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WaMu Asset Acceptance Corp., et al. – ‘424B5’ on 7/26/06

On:  Wednesday, 7/26/06, at 2:08pm ET   ·   Accession #:  950117-6-3153   ·   File #s:  333-130795, -22

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

 7/26/06  WaMu Asset Acceptance Corp.       424B5                  1:3.3M                                   Command F..Self-Filer/FA
          Washington Mutual Mtge Pass-Through Certificates WMAL..2006-AR6

Prospectus   —   Rule 424(b)(5)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B5       Washington Mutual Wmalt 2006-Ar6                    HTML   3.17M 


Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page   -   Filing Submission
5Summary Information
"Transaction Participants
"What You Own
"Information About the Mortgage Pool
6The Certificates
"The Offered Certificates
12The Non-Offered Certificates
13Initial Principal Balance of the Certificates
"Last Scheduled Distribution Date
"Distributions on the Certificates
"Monthly Distributions
14Distributions of Interest
15Compensating Interest and Interest Shortfalls
16Distributions of Principal
17Cross-Collateralization of Loan Group 1 and Loan Group 2
"The Class R Certificates
"Credit Enhancements
18Allocation of Losses
"Optional Termination
"Yield Considerations
19Book-Entry Registration
"Denominations
"Legal Investment
"ERISA Considerations
"Federal Income Tax Consequences
"Ratings
21Risk Factors
36The Sponsor
"General
"The Sponsor's Origination Channels
37Static Pool Information
"Underwriting of the Mortgage Loans
38Evaluation of the Borrower's Credit Standing
"Evaluation of the Borrower's Repayment Ability
"Evaluation of the Adequacy of the Collateral
39Documentation Programs
"Exceptions to Program Parameters
40Automated Underwriting System
"Due Diligence
"The Originators
"Alliance Bancorp
41The Depositor
"The Trust
"Assignment of the Mortgage Loans and Other Assets to the Trust
42Restrictions on Activities of the Trust
"Discretionary Activities With Respect to the Trust
43The Trustees
"The Trustee
"Material Duties of the Trustee
44Events of Default Under the Pooling Agreement
"The Delaware Trustee
45Limitations on the Trustees' Liability
"Resignation and Removal of the Trustees
46The Servicers
"The Servicer
"The Servicer's Servicing Experience
47Servicing Procedures
52The Servicer's Quality Control Procedures
"Interim Servicing
"The Administrative Agent
"The Administrative Agent's Servicing Experience
53Services Performed by the Administrative Agent
"The Administrative Agent's Quality Control Procedures
54Special Servicing Agreements
"Affiliations and Related Transactions
55Description of the Mortgage Pool
60The Indexes
61Additional Information
62Representations and Warranties Regarding the Mortgage Loans
63Criteria for Selection of Mortgage Loans
64Description of the Certificates
66Definitive Certificates
"Priority of Distributions
71Distributions to the Class 2X-PPP Certificates
79Calculation of LIBOR
80Calculation of Index for MTA Certificates
"Cross-Collateralization
83Group 1 Senior Principal Distribution Amount
84Group 2 Senior Principal Distribution Amount
"Subordinate Principal Distribution Amount
86Principal Prepayments
87Subordination and Allocation of Losses
89Available Distribution Amount
91Optional Termination of the Trust
"Amendment of the Pooling Agreement
"Payment of Fees and Expenses
93Reports and Other Information
95Yield and Prepayment Considerations
96Principal Prepayments and Compensating Interest
97LIBOR Certificates
"Rate of Payments
"Prepayment Assumptions
104Lack of Historical Prepayment Data
"Yield Considerations with Respect to the Class X Certificates
106Yield Considerations with Respect to the Senior Subordinate Certificates
110Additional Yield Considerations Applicable Solely to the Class R Certificates
111Subordination
"Shifting of Interests
"Material Federal Income Tax Consequences
113Special Tax Considerations Applicable to the Class A and Class B Certificates
"Taxation of the Cap Agreement Portion of the Class X Certificates
115Taxation of the Class2X-PPP Component Portion of the Class 2X-PPP Certificates
116Special Tax Considerations Applicable to the Residual Certificates
118Certain Legal Investment Aspects
120Method of Distribution
"Legal Matters
121Certificate Ratings
122Appendix A: Decrement Tables
124Appendix B: Mortgage Loan Tables
135Index of Terms
161Additional Risk Factors Applicable to Negative Amortization Loans
164Description of the Trusts
"Description of the Mortgage Assets to be Held By a Trust
171Mortgage Loan Information in Prospectus Supplement
172Description of the Pre-Funding Account for the Purchase of Additional Mortgage Loans
173The Depositor, the Sponsor, the Servicer and Certain Other Transaction Parties
"Use of Proceeds
174Yield and Maturity Considerations
176Maturity and Weighted Average Life
179The Depositor's Mortgage Loan Purchase Program
"Underwriting Standards
181Qualifications of Originators and Mortgage Loan Sellers
"Description of the Securities
182Form of Securities
185Exchangeable Securities
187Assignment of Trust Assets; Review of Files by Trustee
188Representations and Warranties Regarding the Mortgage Loans; Remedies for Breach
190Establishment of Custodial Account; Deposits to Custodial Account In Respect of Trust Assets
194Deposits to Distribution Account
"Distributions on the Securities
196Advances by Servicer in Respect of Delinquencies on the Trust Assets
197Form of Reports to Securityholders
"Collection and Other Servicing Procedures Employed by the Servicer, Manager, Bond Administrator or Certificate Administrator
199Description of Sub-Servicing
200Procedures for Realization Upon Defaulted Mortgage Assets
201Retained Interest; Servicing or Administration Compensation and Payment of Expenses
202Annual Servicing Compliance Reports
203Matters Regarding the Servicer and the Depositor
"Events of Default Under the Governing Agreement and Rights Upon Events of Default
206Amendment of the Governing Agreements
207Termination of the Trust and Disposition of Trust Assets
"Description of the Trustee
208Duties of the Trustee
209Description of Credit Support
210Letter of Credit
212Mortgage Pool Insurance Policy
213Special Hazard Insurance Policy
215Bankruptcy Bond
"Fraud Bond
"Financial Guarantee Insurance
"Reserve Fund
"Overcollateralization
216Cross-Support Features
"Other Financial Obligations Related to the Securities
"Swaps and Yield Supplement Agreements
"Purchase Obligations
217Mandatory Auctions
218Description of Primary Insurance Policies
"Primary Mortgage Insurance Policies
"Primary Hazard Insurance Policies
219FHA Insurance
222VA Guarantees
"Legal Aspects of Mortgage Assets
223Mortgage Loans
"Cooperative Loans
224Foreclosure on Mortgages
226Foreclosure on Mortgaged Properties Located in the Commonwealth of Puerto Rico
"Foreclosure on Cooperative Shares
227Rights of Redemption with Respect to Mortgage Loans
"Anti-Deficiency Legislation and Other Limitations on Lenders
229Junior Mortgages
"Home Equity Line of Credit Loans
230Enforceability of Due-on-Sale Clauses
"Prepayment Charges and Prepayments
"Leases and Rents
231Subordinate Financing
"Applicability of Usury Laws
"Alternative Mortgage Instruments
232Servicemembers Civil Relief Act
"Environmental Legislation
233Forfeitures in Drug and RICO Proceedings
"Negative Amortization Loans
235Opinions
236REMICs
237Taxation of Owners of REMIC Regular Certificates
244Taxation of Owners of REMIC Residual Certificates
249Matters Relevant to Holders of All REMIC Certificates
254Withholding Regulations
"Notes
"Grantor Trusts
262Partnership Trusts
267Tax Return Disclosure and Investor List Requirements
"State and Other Tax Consequences
268Plan Asset Regulation
"Underwriter's and WCC Exemption
271Other Exemptions
272Insurance Company General Accounts
"Representations from Investing Plans
"Tax-Exempt Plan Investors
273Consultation with Counsel
275Methods of Distribution
276Financial Information
"Available Information
"Incorporation of Certain Information by Reference
278Glossary
283APPENDIX A: Global Clearance, Settlement and Tax Documentation Procedures With Respect to Book-Entry Securities

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Prospectus Supplement to Prospectus Dated January 6, 2006

Washington Mutual Mortgage Pass-Through Certificates,
WMALT Series 2006-AR6

WaMu Asset Acceptance Corp.

Depositor

Washington Mutual Bank

Servicer

Washington Mutual Mortgage Securities Corp.

Sponsor

$857,591,100

(Approximate)

                                                       The Washington Mutual Mortgage Pass-Through Certificates WMALT Series 2006-AR6 Trust will issue nineteen classes of offered certificates and three classes of privately placed certificates. Each class of certificates will be entitled to receive monthly distributions of interest, principal or both, beginning on August 25, 2006. The certificate interest rate for some classes of offered certificates will be variable, and will be based in part on the one-year MTA index or the one-month LIBOR index, as described in this prospectus supplement. The table on page S-6 of this prospectus supplement contains a list of the classes of offered certificates, including the initial class principal balance, certificate interest rate, and special characteristics of each class.

                                                       The primary asset of the Trust will be a pool of first lien single-family residential mortgage loans whose interest rates (after an initial fixed-rate period) adjust monthly and which include a negative amortization feature. The Trust will also contain other assets, which are described on page S-41 of this prospectus supplement.

                                                       Offered Certificates

                                   

Total principal amount (approximate)      $857,591,100
       

First payment date      August 25, 2006
       

Interest and/or principal paid      Monthly
       

Last payment date      August 25, 2046

                                                       Credit enhancement for the offered certificates is being provided by three classes of privately offered certificates, which have an aggregate principal balance of approximately $17,508,454. Additional credit enhancement for the offered senior certificates is being provided by eleven classes of offered subordinate certificates. Losses otherwise allocable to some senior certificates will instead be allocated to other senior certificates.

   Consider carefully the risk factors beginning on page S-21 in this prospectus supplement and page 5 in the accompanying prospectus.  
     
   The certificates will represent interests only in the issuing entity which is Washington Mutual Mortgage Pass-Through Certificates WMALT Series 2006-AR6 Trust and will not represent interests in or obligations of Washington Mutual Bank, Washington Mutual Mortgage Securities Corp., WaMu Asset Acceptance Corp., Washington Mutual, Inc. or any of their affiliates.  
     
   Neither these certificates nor the underlying mortgage loans are guaranteed by any agency or instrumentality of the United States.  
     
   This prospectus supplement may be used to offer and sell the offered certificates only if accompanied by the prospectus.  

The underwriter listed below will offer the offered certificates at varying prices to be determined at the time of sale. The proceeds to WaMu Asset Acceptance Corp. from the sale of the offered certificates will be approximately 101.04% of the principal balance of the offered certificates plus accrued interest, before deducting expenses. The underwriter's commission will be the difference between the price it pays to WaMu Asset Acceptance Corp. for the offered certificates and the amount it receives from the sale of the offered certificates to the public.

Neither the SEC nor any state securities commission has approved or disapproved of 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.

Underwriter

WaMu Capital Corp.

July 25, 2006


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Important Notice About Information Presented in this
Prospectus Supplement and the Accompanying Prospectus

      We provide information to you about the offered certificates in two separate documents that progressively provide more detail: (a) the accompanying prospectus, which provides general information, some of which may not apply to your series of certificates, and (b) this prospectus supplement, which describes the specific terms of your series of certificates.

      You should be certain to review the information in this prospectus supplement for a description of the specific terms of your certificates.

      We include cross-references in this prospectus supplement and the accompanying prospectus to captions in these materials where you can find further related discussions. The following table of contents and the table of contents included in the accompanying prospectus provide the pages on which these captions are located.

      You can find a listing of the pages where some of the capitalized terms used in this prospectus supplement and the accompanying prospectus are defined under the caption “Index of Terms” on page S-135 in this prospectus supplement and under the caption “Glossary” beginning on page 142 in the accompanying prospectus. Capitalized terms used in this prospectus supplement and not otherwise defined in this prospectus supplement have the meanings assigned in the accompanying prospectus.

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 to 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.

S-2


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TABLE OF CONTENTS

    Page

SUMMARY INFORMATION

      S-5  

Transaction Participants

      S-5  

What You Own

      S-5  

Information About the Mortgage Pool

      S-5  

The Certificates

      S-6  

The Offered Certificates

      S-6  

The Non-Offered Certificates

      S-12  

Initial Principal Balance of the Certificates

      S-13  

Last Scheduled Distribution Date

      S-13  

Distributions on the Certificates

      S-13  

Monthly Distributions

      S-13  

Distributions of Interest

      S-14  

Compensating Interest and Interest Shortfalls

      S-15  

Distributions of Principal

      S-16  

Cross-Collateralization of Loan Group 1 and Loan Group 2

      S-17  

The Class R Certificates

      S-17  

Credit Enhancements

      S-17  

Allocation of Losses

      S-18  

Optional Termination

      S-18  

Yield Considerations

      S-18  

Book-Entry Registration

      S-19  

Denominations

      S-19  

Legal Investment

      S-19  

ERISA Considerations

      S-19  

Federal Income Tax Consequences

      S-19  

Ratings

      S-19  

RISK FACTORS

      S-21  

THE SPONSOR

      S-36  

General

      S-36  

The Sponsor's Origination Channels

      S-36  

STATIC POOL INFORMATION

      S-37  

UNDERWRITING OF THE MORTGAGE LOANS

      S-37  

General

      S-37  

Evaluation of the Borrower's Credit Standing

      S-38  

Evaluation of the Borrower's Repayment Ability

      S-38  

Evaluation of the Adequacy of the Collateral

      S-38  

Documentation Programs

      S-39  

Exceptions to Program Parameters

      S-39  

Automated Underwriting System

      S-40  

Due Diligence

      S-40  

THE ORIGINATORS

      S-40  

Alliance Bancorp

      S-40  

THE DEPOSITOR

      S-41  

THE TRUST

      S-41  

General

      S-41  

Assignment of the Mortgage Loans and Other Assets to the Trust

      S-41  

Restrictions on Activities of the Trust

      S-42  

Discretionary Activities With Respect to the Trust

      S-42  

THE TRUSTEES

      S-43  

The Trustee

      S-43  

General

      S-43  

Material Duties of the Trustee

      S-43  

Events of Default Under the Pooling Agreement

      S-44  

The Delaware Trustee

      S-44  

Limitations on the Trustees' Liability

      S-45  

Resignation and Removal of the Trustees

      S-45  

THE SERVICERS

      S-46  

General

      S-46  

The Servicer

      S-46  

The Servicer's Servicing Experience

      S-46  

Servicing Procedures

      S-47  

The Servicer's Quality Control Procedures

      S-52  

Interim Servicing

      S-52  

The Administrative Agent

      S-52  

The Administrative Agent's Servicing Experience

      S-52  

Services Performed by the Administrative Agent

      S-53  

The Administrative Agent's Quality Control Procedures

      S-53  

Special Servicing Agreements

      S-54  

AFFILIATIONS AND RELATED TRANSACTIONS

      S-54  

DESCRIPTION OF THE MORTGAGE POOL

      S-55  

The Indexes

      S-60  

Additional Information

      S-61  

Representations and Warranties Regarding the Mortgage Loans

      S-62  

Criteria for Selection of Mortgage Loans

      S-63  

DESCRIPTION OF THE CERTIFICATES

      S-64  

General

      S-64  

Book-Entry Registration

      S-66  

Definitive Certificates

      S-66  

Priority of Distributions

      S-66  

Distributions to the Class 2X-PPP Certificates

      S-71  

Distributions of Interest

      S-72  

Calculation of LIBOR

      S-79  

Calculation of Index for MTA Certificates

      S-80  

Cross-Collateralization

      S-80  

S-3


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    Page

Distributions of Principal

      S-82  

General

      S-82  

Group 1 Senior Principal Distribution Amount

      S-83  

Group 2 Senior Principal Distribution Amount

      S-84  

Subordinate Principal Distribution Amount

      S-84  

Principal Prepayments

      S-86  

Subordination and Allocation of Losses

      S-87  

The Class R Certificates

      S-89  

Available Distribution Amount

      S-89  

Last Scheduled Distribution Date

      S-90  

Optional Termination of the Trust

      S-91  

Amendment of the Pooling Agreement

      S-91  

Payment of Fees and Expenses

      S-91  

Reports and Other Information

      S-93  

YIELD AND PREPAYMENT CONSIDERATIONS

      S-95  

General

      S-95  

Principal Prepayments and Compensating Interest

      S-96  

LIBOR Certificates

      S-97  

Rate of Payments

      S-97  

Prepayment Assumptions

      S-97  

Lack of Historical Prepayment Data

      S-104  

Yield Considerations with Respect to the Class X Certificates

      S-104  

Yield Considerations with Respect to the Senior Subordinate Certificates

      S-106  

Additional Yield Considerations Applicable Solely to the Class R Certificates

      S-110  

CREDIT ENHANCEMENTS

      S-111  

Subordination

      S-111  

Shifting of Interests

      S-111  

MATERIAL FEDERAL INCOME TAX CONSEQUENCES

      S-111  

Special Tax Considerations Applicable to the Class A and Class B Certificates

      S-113  

Taxation of the Cap Agreement Portion of the Class X Certificates

      S-113  

Taxation of the Class2X-PPP Component Portion of the Class 2X-PPP Certificates

      S-115  

Special Tax Considerations Applicable to the Residual Certificates

      S-116  

CERTAIN LEGAL INVESTMENT ASPECTS

      S-118  

ERISA CONSIDERATIONS

      S-119  

METHOD OF DISTRIBUTION

      S-120  

LEGAL MATTERS

      S-120  

CERTIFICATE RATINGS

      S-121  

APPENDIX A: DECREMENT TABLES

      S-122  

APPENDIX B: MORTGAGE LOAN TABLES

      S-124  

INDEX OF TERMS

      S-135  

       

S-4


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SUMMARY INFORMATION

The following summary highlights selected information from this prospectus supplement. It does not contain all of the information that you need to consider in making your investment decision. To understand the terms of the offered certificates, read carefully this entire prospectus supplement and the accompanying prospectus.

This summary provides an overview of certain calculations, cash flows and other information to aid your understanding. This summary is qualified by the full description of these calculations, cash flows and other information in this prospectus supplement and the accompanying prospectus.

TRANSACTION PARTICIPANTS

On July 27, 2006, which is the closing date, the mortgage loans that support the certificates will be sold by Washington Mutual Mortgage Securities Corp., the sponsor of the securitization transaction, to WaMu Asset Acceptance Corp., the depositor. On the closing date, the depositor will sell the mortgage loans and related assets to the Washington Mutual Mortgage Pass-Through Certificates WMALT Series 2006-AR6 Trust. In exchange for the mortgage loans and related assets, the Trust will issue the certificates pursuant to the order of the depositor.

The sponsor purchased the mortgage loans directly or indirectly from affiliated or unaffiliated third parties who either originated the mortgage loans or purchased the mortgage loans through correspondent or broker lending. Approximately 23.6%, 13.2%, 11.0% and 11.0% of the mortgage loans (by principal balance as of the Cut-Off Date (as defined in “Description of the Mortgage Pool” in this prospectus supplement)) were originated by Alliance Bancorp, First Horizon Home Loan Corporation, Plaza Home Mortgage, Inc. and Residential Funding Corporation, respectively.

The mortgage loans will be serviced by Washington Mutual Bank, as servicer. Some servicing functions will be performed by Washington Mutual Mortgage Securities Corp., as administrative agent of Washington Mutual Bank. Some servicing functions will be outsourced to third party vendors. Some mortgage loans will be serviced by either the respective originators of those mortgage loans or the entity that sold those mortgage loans to the sponsor on an interim basis until the servicing is transferred to Washington Mutual Bank. By September 1, 2006, the servicing of those mortgage loans is expected to have been transferred to Washington Mutual Bank.

The trustee of the Trust will be LaSalle Bank National Association, and the Delaware trustee will be Christiana Bank & Trust Company.

WHAT YOU OWN

Your certificates represent interests only in the assets of the issuing entity. All payments to you will come only from the amounts received in connection with those assets.

The Trust owns a pool of mortgage loans and other assets, as described under “The Trust” in this prospectus supplement.

There are no outstanding series or classes of securities that are backed by the assets of the issuing entity or otherwise have claims on the assets of the issuing entity, other than the certificates. The depositor does not expect that any securities representing additional interests in or claims on the assets of the issuing entity will be issued in the future.

Information About the Mortgage Pool

The mortgage pool consists of 2,061 mortgage loans with an aggregate principal balance as of the Cut-Off Date (as defined in “Description of the Mortgage Pool” in this prospectus supplement) of approximately $875,099,554. All of the mortgage loans are secured by residential properties (or shares of cooperative apartments) and each has an original term to maturity of not more than 40 years.

After an initial fixed-rate period of one or three months, the interest rate on each mortgage loan will adjust monthly to equal the sum of an index and a margin. As of the Cut-Off Date, approximately 21.4% of the mortgage loans (by aggregate principal balance) were still in their initial fixed-rate period. The interest rates on the mortgage loans are subject to overall maximum and minimum interest rate limits.

The index for approximately 81.9% and 98.9% of the mortgage loans (by aggregate principal balance as of the Cut-Off Date) in loan group 1 and loan group 2, respectively, will be One-Year MTA, the 12-month moving average yield on United States Treasury Securities adjusted to a constant maturity of one year. The index for approximately 18.1%

S-5


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and 1.1% of the mortgage loans (by aggregate principal balance as of the Cut-Off Date) in loan group 1 and loan group 2, respectively, will be the average of interbank offered rates for one-month U.S. dollar-denominated deposits in the London market as described in this prospectus supplement under the heading “Description of the Mortgage Loans—The Indexes”.

While the interest rate on each mortgage loan will adjust monthly (after the initial fixed-rate period), the minimum monthly payment on each mortgage loan generally will adjust only annually (except that for approximately 0.4%, by aggregate principal balance as of the Cut-Off Date, of the mortgage loans, the minimum monthly payment will initially adjust sixty months after origination of such mortgage loans, and then adjust annually thereafter). On each annual payment adjustment date, the minimum monthly payment generally will not increase or decrease by more than 7.5%. As a result, the interest due with respect to a mortgage loan for any given month may, under certain circumstances, exceed the monthly payment for that month. In that case, payment of the excess of interest due over the monthly payment will be deferred and that excess will be added to the principal balance of that mortgage loan in the form of “negative amortization.” See “Description of the Mortgage Pool” in this prospectus supplement.

In the event of a material breach of the representations and warranties made by the sponsor or the depositor with respect to the mortgage loans, or in the event that a required loan document is not included in the mortgage files for the mortgage loans, the breaching party will, unless it has cured the breach in all material respects, be required to repurchase the affected mortgage loan or substitute a new mortgage loan for the affected mortgage loan. See “Description of the Mortgage PoolRepresentations and Warranties Regarding the Mortgage Loans” in this prospectus supplement.

For a further description of the mortgage loans, see “Description of the Mortgage Pool” and Appendix B in this prospectus supplement.

The mortgage pool consists of the following two loan groups:

Loan Group   Number of
Mortgage
Loans
  Approximate
Principal Balance
as of the
Cut-Off Date
  Maximum
Years to
Maturity
From
Origination
Date

Loan Group 1           650           $ 286,755,289             40  
Loan Group 2           1,411           $ 588,344,264             40  

The mortgage loans in loan group 1 are mortgage loans that do not impose prepayment penalties. The mortgage loans in loan group 2 are mortgage loans that impose a prepayment penalty for voluntary prepayments in full for a period no greater than thirty-six months from the date of origination of such mortgage loan.

THE CERTIFICATES

The Offered Certificates

The approximate initial class principal balance, annual certificate interest rate and type of each class of the offered certificates will be as follows:

Class   Approximate
Initial Class
Principal
Balance
    Annual
Certificate
Interest
Rate
    Type

1A     $ 153,556,000       Variable(1)     Senior/LIBOR

1A-1B

      76,778,000       Variable(2)     Senior/LIBOR/Mezzanine

2A

      315,058,000       Variable(3)     Senior/One-Year MTA

2A-1B

      157,529,000       Variable(4)     Senior/One-Year MTA/Mezzanine

CA-1C

      78,104,000 (5)     Variable(6)     Senior/LIBOR/Mezzanine

1X

      (7)       Variable(8)     Senior/IO/PO

2X-PPP

      (7)       Variable(9)     Senior/IO/PO

B-1

      17,503,000       Variable(10)     Subordinate/LIBOR

B-2

      17,501,000       Variable(11)     Subordinate/LIBOR

B-3

      4,375,000       Variable(12)     Subordinate/LIBOR

B-4

      8,750,000       Variable(13)     Subordinate/LIBOR

B-5

      4,375,000       Variable(14)     Subordinate/LIBOR

B-6

      4,375,000       Variable(15)     Subordinate/LIBOR

B-7

      4,375,000       Variable(16)     Subordinate/LIBOR

B-8

      2,187,000       Variable(17)     Subordinate/LIBOR

B-9

      4,375,000       Variable(18)     Subordinate/LIBOR

B-10

      4,375,000       Variable(18)     Subordinate/LIBOR

B-11

      4,375,000       Variable(18)     Subordinate/LIBOR

R

      100       4.092%     Senior/Residual

               
(1)   For each distribution date on or before the date on which the aggregate principal balance of the mortgage loans has been reduced to less than 10% of that balance as of the Cut-Off Date (the “Clean-Up Call Option Date”), the annual certificate interest rate on the Class 1A Certificates will equal the least of (x) the product of (i) the weighted average of the mortgage interest rates on the mortgage loans in loan group 1, as of the second preceding due date less the per annum rate at which the servicing fee (as described in “Description of the Certificates—Payment of Fees and Expenses” in this prospectus supplement) is calculated and (ii) a fraction, the numerator of which is 30 and the denominator of which is the actual number of days in the related certificate accrual period (the “Adjusted Loan Group 1 Weighted Average Pass-Through Rate”), (y) the London Interbank Offered Rate for one-month United States dollar deposits, as described in this prospectus supplement under “Description of the Certificates—Distributions of Interest” (“LIBOR”), plus 0.19% and (z) the Maximum Loan Group 1 Rate (as defined in “Description of the Certificates—Distributions of Interest” in this prospectus supplement). For each distribution date after the Clean-Up Call Option Date, the annual certificate interest rate on the Class 1A Certificates will equal the least of (x) the Adjusted Loan Group 1 Weighted Average Pass-Through Rate, (y) LIBOR plus 0.38% and (z) the Maximum Loan Group 1 Rate. In addition, if on any distribution date the certificate interest rate on the Class 1A Certificates is equal to the Adjusted Loan Group 1 Weighted Average Pass-Through Rate, the Class 1A Certificates may be entitled to receive, as interest, carryover shortfall amounts from amounts, if any, otherwise payable to the Class 1X and Class 2X-PPP Certificates, as described in this prospectus supplement. See “Description of the Certificates—Distributions of Interest” in this prospectus supplement. For the initial distribution date, after giving effect to carryover shortfall payments, if any, the annual certificate interest rate on these certificates will equal LIBOR as of July 25, 2006 plus 0.19%.

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(2)   For each distribution date on or before the Clean-Up Call Option Date, the annual certificate interest rate on the Class 1A-1B Certificates will equal the least of (x) the Adjusted Loan Group 1 Weighted Average Pass-Through Rate, (y) LIBOR, plus 0.25% and (z) the Maximum Loan Group 1 Rate. For each distribution date after the Clean-Up Call Option Date, the annual certificate interest rate on the Class 1A-1B Certificates will equal the least of (x) the Adjusted Loan Group 1 Weighted Average Pass-Through Rate, (y) LIBOR plus 0.50% and (z) the Maximum Loan Group 1 Rate. In addition, if on any distribution date the certificate interest rate on the Class 1A-1B Certificates is equal to the Adjusted Loan Group 1 Weighted Average Pass-Through Rate, the Class 1A-1B Certificates may be entitled to receive, as interest, carryover shortfall amounts from amounts, if any, otherwise payable to the Class 1X and Class 2X-PPP Certificates, as described in this prospectus supplement. See “Description of the Certificates—Distributions of Interest” in this prospectus supplement. For the initial distribution date, after giving effect to carryover shortfall payments, if any, the annual certificate interest rate on these certificates will equal LIBOR as of July 25, 2006 plus 0.25%.
     
(3)   For each distribution date, the annual certificate interest rate on the Class 2A Certificates will equal the lesser of (x) the weighted average of the mortgage interest rates on the mortgage loans in loan group 2, as of the second preceding due date less the per annum rate at which the servicing fee (as described in “Description of the Certificates—Payment of Fees and Expenses” in this prospectus supplement) is calculated (the “Loan Group 2 Weighted Average Pass-Through Rate”) and (y) (1) for each distribution date in or before January 2007, One-Year MTA plus 1.26% and (2) for each distribution date after the distribution date in January 2007, One-Year MTA plus 0.96%. See “Description of the Certificates—Distributions of Interest” in this prospectus supplement. In addition, if on the initial distribution date the certificate interest rate on the Class 2A Certificates is equal to the Loan Group 2 Weighted Average Pass-Through Rate, the Class 2A Certificates may be entitled to receive, as interest, carryover shortfall amounts from amounts, if any, otherwise payable to the Class 1X and Class 2X-PPP Certificates, as described in this prospectus supplement. The Class 2A Certificates will not be entitled to receive carryover shortfall amounts on any distribution date other than the initial distribution date. See “Description of the Certificates—Distributions of Interest” in this prospectus supplement. For the initial distribution date, after giving effect to carryover shortfall payments, if any, the annual certificate interest rate on these certificates will equal approximately 5.542%.
     
(4)   For each distribution date, the annual certificate interest rate on the Class 2A-1B Certificates will equal the lesser of (x) the Loan Group 2 Weighted Average Pass-Through Rate and (y) (1) for each distribution date in or before January 2007, One-Year MTA plus 1.30% and (2) for each distribution date after the distribution date in January 2007, One-Year MTA plus 1.00 %. See “Description of the Certificates—Distributions of Interest” in this prospectus supplement. In addition, if on the initial distribution date the certificate interest rate on the Class 2A-1B Certificates is equal to the Loan Group 2 Weighted Average Pass-Through Rate, the Class 2A-1B Certificates may be entitled to receive, as interest, carryover shortfall amounts from amounts, if any, otherwise payable to the Class 1X and Class 2X-PPP Certificates, as described in this prospectus supplement. The Class 2A-1B Certificates will not be entitled to receive carryover shortfall amounts on any distribution date other than the initial distribution date. See “Description of the Certificates—Distributions of Interest” in this prospectus supplement. For the initial distribution date, after giving effect to carryover shortfall payments, if any, the annual certificate interest rate on these certificates will equal approximately 5.582%.

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(5)   Solely for purposes of calculating distributions of principal and interest and the allocation of losses realized on the mortgage loans, the Class CA-1C Certificates will be deemed to be comprised of two components (the “Class CA-1C Group 1 Component” and the “Class CA-1C Group 2 Component”, each, a “Class CA-1C Component”). Each Class CA-1C Component will have a component principal balance representing the portion of the Class CA-1C principal balance derived from the related loan group. Interest will be payable with respect to each Class CA-1C Component. The initial principal balance of the Class CA-1C Group 1 Component and the Class CA-1C Group 2 Component will be approximately $25,594,000 and $52,510,000, respectively.
     
(6)   For each distribution date on or before the Clean-Up Call Option Date, the annual certificate interest rate on the Class CA-1C Group 1 Component will equal the least of (x) the Adjusted Loan Group 1 Weighted Average Pass-Through Rate, (y) LIBOR plus 0.28% and (z) the Maximum Loan Group 1 Rate. For each distribution date after the Clean-Up Call Option Date, the annual certificate interest rate on the Class CA-1C Group 1 Component will equal the least of (x) the Adjusted Loan Group 1 Weighted Average Pass-Through Rate, (y) LIBOR plus 0.56% and (z) the Maximum Loan Group 1 Rate.
     
    For each distribution date on or before the Clean-Up Call Option Date, the annual certificate interest rate on the Class CA-1C Group 2 Component will equal the least of (x) the product of (i) the Loan Group 2 Weighted Average Pass-Through Rate and (ii) a fraction, the numerator of which is 30 and the denominator of which is the actual number of days in the related certificate accrual period (the “Adjusted Loan Group 2 Weighted Average Pass-Through Rate”), (y) LIBOR plus 0.28% and (z) the Maximum Loan Group 2 Rate (as defined in “Description of the Certificates—Distributions of Interest” in this prospectus supplement). For each distribution date after the Clean-Up Call Option Date, the annual certificate interest rate on the Class CA-1C Group 2 Component will equal the least of (x) the Adjusted Loan Group 2 Weighted Average Pass-Through Rate, (y) LIBOR plus 0.56% and (z) the Maximum Loan Group 2 Rate.
     
    In addition, if on any distribution date the certificate interest rate on any of the Class CA-1C Components is equal to the Adjusted Loan Group 1 Weighted Average Pass-Through Rate or the Adjusted Loan Group 2 Weighted Average Pass-Through Rate, as applicable, the Class CA-1C Certificates may be entitled to receive, as interest, carryover shortfall amounts from amounts, if any, otherwise payable to the Class 1X and Class 2X-PPP Certificates, as described in this prospectus supplement. See “Description of the Certificates—Distributions of Interest” in this prospectus supplement. For the initial distribution date, after giving effect to carryover shortfall payments, if any, the annual certificate interest rate on these Class CA-1C Components will equal LIBOR as of July 25, 2006 plus 0.28%.
     
(7)   Solely for purposes of calculating distributions of principal and interest and the allocation of losses realized on the mortgage loans, (i) the Class 1X Certificates will be deemed to be comprised of an interest-only component and a principal-only component and (ii) the Class 2X-PPP Certificates will be deemed to be comprised of an interest-only component and a principal-only component. Interest, if any, will be payable with respect to each Class X interest-only component. The Class 1X and Class 2X-PPP interest-only components will not have a principal balance and principal will not be payable with respect to the Class X interest-only components. Each of the Class 1X and Class 2X-PPP principal-only components will have a principal balance which initially will equal zero. Interest will not accrue on any Class X principal-only component. In the event that interest otherwise payable with respect to the Class 1X or Class 2X-PPP interest-only component is reduced as a result of the allocation of net negative amortization (as described in “Description of the Certificates—Distributions of Interest” in this prospectus supplement), the amount of such reduction will be added as principal to the related Class X principal balance.

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    In addition, the Class 2X-PPP Certificates will be entitled to receive prepayment penalties paid by borrowers upon voluntary full prepayment of certain mortgage loans in loan group 2 if such mortgage loans are prepaid during certain periods. See “Description of the Mortgage Pool” and “Description of the Certificates—Distributions to the Class 2X-PPP Certificates” herein and the “Prepayment Penalty Terms of the Group 1 Loans” and “Prepayment Penalty Terms of the Group 2 Loans” tables in Appendix B hereto for more information regarding the Class 2X-PPP Certificates and prepayment penalties.
     
(8)   The amount of interest available for distribution to the Class 1X Certificates on any distribution date (before giving effect to the allocation of any shortfall in interest collections and payment of carryover shortfall amounts) will equal the Class 1X Accrued Interest (as defined in this prospectus supplement). Notwithstanding the foregoing, interest otherwise available for distribution to the Class 1X Certificates on any distribution date may instead be distributed as carryover shortfall amounts. See “Description of the Certificates—Distributions of Interest” in this prospectus supplement.
     
(9)   The amount of interest available for distribution to the Class 2X-PPP Certificates on any distribution date (before giving effect to the allocation of any shortfall in interest collections and payment of carryover shortfall amounts) will equal the Class 2X-PPP Accrued Interest (as defined in this prospectus supplement). Notwithstanding the foregoing, interest otherwise available for distribution to the Class 2X-PPP Certificates on any distribution date may instead be distributed as carryover shortfall amounts. See “Description of the Certificates—Distributions of Interest” in this prospectus supplement.
     
(10)   For each distribution date on or before the Clean-Up Call Option Date, the annual certificate interest rate on the Class B-1 Certificates will equal the least of (x) the Class B Weighted Average Pass-Through Rate (as defined in “Description of the Certificates—Distributions of Interest” in this prospectus supplement), (y) LIBOR plus 0.38% and (z) the Maximum Class B Rate (as defined in “Description of the Certificates—Distributions of Interest” in this prospectus supplement). For each distribution date after the Clean-Up Call Option Date, the annual certificate interest rate on the Class B-1 Certificates will equal the least of (x) the Class B Weighted Average Pass-Through Rate, (y) LIBOR plus 0.57% and (z) the Maximum Class B Rate. In addition, if on any distribution date the certificate interest rate on the Class B-1 Certificates is equal to the Class B Weighted Average Pass-Through Rate, the Class B-1 Certificates may be entitled to receive, as interest, carryover shortfall amounts from amounts, if any, otherwise payable to the Class 1X and Class 2X-PPP Certificates, as described in this prospectus supplement. See “Description of the Certificates—Distributions of Interest” in this prospectus supplement. For the initial distribution date, after giving effect to carryover shortfall payments, if any, the annual certificate interest rate on these certificates will equal LIBOR as of July 25, 2006 plus 0.38%.

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(11)   For each distribution date on or before the Clean-Up Call Option Date, the annual certificate interest rate on the Class B-2 Certificates will equal the least of (x) the Class B Weighted Average Pass-Through Rate, (y) LIBOR plus 0.40% and (z) the Maximum Class B Rate. For each distribution date after the Clean-Up Call Option Date, the annual certificate interest rate on the Class B-2 Certificates will equal the least of (x) the Class B Weighted Average Pass-Through Rate, (y) LIBOR plus 0.60% and (z) the Maximum Class B Rate. In addition, if on any distribution date the certificate interest rate on the Class B-2 Certificates is equal to the Class B Weighted Average Pass-Through Rate, the Class B-2 Certificates may be entitled to receive, as interest, carryover shortfall amounts from amounts, if any, otherwise payable to the Class 1X and Class 2X-PPP Certificates, as described in this prospectus supplement. See “Description of the Certificates—Distributions of Interest” in this prospectus supplement. For the initial distribution date, after giving effect to carryover shortfall payments, if any, the annual certificate interest rate on these certificates will equal LIBOR as of July 25, 2006 plus 0.40%.
     
(12)   For each distribution date on or before the Clean-Up Call Option Date, the annual certificate interest rate on the Class B-3 Certificates will equal the least of (x) the Class B Weighted Average Pass-Through Rate, (y) LIBOR plus 0.43% and (z) the Maximum Class B Rate. For each distribution date after the Clean-Up Call Option Date, the annual certificate interest rate on the Class B-3 Certificates will equal the least of (x) the Class B Weighted Average Pass-Through Rate, (y) LIBOR plus 0.645% and (z) the Maximum Class B Rate. In addition, if on any distribution date the certificate interest rate on the Class B-3 Certificates is equal to the Class B Weighted Average Pass-Through Rate, the Class B-3 Certificates may be entitled to receive, as interest, carryover shortfall amounts from amounts, if any, otherwise payable to the Class 1X and Class 2X-PPP Certificates, as described in this prospectus supplement. See “Description of the Certificates—Distributions of Interest” in this prospectus supplement. For the initial distribution date, after giving effect to carryover shortfall payments, if any, the annual certificate interest rate on these certificates will equal LIBOR as of July 25, 2006 plus 0.43%.
     
(13)   For each distribution date on or before the Clean-Up Call Option Date, the annual certificate interest rate on the Class B-4 Certificates will equal the least of (x) the Class B Weighted Average Pass-Through Rate, (y) LIBOR plus 0.55% and (z) the Maximum Class B Rate. For each distribution date after the Clean-Up Call Option Date, the annual certificate interest rate on the Class B-4 Certificates will equal the least of (x) the Class B Weighted Average Pass-Through Rate, (y) LIBOR plus 0.825% and (z) the Maximum Class B Rate. In addition, if on any distribution date the certificate interest rate on the Class B-4 Certificates is equal to the Class B Weighted Average Pass-Through Rate, the Class B-4 Certificates may be entitled to receive, as interest, carryover shortfall amounts from amounts, if any, otherwise payable to the Class 1X and Class 2X-PPP Certificates, as described in this prospectus supplement. See “Description of the Certificates—Distributions of Interest” in this prospectus supplement. For the initial distribution date, after giving effect to carryover shortfall payments, if any, the annual certificate interest rate on these certificates will equal LIBOR as of July 25, 2006 plus 0.55%.
     
(14)   For each distribution date on or before the Clean-Up Call Option Date, the annual certificate interest rate on the Class B-5 Certificates will equal the least of (x) the Class B Weighted Average Pass-Through Rate, (y) LIBOR plus 0.60% and (z) the Maximum Class B Rate. For each distribution date after the Clean-Up Call Option Date, the annual certificate interest rate on the Class B-5 Certificates will equal the least of (x) the Class B Weighted Average Pass-Through Rate, (y) LIBOR plus 0.90% and (z) the Maximum Class B Rate. In addition, if on any distribution date the certificate interest rate on the Class B-5 Certificates is equal to the Class B Weighted Average Pass-Through Rate, the Class B-5 Certificates may be entitled to receive, as interest, carryover shortfall amounts from amounts, if any, otherwise payable to the Class 1X and Class 2X-PPP Certificates, as described in this prospectus supplement. See “Description of the Certificates—Distributions of Interest” in this prospectus supplement. For the initial distribution date, after giving effect to carryover shortfall payments, if any, the annual certificate interest rate on these certificates will equal LIBOR as of July 25, 2006 plus 0.60%.

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(15)   For each distribution date on or before the Clean-Up Call Option Date, the annual certificate interest rate on the Class B-6 Certificates will equal the least of (x) the Class B Weighted Average Pass-Through Rate, (y) LIBOR plus 0.66% and (z) the Maximum Class B Rate. For each distribution date after the Clean-Up Call Option Date, the annual certificate interest rate on the Class B-6 Certificates will equal the least of (x) the Class B Weighted Average Pass-Through Rate, (y) LIBOR plus 0.99% and (z) the Maximum Class B Rate. In addition, if on any distribution date the certificate interest rate on the Class B-6 Certificates is equal to the Class B Weighted Average Pass-Through Rate, the Class B-6 Certificates may be entitled to receive, as interest, carryover shortfall amounts from amounts, if any, otherwise payable to the Class 1X and Class 2X-PPP Certificates, as described in this prospectus supplement. See “Description of the Certificates—Distributions of Interest” in this prospectus supplement. For the initial distribution date, after giving effect to carryover shortfall payments, if any, the annual certificate interest rate on these certificates will equal LIBOR as of July 25, 2006 plus 0.66%.
     
(16)   For each distribution date on or before the Clean-Up Call Option Date, the annual certificate interest rate on the Class B-7 Certificates will equal the least of (x) the Class B Weighted Average Pass-Through Rate, (y) LIBOR plus 1.20% and (z) the Maximum Class B Rate. For each distribution date after the Clean-Up Call Option Date, the annual certificate interest rate on the Class B-7 Certificates will equal the least of (x) the Class B Weighted Average Pass-Through Rate, (y) LIBOR plus 1.80% and (z) the Maximum Class B Rate. In addition, if on any distribution date the certificate interest rate on the Class B-7 Certificates is equal to the Class B Weighted Average Pass-Through Rate, the Class B-7 Certificates may be entitled to receive, as interest, carryover shortfall amounts from amounts, if any, otherwise payable to the Class 1X and Class 2X-PPP Certificates, as described in this prospectus supplement. See “Description of the Certificates—Distributions of Interest” in this prospectus supplement. For the initial distribution date, after giving effect to carryover shortfall payments, if any, the annual certificate interest rate on these certificates will equal LIBOR as of July 25, 2006 plus 1.20%.
     
(17)   For each distribution date on or before the Clean-Up Call Option Date, the annual certificate interest rate on the Class B-8 Certificates will equal the least of (x) the Class B Weighted Average Pass-Through Rate, (y) LIBOR plus 1.40% and (z) the Maximum Class B Rate. For each distribution date after the Clean-Up Call Option Date, the annual certificate interest rate on the Class B-8 Certificates will equal the least of (x) the Class B Weighted Average Pass-Through Rate, (y) LIBOR plus 2.10% and (z) the Maximum Class B Rate. In addition, if on any distribution date the certificate interest rate on the Class B-8 Certificates is equal to the Class B Weighted Average Pass-Through Rate, the Class B-8 Certificates may be entitled to receive, as interest, carryover shortfall amounts from amounts, if any, otherwise payable to the Class 1X and Class 2X-PPP Certificates, as described in this prospectus supplement. See “Description of the Certificates—Distributions of Interest” in this prospectus supplement. For the initial distribution date, after giving effect to carryover shortfall payments, if any, the annual certificate interest rate on these certificates will equal LIBOR as of July 25, 2006 plus 1.40%.
     
(18)   For each distribution date on or before the Clean-Up Call Option Date, the annual certificate interest rate on the Class B-9, Class B-10 and Class B-11 Certificates will equal the least of (x) the Class B Weighted Average Pass-Through Rate, (y) LIBOR plus 1.75% and (z) the Maximum Class B Rate. For each distribution date after the Clean-Up Call Option Date, the annual certificate interest rate on the Class B-9, Class B-10 and Class B-11 Certificates will equal the least of (x) the Class B Weighted Average Pass-Through Rate, (y) LIBOR plus 2.625% and (z) the Maximum Class B Rate. In addition, if on any distribution date the certificate interest rate on the Class B-9, Class B-10 and Class B-11 Certificates is equal to the Class B Weighted Average Pass-Through Rate, the Class B-9, Class B-10 and Class B-11 Certificates may be entitled to receive, as interest, carryover shortfall amounts from amounts, if any, otherwise payable to the Class 1X and Class 2X-PPP Certificates, as described in this prospectus supplement. See “Description of the Certificates—Distributions of Interest” in this prospectus supplement. For the initial distribution date, after giving effect to carryover shortfall payments, if any, the annual certificate interest rate on these certificates will equal LIBOR as of July 25, 2006 plus 1.75%.

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The Non-Offered Certificates

In addition to the offered certificates, the Trust will also issue the Class B-12, Class B-13 and Class B-14 Certificates. These certificates are not being offered by this prospectus supplement.

The approximate initial class principal balance, annual certificate interest rate and type of each of the Class B-12, Class B-13 and Class B-14 Certificates will be as follows:

Class   Approximate
Initial Class
Principal
Balance
         Annual
Certificate
Interest Rate
         Type

B-12          $ 3,500,000            Variable(1)          Subordinate/LIBOR

B-13

           6,563,000            Variable(1)          Subordinate/LIBOR

B-14

           7,445,454            Variable(1)          Subordinate/LIBOR

               
(1)   For each distribution date on or before the Clean-Up Call Option Date, the annual certificate interest rate on the Class B-12, Class B-13 and Class B-14 Certificates will equal the least of (x) the Class B Weighted Average Pass-Through Rate, (y) LIBOR plus 1.75% and (z) the Maximum Class B Rate. For each distribution date after the Clean-Up Call Option Date, the annual certificate interest rate on the Class B-12, Class B-13 and Class B-14 Certificates will equal the least of (x) the Class B Weighted Average Pass-Through Rate, (y) LIBOR plus 2.625% and (z) the Maximum Class B Rate. In addition, if on any distribution date the certificate interest rate on the Class B-12, Class B-13 and Class B-14 Certificates is equal to the Class B Weighted Average Pass-Through Rate, the Class B-12, Class B-13 and Class B-14 Certificates may be entitled to receive, as interest, carryover shortfall amounts from amounts, if any, otherwise payable to the Class 1X and Class 2X-PPP Certificates, as described in this prospectus supplement. See “Description of the Certificates—Distributions of Interest” in this prospectus supplement. For the initial distribution date, after giving effect to carryover shortfall payments, if any, the annual certificate interest rate on these certificates will equal LIBOR as of July 25, 2006 plus 1.75%.

The Class B-12, Class B-13 and Class B-14 Certificates will be subordinate in right of payment to the offered certificates and will not receive distributions of interest or principal on any distribution date until the offered certificates have received all distributions of interest and principal that they are entitled to receive on that distribution date. In addition, losses realized on the mortgage loans will be allocated to the Class B-12, Class B-13 and Class B-14 Certificates, until their principal balances have been reduced to zero, before they are allocated to the offered certificates. See “Description of the Certificates—Subordination and Allocation of Losses” in this prospectus supplement.

Relationship Between Loan Groups and the Offered Certificates

The certificates whose class designation begins with “1” or “R” correspond to loan group 1. The certificates whose class designation begins with “2” correspond to loan group 2. The certificates whose class designation begins with “C” or “B” correspond to loan groups 1 and 2. Each of the certificates generally receives distributions based on principal and interest collected from mortgage loans in its corresponding loan group or loan groups.

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Initial Principal Balance of the Certificates

The initial aggregate principal balance of the certificates issued by the Trust is approximately $875,099,554, subject to an upward or downward variance of no more than 5%.

The initial aggregate principal balance of the certificates has the following composition:

the senior certificates comprise approximately 89.25% of the principal balance of the mortgage loans;
 
the Class B-1, Class B-2, Class B-3, Class B-4, Class B-5, Class B-6, Class B-7, Class B-8, Class B-9, Class B-10 and Class B-11 Certificates comprise approximately 8.75% of the aggregate principal balance of the mortgage loans; and
 
the privately offered Class B-12, Class B-13 and Class B-14 Certificates comprise approximately 2.00% of the aggregate principal balance of the mortgage loans.

Last Scheduled Distribution Date

The last scheduled distribution date for each class of certificates is the distribution date in the month after the scheduled maturity date for the latest maturing mortgage loan in the related loan group or loan groups.

The actual rate of principal payments on the certificates will depend on the rate of principal payments (including principal prepayments) on the related mortgage loans. No assurance can be given as to the actual payment experience on the mortgage loans.

See “Description of the Certificates—Last Scheduled Distribution Date” in this prospectus supplement.

DISTRIBUTIONS ON THE CERTIFICATES

Monthly Distributions

Each month, the trustee, LaSalle Bank National Association, will make distributions of interest and/or principal to the holders of the certificates. Distributions will be made on the 25th day of each month, or if the 25th day is not a business day, on the next business day. The first distribution date will be August 25, 2006.

Source of Payments. The mortgagors pay their interest and principal during the month to the servicer. Each month, the servicer subtracts its servicing fee and sends the remainder to the trustee. On the distribution date for that month, the trustee distributes that remaining amount by loan group to the holders of the certificates related to that loan group in the order described in “Description of the Certificates—Priority of Distributions” in this prospectus supplement (in accordance with the monthly distribution report). The servicing fee will be calculated as a per annum percentage for each mortgage loan. The servicing fee for each mortgage loan (a) (1) indexed to One-Year MTA and in loan group 1, will equal (x) the greater of (i) 0.375% and (ii) the excess, if any, of the gross margin on the applicable mortgage loan (as stated in the related mortgage note) over 2.05% or (y) the initial fixed rate on such mortgage loan and (2) indexed to One-Year MTA and in loan group 2, will equal (x) the greater of (i) 0.375% and (ii) the excess, if any, of the gross margin on the applicable mortgage loan (as stated in the related mortgage note) over 1.50% or (y) the initial fixed rate on such mortgage loan and (b) indexed to One-Month LIBOR, as described in this prospectus supplement under the heading “Description of the Mortgage Loans—The Indexes”, will equal (1) the greater of (i) 0.375% and (ii) the excess, if any, of the gross margin on the applicable mortgage loan (as stated in the related mortgage note) over 1.00% or (2) the initial fixed rate on such mortgage loan.

Advances. For any month, if the servicer receives a payment on a mortgage loan that is less than the minimum monthly payment due or if no payment is received at all, the servicer will advance its own funds or funds collected by the servicer on the mortgage loans but not required to be distributed to the certificateholders on the current distribution date, to cover the difference between the minimum monthly payment due and the amount actually received by the servicer. However, the servicer will not be required to make advances if it determines that those advances will not be recoverable from future payments or collections on that mortgage loan. See “The Servicers—The Servicer—Servicing Procedures—Advances” in this prospectus supplement.

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Distributions of Interest

Each class of offered certificates will accrue interest on its class principal balance. On each distribution date interest will be distributed to these classes in the order described in “Description of the Certificates—Priority of Distributions” in this prospectus supplement.

Solely for purposes of calculating distributions of principal and interest and the allocation of losses realized on the mortgage loans, each of the Class 1X and Class 2X-PPP Certificates will be deemed to be comprised of an interest-only component and a principal-only component. Interest, if any, will be payable with respect to each Class 1X and Class 2X-PPP interest-only component. The Class 1X and Class 2X-PPP interest-only components will not have a principal balance and principal will not be payable with respect to the interest-only components. Each of the Class 1X and 2X-PPP principal-only components will have a principal balance, which initially will equal zero. Interest will not accrue on any Class 1X or Class 2X-PPP principal-only component.

Solely for purposes of calculating distributions of principal and interest and the allocation of losses realized on the mortgage loans, the Class CA-1C Certificates will be deemed to be comprised of the Class CA-1C Group 1 Component and the Class CA-1C Group 2 Component. Each Class CA-1C Component will have a component principal balance representing the portion of the related class principal balance derived from the related loan group. Interest will be payable with respect to each Class CA-1C Component.

Interest to be distributed on the certificates (or added to the principal balance of the certificates in the form of Net Negative Amortization, as defined below) on any distribution date will consist of accrued and unpaid interest as of previous distribution dates and interest accrued during the period beginning on the 25th day of the preceding calendar month (or, in the case of the first distribution date, July 27, 2006) and ending on the 24th day of the month of that distribution date, except for the Class 2A, Class 2A-1B, Class 1X and Class 2X-PPP Certificates, which accrue interest during the preceding calendar month. Interest on the Class 1A, Class 1A-1B, Class CA-1C and Class B Certificates will be calculated based on the actual number of days in the certificate accrual period and assuming a 360 day year. Interest on the Class 2A, Class 2A-1B, Class 1X and Class 2X-PPP Certificates will be calculated based on a year consisting of twelve thirty-day months.

In the event that an increase in the applicable index causes interest to accrue on a mortgage loan for a given month in excess of the monthly payment for that mortgage loan, the excess interest will be added to the outstanding principal balance of that mortgage loan in the form of “negative amortization.” For any distribution date, the excess, if any, of (i) the aggregate amount of negative amortization with respect to all mortgage loans in a loan group for the calendar month prior to that distribution date, over (ii) the aggregate amount of prepayments in full and partial prepayments received with respect to all mortgage loans in that loan group during the related prepayment period (the “Net Negative Amortization”), will be deducted from interest payable to the related certificates as described in “Description of the Certificates—Distributions of Interest” in this prospectus supplement. The amount deducted from the interest payable to each class of certificates will be added to the principal balance of that class.

It is possible that, on any given distribution date, there will be insufficient payments from the mortgage loans to make the interest distributions (net of any Net Negative Amortization deducted from interest payable) described in this prospectus supplement. If the servicer does not advance its own funds, because it determines that the advance would be nonrecoverable, some certificates, most likely the subordinate certificates, may not receive the full amount of accrued interest to which they are entitled. If this happens, those certificates will be entitled to receive any shortfall in interest distributions on future distribution dates in the same priority as their distribution of current interest. However, there will be no extra interest paid on that shortfall.

The amount of interest each Class CA-1C Component, the Class 1A and Class 1A-1B Certificates and each class of Class B Certificates accrues during each certificate accrual period will equal a ratio, the numerator of which is the actual number of days in that accrual period and the denominator of which is 360, multiplied by the annual certificate interest rate in effect for that

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accrual period for that class or component and multiplied by the related class principal balance or component principal balance. The amount of interest the Class 2A and Class 2A-1B Certificates accrue during each certificate accrual period will equal 1/12th of the annual certificate interest rate in effect for that accrual period for that class multiplied by their respective class principal balance. The principal balance used for this calculation for the Class A and Class B Certificates on the first distribution date will be the applicable principal balance as of July 27, 2006, which is the closing date. The principal balance used for this calculation on each distribution date thereafter will be the applicable principal balance immediately after the preceding distribution date. For a description of how the interest distributions to the Class 1X and Class 2X-PPP Certificates are determined, see “Description of the Certificates—Distributions of Interest” in this prospectus supplement. The annual certificate interest rate for each class of offered certificates is described on pages S-6 to S-12 of this prospectus supplement.

No interest will accrue on the Class 1X or Class 2X-PPP principal-only components.

One-Year MTA Certificates. The certificate interest rates for the Class 2A and Class 2A-1B Certificates adjusts monthly based on an index (currently the One-Year MTA, as described in “Description of the Mortgage Pool—The Indexes” in this prospectus supplement). The formulas for the calculation of the certificate interest rates for the Class 2A and Class 2A-1B Certificates appear in the notes to the table on page S-6 of this prospectus supplement. However, the certificate interest rates for these classes of certificates are subject to caps described the notes to the table on page S-6 of this prospectus supplement.

For the initial distribution date only, the Class 2A and Class 2A-1B Certificates may receive as interest, in addition to interest accrued at their certificate interest rates, carryover shortfall amounts, as described in “Description of the Certificates—Distributions of Interest—Carryover Shortfall Amount” in this prospectus supplement. The Class 2A and Class 2A-1B Certificates will not receive any carryover shortfall payments on any other distribution date. For more information, see “Risk Factors—The Class 2A and Class 2A-1B Certificates May Receive Interest at a Certificate Interest Rate Lower than One-Year MTA Index Plus the Related Margin”, “Description of the Mortgage Pool—The Indexes” and “Description of the Certificates—Distributions of Interest” in this prospectus supplement.

LIBOR Certificates. The certificate interest rates for the Class 1A, Class 1A-1B, Class CA-1C and Class B Certificates adjust monthly based on the average of quotations of the London Interbank Offered Rate for one-month U.S. dollar deposits, or LIBOR, as described in “Description of the Certificates—Calculation of LIBOR” in this prospectus supplement. The formulas for the calculation of the certificate interest rates for these LIBOR Certificates appear in the notes to the table on page S-6 of this prospectus supplement. However, the certificate interest rates for these classes of certificates (or the components thereof) are subject to caps described the notes to the table on page S-6 of this prospectus supplement.

On each distribution date, the Class 1A, Class 1A-1B, Class CA-1C and Class B Certificates may receive as interest, in addition to interest accrued at their certificate interest rates, carryover shortfall amounts, as described in “Description of the Certificates—Distributions of Interest—Carryover Shortfall Amount” in this prospectus supplement.

Interest otherwise available for distribution to the Class 1X and Class 2X-PPP Certificates on any distribution date may be reduced by carryover shortfall amounts payable to the Class A and Class B Certificates, as described in “Description of the Certificates—Distributions of Interest—Carryover Shortfall Amounts” in this prospectus supplement.

Compensating Interest and Interest Shortfalls

Prepayments in Full. When mortgagors make prepayments in full, they need not pay a full month's interest. Instead, they are required to pay interest only to the date of their prepayment. To compensate certificateholders for the shortfall in interest this causes, the servicer may pay compensating interest to the certificateholders out of the servicing fee it collects, as well as from certain other sources. For a description of how compensating interest is allocated among the certificates as well as important limitations on the amount of compensating interest that will be allocated among the certificates, see “Description of the Certificates—Distributions of Interest—Compensating Interest” and “Yield and

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Prepayment Considerations” in this prospectus supplement.

Partial Prepayments. When mortgagors make partial prepayments, they do not pay interest on the amount of that prepayment. Certificateholders will receive no compensating interest to compensate them for the shortfall in interest this causes.

Distributions of Principal

General. As the mortgagors pay principal on the mortgage loans in each loan group, that principal is passed on to the holders of the certificates related to that loan group.

The Class A Certificates and (in the event Net Negative Amortization has been allocated to the Class 1X or Class 2X-PPP Certificates) the Class 1X and Class 2X-PPP Certificates, in the aggregate, generally will receive their pro rata share of scheduled principal payments received on the mortgage loans in the related loan group on each distribution date. In addition, unless credit enhancement to the Class A, Class 1X and Class 2X-PPP Certificates has reached a specified level and the delinquencies and losses on the mortgage loans in the related loan group do not exceed specified limits, the Class A, Class 1X and Class 2X-PPP Certificates, in the aggregate, generally will receive 100% of all principal prepayments received on the mortgage loans in the related loan group, net of any portion thereof applied to reduce negative amortization, until the tenth anniversary of the first distribution date, after which they will receive a disproportionately large, but decreasing, share of principal prepayments.

Certificates Related to Loan Group 1: On each distribution date, a portion of the principal received or advanced on the mortgage loans in loan group 1 will be distributed, first, to the Class 1A and Class 1A-1B Certificates and the Class CA-1C Group 1 Component, pro rata, and, second, to the Class 1X Certificates, as described in “Description of the Certificates—Distributions of Principal—Group 1 Senior Principal Distribution Amount” in this prospectus supplement. However, not all of these certificates will receive principal on each distribution date. See Appendix A for a table showing, for each class of these certificates (other than the Class 1X Certificates), the rate of return of principal that would result from different rates of prepayments on the mortgage loans in loan group 1. However, if the Class B Certificates are no longer outstanding, then the Class 1A, Class 1A-1B and Class 1X Certificates and the Class CA-1C Group 1 Component will not receive principal in the order of priority described in “Description of the Certificates—Distributions of Principal—Group 1 Senior Principal Distribution Amount” in this prospectus supplement. Instead, each of these classes of certificates will generally receive principal pro rata according to its class principal balance or related component principal balance, as applicable. If the Class B Certificates are outstanding, the Class 1X Certificates will not receive any distributions of principal until the principal balances of the Class 1A and Class 1A-1B Certificates and the Class CA-1C Group 1 Component have each been reduced to zero.

Certificates Related to Loan Group 2: On each distribution date, a portion of the principal received or advanced on the mortgage loans in loan group 2 will be distributed, first, to the Class 2A and Class 2A-1B Certificates and the Class CA-1C Group 2 Component, pro rata, and, second, to the Class 2X-PPP Certificates, as described in “Description of the Certificates—Distributions of Principal—Group 2 Senior Principal Distribution Amount” in this prospectus supplement. However, not all of these certificates will receive principal on each distribution date. See Appendix A for a table showing, for each class of these certificates (other than the Class 2X-PPP Certificates), the rate of return of principal that would result from different rates of prepayments on the mortgage loans in loan group 2. However, if the Class B Certificates are no longer outstanding, then the Class 2A, Class 2A-1B and Class 2X-PPP Certificates and the Class CA-1C Group 2 Component will not receive principal in the order of priority described in “Description of the Certificates—Distributions of Principal—Group 2 Senior Principal Distribution Amount” in this prospectus supplement. Instead, each of these classes of certificates will generally receive principal pro rata according to its class principal balance or related component principal balance, as applicable. If the Class B Certificates are outstanding, the Class 2X-PPP Certificates will not receive any distributions of principal until

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the principal balances of the Class 2A and Class 2A-1B Certificates and Class CA-1C Group 2 Component have each been reduced to zero.

Class B Certificates. On each distribution date, the Class B-1, Class B-2, Class B-3, Class B-4, Class B-5, Class B-6, Class B-7, Class B-8, Class B-9, Class B-10, Class B-11, Class B-12, Class B-13 and Class B-14 Certificates will be entitled to receive a portion of the scheduled principal received or advanced on the mortgage loans in loan groups 1 and 2, pro rata, according to their respective class principal balances. Unless credit enhancement to the related senior certificates has reached a specified level and the delinquencies and losses on the mortgage loans do not exceed specified limits, the Class B Certificates generally will receive a portion of the principal prepayments on the mortgage loans only on and after the tenth anniversary of the first distribution date. However, under certain conditions described in this prospectus supplement under “Description of the Certificates—Priority of Distributions,” the amount of principal prepayments otherwise distributable to some classes of Class B Certificates (as defined in “Description of the Certificates—General” in this prospectus supplement) will instead be paid to other classes of these certificates with a higher priority.

Priority of Principal Distributions. Each class of certificates entitled to principal receives its principal entitlements in the order described in “Description of the Certificates—Priority of Distributions” in this prospectus supplement. It is possible that, on any given distribution date, there will be insufficient payments from the mortgage loans to make the principal distributions described in this prospectus supplement. As a result, some certificates, most likely the subordinate certificates, may not receive the full amount of principal distributions to which they are entitled.

The Class 1X and Class 2X-PPP Certificates will not receive any distributions of principal in respect of their interest-only components.

For a more detailed description of how distributions of principal will be allocated among the various classes of certificates, see “Description of the Certificates—Distributions of Principal” in this prospectus supplement.

Cross-Collateralization of Loan Group 1 and Loan Group 2

In certain limited circumstances, principal and interest collected from either of loan group 1 or loan group 2 may be used to pay principal or interest, or both, to the senior certificates unrelated to that loan group. See “Description of the Certificates—Cross-Collateralization” in this prospectus supplement.

The Class R Certificates

The Class R Certificates will receive $100 of principal on the first distribution date, as well as one month's interest on that amount. These certificates are not expected to receive any material distributions on any other distribution date. See “Description of the Certificates—The Class R Certificates” in this prospectus supplement. However, holders of the Class R Certificates may have tax liabilities that substantially exceed any distributions on those certificates. See “Yield and Prepayment Considerations—Additional Yield Considerations Applicable Solely to the Class R Certificates” and “Material Federal Income Tax Consequences—Special Tax Considerations Applicable to the Residual Certificates” in this prospectus supplement.

CREDIT ENHANCEMENTS

Subordination. The senior certificates will receive all distributions of interest and principal that they are entitled to receive on each distribution date before the subordinate certificates receive any distributions on that distribution date. This provides credit enhancement to the senior certificates. In a similar fashion, each class of subordinate certificates will provide credit enhancement to all other subordinate certificates with lower numerical class designations.

Shifting of Interests. The senior certificates generally will receive their pro rata share of scheduled principal payments received on the mortgage loans in the related loan group on each distribution date. In addition, unless credit enhancement to the senior certificates has reached a specified level and the delinquencies and losses on the mortgage loans in the related loan group do not exceed specified limits, the senior certificates in the aggregate will receive 100% of all principal prepayments received on the

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mortgage loans in the related loan group, net of any portion thereof applied to reduce negative amortization, until the tenth anniversary of the first distribution date. During the next four years the senior certificates in the aggregate will generally receive a disproportionately large, but decreasing, share of principal prepayments on the mortgage loans in the related loan group. This will result in a quicker return of principal to the senior certificates and increases the likelihood that holders of the senior certificates will be paid the full amount of principal to which they are entitled.

For a more detailed description of how principal prepayments are allocated among the senior certificates and the subordinate certificates, see “Description of the Certificates—Principal Prepayments” in this prospectus supplement.

ALLOCATION OF LOSSES

Realized Losses. A loss is realized on a mortgage loan when the servicer determines that it has received all amounts it expects to recover for that mortgage loan and the amounts are less than the outstanding principal balance of the mortgage loan and its accrued and unpaid interest. Losses will be allocated to the certificates by deducting the losses from the principal balance of the certificates without making any payments to the certificateholders. The amount of losses will be allocated to the most junior class of subordinate certificates related to the loan group that suffered those losses then outstanding. Losses will be allocated to the senior certificates other than the Class R Certificates only after the principal balances of all of the subordinate certificates have been reduced to zero. After the principal balances of all of the subordinate certificates have been reduced to zero, (i) any loss with respect to a mortgage loan in loan group 1 will be allocated (a) first, to the Class CA-1C Certificates, to its Class CA-1C Group 1 Component, until such component principal balance has been reduced to zero; (b) second, to the Class 1A-1B Certificates, until its class principal balance has been reduced to zero; and (c) third, to the Class 1A and Class 1X Certificates, pro rata according to class principal balance, until their respective class principal balances have each been reduced to zero and (ii) any loss with respect to a mortgage loan in loan group 2 will be allocated (a) first, to the Class CA-1C Certificates, to its Class CA-1C Group 2 Component, until such component principal balance has been reduced to zero; (b) second, to the Class 2A-1B Certificates, until its class principal balance has been reduced to zero; and (c) third, to the Class 2A and Class 2X-PPP Certificates, pro rata according to class principal balance, until their respective class principal balances have each been reduced to zero.

OPTIONAL TERMINATION

When the aggregate principal balance of the mortgage loans owned by the Trust has been reduced to less than 10% of that balance as of the Cut-Off Date, the servicer may purchase all of the mortgage loans owned by the Trust, which will result in the termination of the Trust. See “Description of the Certificates—Optional Termination of the Trust” in this prospectus supplement.

YIELD CONSIDERATIONS

The yield to maturity on each class of certificates will depend upon, among other things:

the price at which the certificates are purchased;
 
the amount payable to that class as interest, as applicable;
 
the amount of net negative amortization;
 
the rate of prepayments (including liquidations) on the related mortgage loans; and
 
whether the optional termination of the Trust occurs.

The Class 1X and Class 2X-PPP Certificates, which generally receive only distributions of interest (except for amounts added to their class principal balance as a result of the allocation of Net Negative Amortization, which is then distributed to those Class X Certificates as principal), will be especially sensitive to the rate of prepayments on the related mortgage loans. For a discussion of special yield considerations applicable to these certificates, see “Risk Factors” and “Yield and Prepayment Considerations—Yield Considerations with Respect to the Class X Certificates” in this prospectus supplement.

See “Yield and Prepayment Considerations” in this prospectus supplement.

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BOOK-ENTRY REGISTRATION

In general, the offered certificates, other than the Class R Certificates, will be available only in book-entry form through the facilities of The Depository Trust Company, Euroclear and Clearstream. See “Description of the Securities—Form of Securities” in the accompanying prospectus.

DENOMINATIONS

The offered certificates, other than the Class X and Class R Certificates, are offered in minimum denominations of $25,000 each and multiples of $1 in excess of $25,000.

The Class X Certificates are offered in minimum denominations of $100,000 initial class notional amount each and multiples of $1 in excess of $100,000.

The Class R Certificates will have an initial class principal balance of $100 and will be offered in a single certificate that represents a 99.99% interest in its class.

LEGAL INVESTMENT

As of the date of their issuance, all of the offered certificates, other than the Class B-6, Class B-7, Class B-8, Class B-9, Class B-10 and Class B-11 Certificates, will be “mortgage related securities” for purposes of the Secondary Mortgage Market Enhancement Act of 1984. See “Certain Legal Investment Aspects” in this prospectus supplement for important information concerning possible restrictions on ownership of the offered certificates by regulated institutions. You should consult your own legal advisors in determining whether and to what extent the offered certificates constitute legal investments for you.

ERISA CONSIDERATIONS

Subject to important considerations described under “ERISA Considerations” in this prospectus supplement and in the accompanying prospectus, the offered certificates, other than the Class 2X-PPP and Class R Certificates, will be eligible for purchase by persons investing assets of employee benefit plans or individual retirement accounts. See “ERISA Considerations” in this prospectus supplement and in the accompanying prospectus.

FEDERAL INCOME TAX CONSEQUENCES

For federal income tax purposes, the servicer will cause three REMIC elections to be made with respect to the Trust. The certificates, other than the Class R Certificates, will represent ownership of REMIC regular interests, and will generally be treated as representing ownership of debt for federal income tax purposes. You will be required to include in income all interest and original issue discount on these certificates in accordance with the accrual method of accounting regardless of your usual methods of accounting. In addition, the Class 2X-PPP Certificates will also represent a right to receive certain prepayment penalties paid with respect to certain mortgage loans in loan group 2. For federal income tax purposes, the Class R Certificates will represent ownership of the REMIC residual interest. The portions of the Class 2X-PPP Certificates that represent a right to receive certain prepayment penalties will represent stripped interests in the mortgage loans to which they relate and will not represent an interest in any REMIC.

For further information regarding the federal income tax consequences of investing in the offered certificates, including important information regarding the tax treatment of the Class R Certificates, see “Material Federal Income Tax Consequences” in this prospectus supplement and in the accompanying prospectus.

RATINGS

It is a condition to the issuance of the offered certificates that they receive the following ratings from Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., and Moody's Investors Service, Inc.:

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    Rating Agency

Class   S&P   Moody's

1A                         AAA                           Aaa  

1A-1B

                        AAA                           Aaa  

2A

                        AAA                           Aaa  

2A-1B

                        AAA                           Aaa  

CA-1C

                        AAA                           Aaa  

1X

                        AAA                           Aaa  

2X-PPP

                        AAA                           Aaa  

B-1

                        AA+                           Aa1  

B-2

                        AA                           Aa1  

B-3

                        AA–                           Aa1  

B-4

                        A+                           Aa2  

B-5

                        A                           Aa3  

B-6

                        A–                           A1  

B-7

                        BBB+                           A1  

B-8

                        BBB                           A2  

B-9

                        BBB–                           A3  

B-10

                        BB+                           Baa2  

B-11

                        BB                           Baa3  

R

                        AAA                           Aaa  

The ratings on the offered certificates address the likelihood of the receipt by holders of the offered certificates of all distributions on the underlying mortgage loans to which they are entitled. They do not address the likely actual rate of prepayments. The rate of prepayments, if different than originally anticipated, could adversely affect the yield realized by holders of the offered certificates or cause the holders of the Class X Certificates to fail to recover their initial investment. The ratings assigned to the Class 2X-PPP Certificates do not address any assessment of the likelihood or frequency of prepayments on the related mortgage loans or the likelihood of receipt of prepayment penalty payments.

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RISK FACTORS

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

      The offered certificates are complex securities and it is important that you possess, either alone or together with an investment advisor, the expertise necessary to evaluate the information contained in this prospectus supplement and the accompanying prospectus in the context of your financial situation.

There is No Guarantee That You Will Receive Principal Payments on Your Certificates at any Specific Rate or on any Specific Dates   As the mortgagors make payments of interest and principal on their mortgage loans, you will receive payments. Because the mortgagors are free to make those payments faster than scheduled, you may receive distributions faster than you expected. There is no guarantee that you will receive principal payments on your certificates at any specific rate or on any specific dates.
     
The Yield on Your Certificates is Directly Related to the Prepayment Rate on the Related Mortgage Loans   The yield to maturity on your certificates is directly related to the rate at which the mortgagors pay principal on the related mortgage loans. Principal payments on the mortgage loans may be in the following forms:
     
     scheduled principal payments; and
     
     principal prepayments, which consist of:
           
        prepayments in full on a mortgage loan;
           
        partial prepayments on a mortgage loan; and
           
        liquidation principal, which is the principal recovered after foreclosing on or otherwise liquidating a defaulted mortgage loan.
     

  Each mortgage loan owned by the Trust is an adjustable-rate mortgage loan with an initial fixed-rate period. In general, during the initial fixed-rate period of one or three months, if prevailing mortgage interest rates decline significantly below the mortgage interest rates on the mortgage loans, the prepayment rate may increase. In addition, even after the initial fixed-rate period, if prevailing mortgage interest rates fall significantly, adjustable-rate mortgage loans could be subject to higher prepayment rates than if prevailing mortgage interest rates remain constant because the availability of fixed-rate mortgage loans at competitive interest rates may encourage mortgagors to refinance their mortgage loans to “lock in” lower fixed interest rates. Penalties for early prepayment may also affect the prepayment rate, as they may discourage mortgagors from prepaying their mortgage loans during the period such prepayment penalties are in effect, even in a declining interest rate environment. See “Description of the Mortgage Pool” in this prospectus supplement for a description of prepayment penalties imposed on the mortgage loans. General economic conditions and homeowner mobility will also affect the prepayment rate. See “Yield and Prepayment Considerations” in this prospectus supplement and “Yield and Maturity Considerations” in the accompanying prospectus. The prepayment rate may affect the yield on all of the offered certificates. However, if you have purchased a Class 1X or Class 2X-PPP Certificate, the prepayment rate will be especially important to you.

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  From time to time, the servicer may implement programs to solicit mortgagors of qualifying mortgage loans that it services for refinance, including mortgage loans underlying the certificates. While those programs will not specifically target the mortgage loans underlying the certificates for refinance, they may have the effect of accelerating the prepayment rate of those mortgage loans, which would adversely affect the yield on all classes of certificates purchased at a premium, particularly the Class 1X and Class 2X-PPP Certificates.
     
An Optional Termination of the Trust May Adversely Affect the Offered Certificates   When the aggregate principal balance of the mortgage loans owned by the Trust has been reduced to less than 10% of that balance as of the Cut-Off Date, the servicer may purchase all of the mortgage loans owned by the Trust, which will terminate the Trust. See “Description of the Certificates—Optional Termination of the Trust” in this prospectus supplement. If this happens, the purchase price paid by the servicer will be passed through to the certificateholders. This would have the same effect as if all of the remaining mortgagors made prepayments in full on the last day of the month. Since the Class 1X and Class 2X-PPP Certificates generally receive only distributions of interest (except for interest added to their class principal balances as a result of the allocation of any Net Negative Amortization, which is then distributed to the Class 1X or Class 2X-PPP Certificates as principal, and with respect to the Class 2X-PPP Certificates, certain prepayment penalties collected on the mortgage loans in loan group 2), an optional termination of the Trust would adversely affect holders of those certificates. In addition, any other class of certificates purchased at a premium could be adversely affected by an optional termination of the Trust.
     
Rapid Prepayments Will Reduce the Yield on the Class 1X Certificates   The Class 1X Certificates generally receive only distributions of interest (except for amounts added to their class principal balance as a result of the allocation of Net Negative Amortization, which is then distributed to the Class 1X Certificates as principal). The yield to maturity on the Class 1X Certificates will be extremely sensitive to the level of prepayments on the mortgage loans in loan group 1. The faster that the mortgage loans in loan group 1 prepay, the less interest the Class 1X Certificates will receive.
     

  The yield to maturity on the Class 1X Certificates will be especially sensitive to the level of prepayments on the mortgage loans in loan group 1 with higher interest rates. For each distribution date, the amount of interest available for distribution to the Class 1X Certificates is calculated by reference to the Loan Group 1 Weighted Average Pass-Through Rate. Consequently, the higher the interest rates on the mortgage loans in loan group 1 that prepay, the less interest will be available for distribution to the Class 1X Certificates. Under certain prepayment scenarios, the Class 1X Certificates may not be entitled to receive any interest. If mortgage interest rates decline, the higher interest rate mortgage loans in loan group 1 are more likely to be refinanced, and, therefore, prepayments in full on these mortgage loans are more likely to occur.

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  You should fully consider the risks associated with an investment in the Class 1X Certificates. If the mortgage loans in loan group 1 prepay faster than expected, if the rate of liquidations on the mortgage loans in loan group 1 is greater than expected or if the Trust is terminated earlier than expected, you may not fully recover your initial investment. See “Yield and Prepayment Considerations—Yield Considerations with Respect to the Class X Certificates” in this prospectus supplement for a table showing expected yields at different prepayment rates.
     
Rapid Prepayments Will Reduce the Yield on the Class 2X-PPP Certificates   The Class 2X-PPP Certificates generally receive only distributions of interest (except for amounts added to their class principal balance as a result of the allocation of Net Negative Amortization, which is then distributed to the Class 2X-PPP Certificates as principal, and certain prepayment penalties collected on the mortgage loans in loan group 2). The yield to maturity on the Class 2X-PPP Certificates will be extremely sensitive to the level of prepayments on the mortgage loans in loan group 2. The faster that the mortgage loans in loan group 2 prepay, the less interest the Class 2X-PPP Certificates will receive.
     

  The yield to maturity on the Class 2X-PPP Certificates will be especially sensitive to the level of prepayments on the mortgage loans in loan group 2 with higher interest rates. For each distribution date, the amount of interest available for distribution to the Class 2X-PPP Certificates is calculated by reference to the Loan Group 2 Weighted Average Pass-Through Rate. Consequently, the higher the interest rates on the mortgage loans in loan group 2 that prepay, the less interest will be available for distribution to the Class 2X-PPP Certificates. Under certain prepayment scenarios, the Class 2X-PPP Certificates may not be entitled to receive any interest. If mortgage interest rates decline, the higher interest rate mortgage loans in loan group 2 are more likely to be refinanced, and, therefore, prepayments in full on these mortgage loans are more likely to occur.
     

  You should fully consider the risks associated with an investment in the Class 2X-PPP Certificates. If the mortgage loans in loan group 2 prepay faster than expected, if the rate of liquidations on the mortgage loans in loan group 2 is greater than expected or if the Trust is terminated earlier than expected, you may not fully recover your initial investment. See “Yield and Prepayment Considerations—Yield Considerations with Respect to the Class X Certificates” in this prospectus supplement for a table showing expected yields at different prepayment rates.

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The Class 2A and Class 2A-1B Certificates Will be Sensitive to Changes in the One-Year MTA Index   The Class 2A and Class 2A-1B Certificates will receive interest at a certificate interest rate equal to the lesser of (x) the Loan Group 2 Weighted Average Pass-Through Rate and (y) the One-Year MTA Index (as described in “Description of the Mortgage Pool—The Indexes” in this prospectus supplement) plus the related margin. Accordingly, the Class 2A and Class 2A-1B Certificates will be sensitive to changes in the index value, unless the certificate interest rate for such certificates is limited to the Loan Group 2 Weighted Average Pass-Through Rate. No prediction can be made as to future levels of the One-Year MTA Index.
     

  For more information, see “Description of the Mortgage Pool—The Indexes” and “Description of the Certificates—Distributions of Interest” in this prospectus supplement.
     
The Class 2A and the Class 2A-1B Certificates May Receive Interest at a Certificate Interest Rate Lower than the One-Year MTA Index Plus the Related Margin   The Class 2A and Class 2A-1B Certificates will receive interest at a certificate interest rate equal to the lesser of (x) the Loan Group 2 Weighted Average Pass-Through Rate and (y) the One-Year MTA Index (as described in “Description of the Mortgage Pool—The Indexes” in this prospectus supplement) plus the related margin. Accordingly, the prepayment of mortgage loans in loan group 2 with relatively higher pass-through rates may cause the Loan Group 2 Weighted Average Pass-Through Rate to be lower than the One-Year MTA Index plus the related margin, in which case the certificate interest rate for these certificates will be limited to the Loan Group 2 Weighted Average Pass-Through Rate. Therefore, the holders of the Class 2A and Class 2A-1B Certificates will be subject to the risk that interest distributable to those certificates will equal the Loan Group 2 Weighted Average Pass-Through Rate.
     

  If on the initial distribution date the certificate interest rate for the Class 2A and Class 2A-1B Certificates is limited to the Loan Group 2 Weighted Average Pass-Through Rate, a carryover shortfall amount, equal to the excess, if any, of (i) the amount of interest that would have accrued on such class at a certificate interest rate equal to the One-Year MTA Index plus the related margin, over (ii) the actual amount of interest accrued on such class for such distribution date, will be payable to such certificates, to the extent of available funds on the initial distribution date.
     

  However, any such carryover shortfall amount will be paid to the Class 2A and Class 2A-1B Certificates on the initial distribution date only, and only to the extent that there are amounts on deposit to pay such shortfalls, funded from interest accrued on and otherwise distributable to the Class 1X and Class 2X-PPP Certificates. Furthermore, on the initial distribution date the amounts available to pay such carryover shortfall amount from interest accrued on and otherwise distributable to the Class 1X and Class 2X-PPP Certificates will be paid first to the Class 1A, Class 1A-1B, Class 2A and Class 2A-1B Certificates, pro rata, and then sequentially to the Class B Certificates, in order of seniority, to the extent remaining after such interest has been applied to pay carryover shortfall amounts to the Class 1A, Class 1A-1B, Class 2A and Class 2A-1B Certificates. Except to the extent that any carryover shortfall amounts are paid to the Class 2A and Class 2A-1B Certificates from amounts otherwise distributable to the Class 1X and Class 2X-PPP Certificates, the holders of the Class 2A and Class 2A-1B Certificates will be subject to the risk that interest distributable to those classes will equal the Loan Group 2 Weighted Average Pass-Through Rate. See “Description of the Certificates—Distributions of Interest” in this prospectus supplement.

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Changes to the Certificate Margins After the Clean-Up Call Option Date Will Reduce the Class 1X and Class 2X-PPP Certificate Interest Distributions   The certificate margins for the Class 1A, Class 1A-1B, CA-1C and Class B Certificates will increase after the Clean-Up Call Option Date to the amounts specified in the notes to the table on page S-6 of this prospectus supplement, which will result in a corresponding decrease in the amount of interest available for distribution to the Class 1X and Class 2X-PPP Certificates. The Clean-Up Call Option Date is the date on which the aggregate principal balance of the mortgage loans has been reduced to less than 10% of that balance as of the Cut-Off Date. Consequently, the faster that the mortgage loans prepay, the sooner this change in the amount of interest available for distribution to the Class 1X and Class 2X-PPP Certificates will occur.
     
The Class 1A, Class 1A-1B, Class CA-1C and Class B Certificates Will be Sensitive to Changes in LIBOR   The Class 1A and Class 1A-1B Certificates will receive interest at a certificate interest rate equal to the least of (x) the Adjusted Loan Group 1 Weighted Average Pass-Through Rate, (y) LIBOR plus the related margin and (z) the Maximum Loan Group 1 Rate. Accordingly, the Class 1A and Class 1A-1B Certificates will be sensitive to changes in LIBOR, unless the certificate interest rate for such certificates is limited to the Adjusted Loan Group 1 Weighted Average Pass-Through Rate. No prediction can be made as to future levels of LIBOR.
     

  Each component of the Class CA-1C Certificates will receive interest at a certificate interest rate equal to the least of (x) the Adjusted Loan Group 1 Weighted Average Pass-Through Rate or the Adjusted Loan Group 2 Weighted Average Pass-Through Rate, as applicable (the “Applicable Class CA-1C Net WAC Cap”), (y) LIBOR plus the related margin and (z) the maximum rate described in clause (z) of the applicable paragraph of note (6) in the table on page S-6 of this prospectus supplement (the “Applicable Maximum Class CA-1C Rate”). Accordingly, each component of the Class CA-1C Certificates will be sensitive to changes in LIBOR, unless the certificate interest rate for such component is limited to the Applicable Class CA-1C Net WAC Cap. No prediction can be made as to future levels of LIBOR.

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  The Class B Certificates will receive interest at a certificate interest rate equal to the least of (x) the Class B Weighted Average Pass-Through Rate, (y) LIBOR plus the related margin and (z) the Maximum Class B Rate. Accordingly, the Class B Certificates will be sensitive to changes in LIBOR, unless the certificate interest rate for such certificates is limited to the Class B Weighted Average Pass-Through Rate. No prediction can be made as to future levels of LIBOR.
     

  See “Description of the Certificates—Distributions of Interest” and “—Calculation of LIBOR” in this prospectus supplement.
     
The Class 1A, Class 1A-1B, Class CA-1C and Class B Certificates May Receive Interest at a Certificate Interest Rate Lower than LIBOR Plus the Related Margin   The Class 1A and Class 1A-1B Certificates will receive interest at a certificate interest rate equal to the least of (x) the Adjusted Loan Group 1 Weighted Average Pass-Through Rate, (y) LIBOR plus the related margin and (z) the Maximum Loan Group 1 Rate. For any class of these certificates, the prepayment of mortgage loans in loan group 1 with relatively higher pass-through rates may cause the Adjusted Loan Group 1 Weighted Average Pass-Through Rate to be lower than LIBOR plus the related margin, in which case the certificate interest rate for these certificates will be limited to the lesser of (i) the Adjusted Loan Group 1 Weighted Average Pass-Through Rate and (ii) the Maximum Loan Group 1 Rate.
     

  If on any distribution date the certificate interest rate for the Class 1A and Class 1A-1B Certificates is limited to the Adjusted Loan Group 1 Weighted Average Pass-Through Rate, a carryover shortfall amount, in the amount described under “Description of the Certificates—Distributions of Interest—Carryover Shortfall Amounts” in this prospectus supplement, will be payable to such certificates, to the extent of available funds on that distribution date or future distribution dates.
     

  Each component of the Class CA-1C Certificates will receive interest at a certificate interest rate equal to the least of (x) the Applicable Class CA-1C Net WAC Cap, (y) LIBOR plus the related margin and (z) the Applicable Maximum Class CA-1C Rate. Accordingly, the prepayment of mortgage loans with relatively higher pass-through rates may cause the Applicable Class CA-1C Net WAC Cap to be lower than LIBOR plus the related margin, in which case the certificate interest rate for the related component of the Class CA-1C Certificates will be limited to the lesser of (i) the Applicable Class CA-1C Net WAC Cap and (ii) the Applicable Maximum Class CA-1C Rate.

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  If on any distribution date the certificate interest rate for one or both components of the Class CA-1C Certificates is limited to the Applicable Class CA-1C Net WAC Cap, a carryover shortfall amount, in the amount described under “Description of the Certificates—Distributions of Interest—Carryover Shortfall Amounts” in this prospectus supplement, will be payable to such certificates, to the extent of available funds on that distribution date or future distribution dates.
     

  The Class B Certificates will receive interest at a certificate interest rate equal to the least of (x) the Class B Weighted Average Pass-Through Rate, (y) LIBOR plus the related margin and (z) the Maximum Class B Rate. For any class of these certificates, the prepayment of mortgage loans with relatively higher pass-through rates may cause the Class B Weighted Average Pass-Through Rate to be lower than LIBOR plus the related margin, in which case the certificate interest rate for these certificates will be limited to the lesser of (i) the Class B Weighted Average Pass-Through Rate and (ii) the Maximum Class B Rate.
     

  If on any distribution date the certificate interest rate for the Class B Certificates is limited to the Class B Weighted Average Pass-Through Rate, a carryover shortfall amount, in the amount described under “Description of the Certificates—Distributions of Interest—Carryover Shortfall Amounts” in this prospectus supplement, will be payable to such certificates, to the extent of available funds on that distribution date or future distribution dates.
     

  However, any such carryover shortfall amounts will be paid on any distribution date only to the extent that there are amounts on deposit to pay such shortfalls, funded from interest accrued on and otherwise distributable to the Class 1X and Class 2X-PPP Certificates. Furthermore, on any distribution date the amounts available to pay such carryover shortfall amounts from interest accrued on and otherwise distributable to the Class 1X and Class 2X-PPP Certificates will be paid first to the Class 1A, Class 1A-1B, Class 2A, Class 2A-1B and Class CA-1C Certificates, as applicable, pro rata, and then sequentially to the Class B Certificates, in order of seniority, to the extent remaining after such interest has been applied to pay carryover shortfall amounts to the Class 1A, Class 1A-1B, Class 2A, Class 2A-1B and Class CA-1C Certificates. Accordingly, these carryover shortfall amounts may remain unpaid on the date of any optional termination of the Trust or the final distribution date.
     

  Except to the extent that any carryover shortfall amounts are paid to (a) the Class CA-1C Certificates from amounts otherwise distributable to the Class 1X and Class 2X-PPP Certificates, the holders of the Class CA-1C Certificates will be subject to the risk that interest distributable to those certificates in respect of each component will equal the lesser of (i) the Applicable Class CA-1C Net WAC Cap and (ii) the Applicable Maximum Class CA-1C Rate, (b) the Class 1A and Class 1A-1B Certificates from amounts otherwise distributable to the Class 1X and Class 2X-PPP Certificates, the holders of the Class 1A and Class 1A-1B Certificates will be subject to the risk that interest distributable to those classes will equal the lesser of (i) the Adjusted Loan Group 1 Weighted Average Pass-Through Rate and (ii) the Maximum Loan Group 1 Rate and (c) the Class B Certificates from amounts otherwise distributable to the Class 1X and Class 2X-PPP Certificates, the holders of the Class B Certificates will be subject to the risk that interest distributable to those classes will equal the lesser of (i) the Class B Weighted Average Pass-Through Rate and (ii) the Maximum Class B Rate. See “Description of the Certificates—Distributions of Interest” in this prospectus supplement.

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Carryover Shortfall Amounts, if any, due to the Class 1A and Class 1A-1B Certificates may be satisfied first, from interest otherwise payable to the Class 1X Certificates and second, from interest otherwise payable to the Class 2X-PPP Certificates   Any carryover shortfall amounts will be paid on any distribution date only to the extent that there are amounts on deposit to pay such shortfalls, funded from interest accrued on and otherwise distributable to the Class 1X and Class 2X-PPP Certificates. For any distribution date, interest otherwise distributable to the Class 1X and Class 2X-PPP Certificates will be reduced in the following priority, (i) first, pro rata, by the aggregate amount paid as carryover shortfall amounts to the Class 2A and Class 2A-1B Certificates (in the case of the initial distribution date only) and the Class CA-1C Group 1 and Group 2 Components, (ii) second, such interest otherwise distributable to the Class 1X Certificates and remaining after the reduction pursuant to clause (i) of this paragraph will be further reduced by the aggregate amount paid as carryover shortfall amounts to the Class 1A and Class 1A-1B Certificates and (iii) third, such interest otherwise distributable to the Class 2X-PPP Certificates and remaining after the reduction pursuant to clause(i) of this paragraph will be further reduced by the portion of the aggregate amount paid as carryover shortfall amounts to the Class 1A and Class 1A-1B Certificates that has not been allocated in reduction of the interest otherwise distributable to the Class 1X Certificates pursuant to clause (ii) of this paragraph.
     

  See “Description of the Certificates—Distributions of Interest—Carryover Shortfall Amounts” in this prospectus supplement for more information.
     
Certificates Bought at Premiums and Discounts May Receive a Lower Yield Than Expected   If you purchase a certificate at a discount from its original principal balance and the rate of principal payments is slower than you expect, your yield may be lower than you anticipate. If you purchase a certificate at a premium over its original principal balance and the rate of principal payments is faster than you expect, your yield may be lower than you anticipate.

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Losses on the Mortgage Loans Will Reduce the Yield on the Certificates   The yield to maturity of the Class B-1, Class B-2, Class B-3, Class B-4, Class B-5, Class B-6, Class B-7, Class B-8, Class B-9, Class B-10 and Class B-11 Certificates will be sensitive to losses on the mortgage loans that occur after the aggregate principal balance of the Class B-12, Class B-13 and Class B-14 Certificates has been reduced to zero. Losses on the mortgage loans that occur after that time will be allocated exclusively to the Class B-1, Class B-2, Class B-3, Class B-4, Class B-5, Class B-6, Class B-7, Class B-8, Class B-8, Class B-9, Class B-10 and Class B-11 Certificates in reverse numerical order until the aggregate principal balance of those certificates has been reduced to zero.
     

  In addition, if the aggregate principal balance of all the Class B Certificates has been reduced to zero, (i) any loss with respect to a mortgage loan in loan group 1 will be allocated (a) first, to the Class CA-1C Certificates, to its Class CA-1C Group 1 Component, until such component principal balance has been reduced to zero; (b) second, to the Class 1A-1B Certificates, until its class principal balance has been reduced to zero; and (c) third, to the Class 1A and Class 1X Certificates, pro rata according to class principal balance, until their respective class principal balances have each been reduced to zero and (ii) any loss with respect to a mortgage loan in loan group 2 will be allocated (a) first, to the Class CA-1C Certificates, to its Class CA-1C Group 2 Component, until such component principal balance has been reduced to zero; (b) second, to the Class 2A-1B Certificates, until its class principal balance has been reduced to zero; and (c) third, to the Class 2A and Class 2X-PPP Certificates, pro rata according to class principal balance, until their respective class principal balances have each been reduced to zero.
     

  See “Description of the Certificates—Subordination and Allocation of Losses” in this prospectus supplement.
     
Losses on the Mortgage Loans in either Loan Group May Reduce the Yield on Senior Certificates Unrelated to That Loan Group   Because the subordinate certificates represent interests in the mortgage loans in both loan groups, the class principal balances of the subordinate certificates could be reduced to zero as a result of realized losses on the mortgage loans in either loan group. Therefore, the allocation of realized losses on the mortgage loans in either of loan group to the subordinate certificates will reduce the subordination provided by the subordinate certificates to all of the senior certificates, including the senior certificates related to either of these loan groups that did not suffer any losses. This will increase the likelihood that future realized losses may be allocated to the senior certificates related to a loan group that did not suffer those previous losses.

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  Similarly, if the subordinate certificates are no longer outstanding, because losses on the mortgage loans are allocated to the Class CA-1C Certificates, the class principal balance of the Class CA-1C Certificates could be reduced to zero as a result of a disproportionate amount of losses on the mortgage loans in either loan group. Therefore, the allocation to the Class CA-1C Certificates of realized losses on the mortgage loans in loan group 1 will increase the likelihood that future realized losses in loan group 2 may be allocated to the senior certificates (or components thereof, as applicable) relating to loan group 2, and the allocation of the Class CA-1C Certificates of realized losses on the mortgage loans in loan group 2 will increase the likelihood that future realized losses in loan groups 1 may be allocated to the senior certificates (or components thereof, as applicable) relating to loan groups 1.
     

  See “Description of the Certificates—Subordination and Allocation of Losses” in this prospectus supplement.
     
The Lack of Secondary Markets May Make it Difficult for You to Resell Your Certificates   The offered certificates will not be listed on any securities exchange. A secondary market for the offered certificates may not develop. If a secondary market does develop, it might not continue or it might not be sufficiently liquid to allow you to resell any of your certificates. You should not expect to be able to obtain a published quotation to sell any of the offered certificates.
     
The Lack of Physical Certificates for Some Certificates May Cause Delays in Payment   You will not have a physical certificate if you own a Class A, Class X, Class B-1, Class B-2, Class B-3, Class B-4, Class B-5, Class B-6, Class B-7, Class B-8, Class B-9, Class B-10 or Class B-11 Certificate. As a result, you will be able to transfer your certificates only through The Depository Trust Company, participating organizations, including Euroclear and Clearstream and indirect participants. In addition, you may experience some delay in receiving distributions on these certificates because the trustee will not send distributions directly to you. Instead, the trustee will send all distributions to The Depository Trust Company, which will then credit those distributions to the participating organizations. Those organizations will in turn credit accounts you have either directly with them or indirectly with them through indirect participants.
     
The Return on Your Certificates Could be Reduced due to the Application of the Servicemembers Civil Relief Act or any Comparable State Legislation   Following the terrorist attacks in the United States on September 11, 2001, the United States has increased its active military operations (including, most recently, significant military actions in Iraq) and has placed a substantial number of military reservists and members of the National Guard on active duty status. It is possible that the number of reservists and members of the National Guard placed on active duty status in the near future may increase. Calling reservists, members of the National Guard and civilians to active military duty may adversely affect the performance of your certificates. Under the Servicemembers Civil Relief Act, as amended (the “Relief Act”), formerly known as the Soldiers' and Sailors' Civil Relief Act of 1940, persons in active military service are provided relief from the performance of some payment obligations. The relief includes a 6.000% per annum interest rate cap on each mortgage loan, provided that the mortgage loan was obtained before the commencement of active military service. In addition, all civil court actions, such as bankruptcy and foreclosure proceedings, are delayed. Furthermore, the servicer may be required to waive all or part of any prepayment penalty that would otherwise be due during the time that any mortgage loan is subject to the Relief Act.

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  State legislation may provide similar relief for military personnel placed on active duty status. For the purpose of this prospectus supplement, references to the Relief Act include any such comparable state legislation.
     

  The application of the interest rate cap to any mortgage loan underlying the related certificates would result in certificateholders receiving less interest than they would otherwise be entitled to. The interest shortfall on any distribution date arising out of each of these mortgage loans would be equal to one month of interest on the principal balance of the mortgage loan at a rate equal to the difference between the interest rate payable by the borrower under the terms of the applicable mortgage note and 6.000%. The interest shortfall would be deducted from the interest payable to each class of related certificates, pro rata, in accordance with interest accrued on each class of certificates (or component thereof, as applicable) related to that loan group for the applicable distribution date.
     

  The effect of a delay in foreclosure proceedings with respect to any mortgage loan underlying the related certificates would be to cause a loss, or increase the severity of any loss that would have otherwise occurred, upon the final liquidation of the mortgage loan. These losses would be applied first to the Class B-14, Class B-13, Class B-12, Class B-11, Class B-10, Class B-9, Class B-8, Class B-7, Class B-6, Class B-5, Class B-4, Class B-3, Class B-2 and Class B-1 Certificates, in that order, and then to the related senior certificates.
     

  Neither the depositor nor the servicer is able to determine how many of the mortgage loans underlying the certificates may be affected by application of the Relief Act in the future.
     
The Balloon Loans Have a Greater Degree of Risk of Default   As of the Cut-Off Date, approximately 2.6% of the mortgage loans in loan group 1 and 7.1% of the mortgage loans in loan group 2 (in each case, by principal balance as of the Cut-Off Date) will not fully amortize over their terms to maturity and, thus, will require principal payments at their stated maturity, which may be substantially greater than the monthly payments otherwise due on such mortgage loans (i.e., balloon payments). All of these mortgage loans amortize over 40 years, but require payment in full 360 months after the origination of such mortgage loans. Mortgage loans with balloon payments involve a greater degree of risk because the ability of a mortgagor to make a balloon payment typically will depend on the mortgagor's ability either to timely refinance the loan or to timely sell the related mortgaged property. The ability of a mortgagor to refinance the loan or sell the related mortgaged property will be affected by a number of factors, including:

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       the level of available mortgage interest rates at the time of refinancing or sale;
       
       the mortgagor's equity in the related mortgaged property;
       
       prevailing general economic conditions; and
       
       the availability of credit for one- to four-family residential properties generally.
     
The Geographic Concentration of the Mortgaged Properties Relating to the Mortgage Loans Increases Your Exposure to Adverse Conditions in California or in Other States With High Concentrations of Mortgaged Properties   The geographic concentration of mortgaged properties can expose the related mortgage loans to a higher incidence of losses due to a greater susceptibility to hazards not covered by standard hazard insurance, such as hurricanes, floods, mudslides and earthquakes, than properties located in other parts of the country. Also, the geographic concentration of mortgaged properties can expose the related mortgage loans to a higher incidence of losses due to economic conditions in states that have higher concentrations of businesses in particular economic segments than the nation as a whole. Consequently, the high concentration of mortgage loans in California or other states may adversely affect losses and prepayments on the mortgage loans which, in turn, would adversely affect the certificates. See Appendix B to this prospectus supplement for a table showing the geographic distribution of the mortgage loans by state.
     
A Loss or Delinquency on a Mortgage Loan May Have a Disproportionate Impact on the Performance of the Mortgage Pool Because the Mortgage Loans Have High Principal Balances   As of the Cut-Off Date, some of the mortgage loans had original principal balances in excess of $1,000,000. You should consider the risk that the loss and delinquency experience on the higher balance mortgage loans may have a disproportionate effect on the mortgage loans as a whole. A loss of the entire principal balance of one of these mortgage loans may result in a substantial realized loss, which may be allocated to the offered certificates. See Appendix B to this prospectus supplement for a table showing the original principal balance ranges of the mortgage loans.
     
Additional Risks Relating to Option ARM Loans   In addition to the risk factors described in this prospectus supplement, you should carefully consider the risk factors described under “Additional Risk Factors Applicable to Negative Amortization Loans” in the accompanying prospectus, as well as the other risk factors in the accompanying prospectus related to your certificates.

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Not All Mortgage Loans Impose Prepayment Penalties, and Those That Do Impose Them for Only a Limited Period of Time   As of the Cut-Off Date, certain of the mortgage loans impose prepayment penalties for certain prepayments of principal. See Appendix B to this prospectus supplement for a table showing prepayment penalty terms of the mortgage loans. Generally, the mortgage loans with prepayment penalties provide for the payment of a penalty in connection with certain voluntary, full or partial prepayments made within a period of time specified in the related mortgage note and generally ranging from six to thirty-six months from the date of origination of such mortgage loan. The amount of the applicable prepayment penalty, to the extent permitted by applicable law, is as provided in the related mortgage note. Such prepayment penalty may discourage mortgagors from prepaying their mortgage loans during the period such prepayment penalties are in effect and, accordingly, thereby affect the rate of prepayment of such mortgage loans even in a declining interest rate environment. See the “Prepayment Penalty Terms of the Group 1 Loans” and “Prepayment Penalty Terms of the Group 2 Loans” tables in Appendix B hereto for information regarding the number of loans, and the related percentage of each loan group, that contain prepayment penalties, broken out for each of the various prepayment penalty terms.
     
Only Penalties on Voluntary Prepayments in Full Will Be Assigned to the Class 2X-PPP Certificateholders   The Class 2X-PPP Certificates will receive distributions of interest and principal as described in this prospectus supplement. In addition, the Class 2X-PPP Certificates are entitled to receive are the Assigned Prepayment Penalties for loan group 2.
     

  The “Assigned Prepayment Penalties” for a loan group and a distribution date will equal the sum of (a) all prepayment penalty payments remitted to the Trust with respect to voluntary full prepayments on those mortgage loans that have prepayment penalties during the Prepayment Penalty Period and (b) any amounts paid by the servicer during the Prepayment Penalty Period pursuant to the pooling agreement if the servicer waives a penalty on a voluntary full prepayment of a mortgage loan other than in accordance with the standards set forth in the pooling agreement, or paid by Washington Mutual Mortgage Securities Corp. during the Prepayment Penalty Period pursuant to the mortgage loan sale agreement if it breaches certain representations and warranties with respect to mortgage loans that require payment of a penalty on voluntary full prepayment.
     

  The holders of the Class 2X-PPP Certificates will not receive any prepayment penalty payments collected by the servicer with respect to voluntary partial prepayments; each such payment will be retained by the servicer as additional servicing compensation. No prepayment penalty payments will be available for distribution to holders of the other classes of certificates.

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  In addition, in the event of a material breach of the representations and warranties made by the depositor or Washington Mutual Mortgage Securities Corp. with respect to the mortgage loans, the breaching party may be required to repurchase the affected mortgage loan from the Trust (or substitute a new mortgage loan for that mortgage loan). The holders of the Class 2X-PPP Certificates will not receive any prepayment penalties collected on a mortgage loan that was repurchased or substituted for, or (in the case of a substitution) collected on the new mortgage loan.
     

  No prepayment penalty payments will be available for distribution to holders of the other classes of certificates.
     
There are Limitations in the Mortgage Loans on the Imposition of Prepayment Penalties; The Servicer May Waive Prepayment Penalties Under Certain Circumstances   Some of the mortgage loans that impose penalties for voluntary full prepayments contain an exception for prepayments made in connection with a bona fide sale of the mortgaged property underlying the mortgage loan during a certain period, and therefore penalties are not imposed on such prepayments and are not available for distribution to the Class 2X-PPP Certificates.
     

  In addition, under certain circumstances set forth in the pooling agreement, the payment of any otherwise applicable penalty for voluntary full prepayment by a mortgagor may be waived by the servicer and, if waived in accordance with the terms of the pooling agreement, the amount of the waived penalty will not be available for distribution to the holders of the Class 2X-PPP Certificates. Circumstances under which the servicer may waive a prepayment penalty include, among other circumstances set forth in the pooling agreement, (i) some cases where the mortgagor sells the mortgaged property and obtains a new mortgage loan originated and serviced by the servicer to purchase another property, provided that the prepayment is made no earlier than one year after origination, (ii) some cases, for mortgage loans with prepayment penalty terms longer than one year, where the mortgagor refinances the mortgage loan with a new mortgage loan originated and serviced by the servicer, provided that 90 days or less remain in the prepayment penalty term or (iii) for prepayments of accrued but unpaid interest that has been added to principal as a result of negative amortization.
     

  Moreover, regardless of the terms of the mortgage note, the servicer will not collect prepayment penalties required to be paid more than three years after the origination of the mortgage loan.

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  Investors should conduct their own analysis of the effect that the payment of penalties for voluntary full prepayment of the related mortgage loans, or decisions by the servicer with respect to waiver thereof, may have on the performance of the Class 2X-PPP certificates. See also “Description of the Mortgage Pool” and “Description of the Certificates—Distributions to the Class 2X-PPP Certificates” in this prospectus supplement for a description of prepayment penalties imposed on the related mortgage loans.

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THE SPONSOR

General

      Washington Mutual Mortgage Securities Corp., the sponsor of the securitization transaction, is a Delaware corporation and a wholly owned subsidiary of Washington Mutual Bank and an indirect wholly-owned subsidiary of Washington Mutual, Inc. At March 31, 2006, Washington Mutual, Inc. and its subsidiaries had assets of $348.7 billion. The sponsor engages in the business of (i) purchasing mortgage loans on a servicing retained and servicing released basis, (ii) selling mortgage loans in whole loan transactions and securitizing mortgage loans through affiliated and unaffiliated depositors, (iii) master servicing mortgage loans, (iv) acting as administrative agent of Washington Mutual Bank and its affiliates with respect to mortgage loans serviced by Washington Mutual Bank and its affiliates and (v) providing securitization services. The sponsor generally acts as master servicer or administrative agent with respect to all mortgage loans securitized by the sponsor.

      Securitization of mortgage loans is an integral part of the sponsor's conduit program. It has engaged in securitizations of first lien single-family residential mortgage loans through WaMu Asset Acceptance Corp., as depositor, since 2005, and has acted as its own depositor from 1979 until 2005.

      The sponsor participated with the underwriter in structuring the securitization transaction.

      The following table shows, for each indicated period, the aggregate principal balance of first lien single-family residential mortgage loans purchased by the sponsor during that period (except mortgage loans purchased in its capacity as depositor from an affiliated sponsor) and the portion of those mortgage loans securitized during that period in securitization transactions for which it or WaMu Asset Acceptance Corp. acted as depositor.

The Sponsor's Purchase and Securitization of Single-Family Residential Mortgage Loans

    Year Ended
December 31, 2004

  Year Ended
December 31, 2005

  Three Months Ended
March 31, 2006

    (Dollar Amounts in Millions)

Aggregate Principal Balance of Mortgage Loans Purchased by Sponsor

     $ 10,803        $ 11,265        $ 5,084  

Aggregate Principal Balance of Mortgage Loans Securitized

     $ 1,045        $ 7,149        $ 4,803  

                       

The Sponsor's Origination Channels

      All of the mortgage loans owned by the Trust have been purchased by the sponsor either from Washington Mutual Bank or from approved mortgage loan sellers. Through the sponsor's conduit program, the sponsor purchases mortgage loans in bulk from approved mortgage loan sellers on both a servicing retained and servicing released basis. In initially approving a mortgage loan seller, the sponsor takes into account the following: annual origination volume, tenure of business and key staff in originating loans, policies and procedures for originating loans including quality control and appraisal review, review audits performed on mortgage loan seller by rating agencies, regulatory agencies and government sponsored entities, the mortgage loan seller's financial statements, errors and omissions insurance coverage and fidelity bond and liability insurance coverage. Approved mortgage loan sellers' financial statements, insurance coverage and new review audits are reviewed on an annual basis. Additionally, the sponsor performs a monthly ongoing performance review of previously purchased mortgage loans for trends in delinquencies, losses and repurchases. The mortgage loan sellers' underwriting guidelines are reviewed for consistency with the sponsor's credit parameters and conformity with the underwriting standards described under “Underwriting of the Mortgage Loans” below and are either approved or approved with exceptions. The mortgage loan sellers represent to the sponsor upon sale that the mortgage loans have been underwritten in accordance with the approved underwriting guidelines.

      The sponsor purchases some mortgage loans from Washington Mutual Bank. Washington Mutual Bank originates mortgage loans through its retail lending division, which is a network of its own banks and mortgage lending offices; through its ConsumerDirect lending division, which originates mortgage loans to

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employees of Washington Mutual Bank and its affiliates, originates mortgage loans through the internet and refinances mortgage loans held in Washington Mutual Bank's mortgage loan portfolio; and through its wholesale lending division, which is a network of independent mortgage loan brokers approved by Washington Mutual Bank. For each mortgage loan originated through Washington Mutual Bank's wholesale lending division, a mortgage loan broker submits a loan application package to Washington Mutual Bank for underwriting and funding, and receives a portion of the loan origination fee charged to the mortgagor at the time the loan is made. For some of the mortgage loans originated under Washington Mutual Bank's correspondent division, the correspondent lenders have delegated underwriting approval. Those correspondent lenders are authorized to underwrite mortgage loans with specified characteristics up to specified loan amounts, and must refer all other mortgage loans to Washington Mutual Bank for underwriting. In the case of mortgage loans underwritten by a correspondent lender, the correspondent lender will represent to Washington Mutual Bank that the mortgage loans have been underwritten in accordance with Washington Mutual Bank's underwriting guidelines. Correspondent lenders without delegated underwriting approval submit loan application packages to Washington Mutual Bank for underwriting and fund each loan only upon approval by Washington Mutual Bank.

STATIC POOL INFORMATION

      On May 15, 2006, the depositor filed with the Securities and Exchange Commission, as (i) Exhibits 99.1, 99.2, 99.3 and 99.4 to a Current Report on Form 8-K, static pool information about prior securitized pools and vintage pools of fixed-rate residential mortgage loans (non-traditional or “alternative A” underwriting standards) of the sponsor and (ii) Exhibits 99.9 and 99.10 to a Current Report on Form 8-K, static pool information about prior securitized pools of Option ARM Loans (non-traditional or “alternative A” underwriting standards) of the sponsor. The static pool information includes (i) information about the original characteristics of each prior securitized pool and vintage pool as of the cut-off date for that pool and (ii) delinquency, loss and prepayment information about each prior securitized pool and vintage pool in quarterly increments from the related cut-off date through March 31, 2006. The static pool information about prior securitized pools and vintage pools of the sponsor that were established before January 1, 2006 will not be deemed to be a part of this prospectus supplement, the accompanying prospectus or the related registration statement. “Option ARM Loans” are adjustable rate mortgage loans whose interest rates are tied to an index, which have an initial fixed-rate period of between one and twelve months, and which have a negative amortization feature.

      There can be no assurance that the rates of delinquencies, losses and prepayments experienced by the prior securitized pools and vintage pools will be comparable to delinquencies, losses and prepayments expected to be experienced by the mortgage loans owned by the Trust.

UNDERWRITING OF THE MORTGAGE LOANS

General

      All of the mortgage loans owned by the Trust have been originated in accordance with the underwriting standards of the sponsor or the underwriting guidelines of Washington Mutual Bank as described in this section. In addition, see “The Originators” in this prospectus supplement for additional information about the mortgage loans originated by Alliance Bancorp.

      The sponsor's underwriting standards and Washington Mutual Bank's underwriting guidelines generally are intended to evaluate the prospective borrower's credit standing and repayment ability and the value and adequacy of the mortgaged property as collateral. Some mortgage loans are manually underwritten, in which case an underwriter reviews a loan application and supporting documentation, if required, and a credit report of the borrower, and based on that review determines whether to originate a loan in the amount and with the terms stated in the loan application. Some mortgage loans may be underwritten through an automated underwriting system, including Washington Mutual Bank's automated underwriting system, described below.

      Prospective borrowers are required to complete a standard loan application in which they may provide financial information regarding such factors as their assets, liabilities and related monthly payments,

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income, employment history and credit history. Each borrower also provides an authorization to access a credit report that summarizes the borrower's credit history.

Evaluation of the Borrower's Credit Standing

      To evaluate a prospective borrower's credit history, the loan underwriter obtains a credit report relating to the borrower from one or more credit reporting companies, usually in the form of a merged credit report. The credit report typically contains information relating to such matters as credit history with local and national merchants and lenders, installment debt payments and any record of defaults, bankruptcy, repossession, suits or judgments. In most cases the credit report provides a credit score for the borrower, which represents a numerical weighing of the borrower's credit characteristics. Credit scores are designed to assess a borrower's creditworthiness and likelihood to default on an obligation over a defined period (usually two to three years) based on a borrower's credit history. Credit scores do not necessarily correspond to the probability of default over the life of a mortgage loan because they reflect past credit history, rather than an assessment of future payment performance. In addition, credit scores only indicate general creditworthiness, and credit scores are not intended to specifically apply to mortgage debt. Credit scores range from approximately 250 to approximately 900, with higher scores indicating more favorable credit history. If the loan underwriter obtains credit scores from three credit reporting companies, the middle score generally is used, and if two credit scores are obtained, the lowest score generally is used. In the case of co-borrowers, the credit score for the borrower with the lowest credit score generally is used (determined for each borrower as described in the immediately preceding sentence). Minimum credit scores are required for some loan products and loan programs. For borrowers for which credit scores are not available, the loan underwriter will require alternative documentation indicating the borrower's creditworthiness, such as rental or utility payment history or payment history on other debt.

Evaluation of the Borrower's Repayment Ability

      Under all documentation programs other than the no ratio programs and the no documentation programs, in evaluating a prospective borrower's ability to repay a mortgage loan, the loan underwriter considers the ratio of the borrower's mortgage payments, real property taxes and other monthly housing expenses to the borrower's gross income (referred to as the “housing-to-income ratio” or “front end ratio”), and the ratio of the borrower's total monthly debt (including certain non-housing expenses) to the borrower's gross income (referred to as the “debt-to-income ratio” or “back end ratio”). The maximum acceptable ratios may vary depending on other loan factors, such as loan amount and loan purpose, loan-to-value ratio, credit score and the availability of other liquid assets. Exceptions to the ratio guidelines may be made when compensating factors are present.

Evaluation of the Adequacy of the Collateral

      The adequacy of the mortgaged property as collateral generally is determined by an appraisal made in accordance with pre-established appraisal guidelines. At origination, all appraisals are required to conform to the Uniform Standards of Professional Appraisal Practice adopted by the Appraisal Standards Board of the Appraisal Foundation, and are made on forms acceptable to Fannie Mae and/or Freddie Mac. Appraisers may be staff appraisers employed by Washington Mutual Bank or independent appraisers selected in accordance with the pre-established appraisal guidelines. Such guidelines generally require that the appraiser, or an agent on its behalf, personally inspect the property and verify whether the property is in adequate condition and, if the property is new construction, whether it is substantially completed. However, in the case of mortgage loans underwritten through an automated underwriting system, an automated valuation model may be used, under which an appraiser does not inspect the property. In either case, the valuation normally is based upon a market data analysis of recent sales of comparable properties and, in some cases, a replacement cost analysis based on the current cost of constructing or purchasing a similar property. In the case of a streamline refinance, the appraisal guidelines may permit the property value obtained for an existing mortgage loan (or a mortgage loan which was previously refinanced) to be used. Title insurance is required for all mortgage loans, except that for mortgage loans secured by shares of cooperative apartments, title insurance is not required for the cooperative apartment building (but a lien

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search is provided by the title company). Specific additional title insurance coverage is required for some types of mortgage loans.

Documentation Programs

      Each mortgage loan has been underwritten under one of the following documentation programs. Under a full/alternative documentation program, a borrower's employment and income are verified. The employment and income as stated in the prospective borrower's loan application are verified either directly with the borrower's stated employer(s) or through receipt of alternative documentation such as the borrower's recent pay stub(s) and/or W-2 form(s) reflecting a minimum of 12 months of employment and income or, in the case of self-employed borrowers or borrowers who derive a substantial portion of their income from commissions, receipt of the borrower's personal (and, if applicable, business) tax returns. For self-employed borrowers, profit and loss statements may also be required. Generally, under a full/alternative documentation program, the borrower's stated assets are also verified either directly with the stated financial institution holding the stated asset or through receipt of alternative documentation such as the borrower's recent bank and/or brokerage statement(s). In addition, the borrower's employment may be verified with the employer by telephone or by other independent means.

      Generally, a reduced documentation program is available to borrowers with certain loan-to-value ratios, loan amounts, and credit scores. A reduced documentation program places increased reliance on the value and adequacy of the mortgaged property as collateral, the borrower's credit standing and (in some cases) the borrower's assets. Generally, under a reduced documentation program, either (i) a borrower's employment and assets are verified, but no verification of a borrower's income is undertaken, (ii) a borrower's employment and income are verified, but no verification of a borrower's assets is undertaken, or (iii) in the case of some rate/term and cash-out refinance mortgage loans, only the borrower's employment is verified. For mortgage loans underwritten under a reduced documentation program, less than 12 months of the borrower's income may be verified. Additionally, mortgage loans underwritten under a reduced documentation program may include mortgage loans originated as a “streamline” refinance if the lender originated the borrower's existing mortgage loan. In this case, the prospective borrower's income and assets either are not required to be obtained or are obtained but not verified, and the appraisal obtained for the existing mortgage loan (or a mortgage loan which was previously refinanced) may be used rather than a new appraisal. Eligibility criteria vary but may include minimum credit scores, maximum loan amounts, maximum debt-to-income ratios and specified payment histories on an existing mortgage loan (generally, a history of timely mortgage payments for the past twelve months, or for the duration of the mortgage loan if less than twelve months old) or on other debt. In all cases, the borrower's employment is verified with the employer by telephone or by other independent means.

      Generally, a no ratio program is available to borrowers with certain loan-to-value ratios, loan amounts, and credit scores. A no ratio program relies on the value and adequacy of the mortgaged property as collateral and the borrower's credit standing. The borrower's income is not required to be obtained or verified. Generally, under a no ratio program, the borrower's stated assets are also verified through receipt of the borrower's recent bank or brokerage statements or directly with the financial institution. In all cases, the borrower's employment is verified with the employer by telephone or by other independent means.

      Generally, a no documentation program is available to borrowers with certain loan-to-value ratios, loan amounts, and credit scores. A no documentation program relies on the value and adequacy of the mortgaged property as collateral and the borrower's credit standing. Generally, the borrower's employment, income and assets are neither obtained nor verified. In some cases, the borrower's employment may be verified by telephone with the employer or by other independent means if the borrower's employment has been disclosed.

Exceptions to Program Parameters

      Exceptions to the underwriting standards described above may be made on a case-by-case basis if compensating factors are present. In those cases, the basis for the exception is documented. Compensating factors may include, but are not limited to, low loan-to-value ratio, low debt-to-income ratio, good credit

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standing, the availability of other liquid assets, stable employment and time in residence at the prospective borrower's current address.

Automated Underwriting System

      Some mortgage loans may have been originated through Washington Mutual Bank's retail and wholesale lending divisions and have been underwritten in whole or in part through Washington Mutual Bank's proprietary automated underwriting system, known as Enterprise Decision Engine or “EDE”. Based on the borrower's credit report and the information in the borrower's loan application, the system either (a) approves the loan subject to the satisfaction of specified conditions, which may include the receipt of additional documentation, or (b) refers the loan application to an underwriter for manual underwriting. In making the underwriting decision, EDE distinguishes between ten different levels of credit standing, based on both the credit score and other items in the borrower's credit report. Washington Mutual Bank has developed these ten levels of credit standing based on a statistical analysis of the past performance of approximately 193,000 mortgage loans originated by Washington Mutual Bank for its own portfolio between 1998 and 2001. Washington Mutual Bank has been using EDE for underwriting of mortgage loans since January 2005. Washington Mutual Bank has also used in the past, and currently uses, other automated underwriting systems. All or some of the mortgage loans originated by Washington Mutual Bank may have been underwritten through EDE or another automated underwriting system.

Due Diligence

      The sponsor's credit risk oversight department conducts a credit, appraisal, and compliance review of adverse samplings (and, in some cases, statistical samplings) of mortgage loans prior to purchase from unaffiliated mortgage loan sellers. Sample size is determined by due diligence results for prior purchased pools from that seller, performance of mortgage loans previously purchased and characteristics of the pool presented for purchase. Automated valuation models are obtained on all mortgage loans purchased from unaffiliated sellers. For mortgage loans originated by Washington Mutual Bank, Washington Mutual Bank's credit risk oversight department conducts a quality control review of statistical samplings of originated mortgage loans on a regular basis.

THE ORIGINATORS

      The sponsor purchased the mortgage loans directly or indirectly from affiliated or unaffiliated third parties who either originated the mortgage loans or purchased the mortgage loans through correspondent or broker lending. The following unaffiliated third parties originated at least 10% of the mortgage loans (by aggregate principal balance as of Cut-Off Date): Alliance Bancorp, approximately 23.6%; First Horizon Home Loan Corporation, approximately 13.2%; Plaza Home Mortgage, Inc., approximately 11.0%; and Residential Funding Corporation, approximately 11.0%. No other unaffiliated third party originator originated more than 10% of the mortgage loans. All of the mortgage loans owned by the Trust have been originated in accordance with the underwriting standards of the sponsor. Below is information about Alliance Bancorp, including information about its origination program and origination experience.

Alliance Bancorp

      Alliance Bancorp is a California corporation. Alliance Bancorp is a leading residential mortgage banking company that focuses primarily on the origination and sale of “Prime Alt-A” mortgages. Prime Alt-A mortgages are mortgages made to borrowers whose credit is generally within Fannie Mae or Freddie Mac guidelines, but are considered “non-conforming” due to loan balances in excess of maximum conforming lending limits, limited or no documentation required for approval of the borrower. Alliance Bancorp's target Prime Alt-A mortgage borrowers consist of prime quality borrowers with high-end FICO scores, low loan-to-value ratios and non-conforming documentation. Alliance Bancorp has been originating mortgage loans since 1990 and Option ARM Loans since 2005. The principal executive offices of Alliance Bancorp are located at 1000 Marina Boulevard, Suite 100, Brisbane, CA 94005.

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      The following table reflects the Alliance Bancorp's originations of Option ARM Loans and total Alt-A originations for current year and previous two years:

Option ARM Loans

  YTD
June 30, 2006

  Year Ending
December 31, 2005

  Year Ending
December 31, 2004

Number of Loans

       1,912          920          

Principal Balance

     $ 819,508,520        $ 405,550,334          
Total Alt-A

                       

Number of Loans

       6,623          7,765          4,736  

Principal Balance

     $ 1,749,867,198        $ 2,136,298,706        $ 1,376,358,067  

                       

THE DEPOSITOR

      WaMu Asset Acceptance Corp., the depositor, is a Delaware corporation and a wholly owned subsidiary of Washington Mutual Bank. The depositor engages in no activities other than securitizing assets. It will have no material continuing obligations with respect to the mortgage loans or the certificates following the issuance of the certificates, other than the obligations (i) to file financing statements perfecting the Trust's interest in the mortgage loans, (ii) to repurchase or substitute for affected mortgage loans in the event of a material breach of a representation and warranty made by the depositor in the pooling agreement that has not been remedied and (iii) to indemnify the underwriter against some civil liabilities, including liabilities under the Securities Act of 1933.

THE TRUST

General

      The issuer of the certificates, the Washington Mutual Mortgage Pass-Through Certificates WMALT Series 2006-AR6 Trust (the “Trust”), will be a statutory trust formed under the laws of the State of Delaware pursuant to a trust agreement between WaMu Asset Acceptance Corp., as depositor, and Christiana Bank & Trust Company, as Delaware trustee. The pooling and servicing agreement, dated as of the July 1, 2006 (the “pooling agreement”), among the depositor, Washington Mutual Bank, as servicer, the Delaware trustee and LaSalle Bank National Association, as trustee, will restate the trust agreement and will be the governing instrument of the Trust.

      The Trust will not own any assets other than the mortgage loans and the other assets described below. The Trust will not have any liabilities other than those incurred in connection with the pooling agreement and any related agreement. The Trust will not have any directors, officers or other employees. No equity contribution will be made to the Trust by the sponsor, the depositor or any other party, except for a de minimis contribution made by the depositor pursuant to the trust agreement, and the Trust will not have any other capital. The fiscal year end of the Trust will be December 31. The Trust will act through the trustee and the Delaware trustee, whose fees and reasonable expenses will be paid or reimbursed by the servicer.

Assignment of the Mortgage Loans and Other Assets to the Trust

      A pool of mortgage loans, as described in this prospectus supplement, will be sold to the Trust on July 27, 2006 (the “Closing Date”). The Trust will own the right to receive all scheduled monthly payments of principal and interest due on the mortgage loans after, and all principal prepayments collected on or after July 1, 2006, except with respect to (i) approximately 2.9% of the mortgage loans (by aggregate principal balance as of the Cut-Off Date, as defined in “Description of the Mortgage Pool” in this prospectus supplement) (the “August A Loans”) for which the Trust will be entitled to all scheduled monthly payments of principal and interest due on those August Loans after August 1, 2006 and all principal prepayments collected with respect to those August A Loans on or after July 12, 2006 and (ii) approximately 1.9% of the mortgage loans (by aggregate principal balance as of the Cut-Off Date, as defined in “Description of the Mortgage Pool” in this prospectus supplement) (the “August B Loans,” and together with the August A Loans, the “August Loans”) for which the Trust will be entitled to all

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scheduled monthly payments of principal and interest due on those August Loans after August 1, 2006 and all principal prepayments collected with respect to those August B Loans on or after July 14, 2006. A schedule to the pooling agreement will include information about each mortgage loan, including:

the applicable loan group;
 
the outstanding principal balance as of the close of business on the Cut-Off Date (as defined in “Description of the Mortgage Pool” in this prospectus supplement);
 
the term of the mortgage loan; and
 
the mortgage interest rate as of the close of business on the Cut-Off Date and information about how that mortgage interest rate adjusts.

      The mortgage pool will be the primary asset of the Trust. The Trust will also contain other assets, including:

insurance policies related to individual mortgage loans, if applicable;
 
any property that secured a mortgage loan that the Trust acquires after the Cut-Off Date by foreclosure or deed in lieu of foreclosure; and
 
amounts held in the certificate account.

      In exchange for the mortgage loans and the other assets described above, the trustee will authenticate and deliver the certificates pursuant to the order of the depositor.

      It is the intent of the parties to the pooling agreement that the conveyance of the mortgage loans and the related assets to the Trust constitute an absolute sale of those assets. However, in the event that the pooling agreement for any reason is held or deemed to create a security interest in those assets, then the pooling agreement will constitute a security agreement and the depositor grants to the Trust a security interest in those assets. The depositor will file financing statements perfecting such security interest.

Restrictions on Activities of the Trust

      Pursuant to the pooling agreement, the Trust will have the power and authority (i) to acquire, hold, lease, manage, administer, control, invest, reinvest, operate and transfer assets of the Trust, (ii) to issue and make distributions on the certificates and (iii) to engage in such other activities as are described in the pooling agreement. The Trust will be required to act in accordance with requirements specified in the pooling agreement that are designed to maintain the Trust's existence as a legal entity separate and distinct from any other entity. The Trust will not be permitted to do any of the following:

to engage in any business or activity other than those described in the pooling agreement;
 
to incur or assume any indebtedness other than indebtedness incurred under the pooling agreement or any related agreement;
 
to guarantee or otherwise assume liability for the debts of any other entity;
 
to confess a judgment against the Trust;
 
to possess or assign the assets of the Trust for other than a Trust purpose;
 
to lend any funds to any entity, except as contemplated by the pooling agreement; or
 
to do other actions prohibited by the pooling agreement.

      The permissible activities of the Trust may not be modified except by an amendment to the pooling agreement. See “Description of the Certificates—Amendment of the Pooling Agreement” in this prospectus supplement.

Discretionary Activities With Respect to the Trust

      The following is a description of material discretionary activities that may be taken with regard to the administration of the mortgage loans or the certificates:

The servicer will be authorized to exercise discretion with regard to its servicing of the mortgage loans in accordance with the servicing standard specified in the pooling agreement. See “Servicing of the Mortgage Loans—The Servicer—Servicing Procedures” in this prospectus supplement.

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Each of the sponsor and the depositor will have discretion to determine whether to repurchase a mortgage loan or to substitute for a mortgage loan, if required under the mortgage loan purchase agreement or the pooling agreement, as applicable, to repurchase or substitute for a defective mortgage loan. See “Description of the Mortgage Pool—Representations and Warranties Regarding the Mortgage Loans” in this prospectus supplement.
 
On any Distribution Date after the Clean-Up Call Option Date, the servicer will be permitted to purchase all of the mortgage loans owned by the Trust. See “Description of the Certificates—Optional Termination of the Trust” in this prospectus supplement.
 
In the event of certain transfers of the Class R Certificates to a person who is not a permitted transferee under the pooling agreement, the depositor will have the right to sell the Class R Certificates to a purchaser selected by the depositor.
 
In the event of a default by the servicer under the pooling agreement that has not been remedied, either the trustee or holders of certificates evidencing at least 25% of the voting rights will have the right to terminate the servicer. If the servicer is terminated or resigns the trustee will become the successor servicer; however, the trustee will have the right to appoint, or to petition a court to appoint, a successor servicer. See “The Trustees—The Trustee—Events of Default Under the Pooling Agreement” in this prospectus supplement.
 
Holders of certificates evidencing more than 50% of the voting rights will have the right at any time to remove the trustee or the Delaware trustee and to appoint an eligible successor trustee.

THE TRUSTEES

The Trustee

General

      LaSalle Bank National Association (“LaSalle”) will be the trustee under the pooling agreement. LaSalle is a national banking association formed under the federal laws of the United States of America. Its parent company, LaSalle Bank Corporation, is an indirect subsidiary of ABN AMRO Bank N.V., a Netherlands banking corporation. LaSalle has extensive experience serving as trustee on securitizations of residential mortgage loans. Since January 1994, LaSalle has served as trustee or paying agent on over 400 residential mortgage-backed security transactions involving assets similar to the mortgage loans. As of April 30, 2006, LaSalle serves as trustee or paying agent on over 300 residential mortgage-backed security transactions. The depositor and servicer may maintain other banking relationships in the ordinary course of business with the trustee. The trustee's corporate trust office is located at 135 South LaSalle Street, Suite 1625, Chicago, Illinois, 60603, Attention: Global Securities and Trust Services—Washington Mutual Mortgage Pass-Through Certificates WMALT Series 2006-AR6, or at such other address as the trustee may designate from time to time.

Material Duties of the Trustee

      The trustee will have the following material duties under the pooling agreement:

to hold the mortgage notes, mortgages and other legal documents in the mortgage files;
 
to review each mortgage file and deliver a certification to the effect that, except as noted in the certification, all required documents have been executed and received;
 
to authenticate and deliver the certificates, pursuant to the order of the depositor;
 
to maintain a certificate register and, upon surrender of certificates for registration of transfer or exchange, to authenticate and deliver new certificates;
 
to make the required distributions to certificateholders on each Distribution Date, in accordance with the monthly distribution report prepared by the administrative agent;

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to deliver or make available to certificateholders the monthly distribution reports and any other reports required to be delivered by the trustee under the pooling agreement;
 
in the event that the trustee has received notice from the servicer that the remaining Class Principal Balance of a class of certificates is to be paid on a specified Distribution Date, to send a notice to that effect to the holders of that class of certificates; and
 
upon the termination or resignation of the servicer, to act as successor servicer, or to appoint a successor servicer, to the extent described under “—Events of Default Under the Pooling Agreement” below.

      In its capacity as trustee, LaSalle will hold the mortgage loan files exclusively for the use and benefit of the Trust. LaSalle will not have any duty or obligation to inspect, review or examine any of the documents, instruments, certificates or other papers relating to the mortgage loans delivered to it to determine that the same are valid. The disposition of the mortgage loan files will be governed by the pooling agreement.

      LaSalle provides custodial services on over 1,000 residential, commercial and asset-backed securitization transactions and maintains almost 2.5 million custodial files in its two vault locations in Elk Grove, Illinois and Irvine, California. LaSalle's two vault locations can maintain a total of approximately 6 million custody files. All custody files are segregated and maintained in secure and fire resistant facilities in compliance with customary industry standards. The vault construction complies with Fannie Mae/Ginnie Mae guidelines applicable to document custodians. LaSalle maintains disaster recovery protocols to ensure the preservation of custody files in the event of force majeure and maintains, in full force and effect, such fidelity bonds and/or insurance policies as are customarily maintained by banks which act as custodians. LaSalle uses unique tracking numbers for each custody file to ensure segregation of collateral files and proper filing of the contents therein and accurate file labeling is maintained through a monthly quality assurance process. LaSalle uses a licensed collateral review system to track and monitor the receipt and movement internally or externally of custody files and any release or reinstatement of collateral.

Events of Default Under the Pooling Agreement

      In the event of a default by the servicer under the pooling agreement that has not been remedied, either the trustee or holders of certificates evidencing at least 25% of the voting rights will have the right to terminate the servicer. If the servicer is terminated, or the servicer resigns because its duties under the pooling agreement are no longer permitted under applicable law, the trustee will become the successor servicer. However, if the trustee is unwilling or unable to act as successor servicer, it may appoint, or petition a court to appoint, a successor servicer.

      The trustee will be required to notify certificateholders and the rating agencies of any event of a default by the servicer known to the trustee, and of the appointment of any successor servicer.

      In the event of a default by the depositor under the pooling agreement that has not been remedied, holders of certificates evidencing at least 25% of the voting rights will have the right to direct the trustee to institute a legal action to enforce the depositor's obligations under the pooling agreement.

      See “Description of the Securities—Events of Default Under the Governing Agreement and Rights Upon Events of Default” in the prospectus.

The Delaware Trustee

      Christiana Bank & Trust Company, the Delaware trustee under the pooling agreement, is a Delaware banking corporation. The Delaware trustee has served as Delaware trustee for asset-backed securities transactions involving first lien single-family residential mortgage loans since approximately January 2002.

      The Delaware trustee will serve as trustee for the Trust for the sole purpose of satisfying the requirement under the Delaware statutory trust statute that the Trust have at least one trustee with a principal place of business in Delaware. The Delaware trustee's duties under the pooling agreement will be limited to (i) accepting legal process served on the Trust in the State of Delaware and (ii) executing any

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certificates with respect to the Trust which the Delaware Trustee is required to execute under the Delaware statutory trust statute.

Limitations on the Trustees' Liability

      Neither the trustee nor the Delaware trustee will be liable under the pooling agreement:

except for the performance of such duties and obligations as are specifically set forth in the pooling agreement;
 
for any action taken or omitted by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by the pooling agreement; or
 
for any action taken or omitted by it in good faith in accordance with the direction of holders of certificates evidencing at least 25% of the voting rights relating to the time, method and place of conducting any proceeding for any remedy available to such trustee, or relating to the exercise of any trust or power conferred upon such trustee under the pooling agreement.

      In the absence of bad faith, the trustee and the Delaware trustee may conclusively rely upon any certificates or opinions of counsel furnished to such trustee under the pooling agreement. Any such opinion of counsel will be full and complete authorization and protection in respect of any action taken or omitted to be taken by such trustee in good faith and in accordance with such opinion of counsel. Neither the trustee nor the Delaware trustee will be deemed to have knowledge or notice of any matter, including an event of default, unless actually known to it or unless it has received written notice thereof.

Resignation and Removal of the Trustees

      Each of the trustee and the Delaware trustee may at any time resign by giving written notice thereof to the servicer. Upon receiving such notice of resignation, the servicer will be required to appoint a successor trustee. If the trustee or the Delaware trustee ceases to be eligible under the pooling agreement and fails to resign, or if the trustee or the Delaware trustee becomes incapable of acting, the servicer may remove such trustee and appoint a successor trustee. The holders of certificates evidencing at least 50% of the voting rights may at any time remove the trustee or the Delaware trustee and appoint a successor trustee.

      Any expenses associated with the resignation of a trustee will be required to be paid by such trustee, and any expenses associated with the removal of a trustee will be required to be paid by the servicer.

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THE SERVICERS

General

      All of the mortgage loans owned by the Trust will be serviced by Washington Mutual Bank, as servicer, pursuant to the pooling agreement. Washington Mutual Mortgage Securities Corp. will act as administrative agent of the servicer with respect to the mortgage loans, pursuant to an administrative agent agreement between the administrative agent and the servicer. The administrative agent will be responsible for calculating monthly distributions on the certificates, preparing monthly distribution reports and other functions, as described under “—The Administrative Agent” below.

      The servicer will outsource to third party vendors some servicing functions, as described under “—The Servicer—The Servicer's Servicing Procedures—The Servicer's Third Party Vendors” below. The administrative agent will calculate monthly distributions to certificateholders and prepare monthly distribution reports using software licensed from a third party vendor and based on the third party vendor's model of the priority of distributions on the certificates.

      As of the Cut-Off Date, some of the mortgage loans had not yet had their servicing transferred to the servicer. These mortgage loans will be serviced by their respective originators or mortgage loan sellers on an interim basis until the servicing of such mortgage loans is transferred to the servicer. See “—Interim Servicing” below for more information.

The Servicer

The Servicer's Servicing Experience

      The servicer has been servicing single-family residential mortgage loans for over 100 years. The single-family residential mortgage loans serviced by the servicer have included, since 2001, sub-prime residential mortgage loans serviced for Long Beach Mortgage Company, an affiliate of the servicer, or for its securitization trusts.

      The following table shows the number and aggregate principal balance of single-family residential mortgage loans, including conforming and nonconforming mortgage loans and fixed rate and adjustable rate mortgage loans, and including prime and sub-prime mortgage loans, serviced by the servicer as of the specified date.

Single-Family Residential Prime and Subprime Mortgage Loans Serviced by the Servicer
(Dollar Amounts in Millions)

    12/31/2004

  12/31/2005

  3/31/2006

Number of Mortgage Loans Serviced for Washington Mutual Bank or Its Affiliates (or Their Securitization Trusts)

       965,841          964,940          974,669  

Aggregate Principal Balance

     $ 238,360        $ 259,466        $ 266,100  

Number of Mortgage Loans Serviced for Unaffiliated Third Parties

       3,832,119          3,568,487          3,529,580  

Aggregate Principal Balance

     $ 445,272        $ 436,293        $ 437,416  

                       

      The following table shows the number and aggregate principal balance of single-family residential mortgage loans, including conforming and nonconforming mortgage loans and fixed rate and adjustable rate mortgage loans (but excluding sub-prime mortgage loans), serviced by the servicer as of the specified date.

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Single-Family Residential Prime Mortgage Loans Serviced by the Servicer
(Dollar Amounts in Millions)

    12/31/2004

  12/31/2005

  3/31/2006

Number of Mortgage Loans Serviced for Washington Mutual Bank or Its Affiliates (or Their Securitization Trusts)

       798,269          766,384          731,028  

Aggregate Principal Balance

     $ 213,525        $ 226,334        $ 224,965  

Number of Mortgage Loans Serviced for Unaffiliated Third Parties

       3,820,696          3,527,567          3,524,218  

Aggregate Principal Balance

     $ 444,595        $ 429,916        $ 436,610  

                       

Servicing Procedures

      Servicing Functions. The functions to be performed by the servicer will include payment collection and payment application, investor reporting and other investor services, default management and escrow administration. The servicer will perform its servicing functions at loan servicing centers located in Florence, South Carolina; Milwaukee, Wisconsin; Northridge/Chatsworth, California; and Jacksonville, Florida.

      Servicing Standard; Waivers and Modifications. Pursuant to the pooling agreement, the servicer will be required to service the mortgage loans consistent with prudent mortgage loan servicing practices and (unless inconsistent with those servicing practices) in the same manner in which, and with the same care, skill, prudence and diligence with which, it services and administers similar mortgage loans for other portfolios. The servicer will be required to make reasonable efforts to collect or cause to be collected all payments under the mortgage loans and, to the extent consistent with the pooling agreement and applicable insurance policies, follow such collection procedures as are followed with respect to comparable mortgage loans that are held in portfolios of responsible mortgage lenders in the local areas where each mortgaged property is located.

      Consistent with the servicing standard described above, the servicer will be permitted to waive, modify or vary any term of any mortgage loan, subject to certain conditions, as described in “Description of the Securities—Collection and Other Servicing Procedures Employed by the Servicer, Manager, Bond Administrator or Certificate Administrator” in the prospectus.

      Mortgage Loan Servicing System. In performing its servicing functions, the servicer will use computerized mortgage loan servicing systems that it leases from Fidelity Information Services, a division of Fidelity National Financial (“Fidelity”), a third party vendor (collectively, the “Fidelity System”). The Fidelity System produces detailed information about the financial status of each mortgage loan, including outstanding principal balance, current interest rate and the amount of any advances, unapplied payments, outstanding fees, escrow deposits or escrow account overdrafts, and about transactions that affect the mortgage loan, including the amount and due date of each payment, the date of receipt of each payment (including scheduled payments and prepayments), and how the payment was applied. The Fidelity System also produces additional information about mortgage loans that are in default, including the amount of any insurance and liquidation proceeds received. The servicer began using the Fidelity System in 1996. Prior to July 2004, the servicer serviced some mortgage loans using a proprietary mortgage loan servicing system; in July 2004, the servicer consolidated servicing into a single servicing platform by converting approximately 1.2 million loan records from the proprietary mortgage loan servicing system to the Fidelity System.

      Custodial Account, Escrow Account, Investment Account and Certificate Account. Mortgagor payments on the mortgage loans, including scheduled monthly payments, any Curtailments and Payoffs and any escrow payments (which are payments made by some mortgagors and held by the servicer in escrow for future payment of taxes and insurance), will initially be deposited into either a lockbox account maintained by a third party financial institution or a payment clearing account maintained by the servicer. Payments deposited into the lockbox account will be transferred by the servicer into the payment clearing account. Other collections on the mortgage loans, including Liquidation Proceeds and Insurance Proceeds (each, as defined in the pooling agreement) (other than Insurance Proceeds required for the restoration or repair of the related mortgaged property, which the servicer will retain for such purpose), will also initially be deposited into a payment clearing account maintained by the servicer. Within 48 hours of

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receipt, the servicer will (i) transfer all such collections on the mortgage loans (other than escrow payments) into a custodial account maintained by the servicer and (ii) transfer all escrow payments into an escrow account maintained by the servicer.

      The servicer will deposit into the custodial account any required advances of principal and interest. See “—Advances” below. The servicer will also deposit into the custodial account any Repurchase Proceeds. See “Description of the Mortgage Pool—Representations and Warranties Regarding the Mortgage Loans” below.

      Under the pooling agreement, the servicer will be permitted to make a net deposit into the custodial account of the amounts required to be deposited into that account less the amounts that the servicer is permitted to withdraw from that account, as described under “—Permitted Withdrawals” below. Under the pooling agreement, the servicer will also be permitted to transfer funds held in the custodial account into an investment account maintained with an eligible investment depository, and to invest those funds in eligible investments, for its own benefit, before those funds are to be transferred to a certificate account maintained by the trustee.

      On the business day immediately preceding each Distribution Date, the servicer will transfer (or cause the administrative agent to transfer) from the investment account into the certificate account the funds held in the investment account that are required to be distributed to certificateholders on that Distribution Date. The servicer may request the trustee to invest funds held in the certificate account in eligible investments, for the servicer's benefit, before those funds are to be distributed to certificateholders.

      On each Distribution Date, the trustee will withdraw from the certificate account the funds required to be distributed to certificateholders on that date in accordance with the monthly distribution report prepared by the administrative agent.

      Scheduled monthly payments generally will be held pending distribution to certificateholders from the date of receipt by the servicer until the immediately following Distribution Date. However, if a monthly payment is received prior to its scheduled Due Date, that payment will be held until the Distribution Date in the calendar month in which it was due. Payoffs received by the servicer in any Prepayment Period (that is, from the 15th day of a calendar month until the 14th day of the next calendar month) will be held until the Distribution Date immediately following the end of that Prepayment Period. Curtailments, Liquidation Proceeds, Insurance Proceeds, Subsequent Recoveries and Repurchase Proceeds will be held from the date of receipt by the servicer until the Distribution Date in the immediately succeeding calendar month.

      Funds held in the lockbox accounts and the payment clearing accounts may be commingled with collections on other mortgage loans serviced by the servicer. Funds held in the investment account may be commingled with funds related to series of pass-through certificates with one or more classes of certificates that have ratings equal to the highest of the ratings of the certificates. Funds held in the custodial account, the escrow account and the certificate account will not be commingled with collections on mortgage loans that are not owned by the Trust.

      Only the servicer or the third party financial institutions that maintain the lockbox accounts will have access to funds held in those accounts. Only the servicer will have access to funds held in the payment clearing accounts, the custodial account and the escrow account. Only the servicer and the administrative agent will have access to funds held in the investment account. Only the trustee will have direct access to funds held in the certificate account; however, the servicer or the administrative agent on its behalf may direct the trustee to invest funds in the certificate account for the servicer's benefit and may direct the trustee to make certain withdrawals from that account.

      All of the transaction accounts described above will be reconciled on a monthly basis. There will not be any external verification of activity in the transaction accounts, except as may occur in connection with the annual examination by Washington Mutual, Inc.'s independent accountants in connection with their audit of Washington Mutual, Inc. and its subsidiaries, or in connection with periodic examination by the servicer's regulatory authorities.

      The diagram on the next page illustrates the flow of collections and other payments on the mortgage loans through the transaction accounts described above.

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Flow of Payments

Mortgagor
Payments

Other
Mortgage
Loan
Collections

Servicer
Advances of
Principal and
Interest and
Repurchase
Proceeds

Lockbox Accounts

Payment Clearing
Accounts

Escrow Account

Custodial Account

Investment Account

Certificate Account

Distributions to
Certificateholders

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      Permitted Withdrawals. The pooling agreement will permit the servicer to make withdrawals (or, in the case of the certificate account, to direct the trustee to make withdrawals), from time to time, from the custodial account, the investment account and the certificate account for the following purposes:

to reimburse itself for advances, as described under “—Advances” below;
 
to pay to itself the servicing fee (to the extent not applied to pay compensating interest);
 
to pay to itself investment earnings earned on funds held in the investment account and the certificate account (to the extent not applied to pay compensating interest);
 
to pay to itself interest that was accrued and received on Payoffs received during the period from the first day through the 14th day of any month (to the extent not applied to pay compensating interest);
 
to reimburse itself or the depositor or any of their directors, officers, employees or agents for certain expenses, costs and liabilities incurred in connection with any legal action relating to the pooling agreement or the certificates, as and to the extent described under “Description of the Securities—Matters Regarding the Servicer and the Depositor” in the prospectus;
 
with respect to any mortgage loans that are Lender PMI Loans, to remit to the applicable insurer any primary mortgage insurance premiums that are payable by the mortgagee; and
 
other permitted purposes described in the pooling agreement.

      Procedures for Applying Additional Payments. If the servicer receives a payment on a non-delinquent mortgage loan in addition to the minimum monthly payment, the servicer generally will apply the additional payment as a Curtailment (unless the mortgagor instructs the servicer to apply the payment in another manner). If the mortgage loan is an Option ARM Loan and the interest accrued on the mortgage loan exceeds the minimum monthly payment, the servicer will first increase the principal balance of the mortgage loan by the amount of the excess interest in the form of negative amortization, and will then decrease the principal balance by the amount of the Curtailment.

      The servicer generally will not apply Curtailments on delinquent mortgage loans. If the servicer receives an additional payment on a delinquent mortgage loan with instruction from the mortgagor to apply the payment as a Curtailment, the servicer will hold the additional payment until the mortgage loan has been brought current. If the servicer receives an additional payment on a delinquent mortgage loan without instruction from the mortgagor as to payment application, the servicer generally will apply the additional payment to bring the mortgage loan current, to reimburse the servicer for any escrow advances and to pay any applicable outstanding fees, and will apply any remainder as a Curtailment.

      Advances. The servicer will be required under the pooling agreement to advance its own funds (i) to cover any shortfall between payments of principal and interest scheduled to be received in respect of the mortgage loans each month and the amounts actually received, (ii) to pay any taxes or insurance with respect to mortgaged properties to the extent not paid by the mortgagor, (iii) to cover costs and expenses in connection with foreclosure or bankruptcy proceedings and (iv) to pay for the maintenance of and, to the extent not covered by insurance, the restoration of, properties acquired or to be acquired through foreclosure; provided, however, that the servicer will not make any of the advances described in clauses (i), (ii), (iii) and (iv) above if it determines, in good faith, that the advance would not be recoverable from late payments, Insurance Proceeds, Liquidation Proceeds or other amounts received for the applicable mortgage loan; provided, further, that in the case of clause (iv) above, the servicer will not make advances for the restoration of foreclosure properties unless it determines that the restoration will increase the Liquidation Proceeds after reimbursement to itself for those advances; and provided, further, that for any Balloon Loan that is delinquent on its maturity date, the servicer will not be required to advance the related balloon payment but will be required to continue to make advances with respect to that Balloon Loan in an amount equal to one month's interest on the unpaid principal balance at the applicable Pass-Through Rate to the extent the servicer deems such amount to be recoverable. The servicer will not charge interest or other fees with respect to any advances. For any Distribution Date and any advance described in clause (i) of this paragraph, instead of advancing its own funds, the servicer will be permitted to advance funds it collected on the mortgage loans but that are not required to be distributed to the certificateholders on the current Distribution Date, in which case the servicer will be required to

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reimburse those funds to the Trust prior to the Distribution Date on which they are required to be distributed to certificateholders.

      If, at the time a mortgage loan becomes a Liquidated Mortgage Loan, an advance previously made by the servicer with respect to that mortgage loan has not been recovered from late payments, Insurance Proceeds, Liquidation Proceeds or other amounts received for that mortgage loan (a “Nonrecoverable Advance”), the servicer will be entitled to be reimbursed for such advance from collections on other mortgage loans owned by the Trust.

      Servicing of Delinquent Mortgage Loans; Foreclosure. The servicer will make reasonable efforts to collect or cause to be collected all delinquent payments (that is, payments that are more than 30 days past due). Such efforts may include payment reminder telephone calls to the mortgagor, letter campaigns and drive-by property inspections. The servicer will be required under the pooling agreement to foreclose upon the mortgaged property related to each defaulted mortgage loan as to which no satisfactory arrangements can be made for collection of delinquent payments. Under the pooling agreement, the servicer will be permitted, in lieu of foreclosure, if prudent to do so and taking into account the desirability of maximizing net Liquidation Proceeds, to accept a payment of less than the outstanding principal balance of the defaulted mortgage loan. The servicer will not be permitted to foreclose upon a mortgaged property if it is aware of evidence of toxic waste or other environmental contamination on the mortgaged property and it determines that it would be imprudent to foreclose. See “Description of the Securities—Procedures for Realization Upon Defaulted Mortgage Assets” and “Legal Aspects of the Mortgage Assets—Foreclosure on Mortgages” in the prospectus.

      Maintenance of Primary Mortgage, Hazard and Flood Insurance. For each mortgage loan with an original loan-to-value ratio greater than 80%, the pooling agreement generally will require the servicer to keep in full force and effect a primary mortgage insurance policy. The servicer generally will not be required to maintain such policy if the outstanding principal balance of the mortgage loan is 80% or less of the original appraised value of the related mortgaged property, unless required by applicable law.

      The servicer will also be required to maintain or cause to be maintained hazard insurance and, if applicable, flood insurance for each mortgage loan.

      Limitations on the Servicer's Liability. See “Description of the Securities—Matters Regarding the Servicer and the Depositor” in the prospectus for a description of certain limitations on the servicer's liability under the pooling agreement.

      Back-up Servicing. See “Description of the Securities—Events of Default Under the Governing Agreement and Rights Upon Events Of Default” in the prospectus for a description of the material terms under the pooling agreement regarding the servicer's replacement, resignation or transfer.

      The Servicer's Third Party Vendors. The servicer expects to outsource to third party vendors the following servicing functions: (i) processing and monitoring of foreclosure actions, (ii) processing and monitoring of mortgagor bankruptcy proceedings, (iii) preservation of properties related to delinquent loans, (iv) processing of primary mortgage insurance claims, (v) maintenance, marketing and sale of REO properties, (vi) assuring that hazard insurance coverage is maintained, (vii) determining whether flood insurance coverage is required and assuring that any required coverage is maintained, (viii) tax bill procurement and tracking of delinquent tax payments, (ix) printing and mailing billing statements and (x) depositing mortgagor payments into a lockbox account. From time to time, the servicer may cease to outsource one or more of the foregoing servicing functions or may choose to outsource additional servicing functions. Some vendors may perform more than one function, and some functions may be performed by more than one vendor.

      The servicer has entered into service level agreements with some of its vendors, which set forth detailed performance criteria, including in some cases minimum time requirements for completing specified tasks and maximum error rates, and which in some cases impose penalties for non-compliance with such criteria. The servicer will monitor vendor compliance with applicable servicing criteria through procedures that may include reviews of statistical samplings of mortgage loans and reviews of reports on vendor performance prepared by the vendor or the servicer.

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The Servicer's Quality Control Procedures

      The servicer uses a combination of management controls and technology controls to ensure the accuracy and integrity of servicing records. Management controls include the use of approval levels, the segregation of duties, and reconciliations of servicing data and accounts, among others. Technology controls include the use of data security controls and interface controls to ensure that only authorized persons have the ability to access and change system data or to submit data to or receive data from vendors and investors. Specific security profiles for each job function include a predetermined set of data security controls that are appropriate for that job function. The data center for the Fidelity System, which is located in Jacksonville, Florida, is kept in a fire protected environment, and commercial electrical power is backed up by generators.

      In addition, the servicer conducts periodic internal audits of critical servicing and technology functions. External audits by entities such as Fannie Mae, Freddie Mac and Ginnie Mae and the annual examination by Washington Mutual, Inc.'s independent accountants in connection with their audit of Washington Mutual, Inc. and its subsidiaries may provide independent verification of the adequacy of such functions. Periodic examination by the servicer's regulatory authorities may provide additional independent review of the servicer's management controls.

      Both the servicer and Fidelity maintain detailed business continuity plans to enable each entity to resume critical business functions in the event of a disaster or other serious system outage, which plans are reviewed and updated periodically. Fidelity is contractually obligated to return the servicer to full functionality within 48 hours of a reported system outage. The servicer and Fidelity perform annual disaster recovery tests in which they reroute data and servicing system operations to Fidelity's back-up site, and then process sample transactions from all servicing locations to ensure the functionality of the back-up site.

      It is the servicer's policy to require its other third party vendors to implement measures similar to those described above to ensure the accuracy and integrity of servicing records.

Interim Servicing

      While Washington Mutual Bank will act as servicer for all of the mortgage loans, as of the Cut-Off Date, some of the mortgage loans had not yet had their servicing transferred to Washington Mutual Bank. Those mortgage loans will be serviced by the respective originators or mortgage loan sellers of those mortgage loans on an interim basis until the servicing is transferred to Washington Mutual Bank. As of the Cut-Off Date, approximately 23.3% (by aggregate principal balance) of the mortgage loans will be serviced on an interim basis by Alliance Bancorp. As of the Cut-Off Date, no other entity will act as interim servicer for 10% or more of the mortgage loans. By September 1, 2006, the servicing of those mortgage loans is expected to have transferred to Washington Mutual Bank. Servicing transfers can result in a temporary increase in delinquencies.

The Administrative Agent

The Administrative Agent's Servicing Experience

      Washington Mutual Mortgage Securities Corp., the administrative agent, is a Delaware corporation and a wholly owned subsidiary of the servicer. The administrative agent has been master servicing single-family residential mortgage loans since before 1979. The administrative agent has been acting as administrative agent of the servicer with respect to single-family residential mortgage loans serviced by the servicer since February 2005. The services performed by Washington Mutual Mortgage Securities Corp. as master servicer include (in addition to other services) substantially the same services as those performed by it as administrative agent.

      The following table shows the number and aggregate principal balance of single-family residential mortgage loans, including conforming and nonconforming mortgage loans and fixed rate and adjustable rate mortgage loans (but excluding sub-prime mortgage loans), serviced by the administrative agent (as master servicer or administrative agent) as of the specified date.

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Single-Family Residential Prime Mortgage Loans Serviced by the Administrative Agent
(Dollar Amounts in Millions)

    12/31/2004

  12/31/2005

  3/31/2006

Number of Mortgage Loans Serviced for Washington Mutual Bank or Its Affiliates (or Their Securitization Trusts)

       110,940          191,332          184,844  

Aggregate Principal Balance

     $ 42,500        $ 79,420        $ 79,175  

Number of Mortgage Loans Serviced for Unaffiliated Third Parties

       257,060          233,181          223,334  

Aggregate Principal Balance

     $ 47,635        $ 42,325        $ 40,677  

Services Performed by the Administrative Agent

      The servicer and the administrative agent are parties to an administrative agent agreement under which the administrative agent has agreed to perform some of the services required to be performed by the servicer under the pooling agreement. The administrative agent will perform the following services: (1) calculation of monthly distributions to certificateholders, (2) calculation of compensating interest to be paid by the servicer, (3) preparation of monthly distribution reports and other reports required under the pooling agreement, (4) tax administration services for the Trust, (5) communications with investors and rating agencies with respect to the certificates and (6) other services specified in the administrative agent agreement.

      The administrative agent's principal offices are located in Vernon Hills, Illinois. The administrative agent will perform its services using a proprietary computerized mortgage loan servicing system, which it has been using since approximately 1990. The administrative agent's proprietary mortgage loan servicing system produces detailed information about the financial status of each mortgage loan, including outstanding principal balance and current interest rate, and about transactions that affect the mortgage loan, including the amount and due date of each scheduled payment, the amount and date of receipt of each Payoff, the amount and month of receipt of all other unscheduled payments, and how each payment was applied. Each month, the administrative agent will receive from the servicer a servicing report generated by the Fidelity System with respect to the mortgage loans owned by the Trust, and will input data from that servicing report into its own mortgage loan servicing system.

      The administrative agent will calculate monthly distributions to certificateholders and prepare monthly distribution reports using software that it has licensed from IMAKE Consulting, Inc. (“IMAKE”), a third party vendor. IMAKE will develop that software based on its model of the priority of distributions on the certificates. Each month, the administrative agent will generate a monthly distribution report by uploading data from its mortgage loan servicing system onto a server that houses the software licensed from IMAKE. In order to verify the accuracy of the monthly distribution report, the administrative agent will upload the distribution report onto the internet website of a nationally recognized accounting firm, which will compare the distribution report to a report prepared by it based on its own independently developed model of the priority of distributions on the certificates. The administrative agent will deliver the final monthly distribution report to the trustee and post it on the administrative agent's internet website.

      The servicer will pay the administrative agent a fee for its services under the administrative agent agreement. Payment of this fee will not affect distributions to certificateholders.

The Administrative Agent's Quality Control Procedures

      The administrative agent uses substantially the same management and technology controls as those of the servicer to ensure the accuracy and integrity of servicing records. See “—The Servicer—Servicing Procedures—Quality Control Procedures” above.

      The administrative agent conducts periodic internal audits of critical servicing and technology functions. Investor reviews and the annual examination by Washington Mutual, Inc.'s independent accountants in connection with their audit of Washington Mutual, Inc. and its subsidiaries may provide independent verification of the adequacy of such functions. Periodic examination by the servicer's regulatory authorities may provide additional independent review of the administrative agent's management controls.

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      The administrative agent maintains a detailed business continuity plan to enable it to resume critical business functions in the event of a disaster or other serious servicing system outage, which plan is reviewed and updated periodically. The administrative agent performs annual disaster recovery tests in which it reroutes data and servicing system operations to a back-up site, and then processes sample transactions to ensure the functionality of the back-up site.

      It is the administrative agent's policy to require its third party vendors to implement measures similar to those described above to ensure the accuracy and integrity of servicing records.

Special Servicing Agreements

      The pooling agreement permits the servicer to enter into one or more special servicing agreements with unaffiliated owners of one or more classes of Subordinate Certificates or of a class of securities representing interests in one or more classes of Subordinate Certificates. Under those agreements, the owner may, for delinquent mortgage loans:

             (a) instruct the servicer to start or delay foreclosure proceedings, provided that the owner deposits a specified amount of cash with the servicer, which will be available for distribution to certificateholders if Liquidation Proceeds are less than they otherwise may have been had the servicer acted pursuant to its normal servicing procedures;

             (b) purchase those delinquent mortgage loans from the Trust immediately before the beginning of foreclosure proceedings at a price equal to the aggregate outstanding principal balance of the mortgage loans, plus accrued interest at the applicable mortgage interest rates through the last day of the month in which the mortgage loans are purchased; and/or

             (c) assume all of the servicing rights and obligations for the delinquent mortgage loans so long as (i) the servicer has the right to transfer the servicing rights and obligations of the mortgage loans to another servicer and (ii) the owner will service the mortgage loans according to the servicer's servicing guidelines.

AFFILIATIONS AND RELATED TRANSACTIONS

      The sponsor, the depositor and the administrative agent are all wholly owned subsidiaries of Washington Mutual Bank. Washington Mutual Bank is the servicer of the mortgage loans.

      There is not currently, and there was not during the past two years, any material business relationship, agreement, arrangement, transaction or understanding that is or was entered into outside the ordinary course of business or is or was on terms other than would be obtained in an arm's length transaction with an unrelated third party, between (a) any of the sponsor, the depositor and the Trust and (b) any of the servicer, the administrative agent, the trustees or any originator of the mortgage loans.

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DESCRIPTION OF THE MORTGAGE POOL*

      The mortgage pool will consist of 2,061 mortgage loans that will have an aggregate principal balance as of the Cut-Off Date, after deducting payments due on or before that date, of approximately $875,099,554. For each mortgage loan other than an August Loan, the “Cut-Off Date” is July 1, 2006. For (i) each August A Loan the “Cut-Off Date” is July 12, 2006 and (ii) each August B Loan the “Cut-Off Date” is July 14, 2006; provided, that with respect to the August Loans, all references to “principal balance” in this prospectus supplement are calculated after the deduction of the principal portion of the August 1, 2001 scheduled monthly payments. The mortgage loans in loan group 1 (of which approximately 0.5% and 0.2% are August A Loans and August B Loans, respectively) and loan group 2 (of which approximately 4.1% and 2.7% are August A Loans and August B Loans, respectively) will have an aggregate principal balance as of the Cut-Off Date, after deducting payments due on or before that date, of approximately $286,755,289 and $588,344,264, respectively. The mortgage loans in loan group 1 are mortgage loans that do not impose prepayment penalties. The mortgage loans in loan group 2 are mortgage loans that impose a prepayment penalty for voluntary prepayments in full for a period no greater than thirty-six months from the date of origination of such mortgage loan.

      The mortgage loans are secured by first mortgages or first deeds of trust or other similar security instruments creating first liens on fee simple or leasehold interests in one- to four-family residential properties or shares of stock relating to cooperative apartments. These mortgaged properties, which may include detached homes, duplexes, triplexes, fourplexes, townhouses, individual condominium units, individual units in planned unit developments and other attached dwelling units that are part of buildings consisting of more than four units (so long as the mortgaged property (other than cooperative apartments) consists of no more than four units), have the additional characteristics described below, in Appendix B (which is incorporated by reference into this prospectus supplement) and in the accompanying prospectus.

      As of the Cut-Off Date, approximately 1.1% of the borrowers are obligated on more than one mortgage loan underlying the certificates. As of the Cut-Off Date, the maximum number of mortgage loans related to a single borrower is four, and the maximum aggregate principal balance of mortgage loans related to a single borrower obligated on more than one mortgage loan represents approximately 0.1% of the mortgage loans by principal balance.

      For all mortgage loans, the Minimum Monthly Payment will be due on the first day of each month (the “Due Date”). Each mortgage loan will have a first Due Date during the period from July 2005 through August 2006, inclusive, and will have an original term to maturity of not more than 40 years.

      Each mortgage loan will be a conventional mortgage loan evidenced by a mortgage note. After an initial fixed-rate period of one or three months, the mortgage interest rate on each mortgage loan will be adjusted monthly to equal the sum of the applicable Index and the per annum rate specified in the


* The description of the mortgage pool and the mortgaged properties in this section and in Appendix B is based on the principal balance of the mortgage loans as of the close of business on the Cut-Off Date. Unless otherwise specifically stated or required by the context, all references in this prospectus supplement to “principal balance” refer to the principal balance as of the Cut-Off Date after giving effect to scheduled monthly payments due on or before the Cut-Off Date, whether or not received, and with respect to the August Loans, after deduction of the principal portion of the August 1, 2006 scheduled monthly payments. Due to rounding, percentages may not sum to 100%. References to percentages of mortgage loans refer in each case to the percentage of the aggregate principal balance of the mortgage loans in the related loan group or in the aggregate, as applicable, based on the outstanding principal balances determined as described above. References to weighted averages refer in each case to weighted averages by principal balance as of the Cut-Off Date of the related mortgage loans determined in the same way as described in the previous sentence. Before the issuance of the certificates, mortgage loans may be removed from the mortgage pool as a result of Payoffs, delinquencies or otherwise. If that happens, other mortgage loans may be included in the mortgage pool. The depositor believes that the information in this prospectus supplement for the mortgage pool is representative of the characteristics of the mortgage pool as it will actually be constituted when the certificates are issued, although the range of mortgage interest rates and other characteristics of the mortgage loans in the mortgage pool may vary. See “—Additional Information” in this prospectus supplement.

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applicable mortgage note (the “Margin”), rounded to the nearest 0.001% or 0.125% (except with respect to 0.2% of the mortgage loans for which the mortgage interest rate will not be rounded), as specified in the applicable mortgage note. In addition, adjustments to the mortgage interest rate for each mortgage loan are subject to a lifetime maximum interest rate (a “Rate Ceiling”). As of the Cut-Off Date, approximately 0.4% (by aggregate principal balance) of the mortgage loans have reached their Rate Ceiling. The minimum interest rate for each mortgage loan is its related Margin.

      Each mortgage loan was originated with an initial fixed-rate period of one or three months. As of the Cut-Off Date, approximately 21.4% (by aggregate principal balance) of the mortgage loans were still in their one or three month fixed-rate period.

      For each mortgage loan, a minimum monthly payment (the “Minimum Monthly Payment”) is required to be paid by the mortgagor pursuant to the terms of the mortgage note. The initial Minimum Monthly Payment for each mortgage loan is the amount which will fully amortize the mortgage loan at its initial fixed interest rate (which will generally be lower than the sum of the Index and Margin) in equal monthly installments over its remaining term to maturity. The Minimum Monthly Payment for each mortgage loan will adjust annually (except that approximately 0.4%, by aggregate principal balance as of the Cut-Off Date, of the mortgage loans have a fixed Minimum Monthly Payment for the first sixty months after origination of such mortgage loans, and after the expiration of this fixed payment period, the Minimum Monthly Payment on each of these mortgage loans will adjust annually thereafter), and on any Due Date on which the principal balance of the mortgage loan would otherwise exceed 110% (in the case of approximately 54.5% of the mortgage loans, as of the Cut-Off Date), 115% (in the case of approximately 44.5% of the mortgage loans, as of the Cut-Off Date) or 125% (in the case of approximately 0.9% of the mortgage loans, as of the Cut-Off Date) of its original principal balance, to an amount which will fully amortize the mortgage loan at the then current mortgage interest rate in equal monthly installments over its remaining term to maturity. The Minimum Monthly Payment may not, however, increase or (in the case of approximately 1.8% of the mortgage loans, as of the Cut-Off Date) decrease on any adjustment date by an amount greater than 7.5% of the Minimum Monthly Payment in effect immediately before that adjustment date (the “Payment Cap”), provided that this 7.5% limitation does not apply to the adjustment made on the fifth anniversary of the first Due Date, on each fifth anniversary thereafter and on the final adjustment date, or if the principal balance of the mortgage loan would otherwise exceed 110%, 115% or 125%, as applicable, of its original principal balance. In addition, any amounts owed under each mortgage loan on its maturity date are required to be paid on that date without regard to any Minimum Monthly Payment. Depending on the amount and timing of increases to the principal balance of a mortgage loan due to negative amortization, the final payment on that mortgage loan may be substantially larger than the immediately preceding Minimum Monthly Payment.

      Since the mortgage interest rate on each mortgage loan adjusts monthly and the Minimum Monthly Payment adjusts annually (except for the approximately 0.4%, by aggregate principal balance as of the Cut-Off Date, of the mortgage loans that have a fixed Minimum Monthly Payment for the first sixty months after origination of such mortgage loans, and after the expiration of this fixed payment period, the Minimum Monthly Payment on each of these mortgage loans will adjust annually thereafter), subject to the limitations described above, and since the Minimum Monthly Payment may not be increased on most adjustment dates by an amount greater than 7.5%, increases in the Index will cause a larger portion of the Minimum Monthly Payment to be allocated to interest and a smaller portion to principal. In some cases, the interest due on the mortgage loan may exceed the Minimum Monthly Payment. Any such excess will be added to the outstanding principal balance of the mortgage loan in the form of “negative amortization.” Decreases in the Index, on the other hand, will cause a larger portion of the Minimum Monthly Payment to be allocated to principal and a smaller portion to interest.

      The Minimum Monthly Payment for the entire first year (or first five years, as applicable) of a mortgage loan following origination reflects the fixed rate in effect during its initial fixed-rate period, which will generally be lower than the fully indexed rate in effect at any time during the first year. Therefore, even if the applicable Index does not increase, the Minimum Monthly Payment during the first year (or first five years, as applicable) of the mortgage loan may not be enough to pay the amount of interest due on the mortgage loan at the fully indexed rate, which is calculated based on the sum of the applicable Index and the Margin. If the mortgagor chooses to pay the Minimum Monthly Payment rather

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than one of the other higher payment options described below, this will lead to an increase in the outstanding principal balance of the mortgage loan in the form of negative amortization. Even after the first year (or first five years, as applicable), when the Minimum Monthly Payment may increase by 7.5%, this adjustment may not be enough to raise the Minimum Monthly Payment to the amount necessary to pay the interest due on the mortgage loan based on the sum of the applicable Index and the Margin in effect during the following year. If the new Minimum Monthly Payment is still less than the fully indexed rate during the following year, there will continue to be negative amortization if the mortgagor chooses to pay only the Minimum Monthly Payment. Therefore the effect of the initial fixed rate at the beginning of the life of the mortgage loan may be to continue to cause the Minimum Monthly Payment to be less than the monthly interest due on the mortgage loan until the fifth anniversary of the first Due Date (or until such Due Date as the principal balance of the mortgage loan would otherwise exceed 110%, 115% or 125%, as applicable, of its original principal balance) when the Minimum Monthly Payment will be reset to a fully-amortizing payment.

      Except for mortgagors who elect to participate in the servicer's Auto Pay program (as described below), the monthly statement for some of the mortgage loans may show one or more payment options, which may include an amount less than, equal to or greater than a fully-amortizing monthly payment (that is, an amount that would fully amortize the mortgage loan at its current interest rate in equal monthly installments over its remaining term to maturity). In general, when the Minimum Monthly Payment is less than the amount of interest due that month (which, after the initial fixed-rate period, is calculated each month as the sum of the applicable Index and the Margin), the mortgagor may have the option to pay the actual amount of interest due that month. Likewise, whenever the Minimum Monthly Payment is less than a fully-amortizing monthly payment, the mortgagor may have the option to pay that fully-amortizing amount. Finally, the mortgagor may have the option of paying a monthly payment that would amortize the mortgage loan based on a 15-year term from the first payment date, rather than the actual 30-year or 40-year term of the mortgage loan. Even those mortgage loans that do not specify particular payment options allow the related mortgagor to make payments in addition to the Minimum Monthly Payment.

      Mortgagors may elect to participate in the servicer's Auto Pay program, under which funds in an amount preselected by the mortgagor (not less than the Minimum Monthly Payment) are electronically debited from the mortgagor's checking or savings account and credited to the mortgage loan on a monthly payment date. The mortgagor may select as the monthly payment date any date from the first through the 15th day of the month. In order to enroll in the Auto Pay program, the mortgagor's bank account must be with a financial institution that is a member of the Automated Clearing House processing system.

      Mortgagors may remit principal prepayments together with the scheduled monthly payment or at any other time.

      The servicer will send monthly statements to mortgagors. The servicer may assess late fees for late monthly payments, nonsufficient funds fees, payoff statement fees (in connection with Payoffs) and, if applicable, prepayment penalties for early Payoffs.

      In addition, for any month, if the servicer receives a payment on a mortgage loan that is less than the Minimum Monthly Payment or if no payment is received at all, the servicer will advance its own funds or funds collected by the servicer on the mortgage loans but not required to be distributed to the certificateholders on the current Distribution Date, to cover the difference between the Minimum Monthly Payment scheduled to be received and the amount actually received with respect to that mortgage loan. However, the servicer will not be required to make such advances if it determines that those advances will not be recoverable from future payments or collections on that mortgage loan.

      Approximately 0.3% (by aggregate principal balance as of the Cut-Off Date) of the mortgage loans are assumable to the extent provided in the related mortgage note.

      None of the mortgage loans will be “Buydown Loans,” which are mortgage loans for which scheduled payments of principal and/or interest have been subsidized for a period of time through a fund provided by the originator or another person at the time of origination. Some of the risks of loss on some mortgage loans will be covered up to specified limits by primary insurance policies.

      As of the Cut-Off Date, all payments due on each mortgage loan have been made, and no mortgage loan was delinquent (that is, more than 30 days past due) more than once during the twelve-months

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preceding the Cut-Off Date (or during such shorter period as has elapsed from the date of acquisition of such mortgage loan by the sponsor) and any such delinquency lasted for no more than 30 days.

      Each mortgage loan with both (i) an original loan-to-value ratio and (ii) a loan-to-value ratio as of the Cut-Off Date in excess of 80% was covered, as of the Cut-Off Date, by a primary insurance policy. For purposes of determining whether a primary insurance policy is required, the loan-to-value ratio is generally calculated as follows: (1) with respect to mortgage loans not secured by property located in the State of New York, the original principal amount of such loan divided by the lesser of (x) the original appraised value of the related mortgaged property and (y) the purchase price of such loan; and (2) with respect to mortgage loans secured by property in the State of New York, the original principal amount of such loan divided by the original appraised value of the related mortgaged property.

      As of the Cut-Off Date, approximately 5.6% (by aggregate principal balance) of the mortgage loans will not, by the terms of the related mortgages, fully amortize by their stated maturity dates (each, a “Balloon Loan”).

      Some of the mortgage loans may require the mortgagor to pay the amount of the premium under the related primary insurance policy to the servicer, and the servicer is required to pay that premium to the applicable insurer (each, a “Lender PMI Loan”). At such time as the primary insurance policy is no longer required to be maintained, the mortgagor will cease to pay the amount of the premium to the servicer.

      As of the Cut-Off Date, certain of the mortgage loans impose prepayment penalties for certain prepayments of principal. See Appendix B to this prospectus supplement for a table showing prepayment penalty terms of the mortgage loans by loan group. Generally, the mortgage loans with prepayment penalties provide for the payment of a penalty in connection with certain voluntary, full or partial prepayments made within a period of time specified in the related mortgage note and generally ranging from six to thirty-six months from the date of origination of such mortgage loan. The amount of the applicable prepayment penalty, to the extent permitted under applicable law, is as provided in the related mortgage note. Generally, the prepayment penalty amount is (i) six months of interest on the amount of the prepayment that exceeds 20% of the original principal balance, (ii) a specified number of months of interest or (iii) a specified percentage as provided in the mortgage note. See the “Prepayment Penalty Terms of the Group 1 Loans” and “Prepayment Penalty Terms of the Group 2 Loans” tables in Appendix B hereto for information regarding the number of loans, and the related percentage of each loan group, that contain prepayment penalties, broken out for each of the various prepayment penalty terms.

      Investors should note that, regardless of the terms of the mortgage note, the servicer will not collect prepayment penalties after the third anniversary of the origination of the mortgage loan.

      The mortgage loans will be purchased by the depositor directly from the sponsor, which purchased the mortgage loans directly or indirectly from affiliated or unaffiliated third parties who either originated the applicable mortgage loans or purchased the mortgage loans through correspondent or broker lending programs operated by these third parties. See “The Sponsor—The Sponsor's Origination Channels,” “Underwriting of the Mortgage Loans” and “The Originators” in this prospectus supplement.

Loan Group 1

      The mortgage loans in loan group 1 consist of 650 mortgage loans with an aggregate principal balance as of the Cut-Off Date of approximately $286,755,289.

      As of the Cut-Off Date, approximately 5.9% of the mortgage loans in loan group 1 were covered by a primary insurance policy.

      As of the Cut-Off Date, approximately 2.6% (by aggregate principal balance) of the mortgage loans in loan group 1 are Balloon Loans. As of the Cut-Off Date, all of the Balloon Loans in loan group 1 amortize over 40 years, but require payment in full 360 months after the origination of such mortgage loans.

      None of the mortgage loans in loan group 1 imposes penalties for early prepayments of any kind.

      See Appendix B for a detailed description of the mortgage loans in loan group 1.

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Loan Group 2

      The mortgage loans in loan group 2 consist of 1,411 mortgage loans with an aggregate principal balance as of the Cut-Off Date of approximately $588,344,264.

      As of the Cut-Off Date, approximately 2.8% of the mortgage loans in loan group 2 were covered by a primary insurance policy.

      As of the Cut-Off Date, approximately 7.1% (by aggregate principal balance) of the mortgage loans in loan group 2 are Balloon Loans. As of the Cut-Off Date, all of the Balloon Loans in loan group 2 amortize over 40 years, but require payment in full 360 months after the origination of such mortgage loans.

      As of the Cut-Off Date, all of the mortgage loans in loan group 2 impose penalties for early prepayments. The amount of the applicable prepayment penalty, to the extent permitted by applicable law, is as provided in the related mortgage note.

      As of the Cut-Off Date, approximately 0.3% (by aggregate principal balance) of the mortgage loans in loan group 2 impose penalties for early prepayments in full (and in some cases for partial prepayments) received on or before the half year anniversary of the origination of the mortgage loan. The amount of the prepayment penalty for these mortgage loans is 6 months of interest on the amount of the prepayment exceeding 20% of the original loan amount.

      As of the Cut-Off Date, approximately 31.5% (by aggregate principal balance) of the mortgage loans in loan group 2 impose penalties for early prepayments in full (and in some cases for partial prepayments) received on or before the first anniversary of the origination of the mortgage loan. The amount of the prepayment penalty (i) for 92.2% of these mortgage loans is 6 months of interest on the amount of the prepayment exceeding 20% of the original loan amount, (ii) for 2.6% of these mortgage loans is 6 months of interest on 80% of the amount of the prepayment, (iii) for 1.4% of these mortgage loans is either (1) if property is owner-occupied—2% of the outstanding loan amount, (2) if property is not owner-occupied and the original loan amount is less than $75,000.00—1% of the outstanding loan amount or (3) if property is not owner-occupied and the original loan amount is greater than or equal to $75,000.00—6 months interest on the outstanding loan amount, (iv) for 1.3% of these mortgage loans is 2% of the amount of the prepayment, (v) for 1.1% of these mortgage loans is the lesser of (1) 2% of the prepaid principal balance and (2) the lesser of (a) 3 months of interest on the prepaid principal balance and (b) the balance of the first year's interest on the prepaid principal balance, except in the case of certain refinancings in which an additional penalty of 3 months of interest on the prepaid principal balance will be imposed, (vi) for 0.7% of these mortgage loans is 2% of the original loan amount, (vii) for 0.5% of these mortgage loans is 2 months of interest on the amount of the prepayment exceeding 33% of the original loan amount and (viii) for 0.1% of these mortgage loans is 2% of the amount of the prepayment (only applies if the outstanding balance at the time of prepayment is at least $50,000).

      As of the Cut-Off Date, approximately 4.3% (by aggregate principal balance) of the mortgage loans in loan group 2 impose penalties for early prepayments in full (and in some cases for partial prepayments) received on or before the second anniversary of the origination of the mortgage loan. The amount of the prepayment penalty (i) for 92.5% of these mortgage loans is 6 months of interest on the amount of the prepayment exceeding 20% of the original loan amount, (ii) for 3.8% of these mortgage loans is 2% of the amount of the prepayment if the prepayment occurs during the first year and 1% of the amount of the prepayment if the prepayment occurs during the second year and (iii) for 3.7% of these mortgage loans is 2% of the original loan amount.

      As of the Cut-Off Date, approximately 63.9% (by aggregate principal balance) of the mortgage loans in loan group 2 impose penalties for early prepayments in full (and in some cases for partial prepayments) received on or before the third anniversary of the origination of the mortgage loan. The amount of the prepayment penalty (i) for 86.5% of these mortgage loans is 6 months of interest on the amount of the prepayment exceeding 20% of the original loan amount, (ii) for 7.4% of these mortgage loans is 6 months of interest on 80% of the amount of the prepayment, (iii) for 2.3% of these mortgage loans is 2% of the original loan amount, (iv) for 1.4% of these mortgage loans is either (1) if property is owner-occupied—2% of the outstanding loan amount, (2) if property is not owner-occupied and the original loan amount is less than $75,000.00—1% of the outstanding loan amount or (3) if property is not

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owner-occupied and the original loan amount is greater than or equal to $75,000.00—6 months interest on the outstanding loan amount, (v) for 1.0% of these mortgage loans is 2% of the amount of the prepayment, (vi) for 0.8% of these mortgage loans is the lesser of (1) 2% of the prepaid principal balance and (2) the lesser of (a) 3 months of interest on the prepaid principal balance and (b) the balance of the first year's interest on the prepaid principal balance, except in the case of certain refinancings in which an additional penalty of 3 months of interest on the prepaid principal balance will be imposed, (vii) for 0.2% of these mortgage loans is 5% of the amount of the prepayment if the prepayment occurs during the first year, 4% of the amount of the prepayment if the prepayment occurs during the second year and 3% of the amount of the prepayment if the prepayment occurs during the third year, (viii) for 0.2% of these mortgage loans is 2 months of interest on the amount of the prepayment exceeding 33% of the original loan amount, (ix) for 0.1% of these mortgage loans is lesser of (a) 3 months of interest on the amount of the prepayment and (b) 2% of the amount of the prepayment, (x) for 0.1% of these mortgage loans is the lesser of (a) 2% of the amount of the prepayment and (b) 60 days of interest on the amount of the prepayment, (xi) for 0.0% of these mortgage loans is 1% of the amount of the prepayment and (xii) for 0.0% of these mortgage loans is 1% of the original loan amount.

      See Appendix B for a detailed description of the mortgage loans in loan group 2.

The Indexes

      The index for each mortgage loan (the “Index”) is either One-Year MTA or One-Month LIBOR.

      The index for approximately 81.9% and 98.9% of the mortgage loans in loan group 1 and loan group 2 (in each case, by aggregate principal balance as of the Cut-Off Date) is a per annum rate equal to the twelve-month moving average monthly yield on United States Treasury Securities adjusted to a constant maturity of one year (“One-Year MTA”), as published by the Board of Governors of the Federal Reserve System in the Federal Reserve Statistical Release “Selected Interest Rates (H.15)”, determined by averaging the monthly yields for the most recently available twelve months. The One-Year MTA figure used for each interest rate adjustment date will be the most recent One-Year MTA figure available as of fifteen days before that date. If One-Year MTA is no longer available, the servicer will choose a new Index that is based on comparable information.

      Listed below are some historical values of One-Year MTA since 2001. The values of One-Year MTA shown are intended only to provide an historical summary of the movements in the One-Year MTA and may not be indicative of future rates. No assurances can be given as to the value of One-Year MTA on any interest rate adjustment date or during the life of any mortgage loan.

Month

  2006

  2005

  2004

  2003

  2002

  2001

January

       3.751%          2.022%          1.234%          1.935%          3.260%          5.999%  

February

       3.888%          2.171%          1.229%          1.858%          3.056%          5.871%  

March

       4.011%          2.347%          1.225%          1.747%          2.912%          5.711%  

April

       4.143%          2.504%          1.238%          1.646%          2.787%          5.530%  

May

       4.282%          2.633%          1.288%          1.548%          2.668%          5.318%  

June

       4.432%          2.737%          1.381%          1.449%          2.553%          5.102%  

July

               2.865%          1.463%          1.379%          2.414%          4.897%  

August

               3.019%          1.522%          1.342%          2.272%          4.671%  

September

               3.163%          1.595%          1.302%          2.180%          4.395%  

October

               3.326%          1.677%          1.268%          2.123%          4.088%  

November

               3.478%          1.773%          1.256%          2.066%          3.763%  

December

               3.618%          1.887%          1.244%          2.002%          3.481%  

                                               

      The index for approximately 18.1% and 1.1% of the mortgage loans in loan group 1 and loan group 2 (in each case, by aggregate principal balance as of the Cut-Off Date) is the average of interbank offered rates for one-month U.S. dollar-denominated deposits in the London market, as published in The Wall Street Journal and most recently available as of fifteen days before the applicable interest rate adjustment date (“One-Month LIBOR”). In the event One-Month LIBOR is no longer available, the servicer will choose a new Index in accordance with the terms of the related mortgage note and in compliance with federal and state law.

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      Listed below are some historical values of the average of interbank offered rates for one-month U.S. dollar-denominated deposits in the London market. These values were not determined in accordance with the provisions for One-Month LIBOR described above. The values shown below are intended only to provide a historical summary of the movement in rates related to One-Month LIBOR and may not be indicative of future rates. The values shown below were derived from various sources.

Month

  2006

  2005

  2004

  2003

  2002

  2001

January

       4.570%          2.590%          1.100%          1.340%          1.848%          5.570%  

February

       4.633%          2.716%          1.098%          1.338%          1.870%          5.208%  

March

       4.829%          2.870%          1.090%          1.300%          1.879%          5.080%  

April

       5.040%          3.089%          1.100%          1.320%          1.840%          4.433%  

May

       5.111%          3.130%          1.114%          1.320%          1.844%          4.058%  

June

       5.334%          3.340%          1.369%          1.120%          1.839%          3.863%  

July

               3.519%          1.504%          1.100%          1.820%          3.750%  

August

               3.700%          1.670%          1.119%          1.820%          3.581%  

September

               3.864%          1.840%          1.120%          1.811%          2.630%  

October

               4.090%          2.000%          1.120%          1.716%          2.288%  

November

               4.294%          2.290%          1.170%          1.439%          2.119%  

December

               4.390%          2.400%          1.120%          1.380%          1.874%  

                                               

Additional Information

      Appendix B contains important information about the mortgage loans in each loan group including:

the mortgage interest rates, the Pass-Through Rates and the original principal balances of the mortgage loans;
 
the Margins, the interest rate floors and the Rate Ceilings;
 
the years in which initial monthly payments on the mortgage loans are due;
 
the first interest rate adjustment dates on the mortgage loans;
 
the loan-to-value ratios of the mortgage loans as of the Cut-Off Date;
 
the types of mortgaged properties;
 
the geographic distribution by state of the mortgaged properties;
 
the scheduled maturity years of the mortgage loans;
 
the original terms to maturity of the mortgage loans;
 
the number of mortgage loans originated under full documentation or reduced documentation programs;
 
the stated owner occupancy status of the mortgaged properties when the mortgage loans were originated;
 
the mortgagor's purpose of financing;
 
the credit score ranges;
 
the prepayment penalty terms;
 
the monthly debt to income ratio of all debt;
 
the combined loan-to-value ratios of the mortgage loans;
 
current and past delinquencies of the mortgage loans; and
 
the number of mortgage loans, and the percentage of such loan group, that contain prepayment penalties, broken out for each of the various prepayment penalty terms.

      The credit score tables appearing in Appendix B show the credit scores, if any, that the originators or underwriters of the mortgage loans collected for the mortgagors. The credit scores shown were collected from a variety of sources over a period of weeks, months or longer, and the credit scores do not necessarily reflect the credit scores that would be reported as of the date of this prospectus supplement.

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Credit scores should not be considered as an accurate predictor of the likelihood of repayment of the related mortgage loans. See “Underwriting of the Mortgage Loans—Evaluation of the Borrower's Credit Standing” in this prospectus supplement.

      The material terms of the pooling agreement are described in this prospectus supplement, and the pooling agreement will be available to purchasers of the certificates through a Current Report on Form 8-K that will be filed with the Securities and Exchange Commission within fifteen days after the initial issuance of the certificates. If mortgage loans are removed from or added to the mortgage pool as described in the footnote on page S-55, that removal or addition will be noted in a Distribution Report on Form 10-D or a Current Report on Form 8-K.

Representations and Warranties Regarding the Mortgage Loans

      Under the mortgage loan sale agreement pursuant to which the sponsor will sell the mortgage loans to the depositor, the sponsor will make representations and warranties in respect of the mortgage loans, which representations and warranties the depositor will assign to the Trust pursuant to the pooling agreement. Among those representations and warranties are the following:

Each mortgage is a valid and enforceable first lien on an unencumbered estate in fee simple or leasehold estate in the related mortgaged property, except as such enforcement may be limited by laws affecting the enforcement of creditors' rights generally and principles of equity, and except as provided in the mortgage loan sale agreement;
 
The depositor will be the legal owner of each mortgage loan, free and clear of any encumbrance or lien (other than any lien under the mortgage loan sale agreement);
 
All payments due on each mortgage loan have been made and no mortgage loan was delinquent (i.e., was more than 30 days past due) more than once in the preceding 12 months and any such delinquency lasted for no more than 30 days;
 
There are no delinquent assessments or taxes outstanding against any mortgaged property;
 
There is no offset, defense or counterclaim to any mortgage note, except as stated in the mortgage loan sale agreement;
 
Each mortgaged property is free of damage and in good repair, ordinary wear and tear excepted;
 
Each mortgage loan at the time it was made complied with all applicable local, state and federal laws, including, without limitation, usury, equal credit opportunity, disclosure and recording laws, and predatory and abusive lending laws applicable to the originating lender;
 
Each mortgage loan (except mortgage loans secured by cooperative properties) is covered by a title insurance policy insuring the lien status of the mortgage, subject to the exceptions set forth in the policy;
 
Each mortgage loan with a loan-to-value ratio both (i) as of the Cut-Off Date and (ii) as of its respective origination date in excess of 80% was covered, as of the Cut-Off Date, by a primary insurance policy, and such policy or guaranty is valid and remains in full force and effect;
 
All hazard insurance or other insurance required under the mortgage loan sale agreement has been validly issued and remains in full force and effect;
 
Each mortgage and mortgage note is the legal, valid and binding obligation of the maker thereof and is enforceable in accordance with its terms, except only as such enforcement may be limited by laws affecting the enforcement of creditors' rights generally and principles of equity;
 
The sponsor used no adverse selection procedures in selecting the mortgage loans from among the outstanding adjustable rate conventional mortgage loans owned by it which were available for sale and as to which the representations and warranties in the mortgage loan sale agreement could be made; and

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Each mortgage loan constitutes a qualified mortgage under the Internal Revenue Code.

      Pursuant to the pooling agreement, the depositor will represent and warrant to the Trust that, as of the Closing Date, the Trust will be the legal owner of each mortgage loan, free and clear of any encumbrance or lien (other than (i) any lien arising before the depositor's purchase of the mortgage loan from the sponsor and (ii) any lien under the pooling agreement).

      In the event of a material breach of the representations and warranties made by the sponsor or the depositor, the breaching party will be required to either cure the breach in all material respects, repurchase the affected mortgage loan or substitute for the affected mortgage loan. In the event that a required loan document is not included in the mortgage files for the mortgage loans, the sponsor generally will also be required to either cure the defect or repurchase or substitute for the affected mortgage loan. See “Description of the Securities—Representations and Warranties Regarding the Mortgage Loans; Remedies for Breach” in the prospectus for a description of the purchase price for each repurchased mortgage loan and the requirements with respect to substitutions of mortgage loans.

Criteria for Selection of Mortgage Loans

      The sponsor selected the mortgage loans from among its portfolio of mortgage loans held for sale based on a variety of considerations, including type of mortgage loan, geographic concentration, range of mortgage interest rates, principal balance, credit scores and other characteristics described in Appendix B to this prospectus supplement, and taking into account investor preferences and the depositor's objective of obtaining the most favorable combination of ratings on the certificates.

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DESCRIPTION OF THE CERTIFICATES

General

      The certificates will be issued pursuant to the pooling agreement to be dated as of the Cut-Off Date among WaMu Asset Acceptance Corp., as depositor, Washington Mutual Bank, as servicer, LaSalle Bank National Association, as trustee, and Christiana Bank & Trust Company, as Delaware trustee. A form of the pooling agreement is filed as an exhibit to the registration statement relating to the certificates. The accompanying prospectus contains important additional information regarding the terms and conditions of the pooling agreement and the certificates. The offered certificates will not be issued unless they receive the ratings from Standard & Poor's Ratings Services, 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. As of the Closing Date, the offered certificates, other than the Class B-6, Class B-7, Class B-8, Class B-9, Class B-10 and Class B-11 Certificates, will qualify as “mortgage related securities” within the meaning of the Secondary Mortgage Market Enhancement Act of 1984.

      The Washington Mutual Mortgage Pass-Through Certificates, WMALT Series 2006-AR6 will consist of the following classes:

                

Class 1A

                             Class B-2                              Class B-10
                

Class 1A-1B

                             Class B-3                              Class B-11
                

Class 2A

                             Class B-4                              Class B-12
                

Class 2A-1B

                             Class B-5                              Class B-13
                

Class CA-1C

                             Class B-6                              Class B-14
                

Class 1X

                             Class B-7                              Class R
                

Class 2X-PPP

                             Class B-8    
                

Class B-1

                             Class B-9    

      Collectively, the certificates will represent all of the beneficial interests in the Trust. The certificates will have the following designations:

      

Class A Certificates

     Class 1A, Class 1A-1B, Class 2A, Class 2A-1B and Class CA-1C Certificates.
       
      

Class X Certificates

     Class 1X and Class 2X-PPP Certificates.
       
      

Senior Certificates

     Class A, Class X and Class R Certificates.
       
      

Senior Subordinate Certificates

     Class B-1, Class B-2, Class B-3, Class B-4, Class B-5, Class B-6, Class B-7, Class B-8, Class B-9, Class B-10 and Class B-11 Certificates.
       
      

Junior Subordinate Certificates

     Class B-12, Class B-13, Class and Class B-14 Certificates.
       
      

Class B or Subordinate Certificates

     Senior Subordinate and Junior Subordinate Certificates. The Class B Certificates are subordinate certificates for the Senior Certificates and, therefore, as used in this prospectus supplement, their “related loan group” includes the mortgage loans in loan group 1 and loan group 2.
       
      

Residual Certificates

     Class R Certificates.
       
      

Regular Certificates

     All classes of certificates other than the Class R Certificates.
       
      

LIBOR Certificates

     Class 1A, Class 1A-1B, Class CA-1C and Class B Certificates.
       
      

MTA Certificates

     Class 2A and Class 2A-1B Certificates.

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Physical Certificates

     Junior Subordinate and Class R Certificates.
       
      

Book-Entry Certificates

     All classes of certificates other than the Physical Certificates.

      Only the Senior Certificates and the Senior Subordinate Certificates, called the offered certificates, are offered by this prospectus supplement. The Junior Subordinate Certificates are not offered by this prospectus supplement.

      The “Class Principal Balance” for any Distribution Date and for any class of certificates will equal the aggregate amount of principal to which such class or, in the case of the Class 1X and Class 2X-PPP Certificates, the related principal-only component is entitled on the Closing Date, reduced by all distributions of principal to that class or those components, as applicable, and all allocations of losses required to be borne by that class or those components, as applicable, before that Distribution Date and increased by the portion of the aggregate Net Negative Amortization allocated to that class or those components, as applicable, as described in “—Distributions of Interest” in this prospectus supplement. The “Class Principal Balance” of the Class CA-1C Certificates will equal the sum of the related Component Principal Balances. As of the Cut-Off Date, the Class Principal Balance of the Class CA-1C Group 1 Component and Class CA-1C Group 2 Component will be approximately $25,594,000 and $52,510,000, respectively.

      The “Certificate Principal Balance” for any certificate will be the portion of the corresponding Class Principal Balance that it represents; provided, however, that each of the Class 1X and Class 2X-PPP Certificates will represent a portion of the related Class Principal Balance equal to its percentage interest in the related Class X Notional Amount (as described in this prospectus supplement under “Distributions of Interest—Class X Notional Amounts and Class X Principal Balances”).

      Solely for purposes of calculating distributions of principal and interest and the allocation of losses realized on the mortgage loans, each of the Class 1X and Class 2X-PPP Certificates will be deemed to be comprised of an interest-only component and a principal-only component. Interest, if any, will be payable with respect to each Class X interest-only component, calculated as described in this prospectus supplement under “—Distributions of Interest—Interest Distributions on the Class X Certificates.” In addition, each of the Class 1X and Class 2X-PPP Certificates will have a Class Principal Balance, which will be the principal balance of their related principal-only component and which will initially equal zero. In the event that interest otherwise payable with respect to the Class 1X or Class 2X-PPP interest-only component and derived from a loan group is reduced as a result of the allocation of Net Negative Amortization, the amount of such reduction will be added as principal to the related Class X Principal Balance. Interest will not accrue on any Class X Principal Balance.

      Solely for purposes of calculating distributions of principal and interest and the allocation of losses realized on the mortgage loans, the Class CA-1C Certificates will be deemed to be comprised of the Class CA-1C Group 1 Component and the Class CA-1C Group 2 Component. Each Class CA-1C Component will have a Component Principal Balance representing the portion of the Class Principal Balance derived from the related loan group. Interest will be payable with respect to each Class CA-1C Component.

      The “Component Principal Balance” for any component of the Class CA-1C Certificates and any Distribution Date will equal the aggregate amount of principal to which that component is entitled on the Closing Date, reduced by all distributions of principal to that component, and all allocations of losses required to be borne by that component, before that Distribution Date and increased by the portion of the aggregate Net Negative Amortization allocated to that component, as described in “—Distributions of Interest” in this prospectus supplement.

      The Senior Certificates will comprise approximately 89.25%, the Senior Subordinate Certificates will comprise approximately 8.75%, and the Junior Subordinate Certificates will comprise approximately 2.00% of the aggregate principal balance of the mortgage loans as of the Cut-Off Date.

      The offered certificates, other than the Class X and Class R Certificates, are each offered in minimum denominations equivalent to not less than $25,000 each and multiples of $1 in excess of that amount.

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      The Class X Certificates are offered in minimum denominations equivalent to not less than $100,000 initial related Class X Notional Amount each and multiples of $1 in excess of that amount.

      The Class R Certificates will have an initial Class Principal Balance of $100 and will be offered in registered, certificated form in a single denomination of a 99.99% percentage interest. The remaining 0.01% percentage interest of the Class R Certificates will be owned by the servicer as described in this prospectus supplement under “Material Federal Income Tax Consequences.”

      Distributions (i) on the Class 1A, Class 1A-1B and Class 1X Certificates will be based solely on payments received or advanced in respect of the mortgage loans in loan group 1, (ii) on the Class 2A, Class 2A-1B and Class 2X-PPP Certificates will be based solely on payments received or advanced in respect of the mortgage loans in loan group 2 and (iii) on the Class CA-1C and Class B Certificates will be based solely on payments received or advanced in respect of the mortgage loans in loan group 1 and loan group 2, except in each case, in the limited circumstances described in this prospectus supplement under “—Cross-Collateralization,” and except that Carryover Shortfall Amounts for the Class A and Class B Certificates may be paid from interest otherwise available for distribution to the Class 1X and Class 2X-PPP Certificates.

Book-Entry Registration

      Each class of Book-Entry Certificates will initially be represented by a single certificate registered in the name of Cede & Co., a nominee of The Depository Trust Company, New York, New York (“DTC”). See “Description of the Securities—Form of Securities” in the accompanying prospectus for a description of the book-entry system.

Definitive Certificates

      The Book-Entry Certificates will be issued in fully registered, certificated form to certificateholders or their nominees, rather than to DTC or its nominee, only upon the occurrence of certain events described under “Description of the Securities—Form of Securities—Definitive Securities” in the accompanying prospectus.

      The trustee or its paying agent, if any, will make distributions of principal and interest on the definitive certificates directly to holders of those definitive certificates in accordance with the pooling agreement procedures described in this prospectus supplement. Distributions of principal and interest on each Distribution Date will be made to holders in whose names certificates were registered at the close of business on the related record date. Distributions will be made by wire transfer in immediately available funds for the account of each holder or, if a holder has not provided wire instructions, by check mailed to the address of the holder as it appears on the register maintained by the certificate registrar. The final payment on any certificate will be made only on presentation and surrender of the certificate at the offices of the trustee or its agent or such office or agency as is specified in the notice of final distribution to holders of certificates being retired. When the trustee receives notice from the servicer (which is required to be no later than the sixteenth day of the month in which a class will be retired) that it believes the remaining unpaid principal balance of a class of certificates will be distributable on the next Distribution Date, the trustee is required to provide notice to registered certificateholders of that class not later than the eighteenth day of the month in which that class will be retired.

      Definitive certificates will be transferable and exchangeable at the office or agency of the trustee maintained for that purpose, which initially shall be in Chicago, Illinois. A reasonable service charge may be imposed for any registration of transfer or exchange, and the trustee or its agent may require payment of a sum sufficient to cover any tax or other governmental charge imposed in connection with registration of transfer or exchange.

Priority of Distributions

      Beginning in August 2006, on the 25th day of each month, or if the 25th day is not a business day, on the immediately following business day (each, a “Distribution Date”), distributions will be made to the certificateholders in the order and priority as follows:

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       (a)   with respect to the Class 1A, Class 1A-1B, Class 1X and Class R Certificates and the Class CA-1C Group 1 Component, before the Credit Support Depletion Date, to the extent of the Available Distribution Amount for loan group 1 for that Distribution Date:
           
      (i)   first, to the Class 1A, Class 1A-1B, Class 1X and Class R Certificates and the Class CA-1C Group 1 Component, pro rata, accrued and unpaid interest at their respective certificate interest rate on their respective Class Principal Balance or Component Principal Balance, as applicable (or, in the case of the Class 1X Certificates, accrued and unpaid interest calculated as described in the definition of “Class 1X Accrued Interest”); provided, however, that, notwithstanding the foregoing, amounts to be distributed to the Class 1X Certificates in respect of accrued interest (after giving effect to any Net Negative Amortization allocated to the Class 1X Certificates and any shortfall in interest collections resulting from the delay in distribution of Curtailments and some Payoffs (to the extent not covered by compensating interest) and the Relief Act allocated to the Class 1X Certificates) (the “Class 1X Distributable Interest”) with respect to the mortgage loans in loan group 1 will be reduced to the extent necessary to pay first, any Carryover Shortfall Amounts to the Class A Certificates pursuant to clause (c) below, and second, any Carryover Shortfall Amounts to the Class B Certificates pursuant to clause (d)(xxiv) below;
           
      (ii)   second, to the Class R Certificates, as principal, until the Class R Principal Balance has been reduced to zero;
           
      (iii)   third, to the Class 1A, Class 1A-1B and Class 1X Certificates and the Class CA-1C Group 1 Component, as principal, the Group 1 Senior Principal Distribution Amount, in the order described in “—Distributions of Principal—Group 1 Senior Principal Distribution Amount” in this prospectus supplement;
       
       (b)   with respect to the Class 2A, Class 2A-1B and Class 2X-PPP Certificates and the Class CA-1C Group 2 Component, before the Credit Support Depletion Date, to the extent of the Available Distribution Amount for loan group 2 for that Distribution Date:
           
      (i)   first, to the Class 2A, Class 2A-1B and Class 2X-PPP Certificates and the Class CA-1C Group 2 Component, pro rata, accrued and unpaid interest at their respective certificate interest rate on their respective Class Principal Balance or Component Principal Balance, as applicable (or, in the case of the Class 2X-PPP Certificates, accrued and unpaid interest calculated as described in the definition of “Class 2X-PPP Accrued Interest”); provided, however, that, notwithstanding the foregoing, amounts to be distributed to the Class 2X-PPP Certificates in respect of accrued interest (after giving effect to any Net Negative Amortization allocated to the Class 2X-PPP Certificates and any shortfall in interest collections resulting from the delay in distribution of Curtailments and some Payoffs (to the extent not covered by compensating interest) and the Relief Act allocated to the Class 2X-PPP Certificates) (the “Class 2X-PPP Distributable Interest”) with respect to the mortgage loans in loan group 2 will be reduced to the extent necessary to pay first, any Carryover Shortfall Amounts to the Class A Certificates pursuant to clause (c) below, and second, any Carryover Shortfall Amounts to the Class B Certificates pursuant to clause (d)(xxiv) below; and
           
      (ii)   second, to the Class 2A, Class 2A-1B and Class 2X-PPP Certificates and the Class CA-1C Group 2 Component, as principal, the Group 2 Senior Principal Distribution Amount, in the order described in “—Distributions of Principal—Group 2 Senior Principal Distribution Amount” in this prospectus supplement;

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       (c)   (i)   on the initial Distribution Date, to the Class 1A, Class 1A-1B, Class 2A and Class 2A-1B Certificates and the Class CA-1C Group 1 and Group 2 Components, their Carryover Shortfall Amounts, pro rata according to such Carryover Shortfall Amounts, from the aggregate Class 1X Distributable Interest and Class 2X-PPP Distributable Interest (which aggregate amount of Class 1X Distributable Interest and Class 2X-PPP Distributable Interest will be reduced by the aggregate amount paid as Carryover Shortfall Amounts to the Class 1A, Class 1A-1B, Class 2A and Class 2A-1B Certificates and the Class CA-1C Group 1 and Group 2 Components as follows: (A) first, the aggregate Class 1X Distributable Interest and Class 2X-PPP Distributable Interest will be reduced, pro rata, by the aggregate amount paid pursuant to this clause (c)(i) as Carryover Shortfall Amounts to the Class 2A and Class 2A-1B Certificates and the Class CA-1C Group 1 and Group 2 Components; (B) second, the Class 1X Distributable Interest remaining after the reduction pursuant to clause (c)(i)(A) above will be further reduced by the aggregate amount paid pursuant to this clause (c)(i) as Carryover Shortfall Amounts to the Class 1A and Class 1A-1B Certificates; and (C) third, the Class 2X-PPP Distributable Interest remaining after the reduction pursuant to clause (c)(i)(A) above will be further reduced by the portion of the aggregate amount paid pursuant to this clause (c)(i) as Carryover Shortfall Amounts to the Class 1A and Class 1A-1B Certificates that has not been allocated in reduction of the Class 1X Distributable Interest pursuant to clause (c)(i)(B) above); and
           
      (ii)   on each Distribution Date after the initial Distribution Date, to the Class 1A and Class 1A-1B Certificates and the Class CA-1C Group 1 and Group 2 Components, their Carryover Shortfall Amounts, pro rata according to such Carryover Shortfall Amounts, from the aggregate Class 1X Distributable Interest and Class 2X-PPP Distributable Interest (which aggregate amount of Class 1X Distributable Interest and Class 2X-PPP Distributable Interest will be reduced by the aggregate amount paid as Carryover Shortfall Amounts to the Class 1A and Class 1A-1B Certificates and the Class CA-1C Group 1 and Group 2 Components as follows: (A) first, the aggregate Class 1X Distributable Interest and Class 2X-PPP Distributable Interest will be reduced, pro rata, by the aggregate amount paid pursuant to this clause (c)(ii) as Carryover Shortfall Amounts to the Class CA-1C Group 1 and Group 2 Components; (B) second, the Class 1X Distributable Interest remaining after the reduction pursuant to clause (c)(ii)(A) above will be further reduced by the aggregate amount paid pursuant to this clause (c)(ii) as Carryover Shortfall Amounts to the Class 1A and Class 1A-1B Certificates; and (C) third, the Class 2X-PPP Distributable Interest remaining after the reduction pursuant to clause (c)(ii)(A) above will be further reduced by the portion of the aggregate amount paid pursuant to this clause (c)(ii) as Carryover Shortfall Amounts to the Class 1A and Class 1A-1B Certificates that has not been allocated in reduction of the Class 1X Distributable Interest pursuant to clause (c)(ii)(B) above);
       
       (d)   with respect to the Class B and Class R Certificates, before the Credit Support Depletion Date, to the extent of the Available Distribution Amount for loan group 1 and loan group 2 for that Distribution Date, subject to the payment of the Senior Certificates as described above in paragraphs (a), (b) and (c) and subject to any payments to the Senior Certificates from amounts otherwise distributable to the Class B Certificates, as described in this prospectus supplement under “—Cross-Collateralization”:
           
      (i)   first, to the Class B-1 Certificates, accrued and unpaid interest at their certificate interest rate on the Class B-1 Principal Balance;
           
      (ii)   second, to the Class B-1 Certificates, their pro rata share of the Subordinate Principal Distribution Amount;
           
      (iii)   third, to the Class B-2 Certificates, accrued and unpaid interest at their certificate interest rate on the Class B-2 Principal Balance;
           
      (iv)   fourth, to the Class B-2 Certificates, their pro rata share of the Subordinate Principal Distribution Amount;

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      (v)   fifth, to the Class B-3 Certificates, accrued and unpaid interest at their certificate interest rate on the Class B-3 Principal Balance;
           
      (vi)   sixth, to the Class B-3 Certificates, their pro rata share of the Subordinate Principal Distribution Amount;
           
      (vii)   seventh, to the Class B-4 Certificates, accrued and unpaid interest at their certificate interest rate on the Class B-4 Principal Balance;
           
      (viii)   eighth, to the Class B-4 Certificates, their pro rata share of the Subordinate Principal Distribution Amount;
           
      (ix)   ninth, to the Class B-5 Certificates, accrued and unpaid interest at their certificate interest rate on the Class B-5 Principal Balance;
           
      (x)   tenth, to the Class B-5 Certificates, their pro rata share of the Subordinate Principal Distribution Amount;
           
      (xi)   eleventh, to the Class B-6 Certificates, accrued and unpaid interest at their certificate interest rate on the Class B-6 Principal Balance;
           
      (xii)   twelfth, to the Class B-6 Certificates, their pro rata share of the Subordinate Principal Distribution Amount;
           
      (xiii)   thirteenth, to the Class B-7 Certificates, accrued and unpaid interest at their certificate interest rate on the Class B-7 Principal Balance;
           
      (xiv)   fourteenth, to the Class B-7 Certificates, their pro rata share of the Subordinate Principal Distribution Amount;
           
      (xv)   fifteenth, to the Class B-8 Certificates, accrued and unpaid interest at their certificate interest rate on the Class B-8 Principal Balance;
           
      (xvi)   sixteenth, to the Class B-8 Certificates, their pro rata share of the Subordinate Principal Distribution Amount;
           
      (xvii)   seventeenth, to the Class B-9 Certificates, accrued and unpaid interest at their certificate interest rate on the Class B-9 Principal Balance;
           
      (xviii)   eighteenth, to the Class B-9 Certificates, their pro rata share of the Subordinate Principal Distribution Amount;
           
      (xix)   nineteenth, to the Class B-10 Certificates, accrued and unpaid interest at their certificate interest rate on the Class B-10 Principal Balance;
           
      (xx)   twentieth, to the Class B-10 Certificates, their pro rata share of the Subordinate Principal Distribution Amount;
           
      (xxi)   twenty-first, to the Class B-11 Certificates, accrued and unpaid interest at their certificate interest rate on the Class B-11 Principal Balance;
           
      (xxii)   twenty-second, to the Class B-11 Certificates, their pro rata share of the Subordinate Principal Distribution Amount;
           
      (xxiii)   twenty-third, to the Junior Subordinate Certificates, interest and principal in the same manner as for the Senior Subordinate Certificates, first to the Class B-12 Certificates, then to the Class B-13 Certificates and then to the Class B-14 Certificates;
           
      (xxiv)   twenty-fourth, to each class of Subordinate Certificates in order of seniority, the Carryover Shortfall Amount for each such class, to the extent of the aggregate Class 1X Distributable Interest and Class 2X-PPP Distributable Interest remaining after the distributions pursuant to clause (c) above (pro rata according to such aggregate Class 1X Distributable Interest and Class 2X-PPP Distributable Interest);
           
      (xxv)   twenty-fifth, to each class of Subordinate Certificates in order of seniority, up to the amount of unreimbursed realized principal losses previously allocated to that class, if any; provided, however, that any amounts distributed pursuant to this clause (d)(xxv) will not cause a further reduction in the Class Principal Balances of any of the certificates; and

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      (xxvi)   twenty-sixth, to the Class R Certificates.

      Notwithstanding the above, amounts to be distributed to each class of certificates in respect of accrued interest on any Distribution Date will be reduced by the amount of Net Negative Amortization, if any, allocated to that class. In addition, notwithstanding the immediately preceding paragraph, on any Distribution Date on which the Subordination Level for any class or classes of Subordinate Certificates is less than the Subordination Level for that class as of the Closing Date, a different distribution will be made. The amount of the Subordinate Principal Prepayments Distribution Amount, if any, otherwise allocable to such class or classes will be allocated to the more senior classes of the Subordinate Certificates, pro rata according to the Class Principal Balances of those classes.

      With respect to any class of Subordinate Certificates, the “Subordination Level” on any specified date is the percentage obtained by dividing the sum of the Class Principal Balances of that class and all classes of Subordinate Certificates that are subordinate in right of payment to that class by the sum of the Class Principal Balances of all classes of certificates as of that date before giving effect to distributions and allocations of realized losses to the certificates on that date.

      The “Credit Support Depletion Date” is the first Distribution Date on which the aggregate Class Principal Balance of the Class B Certificates has been or will be reduced to zero.

      On each Distribution Date on or after the Credit Support Depletion Date, distributions of the Available Distribution Amount for loan group 1 will be made with respect to the Class 1A, Class 1A-1B and Class 1X Certificates and the Class CA-1C Group 1 Component as follows:

              (i)   first, to the Class 1A, Class 1A-1B and Class 1X Certificates and the Class CA-1C Group 1 Component, pro rata, accrued and unpaid interest at their respective certificate interest rate on their respective Class Principal Balance or Component Principal Balance, as applicable (or, in the case of the Class 1X Certificates, accrued and unpaid interest calculated as described in the definition of “Class X Accrued Interest”);
       
              (ii)   second, to the Class 1A, Class 1A-1B and Class 1X Certificates and the Class CA-1C Group 1 Component, pro rata, as principal, the Group 1 Senior Principal Distribution Amount;
       
              (iii)   third, to the Class 1A, Class 1A-1B and Class 1X Certificates and the Class CA-1C Group 1 Component, pro rata, and then to each class of Class B Certificates in order of seniority, up to the amount of unreimbursed realized principal losses previously allocated to that class, if any; provided, however, that any amounts distributed pursuant to this clause (iii) will not cause a further reduction in the Class Principal Balances of any of the certificates;
       
              (iv)   fourth, payments, if any, to the Class 2A, Class 2A-1B and Class 2X-PPP Certificates and the Class CA-1C Group 2 Component as described in this prospectus supplement under “—Cross-Collateralization”; and
       
              (v)   fifth, to the Class R Certificates.

      Notwithstanding the above, amounts to be distributed to each class of certificates in respect of accrued interest on any Distribution Date will be reduced by the amount of Net Negative Amortization, if any, allocated to that class.

      On each Distribution Date on or after the Credit Support Depletion Date, distributions of the Available Distribution Amount for loan group 2 will be made with respect to the Class 2A, Class 2A-1B and Class 2X-PPP Certificates and the Class CA-1C Group 2 Component as follows:

              (i)   first, to the Class 2A, Class 2A-1B and Class 2X-PPP Certificates and the Class CA-1C Group 2 Component, pro rata, accrued and unpaid interest at their respective certificate interest rate on their respective Class Principal Balance or Component Principal Balance, as applicable (or, in the case of the Class 2X-PPP Certificates, accrued and unpaid interest calculated as described in the definition of “Class X Accrued Interest”);

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              (ii)   second, to the Class 2A, Class 2A-1B and Class 2X-PPP Certificates and the Class CA-1C Group 2 Component, pro rata, as principal, the Group 2 Senior Principal Distribution Amount;
       
              (iii)   third, to the Class 2A, Class 2A-1B and Class 2X-PPP Certificates and the Class CA-1C Group 2 Component, pro rata, and then to each class of Class B Certificates in order of seniority, up to the amount of unreimbursed realized principal losses previously allocated to that class, if any; provided, however, that any amounts distributed pursuant to this clause (iii) will not cause a further reduction in the Class Principal Balances of any of the certificates;
       
              (iv)   fourth, payments, if any, to the Class 1A, Class 1A-1B and Class 1X Certificates and the Class CA-1C Group 1 Component as described in this prospectus supplement under “—Cross-Collateralization”; and
       
              (v)   fifth, to the Class R Certificates.

      Notwithstanding the above, amounts to be distributed to each class of certificates in respect of accrued interest on any Distribution Date will be reduced by the amount of Net Negative Amortization, if any, allocated to that class.

Distributions to the Class 2X-PPP Certificates

      The Class 2X-PPP Certificates will receive distributions of interest and principal as described in this prospectus supplement. In addition, the Class 2X-PPP Certificates are entitled to receive are the Assigned Prepayment Penalties for loan group 2.

      The “Assigned Prepayment Penalties” for a loan group and a Distribution Date will equal the sum of (a) all prepayment penalty payments remitted to the Trust with respect to voluntary full prepayments on those mortgage loans in that loan group that have prepayment penalties during the period (the “Prepayment Penalty Period”) beginning on the 15th day of the immediately preceding calendar month (or, in the case of the first distribution date, beginning on the Cut-Off Date) and ending on the 14th day of the calendar month in which the Distribution Date occurs and (b) any amounts paid by the servicer during the Prepayment Penalty Period pursuant to the pooling agreement if the servicer waives a penalty on a voluntary full prepayment of a mortgage loan in that loan group other than in accordance with the standards set forth in the pooling agreement, or paid by Washington Mutual Mortgage Securities Corp. during the Prepayment Penalty Period pursuant to the mortgage loan sale agreement if it breaches certain representations and warranties with respect to mortgage loans in that loan group that require payment of a penalty on voluntary full prepayment.

      Some of the mortgage loans that impose penalties for voluntary full prepayments contain an exception for prepayments made in connection with a bona fide sale of the mortgaged property underlying the mortgage loan during a certain period, and therefore penalties are not imposed on such prepayments and are not available for distribution to the Class 2X-PPP Certificates.

      In addition, under certain circumstances set forth in the pooling agreement, the payment of any otherwise applicable penalty for voluntary full prepayment by a mortgagor may be waived by the servicer and, if waived in accordance with the terms of the pooling agreement, the amount of the waived penalty will not be available for distribution to the holders of the Class 2X-PPP Certificates. Circumstances under which the servicer may waive a prepayment penalty include, among other circumstances set forth in the pooling agreement, (i) some cases where the mortgagor sells the mortgaged property and obtains a new mortgage loan originated and serviced by the servicer to purchase another property, provided that the prepayment is made no earlier than one year after origination, (ii) some cases, for mortgage loans with prepayment penalty terms longer than one year, where the mortgagor refinances the mortgage loan with a new mortgage loan originated and serviced by the servicer, provided that 90 days or less remain in the prepayment penalty term or (iii) for prepayments of accrued but unpaid interest that has been added to principal as a result of negative amortization.

      However, if the servicer waives a penalty on a voluntary full prepayment other than in accordance with the standards set forth in the pooling agreement, the servicer will be obligated to pay, or if

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Washington Mutual Mortgage Securities Corp. breaches certain representations and warranties in the mortgage loan sale agreement with respect to mortgage loans that require payment of a penalty on voluntary full prepayment, Washington Mutual Mortgage Securities Corp. will be obligated to pay, to the Trust an amount equal to the amount of the penalty on such voluntary full prepayment, for distribution to the holders of the related Class 2X-PPP Certificates.

      Moreover, regardless of the terms of the mortgage note, the servicer will not collect prepayment penalties required to be paid more than three years after the origination of the mortgage loan.

      Investors should conduct their own analysis of the effect that the payment of penalties for voluntary full prepayment of the related mortgage loans, or decisions by the servicer with respect to waiver thereof, may have on the performance of the Class 2X-PPP Certificates. For additional information concerning the servicer's ability to waive penalties for voluntary full prepayment, see the pooling agreement. No prepayment penalty payments will be available for distribution to holders of the other classes of certificates. See “Description of the Mortgage Pool” in this prospectus supplement and the “Prepayment Penalty Terms of the Group 1 Loans” and “Prepayment Penalty Terms of the Group 2 Loans” tables in Appendix B hereto for more information regarding the types of prepayment penalties. See also, “Material Federal Income Tax Consequences—Taxation of the Class 2X-PPP Component Portion of the Class 2X-PPP Certificates” in this prospectus supplement for important tax information regarding the Class 2X-PPP Certificates.

Distributions of Interest

      For each class of certificates, interest will be passed through monthly on each Distribution Date, beginning in August 2006. The amount of interest each class of LIBOR Certificates (or component thereof, as applicable) accrues during each certificate accrual period will equal a ratio, the numerator of which is the actual number of days in that accrual period and the denominator of which is 360, multiplied by the annual certificate interest rate in effect for that accrual period for that class (or component), and the amount of interest on each class of MTA Certificates accrues during each certificate accrual period will equal 1/12th of the annual certificate interest rate in effect for that accrual period for that class, in each case, multiplied by the related Class Principal Balance (or Component Principal Balance), and the amount of interest each class of Class X Certificates accrues during each certificate accrual period will be the amount described below in “—Interest Distributions on the Class X Certificates”, in each case, less any prepayment interest shortfalls not covered by compensating interest (as described below in “—Compensating Interest”), any interest shortfalls relating to the Relief Act and any Net Negative Amortization allocated to that class of certificates (or component thereof); provided, however, that the amount of interest to be distributed to the certificates may be adjusted as described in “—Carryover Shortfall Amounts” in this prospectus supplement.

      The “Adjusted Cap Rate” for any Distribution Date and the Class 1A and Class 1A-1B Certificates will equal a fraction, the numerator of which is equal to the product of (i) the amount of interest accrued on the mortgage loans in loan group 1 at the Loan Group 1 Weighted Average Pass-Through Rate for that Distribution Date less the Net Negative Amortization with respect to loan group 1 and (ii) 12, and the denominator of which is the Loan Group 1 Balance, such fraction multiplied by a ratio, the numerator of which is 30 and the denominator of which is the actual number of days in the related certificate accrual period.

      The “Adjusted Cap Rate” for any Distribution Date and the Class 2A and Class 2A-1B Certificates will equal a fraction, the numerator of which is equal to the product of (i) the amount of interest accrued on the mortgage loans in loan group 2 at the Loan Group 2 Weighted Average Pass-Through Rate for that Distribution Date less the Net Negative Amortization with respect to loan group 2 and (ii) 12, and the denominator of which is the Loan Group 2 Balance.

      The “Adjusted Cap Rate” for any Distribution Date and the Class CA-1C Group 1 Component will equal a fraction, the numerator of which is equal to the product of (i) the amount of interest accrued on the mortgage loans in loan group 1 at the Loan Group 1 Weighted Average Pass-Through Rate for that Distribution Date less the Net Negative Amortization with respect to loan group 1 and (ii) 12, and the denominator of which is the Loan Group 1 Balance, such fraction multiplied by a ratio, the numerator of

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which is 30 and the denominator of which is the actual number of days in the related certificate accrual period.

      The “Adjusted Cap Rate” for any Distribution Date and the Class CA-1C Group 2 Component will equal a fraction, the numerator of which is equal to the product of (i) the amount of interest accrued on the mortgage loans in loan group 2 at the Loan Group 2 Weighted Average Pass-Through Rate for that Distribution Date less the Net Negative Amortization with respect to loan group 2 and (ii) 12, and the denominator of which is the Loan Group 2 Balance, such fraction multiplied by a ratio, the numerator of which is 30 and the denominator of which is the actual number of days in the related certificate accrual period.

      The “Adjusted Cap Rate” for any Distribution Date and any class of Class B Certificates will equal the Class B Weighted Average Pass-Through Rate, computed for this purpose by (i) reducing the Adjusted Loan Group 1 Weighted Average Pass-Through Rate by a per annum rate equal to a fraction, the numerator of which is the Net Negative Amortization with respect to loan group 1 multiplied by 12, and the denominator of which is the Loan Group 1 Balance and (ii) reducing the Adjusted Loan Group 2 Weighted Average Pass-Through Rate by a per annum rate equal to a fraction, the numerator of which is the Net Negative Amortization with respect to loan group 2 multiplied by 12, and the denominator of which is the Loan Group 2 Balance.

      The “Net Negative Amortization” for any Distribution Date and each loan group will equal the excess, if any, of (i) the aggregate amount of negative amortization with respect to all mortgage loans in such loan group during the prior calendar month over (ii) the aggregate amount of Payoffs and Curtailments received with respect to all mortgage loans in such loan group during the related Prepayment Period.

      For any Distribution Date, the Net Negative Amortization for each of loan group 1 and loan group 2 will be allocated among the certificates as follows:

              (i)   first, (a) the Net Negative Amortization for the mortgage loans in loan group 1, to the Class 1X Certificates in reduction of the interest otherwise payable to the Class 1X Certificates, until such amount is reduced to zero and (b) the Net Negative Amortization for the mortgage loans in loan group 2, to the Class 2X-PPP Certificates in reduction of the interest otherwise payable to the Class 2X-PPP Certificates, until such amount is reduced to zero;
       
              (ii)   second, (a) the Net Negative Amortization for the mortgage loans in loan group 1 remaining after the allocation pursuant to clause (i)(a) above, to the Class 2X-PPP Certificates in reduction of the remaining interest otherwise payable to the Class 2X-PPP Certificates, until such remaining amount is reduced to zero and (b) the Net Negative Amortization for the mortgage loans in loan group 2 remaining after the allocation pursuant to clause (i)(b) above, to the Class 1X Certificates in reduction of the remaining interest otherwise payable to the Class 1X Certificates, until such remaining amounts are reduced to zero;
       
              (iii)   third, the Net Negative Amortization for the mortgage loans in loan group 1 remaining after the allocations pursuant to clauses (i) and (ii) above, to the Class 1A, Class 1A-1B and Class B Certificates and the Class CA-1C Group 1 Component in proportion to the excess, if any, for each such class or component of (x) the current interest accrued at the applicable certificate interest rate for such class or component over (y) the amount of current interest that would have accrued had the certificate interest rate for such class or component equaled the Adjusted Cap Rate for such class or component and for such Distribution Date (such excess, in the case of each Class of Class B Certificates, multiplied by a fraction, the numerator of which is the Subordinate Component Balance for loan group 1 and the denominator of which is the aggregate Class Principal Balance of the Class B Certificates); and

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              (iv)   fourth, the Net Negative Amortization for the mortgage loans in loan group 2 remaining after the allocations pursuant to clauses (i) and (ii) above, to the Class 2A, Class 2A-1B and Class B Certificates and the Class CA-1C Group 2 Component in proportion to the excess, if any, for each such class or component of (x) the current interest accrued at the applicable certificate interest rate for such class or component over (y) the amount of current interest that would have accrued had the certificate interest rate for such class or component equaled the Adjusted Cap Rate for such class or component and for such Distribution Date (such excess, in the case of each Class of Class B Certificates, multiplied by a fraction, the numerator of which is the Subordinate Component Balance for loan group 2 and the denominator of which is the aggregate Class Principal Balance of the Class B Certificates).

      The Class Principal Balance or Component Principal Balance of each class of certificates or components thereof will be increased by the portion of the Net Negative Amortization allocated to such class or component in reduction of interest distributable to such class or component. As a result of the allocation of Net Negative Amortization, a portion of the interest accrued on the certificates may be distributed to the certificates later than otherwise anticipated.

      Interest to be distributed on the applicable classes of certificates (or added to the Class Principal Balance of the certificates as a result of the allocation of Net Negative Amortization) on any Distribution Date will consist of accrued and unpaid interest as of previous Distribution Dates and interest accrued during the period beginning on the 25th day of the preceding calendar month (or, in the case of the first Distribution Date, the Closing Date) and ending on the 24th day of the month of that Distribution Date, except for the MTA Certificates and each class of Class X Certificates, which accrue interest during the preceding calendar month. Interest to be distributed on the LIBOR Certificates will be calculated based on the actual number of days in the certificate accrual period and assuming a 360 day year. Interest to be distributed on the MTA Certificates and each class of Class X Certificates will be calculated based on a year consisting of twelve thirty-day months. All distributions of interest for each class of certificates will generally be made only to the extent of the Available Distribution Amount as described under “—Priority of Distributions” in this prospectus supplement.

      The annual certificate interest rate for each class of MTA Certificates for each Distribution Date will be determined based on the most recently available One-Year MTA figure as of 15 days before the beginning of the related interest accrual period. If One-Year MTA is no longer available, the index used to determine the annual certificate interest rates on the MTA Certificates will be the same index selected to determine the mortgage interest rates on those mortgage loans indexed, as of the Cut-Off Date, to One-Year MTA.

      The annual certificate interest rates for the offered certificates are listed in the table on page S-6 of this prospectus supplement and in the notes to that table.

      The “Pass-Through Rate” for each mortgage loan is equal to the excess, if any, of the per annum mortgage interest rate on that mortgage loan over the servicing fee rate (as described in footnote (1) to the table under “—Payment of Fees and Expenses” in this prospectus supplement).

      The “Adjusted Loan Group 1 Weighted Average Pass-Through Rate” for any Distribution Date is the product of (i) the Loan Group 1 Weighted Average Pass-Through Rate and (ii) a fraction, the numerator of which is 30 and the denominator of which is the actual number of days in the related certificate accrual period.

      The “Loan Group 1 Weighted Average Pass-Through Rate” for any Distribution Date is the weighted average of the Pass-Through Rates of the mortgage loans in loan group 1 as of the second preceding Due Date (after giving effect to (a) the payments due on those mortgage loans on that Due Date and (b) except for the first Distribution Date, any Payoffs received on or before the 14th day of the calendar month of that Due Date).

      The “Adjusted Loan Group 2 Weighted Average Pass-Through Rate” for any Distribution Date is the product of (i) the Loan Group 2 Weighted Average Pass-Through Rate and (ii) a fraction, the numerator of which is 30 and the denominator of which is the actual number of days in the related certificate accrual period.

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      The “Loan Group 2 Weighted Average Pass-Through Rate” for any Distribution Date is the weighted average of the Pass-Through Rates of the mortgage loans in loan group 2 as of the second preceding Due Date (after giving effect to (a) the payments due on those mortgage loans on that Due Date and (b) except for the first Distribution Date, any Payoffs received on or before the 14th day of the calendar month of that Due Date).

      The “Class B Weighted Average Pass-Through Rate” for any Distribution Date is the product of (i) a fraction, the numerator of which is 30 and the denominator of which is the actual number of days in the related certificate accrual period and (ii) the quotient expressed as a percentage of:

             (a) the sum of:

                    (i) the product of (x) the Loan Group 1 Weighted Average Pass-Through Rate and (y) the Subordinate Component Balance for loan group 1 immediately before that Distribution Date; and

                    (ii) the product of (x) the Loan Group 2 Weighted Average Pass-Through Rate and (y) the Subordinate Component Balance for loan group 2 immediately before that Distribution Date;

             divided by:

             (b) the sum of the Subordinate Component Balances for loan group 1 and loan group 2 immediately before that Distribution Date.

      The “Maximum Class B Rate” for any Distribution Date is the Class B Weighted Average Pass-Through Rate modified as follows: for purposes of calculating the Pass-Through Rate for each mortgage loan, the Rate Ceiling for such mortgage loan will be substituted for the per annum mortgage interest rate for such mortgage loan.

      The “Maximum Loan Group 1 Rate” and “Maximum Loan Group 2 Rate” for any Distribution Date is the Adjusted Loan Group 1 Weighted Average Pass-Through Rate and Adjusted Loan Group 2 Weighted Average Pass-Through Rate, respectively, modified as follows: for purposes of calculating the Pass-Through Rate for each related mortgage loan, the Rate Ceiling for such mortgage loan will be substituted for the per annum mortgage interest rate for such mortgage loan.

      Interest Distributions on the Class X Certificates

      The amount of interest available for distribution to the Class 1X Certificates (the “Class 1X Accrued Interest”) on any Distribution Date (before giving effect to the allocation of any Net Negative Amortization and any shortfall in interest collections and payment of Carryover Shortfall Amounts) will equal, subject to the limitations described in this section, the excess, if any, of:

              (x)   the product of (i) a fraction, the numerator of which is the Loan Group 1 Weighted Average Pass-Through Rate and the denominator of which is 12, and (ii) the Loan Group 1 Balance
   
  over
       
              (y)   the product of (i) a fraction, the numerator of which is the Weighted Average Certificate Interest Rate for loan group 1 and the denominator of which is 12, and (ii) the Loan Group 1 Balance reduced by the Class 1X Principal Balance;

provided, however, that if either loan group is an Overcollateralized Group, the amount of interest available for distribution for the Class 1X Certificates may be greater or less than it otherwise would be, as described in the pooling agreement.

      Notwithstanding the foregoing, interest otherwise available for distribution to the Class 1X Certificates on any distribution date may instead be distributed as carryover shortfall amounts. See “Description of the Certificates—Distributions of Interest” in this prospectus supplement.

      The amount of interest available for distribution to the Class 2X-PPP Certificates (the “Class 2X-PPP Accrued Interest”) on any Distribution Date (before giving effect to the allocation of any Net Negative

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Amortization and any shortfall in interest collections and payment of Carryover Shortfall Amounts) will equal, subject to the limitations described in this section, the excess, if any, of:

              (x)   the product of (i) a fraction, the numerator of which is the Loan Group 2 Weighted Average Pass-Through Rate and the denominator of which is 12, and (ii) the Loan Group 2 Balance
   
  over
       
              (y)   the product of (i) a fraction, the numerator of which is the Weighted Average Certificate Interest Rate for loan group 2 and the denominator of which is 12, and (ii) the Loan Group 2 Balance reduced by the Class 2X-PPP Principal Balance;

provided, however, that if either loan group is an Overcollateralized Group, the amount of interest available for distribution for the Class 2X-PPP Certificates may be greater or less than it otherwise would be, as described in the pooling agreement.

      Notwithstanding the foregoing, interest otherwise available for distribution to the Class 2X-PPP Certificates on any distribution date may instead be distributed as carryover shortfall amounts. See “Description of the Certificates—Distributions of Interest” in this prospectus supplement.

      Notwithstanding the foregoing, if the aggregate amount of interest available for distribution to the Class 1X and Class 2X-PPP Certificates on any Distribution Date, calculated as described above, is greater than the Maximum Class X Interest Amount, then the aggregate amount of interest available for distribution to the Class 1X and Class 2X-PPP Certificates will be capped at the Maximum Class X Interest Amount, and the amount of interest accrued on each of the Class 1X and Class 2X-PPP Certificates, if such amount is positive, will equal its pro rata portion of the Maximum Class X Interest Amount (pro rata according to such amount, calculated as described above without giving effect to this sentence).

      The “Maximum Class X Interest Amount” for any Distribution Date is the excess, if any, of

              (x)   the product of (i) a fraction, the numerator of which is the weighted average of the Loan Group 1 Weighted Average Pass-Through Rate and Loan Group 2 Weighted Average Pass-Through Rate and the denominator of which is 12, and (ii) the aggregate of the Loan Group 1 Balance and Loan Group 2 Balance
   
  over
       
              (y)   the product of (i) a fraction, the numerator of which is the Aggregate Weighted Average Certificate Interest Rate and the denominator of which is 12, and (ii) the aggregate of the Loan Group 1 Balance and Loan Group 2 Balance reduced by the aggregate Class 1X Principal Balance and Class 2X-PPP Principal Balance.

      The “Loan Group 1 Balance” for any Distribution Date is the aggregate principal balance of the mortgage loans in loan group 1 as of the second preceding due date (after giving effect to (a) the payments due on those mortgage loans on that Due Date and (b) except for the first Distribution Date, any Payoffs on those mortgage loans received on or before the 14th day of the calendar month of that Due Date).

      The “Loan Group 2 Balance” for any Distribution Date is the aggregate principal balance of the mortgage loans in loan group 2 as of the second preceding due date (after giving effect to (a) the payments due on those mortgage loans on that Due Date and (b) except for the first Distribution Date, any Payoffs on those mortgage loans received on or before the 14th day of the calendar month of that Due Date).

      The “Aggregate Weighted Average Certificate Interest Rate” for any Distribution Date is the weighted average (weighted according to Class Principal Balance or Component Principal Balance, as applicable) of the annual certificate interest rates on the Class 1A, Class 1A-1B, Class 2A, Class 2A-1B, Class CA-1C and Class B Certificates (or components thereof, as applicable) (each of which annual certificate interest rates, in the case of the LIBOR Certificates (or components thereof), will be multiplied by a fraction, the numerator of which is the actual number of days in the related certificate accrual period and the denominator of which is 30).

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      The “Weighted Average Certificate Interest Rate” for any loan group for any Distribution Date is the weighted average of the annual certificate interest rates on the Class A and Class B Certificates (or components thereof, as applicable) related to such loan group (each of which annual certificate interest rates, in the case of the LIBOR Certificates (or components thereof), will be multiplied by a fraction, the numerator of which is the actual number of days in the related certificate accrual period and the denominator of which is 30) (such rates weighted, (i) in the case of the Class A Certificates related to such loan group, according to the Class Principal Balance or Component Principal Balance thereof, as applicable, and (ii) in the case of each class of Class B Certificates, according to the product of the Class Principal Balance thereof and a fraction, the numerator of which is the Subordinate Component Balance for such loan group and the denominator of which is the aggregate Class Principal Balance of all the Class B Certificates).

      Class X Notional Amounts and Class X Principal Balances

      Solely for purposes of calculating distributions of principal and interest and the allocation of losses realized on the mortgage loans, each class of Class X Certificates will be deemed to be comprised of an interest-only component and a principal-only component. Interest, if any, will be payable with respect to the Class X interest-only components, calculated as described in this prospectus supplement under “—Distributions of Interest—Interest Distributions on the Class X Certificates.” In addition, each class of Class X Certificates will have a Class Principal Balance, which will be the principal balance of the related principal-only component and which will initially equal zero. In the event that interest otherwise payable with respect to a Class X interest-only component is reduced as a result of the allocation of Net Negative Amortization, the amount of such reduction will be added as principal to the related Class X Principal Balance. Interest will not accrue on any Class X Principal Balance.

      The Class 1X Certificates will have a Class Principal Balance, which will equal the principal balance of their principal-only component, and which will initially equal zero. The Class 2X-PPP Certificates will have a Class Principal Balance, which will equal the principal balance of their principal-only component, and which will initially equal zero.

      Solely for purposes of determining the percentage interest of each Class 1X and Class 2X-PPP Certificate in distributions to the related class of Class X Certificates and the percentage voting right of each Class 1X and Class 2X-PPP Certificate, each class of Class 1X and Class 2X-PPP Certificates will have a Class Notional Amount. Distributions of principal, if any, and interest to each class of Class 1X and Class 2X-PPP Certificates will not be calculated based on the Class 1X and Class 2X-PPP Notional Amounts. The “Class 1X Notional Amount” will equal the aggregate principal balance of the mortgage loans in loan group 1 as of the Cut-Off Date after giving effect to the payments due on those mortgage loans on that date. The “Class 2X-PPP Notional Amount” will equal the aggregate principal balance of the mortgage loans in loan group 2 as of the Cut-Off Date after giving effect to the payments due on those mortgage loans on that date. The Class 1X and Class 2X-PPP Notional Amount as of the Cut-Off Date will be approximately $286,755,289 and $588,344,264, respectively.

      Compensating Interest

      The servicer is obligated to remit to the certificate account on the business day before each Distribution Date with respect to each loan group an amount equal to the least of (a) any shortfall for the previous month in interest collections resulting from the timing of Payoffs on the mortgage loans in that loan group made from the 15th day of the calendar month preceding the Distribution Date to the last day of the month, (b) the sum of (i) 112 of 0.050% of the aggregate Stated Principal Balance of the mortgage loans in that loan group, (ii) any reinvestment income realized by the servicer relating to Payoffs on the mortgage loans in that loan group made during the Prepayment Period and (iii) interest payments on Payoffs in that loan group received during the period of the first day through the 14th day of the month of the Distribution Date and (c) 112 of 0.125% of the aggregate Stated Principal Balance of the mortgage loans in that loan group. Compensating interest will be paid with respect to each loan group and will be added to the Available Distribution Amount for each loan group.

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      Any remaining shortfall in interest collections resulting from the delay in distribution of Payoffs and Curtailments in a loan group, and any shortfall resulting from application of the Relief Act in a loan group, will be allocated among the related classes of certificates (or components thereof, as applicable) pro rata according to the amount of interest to which each such class (or component) (or, in the case of the Class B Certificates, only the portion of those certificates that derives its interest from the related loan group) would otherwise be entitled (before giving effect to the payment of Carryover Shortfall Amounts), in reduction of that amount.

      See “Yield and Prepayment Considerations” in this prospectus supplement.

      Carryover Shortfall Amounts

      For any Distribution Date and the Class 1A and Class 1A-1B Certificates, the “Carryover Shortfall Amount” for such class will equal the sum of:

              (i)   the excess, if any, of (a) the amount of interest that would have accrued on such class at a certificate interest rate equal to the lesser of (1) LIBOR plus the related margin and (2) the Maximum Loan Group 2 Rate over (b) the actual amount of interest accrued on such class for such Distribution Date;
       
              (ii)   the portion of the amount described in clause (i) above remaining unpaid from prior Distribution Dates; and
       
              (iii)   one month's interest at the rate described in clause (i)(a) above on the amount described in clause (ii) above.

      For the initial Distribution Date and the Class 2A and Class 2A-1B Certificates, the “Carryover Shortfall Amount” for such class will equal the excess, if any, of (a) the amount of interest that would have accrued on such class at a certificate interest rate equal to One-Year MTA plus the related margin, over (b) the actual amount of interest accrued on such class for the initial Distribution Date.

      For any Distribution Date and the Class CA-1C Certificates, the “Carryover Shortfall Amount” for such class will equal the sum of the carryover shortfall amount for each Class CA-1C Component, each calculated as the sum of:

              (i)   the excess, if any, of (a) the amount of interest that would have accrued on such Class CA-1C Component at a certificate interest rate equal to the lesser of (1) LIBOR plus the related margin and (2) the maximum rate described in clause (z) of the applicable paragraph of note (6) to the table on page S-6 of this prospectus supplement over (b) the actual amount of interest accrued on such Class CA-1C Component for such Distribution Date;
       
              (ii)   the portion of the amount described in clause (i) above remaining unpaid from prior Distribution Dates; and
       
              (iii)   one month's interest at the rate described in clause (i)(a) above on the amount described in clause (ii) above.

      For any Distribution Date and for any class of Class B Certificates, the “Carryover Shortfall Amount” for such class will equal the sum of:

              (i)   the excess, if any, of (a) the amount of interest that would have accrued on such class at a certificate interest rate equal to the lesser of (1) LIBOR plus the related margin and (2) the Maximum Class B Rate over (b) the actual amount of interest accrued on such class for such Distribution Date;
       
              (ii)   the portion of the amount described in clause (i) above remaining unpaid from prior Distribution Dates; and
       
              (iii)   one month's interest at the rate described in clause (i)(a) above on the amount described in clause (ii) above.

      For any Distribution Date, Carryover Shortfall Amounts for the Class 1A, Class 1A-1B, Class 2A and Class 2A-1B Certificates (except than with respect to the Class 2A and Class 2A-1B Certificates, in the case of the initial Distribution Date only) and the Class CA-1C Group 1 and Group 2 Components will

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be paid to those classes, pro rata based on unpaid Carryover Shortfall Amounts, to the extent of the aggregate Class 1X Distributable Interest and Class 2X-PPP Distributable Interest for that Distribution Date. Carryover Shortfall Amounts will only be paid to the Class 2A and Class 2A-1B Certificates on the initial Distribution Date.

      For any Distribution Date, the aggregate Class 1X Distributable Interest and Class 2X-PPP Distributable Interest (which aggregate amount of Class 1X Distributable Interest and Class 2X-PPP Distributable Interest will be reduced by the aggregate amount paid as Carryover Shortfall Amounts to the Class 1A, Class 1A-1B, Class 2A and Class 2A-1B Certificates and the Class CA-1C Group 1 and Group 2 Components as follows: (A) first, the aggregate Class 1X Distributable Interest and Class 2X-PPP Distributable Interest will be reduced, pro rata, by the aggregate amount paid as Carryover Shortfall Amounts to the Class 2A and Class 2A-1B Certificates (in the case of the initial distribution date only) and the Class CA-1C Group 1 and Group 2 Components; (B) second, the Class 1X Distributable Interest remaining after the reduction pursuant to clause (A) of this paragraph will be further reduced by the aggregate amount paid as Carryover Shortfall Amounts to the Class 1A and Class 1A-1B Certificates; and (C) third, the Class 2X-PPP Distributable Interest remaining after the reduction pursuant to clause (A) of this paragraph will be further reduced by the portion of the aggregate amount paid as Carryover Shortfall Amounts to the Class 1A and Class 1A-1B Certificates that has not been allocated in reduction of the Class 1X Distributable Interest pursuant to clause (B) of this paragraph.

      Carryover Shortfall Amounts for the Class B Certificates for any Distribution Date will be paid to those classes, in order of seniority, to the extent of the Class X Distributable Interest remaining after the distributions of Carryover Shortfall Amounts to the Class A Certificates, as applicable, for that Distribution Date. See “—Priority of Distributions” in this prospectus supplement.

      The amount of interest otherwise available for distribution to the Class 1X and Class 2X-PPP Certificates on any Distribution Date will be reduced by the Carryover Shortfall Amounts paid to the holders of the Class A and Class B Certificates on that Distribution Date.

Calculation of LIBOR

      The annual certificate interest rates of the LIBOR Certificates are based on the London Interbank Offered Rate for one-month United States dollar deposits (“LIBOR”) as determined by the administrative agent on behalf of the servicer on the basis of quotations as described below. The administrative agent will determine LIBOR for each certificate accrual period on the second business day prior to the day on which that accrual period begins (each, a “LIBOR Determination Date”). For this purpose a “business day” is any day on which banks in London are open for conducting transactions in foreign currency and exchange.

      On each LIBOR Determination Date, the administrative agent will determine LIBOR based on the “Interest Settlement Rate” for United States dollar deposits of one-month maturity set by the British Bankers' Association (the “BBA”) as of 11:00 a.m. (London time) on such LIBOR Determination Date. Interest Settlement Rates currently are based on rates quoted by sixteen BBA designated banks as being, in the view of such banks, the offered rate at which deposits are being quoted to prime banks in the London interbank market. Such Interest Settlement Rates are calculated by eliminating the four highest rates and the four lowest rates, averaging the eight remaining rates, carrying the result (expressed as a percentage) out to six decimal places, and rounding to five decimal places.

      The BBA's Interest Settlement Rates are currently displayed on each of the Dow Jones Telerate Service page 3750, Reuters Monitor Money Rates Service page “LIBOR01” and Bloomberg L.P. page “BBAM” (each such page, or such other page as may replace any of the foregoing on such service or such other service as may be nominated by the BBA as the information vendor for the purpose of displaying the BBA's Interest Settlement Rates for deposits in United States dollars, each, a “Designated Rate Page”).

      If on any LIBOR Determination Date, such Interest Settlement Rates are not available from any Designated Rate Page, LIBOR for the related accrual period will be the most recently published Interest Settlement Rate. In the event that the BBA no longer sets an Interest Settlement Rate, the administrative agent will calculate LIBOR for the immediately following accrual period as follows: the administrative

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agent will determine LIBOR by reference to the quotations offered by the principal London office of each of the designated reference banks meeting the criteria set forth below for making one-month United States dollar deposits in leading banks in the London Interbank market, as of 11:00 a.m. (London time) on the LIBOR Determination Date.

      Under this method LIBOR will be established by the administrative agent on each LIBOR Determination Date as follows:

             (a) If on any LIBOR Determination Date two or more reference banks provide offered quotations, LIBOR for the next interest accrual period will be the arithmetic mean of the offered quotations, carrying the result (expressed as a percentage) out to six decimal places, and rounding to five decimal places.

             (b) If on any LIBOR Determination Date only one or none of the reference banks provides offered quotations, LIBOR for the next interest accrual period will be the greater of:

                       LIBOR as determined on the previous LIBOR Determination Date or
       
                       the reserve interest rate.

      The reserve interest rate will be the rate per annum that the administrative agent determines to be either:

                the arithmetic mean, (expressed as a percentage) carried out to six decimal places, and rounded to five decimal places, of the one-month United States dollar lending rates that New York City banks selected by the administrative agent are quoting, on the relevant LIBOR Determination Date, to the principal London offices of at least two of the reference banks to which the quotations are, in the opinion of the administrative agent, being so made, or
       
                if the administrative agent cannot determine the arithmetic mean, the lowest one-month United States dollar lending rate which New York City banks selected by the administrative agent are quoting on the LIBOR Determination Date to leading European banks.

             (c) If on any LIBOR Determination Date the administrative agent is required but is unable to determine the reserve interest rate in the manner provided in paragraph (b) above, LIBOR for the next interest accrual period will be LIBOR as determined on the preceding LIBOR Determination Date, or, in the case of the first LIBOR Determination Date, LIBOR will be considered to be the per annum rate specified as such herein, if so specified.

      Each reference bank (i) will be a leading bank engaged in transactions in Eurodollar deposits in the international Eurocurrency market, (ii) will not control, be controlled by, or be under common control with, the servicer and (iii) will have an established place of business in London. If any reference bank should be unwilling or unable to act as such or if the servicer should terminate the designation of any such reference bank, the servicer will promptly designate another leading bank meeting the criteria specified above.

      The establishment of LIBOR on each LIBOR Determination Date by the servicer for the related accrual period will, in the absence of manifest error, be final and binding.

Calculation of Index for MTA Certificates

      The applicable Index for the MTA Certificates will be calculated as described in “Description of the Certificates—Distributions of Interest” in this prospectus supplement. For more information on the Indexes, see “Description of the Mortgage Pool—The Indexes” in this prospectus supplement.

Cross-Collateralization

      Cross-Collateralization Due to Rapid Prepayments in One Loan Group

      The priority of distributions described in this prospectus supplement under “—Priority of Distributions” will change if all of the following conditions are met:

either (i) the sum of the Class 1A, Class 1A-1B and Class 1X Principal Balance and the Component Principal Balance of the Class CA-1C Group 1 Component or (ii) the sum of the Class 2A, Class 2A-1B and Class 2X-PPP Principal Balance and the Component Principal Balance of the Class CA-1C Group 2 Component Principal Balance has been reduced to zero;

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there are still Class B Certificates outstanding; and
 
either (i) the Class B Percentage on that date is less than 200% of the Class B Percentage as of the Closing Date or (ii) the outstanding principal balance of the mortgage loans in either of loan group 1 or loan group 2 delinquent 60 days or more averaged over the last six months, as a percentage of the related Subordinate Component Balance, is greater than or equal to 50%.

      When all three conditions are met, all principal received or advanced with respect to the mortgage loans in the loan group relating to the Class A and Class X Certificates (or components thereof) that have been paid in full (less any amount of negative amortization allocated to such mortgage loans) will be paid as principal to the remaining Class A and Class X Certificates (or components thereof) related to the other loan group, rather than to the Class B Certificates. That principal will be distributed in the same priority as those Class A and Class X Certificates (or components thereof) would receive other distributions of principal.

      The “Class B Percentage” as of any date of determination and any class of Class B Certificates, will equal the aggregate Class Principal Balance of the Class B Certificates divided by the then outstanding aggregate Stated Principal Balance of the mortgage loans.

      The “Subordinate Component Balance” for either loan group as of any date of determination will equal the product of (i) the aggregate Class Principal Balance of the Class B Certificates and (ii) a fraction, the numerator of which is equal to the excess, if any, of (a) the aggregate Stated Principal Balance of the mortgage loans in that loan group over (b) the aggregate Class Principal Balance or Component Principal Balance of the Class A and Class X Certificates (or components thereof) related to such loan group (and, in the case of loan group 1, the Class R Certificates) and the denominator of which is equal to the excess, if any, of (a) the aggregate Stated Principal Balance of all of the mortgage loans over (b) the aggregate Class Principal Balance of all of the Class A, Class R and Class X Certificates.

      The “Stated Principal Balance” of any mortgage loan as of any date of determination is equal to its principal balance as of the Cut-Off Date, after application of all scheduled principal payments due on or before the Cut-Off Date, whether or not received, and with respect to the August Loans after the deduction of the principal portion of the August 1, 2006, scheduled monthly payments, reduced by all amounts allocable to principal that have been distributed to certificateholders with respect to that mortgage loan on or before that date of determination, and as further reduced to the extent that any realized loss on that mortgage loan has been allocated to one or more classes of certificates on or before that date of determination, and as increased by the amounts of any negative amortization (as described above under “Description of the Mortgage Pool” in this prospectus supplement) with respect to that mortgage loan for all prior interest accrual periods.

      Cross-Collateralization Due to Disproportionate Realized Losses in One Loan Group

      Realized losses on the group 1 and group 2 loans are allocated generally to the Class B Certificates and not just to the portion of the Class B Certificates representing an interest in the loan group that incurred the loss. Therefore, if realized losses in either loan group that are allocated to the Class B Certificates exceed the Subordinate Component Balance for that loan group, the principal balance of the mortgage loans in that loan group will be less than the principal balance of the related Senior Certificates (or components thereof). That is, the amount of collateral in that loan group will be less than the amount of certificates being supported by that collateral and, therefore, that loan group is undercollateralized. In addition, either loan group may become undercollateralized as a result of the allocation of Net Negative Amortization for one loan group to the Class X Certificates related to the other loan group. If either loan group becomes undercollateralized, then payments on the mortgage loans in the other loan group may be used to pay interest and then principal to the Senior Certificates (or components thereof) related to the undercollateralized loan group to the extent described below.

      If, on any Distribution Date, the aggregate Class Principal Balance or Component Principal Balance of the Class A and Class X Certificates (or components thereof) related to either loan group is greater than the aggregate Stated Principal Balance of the mortgage loans in such loan group (such loan group,

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an “Undercollateralized Group” and the other loan group that is not an Undercollateralized Group, an “Overcollateralized Group”), then the priority of distributions described in this prospectus supplement under “—Priority of Distributions” will be altered as follows: The Available Distribution Amount for the Overcollateralized Group, to the extent remaining following distributions to the related Senior Certificates (or components thereof) pursuant to paragraph (a) and (b), as applicable (or if after the Credit Support Depletion Date, pursuant to the first two paragraphs immediately following the definition of “Credit Support Depletion Date”), under “—Priority of Distributions” in this prospectus supplement, will be paid in the following priority: (1) first, that amount, up to an amount for the Undercollateralized Group (the “Total Transfer Amount”) equal to the sum of the Interest Transfer Amount and the Principal Transfer Amount for the Undercollateralized Group, will be distributed first to the Class A Certificates (or components thereof) related to the Undercollateralized Group in payment of any accrued but unpaid interest, and then to those Class A Certificates and the related Class X Certificates (or components thereof) as principal, in the same order and priority as they would receive other distributions of principal; and (2) second, any remaining amount will be distributed pursuant to paragraph (d) under “—Priority of Distributions” in this prospectus supplement.

      On each Distribution Date, the “Interest Transfer Amount” for the Undercollateralized Group will equal one month's interest on the applicable Principal Transfer Amount at the weighted average of the certificates interest rates on the Class A Certificates (or components thereof) related to the Undercollateralized Group, plus any shortfall of interest on those Class A Certificates (or components thereof) from prior Distribution Dates.

      On each Distribution Date, the “Principal Transfer Amount” for the Undercollateralized Group will equal the excess of the aggregate Class Principal Balance of the Class A and Class X Certificates (or components thereof) related to the Undercollateralized Group over the aggregate Stated Principal Balance of the mortgage loans in that loan group.

      If the Weighted Average Pass-Through Rate of the Undercollateralized Group is greater than the Weighted Average Pass-Through Rate of the Overcollateralized Group, the payment of interest to the certificates related to the Undercollateralized Group from the interest collected on the Overcollateralized Group may cause a shortfall in the amount of principal and interest otherwise distributable to the Class B Certificates. In addition, after the aggregate principal balance of the Class B Certificates has been reduced to zero, this may cause a shortfall of principal that would be allocated to the Senior Certificates (or components thereof) related to the Undercollateralized Group.

Distributions of Principal

General

      On each Distribution Date, certificateholders will be entitled to receive principal distributions from the related Available Distribution Amount to the extent and in the priority described in this prospectus supplement. See “—Priority of Distributions” in this prospectus supplement.

      For any Distribution Date and any loan group, the “Principal Payment Amount” is the sum, with respect to the mortgage loans in that loan group, of (i) the portion of the required monthly payments on the mortgage loans allocated to principal after deducting accrued interest on the mortgage loans due on the Due Date immediately before the Distribution Date (except on the first Distribution Date with respect to the August Loans for which no scheduled principal payments will be included in the Principal Payment Amount), (ii) the principal portion of Repurchase Proceeds that were received on the mortgage loans during the preceding calendar month and (iii) any other unscheduled payments of principal that were received on the mortgage loans during the preceding calendar month, other than Payoffs, Curtailments, Liquidation Principal or Subsequent Recoveries.

      “Payoffs” are prepayments in full on a mortgage loan and “Curtailments” are partial prepayments on a mortgage loan, including any amounts in excess of the Minimum Monthly Payment. For any Distribution Date and any loan group, the “Principal Prepayment Amount” is the sum, with respect to the mortgage loans in that loan group, of all Payoffs and Curtailments relating to the mortgage loans in that loan group that were received during the related Prepayment Period, reduced (but not to less than

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zero) by the aggregate amount of negative amortization with respect to the mortgage loans during the prior calendar month.

      “Repurchase Proceeds” are proceeds received with respect to a mortgage loan that was repurchased by the depositor or the sponsor because of a material breach of the representations and warranties with respect to that mortgage loan, or because a required loan document was not included in the mortgage file, as described under “Description of the Mortgage Pool—Representations and Warranties Regarding the Mortgage Loans” in this prospectus supplement.

      For each Distribution Date and each Payoff, the related “Prepayment Period” will start on the 15th day of the month preceding the month in which the Distribution Date occurs (or, in the case of the first Distribution Date, beginning on the Cut-Off Date) and will end on the 14th day of the month in which the Distribution Date occurs. For each Distribution Date and each Curtailment, the related “Prepayment Period” will be the month preceding the month in which the Distribution Date occurs (except on the first Distribution Date with respect to the August Loans the Prepayment Period will be the period beginning on the Cut-Off Date and ending on the last day of the month in which the Cut-Off Date occurs).

      “Liquidation Principal” is the principal portion of Liquidation Proceeds and Insurance Proceeds (each, as defined in the pooling agreement) received with respect to each mortgage loan that became a Liquidated Mortgage Loan (but not in excess of the principal balance of that mortgage loan) during the calendar month preceding the month of the Distribution Date. A “Liquidated Mortgage Loan” is a mortgage loan for which the servicer has determined that it has received all amounts that it expects to recover from or on account of the mortgage loan, whether from Insurance Proceeds, Liquidation Proceeds or otherwise.

      Distributions to certificateholders on each Distribution Date will include any Subsequent Recoveries received by the servicer during the calendar month preceding the month of the Distribution Date. “Subsequent Recoveries” are amounts received by the servicer in connection with the liquidation of defaulted mortgage loans after those mortgage loans became Liquidated Mortgage Loans, up to the amount of losses previously allocated in respect of those mortgage loans. On each Distribution Date on which Subsequent Recoveries are distributed to certificateholders, the Class Principal Balance of the class of Subordinate Certificates with the lowest priority outstanding generally will be increased by the amount of those Subsequent Recoveries.

      The Class 1X and Class 2X-PPP Certificates will only be entitled to receive distributions of principal to the extent of their respective Class Principal Balance. The Class 1X and Class 2X-PPP Certificates will not receive principal distributions in respect of their interest-only components or Class Notional Amounts. See “—Distributions of Interest—Class X Notional Amounts and Class X Principal Balances” in this prospectus supplement.

Group 1 Senior Principal Distribution Amount

      On each Distribution Date before the Credit Support Depletion Date, an amount, up to the amount of the Group 1 Senior Principal Distribution Amount for that Distribution Date, will be distributed as principal, sequentially, (i) first, to the Class 1A and Class 1A-1B Certificates and the Class CA-1C Group 1 Component, pro rata according to Class Principal Balance or Component Principal Balance, respectively, until the Class 1A and Class 1A-1B Principal Balances and the Class CA-1C Group 1 Component Principal Balance have each been reduced to zero, and (ii) second, to the Class 1X Certificates, until the Class 1X Principal Balance has been reduced to zero.

      The “Group 1 Senior Principal Distribution Amount” for any Distribution Date will equal the sum of (i) the Group 1 Senior Percentage of the Principal Payment Amount for loan group 1, (ii) the Group 1 Senior Prepayment Percentage of the Principal Prepayment Amount for loan group 1 and (iii) the Group 1 Senior Liquidation Amount; provided, however, that for the first Distribution Date, this amount will be reduced by $100 to pay principal to the Class R Certificates as provided in clause (a)(ii) of the first paragraph under “—Priority of Distributions” in this prospectus supplement.

      The “Group 1 Senior Percentage” for any Distribution Date will equal the sum of the aggregate Class Principal Balance of the Class 1A, Class 1A-1B, Class 1X and Class R Certificates and the Component Principal Balance of the Class CA-1C Group 1 Component divided by the Stated Principal

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Balance of the mortgage loans in loan group 1, in each case immediately before that Distribution Date. The “Group 1 Subordinate Percentage” for any Distribution Date will equal the excess of 100% over the Group 1 Senior Percentage for that date. The Group 1 Senior Percentage and the Group 1 Subordinate Percentage as of the Closing Date will be approximately 89.25% and 10.75%, respectively.

      The “Group 1 Senior Liquidation Amount” for any Distribution Date will equal the sum of (A) the aggregate, for each mortgage loan in loan group 1 that became a Liquidated Mortgage Loan during the calendar month preceding the month of that Distribution Date, of the lesser of (i) the Group 1 Senior Percentage of the Stated Principal Balance of that mortgage loan and (ii) the Group 1 Senior Prepayment Percentage of the Liquidation Principal with respect to that mortgage loan and (B) the Group 1 Senior Prepayment Percentage of any Subsequent Recoveries on group 1 loans.

Group 2 Senior Principal Distribution Amount

      On each Distribution Date before the Credit Support Depletion Date, an amount, up to the amount of the Group 2 Senior Principal Distribution Amount for that Distribution Date, will be distributed as principal, sequentially, (i) first, to the Class 2A and Class 2A-1B Certificates and the Class CA-1C Group 2 Component, pro rata according to Class Principal Balance or Component Principal Balance, respectively, until the Class 2A and Class 2A-1B Principal Balances and the Class CA-1C Group 2 Component Principal Balance have each been reduced to zero, and (ii) second, to the Class 2X-PPP Certificates, until the Class 2X-PPP Principal Balance has been reduced to zero.

      The “Group 2 Senior Principal Distribution Amount” for any Distribution Date will equal the sum of (i) the Group 2 Senior Percentage of the Principal Payment Amount for loan group 2, (ii) the Group 2 Senior Prepayment Percentage of the Principal Prepayment Amount for loan group 2 and (iii) the Group 2 Senior Liquidation Amount.

      The “Group 2 Senior Percentage” for any Distribution Date will equal the sum of the aggregate Class Principal Balance of the Class 2A, Class 2A-1B and Class 2X-PPP Certificates and the Component Principal Balance of the Class CA-1C Group 2 Component divided by the Stated Principal Balance of the mortgage loans in loan group 2, in each case immediately before that Distribution Date. The “Group 2 Subordinate Percentage” for any Distribution Date will equal the excess of 100% over the Group 2 Senior Percentage for that date. The Group 2 Senior Percentage and the Group 2 Subordinate Percentage as of the Closing Date will be approximately 89.25% and 10.75%, respectively.

      The “Group 2 Senior Liquidation Amount” for any Distribution Date will equal the sum of (A) the aggregate, for each mortgage loan in loan group 2 that became a Liquidated Mortgage Loan during the calendar month preceding the month of that Distribution Date, of the lesser of (i) the Group 2 Senior Percentage of the Stated Principal Balance of that mortgage loan and (ii) the Group 2 Senior Prepayment Percentage of the Liquidation Principal with respect to that mortgage loan and (B) the Group 2 Senior Prepayment Percentage of any Subsequent Recoveries on group 2 loans.

Subordinate Principal Distribution Amount

      On each Distribution Date, an amount, up to the amount of the Subordinate Principal Distribution Amount for that Distribution Date, will be distributed as principal to the Subordinate Certificates. On each Distribution Date, except Distribution Dates on which the Subordination Level for any class or classes of the Subordinate Certificates is less than the related Subordination Level as of the Closing Date, each class of the Subordinate Certificates will be entitled to receive its pro rata (by Class Principal Balance) share of the Subordinate Principal Distribution Amount, to the extent of the Available Distribution Amount for loan group 1 and loan group 2 remaining after distributions of interest and principal to the Class A and Class X Certificates (including any distributions of interest and principal to the Senior Certificates as described under “—Cross-Collateralization” in this prospectus supplement), distributions of interest and principal to all of the Subordinate Certificates senior to that class and distributions of interest to that class. See “—Priority of Distributions” in this prospectus supplement. The relative seniority, from highest to lowest, of the Subordinate Certificates is as follows: Class B-1, Class B-2, Class B-3, Class B-4, Class B-5, Class B-6, Class B-7, Class B-8, Class B-9, Class B-10, Class B-11, Class B-12, Class B-13 and Class B-14.

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      The “Subordinate Principal Distribution Amount” for any Distribution Date will equal the excess of:

             (A) the sum of:

                    (i) the Group 1 Subordinate Percentage of the Principal Payment Amount for loan group 1;

                    (ii) the Group 2 Subordinate Percentage of the Principal Payment Amount for loan group 2;

                    (iii) the Subordinate Principal Prepayments Distribution Amount (without regard to the proviso in its definition); and

                    (iv) the Subordinate Liquidation Amount;

             over

             (B) the sum of:

                    (i) if either (x) the sum of the Class 1A, Class 1A-1B and Class 1X Principal Balance and the Component Principal Balance of the Class CA-1C Group 1 Component or (y) the sum of the Class 2A, Class 2A-1B and Class 2X-PPP Principal Balance and the Component Principal Balance of the Class CA-1C Group 2 Component Principal Balance has been reduced to zero, principal paid from the Available Distribution Amount for the loan group related to those Class A and Class X Certificates to the remaining Class A and Class X Certificates, as described under “—Cross-Collateralization” in this prospectus supplement; and

                    (ii) the amounts paid from the Available Distribution Amount for an Overcollateralized Group to the Class A and Class X Certificates (or components thereof) related to an Undercollateralized Group, as described under “—Cross-Collateralization” in this prospectus supplement.

      The “Subordinate Principal Prepayments Distribution Amount” for any Distribution Date will equal the sum of (i) the Group 1 Subordinate Prepayment Percentage of the Principal Prepayment Amount for loan group 1 and (ii) the Group 2 Subordinate Prepayment Percentage of the Principal Prepayment Amount for loan group 2; provided, however, that if the amount specified in clause (B) of the definition of “Subordinate Principal Distribution Amount” is greater than the sum of the amounts specified in clauses (A)(i), (A)(ii) and (A)(iv) of that definition, then the Subordinate Principal Prepayments Distribution Amount will be reduced by the amount of that excess.

      The “Group 1 Subordinate Prepayment Percentage” for any Distribution Date will equal the excess of 100% over the Group 1 Senior Prepayment Percentage; provided, however, that if the sum of the aggregate Class Principal Balance of the Class 1A, Class 1A-1B, Class 1X and Class R Certificates and the Component Principal Balance of the Class CA-1C Group 1 Component has been reduced to zero, then the Group 1 Subordinate Prepayment Percentage will equal 100%. The “Group 2 Subordinate Prepayment Percentage” for any Distribution Date will equal the excess of 100% over the Group 2 Senior Prepayment Percentage; provided, however, that if the sum of the Class 2A, Class 2A-1B and Class 2X-PPP Principal Balance and the Component Principal Balance of the Class CA-1C Group 2 Component has been reduced to zero, then the Group 2 Subordinate Prepayment Percentage will equal 100%.

      The “Subordinate Liquidation Amount” for any Distribution Date will equal the excess, if any, of the sum of (i) the aggregate Liquidation Principal for all mortgage loans that became Liquidated Mortgage Loans during the calendar month preceding the month of that Distribution Date and (ii) any Subsequent Recoveries on the mortgage loans received during that calendar month, over the sum of the Group 1 Senior Liquidation Amount and the Group 2 Senior Liquidation Amount for that Distribution Date.

      The rights of the holders of the Class B Certificates to receive distributions of interest and principal are subordinated to the rights of the holders of the Class A, Class R and Class X Certificates to receive all distributions of interest and principal to which they are entitled. See “—Subordination and Allocation of Losses” in this prospectus supplement.

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Principal Prepayments

      The “Group 1 Senior Prepayment Percentage” and “Group 2 Senior Prepayment Percentage” for any Distribution Date before August 2016 will equal 100%. During the next four years, this percentage will be calculated as follows:

for any Distribution Date occurring in or between August 2016 and July 2017, the Group 1 or Group 2 Senior Percentage, as applicable, for that Distribution Date plus 70% of the excess of 100% over that percentage for that Distribution Date;
 
for any Distribution Date occurring in or between August 2017 and July 2018, the Group 1 or Group 2 Senior Percentage, as applicable, for that Distribution Date plus 60% of the excess of 100% over that percentage for that Distribution Date;
 
for any Distribution Date occurring in or between August 2018 and July 2019, the Group 1 or Group 2 Senior Percentage, as applicable, for that Distribution Date plus 40% of the excess of 100% over that percentage for that Distribution Date; and
 
for any Distribution Date occurring in or between August 2019 and July 2020, the Group 1 or Group 2 Senior Percentage, as applicable, for that Distribution Date plus 20% of the excess of 100% over that percentage for that Distribution Date.

For any Distribution Date occurring in or after August 2020, the Group 1 and Group 2 Senior Prepayment Percentage will equal the Group 1 and Group 2 Senior Percentage, respectively, for that Distribution Date.

      There are important exceptions to the calculations of the Senior Prepayment Percentage described in the above paragraph. On any Distribution Date, (i) if the Group 1 or Group 2 Senior Percentage for that Distribution Date exceeds the initial Group 1 or Group 2 Senior Percentage, respectively, as of the Closing Date, then the Group 1 and Group 2 Senior Prepayment Percentage for that Distribution Date will equal 100%, (ii) if on or before the Distribution Date in July 2009, (a) the Class B Percentage for that Distribution Date is greater than or equal to twice the Class B Percentage as of the Closing Date and (b) cumulative realized losses on the mortgage loans allocated to the Class B Certificates, as a percentage of the aggregate Class Principal Balance of the Class B Certificates as of the Closing Date, do not exceed 20%, then the Group 1 and Group 2 Senior Prepayment Percentages shall equal the Group 1 or Group 2 Senior Percentages, as applicable, for such Distribution Date plus 50% of the Group 1 or Group 2 Subordinate Percentage, as applicable, for such Distribution Date, and (iii) if after the Distribution Date in July 2009, (a) the Class B Percentage for such Distribution Date is greater than or equal to twice the Class B Percentage as of the Closing Date and (b) cumulative realized losses on the mortgage loans allocated to the Class B Certificates, as a percentage of the aggregate Class Principal Balance of the Class B Certificates as of the Closing Date, do not exceed 30%, then the Group 1 and Group 2 Senior Prepayment Percentages shall equal the Group 1 and Group 2 Senior Percentages, as applicable.

      Notwithstanding the above, on any Distribution Date, neither the Group 1 nor Group 2 Senior Prepayment Percentage for that Distribution Date will decrease as described in the definition of Group 1 and Group 2 Senior Prepayment Percentages in the above two paragraphs if (a) the mean aggregate Stated Principal Balance, as of the Distribution Date in each of the immediately preceding six calendar months, of the mortgage loans in either loan group that were 60 or more days delinquent as of such date is greater than 50% of the Subordinate Component Balance for that loan group as of the current Distribution Date or (b) cumulative realized losses on the mortgage loans in either loan group allocated to the Class B Certificates, as a percentage of the Subordinate Component Balance for that loan group as of the Closing Date, are greater than, for any Distribution Date (1) before the eleventh anniversary of the first Distribution Date, 30%, (2) on or after the eleventh anniversary but before the twelfth anniversary of the first Distribution Date, 35%, (3) on or after the twelfth anniversary but before the thirteenth anniversary of the first Distribution Date, 40%, (4) on or after the thirteenth anniversary but before the fourteenth anniversary of the first Distribution Date, 45%, and (5) on or after the fourteenth anniversary of the first Distribution Date, 50%. Finally, if on any Distribution Date the allocation to the Senior Certificates (or components thereof, as applicable) related to either of loan group 1 or 2 in the percentage required would reduce the sum of the Class Principal Balances or Component Principal Balances of those certificates (or components) below zero, the Group 1 or Group 2 Senior Prepayment Percentage, as applicable, for that Distribution Date will be limited to the percentage necessary to reduce that sum to zero.

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Subordination and Allocation of Losses

      The Subordinate Certificates will be subordinate in right of payment and provide credit support to the Class A, Class X and Class R Certificates to the extent described in this prospectus supplement. The support provided by the Subordinate Certificates is intended to enhance the likelihood of regular receipt by these Senior Certificates of the full amount of the monthly distributions of interest and principal to which they are entitled and to afford the Senior Certificates protection against some losses. The protection afforded to the Senior Certificates by the Subordinate Certificates will be accomplished by the preferential right on each Distribution Date of the Senior Certificates to receive distributions of interest and principal to which they are entitled before distributions of interest and principal to the Subordinate Certificates and by the allocation of losses to the Subordinate Certificates before any allocation of losses to the Senior Certificates.

      In addition, each class of Subordinate Certificates will be subordinate in right of payment and provide credit support to each class of Subordinate Certificates with a lower numerical class designation. The protection afforded a class of Subordinate Certificates by the classes of Subordinate Certificates with higher numerical class designations will be similarly accomplished by the preferential right of those classes with lower numerical class designations to receive distributions of interest and principal before distributions of interest and principal to those classes of Subordinate Certificates with higher numerical class designations.

      After the Class Principal Balances of all of the Subordinate Certificates have been reduced to zero, any loss with respect to a mortgage loan in loan group 1 or loan group 2 will be allocated to the Class A and Class X Certificates, in the manner described below.

      Any loss realized on a mortgage loan in loan group 1 or loan group 2 will be allocated among the certificates as follows:

             (i) for losses allocable to principal:

                    (a) first, to the Junior Subordinate Certificates in reverse numerical order, until their aggregate Class Principal Balance has been reduced to zero;

                    (b) second, to the Class B-11 Certificates, until the Class B-11 Principal Balance has been reduced to zero;

                    (c) third, to the Class B-10 Certificates, until the Class B-10 Principal Balance has been reduced to zero;

                    (d) fourth, to the Class B-9 Certificates, until the Class B-9 Principal Balance has been reduced to zero;

                    (e) fifth, to the Class B-8 Certificates, until the Class B-8 Principal Balance has been reduced to zero;

                    (f) sixth, to the Class B-7 Certificates, until the Class B-7 Principal Balance has been reduced to zero;

                    (g) seventh, to the Class B-6 Certificates, until the Class B-6 Principal Balance has been reduced to zero;

                    (h) eighth, to the Class B-5 Certificates, until the Class B-5 Principal Balance has been reduced to zero;

                    (i) ninth, to the Class B-4 Certificates, until the Class B-4 Principal Balance has been reduced to zero;

                    (j) tenth, to the Class B-3 Certificates, until the Class B-3 Principal Balance has been reduced to zero;

                    (k) eleventh, to the Class B-2 Certificates, until the Class B-2 Principal Balance has been reduced to zero;

                    (l) twelfth, to the Class B-1 Certificates, until the Class B-1 Principal Balance has been reduced to zero; and

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                    (m) thirteenth, (i) any loss with respect to a mortgage loan in loan group 1 will be allocated (a) first, to the Class CA-1C Certificates, to its Class CA-1C Group 1 Component, until such Component Principal Balance has been reduced to zero; (b) second, to the Class 1A-1B Certificates, until its Class Principal Balance has been reduced to zero; and (c) third, to the Class 1A and Class 1X Certificates, pro rata according to Class Principal Balance, until their respective Class Principal Balances have each been reduced to zero and (ii) any loss with respect to a mortgage loan in loan group 2 will be allocated (a) first, to the Class CA-1C Certificates, to its Class CA-1C Group 2 Component, until such Component Principal Balance has been reduced to zero; (b) second, to the Class 2A-1B Certificates, until its Class Principal Balance has been reduced to zero; and (c) third, to the Class 2A and Class 2X-PPP Certificates, pro rata according to Class Principal Balance, until their respective Class Principal Balances have each been reduced to zero;

and

             (ii) for losses allocable to interest:

                    (a) first, to the Junior Subordinate Certificates in reverse numerical order, in reduction of accrued but unpaid interest and then in reduction of the Class Principal Balances of those certificates;

                    (b) second, to the Class B-11 Certificates, in reduction of accrued but unpaid interest and then in reduction of the Class B-11 Principal Balance;

                    (c) third, to the Class B-10 Certificates, in reduction of accrued but unpaid interest and then in reduction of the Class B-10 Principal Balance;

                    (d) fourth, to the Class B-9 Certificates, in reduction of accrued but unpaid interest and then in reduction of the Class B-9 Principal Balance;

                    (e) fifth, to the Class B-8 Certificates, in reduction of accrued but unpaid interest and then in reduction of the Class B-8 Principal Balance;

                    (f) sixth, to the Class B-7 Certificates, in reduction of accrued but unpaid interest and then in reduction of the Class B-7 Principal Balance;

                    (g) seventh, to the Class B-6 Certificates, in reduction of accrued but unpaid interest and then in reduction of the Class B-6 Principal Balance;

                    (h) eighth, to the Class B-5 Certificates, in reduction of accrued but unpaid interest and then in reduction of the Class B-5 Principal Balance;

                    (i) ninth, to the Class B-4 Certificates, in reduction of accrued but unpaid interest and then in reduction of the Class B-4 Principal Balance;

                    (j) tenth, to the Class B-3 Certificates, in reduction of accrued but unpaid interest and then in reduction of the Class B-3 Principal Balance;

                    (k) eleventh, to the Class B-2 Certificates, in reduction of accrued but unpaid interest and then in reduction of the Class B-2 Principal Balance;

                    (l) twelfth, to the Class B-1 Certificates, in reduction of accrued but unpaid interest and then in reduction of the Class B-1 Principal Balance; and

                    (m) thirteenth, (i) any loss with respect to a mortgage loan in loan group 1 will be allocated (a) first, to the Class CA-1C Certificates, to its Class CA-1C Group 1 Component in reduction of accrued but unpaid interest on such Component Principal Balance and then until such Component Principal Balance has been reduced to zero; (b) second, to the Class 1A-1B Certificates in reduction of accrued but unpaid interest on such Class Principal Balance and then until such Class Principal Balance has been reduced to zero; and (c) third, to the Class 1A and Class 1X Certificates, pro rata according to Class Principal Balance, in reduction of accrued but unpaid interest on such Class Principal Balances and then until each such Class Principal Balance has been reduced to zero and (ii) any loss with respect to a mortgage loan in loan group 2 will be allocated (a) first, to the Class CA-1C Certificates, to its Class CA-1C Group 2 Component in reduction of accrued but unpaid interest on such Component Principal Balance and

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then until such Component Principal Balance has been reduced to zero; (b) second, to the Class 2A-1B Certificates in reduction of accrued but unpaid interest on such Class Principal Balance and then until such Class Principal Balance has been reduced to zero; and (c) third, to the Class 2A and Class 2X-PPP Certificates, pro rata according to Class Principal Balance, in reduction of accrued but unpaid interest on such Class Principal Balances and then until each such Class Principal Balance has been reduced to zero.

      On each Distribution Date, if the aggregate Class Principal Balance of all outstanding classes of Class A, Class X, Class R and Subordinate Certificates exceeds the aggregate Stated Principal Balance of the mortgage loans (after giving effect to distributions of principal and the allocation of all losses to the certificates on that Distribution Date), that excess will be deemed a principal loss and will be allocated to the most junior class of Subordinate Certificates then outstanding.

      Because the Subordinate Certificates represent interests in both loan groups, the Class Principal Balances of the Subordinate Certificates could be reduced to zero as a result of a disproportionate amount of losses on the mortgage loans in one of the loan groups. Therefore, the allocation to the Subordinate Certificates of losses on the mortgage loans in the other loan group will increase the likelihood that future losses may be allocated to the Senior Certificates (or components thereof, as applicable) relating to the loan group which did not incur the loss.

      Similarly, if the Subordinate Certificates are no longer outstanding, because the Class CA-1C Certificates represent interests in loan group 1 and loan group 2, the Class CA-1C Principal Balance could be reduced to zero as a result of a disproportionate amount of losses on the mortgage loans in one of the loan groups. Therefore, the allocation to the Class CA-1C Certificates of losses on the mortgage loans in the other loan group will increase the likelihood that future losses may be allocated to the Senior Certificates (or components thereof, as applicable) relating to the other loan group.

The Class R Certificates

      The Class R Certificates will receive $100 of principal on the first Distribution Date, as well as one month's interest on that amount. These certificates will not receive any distributions of interest or principal on any other Distribution Date. However, on each Distribution Date, the Class R Certificates will receive any amounts remaining (which are not expected to be material) in the certificate account from the Available Distribution Amount after distributions of interest and principal on the regular interests issued by REMIC III (as defined in the pooling agreement) and payment of expenses, if any, of the Trust, together with excess liquidation proceeds (as described in paragraph (1)(h) of “—Available Distribution Amount” below), if any. Distributions of any remaining amounts to the Class R Certificates will be subordinate to all payments required to be made with respect to the other certificates and each class of REMIC I Regular Interests (as defined in the pooling agreement) on any Distribution Date.

Available Distribution Amount

      On each Distribution Date, the Available Distribution Amount for that Distribution Date, which will be determined separately with respect to each loan group, and, in each case, will generally include scheduled principal and interest payments due on the Due Date immediately before that Distribution Date, Curtailments received in the previous calendar month, Payoffs received in the Prepayment Period to the extent described below and amounts received from liquidations of mortgage loans in the previous calendar month, will be distributed to the certificateholders, as specified in this prospectus supplement.

      The “Available Distribution Amount” for any Distribution Date for each loan group, as more fully described in the pooling agreement, will equal the sum, for the mortgage loans in the loan group, of the following amounts:

             (1) the total amount of all cash received by or on behalf of the servicer for the mortgage loans by the determination date (which will be at least ten days before that Distribution Date) and not

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previously distributed (including proceeds of mortgage loans in the loan group that are liquidated and scheduled amounts of distributions from buydown funds respecting Buydown Loans, if any), except:

                    (a) all scheduled payments of principal and interest collected but due on a date after that Distribution Date;

                    (b) all Curtailments received after the previous calendar month;

                    (c) all Payoffs received after the Prepayment Period immediately preceding that Distribution Date (together with any interest payment received with those Payoffs to the extent that it represents the payment of interest accrued on the mortgage loans for the period after the previous calendar month), and interest that was accrued and received on Payoffs received during the period from the first to the 14th day of the month of that Distribution Date, which interest will not be included in the calculation of the Available Distribution Amount for any Distribution Date;

                    (d) Liquidation Proceeds, Insurance Proceeds and Subsequent Recoveries received on the mortgage loans in the loan group after the previous calendar month;

                    (e) all amounts payable to the servicer in reimbursement for advances made by the servicer under the pooling agreement;

                    (f) the servicing fee for each mortgage loan in the loan group;

                    (g) all prepayment penalties, late charges, non-sufficient funds fees and other fees and charges collected on the mortgage loans in the loan group; and

                    (h) excess liquidation proceeds, which equals the excess, if any, of aggregate Liquidation Proceeds and Insurance Proceeds on mortgage loans in the loan group received during the previous calendar month over the amount that would have been rece ived if Payoffs had been made with respect to those mortgage loans in the loan group during the previous calendar month;

             (2) the total, to the extent not previously distributed, of the following amounts, to the extent advanced or received, as applicable, by the servicer:

                    (a) all advances made by the servicer for that Distribution Date relating to the mortgage loans in the loan group in respect to delinquent monthly payments; and

                    (b) any amounts payable as compensating interest by the servicer for that Distribution Date related to the mortgage loans in the loan group; and

             (3) any Repurchase Proceeds with respect to the mortgage loans in the loan group received during the calendar month before that Distribution Date.

Last Scheduled Distribution Date

      The Last Scheduled Distribution Date for the Class 1A, Class 1A-1B and Class 1X Certificates is the Distribution Date in July 2046, which is the Distribution Date in the month after the scheduled maturity date for the latest maturing mortgage loan in loan group 1.

      The Last Scheduled Distribution Date for the Class 2A, Class 2A-1B and Class 2X-PPP Certificates is the Distribution Date in August 2046, which is the Distribution Date in the month after the scheduled maturity date for the latest maturing mortgage loan in loan group 2.

      The Last Scheduled Distribution Date for the Class CA-1C and the Class B Certificates is the Distribution Date in August 2046, which is the Distribution Date in the month after the scheduled maturity date for the latest maturing mortgage loan in loan group 1 or loan group 2.

      The actual rate of principal payments on the certificates will depend on the rate of principal payments (including principal prepayments) on the related mortgage loans, which, in turn, may be influenced by a variety of economic, geographic and social factors, as well as the level of prevailing mortgage interest rates. No assurance can be given as to the actual payment experience on the mortgage loans.

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Optional Termination of the Trust

      The servicer may purchase the mortgage loans and all property acquired in respect of any mortgage loan still owned by the Trust on or after the Clean-Up Call Option Date (the “Clean-Up Call Option”), which will cause the termination of the Trust and the retirement of the certificates as of the Distribution Date immediately following the exercise by the servicer of the Clean-Up Call Option. Such an optional termination of the Trust may occur even if the aggregate principal balance of the mortgage loans in any particular loan group is greater than 10% of that balance as of the Cut-Off Date.

      The purchase price will equal the sum of (1) the excess of (a) 100% of the aggregate scheduled principal balance of the mortgage loans (other than any mortgage loans in respect of which the related mortgaged property has been acquired by the Trust), plus accrued interest at the applicable Pass-Through Rates through the last day of the month of purchase, over (b) the amount of any Bankruptcy Losses incurred with respect to the mortgage loans to the extent not already allocated to the certificates as a realized loss and (2) without duplication, the appraised fair market value of all mortgaged properties acquired by the Trust and of any other property owned by the Trust, such sum reduced by unreimbursed advances (other than advances made with respect to mortgage loans as to which the servicer expects that foreclosure is not imminent). The trustee will be required to notify certificateholders in writing of the servicer's election to purchase the mortgage loans not less than 30 days prior to the date of purchase.

      An optional termination of the Trust will cause the outstanding principal balance of the certificates to be paid in full through the distribution of the proceeds of that purchase and the allocation of the associated realized losses, if any, on each mortgaged property owned by the Trust the fair market value of which is less than the principal balance of the related mortgage loan as of the time that the Trust acquired the mortgaged property and accrued and unpaid interest on that mortgage loan, and upon that payment in full, the Trust will be terminated. Any Subsequent Recoveries received after the termination of the Trust will be retained by the servicer.

Amendment of the Pooling Agreement

      See “Description of the Securities—Amendment of the Governing Agreements” in the prospectus for a description of the provisions for amendment of the pooling agreement.

      The percentage voting right of each certificate, for purposes of a vote on an amendment of the pooling agreement or any other matter on which certificateholders are entitled to vote under the pooling agreement, will be determined as follows:

with respect to any certificate (other than the Class X and Residual Certificates), the product of (x) 100% reduced by 1% for each outstanding class of Class X Certificates and (y) its Certificate Principal Balance divided by the aggregate Certificate Principal Balance of all the certificates, such product expressed as a percentage;
 
with respect to any Class X Certificate, the product of (x) 1% and (y) the portion of the related Class X Notional Amount evidenced by such certificate divided by such Class X Notional Amount, such product expressed as a percentage; and
 
with respect to any Residual Certificate, zero.

Payment of Fees and Expenses

      The following table describes each type of fee or expense that may be paid from collections on the mortgage loans.

Fee or Expense

     General Purpose
of Fee or Expense

     Party
Receiving Fee
or Expense

     Source of Funds
for Payment of Fee
or Expense

     Distribution
Priority of Fee
or Expense

servicing fee (1)      compensation of the servicer for services provided under the pooling agreement      servicer      all collections on the mortgage loans      prior to distributions to certificateholders

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Fee or Expense

     General Purpose
of Fee or Expense

     Party
Receiving Fee
or Expense

     Source of Funds
for Payment of Fee
or Expense

     Distribution
Priority of Fee
or Expense

all prepayment penalties (except certain prepayment penalties paid by borrowers upon voluntary full prepayment of certain mortgage loans, which will be paid to the Class 2X-PPP Certificates), late charges, nonsufficient funds fees and other fees and charges collected on the mortgage loans      compensation of the servicer for services provided under the pooling agreement      servicer      all prepayment penalties (except certain prepayment penalties paid by borrowers upon voluntary full prepayment of certain mortgage loans), late charges, nonsufficient funds fees and other fees and charges collected on the mortgage loans      prior to distributions to certificateholders
                 
all interest payments on Payoffs received from the first day through the 14th day of any calendar month      compensation of the servicer for services provided under the pooling agreement      servicer      all interest payments on Payoffs received from the first day through the 14th day of any calendar month      prior to distributions to certificateholders
                 
all investment earnings earned on funds held in the investment account and the certificate account      compensation of the servicer for services provided under the pooling agreement      servicer      all investment earnings earned on funds held in the investment account and the certificate account      prior to distributions to certificateholders
                 
reimbursement for advances made under the pooling agreement, other than Nonrecoverable Advances (2)      reimbursement of the servicer for advances made under the pooling agreement      servicer      collections on the mortgage loans with respect to which the advances were made      prior to distributions to certificateholders
                 
reimbursement for Nonrecoverable Advances (2)      reimbursement of the servicer for advances made under the pooling agreement      servicer      all collections on the mortgage loans      prior to distributions to certificateholders
                 
reimbursement for certain expenses, costs and liabilities incurred by the servicer or the depositor in connection with any legal action relating to the pooling agreement or the certificates (3)      reimbursement of the servicer or the depositor for certain expenses, costs and liabilities      servicer or depositor      all collections on the mortgage loans      prior to distributions to certificateholders
                 
any penalty tax imposed under the Internal Revenue Code on a REMIC formed under the pooling agreement in the event the REMIC engages in a prohibited transaction (4)      compliance with Internal Revenue Code      United States Treasury      all collections on the mortgage loans      prior to distributions to certificateholders


(1) The servicing fee will be calculated as a per annum percentage for each mortgage loan. The servicing fee with respect to each mortgage loan (a) (1) indexed to One-Year MTA and in loan group 1, will equal (x) the greater of (i) 0.375% and (ii) the excess, if any, of the gross margin on the applicable mortgage

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loan (as stated in the related mortgage note) over 2.05% or (y) the initial fixed rate on such mortgage loan and (2) indexed to One-Year MTA and in loan group 2, will equal (x) the greater of (i) 0.375% and (ii) the excess, if any, of the gross margin on the applicable mortgage loan (as stated in the related mortgage note) over 1.50% or (y) the initial fixed rate on such mortgage loan and (b) indexed to One-Month LIBOR, as described in this prospectus supplement under the heading “Description of the Mortgage Loans—The Indexes”, will equal (1) the greater of (i) 0.375% and (ii) the excess, if any, of the gross margin on the applicable mortgage loan (as stated in the related mortgage note) over 1.00% or (2) the initial fixed rate on such mortgage loan.

(2) See “The Servicers—The Servicer—Servicing ProceduresAdvances” in this prospectus supplement for a description of the servicer's obligation to make advances.

(3) See “Description of the Securities—Matters Regarding the Servicer and the Depositor” in the prospectus for a description of these reimburseable expenses, costs and liabilities.

(4) See “Material Federal Income Tax Consequences—Matters Relevant to Holders of All REMIC Certificates—Prohibited Transactions and Other Possible REMIC Taxes” in the prospectus. It is not anticipated that any REMIC will engage in a prohibited transaction.

      Any change to the fees and expenses described in the table above will require (i) an amendment to the pooling agreement and (ii) the consent of certificateholders (unless such change does not adversely affect in any material respect the interests of any certificateholder).

      The servicer will be obligated to pay the fees and reimbursable expenses of the trustees and all expenses incurred in connection with the servicer's responsibilities under the pooling agreement (subject to reimbursement for advances, as described in the table above).

      In the event of any resignation or termination of the servicer pursuant to the pooling agreement, the trustee, if acting as successor servicer, will be entitled to the same compensation as that to which the servicer would have been entitled. If another successor servicer is appointed, the trustee will be permitted to make arrangements for the compensation of such successor servicer out of collections on the mortgage loans, subject to the limitation that such compensation, together with the compensation to the trustee, may not exceed the compensation to which the servicer would have been entitled.

Reports and Other Information

      Prior to each Distribution Date, the administrative agent on behalf of the servicer will prepare and provide to the trustee a distribution report for the related distribution period. Such report will show information about the certificates, including the following: (1) the total amount of (i) interest, (ii) scheduled principal, (iii) Payoffs and Curtailments, (iv) Liquidation Proceeds and Insurance Proceeds, (v) Repurchase Proceeds and (vi) Subsequent Recoveries available for distribution to the certificates on that Distribution Date; (2) the amount of interest and principal to be distributed to each class of certificates on that Distribution Date; (3) the Assigned Prepayment Premiums and related amounts to be distributed to the Class 2X-PPP Certificates; (4) the amount of (i) any realized losses, (ii) any shortfall in interest collections resulting from the delay in distribution of Curtailments and Payoffs or from the Relief Act (to the extent not covered by compensating interest) and (iii) any Net Negative Amortization to be allocated to each class of certificates on that Distribution Date; and (5) the Class Principal Balance for each class of certificates before and after giving effect to such distributions and allocations.

      The distribution report will show information about the mortgage loans, including the following: (1) the number and aggregate principal balance of the mortgage loans at the beginning and end of the distribution period; (2) updated aggregate pool information, including weighted average Pass-Through Rate, weighted average remaining term and geographic concentrations; (3) delinquency information for the distribution period, including (i) the number and aggregate principal balance of the mortgage loans delinquent one, two and three months or more, (ii) the number and aggregate principal balance of the mortgage loans with respect to which foreclosure proceedings have been initiated and (iii) the number and aggregate principal balance of the mortgage loans with respect to which the related mortgaged properties have been acquired by the Trust through foreclosure; and (4) the aggregate amount of advances of scheduled principal and interest made by the servicer during the related distribution period.

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      The trustee will be required to send or otherwise make available to certificateholders on each Distribution Date the monthly distribution report described above. The trustee may make available these reports and certain other information through its site on the world wide web. The web page is currently located at www.etrustee.net.” Assistance in using the website can be obtained by calling the trustee's investor relations desk at 312-992-4855. The location of this web page and the procedures used therein are subject to change from time to time by the trustee.

      Reports about the certificates required to be filed with the Securities and Exchange Commission, including the Trust's Annual Reports on Form 10-K, Distribution Reports on Form 10-D and Current Reports on Form 8-K, will be filed with the Commission under the file number assigned to the Trust. The public may read and copy any materials filed with the Commission at the Commission's Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission maintains an internet website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission. The address of that internet website is http://www.sec.gov.

      The Trust's Annual Reports on Form 10-K, Distribution Reports on Form 10-D and Current Reports on Form 8-K, and any amendments to those reports, will be made available on the administrative agent's internet website as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Commission. Distribution reports will also be made available on the administrative agent's internet website on each Distribution Date. The administrative agent may also make available on its internet website monthly reports with information about each mortgage loan, including actual and scheduled principal balance, current Pass-Through Rate, amount of last payment and delinquency history. The administrative agent's internet website is located at www.wamumsc.com and reports are available by clicking on “Investor Information.”

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YIELD AND PREPAYMENT CONSIDERATIONS

General

      The yield to maturity of each class of certificates will depend upon, among other things, the price at which the certificates are purchased, the amount payable to that class as interest, the actual characteristics of the mortgage loans in the related loan group or loan groups, the rate of principal payments (including prepayments) on the mortgage loans in the related loan group or loan groups and the rate and timing of liquidations and loss severity on the mortgage loans in the related loan group or loan groups. The yield to maturity to holders of the MTA and Class X Certificates will be lower than the yield to maturity otherwise produced by the applicable interest rate and purchase price of those certificates because interest and principal distributions will not be payable to the certificateholders until the 25th day of the month following the month of accrual (without any additional distribution of interest or earnings with respect to the delay).

      Distributions to the Class A and Class X Certificates relate to payments on the mortgage loans in the related loan group or loan groups, as applicable, except in the limited circumstances described in this prospectus supplement under “Description of the Certificates—Cross-Collateralization,” and except that Carryover Shortfall Amounts for the Class A Certificates may be paid from interest otherwise available for distribution to the Class 1X and Class 2X-PPP Certificates. Distributions to the Class B Certificates relate to payments on all of the mortgage loans.

      The mortgage interest rates on the mortgage loans will adjust monthly (except during an initial fixed-rate period of one or three months) and may vary significantly over time. When a mortgage loan begins its adjustable period, increases and decreases in the mortgage interest rate on that mortgage loan will be calculated for each monthly accrual period based on the index as of a specified date. The index may not rise and fall consistently with mortgage interest rates. As a result, the mortgage interest rates on the mortgage loans at any time may not equal the prevailing mortgage interest rates for similar adjustable-rate loans, and accordingly the prepayment rate may be lower or higher than would otherwise be anticipated. Moreover, each mortgage loan has a Rate Ceiling.

      Although mortgage interest rates will increase (subject to the Rate Ceilings) or decrease as the index changes (following the initial fixed-rate period, if applicable), the Minimum Monthly Payments on the mortgage loans generally will adjust only once a year (and with respect to approximately 0.4%, by aggregate principal balance as of the Cut-Off Date, of the mortgage loans the Minimum Monthly Payment will initially adjust after the expiration of the first sixty months from origination of such mortgage loans, and after the expiration of this fixed payment period, the Minimum Monthly Payment on each of these mortgage loans will adjust annually thereafter). As a result, an increase or decrease in the index will cause the amortization of the mortgage loans to decelerate or accelerate, thereby causing a corresponding change in the amortization of the certificates. In the event that an increase in the index causes the interest due on a mortgage loan for a given month to exceed the current monthly payment for that month, the shortfall in interest will be added to the outstanding principal balance of that mortgage loan in the form of “negative amortization.” In addition, because the initial Minimum Monthly Payment is set based on the initial fixed rate rather than the sum of the Margin and then-current applicable Index, it is likely that the Minimum Monthly Payment will be less than the interest due on that mortgage loan during the early years of a mortgage loan. If a mortgagor only pays the Minimum Monthly Payment due, there will likely be interest shortfalls and the corresponding negative amortization on the mortgage loan until the fifth anniversary of the first Due Date (or until such Due Date as the principal balance of the mortgage loan would otherwise exceed 110%, 115% or 125%, as applicable, of its original principal balance) when the Minimum Monthly Payment will be reset to a fully amortizing amount.

      Amounts received with respect to Payoffs and Curtailments will be used to cover interest shortfalls on the certificates resulting from negative amortization. To the extent that the aggregate amount of negative amortization with respect to all mortgage loans for a given month exceeds the amount of Payoffs and Curtailments for the related Distribution Date, such excess amount will be deducted from the interest payable to the certificates and added to the Class Principal Balances of the certificates as described in “Description of the Certificates—Distributions of Interest,” thereby causing a delay in the payment of accrued interest. See “Description of the Mortgage Pool” in this prospectus supplement.

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      In the event that the amount of interest otherwise payable to the Class1X or Class 2X-PPP Certificates is reduced as a result of the allocation of Net Negative Amortization, the amount of such reduction will be added as principal to the related Class Principal Balance. Before the Credit Support Depletion Date, the Class X Certificates will not receive any distributions of principal until the Class Principal Balances of the Class A Certificates of the related loan group have all been reduced to zero.

      Further, some mortgagors who prefer the certainty provided by fixed-rate mortgage loans may nevertheless obtain adjustable-rate mortgage loans at a time when they regard the mortgage interest rates (and, therefore, the payments) on fixed-rate mortgage loans as unacceptably high. These mortgagors may be induced to refinance adjustable-rate mortgage loans when the mortgage interest rates and monthly payments on comparable fixed-rate mortgage loans decline to levels that these mortgagors regard as acceptable, even though the mortgage interest rates and monthly payments may be significantly higher than the current mortgage interest rates and monthly payments on the mortgagors' adjustable-rate mortgage loans. The ability to refinance a mortgage loan will depend on a number of factors prevailing at the time refinancing is desired, including, without limitation, real estate values, the mortgagor's financial situation, prevailing mortgage interest rates, the mortgagor's equity in the related mortgaged property, tax laws and prevailing general economic conditions.

Principal Prepayments and Compensating Interest

      When a mortgagor prepays a mortgage loan in full between Due Dates for the mortgage loan, the mortgagor pays interest on the amount prepaid only to the date of prepayment instead of for the entire month. Also, when a Curtailment is made on a mortgage loan together with the scheduled Minimum Monthly Payment for a month on or after the related Due Date, the principal balance of the mortgage loan is reduced by the amount of the Curtailment as of that Due Date, but the principal is not distributed to certificateholders until the Distribution Date in the next month; therefore, one month of interest shortfall accrues on the amount of the Curtailment.

      To reduce the adverse effect on certificateholders from the deficiency in interest payable as a result of a Payoff on a mortgage loan between its Due Dates, the servicer will pass through compensating interest to the related certificateholders to the limited extent and in the manner described below. The servicer is obligated to remit to the certificate account on the day before each Distribution Date with respect to the mortgage loans in each loan group that experience a Payoff between the 15th day and the last day of the month before the Distribution Date, an amount equal to the least of (a) any shortfall for the previous month in interest collections resulting from the timing of Payoffs on the mortgage loans in that loan group made from the 15th day of the calendar month before the Distribution Date to the last day of the month, (b) the sum of (i) 112 of 0.050% of the aggregate Stated Principal Balance of the mortgage loans in that loan group, (ii) any reinvestment income realized by the servicer relating to Payoffs on the mortgage loans in that loan group made during the Prepayment Period and (iii) interest payments on the Payoffs on the mortgage loans in that loan group received during the period of the first day through the 14th day of the month of the Distribution Date and (c) 112 of 0.125% of the aggregate Stated Principal Balance of the mortgage loans in that loan group. Payoffs received on mortgage loans from the first day through the 14th day of any month will be passed through to the certificateholders on the Distribution Date of the same month (except for Payoffs received from the Cut-Off Date through July 14, 2006, which will be passed through to the related certificateholders on the August 2006 Distribution Date), rather than on the Distribution Date of the following month, together with a full month's interest for the prior month. Accordingly, no compensating interest will be payable for Payoffs on the mortgage loans in that loan group received during that period. Payoffs received during the period from the 15th day through the last day of any month will be passed through on the Distribution Date in the following month, and, in order to provide for a full month's interest payment for the prior month, compensating interest will be passed through to related certificateholders for that period.

      To the extent that the amount allocated to a loan group to pay compensating interest is insufficient to cover the deficiency in interest payable as a result of the timing of a Payoff, or to the extent that there is an interest deficiency from a Curtailment or the application of the Relief Act, that remaining deficiency will be allocated to the related certificates (or components thereof, as applicable) related to that loan group (or, in the case of the Class B Certificates, only the portion of those certificates that derives its

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interest from that loan group), pro rata according to the amount of interest to which each class of certificates (or component or portion thereof) would otherwise be entitled, in reduction of that amount.

LIBOR Certificates

      The yield to investors in the LIBOR Certificates will be sensitive to fluctuations in LIBOR. Changes in LIBOR may not correlate with changes in prevailing mortgage interest rates. It is possible that lower prevailing mortgage interest rates, which might be expected to result in faster prepayments, could occur concurrently with an increased level of LIBOR. Conversely, higher prevailing mortgage interest rates, which would be expected to result in slower prepayments, could occur concurrently with a lower level of LIBOR.

Rate of Payments

      The rate of principal payments on the certificates (including the Class X Certificates, to the extent that a portion of Net Negative Amortization has been added to their Class Principal Balances) generally is directly related to the rate of principal payments on the mortgage loans in the related loan group, which may be in the form of scheduled payments, principal prepayments or liquidations. See “Risk Factors” in this prospectus supplement and “Yield and Maturity Considerations” in the accompanying prospectus. As of the Cut-Off Date, approximately 0.3% (by aggregate principal balance) of the mortgage loans are assumable to the extent provided in the related mortgage note. See “Description of the Mortgage Pool” in this prospectus supplement for a description of prepayment penalties imposed on the mortgage loans.

      From time to time, the servicer may implement programs to solicit mortgagors of qualifying mortgage loans that it services for refinance, including the mortgage loans underlying the certificates. While those programs will not specifically target the mortgage loans underlying the certificates for refinance, they may have the effect of accelerating the prepayment rate of those mortgage loans, which would adversely affect the yield on all classes of certificates purchased at a premium.

      A higher than anticipated rate of prepayments would reduce the aggregate principal balance of the mortgage loans more quickly than expected. As a consequence, aggregate interest payments for the mortgage loans would be substantially less than expected. Therefore, a higher rate of principal prepayments in a loan group could result in a lower than expected yield to maturity on each related class of certificates purchased at a premium, and in some circumstances investors may not fully recover their initial investments. Conversely, a lower than expected rate of principal prepayments in a loan group would reduce the return to investors on any related classes of certificates purchased at a discount, in that principal payments for the mortgage loans would occur later than anticipated. There can be no assurance that certificateholders will be able to reinvest amounts received from the certificates at a rate that is comparable to the applicable interest rate on the certificates. Investors should fully consider all of the associated risks.

Prepayment Assumptions

      Prepayments on mortgage loans are commonly measured relative to a prepayment standard or model. The prepayment model used in this prospectus supplement (the “Constant Prepayment Rate” or “CPR”) assumes that the outstanding principal balance of a pool of mortgage loans prepays at a specified constant annual rate. In generating monthly cash flows, this rate is converted to an equivalent monthly rate. A 20% CPR assumes a constant per annum rate of prepayment of 20% of the then outstanding principal balance of the pool of mortgage loans. Likewise, a 10% CPR, 15% CPR, 30% CPR and 40% CPR assumes a constant per annum rate of prepayment of 10%, 15%, 30% and 40%, respectively, of the then outstanding principal balance of the pool of mortgage loans.

      None of the prepayment rates purports 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 underlying the certificates. Furthermore, there is no assurance that the mortgage loans in any loan group will prepay at any given percentage of the CPR. The actual rate of prepayments on the mortgage loans may be influenced by a variety of economic, geographic, social and other factors. In general, during the initial fixed-rate period for some of the

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mortgage loans underlying the certificates, if prevailing mortgage interest rates fall significantly below the mortgage interest rates on those mortgage loans, those mortgage loans are likely to be subject to higher prepayment rates than if prevailing mortgage interest rates remain at or above the mortgage interest rates on the mortgage loans underlying the certificates. Conversely, during the initial fixed-rate period for those mortgage loans, if prevailing mortgage interest rates rise above the mortgage interest rates on those 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 all of the mortgage loans and, correspondingly, an earlier than expected retirement of the certificates.

      This prospectus supplement does not describe the specific factors that will affect the prepayment of the mortgage loans or their relative importance. Factors not identified in this prospectus supplement may significantly affect the prepayment rate of the mortgage loans. In particular, this prospectus supplement makes no representation as to either the percentage of the principal amount of the mortgage loans that will be paid as of any date or the overall rate of prepayment.

      For purposes of the tables in Appendix A, it is assumed (collectively, the “Modeling Assumptions”) that the mortgage loans in each loan group are comprised of the groups of hypothetical mortgage loans, which have the common characteristics indicated:

Groups of Hypothetical Mortgage Loans—Loan Group 1

Hypothetical
Loan Number

     Original Principal
Balance ($)

     Unpaid Principal
Balance ($)

     Remaining
Term
(Months)

     Original
Term
(Months)

     Mortgage
Interest
Rate (%)

     Pass-
Through
Rate (%)

     Margin
(%)

     Servicing
Fee After
First
Period (%)

 

1

      289,750.00       295,239.16       351       360       8.37500       6.27500       3.10000       2.10000  
 

2

      711,500.00       720,861.92       353       360       7.65591       6.32294       3.38297       1.33297  
 

3

      242,000.00       241,262.24       355       360       8.54171       6.22500       3.31671       2.31671  
 

4

      844,800.00       844,515.72       355       360       7.53026       6.34303       3.23723       1.18723  
 

5

      377,450.00       380,623.54       356       360       8.50000       6.25000       3.25000       2.25000  
 

6

      2,405,465.50       2,414,991.13       356       360       7.53209       6.32319       3.25890       1.20890  
 

7

      5,344,500.00       5,306,702.16       357       360       8.46853       6.25200       3.21653       2.21653  
 

8

      233,000.00       227,006.96       357       360       8.12700       6.25200       2.87500       1.87500  
 

9

      15,942,932.00       15,900,263.86       357       360       7.42702       6.31525       3.16177       1.11177  
 

10

      33,862,415.00       33,896,363.08       358       360       1.03104       0.00169       3.03636       2.03635  
 

11

      5,468,100.00       5,476,012.74       358       360       8.45676       6.25000       3.20676       2.20676  
 

12

      63,299,899.00       63,312,106.42       358       360       1.27466       0.19927       3.21791       1.16791  
 

13

      78,509,689.60       78,547,650.05       358       360       7.38892       6.31153       3.12287       1.07739  
 

14

      624,000.00       626,065.08       359       360       1.00000       0.00000       2.75000       1.00000  
 

15

      5,524,050.00       5,512,141.35       359       360       8.25467       6.25000       3.00467       2.00467  
 

16

      1,738,500.00       1,743,077.64       359       360       1.28750       0.32910       3.04200       0.95840  
 

17

      47,452,055.00       47,370,238.14       359       360       7.45133       6.29187       3.18588       1.15946  
 

18

      365,000.00       364,246.99       359       360       7.03200       6.33200       2.75000       0.70000  
 

19

      3,680,600.00       3,680,600.00       360       360       2.36520       1.41522       3.02441       0.97441  
 

20

      1,171,500.00       1,173,104.08       360       360       7.61751       6.45278       3.21473       1.16473  
 

21

      798,360.00       802,754.11       477       480       7.57516       6.28497       3.34019       1.29019  
 

22

      266,500.00       264,647.71       478       480       3.00000       1.20000       3.85000       1.80000  
 

23

      7,391,920.00       7,404,627.01       478       480       7.41392       6.31184       3.15208       1.10208  
 

24

      397,500.00       398,308.26       478       480       7.83200       6.33200       3.55000       1.50000  
 

25

      9,859,255.00       9,851,880.53       479       480       7.56063       6.31586       3.29477       1.24477  
 

                                                                 
Hypothetical
Loan
Number

     Months to
Next Rate
Adjustment

     Months to
Next
Payment
Adjustment

     Negative
Amortization
Limit (%)

     Prepayment
Penalty
Term
(Months)

     Monthly
P&I ($)

     Rate
Floor (%)

     Rate
Ceiling (%)

     Index

 

1

      1       4       115       N/A       1,070.97       3.10000       9.95000     One-Month LIBOR
 

2

      1       6       112       N/A       2,445.60       3.38297       9.95000     One-Year MTA
 

3

      1       8       110       N/A       954.93       3.31671       9.95000     One-Month LIBOR

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Hypothetical
Loan
Number

     Months to
Next Rate
Adjustment

     Months to
Next
Payment
Adjustment

     Negative
Amortization
Limit (%)

     Prepayment
Penalty
Term
(Months)

     Monthly
P&I ($)

     Rate
Floor (%)

     Rate
Ceiling (%)

     Index

 

4

      1       8       111       N/A       2,847.64       3.23723       9.95000     One-Year MTA
 

5

      1       9       110       N/A       1,214.03       3.25000       10.95000     One-Month LIBOR
 

6

      1       9       113       N/A       8,519.93       3.25890       10.12780     One-Year MTA
 

7

      1       10       110       N/A       17,872.83       3.21653       10.46096     One-Month LIBOR
 

8

      1       58       110       N/A       1,146.22       2.87500       10.95000     One-Month LIBOR
 

9

      1       10       111       N/A       53,649.92       3.16177       10.50313     One-Year MTA
 

10

      1       11       110       N/A       109,419.41       3.03636       10.56021     One-Month LIBOR
 

11

      1       11       115       N/A       18,097.61       3.20676       10.15827     One-Month LIBOR
 

12

      1       11       110       N/A       211,267.46       3.21791       10.54406     One-Year MTA
 

13

      1       11       115       N/A       264,435.45       3.12287       10.03182     One-Year MTA
 

14

      2       12       110       N/A       2,007.04       2.75000       10.29776     One-Month LIBOR
 

15

      1       12       115       N/A       19,512.59       3.00467       9.95000     One-Month LIBOR
 

16

      2       12       110       N/A       5,831.61       3.04200       10.23750     One-Year MTA
 

17

      1       12       114       N/A       160,314.91       3.18588       9.99319     One-Year MTA
 

18

      1       60       110       N/A       1,330.93       2.75000       9.95000     One-Year MTA
 

19

      1       13       111       N/A       11,942.66       3.02441       9.95000     One-Year MTA
 

20

      2       13       111       N/A       3,768.01       3.21473       9.95000     One-Year MTA
 

21

      1       10       115       N/A       2,055.33       3.34019       9.95000     One-Year MTA
 

22

      1       11       115       N/A       954.03       3.85000       9.95000     One-Year MTA
 

23

      1       11       115       N/A       20,126.37       3.15208       9.95000     One-Year MTA
 

24

      1       59       110       N/A       1,182.92       3.55000       9.95000     One-Year MTA
 

25

      1       12       114       N/A       26,949.72       3.29477       10.05661     One-Year MTA
 

                                                             

Groups of Hypothetical Mortgage Loans—Loan Group 2

Hypothetical
Loan Number

     Original Principal
Balance ($)

     Unpaid Principal
Balance ($)

     Remaining
Term
(Months)

     Original
Term
(Months)

     Mortgage
Interest
Rate (%)

     Pass-
Through
Rate (%)

     Margin
(%)

     Servicing
Fee After
First
Period (%)

 

1

      321,560.00       328,686.68       348       360       7.37500       5.80000       3.07500       1.57500  
 

2

      1,455,200.00       1,451,817.00       359       360       7.86209       5.75920       3.60289       2.10289  
 

3

      524,000.00       532,182.72       347       360       6.68200       5.78200       2.40000       0.90000  
 

4

      256,000.00       260,231.31       351       360       7.50000       5.72500       3.27500       1.77500  
 

5

      1,680,000.00       1,698,207.15       354       360       7.62500       5.72500       3.40000       1.90000  
 

6

      3,562,008.00       3,579,893.67       356       360       7.45682       5.72500       3.23182       1.73182  
 

7

      6,973,600.00       6,996,652.83       357       360       7.61361       5.73294       3.38067       1.88067  
 

8

      2,003,363.00       1,988,739.44       357       360       7.59772       5.78200       3.31572       1.81572  
 

9

      2,739,300.00       2,742,516.66       358       360       1.28569       0.00000       3.10948       2.10948  
 

10

      494,000.00       494,493.78       358       360       8.25000       6.27500       2.97500       1.97500  
 

11

      1,274,000.00       1,275,167.50       358       360       2.43343       0.17596       3.89505       2.39505  
 

12

      6,927,010.00       6,930,182.42       358       360       1.22390       0.01911       3.21865       1.71864  
 

13

      300,000.00       300,121.33       358       360       7.37500       5.72500       3.15000       1.65000  
 

14

      260,000.00       260,105.16       358       360       7.37500       5.72500       3.15000       1.65000  
 

15

      22,650,351.00       22,673,694.15       358       360       7.50709       5.73160       3.27549       1.77549  
 

16

      227,000.00       227,124.92       358       360       7.62500       5.72500       3.40000       1.90000  
 

17

      1,496,000.00       1,499,335.21       358       360       7.91923       5.75000       3.66923       2.16923  
 

18

      127,000.00       126,752.68       359       360       2.25000       0.32500       3.42500       1.92500  
 

19

      170,000.00       169,594.88       359       360       7.62500       5.72500       3.40000       1.90000  
 

20

      84,041,634.00       83,961,450.69       359       360       7.69607       5.76393       3.43214       1.93214  
 

21

      391,500.00       390,798.92       359       360       7.62500       5.72500       3.40000       1.90000  
 

22

      793,000.00       791,174.97       359       360       7.23453       5.77798       2.95655       1.45655  
 

23

      3,324,000.00       3,316,650.62       359       360       7.95820       5.75000       3.70820       2.20820  
 

24

      1,794,302.00       1,800,493.40       359       360       8.42935       5.82500       4.10435       2.60435  

S-99


424B5100th "Page" of 287TOC1stPreviousNextBottomJust 100th
Hypothetical
Loan Number

     Original Principal
Balance ($)

     Unpaid Principal
Balance ($)

     Remaining
Term
(Months)

     Original
Term
(Months)

     Mortgage
Interest
Rate (%)

     Pass-
Through
Rate (%)

     Margin
(%)

     Servicing
Fee After
First
Period (%)

 

25

      865,000.00       866,739.39       359       360       8.45838       5.81205       4.14633       2.64633  
 

26

      8,643,930.00       8,643,930.00       360       360       1.11145       0.00432       3.16423       1.66423  
 

27

      10,250,600.00       10,261,764.00       360       360       7.65752       5.96067       3.19685       1.69685  
 

28

      337,500.00       338,559.00       360       360       7.62500       5.72500       3.40000       1.90000  
 

29

      566,400.00       567,329.24       478       480       7.62500       5.72500       3.40000       1.90000  
 

30

      1,499,000.00       1,501,450.87       478       480       7.25000       5.72500       3.02500       1.52500  
 

31

      564,000.00       563,141.75       479       480       8.12500       6.27500       2.85000       1.85000  
 

32

      392,000.00       391,509.98       479       480       8.75000       5.77500       4.47500       2.97500  
 

33

      11,772,820.00       11,767,975.24       479       480       7.50980       5.76304       3.24676       1.74676  
 

34

      672,000.00       674,748.89       479       480       8.12500       5.82500       3.80000       2.30000  
 

35

      1,698,172.00       1,705,463.16       479       480       8.65484       5.82500       4.32984       2.82984  
 

36

      2,826,040.00       2,826,040.00       480       480       1.40632       0.00000       3.25682       1.75682  
 

37

      3,299,750.00       3,310,891.45       480       480       7.91453       5.96787       3.44666       1.94666  
 

38

      484,000.00       488,931.81       354       360       7.25000       5.80000       2.95000       1.45000  
 

39

      408,000.00       411,993.36       357       360       9.95000       5.60000       5.85000       4.35000  
 

40

      1,218,000.00       1,215,294.55       358       360       8.02303       5.75307       3.76996       2.26996  
 

41

      350,000.00       350,148.30       358       360       7.43200       5.78200       3.15000       1.65000  
 

42

      17,289,400.00       17,249,021.43       359       360       8.30743       5.76906       4.03837       2.53837  
 

43

      972,450.00       975,167.08       359       360       7.90698       5.79159       3.61539       2.11539  
 

44

      272,000.00       271,438.85       359       360       7.03200       5.78200       2.75000       1.25000  
 

45

      3,357,900.00       3,357,900.00       360       360       1.13223       0.05421       3.83677       2.33677  
 

46

      738,000.00       736,439.51       360       360       8.12500       5.90000       3.72500       2.22500  
 

47

      312,000.00       312,380.75       478       480       7.13200       5.78200       2.85000       1.35000  
 

48

      606,400.00       615,948.00       353       360       8.00000       5.75000       3.75000       2.25000  
 

49

      927,000.00       939,446.19       354       360       8.00000       5.75000       3.75000       2.25000  
 

50

      650,000.00       660,561.28       355       360       7.62500       6.40000       2.22500       1.22500  
 

51

      1,300,000.00       1,311,154.41       355       360       7.56255       5.80000       3.26255       1.76255  
 

52

      241,200.00       243,337.24       355       360       8.00000       5.80000       3.70000       2.20000  
 

53

      200,000.00       201,370.89       356       360       8.12500       6.30000       2.82500       1.82500  
 

54

      5,385,010.00       5,430,519.75       356       360       8.43173       5.74900       4.18273       2.68273  
 

55

      356,000.00       357,493.46       357       360       8.00000       5.75000       3.75000       2.25000  
 

56

      14,429,657.00       14,479,356.68       357       360       7.86194       5.77570       3.58624       2.08624  
 

57

      668,993.00       665,340.90       357       360       7.47811       5.77694       3.20117       1.70117  
 

58

      1,594,400.00       1,596,254.14       358       360       1.21223       0.00000       3.08487       2.08487  
 

59

      878,250.00       876,093.96       358       360       3.19696       0.82044       3.87652       2.37652  
 

60

      1,759,642.00       1,759,825.57       358       360       1.44640       0.08944       3.30139       1.80139  
 

61

      32,758,017.00       32,757,482.25       358       360       7.87967       5.77975       3.59992       2.09992  
 

62

      2,355,400.00       2,356,753.73       358       360       7.61809       5.78200       3.33609       1.83609  
 

63

      5,394,400.00       5,405,973.93       358       360       8.32495       5.75000       4.07495       2.57495  
 

64

      1,068,000.00       1,068,646.15       358       360       7.73200       5.78200       3.45000       1.95000  
 

65

      289,900.00       289,335.43       359       360       2.25000       0.25000       3.00000       2.00000  
 

66

      1,075,000.00       1,072,906.48       359       360       2.25000       0.15000       3.60000       2.10000  
 

67

      88,450.00       88,247.38       359       360       8.50000       5.75000       4.25000       2.75000  
 

68

      456,000.00       454,955.37       359       360       7.12500       5.75000       2.87500       1.37500  
 

69

      304,000.00       303,275.55       359       360       8.87500       5.72500       4.65000       3.15000  
 

70

      191,688,039.00       191,353,752.37       359       360       7.97762       5.77489       3.70273       2.20273  
 

71

      7,003,905.00       6,988,283.32       359       360       7.27603       5.78911       2.98692       1.48692  
 

72

      1,975,300.00       1,970,910.69       359       360       7.68399       5.80000       3.38399       1.88399  
 

73

      2,019,700.00       2,014,886.93       359       360       7.76559       5.78192       3.48367       1.98367  
 

74

      448,600.00       447,480.62       359       360       7.75000       5.72000       3.53000       2.03000  
 

75

      22,362,905.00       22,257,797.21       359       360       8.49487       5.75000       4.24487       2.74487  
 

76

      2,434,400.00       2,443,197.28       359       360       8.57337       5.77950       4.29387       2.79387  

S-100


424B5101st "Page" of 287TOC1stPreviousNextBottomJust 101st
Hypothetical
Loan Number

     Original Principal
Balance ($)

     Unpaid Principal
Balance ($)

     Remaining
Term
(Months)

     Original
Term
(Months)

     Mortgage
Interest
Rate (%)

     Pass-
Through
Rate (%)

     Margin
(%)

     Servicing
Fee After
First
Period (%)

 

77

      3,343,120.00       3,354,239.26       359       360       8.36155       5.77972       4.08183       2.58183  
 

78

      495,000.00       493,978.78       359       360       7.73200       5.78200       3.45000       1.95000  
 

79

      14,825,110.00       14,825,110.00       360       360       1.20064       0.01804       3.67053       2.17053  
 

80

      2,013,000.00       2,013,000.00       360       360       1.36215       0.00000       2.93882       1.43883  
 

81

      1,155,200.00       1,155,200.00       360       360       1.52978       0.23061       3.18892       1.68892  
 

82

      244,700.00       244,700.00       360       360       1.00000       0.00000       3.75000       2.25000  
 

83

      106,750.00       106,750.00       360       360       1.75000       0.05000       3.20000       1.70000  
 

84

      170,000.00       169,625.80       360       360       7.62500       5.92500       3.20000       1.70000  
 

85

      608,000.00       609,464.43       360       360       7.12500       5.97500       2.65000       1.15000  
 

86

      7,468,850.00       7,446,099.39       360       360       7.62737       5.92096       3.20641       1.70641  
 

87

      1,262,127.00       1,259,267.51       360       360       7.22577       5.91570       2.81007       1.31007  
 

88

      408,000.00       407,027.71       360       360       7.62500       5.92500       3.20000       1.70000  
 

89

      427,000.00       432,057.36       475       480       7.75000       5.80000       3.45000       1.95000  
 

90

      3,749,650.00       3,768,830.60       477       480       7.52406       5.79910       3.22496       1.72496  
 

91

      48,000.00       47,999.46       478       480       8.37500       6.22500       3.15000       2.15000  
 

92

      2,169,600.00       2,172,493.49       478       480       7.31179       5.74446       3.00716       1.56733  
 

93

      288,750.00       289,399.34       478       480       8.23200       5.78200       3.95000       2.45000  
 

94

      22,975,950.00       22,975,536.44       479       480       7.72804       5.81123       3.41681       1.91681  
 

95

      420,000.00       419,395.20       479       480       7.37500       5.80000       3.07500       1.57500  
 

96

      1,735,000.00       1,732,058.78       479       480       7.96766       5.78200       3.68566       2.18566  
 

97

      731,320.00       734,685.92       479       480       9.10475       5.80000       4.80475       3.30475  
 

98

      2,004,392.00       2,013,922.18       479       480       9.02092       5.79401       4.72691       3.22691  
 

99

      763,700.00       762,636.49       479       480       7.83200       5.78200       3.55000       2.05000  
 

100

      4,614,250.00       4,614,250.00       480       480       1.66184       0.08106       3.38636       1.88636  
 

101

      3,306,500.00       3,301,622.59       480       480       7.73016       5.92500       3.30516       1.80516  
 

                                                                 
Hypothetical
Loan
Number

     Months to
Next Rate
Adjustment

     Months to
Next
Payment
Adjustment

     Negative
Amortization
Limit (%)

     Prepayment
Penalty
Term
(Months)

     Monthly
P&I ($)

     Rate
Floor (%)

     Rate
Ceiling (%)

     Index

 

1

      1       1       115       6       1,111.83       3.07500       8.95000     One-Year MTA
 

2

      1       12       110       6       4,787.33       3.60289       10.58224     One-Year MTA
 

3

      1       12