i) 0.50% and (ii) the aggregate principal balance of the Initial Mortgage Loans as of the Cut-off Date plus amounts on deposit in the Pre-Funding Account as of the Closing Date.

“Class M-9 Principal Distribution Amount” for any Distribution Date is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Senior Certificates after taking into account the payment of the Senior Principal Distribution Amount and the Class A-6 Principal Distribution Amount on the Distribution Date, (ii) the Certificate Principal Balance of the Class M-1 Certificates after taking into account the payment of the Class M-1 Principal Distribution Amount on the Distribution Date, (iii) the Certificate Principal Balance of the Class M-2 Certificates after taking into account the payment of the Class M-2 Principal Distribution Amount on the Distribution Date, (iv) the Certificate Principal Balance of the Class M-3 Certificates after taking into account the payment of the Class M-3 Principal Distribution Amount on the Distribution Date, (v) the Certificate Principal Balance of the Class M-4 Certificates after taking into account the payment of the Class M-4 Principal Distribution Amount on the Distribution Date (vi) the Certificate Principal Balance of the Class M-5 Certificates after taking into account the payment of the Class M-5 Principal Distribution Amount on the Distribution Date, (vii) the Certificate Principal Balance of the Class M-6 Certificates after taking into account the payment of the Class M-6 Principal Distribution Amount on the Distribution Date, (viii) the Certificate Principal Balance of the Class M-7 Certificates after taking into account the payment of the Class M-7 Principal Distribution Amount on the Distribution Date, (ix) the Certificate Principal Balance of the Class M-8 Certificates after taking into account the payment of the Class M-8 Principal Distribution Amount on the Distribution Date and (x) the Certificate Principal Balance of the Class M-9 Certificates immediately prior to the Distribution Date over (y) the lesser of (A) the product of (i) 96.30% and (ii) the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account and (B) the excess, if any, of the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account over the product of (i) 0.50% and (ii) the aggregate principal balance of the Initial Mortgage Loans as of the Cut-off Date plus amounts on deposit in the Pre-Funding Account as of the Closing Date.

“Class M-10 Principal Distribution Amount” for any Distribution Date is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Senior Certificates after taking into account the payment of the Senior Principal Distribution Amount and the Class A-6 Principal Distribution Amount on the Distribution Date, (ii) the Certificate Principal Balance of the Class M-1 Certificates after taking into account the payment of the Class M-1 Principal Distribution Amount on the Distribution Date, (iii) the Certificate Principal Balance of the Class M-2 Certificates after taking into account the payment of the Class M-2 Principal Distribution Amount on the Distribution Date, (iv) the Certificate Principal Balance of the Class M-3 Certificates after taking into account the payment of the Class M-3 Principal Distribution Amount on the Distribution Date, (v) the Certificate Principal Balance of the Class M-4 Certificates after taking into account the payment of the Class M-4 Principal Distribution Amount on the Distribution Date (vi) the Certificate Principal Balance of the Class M-5 Certificates after taking into account the payment of the Class M-5 Principal Distribution Amount on the Distribution Date, (vii) the Certificate Principal Balance of the Class M-6 Certificates after taking into account the payment of the Class M-6 Principal Distribution Amount on the Distribution Date, (viii) the Certificate Principal Balance of the Class M-7 Certificates after taking into account the payment of the Class M-7 Principal Distribution Amount on the Distribution Date, (ix) the Certificate Principal Balance of the Class M-8 Certificates after taking into account the payment of the Class M-8 Principal Distribution Amount on the Distribution Date, (x) the Certificate Principal Balance of the Class M-9 Certificates after taking into account the payment of the Class M-9 Principal Distribution Amount on the Distribution Date and (xi) the Certificate Principal Balance of the Class M-10 Certificates immediately prior to the Distribution Date over (y) the lesser of (A) the product of (i) 97.30% and (ii) the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account and (B) the excess, if any, of the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account over the product of (i) 0.50% and (ii) the aggregate principal balance of the Initial Mortgage Loans as of the Cut-off Date plus amounts on deposit in the Pre-Funding Account as of the Closing Date.

“Class M-11 Principal Distribution Amount” for any Distribution Date is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Senior Certificates after taking into account the payment of the Senior Principal Distribution Amount and the Class A-6 Principal Distribution Amount on the Distribution Date, (ii) the Certificate Principal Balance of the Class M-1 Certificates after taking into account the payment of the Class M-1 Principal Distribution Amount on the Distribution Date, (iii) the Certificate Principal Balance of the Class M-2 Certificates after taking into account the payment of the Class M-2 Principal Distribution Amount on the Distribution Date, (iv) the Certificate Principal Balance of the Class M-3 Certificates after taking into account the payment of the Class M-3 Principal Distribution Amount on the Distribution Date, (v) the Certificate Principal Balance of the Class M-4 Certificates after taking into account the payment of the Class M-4 Principal Distribution Amount on the Distribution Date (vi) the Certificate Principal Balance of the Class M-5 Certificates after taking into account the payment of the Class M-5 Principal Distribution Amount on the Distribution Date, (vii) the Certificate Principal Balance of the Class M-6 Certificates after taking into account the payment of the Class M-6 Principal Distribution Amount on the Distribution Date, (viii) the Certificate Principal Balance of the Class M-7 Certificates after taking into account the payment of the Class M-7 Principal Distribution Amount on the Distribution Date, (ix) the Certificate Principal Balance of the Class M-8 Certificates after taking into account the payment of the Class M-8 Principal Distribution Amount on the Distribution Date, (x) the Certificate Principal Balance of the Class M-9 Certificates after taking into account the payment of the Class M-9 Principal Distribution Amount on the Distribution Date, (xi) the Certificate Principal Balance of the Class M-10 Certificates after taking into account the payment of the Class M-10 Principal Distribution Amount on the Distribution Date and (xii) the Certificate Principal Balance of the Class M-11 Certificates immediately prior to the Distribution Date over (y) the lesser of (A) the product of (i) 98.30% and (ii) the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account and (B) the excess, if any, of the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account over the product of (i) 0.50% and (ii) the aggregate principal balance of the Initial Mortgage Loans as of the Cut-off Date plus amounts on deposit in the Pre-Funding Account as of the Closing Date.

“Credit Enhancement Percentage” for any Distribution Date and the Certificates (other than the Class A-6 Certificates) is the percentage obtained by dividing (x) the aggregate Certificate Principal Balance of the Class A-6 Certificates and Subordinate Certificates (which includes the Overcollateralization Amount, calculated for this purpose only after taking into account principal payments from the Principal Remittance Account but before taking in account the Overcollateralization Increase Amount) by (y) the aggregate principal balance of the Mortgage Loans and any amounts on deposit in the Pre-Funding Account, calculated after taking into account distributions of principal on the Mortgage Loans and distribution of the Principal Distribution Amount to the holders of the certificates then entitled to distributions of principal on the Distribution Date.

The Credit Enhancement Percentage for any Distribution Date and the Class A-6 Certificates is the percentage obtained by dividing (x) the aggregate Certificate Principal Balance of the Subordinate Certificates (which includes the Overcollateralization Amount, calculated for this purpose only after taking into account principal payments from the Principal Remittance Account but before taking in account the Overcollateralization Increase Amount) by (y) the aggregate principal balance of the Mortgage Loans and any amounts on deposit in the Pre-Funding Account, calculated after taking into account distributions of principal on the Mortgage Loans and distribution of the Principal Distribution Amount to the holders of the certificates then entitled to distributions of principal on the Distribution Date.

“Debt Service Reduction” will be any reduction of the amount of the monthly payment on the related Mortgage Loan made by a bankruptcy court in connection with a personal bankruptcy of a mortgagor.

“Deficient Valuation” will be, in connection with a personal bankruptcy of a mortgagor, the positive difference, if any, resulting from the outstanding principal balance on a Mortgage Loan less a bankruptcy court’s valuation of the related Mortgaged Property.

“Interest Accrual Period” for any Distribution Date and any class of Offered Certificates will be the calendar month preceding the month in which that Distribution Date occurs.  Interest on the Offered Certificates will be calculated based on a 360-day year consisting of twelve 30-day months.  

“Interest Carry Forward Amount” with respect to any class of Offered Certificates and any Distribution Date will be equal to the amount, if any, by which the Interest Distribution Amount for that class of certificates for the immediately preceding Distribution Date exceeded the actual amount distributed on such class in respect of interest on the immediately preceding Distribution Date, together with any Interest Carry Forward Amount with respect to such class remaining unpaid from the previous Distribution Date, plus interest accrued thereon at the related Pass-Through Rate for the most recently ended Interest Accrual Period.

“Interest Distribution Amount” will be, with respect to any class of Offered Certificates on any Distribution Date, interest accrued during the related Interest Accrual Period on the related Certificate Principal Balance of that class immediately prior to the Distribution Date at the Pass-Through Rate for that class reduced (to an amount not less than zero), in the case of such class, by the allocable share, if any, for that class of Prepayment Interest Shortfalls to the extent not covered by Compensating Interest paid by the Master Servicer or the Servicers, Relief Act Interest Shortfalls and such class’ allocable share of the interest portion of Realized Losses incurred on the Mortgage Loans.

“Interest Remittance Amount” for any Distribution Date, as more fully described in the Pooling and Servicing Agreement, will equal the sum of the following amounts:

(1)

all interest received by or on behalf of each Servicer with respect to the Mortgage Loans by the Determination Date for such Distribution Date and not previously distributed;

(2)

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

(3)

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

(4)

the interest portions of the total amount deposited in the distribution account in connection with the repurchase of any Mortgage Loan by the Depositor or the Sponsor; and

(5)

the interest portions of the total amount deposited in the distribution account in connection with the optional termination of the trust fund;

minus the sum of the following amounts:

(1)

all scheduled payments of interest collected on the Mortgage Loans but due on a date after the related Due Date;

(2)

all interest paid by the mortgagors in connection with partial principal prepayments received with respect to the Mortgage Loans after the related Prepayment Period ;

(3)

all interest paid by the mortgagors in connection with prepayments in full received with respect to the Mortgage Loans after the related Prepayment Period;

(4)

all amounts (other than Advances in respect of principal) reimbursable to a Servicer pursuant to the terms of the related servicing agreement or to the Master Servicer, the Securities Administrator, the Trustee or the Custodians pursuant to the terms of the Pooling and Servicing Agreement or the Custodial Agreements; and

(5)

any fees payable to the Servicers, the Master Servicer and the Credit Risk Manager and any premiums payable in connection with any lender paid primary mortgage insurance policies for the related Due Period.

“Liquidated Loan” will be a Mortgage Loan as to which the related Servicer has determined that all amounts which it expects to recover from or on account of such Mortgage Loan, whether from insurance proceeds, Liquidation Proceeds or otherwise, have been recovered.

“Liquidation Proceeds” will be amounts received by the related Servicer in connection with the liquidation of a defaulted Mortgage Loan whether through foreclosure or otherwise, other than insurance proceeds.

“Net Monthly Excess Cashflow” for any Distribution Date will be equal to the sum of (i) any Overcollateralization Reduction Amount and (ii) the excess of (x) the Available Distribution Amount for the Distribution Date over (y) the sum for the Distribution Date of the aggregate of the Senior Interest Distribution Amounts payable to the holders of the Senior Certificates, the aggregate of the Interest Distribution Amounts payable to the holders of the Mezzanine Certificates, the Principal Remittance Amount, the premium payable to the Insurer and any Reimbursement Amounts payable to the Insurer.

“Net Mortgage Rate” for each Mortgage Loan will be equal to the mortgage interest rate thereon less the Administration Fee Rate.

“Net WAC Pass-Through Rate” for any Distribution Date and the Senior Certificates and Mezzanine Certificates is a rate per annum equal to the product of (i) a fraction, expressed as a percentage, the numerator of which is the amount of interest which accrued on the Mortgage Loans in the prior calendar month based on the Net Mortgage Rate (adjusted, with respect to the Class A-4, Class A-5A and Class A-6 Certificates, to reflect the premium payable to the Insurer), and the denominator of which is the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the first day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account and (ii) 12.

“Overcollateralization Amount” with respect to any Distribution Date following the Closing Date will be an amount by which the aggregate outstanding principal balance of the Mortgage Loans  (which includes any Subsequent Mortgage Loans which have been transferred to the trust prior to such Distribution Date) and the Remaining Pre-Funded Amount immediately following the Distribution Date exceeds the sum of the Certificate Principal Balances of the Senior Certificates, the Mezzanine Certificates and the Class P Certificates after taking into account all payments of principal on such Distribution Date.

“Overcollateralization Increase Amount” with respect to any Distribution Date will be the amount, if any, by which the Required Overcollateralization Amount for such Distribution Date exceeds the Overcollateralization Amount for such Distribution Date (calculated for this purpose only after assuming that 100% of the Principal Remittance Amount on such Distribution Date has been distributed).

“Overcollateralization Reduction Amount” for any Distribution Date will be the lesser of (a) the Principal Remittance Amount on such Distribution Date and (b) the excess, if any, of

·

the Overcollateralization Amount for such Distribution Date (calculated for this purpose only after assuming that 100% of the Principal Remittance Amount on such Distribution Date has been distributed) over

·

the Required Overcollateralization Amount for such Distribution Date.

“Pass-Through Rate” The Pass-Through Rate on the Class A-1 Certificates for any Distribution Date will be a rate per annum equal to the lesser of (i) 6.250% and (ii) the Net WAC Pass-Through Rate for the Distribution Date.

The Pass-Through Rate on the Class A-2 Certificates for any Distribution Date will be a rate per annum equal to the lesser of (i) 6.420% and (ii) the Net WAC Pass-Through Rate for the Distribution Date.

The Pass-Through Rate on the Class A-3 Certificates for any Distribution Date will be a rate per annum equal to the lesser of (i) 6.510% and (ii) the Net WAC Pass-Through Rate for the Distribution Date.

The Pass-Through Rate on the Class A-4 Certificates for any Distribution Date will be a rate per annum equal to the lesser of (i) 6.423% in the case of each Distribution Date through and including the Optional Termination Date or 6.923% in the case of any Distribution Date thereafter and (ii) the Net WAC Pass-Through Rate for the Distribution Date.

The Pass-Through Rate on the Class A-5A Certificates for any Distribution Date will be a rate per annum equal to the lesser of (i) 6.250% in the case of each Distribution Date through and including the Optional Termination Date or 6.750% in the case of any Distribution Date thereafter and (ii) the Net WAC Pass-Through Rate for the Distribution Date.

The Pass-Through Rate on the Class A-5B Certificates for any Distribution Date will be a rate per annum equal to the lesser of (i) 6.300% in the case of each Distribution Date through and including the Optional Termination Date or 6.800% in the case of any Distribution Date thereafter and (ii) the Net WAC Pass-Through Rate for the Distribution Date.

The Pass-Through Rate on the Class A-6 Certificates for any Distribution Date will be a rate per annum equal to the lesser of (i) 6.363% in the case of each Distribution Date through and including the Optional Termination Date or 6.863% in the case of any Distribution Date thereafter and (ii) the Net WAC Pass-Through Rate for the Distribution Date.

The Pass-Through Rate on the Class A-7 Certificates for any Distribution Date will be a rate per annum equal to the lesser of (i) 6.360% and (ii) the Net WAC Pass-Through Rate for the Distribution Date.  

The Pass-Through Rate on the Class A-8 Certificates for any Distribution Date will be a rate per annum equal to the lesser of (i) 6.364% and (ii) the Net WAC Pass-Through Rate for the Distribution Date

The Pass-Through Rate on the Class M-1 Certificates for any Distribution Date will be a rate per annum equal to the lesser of (i) 6.750% in the case of each Distribution Date through and including the Optional Termination Date or 7.250% in the case of any Distribution Date thereafter and (ii) the Net WAC Pass-Through Rate for the Distribution Date.

The Pass-Through Rate on the Class M-2 Certificates for any Distribution Date will be a rate per annum equal to the lesser of (i) 6.750% in the case of each Distribution Date through and including the Optional Termination Date or 7.250% in the case of any Distribution Date thereafter and (ii) the Net WAC Pass-Through Rate for the Distribution Date.

The Pass-Through Rate on the Class M-3 Certificates for any Distribution Date will be a rate per annum equal to the lesser of (i) 6.750% in the case of each Distribution Date through and including the Optional Termination Date or 7.250% in the case of any Distribution Date thereafter and (ii) the Net WAC Pass-Through Rate for the Distribution Date.

The Pass-Through Rate on the Class M-4 Certificates for any Distribution Date will be a rate per annum equal to the lesser of (i) 6.750% in the case of each Distribution Date through and including the Optional Termination Date or 7.250% in the case of any Distribution Date thereafter and (ii) the Net WAC Pass-Through Rate for the Distribution Date.

The Pass-Through Rate on the Class M-5 Certificates for any Distribution Date will be a rate per annum equal to the lesser of (i) 6.750% in the case of each Distribution Date through and including the Optional Termination Date or 7.250% in the case of any Distribution Date thereafter and (ii) the Net WAC Pass-Through Rate for the Distribution Date.

The Pass-Through Rate on the Class M-6 Certificates for any Distribution Date will be a rate per annum equal to the lesser of (i) 6.750% in the case of each Distribution Date through and including the Optional Termination Date or 7.250% in the case of any Distribution Date thereafter and (ii) the Net WAC Pass-Through Rate for the Distribution Date.

The Pass-Through Rate on the Class M-7 Certificates for any Distribution Date will be a rate per annum equal to the lesser of (i) 6.750% in the case of each Distribution Date through and including the Optional Termination Date or 7.250% in the case of any Distribution Date thereafter and (ii) the Net WAC Pass-Through Rate for the Distribution Date.

The Pass-Through Rate on the Class M-8 Certificates for any Distribution Date will be a rate per annum equal to the lesser of (i) 6.750% in the case of each Distribution Date through and including the Optional Termination Date or 7.250% in the case of any Distribution Date thereafter and (ii) the Net WAC Pass-Through Rate for the Distribution Date.

The Pass-Through Rate on the Class M-9 Certificates for any Distribution Date will be a rate per annum equal to the lesser of (i) 6.750% in the case of each Distribution Date through and including the Optional Termination Date or 7.250% in the case of any Distribution Date thereafter and (ii) the Net WAC Pass-Through Rate for the Distribution Date.

The Pass-Through Rate on the Class M-10 Certificates for any Distribution Date will be a rate per annum equal to the lesser of (i) 6.750% in the case of each Distribution Date through and including the Optional Termination Date or 7.250% in the case of any Distribution Date thereafter and (ii) the Net WAC Pass-Through Rate for the Distribution Date.

The Pass-Through Rate on the Class M-11 Certificates for any Distribution Date will be a rate per annum equal to the lesser of (i) 6.750% in the case of each Distribution Date through and including the Optional Termination Date or 7.250% in the case of any Distribution Date thereafter and (ii) the Net WAC Pass-Through Rate for the Distribution Date.

“Policy” will be the financial guaranty insurance policy provided by the Insurer with respect to the Class A-4, Class A-5A and Class A-6 Certificates.

“Pre-Funded Amount” The amount deposited in the Pre-Funding Account on the Closing Date for the purchase of Subsequent Mortgage Loans, which amount is approximately $18,193,276.

“Pre-Funding Period” The period from the Closing Date up to and including August 29, 2006, in which the Trustee, on behalf of the trust, may purchase Subsequent Mortgage Loans for inclusion in the trust with amounts in the Pre-Funding Account.

“Prepayment Interest Shortfall” for any Distribution Date will be the sum of all interest shortfalls resulting from prepayments in full or in part on the Mortgage Loans during the related Prepayment Period.

“Principal Distribution Amount” for any Distribution Date will be the sum of (i) the Principal Remittance Amount for such Distribution Date plus (ii) any Overcollateralization Increase Amount minus (iii) the amount of any Overcollateralization Reduction Amount for such Distribution Date and any amounts payable or reimbursable therefrom to the Servicers, the Trustee, the Custodians, the Master Servicer or the Securities Administrator prior to distributions being made on the Offered Certificates to the extent  that the Interest Remittance Amount for such Distribution Date is not sufficient to cover such amounts.  In no event will the Principal Distribution Amount with respect to any Distribution Date be (x) less than zero or (y) greater than the then outstanding aggregate Certificate Principal Balance of the Offered Certificates.

“Principal Remittance Amount” for any Distribution Date, as more fully described in the Pooling and Servicing Agreement, will equal the sum of the following amounts:

(1)

the total amount of all principal received by or on behalf of each Servicer with respect to the Mortgage Loans by the Determination Date for such Distribution Date and not previously distributed (including liquidation proceeds, condemnation proceeds, insurance proceeds and subsequent recoveries and, with respect to any Distribution Date immediately following the termination of the Pre-Funding Period, any Remaining Pre-Funded Amount);

(2)

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

(3)

the principal portions of the total amount deposited in the distribution account in connection with the repurchase of any Mortgage Loan by the Depositor or the Sponsor; and

(4)

the principal portions of the total amount deposited in the distribution account in connection with the optional termination of the trust fund;

minus, the sum of the following amounts:

(1)

all scheduled payments of principal collected on the Mortgage Loans but due on a date after the related Due Date;

(2)

all partial principal prepayments received with respect to the Mortgage Loans after the related Prepayment Period, excluding all interest paid by the mortgagors in connection with such partial principal prepayments;

(3)

all prepayments in full received with respect to the Mortgage Loans after the related Prepayment Period, excluding all interest paid by the mortgagors in connection with such prepayments in full;

(4)

liquidation proceeds, insurance proceeds, condemnation proceeds and subsequent recoveries received on the Mortgage Loans after the related Prepayment Period;

(5)

all advances in respect of principal to a Servicer pursuant to the terms of the related servicing agreement or to the Master Servicer, the Securities Administrator, the Trustee or the Custodians pursuant to the terms of the Pooling and Servicing Agreement or the Custodial Agreements; and

(6) all other amounts reimbursable to a Servicer pursuant to the terms of the related servicing agreement or to the Master Servicer, the Securities Administrator, the Trustee or the Custodians pursuant to the terms of the Pooling and Servicing Agreement or the Custodial Agreements for the related Due Period to the extent not reimbursed from the Interest Remittance Amount for the related Due Period.

“Realized Loss” with respect to any Distribution Date and any Mortgage Loan that became a Liquidated Loan during the related Prepayment Period will be the sum of (i) the principal balance of such Mortgage Loan remaining outstanding (after all recoveries of principal have been applied thereto) and the principal portion of Advances made by the related Servicer with respect to such Mortgage Loan which have been reimbursed from Liquidation Proceeds, and (ii) the accrued interest on such Mortgage Loan remaining unpaid and the interest portion of Advances made by the related Servicer with respect to such Mortgage Loan which have been reimbursed from Liquidation Proceeds.  The amounts set forth in clause (i) are the principal portion of Realized Losses and the amounts set forth in clause (ii) are the interest portion of Realized Losses.  With respect to any Mortgage Loan that is not a Liquidated Loan, the amount of any Bankruptcy Loss incurred with respect to such Mortgage Loan as of the related Due Date will be treated as a Realized Loss.

“Reimbursement Amount” means the aggregate of all payments made with respect to the Insured Certificates by the Insurer under the Policy to the extent not previously reimbursed, plus interest thereon at the per annum rate of interest publicly announced from time to time by JPMorgan Chase Bank, N.A. at its principal office in the City of New York as its prime lending rate (any change in such rate of interest to be effective on the date such change is announced by JPMorgan Chase Bank, N.A.) plus 3%, plus any other amounts owing to the Insurer under the Pooling and Servicing Agreement.

“Relief Act Interest Shortfall” for any Distribution Date and a Mortgage Loan will be the reduction in the amount of interest collectible on such Mortgage Loan for the most recently ended calendar month immediately preceding the related Distribution Date as a result of the application of the Servicemembers Civil Relief Act, or similar state or local laws.

“Remaining Pre-Funded Amount” An amount equal to the related Pre-Funded Amount minus the amount equal to 100% of the aggregate Stated Principal Balance of the Subsequent Mortgage Loans transferred to the trust during the Pre-Funding Period.

“Required Overcollateralization Amount” with respect to any Distribution Date (a) if such Distribution Date is prior to the Stepdown Date, 0.85% of the sum of the aggregate outstanding principal balance of the Initial Mortgage Loans as of the Cut-Off Date and the amount on deposit in the Pre-Funding Account on the Closing Date, or (b) if such Distribution Date is on or after the Stepdown Date, the greater of (i) 1.70% of the aggregate outstanding principal balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period, and after reduction for Realized Losses on the Mortgage Loans incurred during the related Prepayment Period), plus, during the Pre-Funding Period, the amount on deposit in the Pre-Funding Account, and (ii) 0.50% of the sum of the aggregate outstanding principal balance of the Initial Mortgage Loans as of the Cut-Off Date and the amount on deposit in the Pre-Funding Account on the Closing Date. If a Trigger Event is in effect on any Distribution Date, the Required Overcollateralization Amount will be the same as the Required Overcollateralization Amount for the previous Distribution Date.

“Senior Interest Distribution Amount” for any Distribution Date will be equal to the sum of the Interest Distribution Amount for such Distribution Date for the Senior Certificates and the Interest Carry Forward Amount, if any, for such Distribution Date for the Senior Certificates.

“Senior Principal Distribution Amount” for any Distribution Date is an amount equal to (a) prior to the Stepdown Date or on or after the Stepdown Date if a Trigger Event is in effect, the lesser of (x) the aggregate Certificate Principal Balance of the Senior Certificates (other than the Class A-6 Certificates) immediately prior to the Distribution Date and (y) the Principal Distribution Amount; and (b) on or after the Stepdown Date if a Trigger Event is not in effect for that Distribution Date, the excess of (x) the aggregate Certificate Principal Balance of the Senior Certificates (other than the Class A-6 Certificates) immediately prior to the Distribution Date over (y) the lesser of (A) the product of (i) approximately 65.19% and the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account and (B) the excess, if any, of the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account over the product of (i) 0.50% and (ii) the aggregate principal balance of the Initial Mortgage Loans as of the Cut-off Date plus amounts on deposit in the Pre-Funding Account as of the Closing Date.

“Shift Percentage” for any Distribution Date is the applicable percentage set forth below with respect to such Distribution Date:

“Stated Principal Balance” means, as to any Mortgage Loan and any Distribution Date, the unpaid principal balance of such Mortgage Loan as of the Due Date in the month preceding the month in which that Distribution Date occurs, as specified in the amortization schedule at the time relating to that Mortgage Loan (before any adjustment to such amortization schedule by reason of any moratorium or similar waiver or grace period) after giving effect to (i) any previous partial principal prepayments, liquidation proceeds and insurance proceeds allocable to principal received during the Prepayment Period for the prior Distribution Date and (ii) the payment of principal due on that Due Date and irrespective of any delinquency in payment by the related borrower.

“Stepdown Date” will be the earlier to occur of (1) the Distribution Date after which the aggregate Certificate Principal Balance of the Senior Certificates and the Class M-1 Certificates has been reduced to zero and (2) the later to occur of (x) the Distribution Date in July 2009 and (y) the first Distribution Date on which the Credit Enhancement Percentage of the Senior Certificates (other than the Class A-6 Certificates) (calculated for this purpose only after taking into account distributions of principal on the Mortgage Loans, but prior to any distribution of the Principal Distribution Amount to the holders of the certificates then entitled to distributions of principal on the Distribution Date) is greater than or equal to approximately 34.81%.

“Subsequent Recoveries” with respect to any Distribution Date will be amounts received during the related Prepayment Period by the related Servicer specifically related to a defaulted Mortgage Loan or disposition of an REO Property prior to the related Prepayment Period that resulted in a Realized Loss, after the liquidation or disposition of such defaulted Mortgage Loan.

“Trigger Event” With respect to any Distribution Date, a Trigger Event is in effect if (x) the percentage obtained by dividing (i) the principal amount of Mortgage Loans delinquent 60 days or more (including Mortgage Loans in foreclosure, bankruptcy and REO) by (ii) the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account exceeds 46.36% of the Credit Enhancement Percentage with respect to the prior Distribution Date or (y) the aggregate amount of Realized Losses incurred since the Cut-off Date through the last day of the related Due Period divided by the aggregate principal balance of the Mortgage Loans as of the Cut-off exceeds the applicable percentages set forth below with respect to such Distribution Date:

Priority of Distributions

Commencing in July 2006, the Securities Administrator will make distributions to certificateholders on each Distribution Date from funds on deposit in the Distribution Account as set forth below.

Interest Distributions

Holders of the Offered Certificates will be entitled to receive on each Distribution Date interest distributions in an aggregate amount equal to interest accrued during the related Interest Accrual Period on the related Certificate Principal Balance thereof at the then-applicable Pass-Through Rates, in the priorities set forth below.

On each Distribution Date, the Interest Remittance Amount will be distributed in the following order of priority:

First, to the Insurer, the premium due in connection with the Policy;

Second, to the holders of Senior Certificates, the related Senior Interest Distribution Amount for such Distribution Date to the extent of the Interest Remittance Amount remaining after the payment of the premium to the Insurer, on a pro rata basis based on the entitlement of each such class;

Third, to the Insurer, any unpaid Reimbursement Amount; and

Fourth, to the holders of the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9, Class M-10 and Class M-11 Certificates, in that order, the related Interest Distribution Amount allocable to each such class to the extent of the Interest Remittance Amount for such Distribution Date remaining after the payment of the premium and Reimbursement Amounts to the Insurer and distributions of interest to the Senior Certificates and to any class of Mezzanine Certificates with a higher payment priority.

On any Distribution Date, any Prepayment Interest Shortfalls to the extent not covered by Compensating Interest paid by the related Servicer or the Master Servicer will first, reduce the Net Monthly Excess Cashflow for such Distribution Date, second, reduce the Overcollateralization Amount on the related Distribution Date, third, will be allocated to reduce the Interest Distribution Amount payable to the Class M-11 Certificates, fourth, will be allocated to reduce the Interest Distribution Amount payable to the Class M-10 Certificates, fifth, will be allocated to reduce the Interest Distribution Amount payable to the Class M-9 Certificates, sixth, will be allocated to reduce the Interest Distribution Amount payable to the Class M-8 Certificates, seventh, will be allocated to reduce the Interest Distribution Amount payable to the Class M-7 Certificates, eighth, will be allocated to reduce the Interest Distribution Amount payable to the Class M-6 Certificates, ninth, will be allocated to reduce the Interest Distribution Amount payable to the Class M-5 Certificates, tenth, will be allocated to reduce the Interest Distribution Amount payable to the Class M-4 Certificates, eleventh, will be allocated to reduce the Interest Distribution Amount payable to the Class M-3 Certificates, twelfth, will be allocated to reduce the Interest Distribution Amount payable to the Class M-2 Certificates, thirteenth, will be allocated to reduce the Interest Distribution Amount payable to the Class M-1 Certificates and fourteenth will be allocated to reduce the Interest Distribution Amount payable to the Senior Certificates on a pro rata basis based on their respective Senior Interest Distribution Amounts before such reduction.  On any Distribution Date, any Relief Act Interest Shortfalls will be allocated to the certificates on a pro rata basis based on their respective Interest Distribution Amounts before such reduction.  The Policy issued in connection with the Class A-4, Class A-5A and Class A-6 Certificates will not cover Prepayment Interest Shortfalls or Relief Act Interest Shortfalls.

With respect to any Distribution Date, to the extent that the aggregate Interest Distribution Amount exceeds the Interest Remittance Amount, a shortfall in interest distributions on one or more classes of Offered Certificates will result and such amounts will be carried forward and paid to the Offered Certificates on future distribution dates to the extent of available funds. The Interest Carry Forward Amount with respect to the Senior Certificates, if any, will be distributed as part of the Senior Interest Distribution Amount on each Distribution Date. The Interest Carry Forward Amount with respect to the Mezzanine Certificates, if any, may be carried forward to succeeding Distribution Dates and, subject to available funds, will be distributed in the manner described under “—Excess Spread and Overcollateralization Provisions” in this prospectus supplement.

Except as otherwise described in this prospectus supplement, on each Distribution Date, distributions of the Interest Distribution Amount for a class of certificates will be made in respect of that class of certificates, to the extent provided in this prospectus supplement, on a pari passu basis, based on the Certificate Principal Balance of the certificates of such class.

Principal Distributions

Holders of each class of Offered Certificates will be entitled to receive on each Distribution Date, to the extent of the Principal Distribution Amount for that Distribution Date, a distribution allocable to principal in the manner set forth below.

(A) On each Distribution Date (i) prior to the Stepdown Date or (ii) on which a Trigger Event is in effect, the Principal Distribution Amount for that Distribution Date will be distributed in the following amounts and order of priority:

First, to the Senior Certificates, the Principal Distribution Amount, in the manner and priority set forth below:

(1)

first, to the Class A-5A and Class A-5B Certificates, pro rata based on Certificate Principal Balance, up to the Class A-5 Priority Amount, until their respective Certificate Principal Balances have been reduced to zero;

(2)

second, concurrently, as follows:

(I)

88.2578910081%, sequentially, as follows:

A.

first, to the Class A-1 Certificates, until its Certificate Principal Balance has been reduced to zero; and

B.

second, to the Class A-2 Certificates, until its Certificate Principal Balance has been reduced to zero; and

(II)

11.7421089919%, sequentially, as follows:

A.

first, to the Class A-7 Certificates, until its Certificate Principal Balance has been reduced to zero; and

B.

second, to the Class A-8 Certificates, until its Certificate Principal Balance has been reduced to zero;

(3)

third, to the Class A-3 Certificates, until its Certificate Principal Balance has been reduced to zero;

(4)

fourth, to the Class A-4 Certificates, until its Certificate Principal Balance has been reduced to zero;

(5)

fifth, to the Class A-5A and Class A-5B Certificates, pro rata based on Certificate Principal Balance, without regard to the Class A-5 Priority Amount, until their respective Certificate Principal Balances have been reduced to zero; and

(6)

sixth, to the Class A-6 Certificates, until its Certificate Principal Balance has been reduced to zero;

Second, to the Insurer, any premium and Reimbursement Amounts not repaid from interest collections as described under “—Interest Distributions” in this prospectus supplement; and

Third, sequentially to the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9, Class M-10 and Class M-11 Certificates, in that order, the Principal Distribution Amount remaining after the distributions in clauses First and Second above, until the Certificate Principal Balance of each such class has been reduced to zero.

(B) On each Distribution Date (i) on or after the Stepdown Date and (ii) on which a Trigger Event is not in effect, the Principal Distribution Amount for that Distribution Date will be distributed in the following amounts and order of priority:

First, to the Senior Certificates, the Senior Principal Distribution Amount, in the manner and priority set forth below:

(1)

first, to the Class A-5A and Class A-5B Certificates, pro rata based on Certificate Principal Balance, up to the Class A-5 Priority Amount, until their respective Certificate Principal Balances have been reduced to zero;

(2)

second, concurrently, as follows:

(I)

88.2578910081%, sequentially, as follows:

A.

first, to the Class A-1 Certificates, until its Certificate Principal Balance has been reduced to zero; and

B.

second, to the Class A-2 Certificates, until its Certificate Principal Balance has been reduced to zero; and

(II)

11.7421089919%, sequentially, as follows:

A.

first, to the Class A-7 Certificates, until its Certificate Principal Balance has been reduced to zero; and

B.

second, to the Class A-8 Certificates, until its Certificate Principal Balance has been reduced to zero;

(3)

third, to the Class A-3 Certificates, until its Certificate Principal Balance has been reduced to zero;

(4)

fourth, to the Class A-4 Certificates, until its Certificate Principal Balance has been reduced to zero;

(5)

fifth, to the Class A-5A and Class A-5B Certificates, pro rata based on Certificate Principal Balance, without regard to the Class A-5 Priority Amount, until their respective Certificate Principal Balances have been reduced to zero;

Second, to the holders of the Class A-6 Certificates, the Class A-6 Principal Distribution Amount in reduction of the Certificate Principal Balance thereof, until the Certificate Principal Balance of the Class A-6 Certificates has been reduced to zero;

Third,  to the Insurer, any premium and Reimbursement Amounts not repaid from interest collections as described under “—Interest Distributions” in this prospectus supplement.

Fourth, to the holders of the Class M-1 Certificates, the Class M-1 Principal Distribution Amount in reduction of the Certificate Principal Balance thereof, until the Certificate Principal Balance of the Class M-1 Certificates has been reduced to zero.

Fifth, to the holders of the Class M-2 Certificates, the Class M-2 Principal Distribution Amount in reduction of the Certificate Principal Balance thereof, until the Certificate Principal Balance of the Class M-2 Certificates has been reduced to zero.

Sixth, to the holders of the Class M-3 Certificates, the Class M-3 Principal Distribution Amount in reduction of the Certificate Principal Balance thereof, until the Certificate Principal Balance of the Class M-3 Certificates has been reduced to zero.

Seventh, to the holders of the Class M-4 Certificates, the Class M-4 Principal Distribution Amount in reduction of the Certificate Principal Balance thereof, until the Certificate Principal Balance of the Class M-4 Certificates has been reduced to zero.

Eighth, to the holders of the Class M-5 Certificates, the Class M-5 Principal Distribution Amount in reduction of the Certificate Principal Balance thereof, until the Certificate Principal Balance of the Class M-5 Certificates has been reduced to zero.

Ninth, to the holders of the Class M-6 Certificates, the Class M-6 Principal Distribution Amount in reduction of the Certificate Principal Balance thereof, until the Certificate Principal Balance of the Class M-6 Certificates has been reduced to zero.

Tenth, to the holders of the Class M-7 Certificates, the Class M-7 Principal Distribution Amount in reduction of the Certificate Principal Balance thereof, until the Certificate Principal Balance of the Class M-7 Certificates has been reduced to zero.

Eleventh, to the holders of the Class M-8 Certificates, the Class M-8 Principal Distribution Amount in reduction of the Certificate Principal Balance thereof, until the Certificate Principal Balance of the Class M-8 Certificates has been reduced to zero.

Twelfth, to the holders of the Class M-9 Certificates, the Class M-9 Principal Distribution Amount in reduction of the Certificate Principal Balance thereof, until the Certificate Principal Balance of the Class M-9 Certificates has been reduced to zero.

Thirteenth, to the holders of the Class M-10 Certificates, the Class M-10 Principal Distribution Amount in reduction of the Certificate Principal Balance thereof, until the Certificate Principal Balance of the Class M-10 Certificates has been reduced to zero.

Fourteenth, to the holders of the Class M-11 Certificates, the Class M-11 Principal Distribution Amount in reduction of the Certificate Principal Balance thereof, until the Certificate Principal Balance of the Class M-11 Certificates has been reduced to zero.

Notwithstanding the priority of distributions described in this section, on any Distribution Date which occurs after the Certificate Principal Balances of the Class A-6 Certificates and the Mezzanine Certificates have been reduced to zero, distributions in respect of principal to the Senior Certificates (other than the Class A-6 Certificates) will be made concurrently to each class of Senior Certificates (other than the Class A-6 Certificates), on a pro rata basis, based on the Certificate Principal Balance of each such class, until the Certificate Principal Balance of each such class has been reduced to zero.

Excess Spread and Overcollateralization Provisions

The weighted average of the Net Mortgage Rates for the Mortgage Loans is generally expected to be higher than the weighted average of the Pass-Through Rates on the Offered Certificates plus the premium payable to the Insurer. As a result, interest collections on the Mortgage Loans are generally expected to be generated in excess of the amount of interest payable to the holders of the Offered Certificates, the premium payable to the Insurer and the fees and expenses payable by the trust. We refer to this excess interest as “Excess Spread”. Excess Spread, together with any Overcollateralization Reduction Amount, will generally constitute the Net Monthly Excess Cashflow on any Distribution Date and will be distributed as follows:

(i)

to the holders of the classes of certificates then entitled to receive distributions in respect of principal, in an amount equal to the Overcollateralization Increase Amount for such Distribution Date, distributable as part of the Principal Distribution Amount for that Distribution Date in accordance with the priorities set forth under in “—Principal Distributions” above;

(ii)

sequentially, to the holders of the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9, Class M-10 and Class M-11 Certificates, in that order, the related Interest Carry Forward Amount for each such class for such Distribution Date;

 (iii)

concurrently, to the holders of the Senior Certificates on a pro rata basis, the Allocated Realized Loss Amount for each such class and such Distribution Date; provided, however, that the Allocated Realized Loss  Amount otherwise distributable to the Class A-6 Certificates will first be distributed to the Class A-1, Class A-2, Class A-3, Class A-5B, Class A-7 and Class A-8 Certificates on a pro rata basis;

(iv)

sequentially, to the holders of the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9, Class M-10 and Class M-11 Certificates, in that order, the Allocated Realized Loss Amount for each such class and such Distribution Date;

(v)

to the holders of the Class CE Certificates as provided in the Pooling and Servicing Agreement; and

(vi)

to the holders of the Class R Certificates, any remaining amounts; provided that if such Distribution Date is the Distribution Date immediately following the expiration of the latest Prepayment Charge term or any Distribution Date thereafter, then any such remaining amounts will be distributed first, to the holders of the Class P Certificates, until the Certificate Principal Balance thereof has been reduced to zero; and second, to the holders of the Class R Certificates.

On each Distribution Date, the Securities Administrator will withdraw from the distribution account all Prepayment Charges received during the related Prepayment Period and will distribute those amounts to the holders of the Class P Certificates.

Subordination and Allocation of Losses

Realized Losses on the Mortgage Loans for any Distribution Date will first, cause a reduction in Net Monthly Excess Cash Flow for that Distribution Date and second, cause a reduction in the Overcollateralization Amount for that Distribution Date until reduced to zero.  To the extent that Realized Losses on a Distribution Date cause the aggregate Certificate Principal Balance of the Offered Certificates and Class P Certificates after taking into account all distributions on such Distribution Date to exceed the sum of (1) the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period (after giving effect to scheduled payments of principal due during the related Due Period, to the extent received or advanced, and unscheduled collections of principal received during the related Prepayment Period) and (2) any amounts on deposit in the Pre-Funding Account, such excess Realized Losses will be allocated first, to the Class M-11 Certificates; second, to the Class M-10 Certificates; third, to the Class M-9 Certificates; fourth, to the Class M-8 Certificates, fifth, to the Class M-7 Certificates, sixth, to the Class M-6 Certificates, seventh, to the Class M-5 Certificates, eighth, to the Class M-4 Certificates, ninth, to the Class M-3 Certificates, tenth, to the Class M-2 Certificates, eleventh, to the Class M-1 Certificates and twelfth, to the Senior Certificates on a pro rata basis based on the Certificate Principal Balance of each such class, in each case to reduce the Certificate Principal Balance thereof until it has been reduced to zero; provided, however, that realized losses otherwise allocable to the Class A-1, Class A-2, Class A-3, Class A-5B, Class A-7 and Class A-8 Certificates will first be allocated to the Class A-6 Certificates, in addition to losses otherwise allocable to the Class A-6 Certificates, until its certificate principal balance is reduced to zero.  In addition, to the extent a Servicer receives Subsequent Recoveries with respect to any defaulted Mortgage Loan, the amount of the Realized Loss with respect to that defaulted Mortgage Loan will be reduced to the extent such recoveries are applied to reduce the Certificate Principal Balance of any class of Offered Certificates on any Distribution Date.

Once Realized Losses have been allocated to the Offered Certificates, such amounts with respect to these certificates will no longer accrue interest nor will such amounts be reinstated thereafter.  However, Allocated Realized Loss Amounts may be paid to holders of the Offered Certificates from Net Monthly Excess Cashflow according to the priorities set forth in this prospectus supplement under “—Excess Spread and Overcollateralization Provisions.”

Any allocation of a Realized Loss on a Mortgage Loan to an Offered Certificate will be made by reducing the Certificate Principal Balance of that Offered Certificate by the amount so allocated as of such Distribution Date after all distributions on such Distribution Date have been made. Notwithstanding anything to the contrary described in this prospectus supplement, in no event will the Certificate Principal Balance of any Offered Certificate be reduced more than once in respect of any particular amount both (i) allocable to such Offered Certificate in respect of Realized Losses and (ii) payable as principal to the holder of such Offered Certificate from Net Monthly Excess Cashflow.

In the event that a Servicer receives a Subsequent Recovery with respect to any defaulted Mortgage Loan, such Subsequent Recovery will be distributed as part of the Available Distribution Amount in accordance with the priorities described under “Description of the Certificates” in this prospectus supplement, except that if a Subsequent Recovery is received with respect to an Insured Certificate as to which the Insurer has paid an Allocated Realized Loss Amount, such Subsequent Recovery will be paid directly to the Insurer, to the extent of the Allocated Realized Loss Amount paid by the Insurer.  In addition, the Certificate Principal Balance of each class of Offered Certificates that has been reduced by the allocation of a Realized Loss to such class will be increased, on a pro rata basis based on the related Allocated Realized Loss Amount with respect to the Senior Certificates, and in order of seniority with respect to the Mezzanine Certificates, by the amount of such Subsequent Recovery, but only to the extent that such certificate has not been reimbursed for the amount of such Realized Loss (or any portion thereof) allocated to such certificate from Net Monthly Excess Cashflow as described under “Description of the Certificates—Excess Spread and Overcollateralization Provisions” in this prospectus supplement.  Holders of such certificates will not be entitled to any payment in respect of current interest on the amount of such increases for any Interest Accrual Period preceding the Distribution Date on which such increase occurs.

Last Scheduled Distribution Date

The last scheduled Distribution Date for the certificates is the Distribution Date in July 2036, which is the Distribution Date occurring one month after the original scheduled maturity date for the latest maturing Mortgage Loan.  

The actual last Distribution Date on any class of certificates will depend on the rate of payments of principal on the Mortgage Loans which, in turn, may be influenced by a variety of economic, geographic and social factors, as well as the level of prevailing interest rates.  No assurance can be given as to the actual payment experience with respect to the Mortgage Loans.

SERVICING

General

The primary servicers of the Mortgage Loans will be as follows: American Home Mortgage Servicing, Inc., with respect to approximately with respect to approximately 59.09% of the Mortgage Loans and Countrywide Home Loans Servicing LP with respect to approximately 36.80% of the Mortgage Loans.  The remainder of the Mortgage Loans will be serviced by certain other servicers, none of which is servicing 10.00% or more of the Mortgage Loans by aggregate principal balance as of the Cut-Off Date.

American Home Mortgage Servicing, Inc.

American Home Mortgage Servicing, Inc. (“American Home Servicing”) is a Maryland corporation.  American Home Servicing is engaged in the business of servicing single family residential mortgage loans secured by properties located in all 50 states and the District of Columbia. American Home Servicing has been servicing mortgage loans since its incorporation in 1972.  American Home Servicing may use subservicers with respect to all or a portion of the mortgage loans, although American Home Servicing is not using any subservicers as of the Cut-off Date.

American Home Servicing will send statements to borrowers and process the payments as received by depositing them within two business days into a custodial account. If the borrower is delinquent, American Home Servicing will attempt to contact the borrower in an effort to make the borrower current.  If the borrower is delinquent for 90 days or more, American Home Servicing will begin the foreclosure process with respect to the borrower.  As part of the foreclosure process, a sale of the property may occur in which American Home Servicing may take possession of the property as “real estate owned” property, commonly known as an REO property.  American Home Servicing will manage any REO property in an attempt to maximize the proceeds from the sale to a third party.

The following table shows the size, composition, and growth of American Home Servicing’s portfolio of first-lien, fixed-rate mortgage loans for the past three years and for the quarter ended March 31, 2006:

American Home Servicing is not aware that any default or servicing related performance trigger has occurred as to any other securitization for which it acts as a master servicer, a servicer, or a sub-servicer.  American Home Servicing is not aware of any material noncompliance with any applicable servicing criteria as to any other securitizations.  American Home Servicing outsources to various third-parties some of its obligations, including tracking of taxes and insurance and the management and sale of REO property.  However, all servicing decisions are made by American Home Servicing.

American Home Servicing is an affiliate of American Home Mortgage Investment Corp., also referred to in this section as AHMIC, a publicly-traded mortgage real estate investment trust that trades on the New York Stock Exchange under the symbol “AHM”.  American Home Servicing is a “taxable REIT subsidiary” of AHMIC.

Collections on the related mortgage loans will be maintained in a payment clearing account for two business days before being deposited into a specifically designated custodial account, segregated from the other assets of the securitization.

American Home Servicing will generally only have the ability to modify Mortgage Loans in the case the related borrower is in default.  If American Home Servicing reduces the borrower’s monthly payment, the amount payable to the Trust may be reduced.

American Home Servicing does not have any custodial responsibility for the assets.  The Custodian has sole responsibility pursuant to the custodial agreement.

American Home Servicing is not aware of any material legal proceeds pending against it or against any of its property, including any proceedings known to be contemplated by governmental authorities.

American Home Servicing is an affiliate of American Home Mortgage Corp., one of the Originators.

Countrywide Home Loans Servicing LP

The principal executive offices of Countrywide Home Loans Servicing LP (“Countrywide Servicing”) are located at 7105 Corporate Drive, Plano, Texas 75024. Countrywide Servicing is a Texas limited partnership directly owned by Countrywide GP, Inc. and Countrywide LP, Inc., each a Nevada corporation and a direct wholly owned subsidiary of Countrywide Home Loans, Inc. (“Countrywide Home Loans”).  Countrywide GP, Inc. owns a 0.1% interest in Countrywide Servicing and is the general partner. Countrywide LP, Inc. owns a 99.9% interest in Countrywide Servicing and is a limited partner.

Countrywide Home Loans established Countrywide Servicing in February 2000 to service mortgage loans originated by Countrywide Home Loans that would otherwise have been serviced by Countrywide Home Loans. In January and February, 2001, Countrywide Home Loans transferred to Countrywide Servicing all of its rights and obligations relating to mortgage loans serviced on behalf of Freddie Mac and Fannie Mae, respectively. In October 2001, Countrywide Home Loans transferred to Countrywide Servicing all of its rights and obligations relating to the bulk of its non-agency loan servicing portfolio (other than the servicing of home equity lines of credit), including with respect to those mortgage loans (other than home equity lines of credit) formerly serviced by Countrywide Home Loans and securitized by certain of its affiliates. While Countrywide Home Loans expects to continue to directly service a portion of its loan portfolio, it is expected that the servicing rights for most newly originated Countrywide Home Loans mortgage loans will be transferred to Countrywide Servicing upon sale or securitization of the related mortgage loans. Countrywide Servicing is engaged in the business of servicing mortgage loans and will not originate or acquire loans, an activity that will continue to be performed by Countrywide Home Loans. In addition to acquiring mortgage servicing rights from Countrywide Home Loans, it is expected that Countrywide Servicing will service mortgage loans for non-Countrywide Home Loans affiliated parties as well as subservice mortgage loans on behalf of other master servicers.

In connection with the establishment of Countrywide Servicing, certain employees of Countrywide Home Loans became employees of Countrywide Servicing. Countrywide Servicing has engaged Countrywide Home Loans as a subservicer to perform certain loan servicing activities on its behalf.

Countrywide Servicing is an approved mortgage loan servicer for Fannie Mae, Freddie Mac, Ginnie Mae, HUD and VA and is licensed to service mortgage loans in each state where a license is required. Its loan servicing activities are guaranteed by Countrywide Financial and/or Countrywide Home Loans when required by the owner of the mortgage loans.

Countrywide Home Loans

Countrywide Home Loans is a New York corporation and a direct wholly owned subsidiary of Countrywide Financial Corporation, a Delaware corporation (“Countrywide Financial”). The principal executive offices of Countrywide Home Loans are located at 4500 Park Granada, Calabasas, California 91302. Countrywide Home Loans is engaged primarily in the mortgage banking business, and as part of that business, originates, purchases, sells and services mortgage loans. Countrywide Home Loans originates mortgage loans through a retail branch system and through mortgage loan brokers and correspondents nationwide. Mortgage loans originated by Countrywide Home Loans are principally first-lien, fixed or adjustable rate mortgage loans secured by single-family residences.

Except as otherwise indicated, reference in the remainder of this prospectus supplement to “Countrywide Home Loans” should be read to include Countrywide Home Loans and its consolidated subsidiaries, including Countrywide Servicing.  Countrywide Home Loans services substantially all of the mortgage loans it originates or acquires. In addition, Countrywide Home Loans has purchased in bulk the rights to service mortgage loans originated by other lenders. Countrywide Home Loans has in the past and may in the future sell to mortgage bankers and other institutions a portion of its portfolio of loan servicing rights. As of December 31, 2002, December 31, 2003, December 31, 2004, December 31, 2005 and March 31, 2006, Countrywide Home Loans provided servicing for mortgage loans with an aggregate principal balance of approximately $452.405 billion, $644.855 billion, $838.322 billion, $1,111.090 billion and $1,152.651 billion, respectively, substantially all of which were being serviced for unaffiliated persons.

Loan Servicing

Countrywide Servicing has established standard policies for the servicing and collection of mortgages. Servicing includes, but is not limited to:

(a)

collecting, aggregating and remitting mortgage loan payments;

(b)

accounting for principal and interest;

(c)

holding escrow (impound) funds for payment of taxes and insurance;

(d)

making inspections as required of the mortgaged properties;

(e)

preparation of tax related information in connection with the mortgage loans;

(f)

supervision of delinquent mortgage loans;

(g)

loss mitigation efforts;

(h)

foreclosure proceedings and, if applicable, the disposition of mortgaged properties; and

(i)

generally administering the mortgage loans, for which it receives servicing fees.

Billing statements with respect to mortgage loans are mailed monthly by Countrywide Servicing. The statement details all debits and credits and specifies the payment due. Notice of changes in the applicable loan rate are provided by Countrywide Servicing to the mortgagor with these statements.

Collection Procedures

When a mortgagor fails to make a payment on a mortgage loan, Countrywide Servicing attempts to cause the deficiency to be cured by corresponding with the mortgagor. In most cases, deficiencies are cured promptly. Pursuant to Countrywide Servicing’s servicing procedures, Countrywide Servicing generally mails to the mortgagor a notice of intent to foreclose after the loan becomes 61 days past due (three payments due but not received) and, generally within 59 days thereafter, if the loan remains delinquent, institutes appropriate legal action to foreclose on the mortgaged property. Foreclosure proceedings may be terminated if the delinquency is cured. Mortgage loans to borrowers in bankruptcy proceedings may be restructured in accordance with law and with a view to maximizing recovery of the loans, including any deficiencies.

Once foreclosure is initiated by Countrywide Servicing, a foreclosure tracking system is used to monitor the progress of the proceedings. The system includes state specific parameters to monitor whether proceedings are progressing within the time frame typical for the state in which the mortgaged property is located. During the foreclosure proceeding, Countrywide Servicing determines the amount of the foreclosure bid and whether to liquidate the mortgage loan.

If foreclosed, the mortgaged property is sold at a public or private sale and may be purchased by Countrywide Servicing. After foreclosure, Countrywide Servicing may liquidate the mortgaged property and charge-off the loan balance which was not recovered through liquidation proceeds.

Servicing and charge-off policies and collection practices with respect to mortgage loans may change over time in accordance with, among other things, Countrywide Servicing’s business judgment, changes in the servicing portfolio and applicable laws and regulations.

Servicing and Other Compensation and Payment of Expenses

Each Servicer will provide customary servicing functions with respect to the Mortgage Loans serviced by such Servicer pursuant to certain servicing agreements between the applicable Servicer and DB Structured Products, Inc. (collectively, the “Servicing Agreements“).  Among other things, the Servicers are obligated under some circumstances to make Advances with respect to the Mortgage Loans.  In managing the liquidation of defaulted Mortgage Loans, the Servicers will have sole discretion to take such action in maximizing recoveries to the Certificateholders including, without limitation, selling defaulted Mortgage Loans and REO properties as described in the related Servicing Agreement.

With respect to each Mortgage Loan, the amount of the servicing fee that will be paid to the related Servicer is a weighted average, for a period of one full month, equal to one-twelfth of the product of (a) 0.250% and (b) the outstanding principal balance of such Mortgage Loan (the “Servicing Fee”).  The Servicing Fee will be payable monthly, computed on the basis of the same principal amount and period respecting which any related interest payment on such Mortgage Loan is computed; provided however that, with respect to certain of the Mortgage Loans serviced by GMACM and Countrywide Servicing, a portion of the Servicing Fee will be paid to GMACM or Countrywide Servicing, as appropriate, pursuant to the terms of side letters between each of GMACM and Countrywide Servicing, and DB Structured Products, Inc.  As additional servicing compensation, the applicable Servicer is entitled to retain all assumption fees, late payment charges and other miscellaneous servicing fees in respect of the Mortgage Loans serviced by it, to the extent collected from mortgagors, together with any interest or other income earned on funds held in the custodial account and any escrow accounts established by such Servicer.  In addition, with respect to certain of the Mortgage Loans serviced by GMACM and Countrywide Servicing, GMACM and Countrywide Servicing, as applicable, are entitled to retain any Prepayment Interest Excess (as defined in the related Servicing Agreement) received in respect of such Mortgage Loans.  

Each Servicer is obligated to pay insurance premiums and other ongoing expenses associated with the Mortgage Loans serviced by it incurred by such Servicer in connection with its responsibilities under the related Servicing Agreement and is entitled to reimbursement for these expenses as provided in the related Servicing Agreement.  See “Description of the Agreements–Material Terms of the Pooling and Servicing Agreements and Underlying Servicing Agreements–Retained Interest, Servicing Compensation and Payment of Expenses” in the prospectus for information regarding expenses payable by the applicable Servicer.

The Sponsor has the right to transfer the servicing of approximately 38.72% of the Mortgage Loans, 4.94% of which are serviced by GMACM and 95.06% of which are serviced by Countrywide Servicing, to a successor servicer which is qualified to service mortgage loans for Fannie Mae or Freddie Mac. The appointment of any successor servicer requires the consent of the Master Servicer and the Insurer, in each case, which consent may not be unreasonably withheld, and confirmation from the rating agencies that the transfer of servicing will not result in a qualification, withdrawal or downgrade of the then-current ratings of any of the Offered Certificates, although there can be no guaranty that such transfer will not have an adverse impact on rates of delinquencies, defaults and losses. See “Risk Factors— The transfer of servicing may result in higher delinquencies and defaults which may adversely affect the yield on your certificates” in this prospectus supplement.  Any expenses incurred by the Master Servicer related to the transfer of servicing to a successor servicer will be reimbursed by the Sponsor or the successor servicer.

In light of DB Structured Products, Inc.’s continued ownership of the servicing rights with respect to approximately 38.72% of the Mortgage Loans, 4.94% of which are serviced by GMACM and 95.06% of which are serviced by Countrywide Servicing, GMACM and Countrywide Servicing will each be parties to separate side letters between each of them and the Sponsor, relating to the servicing of such Mortgage Loans pursuant to which, among other things, a portion of the Servicing Fee will be payable to the Sponsor and the Sponsor may be obligated to reimburse GMACM or Countrywide Servicing, as applicable, for certain servicer payment obligations.  As a result of the side letter, GMACM’s and Countrywide Servicing’s net compensation for performing the servicing activities for the related Mortgage Loans will resemble that of a subservicer.  If either of GMACM or Countrywide Servicing, on one hand, and the Sponsor, on the other hand, agree to terminate the side letter or if the servicing with respect to such Mortgage Loans is transferred from either GMACM or Countrywide Servicing to a qualified successor pursuant to the Pooling and Servicing Agreement, the servicing fee payable to GMACM or Countrywide Servicing, or any successor servicer would not be in excess of the Servicing Fee due to GMACM or Countrywide Servicing as set forth above. Notwithstanding the existence of the side letter, GMACM and Countrywide Servicing have each agreed to service and administer all of the Mortgage Loans serviced by them in accordance with the terms of their respective Servicing Agreement.

Payments on Mortgage Loans; Deposits to Custodial Accounts

Each Servicer will establish and maintain or cause to be established and maintained a separate trust account (the “Custodial Account“) for the benefit of the Certificateholders.  Each Custodial Account will be an eligible account (or similar term as defined in the related Servicing Agreement). Upon receipt by the applicable Servicer of amounts in respect of the Mortgage Loans serviced by it (excluding amounts representing the applicable servicing fee or other servicing compensation, reimbursement for Advances and servicing advances and insurance proceeds to be applied to the restoration or repair of a Mortgaged Property or similar items), the applicable Servicer will deposit such amounts in the related Custodial Account.  Amounts so deposited may be invested in accordance with the terms of the related Servicing Agreement in investments maturing no later than one business day prior to the date on which the amount on deposit therein is required to be remitted to the Securities Administrator if such investment is managed by a person other than the related Servicer or the Securities Administrator, or maturing on the Business Day on which the amount on deposit therein is required to be remitted to the Securities Administrator if such investment is managed by the related Servicer or the Securities Administrator.  All investment income on funds in the related Custodial Account will be for the benefit of the applicable Servicer.

Advances

Subject to the limitations set forth in the following paragraph, each Servicer will be obligated to advance or cause to be advanced on or before each Determination Date from its own funds, an amount equal to the aggregate of all payments of principal and interest, net of its servicing fee, that were due on the Mortgage Loans serviced by it and that were delinquent on the related Determination Date, plus amounts representing assumed payments not covered by any current net income on the Mortgaged Properties acquired by foreclosure or deed in lieu of foreclosure (any such advance, an “Advance”).

Advances are required to be made only to the extent they are deemed by the applicable Servicer to be recoverable from related late collections, insurance proceeds or liquidation proceeds. The purpose of making the Advances is to maintain a regular cash flow to the certificateholders, rather than to guarantee or insure against losses.

All Advances will be reimbursable to the applicable Servicer from late collections, insurance proceeds and liquidation proceeds from the Mortgage Loan as to which the Advance was made. In addition, any Advances previously made in respect of any Mortgage Loan that are deemed by the applicable Servicer to be nonrecoverable from related late collections, insurance proceeds or liquidation proceeds may be reimbursed to the applicable Servicer out of any funds in the related custodial account prior to the distributions on the certificates. In the event that the applicable Servicer fails in its obligation to make any required Advance, the Master Servicer or other successor servicer (which may be the Master Servicer) will be obligated to make the Advance, in each case, to the extent required in the Pooling and Servicing Agreement.  Under the Pooling and Servicing Agreement, the Trustee is required to make, subject to its determination of recoverability and applicable law, any Advance that the Master Servicer is required to make, but fails to make.

Compensating Interest

The Servicers or the Master Servicer, as applicable, will pay amounts referred to herein as “Compensating Interest” in the manner and to the extent set forth below to reduce the adverse effect on certificateholders from the deficiency in interest collected as a result of prepayments in full or in part on the related Mortgage Loans.

Each Servicer will be required to deposit into the related custodial account, prior to distribution to the Master Servicer for any Distribution Date, an amount equal to (a) with respect to American Home Servicing, the lesser of (i) any shortfall in interest collections for the related month resulting from prepayments in full or in part on the related Mortgage Loans made during the related Prepayment Period and (ii) the aggregate servicing fee payable to the related Servicer for the related Due Period, and (b) with respect to (i) all of the Mortgage Loans serviced by Countrywide Servicing and certain of the Mortgage Loans serviced by GMACM, the lesser of (x) any shortfall in interest collections for the related month resulting from prepayments in full made during the portion of the Prepayment Period occurring between the 16th day of the month preceding the month in which such Distribution Date occurs and ending on the last day of the calendar month preceding the month in which such Distribution Date occurs and (y) the aggregate servicing fee payable to Countrywide Servicing or GMACM, as applicable, for the related Due Period as set forth in the related servicing agreement and (ii) certain others of the Mortgage Loans serviced by GMACM, the lesser of (x) any shortfall in interest collections for the related month resulting from prepayments in full or in part on the related Mortgage Loans made during the related Prepayment Period and (y) the aggregate servicing fee payable to GMACM for the related Due Period as set forth in the related servicing agreement.

With respect to the Master Servicer, if the Servicers fail to pay the amount of any Compensating Interest required to be paid on that Distribution Date, the Master Servicer will be required to deposit into the Distribution Account as a payment of Compensating Interest the lesser of (i) the amount required to be paid by the Servicers and not so paid and (ii) the master servicing compensation for such Distribution Date.

Modifications

In instances in which a Mortgage Loan is in default or if default is reasonably foreseeable, and if determined by the Servicer to be in the best interest of the certificateholders and the Insurer, the Servicer may permit servicing modifications of the Mortgage Loan rather than proceeding with foreclosure. However, the Servicer’s ability to perform servicing modifications will be subject to some limitations, including but not limited to the following: any amounts added to the principal balance of the Mortgage Loan, or capitalized amounts added to the Mortgage Loan, will be required to be fully amortized over the remaining term, or the extended term, of the Mortgage Loan; all capitalizations are to be implemented in accordance with the Servicer’s standards and may be implemented only by the Servicer for that purpose; the final maturity of any Mortgage Loan will not be extended beyond the assumed final Distribution Date; and no servicing modification with respect to a Mortgage Loan will have the effect of reducing the mortgage rate.

Special Servicing Agreements

Upon any Mortgage Loan becoming ninety (90) days or more delinquent, the holder of the majority interest in the Class CE Certificates shall have the option to transfer servicing with respect to such delinquent Mortgage Loan to a Special Servicer. Immediately upon the transfer of servicing to the Special Servicer with respect to any Mortgage Loan, the Special Servicer shall service such Mortgage Loan in accordance with (i) all provisions of the Pooling and Servicing Agreement and (ii) any Special Servicing Agreement.  Upon the exercise of such option and with respect to Mortgage Loans that currently or subsequently become ninety (90) days or more delinquent, servicing on such Mortgage Loans will transfer to the Special Servicer, upon prior written notice to the Master Servicer and the Insurer, without any further action by the holder of the majority interest in the Class CE Certificateholders.  Any Special Servicing Agreement shall be acceptable to the Master Servicer, the Trustee and the Rating Agencies and will not modify any material terms of the Pooling and Servicing Agreement.

Upon designation of the Special Servicer, the prior servicer of that Mortgage Loan will have no further rights or obligations with respect to that Mortgage Loan.  The Pooling and Servicing Agreement will provide that if the holder of the majority interest in the Class CE Certificates has not exercised such option, then the Servicer may purchase from the Trust Fund within ninety days of a Mortgage Loan becoming ninety days delinquent that Mortgage Loan at a price equal to 100% of the outstanding principal balance plus accrued and unpaid interest, plus unreimbursed Advances and servicing advances, plus any unpaid servicing fees or master servicing fees.

Upon appointment of a Special Servicer, all provisions of the Pooling and Servicing Agreement shall be binding on the Special Servicer.  In addition, the Special Servicer will enter into a special servicing agreement with the holder of the majority interest in the Class CE Certificates, the Master Servicer and the Trustee that must be acceptable to the rating agencies rating the Certificates and the Insurer.

Evidence as to Compliance

The Pooling and Servicing Agreement and each servicing agreement will provide that each year on or before the date set forth in the Pooling and Servicing Agreement, beginning with the first year after the year in which the Cut-off Date occurs, each party responsible for the servicing function will provide to the Depositor, the Master Servicer and the Trustee a report on an assessment of compliance with the minimum servicing criteria established in Item 1122(a) of Regulation AB (the “AB Servicing Criteria”). The AB Servicing Criteria include specific criteria relating to the following areas: general servicing considerations, cash collection and administration, investor remittances and reporting, and pool asset administration. Such report will indicate that the AB Servicing Criteria were used to test compliance on a platform level basis and will set out any material instances of noncompliance.

The Pooling and Servicing Agreement and each servicing agreement will also provide that the each party responsible for the servicing function will deliver along with its report on assessment of compliance, an attestation report from a firm of independent public accountants on the assessment of compliance with the AB Servicing Criteria.

The Pooling and Servicing Agreement and each servicing agreement will also provide for delivery to the Securities Administrator and the Trustee each year, on or before the date set forth in the Pooling and Servicing Agreement, of a separate annual statement of compliance from each entity responsible for the servicing function to the effect that, to the best knowledge of the signing officer, such entity has fulfilled in all material respects its obligations under the Pooling and Servicing Agreement throughout the preceding year or, if there has been a material failure in the fulfillment of any obligation, the statement will specify such failure and the nature and status thereof.

Copies of the annual reports of assessment of compliance, attestation reports, and statements of compliance, if not available on the Securities Administrator’s website, may be obtained by securityholders without charge upon written request to the Securities Administrator at the address of the Securities Administrator set forth under “The Master Servicer and Securities Administrator” in this prospectus supplement. These items will be filed with the Issuing Entity’s annual report on Form 10-K, to the extent required under Regulation AB.

THE SECURITIES ADMINISTRATOR, THE MASTER SERVICER AND THE CUSTODIANS

Wells Fargo Bank, National Association

General

The information set forth in the following five paragraphs has been provided by the Master Servicer, the Securities Administrator and Wells Fargo Bank as a Custodian.  None of the Servicers, the Trustee, the other Custodian, the Originators, the Insurer or any of their respective affiliates has made or will make any representation as to the accuracy or completeness of the information.

Wells Fargo Bank, National Association (“Wells Fargo Bank”) will act as Securities Administrator and Master Servicer under the Pooling and Servicing Agreement and as a Custodian under a custodial agreement (the “Wells Fargo Custodial Agreement”), dated as of June 1, 2006, by and among Trustee, the Servicers and Wells Fargo Bank as Custodian.  Wells Fargo Bank is a national banking association and a wholly-owned subsidiary of Wells Fargo & Company.  A diversified financial services company with approximately $482 billion in assets, 23 million customers and 153,000 employees as of December 31, 2005, Wells Fargo & Company is a U.S. bank holding company, providing banking, insurance, trust, mortgage and consumer finance services throughout the United States and internationally.  Wells Fargo Bank provides retail and commercial banking services and corporate trust, custody, securities lending, securities transfer, cash management, investment management and other financial and fiduciary services.   The Depositor, the Sponsor and the Servicers may maintain banking and other commercial relationships with Wells Fargo Bank and its affiliates.  Wells Fargo Bank maintains principal corporate trust offices located at 9062 Old Annapolis Road, Columbia, Maryland 21045-1951 (among other locations) and its office for certificate transfer services is located at Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479.

Wells Fargo Bank serves or may have served within the past two years as loan file custodian for various mortgage loans owned by the Sponsor or an affiliate of the Sponsor and anticipates that one or more of those mortgage loans may be included in the Trust.  The terms of any custodial agreement under which those services are provided by Wells Fargo Bank are customary for the mortgage-backed securitization industry and provide for the delivery, receipt, review and safekeeping of mortgage loan files.  

Securities Administrator

Under the terms of the Pooling and Servicing Agreement, Wells Fargo Bank also is responsible for securities administration, which includes pool performance calculations, distribution calculations and the preparation of monthly distribution reports.  As securities administrator, Wells Fargo Bank is responsible for the preparation and filing of all REMIC tax returns on behalf of the Trust REMICs  and the preparation of monthly reports on Form 10-D , periodic reports on Form 8-K and annual reports on Form 10-K that are required to be filed with the Securities and Exchange Commission on behalf of the issuing Trust.  Wells Fargo Bank has been engaged in the business of securities administration since June 30, 1995.  Wells Fargo Bank has been engaged in the business of Securities Administration since June 30, 1995.  As of March 31, 2006, Wells Fargo Bank was acting as securities administrator with respect to more than $829,726,924,092 of outstanding residential mortgage-backed securities.  

Master Servicer

Wells Fargo Bank acts as Master Servicer pursuant to the Pooling and Servicing Agreement.  The Master Servicer is responsible for the aggregation of monthly Servicer reports and remittances and for the oversight of the performance of the Servicer under the terms of the related Servicing Agreement.  In particular, the Master Servicer independently calculates monthly loan balances based on Servicer data, compares its results to Servicer loan-level reports and reconciles any discrepancies with the Servicer.  The Master Servicer also reviews the servicing of defaulted loans for compliance with the terms of the Pooling and Servicing Agreement. In addition, upon the occurrence of certain Servicer events of default under the terms of the Pooling and Servicing Agreement, the Master Servicer may be required to enforce certain remedies on behalf of the Trust and at the direction of the Trustee against such defaulting Servicer.  Wells Fargo Bank has been engaged in the business of master servicing since June 30, 1995.  As of March 31, 2006, Wells Fargo Bank was acting as master servicer for approximately 1155 series of residential mortgage-backed securities with an aggregate outstanding principal balance of approximately $593,256,087,420.

Custodian

Wells Fargo Bank is acting as a Custodian of 4.11% of the mortgage loan files pursuant to the Wells Fargo Custodial Agreement.  In that capacity, Wells Fargo Bank is responsible for holding and safeguarding the mortgage notes and other contents of the mortgage files on behalf of the Trustee and the Certificateholders.  Wells Fargo Bank maintains each mortgage loan file is a separate file folder marked with a unique bar code to assure loan-level file integrity and to assist in inventory management.  Files are segregated by transaction or investor.  Wells Fargo Bank has been engaged in the mortgage document custody business for more than 25 years.  Wells Fargo Bank maintains document custody facilities in its Minneapolis, Minnesota headquarters and in three regional offices located in Richfield, Minnesota, Irvine, California, and Salt Lake City, Utah.  As of March 31, 2006, Wells Fargo Bank maintains mortgage custody vaults in each of those locations with an aggregate capacity of over eleven million files.  

Deutsche Bank National Trust Company

The information set forth in the following paragraph has been provided by Deutsche Bank National Trust Company.  None of the Servicers, the Trustee, Wells Fargo Bank or any of their respective affiliates has made or will make any representation as to the accuracy or completeness of the information.

Deutsche Bank National Trust Company (“DBNTC”) will act as a Custodian of mortgage loan files pursuant to a custodial agreement (the “DBNTC Custodial Agreement”) dated as of June 1, 2006, by and among Trustee, the Servicers and DBNTC.  DBNTC has performed this custodial role in numerous mortgage-backed transactions since 1991.  DBNTC will maintain the mortgage files in secure, fire-resistant facilities.  DBNTC will not physically segregate the mortgage files from other mortgage files in DBNTC’s custody but will be kept in shared facilities.  However, DBNTC’s proprietary document tracking system will show the location within DBNTC’s facilities of each mortgage file and will show that the mortgage loan documents are held by the Trustee on behalf of the trust.  DBNTC has no pending legal proceedings that would materially affect its ability to perform its duties as Custodian on behalf of the Holders.  DBNTC may perform certain of its obligations through one or more third party vendors.  However, DBNTC will remain liable for the duties and obligations required of it under the pooling and servicing agreement. DBNTC is providing the information in the foregoing paragraph at the depositor’s request in order to assist the depositor with the preparation of its disclosure documents to be filed with the SEC pursuant to Regulation AB.  Otherwise, DBNTC has not participated in the preparation of such disclosure documents and assumes no responsibility or liability for their contents.

Approximately 95.89% of the mortgage loan files will be held by DBNTC pursuant to the DBNTC Custodial Agreement.

The Distribution Account

Pursuant to the terms of the Pooling and Servicing Agreement, the Securities Administrator will establish and maintain a separate account (a “Distribution Account”) for the benefit of the Certificateholders and the Insurer.  The Distribution Account will be an Eligible Account (as defined in the Pooling and Servicing Agreement).  Amounts on deposit therein may be invested in Eligible Investments (at the direction and for the benefit of the Master Servicer) maturing no later than one Business Day prior to the related Distribution Date unless such Eligible Investments are invested in investments managed or advised by the Securities Administrator or an affiliate thereof, in which case such Eligible investments may mature on the related Distribution Date. All investment income on funds in the Distribution Account will be for the benefit of the Master Servicer as provided in the Pooling and Servicing Agreement.

Any one or more of the following obligations or securities held in the name of the Trustee for the benefit of the certificateholders will be considered an Eligible Investment:

(i)

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

(ii)

commercial or finance company paper which is then receiving the highest commercial or finance company paper rating of each rating agency, or such lower rating as will not result in the downgrading or withdrawal of the ratings then assigned to the certificates by each rating agency, as evidenced in writing;

(iii)

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

(iv)

guaranteed reinvestment agreements issued by any bank, insurance company or other corporation containing, at the time of the issuance of such agreements, such terms and conditions as will not result in the downgrading or withdrawal of the rating then assigned to the certificates by each rating agency, as evidenced in writing;

(v)

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

(vi)

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

(vii)

interests in any money market fund (including any such fund managed or advised by the Securities Administrator or any affiliate thereof) which at the date of acquisition of the interests in such fund and throughout the time such interests are held in such fund has the highest applicable short term rating by each rating agency rating such fund or such lower rating as will not result in the downgrading or withdrawal of the ratings then assigned to the certificates by each rating agency, as evidenced in writing;

(viii)

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

(ix)

such other investments having a specified stated maturity and bearing interest or sold at a discount acceptable to each rating agency and as will not result in the downgrading or withdrawal of the rating then assigned to the certificates by any rating agency (without giving regard to the Policy), as evidenced by a signed writing delivered by each rating agency.

Master Servicing and Other Compensation and Payment of Expenses

The compensation to be paid to the Master Servicer on each Distribution Date in respect of its master servicing activities will be interest or other income earned on funds held in the Distribution Account.

In the event that the Servicers fail to pay the amount of any Compensating Interest required to be paid on any Distribution Date, the Master Servicer will be required to pay such amounts up to the master servicing compensation payable to the Master Servicer on such Distribution Date.

Events of Default and Removal of Master Servicer

Upon the occurrence of events of default described under “Description of the Agreements—Material Terms of the Pooling and Servicing Agreements and Underlying Servicing Agreements—Events of Default under the Agreement” and “—Rights Upon Events of Default under the Agreements” in the prospectus, the Master Servicer may be removed as Master Servicer of the Mortgage Loans in accordance with the terms of the Pooling and Servicing Agreement.

Any successor to the Master Servicer appointed under the Pooling and Servicing Agreement must be reasonably satisfactory to each rating agency and the Insurer, with a net worth at the time of the appointment of at least $25,000,000.  See “Description of the Agreements—Material Terms of the Pooling and Servicing Agreements and Underlying Servicing Agreements—Events of Default under the Agreement” and “—Rights Upon Events of Default under the Agreements” in the prospectus.

Transfer of Master Servicing

The Master Servicer may sell and assign its rights and delegate its duties and obligations in its entirety as Master Servicer under the Pooling and Servicing Agreement; provided, however, that: (i) the purchaser or transferee accept in writing such assignment and delegation and assume the obligations of the Master Servicer under the Pooling and Servicing Agreement (a) will be required to have a net worth of not less than $25,000,000 (unless otherwise approved by each Rating Agency pursuant to clause (ii) below); (b) will be required to be reasonably satisfactory to the Trustee (as evidenced in a writing signed by the Trustee) and the Insurer; and (c) will be required to execute and deliver to the Trustee an agreement, in form and substance reasonably satisfactory to the Trustee and the Insurer, which contains an assumption by such Person of the due and punctual performance and observance of each covenant and condition to be performed or observed by it as master servicer under the Pooling and Servicing Agreement; (ii) each Rating Agency will be given prior written notice of the identity of the proposed successor to the Master Servicer and each Rating Agency’s rating of the Certificates (without giving regard to the Policy) in effect immediately prior to such assignment, sale and delegation will not be downgraded, qualified or withdrawn as a result of such assignment, sale and delegation, as evidenced by a letter to such effect delivered to the Master Servicer and the Trustee; and  (iii) the Master Servicer assigning and selling the master servicing will be required to deliver to the Trustee and the Insurer an officer’s certificate and an opinion of independent counsel, each stating that all conditions precedent to such action under the Pooling and Servicing Agreement have been completed and such action is permitted by and complies with the terms of the Pooling and Servicing Agreement. No such assignment or delegation will affect any liability of the Master Servicer arising out of acts or omissions prior to the effective date thereof.

Indemnification

The Master Servicer and any director, officer, employee or agent of the Master Servicer will be indemnified and held harmless by the trust against any loss, liability or expense as set forth in the Pooling and Servicing Agreement.

The Securities Administrator and any director, officer, employee or agent of the Securities Administrator will be indemnified and held harmless by the trust against any loss, liability or expense as set forth in the Pooling and Servicing Agreement.

The Custodians and any director, officer, employee or agent of the Custodians will be indemnified and held harmless by the trust against any loss, liability or expense as set forth in the Custodial Agreements.

THE TRUSTEE

HSBC Bank USA, National Association, a national banking association, will be the Trustee under the Pooling and Servicing Agreement. The Depositor and the Master Servicer may maintain other banking relationships in the ordinary course of business with the Trustee. The Trustee’s corporate trust office is located at 452 Fifth Avenue, New York, New York 10018, Attention: Corporate Trust, Deutsche Alt-B Securities Mortgage Loan Trust, Series 2006-AB3 or at such other address as the Trustee may designate from time to time.

As of March 31, 2006, HSBC Bank USA, National Association is acting as trustee for approximately 400 asset-backed securities transactions involving similar pool assets included in the Mortgage Pool.  

The Trustee, prior to the occurrence of an Event of Default and after the curing or waiver of all Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in the Pooling and Servicing Agreement as duties of the Trustee, including:

1.

Upon receipt of all resolutions, certificates, statements, opinions, reports, documents, orders or other instruments which are specifically required to be furnished to the Trustee pursuant to the Pooling and Servicing Agreement, the Trustee (or its Custodian, if applicable) will be required to examine them to determine whether they are in the required form; provided, however, that the Trustee will not be responsible for the accuracy or content of any resolution, certificate, statement, opinion, report, document, order or other instrument furnished hereunder; provided, further, that the Trustee will not be responsible for the accuracy or verification of any calculation provided to it pursuant to the Pooling and Servicing Agreement.

2.

The Trustee will be required to promptly remit to the Servicer any complaint, claim, demand, notice or other document (collectively, the “Notices”) delivered to the Trustee as a consequence of the assignment of any Mortgage Loan hereunder and relating to the servicing of the Mortgage Loans; provided than any such notice (i) is delivered to the Trustee at its Corporate Trust Office, (ii) contains information sufficient to permit the Trustee to make a determination that the real property to which such document relates is a Mortgaged Property (as defined in the Pooling and Servicing Agreement). The Trustee will have no duty under the pooling and servicing agreement with respect to any Notice it may receive or which may be alleged to have been delivered to or served upon it unless such Notice is delivered to it or served upon it at its Corporate Trust Office and such Notice contains the information required pursuant to clause (ii) of the preceding sentence.

3.

Except for those actions that the Trustee is required to take under the Pooling and Servicing Agreement, the Trustee will not have any obligation or liability to take any action or to refrain from taking any action in the absence of written direction as provided in the Pooling and Servicing Agreement.

If an Event of Default has occurred and has not been cured or waived, the Trustee will be required to exercise such of the rights and powers vested in it by the Pooling and Servicing Agreement, using the same degree of care and skill in their exercise, as a prudent person would exercise under the circumstances in the conduct of his own affairs.  

Without limiting the generality of the foregoing, if an Event of Default occurs, the Trustee will be required to, at the direction of the Insurer or at least 51% of the Voting Rights, by notice in writing to the Master Servicer and to the Depositor, with a copy to each Rating Agency, terminate all of the rights and obligations of the Master Servicer in its capacity as Master Servicer under the Pooling and Servicing Agreement, to the extent permitted by law, and in and to the Mortgage Loans and the proceeds thereof. On or after the receipt by the Master Servicer of such written notice, all authority and power of the Master Servicer with respect to the Certificates (other than as a holder of any Certificate) or the Mortgage Loans or otherwise including, without limitation, the compensation payable to the Master Servicer under the Pooling and Servicing Agreement, will pass to and be vested in the Trustee, and, without limitation, the Trustee will be authorized and empowered, as attorney-in-fact or otherwise, to execute and deliver, on behalf of and at the expense of the Master Servicer, any and all documents and other instruments and to do or accomplish all other acts or things necessary or appropriate to effect the purposes of such notice of termination, whether to complete the transfer and endorsement or assignment of the Mortgage Loans and related documents, or otherwise. Notwithstanding the foregoing, the Trustee will be permitted to, if it is unwilling to so to act, or will be required to, if it is legally unable to act, appoint, or petition a court of competent jurisdiction to appoint, a successor master servicer in accordance with the terms of the Pooling and Servicing Agreement.

To the extent that the costs and expenses of the Trustee related to the termination of the Master Servicer, appointment of a successor master servicer or the transfer and assumption of the master servicing by the Trustee (including, without limitation, (i) all legal costs and expenses and all due diligence costs and expenses associated with an evaluation of the potential termination of the Master Servicer as a result of an Event of Default and (ii) all costs and expenses associated with the complete transfer of the master servicing, including all servicing files and all servicing data and the completion, correction or manipulation of such servicing data as may be required by the successor master servicer to correct any errors or insufficiencies in the servicing data or otherwise to enable the successor master servicer to master service the Mortgage Loans in accordance with the Pooling and Servicing Agreement) are not fully and timely reimbursed by the terminated master servicer, the Trustee will be entitled to reimbursement of such costs and expenses from the Distribution Account.

For further discussion of the duties of the Trustee, please see “Description of the Agreements—Material Terms of the Pooling and Servicing Agreements and Underlying Servicing Agreements—Duties of the Trustee” in the prospectus.

The Master Servicer will pay the Trustee the trustee’s fee in respect of its obligations under the Pooling and Servicing Agreement. The Pooling and Servicing Agreement will provide that the Trustee and any director, officer, employee or agent of the Trustee will be indemnified by the trust and will be held harmless against any loss, liability, expense or cost including, without limitation, attorneys fees and expenses (not including expenses and disbursements incurred or made by the Trustee in the ordinary course of the Trustee’s performance in accordance with the provisions of the Pooling and Servicing Agreement) incurred by the Trustee in connection with any pending or threatened legal action or arising out of or in connection with the acceptance or administration of its obligations and duties under the Pooling and Servicing Agreement, the Certificates or the Custodial Agreement, other than any loss, liability or expense (i) resulting from a breach of the obligations and duties of the Servicer under the Pooling and Servicing Agreement (for which the Trustee receives indemnity from the Servicer) or (ii) incurred by reason of willful misfeasance, bad faith or negligence in the performance of the Trustee’s duties under the Pooling and Servicing Agreement, the Certificates or the Custodial Agreement or by reason of reckless disregard, of the Trustee’s obligations and duties under the Pooling and Servicing Agreement, the Certificates or the Custodial Agreement.

The Trustee may resign at any time, in which event the Depositor will be obligated to appoint a successor trustee. The Depositor may also remove the Trustee if the Trustee ceases to be eligible to continue under the Pooling and Servicing Agreement or if the trustee becomes insolvent. Upon becoming aware of the circumstances, the Depositor will be obligated to appoint a successor trustee. The Trustee may also be removed at any time by the holders of the certificates evidencing not less a majority of the voting rights in the trust fund. Any resignation or removal of the Trustee and appointment of a successor trustee will not become effective until acceptance of the appointment by the successor trustee.  If the Trustee resigns or is removed by the Depositor, the expenses associated with the change of trustees will be paid by the former trustee and reimbursed from the Distribution Accounts.  If the Trustee is removed by holders of certificates, such holders will be responsible for paying any compensation payable to a successor trustee, in excess of the amount paid to the predecessor trustee.

The Trustee and any director, officer, employee or agent of the Trustee will be indemnified and held harmless against any loss, liability or expense as set forth in the Pooling and Servicing Agreement.

THE CREDIT RISK MANAGER

Clayton Fixed Income Services Inc. (formerly known as The Murrayhill Company), as credit risk manager for the trust (the “Credit Risk Manager”) will monitor the performance of the Servicers, and make recommendations to the Servicers regarding certain delinquent and defaulted Mortgage Loans and will report to the Depositor on the performance of such Mortgage Loans, pursuant to a Credit Risk Management Agreement to be entered into by the Credit Risk Manager and the Servicers and/or Master Servicer on or prior to the Closing Date. The Credit Risk Manager will rely upon mortgage loan data that is provided to it by the Servicers and/or Master Servicer in performing its advisory and monitoring functions. The Credit Risk Manager will be entitled to receive a “Credit Risk Manager’s Fee” until the termination of the trust or until its removal by a vote of at least 66 2/3% of the Certificateholders. Such fee will be paid by the trust and will be equal to one-twelfth of the product of 0.009% multiplied by the then current aggregate principal balance of the Mortgage Loans.

POOLING AND SERVICING AGREEMENT

General

The certificates will be issued under the Pooling and Servicing Agreement, a form of which is filed as an exhibit to the registration statement.  A Current Report on Form 8-K relating to the certificates containing a copy of the Pooling and Servicing Agreement as executed will be filed by the Depositor with the Securities and Exchange Commission (“SEC”) within fifteen days of the initial issuance of the certificates. The trust fund created under the Pooling and Servicing Agreement will consist of (i) all of the Depositor’s right, title and interest in the Mortgage Loans, the related mortgage notes, mortgages and other related documents; (ii) all payments on or collections in respect of the Mortgage Loans due after the Cut-Off Date or Subsequent Cut-Off Date, as applicable, together with any proceeds of the Mortgage Loans; (iii) any Mortgaged Properties acquired on behalf of certificateholders by foreclosure or by deed in lieu of foreclosure, and any revenues received on these mortgaged properties; (iv) the rights of the Trustee under all insurance policies required to be maintained under the Pooling and Servicing Agreement; (v) the rights of the Depositor under the Mortgage Loan Purchase Agreement, the Servicing Agreements and the assignment; assumption and recognition agreements related to the Servicing Agreements; (vi) the Pre-Funding Account, and any amounts on deposit in the Pre-Funding Account, if any, from time to time, and (vii) with respect to Class A-4, Class A-5A and Class A-6 Certificates, the Policy.  Reference is made to the prospectus for important information in addition to that set forth in this prospectus supplement regarding the trust fund, the terms and conditions of the Pooling and Servicing Agreement and the Offered Certificates. The Depositor will provide to a prospective or actual certificateholder without charge, on written request, a copy, without exhibits, of the Pooling and Servicing Agreement. Requests should be addressed to 60 Wall Street, New York, New York 10005.

Assignment of the Mortgage Loans

The Depositor will acquire all of the Mortgage Loans included in the Mortgage Pool pursuant to a mortgage loan purchase agreement, the (“Mortgage Loan Purchase Agreement”), to be dated as of June 30, 2006, between the Sponsor and the Depositor.  The Mortgage Loans were previously purchased by the Sponsor either directly or indirectly from the Originators.  See “Description of the Mortgage Pool—Underwriting Standards” in this prospectus supplement.

Pursuant to the terms of the Mortgage Loan Purchase Agreement, the Sponsor will make certain representations and warranties with respect to the Mortgage Loans which the Depositor will assign to the Trustee for the benefit of the certificateholders and the Insurer.  If the Sponsor breaches any of the representations and warranties with respect to any Mortgage Loan which materially and adversely affects (i) the value of any of the Mortgage Loans actually delivered or (ii) the interests of the Insurer or the certificateholders therein (without regard to the Policy), the Sponsor will be obligated to cure such breach in all material respects or repurchase the Mortgage Loan or any property acquired in respect thereof.

In addition, the Depositor will make representations and warranties regarding the Mortgage Loans in the Pooling and Servicing Agreement but its assignment of the Mortgage Loans to the Trustee will be without recourse and the Depositor’s obligations relating to the Mortgage Loans will be limited to the representations and warranties made by it under the Pooling and Servicing Agreement.  If the Depositor breaches any of the representations and warranties with respect to any Mortgage Loan which breach materially and adversely affects the interests of the certificateholders in the related Mortgage Loan (without regard to the Policy), the Depositor will be obligated to cure such breach in all material respects or repurchase the Mortgage Loan or any property acquired in respect thereof.

On the Closing Date, the Depositor will transfer to the trust all of its right, title and interest in and to each Initial Mortgage Loan, the related mortgage note, mortgage, assignment of mortgage in recordable form to the Trustee and other related documents (collectively, the “Related Documents”), including all scheduled payments with respect to each such Mortgage Loan due after the Cut-Off Date. The Trustee, concurrently with such transfer, will deliver the certificates to the Depositor.  Each Mortgage Loan transferred to the trust will be identified on a schedule delivered to the Trustee pursuant to the Pooling and Servicing Agreement. The mortgage loan schedule will include information such as the principal balance of each Mortgage Loan as of the Cut-Off Date or Subsequent Cut-Off Date, as applicable, its mortgage interest rate as well as other information with respect to each Mortgage Loan.

The Pooling and Servicing Agreement will require that, by the closing date or related subsequent transfer date, as applicable, the Depositor will deliver or cause to be delivered to the Trustee (or the Custodian, as the Trustee’s agent for such purpose) the original mortgages and original mortgage notes endorsed in blank. If such original is not available or is lost, the Depositor may, in lieu of delivery of the original mortgage or mortgage note, deliver or cause to be delivered true and correct copies thereof, and, with respect to a lost mortgage note, a lost note affidavit.  

On or prior to the Closing Date, the Trustee or the Custodian on its behalf will review the Related Documents pursuant to the Pooling and Servicing Agreement.  If any Related Document is found to be defective in any material respect and such defect is not cured within 90 days following notification thereof to the Sponsor by the Trustee or receipt of any required custodial certification noting such defect delivered by the related Custodian, the Sponsor will be required to either (i) substitute for such Mortgage Loan pursuant to the Pooling and Servicing Agreement; provided, however, that such substitution is permitted only within two years of the Closing Date and may not be made unless an opinion of counsel is provided to the Trustee, the Master Servicer and the Depositor in effect that such substitution will not disqualify any REMIC (as defined in the Pooling and Servicing Agreement) as a REMIC or result in a prohibited transaction tax under the Internal Revenue Code or (ii) purchase such Mortgage Loan at a price (the “Purchase Price”) equal to the outstanding principal balance of such Mortgage Loan as of the date of purchase, plus all accrued and unpaid interest thereon, at the mortgage interest rate from the date interest was last paid by the mortgagor to the next scheduled due date, plus the amount of any unreimbursed Advances and servicing advances made by the applicable Servicer and/or the Master Servicer plus all unreimbursed costs and damages incurred by the trust and the Trustee in connection with any violation of any such Mortgage Loan of any predatory or abusive lending law.  The Purchase Price will be remitted to the Securities Administrator for deposit in the Distribution Account (as defined herein) no later than the day prior to the related Distribution Date. The obligation of the Sponsor to repurchase or substitute for a deleted Mortgage Loan is the sole remedy regarding any defects in the Mortgage Loans and Related Documents available to the certificateholders.

Voting Rights

At all times, 98% of all voting rights will be allocated among the holders of the Senior Certificates, the Mezzanine Certificates and the Class CE Certificates in proportion to the then outstanding Certificate Principal Balances of their respective certificates, 1% of all voting rights will be allocated to the holders of the Class P Certificates in proportion to the then outstanding Certificate Principal Balances of their respective certificates and 1% of all voting rights will be allocated to the holders of the Residual Certificates.  The initial owner of the Residual Certificates is Deutsche Bank Securities Inc.

The Insurer shall be subrogated to the rights of the holder of the Class A-4, Class A-5A and Class A-6 Certificates to the extent of any payment by the Insurer under the Policy.

Pursuant to the terms of the Pooling and Servicing Agreement, unless the Insurer has defaulted on its obligations under the Policy and such default is continuing, the Class A-4, Class A-5A and Class A-6 Certificateholder agrees that the Insurer shall be treated by the Depositor, the Master Servicer, the Trustee, the Securities Administrator and the Sponsor as if the Insurer were the holder of all of the Class A-4, Class A-5A and Class A-6 Certificates for the purpose of the giving of any consent, the making of any direction or the exercise of any voting or other control rights otherwise given to the Class A-4, Class A-5A and Class A-6 Certificateholders thereunder without any further consent of the holders of the Class A-4, Class A-5A and Class A-6 Certificates, and the holders of the Class A-4, Class A-5A and Class A-6 Certificates will not exercise any of such rights without the prior written consent of the Insurer.

Optional Termination

The circumstances under which the obligations created by the Pooling and Servicing Agreement will terminate in respect of the certificates are described in “Description of the Securities–Termination” in the prospectus. The Master Servicer will have the right to purchase all remaining Mortgage Loans and any properties acquired in respect thereof and thereby effect early retirement of the certificates on any Distribution Date following the Due Period during which the aggregate principal balance of the Mortgage Loans and properties acquired in respect thereof remaining in the trust fund at the time of purchase is reduced to less than or equal to 10% of the sum of the aggregate outstanding principal balance of the Initial Mortgage Loans as of the Cut-Off Date and the amount on deposit in the Pre-Funding Account on the Closing Date; provided that the Master Servicer will be required to obtain the consent of the Insurer if the exercise of such right would cause a claim under the Policy or any Reimbursement Amounts would remain unpaid. In addition, in the event the Master Servicer fails to exercise its optional termination right and any of the Class A-4, Class A-5A or Class A-6 Certificates are outstanding or any Reimbursement Amounts owed to the Insurer are outstanding, the Insurer may, at its option, direct the Master Servicer to exercise such optional termination right. In the event the Master Servicer (either at its own direction or at the direction of the Insurer) exercises its option, the purchase price payable in connection with the option will be equal to par with respect to the Mortgage Loans and the fair market value of all properties acquired by the trust in respect of any Mortgage Loans, plus accrued interest for each Mortgage Loan at the related Mortgage Rate to but not including the first day of the month in which the repurchase price is distributed, together with (to the extent not covered by the foregoing) all amounts due and owing to the Trustee, the Insurer, the Servicers, the Master Servicer, the Custodians and the Securities Administrator as of the termination date.  In the event the Master Servicer exercises this option, the purchase price will be paid, to the extent of available funds, in accordance with the priorities set forth in “—Interest Distributions” and “—Principal Distributions” above. In no event will the trust created by the Pooling and Servicing Agreement continue beyond the expiration of 21 years from the death of the survivor of the persons named in the Pooling and Servicing Agreement.  See “Description of the Securities–Termination” in the prospectus.

The Securities Administrator will be required to give notice of any termination to the Certificateholders, upon which the Certificateholders will surrender their Certificates to the Securities Administrator for payment of the final distribution and cancellation. Such notice will be given by letter, mailed not earlier than the 15th day and not later than the 25th day of the month next preceding the month of such final distribution, and will specify (i) the Distribution Date upon which final payment of the Certificates will be made upon presentation and surrender of the Certificates at the office of the Securities Administrator therein designated, (ii) the amount of any such final payment and (iii) that the Record Date otherwise applicable to such Distribution Date is not applicable, payments being made only upon presentation and surrender of the Certificates at the office of the Securities Administrator therein specified.

In the event such notice is given in connection with the purchase of all of the Mortgage Loans by the Master Servicer, the Master Servicer will deliver to the Securities Administrator for deposit in the Distribution Account not later than the Business Day prior to the Distribution Date on which the final distribution on the Certificates an amount in immediately available funds equal to the above-described Termination Price. The Securities Administrator will remit to the Servicers, the Master Servicer, the Trustee, the Insurer and the Custodians from such funds deposited in the Distribution Account (i) any amounts which the Servicers would be permitted to withdraw and retain from the Collection Account as if such funds had been deposited therein (including all unpaid Servicing Fees and all outstanding P&I Advances and Servicing Advances) and (ii) any other amounts otherwise payable by the Securities Administrator to the Master Servicer, the Trustee, the Insurer, the Custodians and the Servicers from amounts on deposit in the Distribution Account pursuant to the terms of the Pooling and Servicing Agreement prior to making any final distributions. Upon certification to the Trustee by the Securities Administrator of the making of such final deposit, the Trustee will promptly release or cause to be released to the Master Servicer the Mortgage Files for the remaining Mortgage Loans, and Trustee will execute all assignments, endorsements and other instruments delivered to it and necessary to effectuate such transfer.

Upon presentation of the Certificates by the Certificateholders on the final Distribution Date, the Securities Administrator will distribute to each Certificateholder so presenting and surrendering its Certificates the amount otherwise distributable on such Distribution Date in respect of the Certificates so presented and surrendered. Any funds not distributed to any Holder or Holders of Certificates being retired on such Distribution Date because of the failure of such Holder or Holders to tender their Certificates will, on such date, be set aside and held in trust and credited to the account of the appropriate non-tendering Holder or Holders. If any Certificates as to which notice has been given are not surrendered for cancellation within six months after the time specified in such notice, the Securities Administrator will mail a second notice to the remaining non-tendering Certificateholders to surrender their Certificates for cancellation in order to receive the final distribution with respect thereto. If within one year after the second notice all such Certificates have not been surrendered for cancellation, the Securities Administrator will, directly or through an agent, mail a final notice to the remaining non-tendering Certificateholders concerning surrender of their Certificates. The costs and expenses of maintaining the funds in trust and of contacting such Certificateholders will be paid out of the assets remaining in the trust funds. If within one (1) year after the final notice any such Certificates have not been surrendered for cancellation, the Securities Administrator will pay to the Depositor all such amounts, and all rights of non-tendering Certificateholders in or to such amounts will thereupon cease. No interest will accrue or be payable to any Certificateholder on any amount held in trust by the Securities Administrator as a result of such Certificateholder’s failure to surrender its Certificate(s) on the final Distribution Date for final payment thereof. Any such amounts held in trust by the Securities Administrator will be held uninvested in an Eligible Account.

In the event that the Master Servicer purchases all the Mortgage Loans or the final payment on or other liquidation of the last Mortgage Loan, the Trust Fund will be terminated in accordance with the following additional requirements:

(i)

The Securities Administrator will specify the first day in the 90-day liquidation period in a statement attached to each Trust REMIC’s final Tax Return pursuant to Treasury regulation Section 1.860F-1 and will satisfy all requirements of a qualified liquidation under Section 860F of the Code and any regulations thereunder, as evidenced by an opinion of counsel obtained by and at the expense of the Master Servicer;

(ii)

During such 90-day liquidation period and, at or prior to the time of making of the final payment on the Certificates, the Trustee will sell all of the assets of REMIC I to the Master Servicer for cash; and

(iii)

At the time of the making of the final payment on the Certificates, the Securities Administrator will distribute or credit, or cause to be distributed or credited, to the Holders of the Residual Certificates all cash on hand in the Trust Fund (other than cash retained to meet claims), and the Trust Fund will terminate at that time.

At the expense of the Master Servicer (or, if the Trust Fund is being terminated as a result of the Last Scheduled Distribution Date, at the expense of the Trust Fund), the Master Servicer will prepare or cause to be prepared the documentation required in connection with the adoption of a plan of liquidation of each Trust REMIC.

By their acceptance of Certificates, the Holders thereof hereby agree to authorize the Securities Administrator to specify the 90-day liquidation period for each Trust REMIC, which authorization will be binding upon all successor Certificateholders.

Reports to Certificateholders

On each Distribution Date, the Securities Administrator will make available to each certificateholder, the Insurer and the Depositor a statement generally setting forth, among other information:

1.

the applicable Interest Accrual Periods and general Distribution Dates;

2.

the total cash flows received and the general sources thereof;

3.

the amount, if any, of fees or expenses accrued and paid, with an identification of the payee and the general purpose of such fees;

4.

the amount of the related distribution to holders of the Offered Certificates (by class) allocable to principal, separately identifying (A) the aggregate amount of any principal prepayments included therein, (B) the aggregate of all scheduled payments of principal included therein and (C) any Overcollateralization Increase Amount included therein;

5.

the amount of such distribution to holders of the Offered Certificates (by class) allocable to interest;

6.

the Interest Carry Forward Amounts for the related Offered Certificates, (if any);

7.

the Certificate Principal Balance of the related Offered Certificates before and after giving effect to the distribution of principal and allocation of Allocated Realized Loss Amounts on such distribution date;

8.

the number and Scheduled Principal Balance of all the Mortgage Loans for the following Distribution Date;

9.

the Pass-Through Rate for each class of Offered Certificates for such Distribution Date;

10.

the aggregate amount of advances included in the distributions on the Distribution Date (including the general purpose of such advances);

11.

the number and aggregate principal balance of any Mortgage Loans (A) that were delinquent (exclusive of Mortgage Loans in foreclosure) using the “OTS” method (1) one scheduled payment, (2) two scheduled payments, and (3) three scheduled payments and (B) as to which foreclosure proceedings have been commenced, and loss information for the period;

12.

the amount of, if any, of excess cashflow or excess spread and the application of such excess cashflow;

13.

with respect to any Mortgage Loan that was liquidated during the preceding calendar month, the loan number and Scheduled Principal Balance of, and Realized Loss on, such Mortgage Loan as of the end of the related Prepayment Period;

14.

whether the Stepdown Date has occurred or whether a Trigger Event is in effect;

15.

the total number and principal balance of any real estate owned, or REO, properties as of the end of the related Prepayment Period;

16.

the cumulative Realized Losses through the end of the preceding month and the amount of Realized Losses allocated to each Class of Certificates;

17.

the three-month rolling average of the percent equivalent of a fraction, the numerator of which is the aggregate Scheduled Principal Balance of the Mortgage Loans that are 60 days or more delinquent or are in bankruptcy or foreclosure or are REO properties, and the denominator of which is the Scheduled Principal Balances of all of the Mortgage Loans, and

18.

the amount of the Prepayment Charges remitted by the Servicer.

On each Distribution Date, the Securities Administrator will make the monthly statement (and, at its option, any additional files containing the same information in an alternative format) available each month via the Securities Administrator’s internet website.  Assistance in using the website can be obtained by calling the Securities Administrator’s customer service desk at (301) 815-6600. Parties that are unable to use the above distribution options are entitled to have a paper copy mailed to them via first class mail by calling the Securities Administrator’s customer service desk and indicating such.  The Securities Administrator will have the right to change the way such statements are distributed in order to make such distribution more convenient and/or more accessible to the above parties and the Securities Administrator will provide timely and adequate notification to all above parties regarding any such changes.

The annual reports on Form 10-K, the distribution reports on Form 10-D, the current reports on Form 8-K and amendments to those reports, in each case prepared and filed by the Securities Administrator with respect to the trust pursuant to section 13(a) or 15(d) of the Exchange Act, will be made available on the website of the Securities Administrator as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission.

In addition, within a reasonable period of time after the end of each calendar year, the Securities Administrator will, upon written request, prepare and deliver to each holder of a Certificate of record during the previous calendar year a statement containing information necessary to enable Certificateholders to prepare their tax returns. Such statements will not have been examined and reported upon by an independent public accountant.

THE POLICY

The Policy

The following summary of the terms of the financial guaranty insurance policy (the “Policy“) does not purport to be complete and is qualified in its entirety by reference to the Policy.

Simultaneously with the issuance of the Class A-4, Class A-5A and Class A-6 Certificates (the “Insured Certificates”), the Insurer will deliver the Policy to the Trustee for the benefit of the holders of the Insured Certificates.  Under the Policy, the Insurer unconditionally and irrevocably guarantees to the trustee for the benefit of any holder of an Insured Certificate the full and complete payment of (i) Guaranteed Distributions on the Insured Certificates and (2) the amount of any Guaranteed Distributions which subsequently is avoided in whole or in part as a preference payment under applicable law.  

 “Guaranteed Distributions” means, with respect to any Distribution Date and each class of Insured Certificates, (i) the amount, if any, by which the amount available to be paid as interest to such class of Insured Certificates, pursuant to the priority of payment set forth in the Pooling and Servicing Agreement, is less than the related Senior Interest Distribution Amount for such class of Insured Certificates, (ii) the amount of any Realized Losses allocated to the applicable class of Insured Certificates for such Distribution Date and (iii) without duplication of amounts included in (ii) above, to the extent unpaid on the final scheduled Distribution Date or the date of earlier termination of the trust pursuant to the terms of the Pooling and Servicing Agreement, after payment of all other amounts due to such class of Insured Certificates, the remaining Certificate Principal Balance of such class of Insured Certificates, in each case in accordance with the original terms of the certificates when issued and without regard to any amendments or modifications of the certificates or the Pooling and Servicing Agreement except amendments or modifications to which the Insurer has given its prior written consent. The Policy will not cover Prepayment Interest Shortfalls, Relief Act Interest Shortfalls, or any taxes or withholding or other charges imposed by any governmental authority. Guaranteed Distributions will not include (x) any portion of a Guaranteed Distribution due to holders of any class of Insured Certificates because a notice and certificate in proper form as required by Policy was not timely received by the Insurer and (y) any portion of a Guaranteed Distribution due to holders of any class of Insured Certificates representing interest on any unpaid interest accrued from and including the date of payment by the Insurer of the amount of such unpaid interest. The Policy will not cover any reduction in the amount of the Senior Interest Distribution Amount payable to the holders of any class of Insured Certificates on any Distribution Date due to the Net WAC Pass-Through Rate for such Insured Certificates for such Distribution Date being less than the fixed rate in the applicable definition of Pass-Through Rate.

Payment of claims on the Policy made in respect of Guaranteed Distributions will be made by the Insurer following receipt by the Insurer of the appropriate notice for payment on the later to occur of (i) 12:00 noon New York City time, on the second business day following receipt of such notice for payment and (ii) 12:00 noon New York City time, on the date on which such payment was due on any class of Insured Certificates, as applicable.

If payment of any amount avoided as a preference under applicable bankruptcy, insolvency, receivership or similar law is required to be made under the Policy, the Insurer shall cause that payment to be made on the later of (a) the date when due to be paid pursuant to the order described below or (b) the first to occur of (i) the fourth business day following receipt by the Insurer from the Trustee or the Securities Administrator of (A) a certified copy of the order (the “Order”) of the court or other governmental body which exercised jurisdiction to the effect that the holder of the applicable Insured Certificate is required to return principal or interest paid on such certificate during the Term of the Policy because those distributions were avoidable as preference payments under applicable bankruptcy law, (B) a certificate of the holder of such Insured Certificate that the Order has been entered and is not subject to any stay, and (C) an assignment duly executed and delivered by the holder of such Insured Certificate, in the form as is reasonably required by the Insurer and provided to the holder of such Insured Certificate, by the Insurer, irrevocably assigning to the Insurer all rights and claims of the holder of such Insured Certificate, relating to or arising under such Insured Certificate, against the trust or otherwise with respect to the preference payment, or (2) the date of receipt by the Insurer from the trustee or the Securities Administrator of the items referred to in clauses (A), (B) and (C) above if, at least four business days prior to the date of receipt, the Insurer shall have received written notice from the trustee or the Securities Administrator that the items referred to in clauses (A), (B) and (C) above were to be delivered on that date and that date was specified in the notice. Payment shall be disbursed to the receiver, conservator, debtor-in-possession or trustee in bankruptcy named in the Order and not to the Securities Administrator on behalf of the trustee or any holder of an Insured Certificate, directly, unless a holder of an Insured Certificate has previously paid that amount to the receiver, conservator, debtor-in-possession or trustee in bankruptcy named in the Order in which case the payment shall be disbursed to the Securities Administrator on behalf of the trustee for distribution to the holder of such Insured Certificate upon proof of payment reasonably satisfactory to the Insurer. In connection with the foregoing, the Insurer shall have the rights provided pursuant to the pooling agreement to the holders of each class of Insured Certificates including, without limitation, the right to direct all matters relating to any preference claim and subrogation to the rights of the trustee and each holder of an Insured Certificate in the conduct of any proceeding with respect to a preference claim.

The terms “receipt” and “received,” with respect to the Policy, shall mean actual delivery to the Insurer and to its fiscal agent, if any, prior to 12:00 noon, New York City time, on a business day; delivery either on a day that is not a business day or after 12:00 noon, New York City time, shall be deemed to be receipt on the next succeeding business day. If any notice or certificate given under the Policy by the Securities Administrator is not in proper form or is not properly completed, executed or delivered, or contains a misstatement, it shall be deemed not to have been received, and the Insurer or the fiscal agent shall promptly so advise the trustee or the Securities Administrator and the trustee or the Securities Administrator, as applicable, may submit an amended notice.

“Term of the Policy” means the period from and including the closing date to and including the date on which (i) the unpaid principal balances of all of the Insured Certificates is zero (after giving effect to all payments), (ii) any period during which any payment on the Insured Certificates could have been avoided in whole or in part as a preference payment under applicable bankruptcy, insolvency, receivership or similar law has expired, and (iii) if any proceedings requisite to avoidance as a preference payment have been commenced prior to the occurrence of (i) and (ii), a final and nonappealable order in resolution of each such proceeding has been entered.

Under the Policy, “business day” means any day other than (i) a Saturday or Sunday, or (ii) a day on which banking institutions in New York City or the city in which the corporate trust office of the Master Servicer, the Trustee or the Securities Administrator is located are authorized or obligated by law, executive order or governmental decree to be closed.

The Insurer’s obligations under the Policy in respect of Guaranteed Distributions will be discharged to the extent funds are transferred to the Securities Administrator on behalf of the trustee as provided in the Policy whether or not those funds are properly applied by the trustee or the Securities Administrator.

The Insurer shall be subrogated to the rights of the holder of an Insured Certificate to receive payments of principal and interest to the extent of any payment by the Insurer under the Policy.

Claims under the Policy constitute direct, unsecured and unsubordinated obligations of the Insurer ranking not less than pan passu with other unsecured and unsubordinated indebtedness of the Insurer for borrowed money. Claims against the Insurer under the Policy and claims against the Insurer under each other financial guaranty insurance policy issued thereby constitute pan passu claims against the general assets of the Insurer. The terms of the Policy cannot be modified or altered by any other agreement or instrument, or by the merger, consolidation or dissolution of the trust fund. The Policy may not be canceled or revoked prior to payment in full of all Guaranteed Distributions with respect to the Insured Certificates.

Pursuant to the terms of the Pooling and Servicing Agreement, unless the Insurer has defaulted on its obligations under the Policy and such default is continuing, the holders of Insured Certificates agrees that the Insurer shall be treated by the Depositor, the Master Servicer, the Trustee, the Securities Administrator and the Sponsor as if the Insurer were the holder of all of the Insured Certificates for the purpose of the giving of any consent, the making of any direction or the exercise of any voting or other control rights otherwise given to the holders of Insured Certificates thereunder without any further consent of the holders of the Insured Certificates, and the holders of the  Insured Certificates will not exercise any of such rights without the prior written consent of the Insurer.

THE POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW. THE POLICY IS GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

THE INSURER

The information set forth in the following paragraphs has been provided by Financial Security Assurance Inc.

General

Financial Security Assurance Inc., which is referred to in this prospectus supplement as “FSA” or the “Insurer”, is a financial guaranty insurance company incorporated in 1984 under the laws of the State of New York.  FSA is licensed to engage in financial guaranty insurance business in all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands and Guam.

FSA and its subsidiaries are engaged in the business of writing financial guaranty insurance, principally in respect of securities offered in domestic and foreign markets and obligations under credit default swaps.  Financial guaranty insurance provides a guaranty of scheduled payments on an issuer’s obligations -- thereby enhancing the credit rating of those obligations -- in consideration for the payment of a premium to the insurer.  FSA and its subsidiaries principally insure asset-backed, collateralized and municipal obligations.  Asset-backed obligations are typically supported by residential mortgage loans, consumer or trade receivables, securities or other assets having an ascertainable cash flow or market value.  Collateralized obligations include public utility first mortgage bonds and sale/leaseback obligation bonds.  Municipal obligations include general obligation bonds, special revenue bonds and other special obligations of state and local governments.  Obligations may be insured on a funded basis through insurance of bonds or other securities or on an unfunded basis through insurance of credit default swaps referencing one or more bonds or other obligations (with or without a deductible or other provision for loss reduction).  FSA insures both newly issued securities sold in the primary market and outstanding securities sold in the secondary market that satisfy FSA’s underwriting criteria.

FSA is a wholly-owned subsidiary of Financial Security Assurance Holdings Ltd., which is referred to in this prospectus supplement as “Holdings”.  Holdings is an indirect subsidiary of Dexia S.A., a publicly held Belgian corporation.  Dexia S.A., through its bank subsidiaries, is primarily engaged in the business of public finance, banking and asset management in France, Belgium and other European countries.  No shareholder of Holdings or FSA is obligated to pay any debt of FSA or any claim under any insurance policy issued by FSA or to make any additional contribution to the capital of FSA.

The principal executive offices of FSA are located at 31 West 52nd Street, New York, New York 10019, and its telephone number at that location is (212) 826-0100.

Reinsurance

Under an intercompany agreement, liabilities on financial guaranty insurance written or reinsured from third parties by FSA or its domestic or Bermuda operating insurance company subsidiaries are generally reinsured among such companies on an agreed-upon percentage substantially proportional to their respective capital, surplus and reserves, subject to applicable statutory risk limitations.  In addition, FSA reinsures a portion of its liabilities under certain of its financial guaranty insurance policies with other reinsurers under various treaties and on a transaction-by-transaction basis.  This reinsurance is used by FSA as a risk management device and to comply with statutory and rating agency requirements; it does not alter or limit FSA’s obligations under any financial guaranty insurance policy.

Ratings

FSA’s financial strength is rated “triple-A” by Fitch Ratings, Moody’s Investors Service, Inc., Standard & Poor’s Ratings Services and Rating and Investment Information, Inc.  These ratings reflect only the views of the respective rating agencies, are not recommendations to buy, sell or hold securities and are subject to revision or withdrawal at any time by those rating agencies.  See “Certificate Ratings” in this prospectus supplement.

Capitalization

The following table sets forth the capitalization of FSA and its subsidiaries as of March 31, 2006 (unaudited), on the basis of accounting principles generally accepted in the United States of America:

For further information concerning FSA, see the Consolidated Financial Statements of FSA and Subsidiaries, and the notes thereto, incorporated by reference in this prospectus supplement.  FSA’s financial statements are included as exhibits to reports filed with the Securities and Exchange Commission by Holdings pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (as amended, the “Exchange Act”) and may be reviewed at the EDGAR web site maintained by the Securities and Exchange Commission.  Copies of the statutory quarterly and annual statements filed with the State of New York Insurance Department by FSA are available upon request to the State of New York Insurance Department.

Incorporation of Certain Documents by Reference

The consolidated financial statements of FSA included in, or as exhibits to, the following documents filed by Holdings with the Securities and Exchange Commission, are hereby incorporated by reference in this prospectus supplement:

(a)

Annual Report on Form 10-K for the year ended December 31, 2005 (audited), and

(b)

Quarterly Report on Form 10-Q for the period ended March 31, 2006 (unaudited).

All documents filed by Holdings pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, after the filing of this prospectus supplement and before the termination of the offering of the Insured Certificates, shall be deemed incorporated by reference into this prospectus supplement.

You may request a free copy of any filings incorporated by reference into this prospectus supplement by calling or writing to the Depositor at 60 Wall Street, New York, New York  10005.

The Depositor, on behalf of the Trust Fund, hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the trust’s annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act and each filing of the financial statements of FSA included in or as an exhibit to the Annual Report of Holdings filed pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by reference in this prospectus supplement shall be deemed to be a new registration statement relating to the Insured Certificates offered herein, and the offering of the Insured Certificates at that time shall be deemed to be the initial bona fide offering thereof.

Insurance Regulation

FSA is licensed and subject to regulation as a financial guaranty insurance corporation under the laws of the State of New York, its state of domicile.  In addition, FSA and its insurance subsidiaries are subject to regulation by insurance laws of the various other jurisdictions in which they are licensed to do business.  As a financial guaranty insurance corporation licensed to do business in the State of New York, FSA is subject to Article 69 of the New York Insurance Law which, among other things, limits the business of a financial guaranty insurer to writing financial guaranty insurance and related business lines, requires each financial guaranty insurer to maintain a minimum surplus to policyholders, establishes contingency, loss and unearned premium reserve requirements for each financial guaranty insurer, and limits the size of individual transactions and the volume of transactions that may be underwritten by each financial guaranty insurer.  Other provisions of the New York Insurance Law, applicable to non-life insurance companies such as FSA, regulate, among other things, permitted investments, payment of dividends, transactions with affiliates, mergers, consolidations, acquisitions or sales of assets and incurrence of liability for borrowings.

Other Information

The Insurer makes no representation regarding the Certificates or the advisability of investing in the Certificates.  The Insurer has not independently verified, is not responsible for, and makes no representation regarding, the accuracy or completeness of this prospectus supplement, other than the information supplied by the Insurer and presented, included or incorporated by reference in this prospectus supplement under the heading “The Insurer.”

PREPAYMENT AND YIELD CONSIDERATIONS

General

The yield to maturity of each class of Offered Certificates will depend upon, among other things, the price at which such certificates are purchased, the applicable interest rate, the actual characteristics of the related Mortgage Loans, the rate and timing of principal payments (including principal prepayments) on the related Mortgage Loans and the rate of liquidations on the related Mortgage Loans.  The yield to maturity to holders of the certificates (other than the Class A-8 Certificates) will be lower than the yield to maturity otherwise produced by the applicable interest rate and purchase price of such certificates, because principal and interest distributions will not be payable to such certificateholders until the 25th day of the month following the month of accrual (without any additional distribution of interest or earnings thereon with respect to such delay).

Because principal distributions are paid to certain classes of Offered Certificates before other classes, holders of classes of Offered Certificates having a later priority of payment bear a greater risk of losses than holders of classes having earlier priorities for distribution of principal. This is because the certificates having a later priority of payment will represent an increasing percentage interest in the trust fund during the period prior to the commencement of distributions of principal on these certificates. As described under “Description of the Certificates—Principal Distributions” in this prospectus supplement, prior to the Stepdown Date, all principal payments on the Mortgage Loans will be allocated to the Senior Certificates entitled to principal. Thereafter, as further described in this prospectus supplement, during certain periods, subject to certain delinquency triggers described in this prospectus supplement, all principal payments on the Mortgage Loans will be allocated among the Senior Certificates and all classes of the Mezzanine Certificates in the priorities described under “Description of the Certificates—Principal Distributions” in this prospectus supplement.

In general, defaults on mortgage loans are expected to occur with greater frequency in their early years. In addition, default rates may be higher for mortgage loans used to refinance an existing mortgage loan. In the event of a mortgagor’s default on a Mortgage Loan, there can be no assurance that recourse will be available beyond the specific Mortgaged Property pledged as security for repayment.  See “The Mortgage Pool—Underwriting Standards” in this prospectus supplement.

Principal Prepayments and Compensating Interest

When a mortgagor prepays a Mortgage Loan in full or in part, the mortgagor pays interest on the amount prepaid only to the date of prepayment, instead of for the entire month.  In addition, when a mortgagor makes a partial principal prepayment, together with its scheduled monthly payment, the principal balance of the Mortgage Loan is reduced by the amount of the partial principal prepayment as of such Due Date.  However, the additional principal is not distributed to the certificateholders until the Distribution Date in the month following the month of such partial principal prepayment.

The Servicers will pay Compensating Interest in the manner and to the extent set forth in the following sentence to reduce the adverse effect on certificateholders from the deficiency in interest collected as a result of prepayments in full or in part on the Mortgage Loans.  Each Servicer will be required to deposit into the related custodial account, prior to distribution to the Master Servicer for any Distribution Date, an amount equal to (a) with respect to Wells Fargo Bank and American Home Servicing the lesser of (i) any shortfall in interest collections for the related month resulting from prepayments in full or in part on the related Mortgage Loans made during the related Prepayment Period and (ii) the aggregate servicing fee payable to the related Servicer for the related Due Period, and (b) with respect to (i) all of the Mortgage Loans serviced by Countrywide Servicing and certain of the Mortgage Loans serviced by GMACM, the lesser of (x) any shortfall in interest collections for the related month resulting from prepayments in full made during the portion of the Prepayment Period occurring between the 16th day of the month preceding the month in which such Distribution Date occurs and ending on the last day of the calendar month preceding the month in which such Distribution Date occurs and (y) the aggregate servicing fee payable to Countrywide Servicing or GMACM, as applicable, for the related Due Period as set forth in the related servicing agreement and (ii) certain others of the Mortgage Loans serviced by GMACM, the lesser of (x) any shortfall in interest collections for the related month resulting from prepayments in full or in part on the related Mortgage Loans made during the related Prepayment Period and (y) the aggregate servicing fee payable to GMACM for the related Due Period as set forth in the related servicing agreement.

In the event that the Servicers fail to pay the amount of any Compensating Interest required to be paid by them on any Distribution Date, the Master Servicer will be required to pay such amounts up to the compensation payable to the Master Servicer on such Distribution Date.

To the extent that the amount allocated to pay Compensating Interest is insufficient to cover the deficiency in interest payable as a result of a full or partial principal prepayment on a Mortgage Loan, such deficiency will be allocated to the certificates as described under “Description of the Certificates—Interest Distributions”.  In addition, any deficiencies in interest due to the application of the Relief Act will be allocated to the certificates on a pro rata basis according to the amount of interest to which each class of certificates would otherwise be entitled.

Rate of Payments

The rate of principal payments on the Senior Certificates and the Mezzanine Certificates, the aggregate amount of distributions on such certificates and the yield to maturity of such certificates will be related to the rate and timing of payments of principal on the Mortgage Loans. The rate of principal payments on the Mortgage Loans will in turn be affected by the rate of principal prepayments thereon (including for this purpose, payments resulting from refinancings, liquidations of the Mortgage Loans due to defaults, casualties, condemnations and repurchases, whether optional or required, by the Depositor or the Sponsor).

Prepayments, liquidations and repurchases of the Mortgage Loans will result in distributions in respect of principal to the holders of the class or classes of Offered Certificates then entitled to receive distributions that otherwise would be distributed over the remaining terms of the Mortgage Loans. Since the rates of payment of principal on the Mortgage Loans will depend on future events and a variety of factors, no assurance can be given as to that rate or the rate of principal prepayments. The extent to which the yield to maturity of any class of Offered Certificates may vary from the anticipated yield will depend upon the degree to which the Offered Certificates are purchased at a discount or premium and the degree to which the timing of payments thereon is sensitive to prepayments on the Mortgage Loans. Further, an investor should consider, in the case of any Senior Certificate or Mezzanine Certificate purchased at a discount, the risk that a slower than anticipated rate of principal payments on the Mortgage Loans could result in an actual yield to the investor that is lower than the anticipated yield. In the case of any such certificate purchased at a premium, the risk that a faster than anticipated rate of principal payments could result in an actual yield to the investor that is lower than the anticipated yield. In general, the earlier prepayments of principal are made on the Mortgage Loans, the greater the effect on the yield to maturity of the Offered Certificates. As a result, the effect on an investors’ yield of principal payments occurring at a rate higher (or lower) than the rate anticipated by the investor during the period immediately following the issuance of the Senior Certificates and the Mezzanine Certificates would not be fully offset by a subsequent like reduction (or increase) in the rate of principal payments.  

It is highly unlikely that the Mortgage Loans will prepay at any constant rate until maturity or that all of the Mortgage Loans will prepay at the same rate. Moreover, the timing of prepayments on the Mortgage Loans may significantly affect the yield to maturity on the Offered Certificates, even if the average rate of principal payments experienced over time is consistent with an investor’s expectation.

The rate of payments (including prepayments) on pools of mortgage loans is influenced by a variety of economic, geographic, social and other factors. If prevailing mortgage rates fall significantly below the mortgage rates on the Mortgage Loans, the rate of prepayment and refinancing would be expected to increase. Conversely, if prevailing mortgage rates rise significantly above the mortgage rates on the Mortgage Loans, the rate of prepayment on the Mortgage Loans would be expected to decrease. Other factors affecting prepayment of mortgage loans include changes in mortgagors’ housing needs, job transfers, unemployment, mortgagors’ net equity in the mortgaged properties and servicing decisions. The interest only feature of the Interest Only Loans may reduce the perceived benefits of refinancing to take advantage of lower market interest rates or to avoid adjustments in the mortgage rates.  However, as a Mortgage Loan with such a feature nears the end of its interest only period, the mortgagor may be more likely to refinance the Mortgage Loan, even if market interest rates are only slightly less than the Mortgage Rate in order to avoid the increase in the monthly payments to amortize the Mortgage Loan over its remaining life. There can be no certainty as to the rate of prepayments on the Mortgage Loans during any period or over the life of the certificates. See “Yield Considerations” in the prospectus.

Weighted Average Life

Weighted average life refers to the average amount of time that will elapse from the date of issuance of a security until each dollar of principal of that security will be repaid to the investor. The weighted average life of the Offered Certificates will be influenced by the rate at which principal on the Mortgage Loans is paid, which may be` in the form of scheduled payments or prepayments (including repurchases and prepayments of principal by the mortgagor as well as amounts received by virtue of condemnation, insurance or foreclosure with respect to the Mortgage Loans), and the timing of these payments.

Prepayment Speed Assumption and Modeling Assumptions

Prepayments on mortgage loans are commonly measured relative to a prepayment standard or model.  The prepayment model (“PPC”) used in this prospectus supplement represents an assumed rate of prepayment each month relative to the then outstanding principal balance of a pool of mortgage loans for the life of those mortgage loans.  100% PPC assumes a per annum rate of 10% (Conditional Prepayment Rate, or CPR) of the then outstanding principal balance of the mortgage loans in the first month of the life of the Mortgage Loans and an additional approximately 15%/11 per annum in each month thereafter through the eleventh month, and on a constant prepayment rate of 25% per annum beginning in the twelfth month and in each month thereafter during the life of the mortgage loans.  0% PPC assumes no prepayments.  Correspondingly, 200% PPC assumes prepayment rates equal to two times PPC, and so forth.  No representation is made that the Mortgage Loans will prepay in accordance with such prepayment model or any other rate.

PPC does not purport to be either an historical description of the prepayment experience of any pool of mortgage loans or a prediction of the anticipated rate of prepayment of any pool of mortgage loans, including the Mortgage Pool, and there is no assurance that the Mortgage Loans will prepay at any given percentage of PPC.  The actual rate of principal prepayments on the Mortgage Loans may be influenced by a variety of economic, geographic, social and other factors.  In general, if prevailing interest rates fall significantly below the interest rates on the Mortgage Loans, the Mortgage Loans are likely to be subject to higher prepayment rates than if prevailing rates remain at or above the interest rates on the Mortgage Loans.  Conversely, if interest rates rise above the interest rates on the Mortgage Loans, the rate of prepayment would be expected to decrease.  A comparatively low interest rate environment may result in a higher-than-expected rate of prepayments on the Mortgage Loans and an earlier than expected retirement of the related certificates.

The Depositor makes no representation as to the specific factors that will affect the prepayment of the Mortgage Loans or the relative importance of such factors.  Factors not identified by the Depositor or discussed in this prospectus supplement may significantly affect the prepayment rate of the Mortgage Loans.  In particular, the Depositor makes no representation as to the percentage of the principal amount of the Mortgage Loans that will be paid as of any date or as to the overall rate of prepayment.

The tables entitled “Percent of Initial Certificate Principal Balance Outstanding at Various Percentages of PPC” have been prepared on the basis of the characteristics of the Mortgage Loans that are expected to be included in the Mortgage Pool, as described under “Description of the Mortgage Pool” and assuming, among other things, the following modeling assumptions (collectively, the “Modeling Assumptions”):

·

scheduled payments on all Mortgage Loans, including the Subsequent Mortgage Loans are received on the first day of each month beginning on July 1, 2006,

·

any prepayments in full on the Mortgage Loans are received on the last day of each month, beginning in June 2006 and include a full month’s interest thereon,

·

there are no defaults or delinquencies on the Mortgage Loans,

·

optional termination of the REMICs does not occur (except where indicated),

·

there are no partial prepayments on the Mortgage Loans and prepayments are computed after giving effect to scheduled payments received,

·

the Mortgage Loans prepay at the indicated constant percentages of 120% PPC,

·

the date of issuance for the certificates is June 30, 2006,

·

cash distributions are received by the certificateholders on the 25th day of each month when due, commencing July 2006,

·

the scheduled monthly payments for each Mortgage Loan are computed based upon its outstanding principal balance, mortgage interest rate and amortized remaining term, such that the Mortgage Loan will fully amortize (except for the balloon loans) on its maturity date,

·

the Certificate Principal Balance of the Class P Certificate is equal to $0.00;

·

the premium payable to the Insurer in connection with the Class A-4, Class A-5A and Class A-6 Certificates is 0.08%; and

·

the Mortgage Loans were aggregated into assumed Mortgage Loans having the following characteristics:

Assumed Loan Characteristics for the Mortgage Loans

*Represents the characteristics of a Subsequent Mortgage Loan.

Variations in actual prepayment experience may increase or decrease the percentages of the initial outstanding certificate principal balances and the weighted average lives shown in the tables entitled “Percent of Initial Certificate Principal Balance Outstanding at Various Percentages of PPC.”  Such variations may occur even if the average prepayment experience of all the Mortgage Loans equals the indicated percentage of the prepayment speed assumption.  There is no assurance, however, that prepayment of the Mortgage Loans will conform to any given percentage of the prepayment speed assumption.  The Depositor makes no representation that the actual rates of prepayments on the Mortgage Loans will in any way correspond to any of the assumptions made in this prospectus supplement.  Further, Subsequent Mortgage Loans shall be conveyed to the Trustee on behalf of the trust during the Pre-Funding Period, which will increase the aggregate principal balance of the Mortgage Loans and otherwise affect the characteristics of the Mortgage Loans that may be reflected in the structuring assumptions.  The Subsequent Mortgage Loans will have the characteristics set forth under “Description Of The Mortgage Pool—Conveyance of Subsequent Mortgage Loans and the Pre-Funding Account” in this prospectus supplement.

Based on the foregoing assumptions, the tables entitled “Percent of Initial Certificate Principal Balance Outstanding at Various Percentages of PPC” indicate the weighted average lives of the Offered Certificates and set forth the percentages of the initial Certificate Principal Balances of each such class of Offered Certificates that would be outstanding after each of the Distribution Dates shown at various percentages of the prepayment speed assumption.

There are no historical prepayment data available for the Mortgage Pool, and comparable data is not available because the Mortgage Loans do not constitute a representative sample of mortgage loans generally.  In addition, historical data available with respect to mortgage loans underlying mortgage pass-through certificates issued by the Government National Mortgage Association, Federal National Mortgage Association and Federal Home Loan Mortgage Corporation may not be comparable to prepayments expected to be experienced by the Mortgage Pool because the Mortgage Loans may have characteristics which differ from the mortgage loans underlying certificates issued by these entities.

The Depositor makes no representation that the Mortgage Loans will prepay in the manner or at any of the rates assumed above.  Each investor must make its own decision as to the appropriate prepayment assumptions to be used in deciding whether or not to purchase any of the certificates.  Since the rate of principal payments (including prepayments) with respect to, and repurchases of, the Mortgage Loans will significantly affect the yields to maturity on the related Offered Certificates, prospective investors are urged to consult their investment advisors as to both the anticipated rate of future principal payments (including prepayments) on the related Mortgage Loans and the suitability of the related certificates to their investment objectives.

Percent of Initial Certificate Principal Balance Outstanding
at Various Percentages of PPC

(1)

The weighted average life of a certificate is determined by (a) multiplying the net reduction, if any, of the certificate principal balance by the number of years from the date of issuance of the certificate to the related Distribution Date, (b) adding the results and (c) dividing the sum by the total net reduction of the certificate principal balance described in (a) above.

(2)

Assumes the Master Servicer exercises its option to purchase the Mortgage Loans on the earliest possible Distribution Date on which it is permitted to exercise this option.  See “Description of the Certificates--Optional Termination” in this prospectus supplement.

Percent of Initial Certificate Principal Balance Outstanding
at Various Percentages of PPC