424B5 1 v077356_424b5.htm

Prospectus Supplement (To the prospectus dated June 16, 2006)

NovaStar Mortgage Funding Trust, Series 2007-2 Issuing Entity		$1,324,400,000

NovaStar Mortgage, Inc. Sponsor and Servicer

NovaStar Mortgage Funding Corporation Depositor		NovaStar Home Equity Loan Asset-Backed Certificates, Series 2007-2

The certificates will be backed by a pool of residential, subprime mortgage loans. The pool contains both adjustable-rate mortgage loans and fixed-rate mortgage loans.


Consider carefully the risk factors starting on page S-12 of this prospectus supplement and page 5 of the prospectus before making a decision to invest in the certificates. The offered certificates represent beneficial ownership interests in the issuing entity. The offered certificates are not interests in or obligations of the Sponsor, Servicer, the Depositor, any of their affiliates, or any other person. No governmental agency or instrumentality has insured or guaranteed the offered certificates or the underlying mortgage loans.		The Certificates- Interest and principal on each class of certificates is scheduled to be paid monthly on the 25th day of the month or, if such day is not a business day, the next succeeding business day. The first scheduled distribution date is June 25, 2007. Credit Enhancement- The more senior classes of certificates will have the benefit of the subordination of the more subordinated classes. All classes of Class A and Mezzanine Certificates will be supported by overcollateralization, which is available to absorb losses. Certain mortgage loans are covered by mortgage insurance policies. Excess cashflow will be available to absorb losses and maintain or restore overcollateralization. Pre-Funding- The trust fund has a pre-funding feature.

	Initial Aggregate Certificate Balance		Pass-Through Rate(1)			Price to Public			Underwriting Discount			Proceeds to the Depositor (2)
Class A-1A Certificates	$	779,369,000		LIBOR + 0.20000	%		100.000000	%		0.19425	%	$	777,855,104
Class A-2A Certificates	$	140,080,000		LIBOR + 0.09000	%		100.000000	%		0.25000	%	$	139,729,800
Class A-2B Certificates	$	80,420,000		LIBOR + 0.16000	%		100.000000	%		0.25000	%	$	80,218,950
Class A-2C Certificates	$	49,730,000		LIBOR + 0.18000	%		100.000000	%		0.25000	%	$	49,605,675
Class A-2D Certificates	$	18,601,000		LIBOR + 0.27000	%		100.000000	%		0.25000	%	$	18,554,498
Class M-1 Certificates	$	70,700,000		LIBOR + 0.30000	%		100.000000	%		0.25000	%	$	70,523,250
Class M-2 Certificates	$	49,700,000		LIBOR + 0.32000	%		100.000000	%		0.25000	%	$	49,575,750
Class M-3 Certificates	$	23,800,000		LIBOR + 0.34000	%		100.000000	%		0.25000	%	$	23,740,500
Class M-4 Certificates	$	21,700,000		LIBOR + 0.50000	%		100.000000	%		0.25000	%	$	21,645,750
Class M-5 Certificates	$	21,700,000		LIBOR + 0.68000	%		100.000000	%		0.25000	%	$	21,645,750
Class M-6 Certificates	$	18,900,000		LIBOR + 0.95000	%		100.000000	%		0.25000	%	$	18,852,750
Class M-7 Certificates	$	18,900,000		LIBOR + 1.75000	%		100.000000	%		0.25000	%	$	18,852,750
Class M-8 Certificates	$	15,400,000		LIBOR + 2.50000	%		100.000000	%		0.25000	%	$	15,361,500
Class M-9 Certificates	$	15,400,000		LIBOR + 2.50000	%		91.546875	%		0.25000	%	$	14,059,719
Total	$	1,324,400,000										$	1,320,221,746

(1)	Subject to increase as described herein and subject to an available funds cap rate described herein and a maximum rate of 11%, except for the Class A-2A Certificates which are not subject to a maximum rate.

(2)	Before deducting expenses, estimated to be $625,000.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus supplement. Any representation to the contrary is a criminal offense.

Greenwich Capital Markets, Inc., Wachovia Capital Markets, LLC and Deutsche Bank Securities Inc. as underwriters, will offer the underwritten certificates only after the underwritten certificates have been issued, delivered to and accepted by the underwriters. The underwriters have the right to reject any order. We expect to deliver the offered certificates on or about June 1, 2007 through The Depository Trust Company and upon request through Clearstream Banking Luxembourg or the Euroclear System.

RBS GREENWICH CAPITAL	WACHOVIA SECURITIES	DEUTSCHE BANK SECURITIES

(Joint Lead Managers and Joint Book-Runners)

The date of this Prospectus Supplement is May 25, 2007.

Important notice about the 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: (1) the accompanying prospectus, which provides general information, some of which may not apply to your series of certificates, and (2) this prospectus supplement, which describes the specific terms of your series of certificates.

This prospectus supplement does not contain complete information about the offering of the certificates. Additional information is contained in the prospectus. You are urged to read both this prospectus supplement and the prospectus in full. We cannot sell the offered certificates to you unless you have received both this prospectus supplement and the accompanying prospectus.

The prospectus contemplates several different types of securities, some of which are not relevant to this offering. You should rely on the information in this prospectus supplement with respect to the certificates offered hereby.

The depositor has filed with the Securities and Exchange Commission a registration statement (Registration No. 333-134461) under the Securities Act of 1933, as amended, with respect to the certificates offered pursuant to this prospectus supplement. This prospectus supplement and the accompanying prospectus, which form a part of the registration statement, omit certain information contained in such registration statement pursuant to the rules and regulations of the Commission. You may inspect and copy the registration statement at the Public Reference Room at the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. and at the Commission’s regional offices at 233 Broadway, New York, New York, 10279 and Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661. Please call the Commission at 1-800-SEC-0330 for further information on the Public Reference Rooms. In addition, the Commission maintains a site on the World Wide Web containing reports, proxy materials, information statements and other items. The address is http://www.sec.gov.

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.

TABLE OF CONTENTS

Summary	S-1
Description of the Certificates	S-1
Pre-Funding Feature	S-5
Distributions on the Certificates	S-5
Calculation of LIBOR	S-8
Credit Enhancement	S-8
Allocation of Losses	S-10
Removal and Substitution of Mortgage Loans	S-10
Advancing	S-11
Servicing Fee	S-11
Clean-up Call	S-11
Federal Income Tax Consequences	S-11
ERISA Considerations	S-11
Legal Investment	S-11
Ratings	S-12
Risk Factors	S-13
Use of Proceeds	S-26
Description of the Mortgage Pool	S-26
Adjustable Rate Feature of the ARM Loans	S-45
Mortgage Loan Groups	S-45
The Initial Group I Mortgage Loans	S-45
The Initial Group II Mortgage Loans	S-62
Conveyance of Subsequent Mortgage Loans and the Pre-Funding Account	S-79
The Originator	S-80
Underwriting Standards for the Mortgage Loans	S-80
Delinquency and Loss Information for the Mortgage Loans	S-84
Private Mortgage Insurance Policies	S-85
Additional Information	S-89
The Sponsor	S-89
Limitations on Liability	S-90
The Servicer	S-90
Foreclosure and Delinquency Experience with Non-Conforming Mortgage Loans	S-91
Static Pool Information	S-91
NovaStar Financial	S-92
The Depositor	S-92
The Trustee	S-93
General	S-93
DBNTC	S-93
The Custodian	S-94
The Back-Up Servicer	S-94
Countrywide Home Loans Servicing LP	S-94
The Hedge Providers	S-98
Wachovia Bank, National Association	S-98
The Royal Bank of Scotland plc	S-98
Deutsche Bank AG	S-98
Legal Proceedings	S-99
Affiliations	S-99
Description of the Certificates	S-99
General	S-99

Payments	S-101
Certificates Supported by Each Group	S-101
Available Funds	S-101
Interest Payments on the Certificates	S-102
Supplemental Interest Trust	S-104
Summary of Interest Rate Hedge Agreements	S-104
Interest Allocations	S-107
Principal Allocations	S-109
Credit Enhancement	S-113
Overcollateralization Provisions, Allocation of Losses and Subsequent Recoveries	S-113
Definitions	S-115
Fees and Expenses	S-127
Calculation of One-Month LIBOR	S-127
Advances	S-128
Book-Entry Certificates	S-129
Assignment of Mortgage Loans	S-133
The Paying Agent	S-134
Optional Termination	S-134
Optional Purchase Pledge	S-134
Certain Yield and Prepayment Considerations	S-134
The Pooling and Servicing Agreement	S-160
Servicing and Other Compensation	S-160
Purchase of Delinquent Mortgage Loans	S-160
Servicing Defaults	S-160
Limitation on Suits	S-162
The Custodian and the Trustee	S-162
Material Federal Income Tax Consequences	S-163
REMIC Elections	S-163
Discount and Premium	S-164
Cap Contract	S-164
Other Matters	S-166
ERISA Considerations	S-166
Method of Distribution	S-168
Certain Legal Matters	S-170
Ratings	S-171
Legal Investment	S-171
Annex I Global Clearance, Settlement and Tax Documentation Procedures	S-172
Initial Settlement	S-172
Secondary Market Trading	S-172
Certain U.S. Federal Income Tax Documentation Requirements	S-174

iii

Flow of Funds Diagram - REMIC Trust (Interest)

Flow of Funds Diagram - REMIC Trust (Principal)

Flow of Funds Diagram - Supplemental Interest

Summary

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

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

Issuing Entity

NovaStar Mortgage Funding Trust, Series 2007-2.

Sponsor, Originator and Servicer

NovaStar Mortgage, Inc., a Virginia corporation.

Depositor

NovaStar Mortgage Funding Corporation, a Delaware corporation.

Trustee and Successor Servicer

Deutsche Bank National Trust Company, a national banking association organized under the laws of the United States.

Custodian

U.S. Bank National Association.

Back-up Servicer

Countrywide Home Loans Servicing LP.

NovaStar Financial, Inc.

NovaStar Financial, Inc., a Maryland corporation.

Hedge Providers

Deutsche Bank AG, The Royal Bank of Scotland plc and Wachovia Bank, National Association.

Mortgage Insurance Providers

Mortgage Guaranty Insurance Corporation

PMI Mortgage Insurance Co.

Radian Guaranty, Inc.

Closing Date

On or about June 1, 2007.

Cut-off Date

The “cut-off date” for the initial mortgage loans is the later of May 1, 2007, and the date of origination of such initial mortgage loan. The cut-off date for any subsequent mortgage loan is the later of (i) the first day of the month in which such subsequent mortgage loan is acquired by the trust and (ii) the date of origination of such subsequent mortgage loan.

Description of the Certificates

The issuing entity will issue Home Equity Loan Asset-Backed Certificates, Series 2007-2, in fifteen classes of Class A and Mezzanine Certificates: five classes of senior Class A Certificates, Class A-1A, Class A-2A, Class A-2B, Class A-2C and Class A-2D; and ten classes of subordinated, Mezzanine Certificates, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9 and Class M-10. The Class A Certificates are senior to the Mezzanine Certificates. The Mezzanine Certificates with lower numerical class designations are senior to those Mezzanine Certificates with higher numerical class designations. The initial certificate balance of each class of offered certificates is shown on the front cover (subject to a variance of 10%).

S-1

The Class A, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8 and Class M-9 Certificates are collectively referred to herein as the “offered certificates” or the “underwritten certificates.” Only the offered certificates are being offered by this prospectus supplement and the accompanying prospectus. The Class A-1A Certificates are referred to herein as the “Group I Certificates” and the Class A-2A, Class A-2B, Class A-2C and Class A-2D Certificates are referred to herein as the “Group II Certificates.”

The issuing entity will also issue four other classes of certificates which are not being offered by this prospectus supplement, including (a) a senior interest-only class of certificates, Class I (that is senior to the Class A and Mezzanine Certificates), (b) one mezzanine class of certificates, the Class M-10 Certificates, (c) one subordinated class of certificates, the Class C Certificates which (i) entitle the holder to receive payments from excess cashflow, (ii) entitle the holder to receive all collected prepayment penalties and (iii) represent the overcollateralization amount and (d) a REMIC residual interest.

The Issuing Entity

The certificates will represent ownership interests in the issuing entity, which will consist primarily of:

a pool of subprime mortgage loans consisting of two groups — a group of residential first-lien and second-lien, fixed and adjustable rate mortgage loans designated as Group I (which is comprised entirely of conforming balance mortgage loans) and a group of residential first-lien and second-lien, fixed and adjustable rate mortgage loans designated as Group II (which is comprised of conforming and non-conforming balance mortgage loans);

·	a security interest in the properties securing the mortgage loans;

·	collections on the mortgage loans;

·	certain hedge agreements (which agreements are not part of any REMIC), as described herein;

·	money on deposit in a pre-funding account which will be used to purchase subsequent mortgage loans for inclusion in the pool;

·	money on deposit in any interest coverage account which may be established to fund shortfalls in collections of interest due to the pre-funding feature; and

·	certain lender paid mortgage insurance policies and related proceeds.

The Mortgage Loans

The initial mortgage loans will consist of 5,877 loans, with an aggregate principal balance of $943,607,780. The initial Group I mortgage loans will consist of 4,772 loans, with an aggregate principal balance of $688,465,155. The initial Group II mortgage loans will consist of 1,105 loans with an aggregate principal balance of $255,142,625.

The initial mortgage loans have the following approximate characteristics as of the cut-off date:

Adjustable-rate mortgage loans: 65.06%

Fixed-rate mortgage loans: 34.94%

Interest only mortgage loans: 4.61%

Second lien mortgage loans: 2.80%

Range of mortgage rates: 5.100% to 14.200%

Weighted average mortgage rate: 9.079%

Range of gross margins of the adjustable-rate mortgage loans: 2.800% to 10.550%

Weighted average gross margin of the adjustable-rate mortgage loans: 5.966%

S-2

Range of minimum mortgage rates of the adjustable-rate mortgage loans: 4.450% to 12.650%

Weighted average minimum mortgage rate of the adjustable-rate mortgage loans: 9.211%

Range of maximum mortgage rates of the adjustable-rate mortgage loans: 10.875% to 19.650%

Weighted average maximum mortgage rate of the adjustable-rate mortgage loans: 16.207%

Weighted average next adjustment date of the adjustable-rate mortgage loans: April 2009

Weighted average remaining term to stated maturity: 347 months

Range of principal balances as of the cut-off date: $11,026 to $1,200,000

Average principal balance as of the cut-off date: $160,559

Range of original loan- to-value ratios(1): 10.62% to 100.00%

Weighted average original loan-to-value ratio(1): 80.77%

Geographic concentrations in excess of 5%:

Florida	21.61	%
California	10.01	%
Maryland	5.35	%

(1) As used in this prospectus supplement, the loan-to-value ratio for any second lien mortgage loan will mean the combined loan-to-value ratio.

The initial Group I Mortgage Loans have an aggregate principal balance of approximately $688,465,155 as of the cut-off date and have the following approximate characteristics as of the cut-off date:

Adjustable-rate Group I Mortgage Loans: 57.95%

Fixed-rate Group I Mortgage Loans: 42.05%

Interest-only Group I Mortgage Loans: 2.63%

Second lien Group I Mortgage Loans: 1.75%

Range of mortgage rates: 5.100% to 13.875%

Weighted average mortgage rate: 9.015%

Range of gross margins of the adjustable-rate Group I Mortgage Loans: 2.800% to 10.550%

Weighted average gross margin of the adjustable-rate Group I Mortgage Loans: 6.018%

Range of minimum mortgage rates of the adjustable-rate Group I Mortgage Loans: 5.100% to 12.600%

Weighted average minimum mortgage rate of the adjustable-rate Group I Mortgage Loans: 9.241%

Range of maximum mortgage rates of the adjustable-rate Group I Mortgage Loans: 11.625% to 19.600%

Weighted average maximum mortgage rate of the adjustable-rate Group I Mortgage Loans: 16.233%

Weighted average next adjustment date of the adjustable-rate Group I Mortgage Loans: April 2009

Weighted average remaining term to stated maturity: 348 months

Range of principal balances as of the cut-off date: $14,993 to $568,000

Average principal balance as of the cut-off date: $144,272

Range of original loan- to-value ratios(1): 10.62% to 100.00%

S-3

Weighted average original loan-to-value ratio(1): 79.49%

Geographic concentrations in excess of 5%:

Florida	19.78	%
California	5.94	%
Maryland	5.61	%

(1) As used in this prospectus supplement, the loan-to-value ratio for any second lien mortgage loan will mean the combined loan-to-value ratio.

The initial Group II Mortgage Loans have an aggregate principal balance of approximately $255,142,625 as of the cut-off date and have the following approximate characteristics as of the cut-off date:

Adjustable-rate Group II Mortgage Loans: 84.27%

Fixed-rate Group II Mortgage Loans: 15.73%

Interest-only Group II Mortgage Loans: 9.95%

Second lien Group II Mortgage Loans: 5.64%

Range of mortgage rates: 5.400% to 14.200%

Weighted average mortgage rate: 9.253%

Range of gross margins of the adjustable-rate Group II Mortgage Loans: 3.350% to 9.125%

Weighted average gross margin of the adjustable-rate Group II Mortgage Loans: 5.870%

Range of minimum mortgage rates of the adjustable-rate Group II Mortgage Loans: 4.450% to 12.650%

Weighted average minimum mortgage rate of the adjustable-rate Group II Mortgage Loans: 9.153%

Range of maximum mortgage rates of the adjustable-rate Group II Mortgage Loans: 10.875% to 19.650%

Weighted average maximum mortgage rate of the adjustable-rate Group II Mortgage Loans: 16.158%

Weighted average next adjustment date of the adjustable-rate Group II Mortgage Loans: March 2009

Weighted average remaining term to stated maturity: 347 months

Range of principal balances as of the cut-off date: $11,026 to $1,200,000

Average principal balance as of the cut-off date: $230,898

Range of original loan- to-value ratios(1): 11.60% to 100.00%

Weighted average original loan-to-value ratio(1): 84.25%

Geographic concentrations in excess of 5%:

Florida			26.53	%
California			21.00	%

(1) As used in this prospectus supplement, the loan-to-value ratio for any second lien mortgage loan will mean the combined loan-to-value ratio.

Certain of the conforming balance mortgage loans included in Group II might otherwise have been included in Group I, but were excluded from Group I because they did not meet Fannie Mae or Freddie Mac criteria (including published guidelines) for factors other than principal balance.

For additional information on the Mortgage Loans, see “Description of the Mortgage Pool” in this prospectus supplement.

S-4

Pre-Funding Feature

On the closing date, the depositor will deposit approximately $456,392,220 into a pre-funding account which will be used from time to time before the end of the pre-funding period to acquire subsequent mortgage loans to include in the mortgage pool, approximately $332,988,077 of which will be used to acquire subsequent mortgage loans for Group I and approximately $123,404,143 of which will be used to acquire subsequent mortgage loans for Group II.

The pre-funding period commences on the closing date and ends on the earlier of (i) the date on which the amount on deposit in the pre-funding account is less than $10,000 and (ii) a date not later than August 31, 2007.

Purchases of subsequent mortgage loans are subject to the same criteria as the initial mortgage loans and additional restrictions related to the composition of the related loan group following the acquisition of the subsequent mortgage loans, as described in this prospectus supplement.

If required by the rating agencies, an interest coverage account will be established and funded on the closing date. Funds so deposited will be used to cover shortfalls in collections of interest due to the pre-funding feature.

Final Scheduled Distribution Date

The final scheduled distribution date for all the certificates is the distribution date in September 2037.

We anticipate that the actual final payment on each class will occur significantly earlier than the indicated date.

Book-Entry Format

The Class A and Mezzanine Certificates will be issued, maintained and transferred on the book-entry records of The Depository Trust Company. The offered certificates will be offered in registered form, in minimum denominations of $25,000 and integral multiples of $1,000 in excess thereof, with a minimum investment of $100,000.

Distributions on the Certificates

Distribution Dates

Payments on the certificates will be made on the 25th day of each month or, if that day is not a business day, on the next business day, commencing on June 25, 2007.

Record Dates

The trustee will make payments to the certificateholders of record as of the related record date. The record date for a distribution date (i) for certificates in book-entry form is the close of business on the last business day prior to that distribution date and (ii) for certificates in definitive form is the close of business on the last business day of the month immediately preceding that distribution date or, in the case of the first distribution date, the closing date.

Distribution priorities

On each distribution date, the available funds representing interest collections on the mortgage pool remaining after paying the administrative fees will be distributed to pay interest on the certificates, up to their required amount, in the following order:

·	first, the available funds representing interest from both Groups of mortgage loans to the Class I Certificates,

S-5

·	second, concurrently, with equal priority in payment, (i) the remaining available funds representing interest from the Group I mortgage loans to the Group I Certificates and (ii) the remaining available funds representing interest from the Group II mortgage loans to the Group II Certificates,

·	third, from the remaining available funds representing interest from one group of mortgage loans to the class(es) of Class A Certificates related to the other group of mortgage loans, to the extent necessary to distribute any interest entitlement remaining undistributed, and

·	fourth, the remaining available funds representing interest from the Group I and Group II mortgage loans sequentially to the classes of Mezzanine Certificates according to numerical class designation.

Interest distributable to each group of certificates will be paid pro-rata among the classes of certificates in each group, based on their respective interest entitlements for the related date.

On each distribution date, the available funds representing principal collections on the Group I and Group II mortgage loans, including any amounts required to be funded from excess cashflow to the extent necessary to maintain or restore the overcollateralization amount to the required overcollateralization amount, net of any overcollateralization release amount (after making payments to the holders of the Class I Certificates in respect of any amounts due that remain unpaid from interest), will be distributed to pay principal on the certificates, up to their required amounts, in the following order:

·	first, the available funds representing principal and excess cashflow from the Group I mortgage loans, to the Class A-1A Certificates until retired;

second, the available funds representing principal and excess cashflow from the Group II mortgage loans, to the Class A-2A Certificates until retired, then to the Class A-2B Certificates, until retired, then to the Class A-2C Certificates, until retired, and then to the Class A-2D Certificates, until retired (however, if all of the Mezzanine Certificates are reduced or written down to zero, the related share of principal and excess cashflow from the Group II mortgage loans will be distributed to the Group II Certificates pro rata, based on certificate principal balance until their certificate principal balances are paid to zero); and

·	third, the remaining available funds representing principal and excess cashflow from the Group I and Group II mortgage loans to the Mezzanine Certificates according to numerical class designation, until retired.

In the event that available funds from one group of mortgage loans are insufficient to make a required payment of principal to its related Class A Certificates, then any available funds representing principal and excess cashflow from the other group remaining after payment of principal to its related Class A Certificates may be used for such required payment to the extent described in this prospectus supplement.

We refer you to “Description of the Certificates” herein for additional information.

Interest

Interest on the certificates will accrue at the applicable pass-through rate for that class of certificates during the related accrual period. For each distribution date, the accrual period for the Class A and the Mezzanine Certificates (the "LIBOR Certificates"), will run from the prior distribution date to and including the day preceding the applicable distribution date, except that for the first distribution date, interest begins to accrue on the closing date.

Interest for the LIBOR Certificates will be calculated on the basis of the actual number of days elapsed in the accrual period and a year consisting of 360 days.

S-6

Pass-Through Rates

The pass-through rate for each class of Class A and Mezzanine Certificates and any distribution date is the lesser of: (1) the formula rate for that class and distribution date and (2) the available funds cap rate for that class and distribution date.

The formula rate for each class of LIBOR Certificates, other than the Class A-2A Certificates, is the lesser of (1) the LIBOR Rate and (2) a maximum rate of 11%. The formula rate for the Class A-2A Certificates is the related LIBOR Rate.

The LIBOR Rate for each class of certificates is as follows:

Class		LIBOR Rate
Class A-1A Certificates		LIBOR plus 0.20000%
Class A-2A Certificates		LIBOR plus 0.09000%
Class A-2B Certificates		LIBOR plus 0.16000%
Class A-2C Certificates		LIBOR plus 0.18000%
Class A-2D Certificates		LIBOR plus 0.27000%
Class M-1 Certificates		LIBOR plus 0.30000%
Class M-2 Certificates		LIBOR plus 0.32000%
Class M-3 Certificates		LIBOR plus 0.34000%
Class M-4 Certificates		LIBOR plus 0.50000%
Class M-5 Certificates		LIBOR plus 0.68000%
Class M-6 Certificates		LIBOR plus 0.95000%
Class M-7 Certificates		LIBOR plus 1.75000%
Class M-8 Certificates		LIBOR plus 2.50000%
Class M-9 Certificates		LIBOR plus 2.50000%
Class M-10 Certificates		LIBOR plus 2.50000%

If the LIBOR Certificates remain outstanding after the first distribution date on which the clean-up call could be exercised, which is the distribution date on which the aggregate principal balance of the mortgage loans as of the end of the related due period is equal to or less than 10% of the sum of (i) the aggregate principal balance of the initial mortgage loans as of the cut-off date and (ii) amounts on deposit in the pre-funding account on the closing date, then the LIBOR Rate on each class of certificates will increase to the following rates:

Class		LIBOR Rate After Step Up
Class A-1A Certificates		LIBOR plus 0.40000%
Class A-2A Certificates		LIBOR plus 0.18000%
Class A-2B Certificates		LIBOR plus 0.32000%
Class A-2C Certificates		LIBOR plus 0.36000%
Class A-2D Certificates		LIBOR plus 0.54000%
Class M-1 Certificates		LIBOR plus 0.45000%
Class M-2 Certificates		LIBOR plus 0.48000%
Class M-3 Certificates		LIBOR plus 0.51000%
Class M-4 Certificates		LIBOR plus 0.75000%
Class M-5 Certificates		LIBOR plus 1.02000%
Class M-6 Certificates		LIBOR plus 1.42500%
Class M-7 Certificates		LIBOR plus 2.62500%
Class M-8 Certificates		LIBOR plus 3.75000%
Class M-9 Certificates		LIBOR plus 3.75000%
Class M-10 Certificates		LIBOR plus 3.75000%

S-7

Principal

On each distribution date, the certificateholders are scheduled to receive their share of an amount of principal generally equal to the sum of:

·	the scheduled principal on the mortgage loans collected or advanced during the related due period;

·	unscheduled principal on the mortgage loans (including recoveries on defaulted mortgage loans) collected during the prior prepayment period; and

·	excess interest to the extent necessary to maintain or restore the overcollateralization amount to the required overcollateralization amount minus any overcollateralization release amount.

The Mezzanine Certificates are unlikely to receive any principal payments until, at the earliest, the distribution date occurring in June 2010 (unless the aggregate principal balance of the Class A Certificates has been reduced to zero).

After the crossover date, principal will be distributed to the certificateholders of each class in accordance with a distribution priority which is designed to maintain a specified level of support below each class. This support consists of the certificates that are more subordinated to that class, overcollateralization, which is subordinated to all classes of Class A and Mezzanine Certificates, and excess interest from the mortgage loans.

Calculation of LIBOR

The London interbank offered rate (“LIBOR”) with respect to any distribution date will be determined by the trustee (provided that, in the case of each interest rate hedge agreement, it will be determined by the applicable Hedge Provider) and will equal the posted rate for United States dollar deposits for one month that appeared on Reuters Screen LIBOR01 as of 11:00 a.m., London time, on the second LIBOR Business Day prior to the immediately preceding distribution date (or, in the case of the first distribution date, the second LIBOR business day preceding the closing date). If no such posted rate appears, LIBOR will be determined on the basis of the offered quotation of the reference banks (which shall be four major banks that are engaged in transactions in the London interbank market) identified in the pooling and servicing agreement for United States dollar deposits for one month to prime banks in the London interbank market as of 11:00 a.m., London time, on such date. See “Description of the Certificates-Calculation of One-Month LIBOR” in this prospectus supplement.

Credit Enhancement

The credit enhancement provided to the holders of the Class A and Mezzanine Certificates will consist of subordination, overcollateralization, excess cashflow, mortgage insurance, limited cross-collateralization and interest rate hedge agreements.

Subordination

The rights of the holders of the Class A Certificates to receive distributions are subordinated, to the extent described in this prospectus supplement, to the rights of the holders of the Class I Certificates.

The rights of the holders of the Mezzanine Certificates to receive distributions will be subordinated, to the extent described in this prospectus supplement, to the rights of the holders of the Class I Certificates and the Class A Certificates.

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The rights of the holders of the Mezzanine Certificates with higher numerical class designations to receive distributions will be subordinated, to the extent described in this prospectus supplement, to the rights of the holders of the Mezzanine Certificates with lower numerical class designations.

Subordination is intended to enhance the likelihood of regular distributions on the more senior certificates and to afford those certificates protection against losses.

Overcollateralization

The issuing entity will have an initial level of overcollateralization of approximately 4.25% of the sum of (i) the aggregate principal balance of the initial mortgage loans as of the cut-off date and (ii) the original pre-funded amount. On any distribution date after the closing date, the issuing entity is required to maintain or restore overcollateralization to the required level as described herein.

The overcollateralization is available for the benefit of all classes of Class A, Mezzanine and Class I Certificates.

Excess Cashflow

Excess cashflow (which includes excess interest from the mortgage loans) will be distributed as follows:

(i) to the class or classes of Class A and Mezzanine Certificates then entitled to receive distributions in respect of principal, in an amount equal to any Extra Principal Distribution Amount, distributable to such classes in the same order as the Group I Principal Distribution Amount and the Group II Principal Distribution Amount as described under “Description of the Certificates—Principal Allocations” herein;

(ii) to the supplemental interest trust to be distributed as described under “Description of the Certificates — Supplemental Interest Trust” herein; and

(iii) any remaining amounts to the holders of the residual certificates, as provided in the pooling and servicing agreement.

Mortgage Insurance

Certain of the initial mortgage loans will be covered by existing lender-paid mortgage insurance policies previously issued to the Servicer, the benefits of which will be assigned to the issuing entity with respect to such mortgage loans. More specifically, approximately 11.24% of the initial mortgage loans by the cut-off date principal balance will be covered by a mortgage insurance policy issued by Mortgage Guaranty Insurance Corporation (“MGIC”), approximately 0.03% of the initial mortgage loans by cut-off date principal balance are covered by a mortgage insurance policy issued by PMI Mortgage Insurance Co. (“PMI”) and approximately 0.01% of the mortgage loans by cut-off date principal balance are covered by a mortgage insurance policy issued by Radian Guaranty Inc. (“Radian”). Approximately 80.46% of the initial mortgage loans by cut-off date principal balance have an original loan-to-value ratio in excess of 60% and are not insured. Additionally, approximately 8.26% of the initial mortgage loans by cut-off date principal balance have an original loan-to-value ratio less than or equal to 60% and are not insured.

The mortgage insurance policies provided by MGIC, PMI and Radian insure a portion of the loss on the related mortgage loan to a level where the uninsured exposure of the mortgage loan is reduced to an amount equal to 55%, 51% and 50%, respectively, of the original loan-to-value ratio of such mortgage loan, as more fully described in the related mortgage insurance policy.

Limited Cross-Collateralization

The mortgage loans have been divided into two subpools, designated as the “Group I mortgage loans” and the “Group II mortgage loans.” The Group I mortgage loans primarily support the Group I Certificates. The Group II mortgage loans primarily support the Group II Certificates. Distributions of collections from both groups of mortgage loans will be used to pay interest and principal to the Mezzanine Certificates, the Class I Certificates and the Class C Certificates. To the extent that available funds representing interest from one group of mortgage loans are insufficient to make a required payment of interest to its related Class A Certificates, then any remaining available funds representing interest from the other group, after payment of interest to its related Class A Certificates, may be used to make such required payment as described in this prospectus supplement. Likewise, remaining funds representing principal from a group after making the required distribution of principal to its related Class A Certificates may be used to make required principal distributions on the other classes of Class A Certificates as described in this prospectus supplement.

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Interest Rate Hedge Agreements

On the closing date or before the end of the pre-funding period, the supplemental interest trust will enter into two interest rate swap agreements and fourteen interest rate cap agreements with the Hedge Providers. Under each interest rate hedge agreement, on each distribution date after the supplemental interest trust has entered into that interest rate hedge agreement until that interest rate hedge agreement is retired, the supplemental interest trust will make a payment equal to a fixed rate on a notional amount to the hedge provider (on a “30/360” basis), and the supplemental interest trust will receive a payment from the hedge provider equal to the product of (a) in the case of the swap agreements, one-month LIBOR, and in the case of the cap agreements, the excess, if any, of one-month LIBOR over the related strike price, (b) the actual number of days elapsed in the related accrual period divided by 360 and (c) the applicable notional amount.

On each distribution date amounts received by the supplemental interest trust in respect of the interest rate hedge agreements will be available to restore the overcollateralization to the required level and to pay any available funds cap shortfall.

See “Description of the Certificates - Summary of Interest Rate Hedge Agreements” in this prospectus supplement.

Allocation of Losses

All realized losses on the mortgage loans will be allocated on each distribution date, sequentially as follows: first to the excess cash flow, second in reduction of the overcollateralization amount and third to the reduction of the principal balance of the classes of Mezzanine Certificates, in inverse order of priority.

See “Risk Factors—Potential inadequacy of credit enhancement” and “Description of the Certificates” in this prospectus supplement.

Removal and Substitution of Mortgage Loans

Upon the earlier of discovery or receipt of notice by the depositor of a breach of any of the representations and warranties contained in the mortgage loan purchase agreement which materially and adversely affects the value of the related mortgage loan or the interests of the certificateholders, the sponsor will have a period of sixty days to effect a cure. If the breach is not cured within the sixty-day period, the sponsor will, either (a) substitute for such mortgage loan a Qualified Substitute Mortgage Loan or (b) purchase such mortgage loan from the issuing entity. See “Description of the Certificates— Assignment of Mortgage Loans” in this prospectus supplement.

The custodian on behalf of the trustee will review each mortgage loan file and if during the process of reviewing the mortgage files, finds any document constituting a part of a mortgage file which is not executed, has not been received, is unrelated to the mortgage loan, or does not conform to the requirements in the pooling and servicing agreement, the custodian will promptly so notify the sponsor and the trustee in writing with details thereof. If, within 45 days after the custodian’s notice of such defect, the sponsor has not caused the defect to be remedied and the defect materially and adversely affects the value of the related mortgage loan or the interest of the certificateholders in the related mortgage loan, the sponsor will either (a) substitute such mortgage loan with a qualified substitute mortgage loan or (b) purchase such mortgage loan from the issuing entity. See “Description of the Certificates—Assignment of Mortgage Loans” in this prospectus supplement.

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Advancing

The servicer will be required to advance amounts representing delinquent payments of scheduled principal and interest, other than balloon payments, as well as expenses to preserve and to protect the value of collateral, in each case to the extent considered recoverable. Reimbursement of these advances is senior to payments to the certificateholders.

Servicing Fee

The servicer will receive a servicing fee on each distribution date in an amount equal to interest at the servicing fee rate for a mortgage loan on the outstanding principal balance of that mortgage loan. The servicing fee rate with respect to each mortgage loan will be 0.50% per annum. The servicing fee will be paid out of available funds on each distribution date prior to any payments on the certificates.

Clean-up Call

The servicer or its designee has a clean-up call option which, if exercised, would result in early retirement of the certificates on any distribution date on or after the date on which the aggregate principal balance of the mortgage loans has declined to 10% or less of the sum of (i) the aggregate principal balance of the initial mortgage loans as of the cut-off date and (ii) the original pre-funded amount. See “Description of the Certificates—Optional Purchase Pledge” in this prospectus supplement.

Federal Income Tax Consequences

Elections will be made to treat certain portions of the issuing entity as one or more REMICs for federal income tax purposes. The Class A and Mezzanine Certificates represent ownership of “regular interests” in a REMIC, along with certain contractual rights and obligations as described herein. Certificateholders will be required to include interest on the certificates in income in accordance with an accrual method of accounting.

ERISA Considerations

After the end of the pre-funding period, the offered certificates may be purchased by ERISA plans provided that certain conditions are satisfied. A fiduciary of any ERISA plan that is considering a purchase of offered certificates should, among other things, consult with experienced legal counsel in determining whether all required conditions for purchase have been satisfied.

Legal Investment

The Class A and Mezzanine Certificates will not constitute “mortgage related securities” for purposes of SMMEA. Institutions whose investment activities are subject to legal investment laws and regulations or to review by certain regulatory authorities may be subject to restrictions on investment in the certificates.

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Ratings

The certificates must receive at least the following ratings from Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., and Moody’s Investors Service, Inc. in order to be issued:

	Ratings
Class		S&P	Moody’s
A-1A		AAA	Aaa
A-2A		AAA	Aaa
A-2B		AAA	Aaa
A-2C		AAA	Aaa
A-2D		AAA	Aaa
M-1		AA+	Aa1
M-2		AA	Aa2
M-3		AA-	Aa3
M-4		A+	A1
M-5		A	A2
M-6		A-	A3
M-7		BBB+	Baa1
M-8		BBB	Baa2
M-9		BBB-	Baa3
M-10		BB+	Ba1

A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning rating agency. A security rating does not address the frequency of principal prepayments or the collection thereof, the corresponding effect on yield to investors or the payment of any shortfall resulting from the application of the available funds cap rate.

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Risk Factors

Prospective investors should consider, among other things, the items discussed under “Risk Factors” in the prospectus and the following factors in connection with the purchase of the offered certificates:

Substantially all of the loans in the mortgage pool were underwritten to non-conforming standards and may experience higher delinquency and loss rates

The underwriting standards for the mortgage loans are described under “Description of the Mortgage Pool—Underwriting Standards for the Mortgage Loans,” and are primarily intended to provide single family mortgage loans for non-conforming credits which do not satisfy the requirements of typical “A” credit borrowers. A “non-conforming credit” means a borrower whose mortgage loan would be ineligible for direct purchase by Fannie Mae due to credit characteristics that do not meet the Fannie Mae underwriting guidelines, for reasons such as creditworthiness and repayment ability. These mortgagors may have a record of credit write-offs, outstanding judgments, prior bankruptcies and other negative credit items. Accordingly, mortgage loans underwritten to non-conforming credit underwriting standards or to standards that do not meet the requirements for typical “A” credit borrowers are likely to experience rates of delinquency, foreclosure and loss that are higher, and may be substantially higher, than mortgage loans originated in accordance with the Fannie Mae underwriting guidelines or to typical “A” credit borrowers.

The mortgage pool contains high original loan-to-value loans which could cause losses to holders of the Class A and Mezzanine Certificates

Approximately 12.36% of the initial Group I mortgage loans and approximately 8.35% of the initial Group II mortgage loans (in each case, by aggregate principal balance of the related loan group as of the cut-off date), respectively, with an original loan-to-value ratio in excess of 60% will be covered by a lender-paid mortgage insurance policy (references to loan-to-value ratios in this prospectus supplement are references to combined loan-to-value ratios with respect to second-lien mortgage loans).

Approximately 47.10% and 55.20% of the initial Group I mortgage loans and initial Group II mortgage loans (in each case, by aggregate principal balance of the related loan group as of the cut-off date), respectively, have original loan-to-value ratios in excess of 80%. Mortgage loans with a loan-to-value ratio in excess of 80% will be affected to a greater extent than mortgage loans with a loan-to-value ratio equal to or less than 80% by any decline in the value of the related property securing such mortgage loans. We can give no assurance that values of the mortgaged properties have remained or will remain at their levels on the dates of origination of the related mortgage loans. If the residential real estate market should experience an overall decline in property values such that the outstanding balances of the mortgage loans, and any secondary financing on the mortgaged properties, become equal to or greater than the value of the mortgaged properties, the actual rates of delinquencies, foreclosures and losses could be higher than those now generally experienced in the mortgage lending industry.

Potential inadequacy of credit enhancement

The overcollateralization, subordination, limited cross-collateralization, loss allocation, excess cashflow and primary mortgage insurance features described in this prospectus supplement are intended to enhance the likelihood that the certificateholders will receive regular payments of interest and principal, but such credit enhancements are limited in nature and may be insufficient to cover all losses on the mortgage loans. The credit enhancement includes the subordination of excess interest to payments of interest and principal on the Class I Certificates, Class A Certificates and Mezzanine Certificates.

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Further, while excess interest, if any, will be available to maintain or restore overcollateralization, there may not be sufficient funds available to make the required distribution of interest on the certificates. Such a shortfall would reduce the interest distributed: first, sequentially, to the Class M-10, Class M-9, Class M-8, Class M-7, Class M-6, Class M-5, Class M-4, Class M-3, Class M-2, and Class M-1 Certificates, second, to the Class A Certificates, pro rata, and third, to the Class I Certificates, in that order.

Although primary mortgage insurance policies have been acquired on behalf of the issuing entity from the mortgage insurance providers, such coverage will provide only limited protection against losses on defaulted covered mortgage loans. Unlike a financial guaranty policy, coverage under the mortgage insurance policies is subject to certain limitations and exclusions including, for example, losses resulting from fraud and physical damage to the mortgaged property and to certain conditions precedent to payment, such as notices and reports. As a result, coverage may be denied or limited on covered mortgage loans. In addition, since the amount of coverage depends on the loan-to-value ratio at the time of origination of the covered mortgage loan, a decline in the value of a mortgaged property will not result in increased coverage, and the issuing entity may still suffer a loss on a covered mortgage loan. The mortgage insurance providers also may affect the timing and conduct of foreclosure proceedings and other servicing decisions regarding defaulted mortgage loans covered by the policy.

Pledge of servicing rights

The servicing rights with respect to the mortgage loans may be pledged by the servicer to a third-party unrelated to the servicer. The pledgee of the servicing rights has the right, at its discretion, to transfer servicing responsibilities to another entity upon the occurrence of a servicer event of default under the pooling and servicing agreement, or upon a default of the servicer or its affiliates under the lending facility between the servicer and the pledgee of the servicing rights, if the pledgee of the servicing rights certifies to the trustee that such entity is a qualified servicer pursuant to the requirements of the pooling and servicing agreement, and such transfer does not cause any of the rating agencies to withdraw, downgrade or qualify the ratings they have assigned to any of the certificates. It is possible that the servicing responsibilities with respect to some or all of the mortgage loans may be transferred from the servicer to a third party in the future, which may or may not occur within a short time following the closing date. At any time that servicing responsibilities are transferred as described above, the mortgage loans may experience an increase in delinquencies and default during the transitions of servicing responsibilities. In addition, in the event of a servicer default under the pooling and servicing agreement, the pledgee of the servicing rights will have the right to require the replacement of the servicer, even if the certificateholders have waived the related default.

The mortgage pool includes balloon loans, which can create increased risk of losses

Approximately 26.44% and 39.45% of the initial Group I and the initial Group II mortgage loans (in each case, by aggregate principal balance of the related loan group as of the cut-off date), respectively, are fixed-rate “balloon loans”; that is, they require monthly payments of principal based on 30-year amortization schedules and have scheduled maturity dates of 15 years from the due date of the first monthly payment or they require monthly payments of principal based on 40-year amortization schedules and have scheduled maturity dates of 30 years from the due date of the first monthly payment, in each case leaving a substantial portion of the original principal amount due and payable on the respective scheduled maturity date; or they are adjustable rate “balloon loans”; that is, they have interest rates that are fixed for two, three or five years and then the interest rates float for twenty-eight, twenty-seven or twenty-five years respectively, and they require monthly payments of principal based on 40-year amortization schedules and have scheduled maturity dates of 30 years from the due date of the first monthly payment. The balloon loans entail a greater degree of risk for prospective investors because the ability of a mortgagor to make a balloon payment typically will depend upon the mortgagor’s ability either to refinance the related balloon loan or to sell the related mortgaged property. The mortgagor’s ability to sell or refinance will be affected by a number of factors, including the level of prevailing mortgage rates at the time of sale or refinancing, the mortgagor’s equity in the related mortgaged property, the financial condition and credit profile of the mortgagor, applicable tax laws and general economic conditions. No person is obligated to refinance any balloon loan.

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The mortgage pool includes mortgage loans secured by second-liens on the related mortgaged property

Approximately 1.75% of the initial Group I mortgage loans and approximately 5.64% of the initial Group II mortgage loans (by aggregate principal balance as of the cut-off date) are secured by second-liens on the related mortgaged properties. The proceeds from any liquidation, insurance or condemnation proceedings will be available to satisfy the outstanding balance of such mortgage loans only to the extent that the claims of the related senior mortgages have been satisfied in full, including any related foreclosure costs. In circumstances when it has been determined to be uneconomical to foreclose on the mortgaged property, the servicer may write off the entire balance of such second-lien mortgage loan as a bad debt. The foregoing considerations will be particularly applicable to mortgage loans secured by second-liens that have high loan-to-value ratios because it is comparatively more likely that the servicer would determine foreclosure to be uneconomical in the case of such mortgage loans. The rate of default of second-lien mortgage loans may be greater than that of mortgage loans secured by first-liens on comparable properties.

An overall decline in the residential real estate markets could adversely affect the values of the mortgaged properties and cause the outstanding principal balances of the second-lien mortgage loans, together with the senior mortgage loans secured by the same mortgaged properties, to equal or exceed the value of the mortgaged properties. This type of a decline would adversely affect the position of a second mortgagee before having the same effect on the related first mortgagee. A rise in interest rates over a period of time and the general condition of a mortgaged property as well as other factors may have the effect of reducing the value of the mortgaged property from the appraised value at the time the mortgage loan was originated. If there is a reduction in value of the mortgaged property, the ratio of the amount of the mortgage loan to the value of the mortgaged property may increase over what it was at the time the mortgage loan was originated. This type of increase may reduce the likelihood of liquidation or other proceeds being sufficient to satisfy the second-lien mortgage loan after satisfaction of any senior liens.

The prepayment experience of the second lien loans may differ from that of the first lien loans. Second lien mortgage loans often are not viewed as permanent financing and may be more likely to be prepaid. However, the smaller monthly payment relative to that of a first lien mortgage loan may reduce the perceived benefits of refinancing. Changes in the tax laws governing deductibility of mortgage interest are likely to have a greater effect on second lien loans than on first lien loans.

The mortgage pool includes interest-only mortgage loans, which may have an increased risk of loss

Approximately 2.63% and 9.95% of the initial Group I and initial Group II mortgage loans (by aggregate principal balance of the related loan group as of the cut-off date), respectively, do not provide for any required payments of principal during the first five or ten years of their term. These loans are sometimes referred to as interest only loans. Interest only loans may have risks and payment characteristics that are not present with fully amortizing mortgage loans, including the following:

no principal distributions will be made to certificateholders from interest only loans during their interest only period except in the case of a prepayment, which may extend the weighted average lives of the notes;

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during the interest only period interest only loans may be less likely to prepaid since the perceived benefits of refinancing may be less than with a fully amortizing mortgage loan;

as the end of the interest only period approaches, an interest only loan may be more likely to be refinanced in order to avoid the increase in the monthly payment required to amortize the loan over its remaining term;

interest only loans may be more likely to default than fully amortizing loans a the end of the interest only period due to the increased monthly payment required to amortize the loan over its remaining term; and

if an interest only loan defaults, the severity of loss may be greater due to the larger unpaid principal balance.

Seasoned Mortgage Loans

Up to approximately 0.26% by aggregate principal balance of the initial Mortgage Loans may be seasoned more than 12 months. These mortgage loans were included in prior securitization trusts of the sponsor, which recently have had their “clean-up calls.” Such mortgage loans were originated in accordance with the originator’s underwriting guidelines in place at the time of their origination. Certain of the borrowers on these mortgage loans may be in or may have emerged recently from bankruptcy proceedings, although any borrowers in bankruptcy are current under their respective bankruptcy plans. The prepayment and default experience on these well seasoned mortgage loans may differ from that on the other mortgage loans, either as a result of differing underwriting guidelines, or simply the passage of time, during which the borrower’s situation and/or needs may have changed

The mortgage loans have geographic concentrations which could cause losses to the holders if certain events occur in such regions

Approximately 19.78%, 5.94% and 5.61% of the initial Group I mortgage loans (by aggregate principal balance of the initial Group I mortgage loans as of the cut-off date) are secured by properties located in Florida, California and Maryland, respectively. Approximately 26.53% and 21.00% of the initial Group II mortgage loans (by aggregate principal balance of the initial Group II mortgage loans as of the cut-off date) are secured by properties located in Florida and California, respectively. In the event any of these states experiences a decline in real estate values, losses on the mortgage loans may be greater than otherwise would be the case. Such mortgage loans may be subject to prepayment or loss, both of which could affect the yield on the Class A and Mezzanine Certificates.

The final pool of mortgage loans will include mortgage loans which will differ from the pool of initial mortgage loans described in this prospectus supplement

Subsequent mortgage loans acquired by the issuing entity as a result of the pre-funding feature may have characteristics different from those of the initial mortgage loans. However, each subsequent mortgage loan must satisfy the eligibility criteria referred to under the “Description of the Mortgage Pool—Conveyance of Subsequent Mortgage Loans and the Pre-Funding Account” at the time of its conveyance to the issuing entity and must be underwritten in accordance with the criteria described under “Description of the Mortgage Pool—Underwriting Standards for the Mortgage Loans” herein. The statistical information presented in this prospectus supplement under “Description of the Mortgage Pool” describes a pool of mortgage loans consisting of the initial mortgage loans to be transferred to the trust on the closing date.

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The pre-funding feature could result in a significant prepayment on the Class A Certificates at the end of the pre-funding period

If funds in the pre-funding account allocable to a Group of mortgage loans are not fully applied to the purchase of subsequent mortgage loans by the end of the pre-funding period, the related remaining funds will be used to make a principal prepayment on the Group I Certificates (to the extent the unapplied funds relate to the Group I mortgage loans), the Group II Certificates (to the extent the unapplied funds relate to the Group II mortgage loans). No assurances can be given that there will not be such a payment.

The rate and timing of principal prepayments on the mortgage loans could adversely affect the yield on the Class A and Mezzanine Certificates

The rate and timing of principal payments on the certificates will depend on the rate and timing of principal payments (including prepayments, defaults, liquidations, purchases of the mortgage loans due to a breach of a representation or warranty and the servicer’s limited right to purchase delinquent mortgage loans) on the mortgage loans. Accordingly, the certificates are subject to inherent cash-flow uncertainties because the mortgage loans may be prepaid at any time. The Group I Certificates will primarily bear the prepayment risk of the Group I mortgage loans, the Group II Certificates will primarily bear the prepayment risk of the Group II mortgage loans and the Mezzanine Certificates will bear the prepayment risk of both Groups of mortgage loans. Generally, when prevailing interest rates increase, prepayment rates on mortgage loans tend to decrease, resulting in a slower return of principal to investors at a time when reinvestment at such higher prevailing rates would be desirable. Conversely, when prevailing interest rates decline, prepayment rates on mortgage loans tend to increase, resulting in a faster return of principal to investors at a time when reinvestment at comparable yields may not be possible.

Approximately 62.74% and 64.62% of the initial Group I mortgage loans and initial Group II mortgage loans (in each case, by aggregate principal balance of the related loan group as of the cut-off date), respectively, are subject to prepayment penalties as of the cut-off date. Of the initial Group I mortgage loans that are subject to prepayment penalties, approximately 56.87% are ARM loans and 43.13% are fixed-rate mortgage loans. Of the initial Group II mortgage loans that are subject to prepayment penalties, approximately 85.62% are ARM loans and 14.38% are fixed-rate mortgage loans. Typically, the mortgage loans with a prepayment penalty provision provide for a prepayment penalty for partial prepayments and full prepayments. Prepayment penalties may be payable for a period of time ranging from one to five years from the related origination date. Such prepayment penalties may reduce the rate of prepayment on the mortgage loans. Under certain circumstances, as described in the pooling and servicing agreement, the servicer may waive the payment of any otherwise applicable prepayment penalty. Investors should conduct their own analysis of the effect, if any, that the prepayment penalties, and decisions by the servicer with respect to the waiver thereof, may have on the prepayment performance of the mortgage loans. The depositor makes no representations as to the effect that the prepayment penalties, and decisions by the servicer with respect to the waiver thereof, may have on the prepayment performance of the mortgage loans.

The yields to maturity on the certificates will depend on, among other things, the rate and timing of principal payments (including prepayments, defaults, liquidations, purchases of the mortgage loans due to a breach of a representation or warranty and purchases of delinquent loans by the servicer) on the mortgage loans. The yield to maturity on the certificates will also depend on the related certificate interest rate and the purchase price for such certificates.

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If the certificates are purchased at a premium and principal payments thereon occur at a rate faster than anticipated at the time of purchase, the investor’s actual yield to maturity will be lower than that assumed at the time of purchase. Conversely, if the certificates are purchased at a discount and principal payments thereon occur at a rate slower than that assumed at the time of purchase, the investor’s actual yield to maturity will be lower than that assumed at the time of purchase. The certificates were structured assuming, among other things, a prepayment rate and corresponding weighted average lives as described herein. The prepayment, yield and other assumptions to be used for pricing purposes for the certificates may vary as determined at the time of sale.

See “Certain Yield and Prepayment Considerations” herein and “Description of the Securities—Weighted Average Life of the Securities” in the prospectus.

Effect of mortgage rates on the pass-through rates

The LIBOR Certificates accrue interest at pass-through rates based on a one-month LIBOR index plus a specified margin, but such pass-through rates are subject to an Available Funds Cap Rate. Each pass-through rate for the LIBOR Certificates, other than that for the Class A-2A Certificates, also is subject to a maximum rate. As a result of the effect of the Available Funds Cap Rate on the pass-through rates on the LIBOR Certificates, such certificates may accrue less interest than they would otherwise accrue if their pass-through rates were based solely on the one month LIBOR index plus the specified margin.

Substantially all of the adjustable-rate mortgage loans have mortgage rates that adjust based on a six-month LIBOR index. The adjustable-rate mortgage loans have periodic and maximum limitations on adjustments to their mortgage rates, and will have the first adjustment to their mortgage rates generally two years, three years, five years or seven years after the origination thereof. The fixed-rate mortgage loans have mortgage rates that will not adjust.

A variety of factors could limit the pass-through rates and adversely affect the yields to maturity on the Class A and Mezzanine Certificates. Some of these factors are described below.

· The pass-through rates for the LIBOR Certificates may adjust monthly while the mortgage rates on the adjustable-rate mortgage loans adjust less frequently and the mortgage rates on the fixed-rate mortgage loans do not adjust. Furthermore, the adjustable-rate mortgage loans will have the first adjustment to their mortgage rates generally two years, three years, five years or seven years following their origination. Consequently, the Available Funds Cap Rate on the pass-through rates on the LIBOR Certificates may prevent any increases in the pass-through rates on such certificates for extended periods.

· If prepayments, defaults and liquidations occur more rapidly on the mortgage loans with relatively higher mortgage rates than on the mortgage loans with relatively lower mortgage rates, the pass-through rates on the Class A and Mezzanine Certificates are more likely to be limited.

· The index used to determine the mortgage rates on the adjustable-rate mortgage loans may respond to different economic and market factors than does one-month LIBOR. It is possible that the mortgage rates on certain of the adjustable-rate mortgage loans may decline while the pass-through rates on the LIBOR Certificates are stable or rising. It is also possible that the mortgage rates on the adjustable-rate mortgage loans and the pass-through rates on the LIBOR Certificates may both decline or increase during the same period, but that the pass-through rates on the LIBOR Certificates may decline more slowly or increase more rapidly.

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If the pass-through rate on any class of Class A and Mezzanine Certificates is limited by the Available Funds Cap Rate on any distribution date, the resulting Available Funds Cap Shortfalls may be recovered by the holders of such class of certificates on such distribution date or future distribution dates, to the extent that on such distribution dates there are Available Funds remaining after certain other payments on the Class A and Mezzanine Certificates and the payment of certain fees and expenses of the trust (including the fixed rate cap payment, net swap payment, or any hedge termination payment owed to a Hedge Provider other than a Defaulted Hedge Termination Payment).

Amounts used to pay such shortfalls on the Class A and Mezzanine Certificates may be supplemented by the Hedge Agreements to the extent described in this prospectus supplement. However, the amount received from the Hedge Provider under the Hedge Agreements may be insufficient to pay the holders of the applicable certificates the full amount of interest which they would have received absent the Available Funds Cap Rate.

Prepayment interest shortfalls and Servicemembers Civil Relief Act (“Relief Act”) shortfalls

When a mortgage loan is prepaid, the mortgagor is charged interest on the amount prepaid only up to the date on which the prepayment is made, rather than for an entire month. This may result in a shortfall in interest collections available for payment on the next distribution date. The servicer is required to cover a portion of such prepayment interest shortfall in interest collections that are attributable to prepayments, but only up to the amount of the servicer’s servicing fee for the related period. The servicer is not required to off-set prepayment interest shortfalls from any interest income or ancillary income otherwise payable to the servicer. In addition, certain shortfalls in interest collections arising from the application of the Relief Act or any state law providing for similar relief will not be covered by the servicer.

On any distribution date, any shortfalls resulting from the application of the Relief Act or any state law providing for similar relief and any prepayment interest shortfalls to the extent not covered by compensating interest paid by the servicer will be allocated, first, to the excess cashflow, and second to the monthly interest distributable amounts with respect to the Class A and Mezzanine Certificates on a pro rata basis based on the respective amounts of interest accrued on such certificates for such distribution date. The holders of the Class A and Mezzanine Certificates will not be entitled to reimbursement for any such interest shortfalls. If these are allocated to the Class A and Mezzanine Certificates, the amount of interest paid to those certificates will be reduced, adversely affecting the yield on your investment.

The assignment of certain of the mortgages in the name of MERS may result in delays and additional costs in commencing, prosecuting and completing foreclosure proceedings

The assignment of certain of the mortgages in the name of Mortgage Electronic Registration Systems, Inc. (“MERS”) is a new practice in the mortgage lending industry. The depositor expects that the servicer or successor servicer will be able to commence foreclosure proceedings on the mortgaged properties, when necessary and appropriate; however, public recording officers and others may have limited, if any, experience with lenders seeking to foreclose mortgages, assignments of which are registered with MERS. Accordingly, delays and additional costs in commencing, prosecuting and completing foreclosure proceedings, defending litigation commenced by third parties and conducting foreclosure sales of the mortgaged properties could result. Those delays and additional costs could in turn delay the distribution of liquidation proceeds to the certificateholders and increase the amount of realized losses on the mortgage loans.

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The Mezzanine Certificates are particularly sensitive to the timing and amount of losses and prepayments on the mortgage loans

The weighted average lives of, and the yields to maturity on, the Mezzanine Certificates, in the increasing order of their numerical class designations, will be progressively more sensitive, in reverse order of such certificates’ distribution priority, to the rate and timing of mortgagor defaults and the severity of ensuing losses on the mortgage loans. If the actual rate and severity of losses on the mortgage loans is higher than those assumed by an investor in those certificates, the actual yield to maturity of such certificates may be lower than the yield anticipated by such holder based on such assumption. The timing of losses on the mortgage loans will also affect an investor’s actual yield to maturity, even if the rate of defaults and severity of losses over the life of the mortgage pool are consistent with an investor’s expectations. In general, the earlier a loss occurs, the greater the effect on an investor’s yield to maturity. Realized losses on the mortgage loans, to the extent they exceed the amount of excess interest and overcollateralization following distributions of principal on the related distribution date, will reduce the Certificate Balances of the classes of Mezzanine Certificates then outstanding in reverse order of their numerical class designation. As a result of such reductions, less interest will accrue on each such class of Mezzanine Certificates than would otherwise be the case. Once a realized loss is allocated to a Mezzanine Certificate, such amounts may be distributable as a result of Subsequent Recoveries on the Mortgage Loans with respect to such written down amount.

Unless the Certificate Balances of the Class A Certificates have been reduced to zero, the Mezzanine Certificates will not be entitled to any principal distributions until, at the earliest, the distribution date in June 2010. Even after the date on which the Mezzanine Certificates are scheduled to begin to amortize they may become locked out of receiving principal distributions during periods in which delinquencies or losses on the mortgage loans exceed certain levels. As a result, the weighted average lives of such certificates will be longer than would otherwise be the case if distributions of principal were allocated among all of the certificates at the same time. As a result of the longer weighted average lives of such certificates, the holders of such certificates have a greater risk of suffering a loss on their investments. Further, because such certificates might not receive any principal if certain delinquency levels occur, it is possible for such certificates, for so long as the Class A Certificates are outstanding, to receive no principal distributions even if no losses have occurred on the mortgage pool.

The structure of the Mezzanine Certificates causes the yield of such classes to be particularly sensitive to changes in the rates of prepayment of the mortgage loans. Because distributions of principal will be made to the holders of such certificates according to the priorities described in this prospectus supplement, the yield to maturity on such classes of certificates will be sensitive to the rates of prepayment on the mortgage loans experienced both before and after the commencement of principal distributions on such classes.

Ratings on the offered certificates are dependent upon the creditworthiness of the Mortgage Insurance Providers

The ratings assigned to the Class A and Mezzanine Certificates by the rating agencies will be based in part on the credit characteristics of the mortgage loans and on ratings assigned to the mortgage insurance providers. Mortgage Guaranty Insurance Corporation ("MGIC") insures all of the initial Group I mortgage loans having lender-paid mortgage insurance policies and approximately 98.35% of the initial Group II mortgage loans (by aggregate principal balance of the related loan group as of the cut-off date) having lender-paid mortgage insurance policies. PMI Mortgage Insurance Co. insures approximately 1.20% of the initial Group II mortgage loans (by aggregate principal balance of the related loan group as of the cut-off date) having lender-paid mortgage insurance policies. Radian Guaranty Inc. insures approximately 0.45% of the initial Group II mortgage loans (by aggregate principal balance of the related loan group as of the cut-off date) having lender-paid mortgage insurance policies. On February 6, 2007, MGIC Investment Corporation (“MGIC Investment”) announced that it had entered into an agreement to merge with Radian Group Inc. (“Radian Group”), with the new company to be called MGIC Radian Financial Group Inc. The merger will result in shares of MGIC Investment’s common stock being exchanged for shares of Radian Group’s common stock. The transaction has been approved by the shareholders and boards of directors of MGIC Investment and Radian Group and is subject to regulatory and other approvals. As a result of the merger announcement described above, Fitch placed MGIC’s rating on “rating watch negative”, and Moody’s changed the outlook for its rating from stable to negative. (See “The Originator—Private Mortgage Insurance Policies” herein for further information.) Any reduction in the ratings assigned to a mortgage insurance provider by the rating agencies could result in the reduction of the ratings assigned to the offered certificates. This reduction in ratings could adversely affect the liquidity and market value of the offered certificates.

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The call of soldiers into active duty could limit the servicer’s ability to collect on the loans

As described in the prospectus, the Relief Act, as amended, and similar state laws limit the rate of interest and the ability of the servicer to foreclose on mortgages if the mortgagor is called into military service after the origination of the loan. A number of reservists and other soldiers have been recently called into active duty and additional soldiers could be called into service in the future. If any of the borrowers enter into active military duty, shortfalls and losses to the issuing entity and the certificates could result, particularly since any interest otherwise due to the certificateholders may be reduced by application of the Relief Act, as described herein.

Violation of various federal and state laws may result in losses on the mortgage loans

Numerous federal and state consumer protection laws impose requirements applicable to the origination of the contracts, including the Truth in Lending Act, the Federal Trade Commission Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Equal Credit Opportunity Act, the Fair Debt Collection Practices Act and the Uniform Consumer Credit Code. In the case of some of these laws, the failure to comply with their provisions may affect the enforceability of the related contract.

In addition to the Home Ownership and Equity Protection Act of 1994 (the “Homeownership Act”), a number of legislative proposals have been introduced at the federal, state and municipal level that are designed to discourage predatory lending practices. Some states have enacted, or may enact, laws or regulations that prohibit inclusion of some provisions in mortgage loans that mortgage rates or origination costs in excess of prescribed levels, and require that borrowers be given certain disclosures prior to the consummation of such mortgage loans. In some cases, state law may impose requirements and restrictions greater than those in the Homeownership Act. The sponsor’s failure to comply with these laws could subject the issuing entity and other assignees of the mortgage loans, to monetary penalties and could result in the borrowers rescinding such mortgage loans whether held by the issuing entity or subsequent holders of the mortgage loans. Lawsuits have been brought in various states making claims against assignees of high cost loans for violations of state law. Named defendants in these cases include numerous participants within the secondary mortgage market, including some securitization trusts.

Violations of certain provisions of these laws may limit the ability of the servicer to collect all or part of the principal of or interest on the mortgage loans, could subject the issuing entity to damages and administrative enforcement and could result in the borrowers rescinding such mortgage loans against either the issuing entity or subsequent holders of the mortgage loans.

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The sponsor will represent that as of the Closing Date or the Subsequent Transfer Date, as applicable, each mortgage loan is in compliance with applicable federal and state laws and regulations. In the event of a breach of such representation, the sponsor will be obligated to cure such breach or repurchase or replace the affected mortgage loan in the manner described under “Description of the Certificates—Assignment of Mortgage Loans” herein.

Recent developments in the residential mortgage market may adversely affect the market value of the Certificates

The residential mortgage market has recently encountered difficulties which may adversely affect the performance or market value of the Certificates.

In recent months, delinquencies and losses with respect to residential mortgage loans generally have increased and may continue to increase, particularly in the subprime sector. In addition, in recent months residential property values in many states have declined or remained stable, after extended periods during which those values appreciated. A continued decline or a lack of increase in those values may result in additional increases in delinquencies and losses on residential mortgage loans generally, especially with respect to second homes and investor properties, and with respect to any residential mortgage loans where the aggregate loan amounts (including any subordinate loans) are close to the related property values. In addition, a number of residential mortgage loan originators, particularly those who originate subprime loans, have recently experienced serious financial difficulties and, in some cases, bankruptcy. Those difficulties have resulted in part from declining markets for their mortgage loans as well as from claims for repurchases of mortgage loans previously sold under provisions that require repurchase in the event of early payment defaults.

All of these general market conditions may affect the performance of the mortgage loans backing the Certificates and, even if they do not affect performance, may adversely affect the market value of the Certificates.

Recent developments affecting NovaStar

In March 2002, an action was filed against NovaStar Home Mortgage, Inc. (“NHMI”) in Superior Court of Orange County, California entitled American Interbanc Mortgage, LLC v. NovaStar Home Mortgage, Inc. et. al. In the action, the plaintiff alleged that NHMI and two other mortgage companies engaged in false advertising and unfair competition under a California statute permitting lawsuits by a competitor. On May 4, 2007, a jury returned a verdict by a 9-3 vote awarding plaintiff $15.9 million. Such award may be trebled under the applicable California statute. The award is joint and several against the three defendants including NHMI. It is unknown if the other two defendants have the financial ability to pay any of the award. NHMI is currently reviewing its alternatives and will first ask the trial court to overturn the verdict because NHMI does not believe the verdict is supported by the facts. Absent such a decision NHMI is currently reviewing its various options for appeal. There can be no assurances that these efforts will be successful. At this time, the trial court has not entered a judgment. Furthermore, NHMI has a variety of alternative legal steps that can be taken. As such, it is too early in the process to determine that a liability is probable nor estimatable, therefore, NovaStar Financial, Inc. (“NFI”) has not recorded any liability or corresponding charge to earnings related to this case.

Since April 2004, a number of substantially similar class action lawsuits have been filed and consolidated into a single action in the United States District Court for the Western District of Missouri. The consolidated complaint generally alleges that NFI made public statements that were misleading for failing to disclose certain regulatory and licensing matters. The plaintiffs purport to have brought this consolidated action on behalf of all persons who purchased NFI’s common stock (and sellers of put options on NFI’s stock) during the period from October 29, 2003 through April 8, 2004. On January 14, 2005, NFI filed a motion to dismiss this action, and on May 12, 2005, the court denied such motion. On February 8, 2007 the court granted plaintiffs’ motion for class certification and on February 20, 2007, NFI filed a motion to reconsider with the court. NFI believes that these claims are without merit and intends to vigorously defend against them.

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In the wake of the securities class action, NFI has also been named as a nominal defendant in several derivative actions brought against certain of its officers and directors in Missouri and Maryland. The complaints in these actions generally claim that the defendants are liable to NFI for failing to monitor corporate affairs so as to ensure compliance with applicable state licensing and regulatory requirements. The parties have reached a settlement of the derivative actions under which NFI agrees to adopt certain corporate governance measures and NFI’s insurance carrier will pay attorney’s fees to plaintiffs’ counsel. The settlement agreement, which has not yet been finalized, will be subject to court approval after notice of the settlement terms is provided to shareholders.

Since February 2007, a number of substantially similar putative class actions have been filed in the United States District Court for the Western District of Missouri. The complaints name NFI and three of its executive officers as defendants and generally allege, among other things, that the defendants made materially false and misleading statements regarding NFI’s business and financial results. The plaintiffs purport to have brought the actions on behalf of all persons who purchased or otherwise acquired NFI’s common stock during the period May 4, 2006 through February 20, 2007. NFI believes that these claims are without merit and will vigorously defend against them.

In addition to those matters listed above, NFI and the Servicer are currently parties to various other legal proceedings and claims, including, but not limited to, breach of contract claims, class actions or individual claims for violations of the RESPA, FLSA, federal and state laws prohibiting employment discrimination, federal and state laws prohibiting discrimination in lending and federal and state licensing and consumer protection laws. Further, several putative class actions have been filed since February 2007 against NFI, alleging generally that NFI made materially false and misleading statements regarding its financial condition and its business.

While management, including internal counsel, currently believes that the ultimate outcome of all these proceedings and claims will not have a material adverse effect on NFI’s or the Servicer’s financial condition or results of operations, litigation is subject to inherent uncertainties. If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on NFI’s or the Servicer’s financial condition and results of operations.

On May 10, 2007, NFI reported first-quarter results. For the quarter ended March 31, 2007, NFI reported net income available to common shareholders of $44.4 million, or $1.18 per fully diluted common share. A one-time tax-related gain of $84.2 million was realized due to the Board’s decision to terminate the REIT status effective January 1, 2008. The Board’s decision to terminate the REIT was based on the fact that the REIT experienced a significant decline in taxable income in 2006 and was expected to recognize little or no taxable income during the period from 2007 through 2011. Given this outlook, and the operating efficiencies to be gained through operating as a traditional C corporation, the Board of Directors approved the formal plan to voluntarily revoke the REIT status. Without the one-time tax-related gain attributable to the REIT revocation, net income available to common shareholders would have been a loss of $39.8 million, or $1.06 per fully diluted share.

In its first-quarter report on Form 10-Q, NFI reported several factors that contributed to a significant change in its liquidity position. During the first quarter of 2007, bond spreads widened on mortgage-backed securities to uncommon levels as a result of investor concerns over credit quality in the subprime mortgage market. This widening caused a significant decline in the value of NFI’s mortgage securities as well as its mortgage loans held-for-sale. Consequently, during the first quarter of 2007, NFI was subject to cash margin calls of approximately $72.4 million and $23.8 million on its mortgage securities and mortgage loans held-for-sale, respectively. NFI could continue to be subject to additional margin calls if the value of its mortgage assets declines.

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As the values of mortgage loans decreased in the first quarter of 2007, not only was NFI subject to cash margin calls but the capital required to invest in new originations increased at the time of funding. NFI has invested approximately $61.4 million of capital in its mortgage loans held-for-sale on its balance sheet as of March 31, 2007 which consists of the difference between the current principal on the loans and the lending value assigned to the loans by NFI’s lenders.

NFI also had significant cash outlays to repurchase loans sold to third parties. When whole pools are sold as opposed to securitized, the third party has recourse against NFI for certain borrower defaults. The cash NFI must have on hand to repurchase these loans is much higher than the principal amount of the loans as NFI generally must reimburse the investor for the remaining unpaid principal balance, any premium recapture, any unpaid accrued interest and any other out-of-pocket advances in accordance with the loan sale agreement. Typically, repurchased loans will subsequently be financed on NFI’s warehouse repurchase agreements if eligible and then liquidated or sold. NFI paid $82.0 million in cash during the first quarter of 2007 to repurchase loans sold to third parties in the first quarter of 2007. Significant capital is tied up in these assets as the amount NFI can borrow against these assets is very low and some may not be eligible for financing. As a result of all of these liquidity factors, NFI had $63.4 million in cash and cash equivalents at March 31, 2007, which was a decrease of $87.2 million from December 31, 2006.

In its first-quarter report on Form 10-Q, NFI also reported that it failed to satisfy the profitability covenant under one of its warehouse repurchase facilities. NFI’s GAAP net income, determined on a pre-tax basis, was not greater than $1 for the six months ended March 31, 2007 and NFI was unable to obtain a modification or waiver of this requirement. Because NFI only had $120,000 of borrowings outstanding under this facility as of March 31, 2007, the breach did not permit lenders under NFI’s other warehouse repurchase facilities to accelerate all amounts then outstanding under those facilities. The borrowing on this line was then paid in full on April 2, 2007. While management of NFI believes NFI was in compliance with all other applicable covenants as of March 31, 2007, any future breach or non-compliance could have a material adverse effect on NFI’s financial condition. On May 1, 2007, the lender under this facility delivered a notice of default to NFI demanding payment of $2.9 million representing fees owed under the agreement and notifying NFI that the lender was applying $2.9 million in cash that it held as collateral towards this amount.

In its servicing attestation for 2006, the Servicer reported “material noncompliance” with applicable servicing criteria as follows: certain monthly bank reconciliations were not prepared and reviewed timely, certain monthly bank reconciliations contained reconciling items that were not cleared timely, reassignment of loans within the Mortgage Electronic Registration System (MERS) was not performed and fidelity bond coverage was not at the level required by the servicing agreements. The Servicer also stated that control activities related to those items have been implemented and individual instances of noncompliance have been or are in the process of being corrected.

In March 2007, Fitch Ratings placed the servicer ratings of the Servicer on watch for possible downgrading. This action reflects the rating agency’s concerns regarding the financial pressures on the Servicer.

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Thereafter, on April 24, 2007 Standard & Poor’s Ratings Services placed the Servicer's subprime and special servicer rankings on NovaStar Mortgage Inc. on CreditWatch with negative implications. According to S&P, “The negative CreditWatch placement reflects our revised assessment of the parent company’s (NovaStar Financial Inc.) financial position, which we currently deem as insufficient. Consequently, we have removed NovaStar Mortgage from our Select Servicer List. Standard & Poor’s will continue to monitor the situation and will take ranking actions as necessary based on any changes in the financial position of NovaStar Financial.”

On April 25, 2007 Moody’s Investors Service downgraded the servicer quality (“SQ”) rating of the Servicer as a primary servicer of subprime loans to SQ3+ from SQ2. According to Moody’s, the rating downgrade is primarily due to a reduction in the Servicer’s servicing stability. Moody’s has lowered the Servicer’s stability assessment to below average from average. The Servicer, like a number of other independent subprime mortgage finance companies, is facing lower profitability as well as a potential increase in the level of liquidity risk due to the challenging conditions in the subprime market.

In April 2007, NFI executed a Master Repurchase Agreement (2007 Residual Securities) (the “Securities Facility”) with Wachovia Investment Holdings, LLC and Wachovia Capital Markets, LLC ( “Wachovia Capital”), providing for the financing of certain of NFI’s existing residual securities and NFI also executed a Master Repurchase Agreement (2007 Servicing Rights) (the “Servicing Rights Facility”) with Wachovia Bank, NA and Wachovia Capital (collectively, with Wachovia Investment Holdings, LLC and their respective affiliates, “Wachovia”), providing for the financing of certain mortgage servicing rights.

On April 30, 2007, NFI entered into a commitment letter setting forth the terms of a commitment for a $1.9 billion comprehensive financing facility arranged by Wachovia Capital. The facility would expand and replace the whole-loan and securities repurchase agreements currently existing between Wachovia and NFI, other than the Servicing Rights Facility and the Residual Securities Facility. The intent of the comprehensive facility is to put in place a financing facility that will enable NFI to primarily use Wachovia for its short-term borrowing needs. The proposed facility is expected to consist of several separate agreements (collectively, the “Agreements”), the first of which, the Whole Loan Master Repurchase Agreement, closed on May 9, 2007. Financing capacity under the proposed facility will be in addition to the aggregate $100 million financing capacity under the Servicing Rights Facility and the Residual Securities Facility.

As part of its plan to address its liquidity situation, during the first quarter of 2007 NFI also initiated a formal process to explore a range of strategic alternatives, including, without limitation, a potential sale or other change of control transactions. On April 11, 2007, NFI announced that it had retained Deutsche Bank Securities Inc. as its financial advisor to evaluate various strategic alternatives. As this evaluation is ongoing, NFI is uncertain as to what strategic alternatives may be available to it, whether NFI will elect to pursue any such strategic alternatives, or what impact any particular strategic alternative will have on NFI’s stock price if pursued. There are various uncertainties and risks relating to NFI’s exploration of strategic alternatives, including:

exploration of strategic alternatives may distract management and disrupt operations, which could have a material adverse impact on NFI’s operating results;

the process of exploring strategic alternatives may be time consuming and expensive;

NFI may not be able to successfully achieve the benefits of the strategic alternative it undertakes; and

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perceived uncertainties as to NFI’s future direction may result in the loss of employees, customers or business partners.

If the exploration of strategic alternatives does result in a transaction, NFI is unable to predict what the market prices of its common stock would be after the announcement of such a transaction. In addition, the market price of NFI’s stock could be highly volatile for several months as it explores strategic alternatives and may continue to be more volatile if and when a transaction is announced or NFI announces that it is no longer exploring strategic alternatives. There can be no assurance as to the likelihood, timing, nature or consequences of any strategic alternatives.

Use of Proceeds

After deducting the estimated expenses of this offering, as identified on the cover page, the net proceeds to the depositor from the sale of the underwritten certificates are estimated to be $1,319,596,746. The depositor will use the entire net proceeds to pay the sponsor for the initial mortgage loans and to make the initial deposit to the pre-funding account and to any required interest coverage account. The sponsor anticipates that it will use a majority of the proceeds to repay indebtedness and accrued interest under its warehouse lines of credit, including those provided by one or more affiliates of the underwriters. The depositor and the sponsor believe that funds provided by the net proceeds of this offering will be sufficient to accomplish the purposes set forth above.

Description of the Mortgage Pool

The statistical information presented in this prospectus supplement describes the initial Group I mortgage loans and the initial Group II mortgage loans (collectively, the “initial mortgage loans”) that are expected to be included in the trust estate on the closing date. The statistical information does not describe the subsequent mortgage loans which may be acquired through the pre-funding feature using the funds on deposit in the pre-funding account.

The “cut-off date” for the initial mortgage loans is the later of May 1, 2007, and the date of origination of such initial mortgage loans. The cut-off date for any subsequent mortgage loan is the later of (i) the first day of the month in which such subsequent mortgage loan is acquired by the trust and (ii) the date of origination of such subsequent mortgage loan.

It is possible that some of the initial mortgage loans may be repaid or prepaid in full or in part, or otherwise removed from the mortgage pool prior to the closing date. In this event, other mortgage loans may be transferred to the issuing entity. The depositor believes that the information set forth herein with respect to the mortgage pool and each initial loan group as presently constituted is representative of the characteristics of the mortgage pool and each loan group as they will be constituted on the closing date, although some characteristics in the mortgage pool may vary.

All statistical information related to the initial mortgage loans and contained herein is stated as of the cut-off date, and all percentages, unless otherwise stated, are by aggregate principal balance.

This prospectus supplement contains information regarding the initial mortgage loans to be included in the pool as of the closing date. These initial mortgage loans consist of mortgage loans originated through May 1, 2007.

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Subsequent mortgage loans are intended to be purchased by the issuing entity from the depositor from time to time before the end of the pre-funding period, from remaining funds on deposit in the pre-funding account as described below under “—Conveyance of Subsequent Mortgage Loans and the Pre-Funding Account.” The subsequent mortgage loans must conform to certain specified characteristics described below under “—Conveyance of Subsequent Mortgage Loans and the Pre-Funding Account.” Although these subsequent mortgage loans will have characteristics that differ somewhat from the initial mortgage loans we describe in this prospectus supplement, the depositor does not expect that their characteristics will vary materially from the initial mortgage loans. In addition, all subsequent mortgage loans must conform to the representations and warranties in the pooling and servicing agreement.

The mortgage pool will consist of conventional, monthly payment, first- and second-lien subprime mortgage loans with terms to maturity of not more than 30 years from the date of origination or modification. The mortgage pool will consist of both adjustable-rate mortgage (“ARM”) loans and fixed-rate mortgage loans.

NovaStar Mortgage, Inc., in its capacity as sponsor, will convey the mortgage loans to NovaStar Mortgage Funding Corporation pursuant to a mortgage loan purchase agreement. NovaStar Mortgage Funding Corporation will then convey the mortgage loans to the trust. All of the mortgage loans will be serviced by NovaStar Mortgage, Inc., as the servicer. The sponsor will make various representations and warranties regarding the mortgage loans under the purchase agreement and will have repurchase or substitution obligations if those representations or warranties are breached and such breach has a material adverse impact on the value of the mortgage loan or the certificateholders’ interest therein. The obligations of NovaStar Mortgage, Inc. under the mortgage loan purchase agreement will be guaranteed by an affiliate, NovaStar Financial, Inc. See “Description of the Certificates—Assignment of Mortgage Loans” herein.

The mortgages for certain mortgage loans were or may be, at the sole discretion of the servicer, originally recorded in the name of Mortgage Electronic Registration Systems, Inc. (“MERS”), solely as nominee for the sponsor, and its successors and assigns; furthermore, subsequent assignments of such mortgages were or may be, at the sole discretion of the servicer, registered electronically through the MERS System. For certain other mortgage loans, (i) the mortgage was originally recorded in the name of the sponsor, (ii) record ownership was later assigned to MERS, solely as nominee for the sponsor, and (iii) subsequent assignments of the mortgage were or may be, at the sole discretion of the servicer, registered electronically through the MERS System. For each of such mortgage loans, MERS serves as mortgagee of record on the mortgage solely as a nominee in an administrative capacity on behalf of the trustee, and does not have any beneficial interest in the mortgage loan.

Approximately 49.29% by principal balance of the initial mortgage loans have original loan-to-value ratios in excess of 80%. Approximately 11.28% of the initial mortgage loans have an original loan-to-value ratio in excess of 60% and are covered by a lender-paid primary mortgage insurance policy insuring first losses on the principal balance of each initial mortgage loan. See “The Originator—Private Mortgage Insurance Policies” herein. The remainder of the mortgage loans will either be covered by a borrower-paid mortgage insurance policy or will not be covered by a mortgage insurance policy.

As of the cut-off date, the minimum loan-to-value ratio at origination for the initial mortgage loans was approximately 10.62%, the maximum loan-to-value ratio at origination was approximately 100.00%, and the weighted average loan-to-value ratio at origination was approximately 80.77% (references to loan-to-value ratios in this prospectus supplement are references to combined loan-to-value ratios with respect to second-lien mortgage loans).

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All of the initial mortgage loans will contain a customary “due-on-sale” clause, although the mortgage loans may be assumable if permitted by the servicer under certain circumstances. See “Certain Yield and Prepayment Considerations” herein. Pursuant to the terms of the pooling and servicing agreement, the servicer will be entitled to all late payment charges received on the mortgage loans as additional servicing compensation and such amounts will not be available for distribution on the certificates.

The initial mortgage loans have original terms to stated maturity of not more than 360 months.

Approximately 0.75% of the initial mortgage loans are 30 to 59 days delinquent as of the cut-off date.

Approximately 0.30% of the initial mortgage loans are 60 or more days delinquent as of the cut-off date.

Approximately 97.20% of the initial mortgage loans are secured by a first-lien on the related mortgaged property, and approximately 2.80% of the initial mortgage loans are secured by a second-lien on the related mortgaged property.

Approximately 9.83% of the initial mortgage loans are secured by a first-lien on the related mortgaged property for which a second-lien was originated at the same time as the first-lien.

None of the initial mortgage loans are subject to temporary buydown plans, pursuant to which the monthly payments made by the mortgage during the early years of the loan are less than the scheduled monthly payments thereon.

The due date for substantially all of the initial mortgage loans is the first day of the month.

Of the initial mortgage loans, approximately 65.06% by principal balance are ARM loans and approximately 34.94% are fixed-rate mortgage loans. The mortgage rates on substantially all of the ARM loans adjust semi-annually.

Prepayment Penalties

Of the initial mortgage loans, approximately 63.25% by principal balance are subject to prepayment penalties as of the cut-off date. Of the initial mortgage loans subject to prepayment penalties, approximately 64.81% are ARM loans, and approximately 35.19% are fixed-rate mortgage loans. The prepayment penalty provisions typically provide for payment of a prepayment penalty for partial prepayments and full prepayments. Prepayments may be payable for a period of time ranging from one to five years from the related origination date. Prepayment penalties received on the mortgage loans will be available for distribution on the Class C Certificates only.

The initial mortgage loans are expected to have the following characteristics as of the cut-off date (the sum in any column may not equal the total indicated due to rounding):

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Geographic Distribution of the Mortgaged Properties of the Initial Mortgage Loans

Geographical Distribution	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
Alabama		104	$	10,572,988.54		1.12	%		10.241	%		346		84.66	%		590
Alaska		7		1,577,285.34		0.17			9.815			358		88.63			636
Arizona		167		32,020,719.94		3.39			8.893			352		80.55			614
Arkansas		55		6,368,271.49		0.67			9.450			351		83.72			605
California		314		94,478,084.98		10.01			8.599			348		78.48			629
Colorado		58		9,661,530.08		1.02			9.293			341		83.21			594
Connecticut		68		12,416,308.99		1.32			8.865			350		82.18			623
Delaware		9		1,836,778.67		0.19			9.064			357		85.60			598
District of Columbia		20		5,170,037.17		0.55			9.254			352		70.88			596
Florida		1,103		203,884,337.51		21.61			8.978			350		79.79			623
Georgia		176		25,496,853.86		2.70			9.898			352		85.27			596
Hawaii		5		1,798,754.19		0.19			8.243			343		68.63			568
Idaho		24		3,044,014.02		0.32			9.331			348		80.21			612
Illinois		216		32,003,500.71		3.39			8.805			344		82.30			619
Indiana		132		13,901,262.33		1.47			9.200			338		85.93			618
Iowa		52		4,602,760.77		0.49			9.687			338		88.19			607
Kansas		74		7,810,249.99		0.83			9.706			345		85.34			597
Kentucky		61		6,014,437.27		0.64			9.574			341		87.11			590
Louisiana		87		10,381,861.13		1.10			9.536			354		82.66			598
Maine		19		3,155,204.05		0.33			9.029			355		82.78			633
Maryland		230		50,480,308.24		5.35			9.019			353		79.49			601
Massachusetts		84		18,304,935.14		1.94			8.925			352		78.89			600
Michigan		281		32,384,715.45		3.43			9.438			349		82.87			600
Minnesota		65		10,168,241.40		1.08			9.457			348		86.11			618
Mississippi		59		6,189,902.34		0.66			9.785			337		85.59			603
Missouri		192		19,563,360.81		2.07			9.367			344		85.02			603
Montana		4		907,897.77		0.10			10.426			359		83.35			601
Nebraska		10		793,432.79		0.08			9.089			343		79.53			592
Nevada		75		15,026,476.16		1.59			8.702			348		80.29			613
New Hampshire		22		3,547,514.00		0.38			9.418			348		75.23			584
New Jersey		149		34,261,165.41		3.63			9.081			352		75.92			599
New Mexico		57		7,819,554.43		0.83			9.288			342		82.62			594

S-29

Geographical Distribution	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
New York		116		23,695,983.18		2.51			9.224			352		75.56			596
North Carolina		192		24,940,138.27		2.64			9.937			349		82.24			599
North Dakota		6		383,904.80		0.04			9.126			303		87.39			630
Ohio		90		10,000,386.77		1.06			9.295			343		84.30			594
Oklahoma		58		4,394,405.05		0.47			9.212			313		83.41			608
Oregon		36		6,844,215.53		0.73			8.848			347		81.51			617
Pennsylvania		333		37,650,654.18		3.99			8.806			342		80.74			602
Rhode Island		22		4,149,656.04		0.44			9.038			352		82.81			635
South Carolina		170		22,073,719.39		2.34			9.662			346		83.69			597
South Dakota		2		266,774.11		0.03			9.835			358		87.06			560
Tennessee		106		12,285,636.16		1.30			9.565			343		87.19			607
Texas		345		40,867,114.97		4.33			8.942			331		78.53			620
Utah		30		6,845,720.49		0.73			9.218			353		84.52			636
Vermont		4		631,336.63		0.07			8.902			359		81.75			623
Virginia		258		42,613,362.49		4.52			8.682			347		79.44			608
Washington		63		13,214,608.41		1.40			8.439			344		82.25			629
West Virginia		22		1,932,405.69		0.20			10.220			339		84.07			586
Wisconsin		36		4,199,121.80		0.45			9.778			354		86.30			592
Wyoming		9		975,890.88		0.10			9.051			347		85.17			646
Total		5,877	$	943,607,779.81		100.00	%		9.079	%		347		80.77	%		612

No more than approximately 0.37% (the highest concentration in a single zip code) of the initial mortgage loans will be secured by mortgaged properties located in Florida in zip code 33023.

Types of Mortgaged Properties of the Initial Mortgage Loans

Property Types	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
Condo		240	$	41,472,438.20		4.40	%		9.299	%		350		81.96	%		634
Multi-Unit		172		36,530,385.93		3.87			9.164			351		80.22			622
PUD		667		137,406,687.66		14.56			9.128			348		82.30			623
Single Family Residence		4,798		728,198,268.02		77.17			9.053			347		80.45			608
Total		5,877	$	943,607,779.81		100.00	%		9.079	%		347		80.77	%		612

S-30

Loan Purpose of the Initial Mortgage Loans

Loan Purpose (1)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
Cash Out Refinance		4,571	$	735,282,879.35		77.92	%		8.949	%		348		78.93	%		602
Purchase		1,047		170,480,552.49		18.07			9.603			344		88.09			651
Rate/Term Refinance		259		37,844,347.97		4.01			9.242			346		83.63			624
Total		5,877	$	943,607,779.81		100.00	%		9.079	%		347		80.77	%		612

(1)

In general, in the case of a mortgage loan made for “rate/term” refinance purposes, substantially all of the proceeds are used to pay in full the principal balance of a previous mortgage loan of the mortgagor with respect to the related mortgaged property and to pay associated origination and closing costs. Mortgage loans made for “cash-out” refinance purposes may involve the use of the proceeds to pay in full the principal balance of a previous mortgage loan and related costs except that a portion of the proceeds are generally retained by the mortgagor for uses unrelated to the mortgaged property. The amount of these proceeds retained by the mortgagor may be substantial.

Occupancy Status of the Mortgaged Properties of the Initial Mortgage Loans

Occupancy Status	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
Investment (Non-Owner Occupied)		297	$	43,807,207.06		4.64	%		9.577	%		355		80.76	%		655
Primary		5,457		873,497,981.13		92.57			9.045			347		80.65			608
Secondary Home		123		26,302,591.62		2.79			9.395			353		84.99			653
Total		5,877	$	943,607,779.81		100.00	%		9.079	%		347		80.77	%		612

S-31

Documentation Type of the Initial Mortgage Loans

Loan Documentation Types	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
Full Documentation		3,908	$	537,503,964.42		56.96	%		8.838	%		344		80.85	%		598
Limited Documentation		24		5,522,915.51		0.59			9.210			350		80.36			610
No Documentation		302		60,204,907.96		6.38			8.865			353		80.95			681
Stated Income		1,643		340,375,991.92		36.07			9.495			351		80.63			621
Total		5,877	$	943,607,779.81		100.00	%		9.079	%		347		80.77	%		612

Risk Classification of the Initial Mortgage Loans

Risk Classification	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
M1		3,277		495,884,159.09		52.55			8.976			344		82.69			614
M2		1,258		212,960,868.74		22.57			9.411			354		78.56			578
M3		323		52,814,322.50		5.60			9.603			354		71.88			556
M4		176		26,542,915.01		2.81			10.067			354		67.64			560
Alt A		840		155,134,865.82		16.44			8.607			345		82.98			677
Fico Enhanced		1		118,470.41		0.01			9.500			300		95.00			581
AA		1		95,879.11		0.01			8.000			72		80.00			583
A		1	$	56,299.13		0.01	%		10.250	%		172		85.00	%		536
Total		5,877	$	943,607,779.81		100.00	%		9.079	%		347		80.77	%		612

S-32

Original Loan-to-Value Ratios of the Initial Mortgage Loans

*Range of LTV Ratios(%)**	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
0.01-49.99		271	$	30,450,188.63		3.23	%		8.417	%		338		39.36	%		602
50.00-54.99		139		18,586,939.13		1.97			8.421			344		52.14			599
55.00-59.99		174		24,492,719.73		2.60			8.404			344		57.54			585
60.00-64.99		224		34,003,215.72		3.60			8.554			347		62.43			583
65.00-69.99		273		41,614,583.08		4.41			8.522			350		67.31			599
70.00-74.99		396		68,065,206.19		7.21			8.576			345		72.02			596
75.00-79.99		562		93,863,140.96		9.95			8.860			351		76.42			592
80.00		860		167,417,647.31		17.74			8.671			353		80.00			620
80.01-84.99		207		38,512,543.40		4.08			8.892			352		83.24			600
85.00-89.99		667		108,839,237.55		11.53			9.369			352		85.96			598
90.00-94.99		973		169,031,657.24		17.91			9.461			354		90.39			617
95.00-99.99		544		95,718,223.28		10.14			9.744			351		95.16			641
100.00		587		53,012,477.59		5.62			10.226			293		100.00			656
Total		5,877	$	943,607,779.81		100.00	%		9.079	%		347		80.77	%		612

*LTV Ratios calculated as of origination

Weighted Average: 80.77% (approximate)

S-33

Principal Balances of the Initial Mortgage Loans

Range of Cut-Off Date Principal Balances ($)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
0.01-50,000.00		492	$	17,862,664.85		1.89	%		10.895	%		231		84.96	%		631
50,000.01-100,000.00		1,694		126,868,341.81		13.45			9.382			329		78.34			602
100,000.01-150,000.00		1,298		162,952,734.80		17.27			9.195			348		79.73			600
150,000.01-200,000.00		883		153,708,594.69		16.29			9.039			351		79.74			604
200,000.01-250,000.00		610		137,125,310.36		14.53			9.024			354		81.00			610
250,000.01-300,000.00		298		81,827,559.01		8.67			8.975			356		81.26			611
300,000.01-350,000.00		191		61,859,117.88		6.56			8.900			354		83.07			621
350,000.01-400,000.00		142		53,189,943.82		5.64			8.684			355		81.41			624
400,000.01-450,000.00		70		29,722,986.37		3.15			8.880			353		82.02			632
450,000.01-500,000.00		64		30,450,136.32		3.23			8.846			358		86.12			619
500,000.01-550,000.00		38		19,896,175.23		2.11			8.990			355		82.19			629
550,000.01-600,000.00		31		17,928,034.27		1.90			8.583			358		83.00			646
600,000.01-650,000.00		21		13,050,208.63		1.38			8.723			358		80.40			621
650,000.01-700,000.00		9		6,024,271.67		0.64			9.354			358		87.44			647
700,000.01-750,000.00		12		8,810,743.08		0.93			9.407			358		87.89			599
750,000.01-800,000.00		5		3,901,911.86		0.41			8.382			358		86.28			671
800,000.01-850,000.00		1		815,710.28		0.09			7.250			359		80.00			618
850,000.01-900,000.00		6		5,267,325.17		0.56			9.123			358		77.34			631
900,000.01-950,000.00		2		1,892,009.55		0.20			9.124			356		84.56			632
950,000.01-1,000,000.00		4		3,888,972.21		0.41			9.046			356		74.08			613
1,000,000.01 and Above		6		6,565,027.95		0.70			7.942			356		75.61			704
Total		5,877	$	943,607,779.81		100.00	%		9.079	%		347		80.77	%		612

Average: $160,559 (approximate)

Remaining Terms to Maturity of the Initial Mortgage Loans

Range of Remaining Terms to Maturity (in months)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
1-60		1	$	22,691.95		0.00	%		10.250	%		53		62.50	%		544
61-120		35		2,906,578.63		0.31			7.479			116		61.71			680
121-180		641		42,104,394.39		4.46			9.985			178		86.65			637
181-240		154		13,952,582.11		1.48			8.834			237		76.64			627
241-300		3		284,565.98		0.03			9.322			298		86.24			587
301-360		5,043		884,336,966.75		93.72			9.045			358		80.62			610
Total		5,877	$	943,607,779.81		100.00	%		9.079	%		347		80.77	%		612

Weighted Average: 347 months (approximate)

S-34

Original Terms to Maturity of the Initial Mortgage Loans

Original Terms to Maturity (in months)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
120		35	$	2,833,391.47		0.30	%		7.484	%		117		61.09	%		682
180		641		42,143,974.37		4.47			9.980			177		86.63			637
240		155		14,008,881.24		1.48			8.840			237		76.68			627
360		5,046		884,621,532.73		93.75			9.045			358		80.62			610
Total		5,877	$	943,607,779.81		100.00	%		9.079	%		347		80.77	%		612

Weighted Average: 349 months (approximate)

Lien Position of the Initial Mortgage Loans

Lien Position	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
First Lien		5,339	$	917,167,242.80		97.20	%		9.013	%		352		80.33	%		611
Second Lien		538		26,440,537.01		2.80			11.365			193		96.24			654
Total		5,877	$	943,607,779.81		100.00	%		9.079	%		347		80.77	%		612

S-35

Credit Scores of the Initial Mortgage Loans

Range of Credit Scores	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
400-499		53	$	6,689,165.67		0.71	%		10.168	%		354		70.80	%		493
500-524		376		55,128,308.47		5.84			9.900			353		75.17			514
525-549		709		110,979,761.61		11.76			9.689			353		75.65			538
550-574		728		119,607,691.85		12.68			9.328			353		78.43			562
575-599		806		119,430,641.36		12.66			9.262			351		80.30			587
600-624		876		137,907,890.41		14.61			8.989			347		82.27			612
625-649		885		142,672,902.98		15.12			8.886			343		83.01			637
650-674		692		114,200,805.31		12.10			8.652			344		83.21			661
675-699		357		60,942,380.19		6.46			8.540			341		83.89			685
700 and Above		395		76,048,231.96		8.06			8.421			341		84.55			737
Total		5,877	$	943,607,779.81		100.00	%		9.079	%		347		80.77	%		612

Weighted Average: 612 (approximate)

Current Mortgage Rates of the Initial Mortgage Loans

Range of Gross Interest Rates (%)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
5.000-5.499		2	$	876,456.85		0.09	%		5.267	%		359		77.33	%		701
5.500-5.999		12		3,339,756.14		0.35			5.857			311		61.76			689
6.000-6.499		35		8,047,443.23		0.85			6.297			331		65.04			670
6.500-6.999		215		39,985,410.54		4.24			6.804			338		70.80			650
7.000-7.499		281		52,711,395.99		5.59			7.267			345		74.24			642
7.500-7.999		648		118,654,305.65		12.57			7.777			349		76.63			639
8.000-8.499		542		99,866,852.71		10.58			8.259			351		78.46			626
8.500-8.999		909		158,279,348.32		16.77			8.763			351		81.37			604
9.000-9.499		625		103,369,675.70		10.95			9.265			353		82.81			610
9.500-9.999		876		141,863,173.71		15.03			9.753			353		83.60			600
10.000-10.499		477		72,843,062.99		7.72			10.243			353		83.01			588
10.500-10.999		506		72,417,809.43		7.67			10.744			350		84.52			579
11.000-11.499		235		26,163,085.58		2.77			11.261			334		86.92			591
11.500-11.999		254		30,101,124.30		3.19			11.740			324		86.01			586
12.000-12.499		116		8,550,634.02		0.91			12.212			286		92.37			610
12.500-12.999		78		3,876,508.94		0.41			12.672			232		95.47			620
13.000-13.499		45		1,888,408.80		0.20			13.183			189		98.91			635
13.500-13.999		20		728,742.51		0.08			13.698			199		95.32			614
14.000-14.499		1		44,584.40		0.00			14.200			178		100.00			763
Total		5,877	$	943,607,779.81		100.00	%		9.079	%		347		80.77	%		612

Weighted Average: 9.079% (approximate)

S-36

Fixed Rate Loan Types of the Initial Mortgage Loans

Fixed Rate Loan Types	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
Fixed Rate		2,087	$	259,326,705.85		78.67	%		8.608	%		333		77.28	%		616
Fixed Rate 30/15 Balloon		385		20,352,468.31		6.17			11.508			177		98.23			653
Fixed Rate 40/30 Balloon		293		48,707,647.94		14.78			8.823			359		78.91			616
Fixed Rate Interest Only*		7		1,268,884.50		0.38			8.387			359		76.63			641
Total		2,772	$	329,655,706.60		100.00	%		8.818	%		328		78.81	%		618

*(10 Year Interest Only Term)

S-37

Initial Periodic Rate Cap of the Initial ARM Loans

Initial Periodic Rate Cap (%)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
3.000		3,104	$	613,605,719.64		99.94	%		9.221	%		358		81.83	%		608
5.000		1		346,353.57		0.06			6.625			355		80.00			664
Total		3,105	$	613,952,073.21		100.00	%		9.219	%		358		81.83	%		608

Periodic Rate Cap of the Initial ARM Loans

Periodic Rate Cap (%)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
1.000		3,104	$	613,605,719.64		99.94	%		9.221	%		358		81.83	%		608
2.000		1		346,353.57		0.06			6.625			355		80.00			664
Total		3,105	$	613,952,073.21		100.00	%		9.219	%		358		81.83	%		608

S-38

Maximum Loan Rates of the Initial ARM Loans

Range of Maximum Interest Rates (%)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
10.500-10.999		1	$	536,000.00		0.09	%		5.875	%		353		49.40	%		670
11.500-11.999		2		976,713.68		0.16			6.786			354		80.00			662
12.000-12.499		2		508,816.95		0.08			5.573			358		76.17			705
12.500-12.999		3		901,511.03		0.15			6.199			356		75.14			661
13.000-13.499		13		3,206,291.05		0.52			6.438			356		75.01			647
13.500-13.999		72		16,547,377.31		2.70			6.888			358		74.43			633
14.000-14.499		104		25,302,466.34		4.12			7.304			358		77.50			646
14.500-14.999		266		61,969,473.14		10.09			7.814			358		78.29			642
15.000-15.499		286		61,675,027.96		10.05			8.278			358		79.34			628
15.500-15.999		514		108,513,523.14		17.67			8.770			358		82.17			602
16.000-16.499		392		77,353,431.71		12.60			9.270			358		82.76			611
16.500-16.999		550		103,332,698.19		16.83			9.751			358		83.78			602
17.000-17.499		313		56,946,123.44		9.28			10.243			358		83.79			590
17.500-17.999		342		56,263,739.76		9.16			10.747			359		84.06			578
18.000-18.499		106		15,699,023.75		2.56			11.269			359		85.64			587
18.500-18.999		107		19,400,269.07		3.16			11.728			359		82.74			572
19.000-19.499		27		3,982,563.43		0.65			12.196			359		87.33			581
19.500-19.999		5		837,023.26		0.14			12.556			359		87.26			545
Total		3,105	$	613,952,073.21		100.00	%		9.219	%		358		81.83	%		608

Weighted Average: 16.207% (approximate)

Minimum Loan Rates of the Initial ARM Loans

Range of Minimum Interest Rates (%)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
4.000-4.499		1	$	1,037,599.43		0.17	%		7.350	%		357		80.00	%		668
5.000-5.499		1		390,000.00		0.06			5.100			360		75.00			716
5.500-5.999		4		1,406,403.85		0.23			6.265			355		65.22			654
6.000-6.499		15		3,524,699.74		0.57			6.748			356		76.16			634
6.500-6.999		70		16,946,094.83		2.76			6.840			358		74.79			634
7.000-7.499		102		23,816,024.38		3.88			7.273			358		77.00			646
7.500-7.999		264		61,616,024.59		10.04			7.802			358		78.39			643
8.000-8.499		283		61,891,973.66		10.08			8.267			358		79.64			629
8.500-8.999		520		109,355,206.21		17.81			8.768			358		82.15			603
9.000-9.499		394		77,585,086.30		12.64			9.267			358		82.68			611
9.500-9.999		547		102,891,014.26		16.76			9.751			358		83.67			602
10.000-10.499		316		57,084,465.42		9.30			10.242			358		83.70			590
10.500-10.999		342		56,432,148.11		9.19			10.747			359		84.11			578
11.000-11.499		107		15,773,808.64		2.57			11.268			359		85.71			587
11.500-11.999		107		19,381,937.10		3.16			11.736			359		82.66			571
12.000-12.499		27		3,982,563.43		0.65			12.196			359		87.33			581
12.500-12.999		5		837,023.26		0.14			12.556			359		87.26			545
Total		3,105	$	613,952,073.21		100.00	%		9.219	%		358		81.83	%		608

Weighted Average: 9.211% (approximate)

S-39

Next Interest Adjustment Date of the Initial ARM Loans

Date of Next Rate Change Date	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
July 2007		1	$	58,828.75		0.01	%		11.375	%		290		80.00	%		646
August 2007		1		155,831.34		0.03			9.250			333		100.00			638
October 2007		2		166,310.30		0.03			7.734			314		80.00			585
November 2007		1		118,470.41		0.02			9.500			300		95.00			581
January 2008		1		107,177.37		0.02			9.950			344		80.00			582
February 2008		2		267,188.93		0.04			9.730			345		86.99			537
March 2008		1		58,241.29		0.01			9.000			346		90.00			551
April 2008		5		693,041.08		0.11			9.312			347		82.18			607
May 2008		12		2,149,973.10		0.35			9.288			348		89.58			563

S-40

Date of Next Rate Change Date	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
June 2008		7		1,132,886.13		0.18			9.046			349		82.04			548
July 2008		20		3,187,711.67		0.52			9.372			350		84.59			572
August 2008		19		4,457,790.51		0.73			9.813			351		82.42			611
September 2008		10		2,104,714.02		0.34			9.837			352		86.26			592
October 2008		40		6,309,606.56		1.03			9.384			353		82.66			588
November 2008		60		11,203,641.43		1.82			8.497			354		85.45			600
December 2008		67		14,888,827.54		2.43			8.540			355		84.83			605
January 2009		49		11,893,349.03		1.94			8.960			356		85.65			621
February 2009		406		86,091,767.98		14.02			8.926			357		82.69			609
March 2009		746		142,458,580.83		23.20			8.933			358		80.98			608
April 2009		824		159,443,260.01		25.97			9.381			359		81.06			609
May 2009		663		138,577,114.60		22.57			9.757			360		81.81			610
June 2009		1		134,191.57		0.02			9.200			349		90.00			546
August 2009		1		137,550.12		0.02			8.375			351		80.00			701
September 2009		1		181,799.34		0.03			8.375			352		90.00			567
October 2009		16		2,475,426.76		0.40			8.087			353		79.37			608
November 2009		26		4,799,305.20		0.78			7.996			354		85.19			603
December 2009		15		2,043,032.07		0.33			8.773			355		85.74			600
January 2010		1		62,356.07		0.01			8.800			356		61.09			575
February 2010		15		3,169,549.96		0.52			8.708			357		83.49			621
March 2010		37		5,722,427.40		0.93			8.719			358		82.46			616
April 2010		19		3,784,829.94		0.62			9.185			359		78.68			599
May 2010		20		3,133,855.00		0.51			8.607			360		75.22			598
December 2011		3		432,571.64		0.07			6.042			355		69.87			703
February 2012		2		278,815.69		0.05			9.199			357		83.13			599
March 2012		6		1,133,196.00		0.18			9.117			358		83.21			648
May 2012		4		592,500.00		0.10			9.351			360		80.26			698
December 2013		1		346,353.57		0.06			6.625			355		80.00			664
Total		3,105	$	613,952,073.21		100.00	%		9.219	%		358		81.83	%		608

The weighted average remaining months to the next interest adjustment date of the initial ARM loans as of the cut-off date will be approximately 23 months.

S-41

Gross Margins of the Initial ARM Loans

Range of Gross Margins (%)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
2.500-2.999		1	$	74,876.46		0.01	%		6.990	%		358		46.01	%		714
3.000-3.499		1		76,436.67		0.01			6.950			359		60.47			596
3.500-3.999		6		1,613,535.30		0.26			6.858			356		66.72			686
4.000-4.499		46		11,531,169.44		1.88			7.323			358		72.49			673
4.500-4.999		234		54,595,386.93		8.89			7.932			358		75.82			670
5.000-5.499		438		92,476,165.36		15.06			8.546			358		79.53			635
5.500-5.999		685		137,639,699.53		22.42			9.072			358		82.31			616
6.000-6.499		749		143,076,048.94		23.30			9.559			358		83.68			593
6.500-6.999		567		106,308,959.02		17.32			10.065			358		84.15			580
7.000-7.499		350		61,959,728.37		10.09			9.827			357		82.86			567
7.500-7.999		23		3,645,370.48		0.59			9.695			354		86.56			588
8.000-8.499		1		415,670.81		0.07			9.225			354		100.00			669
9.000-9.499		3		329,275.77		0.05			11.193			353		97.20			622
10.500-10.999		1		209,750.13		0.03			10.550			357		100.00			732
Total		3,105	$	613,952,073.21		100.00	%		9.219	%		358		81.83	%		608

Weighted Average: 5.966% (approximate)

ARM Loan Types of the Initial ARM Loans

Adjustable Rate Loan Types	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
ARM - 2 Year/6 Month		1,899	$	336,314,527.89		54.78	%		9.434	%		358		81.25	%		597
ARM - 3 Year/6 Month		126		20,063,294.52		3.27			8.702			356		82.46			601
ARM - 5 Year/6 Month		9		1,401,427.72		0.23			8.632			357		77.13			677
ARM - 7 Year/6 Month		1		346,353.57		0.06			6.625			355		80.00			664
ARM - 2 Year/6 Month - Interest Only*		115		38,920,199.65		6.34			8.720			358		82.16			666
ARM - 3 Year/6 Month - Interest Only*		10		2,840,811.00		0.46			7.553			357		76.45			648
ARM - 5 Year/6 Month - Interest Only**		3		459,163.52		0.07			8.397			359		85.71			687
ARM - 2 Year/6 Month - 40/30 Balloon		923		210,289,585.34		34.25			9.057			358		82.73			614
ARM - 3 Year/6 Month - 40/30 Balloon		16		2,740,217.91		0.45			8.744			358		81.07			609
ARM - 5 Year/6 Month - 40/30 Balloon		3		576,492.09		0.09			8.843			358		82.92			617
Total		3,105	$	613,952,073.21		100.00	%		9.219	%		358		81.83	%		608

*(5 Year Interest Only Term)

**(10 Year Interest Only Term)

S-42

Distribution by Amortization Type of the Initial Mortgage Loans

Amortization Types	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
Interest Only		135	$	43,489,058.67		4.61	%		8.631	%		358		81.66	%		664
Not Interest Only		5,742		900,118,721.14		95.39			9.101			347		80.73			609
Total		5,877	$	943,607,779.81		100.00	%		9.079	%		347		80.77	%		612

Distribution of Seasoning of the Initial Mortgage Loans

Seasoning (months)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
0		1,244	$	216,081,195.60		22.90	%		9.464	%		352		79.29	%		610
1		1,510		243,833,566.07		25.84			9.268			349		80.37			611
2		1,498		234,058,837.04		24.80			8.835			348		80.22			612
3		623		112,401,603.08		11.91			8.971			348		82.77			610
4		72		13,831,291.00		1.47			9.148			342		86.27			622
5		359		47,126,706.17		4.99			8.380			332		83.83			627
6		288		37,701,473.13		4.00			8.264			338		81.10			616
7 or More		283		38,573,107.72		4.09			9.153			334		83.18			601
Total		5,877	$	943,607,779.81		100.00	%		9.079	%		347		80.77	%		612

S-43

Original Prepayment Penalty Term of the Initial Mortgage Loans

Original Prepayment Penalty Term (in months)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
No prepayment penalty		2,186	$	346,811,252.87		36.75	%		9.368	%		346		80.48	%		612
12		39		9,968,120.68		1.06			9.132			342		81.87			641
24		1,323		241,320,856.66		25.57			9.207			354		81.92			611
36		2,325		345,214,209.00		36.58			8.698			345		80.24			611
60		4		293,340.60		0.03			9.212			182		85.66			570
Total		5,877	$	943,607,779.81		100.00	%		9.079	%		347		80.77	%		612

S-44

Adjustable Rate Feature of the ARM Loans

Effective with the first payment due on an ARM loan after each related adjustment date, the monthly payment will be adjusted to an amount that will fully amortize the outstanding principal balance of the mortgage loan over its remaining term. The weighted average number of months from the cut-off date to the next adjustment date for the initial ARM loans is approximately 23 months.

Adjustments to the mortgage rates on substantially all of the ARM loans commence after an initial period after origination of two years, three years, five years or seven years in each case on each applicable adjustment date to a rate equal to the sum, generally rounded up to the nearest one-eighth of one percentage point (12.5 basis points), of (i) the related index plus (ii) a fixed gross margin. Substantially all of the ARM loans are subject to an initial fixed rate period. In addition, the mortgage rate on each ARM loan is subject, on its first adjustment date following its origination, to a cap and on each adjustment date thereafter to a periodic rate cap. All of the ARM loans are also subject to specified maximum and minimum lifetime mortgage rates. The ARM loans were generally originated with an mortgage rate below the sum of the current index and the gross margin. Due to the application of the periodic rate caps, maximum mortgage rates and minimum mortgage rates, the mortgage rate on any ARM loan, as adjusted on any related adjustment date, may not equal the sum of the related index and the gross margin.

Substantially all of the ARM loans will not have reached their first adjustment date as of the closing date. The mortgage rate is generally lower than the rate that would have been produced if the applicable gross margin had been added to the related index in effect at origination. ARM loans that have not reached their first adjustment date are, therefore, subject to the initial periodic rate cap on their first adjustment date.

The index applicable to the determination of the mortgage rate on substantially all of the ARM loans will be the average of the interbank offered rates for six-month United States dollar deposits in the London market based on quotations of major banks, as published in the Western Edition of The Wall Street Journal, and most recently available as of the first business day generally 30 days prior to the adjustment date (“Six-Month LIBOR”).

Mortgage Loan Groups

The mortgage loans have been divided into two subpools, designated as the “Group I mortgage loans,” and the “Group II mortgage loans.” The Group I mortgage loans will consist exclusively of mortgage loans that conform to certain Freddie Mac guidelines. The Group II mortgage loans will consist of a combination of mortgage loans which may conform to certain Freddie Mac guidelines and mortgage loans that may not conform to such guidelines. The Group I Certificates receive distributions primarily from the Group I mortgage loans. The Group II Certificates receive distributions primarily from the Group II mortgage loans. The Mezzanine Certificates, the Class I Certificates and the Class C Certificates receive distributions primarily from both Groups of mortgage loans. Information about the characteristics of the mortgage loans in each Group is described under “The Group I Mortgage Loans,” and “The Group II Mortgage Loans” below.

The Initial Group I Mortgage Loans

The initial Group I mortgage loans consist of 4,772 mortgage loans that have an aggregate principal balance of approximately $688,465,155 as of the cut-off date.

S-45

All of the initial Group I mortgage loans conform to certain agency guidelines with respect to the principal balance of such mortgage loans and certain representations made in respect of those mortgage loans, including the following: (i) none of the initial Group I mortgage loans will be subject to the Home Ownership and Equity Protection Act of 1994, or HOEPA, or any comparable state law, (ii) none of the proceeds from any of the initial Group I mortgage loans will be used to finance single premium credit life insurance policies, (iii) the servicer will accurately and fully report its borrower credit files to the three largest credit repositories in a timely manner, (iv) none of the initial Group I mortgage loans impose a prepayment penalty more than three years after origination of the mortgage loan, (v) each of the initial Group I mortgage loans complies in all material respects with applicable local, state and federal laws including, but not limited to, all applicable predatory and abusive lending laws, (vi) none of the initial Group I mortgage loans are “high cost,” “covered” (excluding home loans defined as “covered homes” pursuant to the New Jersey Home Ownership Security Act of 2002), “high risk home,” or “predatory” loan under any applicable federal, state or local law (or are similarly classified and/or defined using different terminology under a law imposing heightened regulatory scrutiny or additional legal liability for residential mortgage loans having high interest rates, points and/or fees) mortgage loans, (vii) none of the initial Group I mortgage loans originated on or after October 1, 2002 and before March 7, 2003 are secured by property located in the State of Georgia, and none of the initial Group I mortgage loans originated on or after March 7, 2003 is a “high cost home loan” as defined under the Georgia Fair Lending Act, (viii) the servicer for each of the initial Group I mortgage loans has fully furnished (and, on a going forward basis, will fully furnish), in accordance with the Fair Credit Reporting Act and its implementing regulations, accurate and complete information (i.e., favorable and unfavorable) on its borrower credit files to Equifax, Experian, and Trans Union Credit Information Company (three of the credit repositories), on a monthly basis (during the period in which the servicer serviced the initial Group I mortgage loans), (ix) the principal balance at origination for each Group I mortgage loan originated in most states may not exceed $417,000 for single-family residences, $533,850 for two-family residences, $645,300 for three-family residences and $801,950 for four-family residences and (x) with respect to the initial Group I mortgage loans originated on or after August 1, 2004 none of the related mortgages nor the related mortgage notes require the borrower to submit to arbitration to resolve any dispute arising out of or relating in any way to the mortgage loan transaction.

Approximately 42.05% of the initial Group I mortgage loans are fixed-rate mortgage loans, and approximately 57.95% of the initial Group I mortgage loans are ARM loans.

Approximately 62.74% of the initial Group I mortgage loans provide for payment by the mortgagor of a prepayment penalty in limited circumstances on certain prepayments.

Approximately 47.10% of the initial Group I mortgage loans had loan-to-value ratios at origination in excess of 80%.

Approximately 98.25% of the initial Group I mortgage loans are secured by first-liens on the related mortgaged property and approximately 1.75% of the initial Group I mortgage loans are secured by second-liens on the related mortgaged property.

The weighted average remaining term to maturity of the initial Group I mortgage loans is approximately 348 months as of the cut-off date.

The average principal balance of the initial Group I mortgage loans as of the cut-off date was approximately $144,272. No initial Group I mortgage loan had a principal balance, as of the cut-off date, of greater than approximately $568,000 or less than approximately $14,993.

The initial Group I mortgage loans had mortgage rates of not less than approximately 5.100% per annum and not more than approximately 13.875% per annum as of the cut-off date, and the weighted average mortgage rate of the initial Group I mortgage loans was approximately 9.015% per annum as of the cut-off date.

S-46

The initial Group I mortgage loans are expected to have the following characteristics as of the cut-off date (the sum in any column may not equal the total indicated due to rounding):

Geographic Distribution of the Mortgaged Properties of the Initial Group I Mortgage Loans

Geographic Distribution	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
Alabama		88	$	8,619,277.52		1.25	%		10.112	%		344		84.16	%		593
Alaska		7		1,577,285.34		0.23			9.815			358		88.63			636
Arizona		128		23,090,670.80		3.35			8.695			353		79.75			610
Arkansas		46		5,249,585.17		0.76			9.580			351		83.37			607
California		167		40,900,200.95		5.94			8.317			352		71.53			616
Colorado		51		7,434,694.28		1.08			9.570			338		83.88			597
Connecticut		61		10,529,002.29		1.53			8.786			352		80.89			619
Delaware		5		945,019.06		0.14			8.710			358		86.16			596
District of Columbia		16		3,238,430.59		0.47			9.534			359		63.63			599
Florida		829		136,191,385.85		19.78			8.818			352		77.61			609
Georgia		152		21,282,065.45		3.09			9.872			352		85.68			595
Hawaii		5		1,798,754.19		0.26			8.243			343		68.63			568
Idaho		21		2,705,564.80		0.39			9.218			349		78.94			611
Illinois		196		27,750,081.06		4.03			8.683			343		81.96			618
Indiana		124		12,387,612.76		1.80			9.201			336		86.31			615
Iowa		49		4,367,089.74		0.63			9.621			337		88.31			608
Kansas		66		6,836,033.54		0.99			9.591			343		85.38			599
Kentucky		52		4,941,288.51		0.72			9.378			337		87.34			600
Louisiana		66		7,934,271.72		1.15			9.442			355		81.84			590
Maine		15		2,214,712.19		0.32			9.264			354		85.76			602
Maryland		191		38,590,548.40		5.61			8.955			353		77.63			596
Massachusetts		75		14,692,111.10		2.13			8.940			352		76.95			606
Michigan		232		25,011,694.11		3.63			9.362			347		82.94			597
Minnesota		57		8,171,445.92		1.19			9.378			348		85.61			618
Mississippi		47		4,429,196.20		0.64			9.615			335		86.15			598
Missouri		167		16,902,342.65		2.46			9.296			343		85.00			602
Montana		4		907,897.77		0.13			10.426			359		83.35			601
Nebraska		9		705,451.23		0.10			9.025			342		78.22			590
Nevada		55		10,671,811.64		1.55			8.470			350		78.87			610
New Hampshire		21		3,451,573.65		0.50			9.356			353		74.54			582
New Jersey		126		26,499,702.44		3.85			9.035			355		73.56			589
New Mexico		51		6,521,883.03		0.95			9.160			343		81.64			598

S-47

Geographic Distribution	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
New York		96		17,695,014.10		2.57			9.269			352		73.15			597
North Carolina		160		19,071,632.54		2.77			9.996			350		81.84			591
North Dakota		5		291,204.80		0.04			8.768			284		86.56			643
Ohio		84		9,329,366.88		1.36			9.256			346		84.20			597
Oklahoma		58		4,394,405.05		0.64			9.212			313		83.41			608
Oregon		27		4,931,493.21		0.72			8.529			350		80.36			607
Pennsylvania		294		32,612,394.91		4.74			8.795			341		80.29			598
Rhode Island		19		3,683,599.86		0.54			8.986			353		81.72			628
South Carolina		133		17,155,469.23		2.49			9.634			346		83.36			593
South Dakota		2		266,774.11		0.04			9.835			358		87.06			560
Tennessee		92		10,391,961.60		1.51			9.589			342		86.73			601
Texas		276		30,403,027.75		4.42			8.718			326		75.36			613
Utah		15		2,093,894.76		0.30			8.923			349		84.90			617
Vermont		4		631,336.63		0.09			8.902			359		81.75			623
Virginia		223		34,218,620.22		4.97			8.601			345		79.06			608
Washington		48		8,637,401.71		1.25			8.395			352		80.71			614
West Virginia		19		1,571,996.50		0.23			10.358			343		83.71			585
Wisconsin		29		3,560,986.62		0.52			9.728			355		86.08			586
Wyoming		9		975,890.88		0.14			9.051			347		85.17			646
Total		4,772	$	688,465,155.31		100.00	%		9.015	%		348		79.49	%		605

No more than approximately 0.41% (the highest concentration in a single zip code) of the initial Group I mortgage loans will be secured by mortgaged properties located in Florida in zip code 33023.

S-48

Types of Mortgaged Properties of the Initial Group I Mortgage Loans

Property Type	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
Condo		170	$	24,945,259.02		3.62	%		9.153	%		354		80.08	%		622
Multi-Unit		144		29,823,339.74		4.33			9.073			351		78.62			619
PUD		454		81,585,933.61		11.85			8.943			348		79.92			611
Single Family Residence		4,004		552,110,622.94		80.19			9.016			347		79.44			602
Total		4,772	$	688,465,155.31		100.00	%		9.015	%		348		79.49	%		605

Loan Purpose of the Initial Group I Mortgage Loans

Loan Purpose(1)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
Cash Out Refinance		4,173	$	614,957,003.00		89.32	%		8.946	%		348		78.67	%		602
Purchase		361		41,478,817.98		6.02			9.852			349		88.28			637
Rate/Term Refinance		238		32,029,334.33		4.65			9.249			344		83.82			619
Total		4,772	$	688,465,155.31		100.00	%		9.015	%		348		79.49	%		605

(1)

S-49

Occupancy Status of the Mortgaged Properties of the Initial Group I Mortgage Loans

Occupancy Status	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
Investment (Non-Owner Occupied)		259	$	36,634,386.14		5.32	%		9.509	%		354		80.62	%		650
Primary		4,419		636,320,189.61		92.43			8.974			347		79.34			601
Secondary Home		94		15,510,579.56		2.25			9.518			355		82.82			639
Total		4,772	$	688,465,155.31		100.00	%		9.015	%		348		79.49	%		605

Documentation Type of the Initial Group I Mortgage Loans

Loan Documentation Types	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
Full Documentation		3,364	$	437,319,316.07		63.52	%		8.791	%		345		80.06	%		597
Limited Documentation		19		3,773,625.51		0.55			9.510			347		79.51			582
No Documentation		212		37,979,291.45		5.52			8.711			353		78.21			670
Stated Income		1,177		209,392,922.28		30.41			9.527			353		78.52			610
Total		4,772	$	688,465,155.31		100.00	%		9.015	%		348		79.49	%		605

Risk Classification of the Initial Group I Mortgage Loans

Risk Classification	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
M1		2,663		367,232,134.39		53.34			8.838			344		81.44			611
M2		1,072		158,305,455.69		22.99			9.432			353		77.83			575
M3		282		44,967,451.43		6.53			9.659			354		71.61			555
M4		161		24,646,748.10		3.58			10.023			353		68.25			561
Alt A		594	$	93,313,365.70		13.55	%		8.426	%		348		81.36	%		667
Total		4,772	$	688,465,155.31		100.00	%		9.015	%		348		79.49	%		605

S-50

Original Loan-to-Value Ratios of the Initial Group I Mortgage Loans

*Range of LTV Ratios (%)**	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
0.01-49.99		242	$	26,041,460.10		3.78	%		8.497	%		338		38.97	%		598
50.00-54.99		131		16,440,913.60		2.39			8.218			342		52.29			598
55.00-59.99		156		22,384,188.50		3.25			8.389			343		57.60			585
60.00-64.99		194		29,173,259.57		4.24			8.578			346		62.35			585
65.00-69.99		242		35,011,622.49		5.09			8.467			348		67.33			596
70.00-74.99		361		56,504,241.14		8.21			8.496			344		71.95			598
75.00-79.99		510		77,619,511.32		11.27			8.920			350		76.36			588
80.00		645		101,017,406.29		14.67			8.808			351		80.00			601
80.01-84.99		181		28,501,397.43		4.14			8.788			350		83.10			599
85.00-89.99		582		84,811,582.72		12.32			9.290			351		85.92			599
90.00-94.99		778		121,130,100.94		17.59			9.422			353		90.39			614
95.00-99.99		405		58,362,379.60		8.48			9.666			348		95.24			635
100.00		345		31,467,091.61		4.57			9.836			321		100.00			647
Total		4,772	$	688,465,155.31		100.00	%		9.015	%		348		79.49	%		605

*LTV Ratios calculated as of origination

Weighted Average: 79.49% (approximate)

S-51

Cut-off Date Principal Balances of the Initial Group I Mortgage Loans

Range of Cut-Off Date Principal Balances ($)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
0.01-50,000.00		355	$	13,038,340.86		1.89	%		10.645	%		243		80.75	%		626
50,000.01-100,000.00		1,442		107,857,260.65		15.67			9.251			333		77.68			600
100,000.01-150,000.00		1,138		142,961,454.69		20.77			9.085			350		79.10			599
150,000.01-200,000.00		780		135,896,515.08		19.74			8.962			352		79.12			601
200,000.01-250,000.00		511		114,888,388.89		16.69			8.918			354		79.90			606
250,000.01-300,000.00		248		68,079,518.57		9.89			8.954			356		80.50			605
300,000.01-350,000.00		153		49,542,503.73		7.20			8.734			354		81.49			617
350,000.01-400,000.00		115		43,004,566.81		6.25			8.613			355		80.13			616
400,000.01-450,000.00		20		8,253,072.01		1.20			8.658			352		82.19			624
450,000.01-500,000.00		7		3,351,281.02		0.49			9.468			358		87.88			597
500,000.01-550,000.00		2		1,024,253.00		0.15			8.528			358		77.84			617
550,000.01-600,000.00		1		568,000.00		0.08			6.710			359		63.11			573
Total		4,772	$	688,465,155.31		100.00	%		9.015	%		348		79.49	%		605

Average: $144,272 (approximate)

Remaining Terms to Maturity of the Initial Group I Mortgage Loans

Range of Remaining Terms to Maturity (in months)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
61-120		32	$	2,326,563.68		0.34	%		7.657	%		117		62.79	%		660
121-180		417		28,084,335.61		4.08			9.221			178		80.39			626
181-240		148		13,278,749.70		1.93			8.889			237		76.75			624
301-360		4,175		644,775,506.32		93.65			9.013			358		79.56			603
Total		4,772	$	688,465,155.31		100.00	%		9.015	%		348		79.49	%		605

Weighted Average: 348 months (approximate)

S-52

Original Terms to Maturity of the Initial Group I Mortgage Loans

Original Terms to Maturity (in months)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
120		32	$	2,326,563.68		0.34	%		7.657	%		117		62.79	%		660
180		417		28,084,335.61		4.08			9.221			178		80.39			626
240		148		13,278,749.70		1.93			8.889			237		76.75			624
360		4,175		644,775,506.32		93.65			9.013			358		79.56			603
Total		4,772	$	688,465,155.31		100.00	%		9.015	%		348		79.49	%		605

Weighted Average: 350 months (approximate)

Lien Position of the Initial Group I Mortgage Loans

Lien Position	Number of Mortgage Loans	Aggregate Cut-off Date Principal Balance	Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon		Weighted Average Stated Remaining Term (Months)	Weighted Average Original LTV		Weighted Average FICO
First Lien		$			%		%			%
Second Lien
Total		$		100.00	%		%			%

Credit Scores of the Initial Group I Mortgage Loans

Range of Credit Scores	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
400-499		42	$	5,576,322.81		0.81	%		10.120	%		353		72.69	%		493
500-524		324		46,997,969.81		6.83			9.900			353		74.56			515
525-549		610		88,041,481.79		12.79			9.691			352		74.80			538
550-574		631		94,715,555.89		13.76			9.305			353		77.69			562
575-599		687		95,991,771.01		13.94			9.142			350		79.47			587
600-624		731		102,223,430.00		14.85			8.891			346		81.53			612
625-649		688		99,338,124.10		14.43			8.716			344		81.72			636
650-674		530		76,999,705.21		11.18			8.439			343		81.54			661
675-699		275		39,630,047.95		5.76			8.372			340		82.69			686
700 and Above		254		38,950,746.74		5.66			8.116			341		83.06			732
Total		4,772	$	688,465,155.31		100.00	%		9.015	%		348		79.49	%		605

Weighted Average: 605 (approximate)

S-53

Current Mortgage Rates of the Initial Group I Mortgage Loans

Range of Gross Interest Rates (%)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
5.000-5.499		1	$	390,000.00		0.06	%		5.100	%		360		75.00	%		716
5.500-5.999		10		2,344,231.95		0.34			5.844			292		61.01			704
6.000-6.499		31		6,415,490.79		0.93			6.289			341		66.33			662
6.500-6.999		196		33,512,953.72		4.87			6.803			336		69.62			649
7.000-7.499		247		40,080,639.75		5.82			7.254			341		72.43			641
7.500-7.999		567		90,063,534.77		13.08			7.769			346		75.84			631
8.000-8.499		445		70,341,720.34		10.22			8.251			349		77.50			615
8.500-8.999		778		121,035,295.78		17.58			8.761			350		81.00			600
9.000-9.499		513		72,646,922.48		10.55			9.254			352		81.38			597
9.500-9.999		712		100,711,352.61		14.63			9.750			353		82.47			589
10.000-10.499		385		52,274,324.66		7.59			10.246			353		81.62			582
10.500-10.999		395		53,419,278.12		7.76			10.747			352		83.29			572
11.000-11.499		174		19,412,493.79		2.82			11.270			343		85.42			580
11.500-11.999		168		17,671,521.85		2.57			11.719			335		82.96			571
12.000-12.499		76		5,469,442.07		0.79			12.208			298		90.76			599
12.500-12.999		41		1,557,385.26		0.23			12.660			239		91.55			603
13.000-13.499		22		785,674.88		0.11			13.153			206		97.38			630
13.500-13.999		11		332,892.49		0.05			13.721			226		89.76			589
Total		4,772	$	688,465,155.31		100.00	%		9.015	%		348		79.49	%		605

Weighted Average: 9.015% (approximate)

S-54

Fixed Rate Loan Types of the Initial Group I Mortgage Loans

Fixed Rate Loan Types	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
Fixed Rate		1,975	$	239,340,380.67		82.67	%		8.592	%		333		77.22	%		615
Fixed Rate 30/15 Balloon		181		7,390,077.45		2.55			11.404			177		96.07			642
Fixed Rate 40/30 Balloon		273		41,516,898.36		14.34			8.827			359		78.85			620
Fixed Rate Interest Only*		7		1,268,884.50		0.44			8.387			359		76.63			641
Total		2,436	$	289,516,240.98		100.00	%		8.697	%		333		77.93	%		617

*(10 Year Interest Only Term)

S-55

Initial Periodic Rate Cap of the Initial Group I ARM Loans

Initial Periodic Rate Cap (%)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
3.000		2,335	$	398,602,560.76		99.91	%		9.248	%		358		80.61	%		596
5.000		1		346,353.57		0.09			6.625			355		80.00			664
Total		2,336	$	398,948,914.33		100.00	%		9.245	%		358		80.61	%		596

Periodic Rate Cap of the Initial Group I ARM Loans

Periodic Rate Cap (%)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
1.000		2,335	$	398,602,560.76		99.91	%		9.248	%		358		80.61	%		596
2.000		1		346,353.57		0.09			6.625			355		80.00			664
Total		2,336	$	398,948,914.33		100.00	%		9.245	%		358		80.61	%		596

Maximum Loan Rates of the Initial Group I ARM Loans

Range of Maximum Interest Rates (%)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
11.500-11.999		1	$	346,353.57		0.09	%		6.625	%		355		80.00	%		664
12.000-12.499		2		508,816.95		0.13			5.573			358		76.17			705
12.500-12.999		2		441,986.84		0.11			6.509			354		70.09			690
13.000-13.499		10		2,436,629.74		0.61			6.293			357		72.40			648
13.500-13.999		55		11,467,188.03		2.87			6.869			357		73.41			627
14.000-14.499		74		14,459,213.37		3.62			7.295			357		75.08			637
14.500-14.999		203		38,451,474.27		9.64			7.816			358		77.33			623
15.000-15.499		200		35,809,848.78		8.98			8.279			358		78.60			609
15.500-15.999		409		75,975,005.31		19.04			8.777			358		81.58			596
16.000-16.499		296		48,422,368.07		12.14			9.259			358		80.77			594
16.500-16.999		418		67,550,337.06		16.93			9.750			358		82.19			588
17.000-17.499		236		38,005,388.74		9.53			10.248			358		82.31			582
17.500-17.999		258		39,666,580.08		9.94			10.754			359		82.80			570
18.000-18.499		81		11,685,657.29		2.93			11.285			359		84.63			580
18.500-18.999		70		10,785,844.24		2.70			11.700			359		79.57			559
19.000-19.499		19		2,599,971.99		0.65			12.194			359		86.01			583
19.500-19.999		2		336,250.00		0.08			12.563			360		78.67			541
Total		2,336	$	398,948,914.33		100.00	%		9.245	%		358		80.61	%		596

Weighted Average: 16.233% (approximate)

S-56

Minimum Loan Rates of the Initial Group I ARM Loans

Range of Minimum Interest Rates (%)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
5.000-5.499		1	$	390,000.00		0.10	%		5.100	%		360		75.00	%		716
5.500-5.999		1		219,000.00		0.05			5.500			355		60.00			709
6.000-6.499		12		2,755,038.43		0.69			6.706			357		74.18			631
6.500-6.999		54		11,553,956.95		2.90			6.848			357		73.80			628
7.000-7.499		72		13,782,664.79		3.45			7.246			358		74.24			639
7.500-7.999		201		38,098,025.72		9.55			7.796			358		77.47			625
8.000-8.499		197		36,026,794.48		9.03			8.261			358		79.10			610
8.500-8.999		414		76,725,982.92		19.23			8.771			358		81.54			596
9.000-9.499		298		48,787,661.03		12.23			9.254			358		80.63			594
9.500-9.999		415		67,108,653.13		16.82			9.750			358		82.01			588
10.000-10.499		239		38,143,730.72		9.56			10.246			358		82.18			582
10.500-10.999		258		39,834,988.43		9.98			10.753			359		82.86			570
11.000-11.499		82		11,760,442.18		2.95			11.284			359		84.73			581
11.500-11.999		71		10,825,753.56		2.71			11.700			359		79.48			559
12.000-12.499		19		2,599,971.99		0.65			12.194			359		86.01			583
12.500-12.999		2		336,250.00		0.08			12.563			360		78.67			541
Total		2,336	$	398,948,914.33		100.00	%		9.245	%		358		80.61	%		596

Weighted Average: 9.241% (approximate)

S-57

Next Interest Adjustment Date of the Initial Group I ARM Loans

Date of Next Rate Change Date	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
June 2008		3	$	375,496.59		0.09	%		9.814	%		349		85.21	%		533
July 2008		11		1,488,872.70		0.37			9.943			350		87.98			562
August 2008		13		1,796,079.16		0.45			10.484			351		88.26			553
September 2008		8		1,285,995.91		0.32			9.871			352		85.36			592
October 2008		33		4,172,137.03		1.05			9.201			353		80.83			587
November 2008		56		8,987,540.21		2.25			8.514			354		84.72			592
December 2008		55		9,342,114.39		2.34			8.412			355		84.03			598
January 2009		32		6,250,768.08		1.57			9.028			356		86.82			613
February 2009		311		53,364,405.59		13.38			9.054			357		82.25			597
March 2009		589		101,230,923.04		25.37			9.007			358		81.18			597
April 2009		603		101,193,597.48		25.37			9.453			359		79.41			593
May 2009		469		85,771,533.40		21.50			9.715			360		78.57			594
June 2009		1		134,191.57		0.03			9.200			349		90.00			546
August 2009		1		137,550.12		0.03			8.375			351		80.00			701
September 2009		1		181,799.34		0.05			8.375			352		90.00			567
October 2009		14		1,511,386.21		0.38			8.825			353		84.16			571
November 2009		24		4,313,821.87		1.08			7.843			354		83.52			597
December 2009		14		1,544,454.47		0.39			8.740			355		81.14			600
January 2010		1		62,356.07		0.02			8.800			356		61.09			575
February 2010		14		2,718,373.03		0.68			8.739			357		84.07			614
March 2010		33		4,874,958.04		1.22			8.815			358		83.93			614
April 2010		17		3,077,118.13		0.77			9.004			359		75.31			591
May 2010		18		2,437,755.00		0.61			8.919			360		73.52			593
December 2011		3		432,571.64		0.11			6.042			355		69.87			703
February 2012		2		278,815.69		0.07			9.199			357		83.13			599
March 2012		6		1,133,196.00		0.28			9.117			358		83.21			648
May 2012		3		504,750.00		0.13			9.030			360		81.17			700
December 2013		1		346,353.57		0.09			6.625			355		80.00			664
Total		2,336	$	398,948,914.33		100.00	%		9.245	%		358		80.61	%		596

The weighted average remaining months to the next interest adjustment date of the initial Group I ARM loans as of the cut-off date will be approximately 23 months.

S-58

Gross Margins of the Initial Group I ARM Loans

Range of Gross Margins (%)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
2.500-2.999		1	$	74,876.46		0.02	%		6.990	%		358		46.01	%		714
3.500-3.999		3		517,974.35		0.13			7.131			358		70.28			671
4.000-4.499		34		7,391,521.68		1.85			7.082			358		70.86			664
4.500-4.999		150		28,223,175.08		7.07			7.933			358		73.26			638
5.000-5.499		311		55,494,882.04		13.91			8.516			358		77.88			625
5.500-5.999		519		89,126,712.46		22.34			9.020			358		80.79			606
6.000-6.499		578		99,547,208.00		24.95			9.534			358		82.42			584
6.500-6.999		439		71,966,628.79		18.04			10.025			358		83.08			573
7.000-7.499		278		43,602,792.35		10.93			9.896			358		81.56			561
7.500-7.999		21		2,718,608.10		0.68			9.720			354		87.35			595
9.000-9.499		1		74,784.89		0.02			11.125			352		100.00			662
10.500-10.999		1		209,750.13		0.05			10.550			357		100.00			732
Total		2,336	$	398,948,914.33		100.00	%		9.245	%		358		80.61	%		596

Weighted Average: 6.018% (approximate)

ARM Loan Types of the Initial Group I ARM Loans

Adjustable Rate Loan Types	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
ARM - 2 Year/6 Month		1,447	$	230,562,971.04		57.79	%		9.446	%		358		79.71	%		586
ARM - 3 Year/6 Month		116		16,781,602.57		4.21			8.639			356		80.39			593
ARM - 5 Year/6 Month		8		1,313,677.72		0.33			8.460			357		77.27			676
ARM - 7 Year/6 Month		1		346,353.57		0.09			6.625			355		80.00			664
ARM - 2 Year/6 Month - Interest Only*		62		14,654,900.18		3.67			8.769			358		82.18			652
ARM - 3 Year/6 Month - Interest Only*		8		1,715,811.00		0.43			8.285			358		83.82			649
ARM - 5 Year/6 Month - Interest Only**		3		459,163.52		0.12			8.397			359		85.71			687
ARM - 2 Year/6 Month - 40/30 Balloon		674		130,041,592.36		32.60			9.061			359		81.95			605
ARM - 3 Year/6 Month - 40/30 Balloon		14		2,496,350.28		0.63			8.862			358		84.87			613
ARM - 5 Year/6 Month - 40/30 Balloon		3		576,492.09		0.14			8.843			358		82.92			617
Total		2,336	$	398,948,914.33		100.00	%		9.245	%		358		80.61	%		596

*(5 Year Interest Only Term)

**(10 Year Interest Only Term)

S-59

Distribution by Amortization Type of the Initial Group I Mortgage Loans

Amortization Types	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
Interest Only		80	$	18,098,759.20		2.63	%		8.687	%		358		82.03	%		652
Not Interest Only		4,692		670,366,396.11		97.37			9.024			347		79.42			603
Total		4,772	$	688,465,155.31		100.00	%		9.015	%		348		79.49	%		605

Distribution of Seasoning of the Initial Group I Mortgage Loans

Seasoning (months)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
0		1,018	$	154,238,100.40		22.40	%		9.375	%		349		77.01	%		601
1		1,206		176,101,681.22		25.58			9.224			350		78.64			602
2		1,235		181,336,409.03		26.34			8.808			350		79.84			606
3		468		72,797,897.98		10.57			9.007			351		81.94			600
4		43		7,260,142.58		1.05			9.060			352		86.41			610
5		330		39,035,804.99		5.67			8.279			331		82.96			629
6		279		34,806,424.63		5.06			8.222			338		80.27			615
7 or More		193		22,888,694.48		3.32			9.086			334		82.67			598
Total		4,772	$	688,465,155.31		100.00	%		9.015	%		348		79.49	%		605

S-60

Original Prepayment Penalty Terms of the Initial Group I Mortgage Loans

Original Prepayment Penalty Term (in months)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
No prepayment penalty		1,804	$	256,539,244.75		37.26	%		9.302	%		346		78.93	%		604
12		28		4,765,223.43		0.69			9.088			338		78.85			623
24		914		149,533,818.27		21.72			9.198			357		80.73			598
36		2,026		277,626,868.86		40.33			8.650			344		79.34			608
Total		4,772	$	688,465,155.31		100.00	%		9.015	%		348		79.49	%		605

S-61

The Initial Group II Mortgage Loans

The initial Group II mortgage loans consist of 1,105 mortgage loans that have an aggregate principal balance of approximately $255,142,625 as of the cut-off date.

None of the initial Group II mortgage loans are subject to HOEPA and each of the Group II mortgage loans complies in all material respects with applicable local, state and federal laws, including but not limited to, all applicable predatory and abusive lending laws.

None of the initial Group II mortgage loans are “high cost” or “Section 32” mortgage loans.

Approximately 15.73% of the initial Group II mortgage loans are fixed-rate mortgage loans, and approximately 84.27% of the initial Group II mortgage loans are ARM loans.

Approximately 64.62% of the initial Group II mortgage loans provide for payment by the mortgagor of a prepayment penalty in limited circumstances on certain prepayments.

Approximately 55.20% of the initial Group II mortgage loans had loan-to-value ratios at origination in excess of 80%.

Approximately 94.36% of the initial Group II mortgage loans are secured by first-liens on the related mortgaged property and approximately 5.64% of the initial Group II mortgage loans are secured by second-liens on the related mortgaged property.

The weighted average remaining term to maturity of the initial Group II mortgage loans is approximately 347 months as of the cut-off date.

The average principal balance of the initial Group II mortgage loans as of the cut-off date was approximately $230,898. No initial Group II mortgage loan had a principal balance, as of the cut-off date, of greater than approximately $1,200,000 or less than approximately $11,026.

The initial Group II mortgage loans had mortgage rates of not less than approximately 5.400% per annum and not more than approximately 14.200% per annum as of the cut-off date, and the weighted average mortgage rate of the initial Group II mortgage loans was approximately 9.253% per annum as of the cut-off date.

S-62

The initial Group II mortgage loans are expected to have the following characteristics as of the cut-off date (the sum in any column may not equal the total indicated due to rounding):

Geographic Distribution of the Mortgaged Properties of the Initial Group II Mortgage Loans

Geographical Distribution	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
Alabama		16	$	1,953,711.02		0.77	%		10.814	%		353		86.87	%		579
Arizona		39		8,930,049.14		3.50			9.405			348		82.64			626
Arkansas		9		1,118,686.32		0.44			8.841			348		85.36			591
California		147		53,577,884.03		21.00			8.814			345		83.78			639
Colorado		7		2,226,835.80		0.87			8.365			351		80.96			581
Connecticut		7		1,887,306.70		0.74			9.301			342		89.33			645
Delaware		4		891,759.61		0.35			9.440			355		85.01			599
District of Columbia		4		1,931,606.58		0.76			8.783			341		83.04			590
Florida		274		67,692,951.66		26.53			9.300			347		84.18			651
Georgia		24		4,214,788.41		1.65			10.027			350		83.21			600
Idaho		3		338,449.22		0.13			10.232			343		90.34			619
Illinois		20		4,253,419.65		1.67			9.599			346		84.54			620
Indiana		8		1,513,649.57		0.59			9.192			357		82.79			639
Iowa		3		235,671.03		0.09			10.909			356		86.06			577
Kansas		8		974,216.45		0.38			10.513			359		85.06			583
Kentucky		9		1,073,148.76		0.42			10.479			359		86.04			548
Louisiana		21		2,447,589.41		0.96			9.839			353		85.32			623
Maine		4		940,491.86		0.37			8.475			359		75.77			706
Maryland		39		11,889,759.84		4.66			9.224			352		85.54			614
Massachusetts		9		3,612,824.04		1.42			8.864			355		86.75			573
Michigan		49		7,373,021.34		2.89			9.698			355		82.60			612
Minnesota		8		1,996,795.48		0.78			9.783			352		88.18			615
Mississippi		12		1,760,706.14		0.69			10.214			343		84.16			614
Missouri		25		2,661,018.16		1.04			9.815			347		85.11			608
Nebraska		1		87,981.56		0.03			9.600			354		90.00			603
Nevada		20		4,354,664.52		1.71			9.270			342		83.77			619
New Hampshire		1		95,940.35		0.04			11.650			178		100.00			648
New Jersey		23		7,761,462.97		3.04			9.238			343		83.98			631
New Mexico		6		1,297,671.40		0.51			9.926			336		87.57			577
New York		20		6,000,969.08		2.35			9.092			354		82.65			594
North Carolina		32		5,868,505.73		2.30			9.743			344		83.54			625
North Dakota		1		92,700.00		0.04			10.250			360		90.00			587

S-63

Geographical Distribution

Number of Mortgage Loans

Aggregate Cut-off Date Principal Balance

Percentage of Aggregate Cut-off Date Principal Balance

Weighted Average Gross Coupon

Weighted Average Stated Remaining Term (Months)

Weighted Average Original LTV

Weighted Average FICO

Ohio	6		671,019.89	0.26		9.833		304	85.74		555
Oregon	9		1,912,722.32	0.75		9.672		339	84.47		642
Pennsylvania	39		5,038,259.27	1.97		8.881		347	83.63		630
Rhode Island	3		466,056.18	0.18		9.450		340	91.42		688
South Carolina	37		4,918,250.16	1.93		9.759		348	84.86		613
Tennessee	14		1,893,674.56	0.74		9.436		347	89.75		636
Texas	69		10,464,087.22	4.10		9.595		347	87.75		640
Utah	15		4,751,825.73	1.86		9.348		355	84.35		645
Virginia	35		8,394,742.27	3.29		9.014		352	80.99		606
Washington	15		4,577,206.70	1.79		8.522		329	85.16		657
West Virginia	3		360,409.19	0.14		9.619		318	85.62		593
Wisconsin	7		638,135.18	0.25		10.056		349	87.57		627
Total	1,105	$	255,142,624.50	100.00	%	9.253	%	347	84.25	%	631

No more than approximately 0.99% (the highest concentration in a single zip code) of the initial Group II mortgage loans will be secured by mortgaged properties located in Maryland in zip code 20744.

S-64

Types of Mortgaged Properties of the Initial Group II Mortgage Loans

Property Types	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
Condo		70	$	16,527,179.18		6.48	%		9.519	%		345		84.79	%		654
Multi-Unit		28		6,707,046.19		2.63			9.565			349		87.31			636
PUD		213		55,820,754.05		21.88			9.399			348		85.77			641
Single Family Residence		794		176,087,645.08		69.02			9.170			347		83.60			626
Total		1,105	$	255,142,624.50		100.00	%		9.253	%		347		84.25	%		631

Loan Purpose of the Initial Group II Mortgage Loans

Loan Purpose (1)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
Cash Out Refinance		398	$	120,325,876.35		47.16	%		8.966	%		351		80.28	%		605
Purchase		686		129,001,734.51		50.56			9.523			343		88.03			655
Rate/Term Refinance		21		5,815,013.64		2.28			9.205			354		82.60			650
Total		1,105	$	255,142,624.50		100.00	%		9.253	%		347		84.25	%		631

(1)

S-65

Occupancy Status of the Mortgaged Properties of the Initial Group II Mortgage Loans

Occupancy Status	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
Investment (Non-Owner Occupied)		38	$	7,172,820.92		2.81	%		9.925	%		358		81.47	%		681
Primary		1,038		237,177,791.52		92.96			9.234			347		84.16			628
Secondary Home		29		10,792,012.06		4.23			9.218			350		88.11			673
Total		1,105	$	255,142,624.50		100.00	%		9.253	%		347		84.25	%		631

Documentation Type of the Initial Group II Mortgage Loans

Loan Documentation Types	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
Full Documentation		544	$	100,184,648.35		39.27	%		9.044	%		343		84.30	%		603
Limited Documentation		5		1,749,290.00		0.69			8.564			356		82.18			672
No Documentation		90		22,225,616.51		8.71			9.128			353		85.64			700
Stated Income		466		130,983,069.64		51.34			9.444			349		84.00			640
Total		1,105	$	255,142,624.50		100.00	%		9.253	%		347		84.25	%		631

Risk Classification of the Initial Group II Mortgage Loans

Risk Classification	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
M1		614		128,652,024.70		50.42			9.371			345		86.23			625
M2		186		54,655,413.05		21.42			9.347			358		80.65			589
M3		41		7,846,871.07		3.08			9.280			358		73.42			557
M4		15		1,896,166.91		0.74			10.638			359		59.80			553
Alt A		246		61,821,500.12		24.23			8.880			341		85.42			694
Fico Enhanced		1		118,470.41		0.05			9.500			300		95.00			581
AA		1		95,879.11		0.04			8.000			72		80.00			583
A		1	$	56,299.13		0.02	%		10.250	%		172		85.00	%		536
Total		1,105	$	255,142,624.50		100.00	%		9.253	%		347		84.25	%		631

S-66

Original Loan-to-Value Ratios of the Initial Group II Mortgage Loans

*Range of LTV Ratios (%)**	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
0.01-49.99		29	$	4,408,728.53		1.73	%		7.941	%		334		41.68	%		624
50.00-54.99		8		2,146,025.53		0.84			9.978			359		51.04			604
55.00-59.99		18		2,108,531.23		0.83			8.559			356		56.99			585
60.00-64.99		30		4,829,956.15		1.89			8.407			357		62.92			574
65.00-69.99		31		6,602,960.59		2.59			8.812			359		67.24			617
70.00-74.99		35		11,560,965.05		4.53			8.966			352		72.38			583
75.00-79.99		52		16,243,629.64		6.37			8.574			358		76.70			610
80.00		215		66,400,241.02		26.02			8.463			357		80.00			650
80.01-84.99		26		10,011,145.97		3.92			9.188			357		83.63			604
85.00-89.99		85		24,027,654.83		9.42			9.645			357		86.10			596
90.00-94.99		195		47,901,556.30		18.77			9.558			356		90.38			628
95.00-99.99		139		37,355,843.68		14.64			9.866			354		95.03			651
100.00		242		21,545,385.98		8.44			10.797			252		100.00			668
Total		1,105	$	255,142,624.50		100.00	%		9.253	%		347		84.25	%		631

*LTV Ratios calculated as of origination

Weighted Average: 84.25% (approximate)

S-67

Cut-off Date Principal Balances of the Initial Group II Mortgage Loans

Range of Cut-Off Date Principal Balances ($)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
0.01-50,000.00		137	$	4,824,323.99		1.89	%		11.570	%		199		96.33	%		645
50,000.01-100,000.00		252		19,011,081.16		7.45			10.120			306		82.08			612
100,000.01-150,000.00		160		19,991,280.11		7.84			9.982			331		84.22			612
150,000.01-200,000.00		103		17,812,079.61		6.98			9.627			346		84.49			626
200,000.01-250,000.00		99		22,236,921.47		8.72			9.568			353		86.71			629
250,000.01-300,000.00		50		13,748,040.44		5.39			9.080			359		85.03			642
300,000.01-350,000.00		38		12,316,614.15		4.83			9.570			357		89.41			639
350,000.01-400,000.00		27		10,185,377.01		3.99			8.983			358		86.84			653
400,000.01-450,000.00		50		21,469,914.36		8.41			8.965			353		81.96			635
450,000.01-500,000.00		57		27,098,855.30		10.62			8.770			358		85.90			622
500,000.01-550,000.00		36		18,871,922.23		7.40			9.016			355		82.42			629
550,000.01-600,000.00		30		17,360,034.27		6.80			8.644			358		83.65			648
600,000.01-650,000.00		21		13,050,208.63		5.11			8.723			358		80.40			621
650,000.01-700,000.00		9		6,024,271.67		2.36			9.354			358		87.44			647
700,000.01-750,000.00		12		8,810,743.08		3.45			9.407			358		87.89			599
750,000.01-800,000.00		5		3,901,911.86		1.53			8.382			358		86.28			671
800,000.01-850,000.00		1		815,710.28		0.32			7.250			359		80.00			618
850,000.01-900,000.00		6		5,267,325.17		2.06			9.123			358		77.34			631
900,000.01-950,000.00		2		1,892,009.55		0.74			9.124			356		84.56			632
950,000.01-1,000,000.00		4		3,888,972.21		1.52			9.046			356		74.08			613
1,000,000.01 and Above		6		6,565,027.95		2.57			7.942			356		75.61			704
Total		1,105	$	255,142,624.50		100.00	%		9.253	%		347		84.25	%		631

Average: $230,898 (approximate)

S-68

Remaining Terms to Maturity of the Initial Group II Mortgage Loans

Range of Remaining Terms to Maturity (in months)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
1-60		1	$	22,691.95		0.01	%		10.250	%		53		62.50	%		544
61-120		3		580,014.95		0.23			6.766			112		57.34			758
121-180		224		14,020,058.78		5.49			11.517			177		99.19			659
181-240		6		673,832.41		0.26			7.744			238		74.50			680
241-300		3		284,565.98		0.11			9.322			298		86.24			587
301-360		868		239,561,460.43		93.89			9.131			358		83.47			629
Total		1,105	$	255,142,624.50		100.00	%		9.253	%		347		84.25	%		631

Weighted Average: 347 months (approximate)

Original Terms to Maturity of the Initial Group II Mortgage Loans

Original Terms to Maturity (in months)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
120		3	$	506,827.79		0.20	%		6.688	%		117		53.28	%		782
180		224		14,059,638.76		5.51			11.498			176		99.11			659
240		7		730,131.54		0.29			7.937			233		75.31			669
360		871		239,846,026.41		94.00			9.131			358		83.47			629
Total		1,105	$	255,142,624.50		100.00	%		9.253	%		347		84.25	%		631

Weighted Average: 349 months (approximate)

S-69

Lien Positions of the Initial Group II Mortgage Loans

Lien Position	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
First Lien		872	$	240,746,891.20		94.36	%		9.117	%		357		83.37	%		629
Second Lien		233		14,395,733.30		5.64			11.522			183		99.05			661
Total		1,105	$	255,142,624.50		100.00	%		9.253	%		347		84.25	%		631

Credit Scores of the Initial Group II Mortgage Loans

Range of Credit Scores	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
400-499		11	$	1,112,842.86		0.44	%		10.406	%		359		61.31	%		491
500-524		52		8,130,338.66		3.19			9.898			354		78.66			514
525-549		99		22,938,279.82		8.99			9.679			355		78.92			537
550-574		97		24,892,135.96		9.76			9.416			355		81.28			563
575-599		119		23,438,870.35		9.19			9.750			352		83.73			588
600-624		145		35,684,460.41		13.99			9.267			350		84.40			613
625-649		197		43,334,778.88		16.98			9.276			340		85.98			637
650-674		162		37,201,100.10		14.58			9.093			345		86.66			660
675-699		82		21,312,332.24		8.35			8.853			343		86.11			685
700 and Above		141		37,097,485.22		14.54			8.741			341		86.12			743
Total		1,105	$	255,142,624.50		100.00	%		9.253	%		347		84.25	%		631

Weighted Average: 631 (approximate)

S-70

Current Mortgage Rates of the Initial Group II Mortgage Loans

Range of Gross Interest Rates (%)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
5.000-5.499		1	$	486,456.85		0.19	%		5.400	%		359		79.19	%		689
5.500-5.999		2		995,524.19		0.39			5.887			355		63.52			653
6.000-6.499		4		1,631,952.44		0.64			6.327			292		59.96			700
6.500-6.999		19		6,472,456.82		2.54			6.813			348		76.91			656
7.000-7.499		34		12,630,756.24		4.95			7.308			358		79.97			647
7.500-7.999		81		28,590,770.88		11.21			7.801			357		79.09			663
8.000-8.499		97		29,525,132.37		11.57			8.280			356		80.73			652
8.500-8.999		131		37,244,052.54		14.60			8.769			355		82.59			614
9.000-9.499		112		30,722,753.22		12.04			9.290			356		86.21			639
9.500-9.999		164		41,151,821.10		16.13			9.762			353		86.36			627
10.000-10.499		92		20,568,738.33		8.06			10.238			354		86.54			605
10.500-10.999		111		18,998,531.31		7.45			10.737			344		87.96			601
11.000-11.499		61		6,750,591.79		2.65			11.237			305		91.22			623
11.500-11.999		86		12,429,602.45		4.87			11.771			309		90.36			608
12.000-12.499		40		3,081,191.95		1.21			12.220			266		95.24			630
12.500-12.999		37		2,319,123.68		0.91			12.680			227		98.11			631
13.000-13.499		23		1,102,733.92		0.43			13.205			177		100.00			639
13.500-13.999		9		395,850.02		0.16			13.678			177		100.00			634
14.000-14.499		1		44,584.40		0.02			14.200			178		100.00			763
Total		1,105	$	255,142,624.50		100.00	%		9.253	%		347		84.25	%		631

Weighted Average: 9.253% (approximate)

Fixed Rate Loan Types of the Initial Group II Mortgage Loans

Fixed Rate Loan Types	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
Fixed Rate		112	$	19,986,325.18		49.79	%		8.800	%		336		78.04	%		625
Fixed Rate 30/15 Balloon		204		12,962,390.86		32.29			11.566			176		99.46			660
Fixed Rate 40/30 Balloon		20		7,190,749.58		17.91			8.800			359		79.22			591
Total		336	$	40,139,465.62		100.00	%		9.693	%		289		85.17	%		630

S-71

Initial Periodic Rate Cap of the Initial Group II ARM Loans

Initial Periodic Rate Cap (%)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
3.000		769	$	215,003,158.88		100.00	%		9.171	%		358		84.08	%		631
Total		769	$	215,003,158.88		100.00	%		9.171	%		358		84.08	%		631

Periodic Rate Cap of the Initial Group II ARM Loans

Periodic Rate Cap (%)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
1.000		769	$	215,003,158.88		100.00	%		9.171	%		358		84.08	%		631
Total		769	$	215,003,158.88		100.00	%		9.171	%		358		84.08	%		631

S-72

Maximum Loan Rates of the Initial Group II ARM Loans

Range of Maximum Interest Rates (%)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
10.500-10.999		1	$	536,000.00		0.25	%		5.875	%		353		49.40	%		670
11.500-11.999		1		630,360.11		0.29			6.875			354		80.00			661
12.500-12.999		1		459,524.19		0.21			5.900			358		80.00			633
13.000-13.499		3		769,661.31		0.36			6.897			353		83.26			644
13.500-13.999		17		5,080,189.28		2.36			6.931			358		76.73			645
14.000-14.499		30		10,843,252.97		5.04			7.315			358		80.73			658
14.500-14.999		63		23,517,998.87		10.94			7.811			357		79.86			671
15.000-15.499		86		25,865,179.18		12.03			8.276			358		80.38			655
15.500-15.999		105		32,538,517.83		15.13			8.754			358		83.57			617
16.000-16.499		96		28,931,063.64		13.46			9.287			358		86.10			640
16.500-16.999		132		35,782,361.13		16.64			9.752			358		86.78			628
17.000-17.499		77		18,940,734.70		8.81			10.234			358		86.75			606
17.500-17.999		84		16,597,159.68		7.72			10.732			358		87.09			598
18.000-18.499		25		4,013,366.46		1.87			11.222			358		88.59			605
18.500-18.999		37		8,614,424.83		4.01			11.763			359		86.70			588
19.000-19.499		8		1,382,591.44		0.64			12.198			359		89.81			577
19.500-19.999		3		500,773.26		0.23			12.551			359		93.04			548
Total		769	$	215,003,158.88		100.00	%		9.171	%		358		84.08	%		631

Weighted Average: 16.158% (approximate)

S-73

Minimum Loan Rates of the Initial Group II ARM Loans

Range of Minimum Interest Rates (%)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
4.000-4.499		1	$	1,037,599.43		0.48	%		7.350	%		357		80.00	%		668
5.500-5.999		3		1,187,403.85		0.55			6.406			356		66.19			644
6.000-6.499		3		769,661.31		0.36			6.897			353		83.26			644
6.500-6.999		16		5,392,137.88		2.51			6.823			358		76.92			647
7.000-7.499		30		10,033,359.59		4.67			7.310			358		80.79			656
7.500-7.999		63		23,517,998.87		10.94			7.811			357		79.86			671
8.000-8.499		86		25,865,179.18		12.03			8.276			358		80.38			655
8.500-8.999		106		32,629,223.29		15.18			8.763			358		83.56			617
9.000-9.499		96		28,797,425.27		13.39			9.287			358		86.14			640
9.500-9.999		132		35,782,361.13		16.64			9.752			358		86.78			628
10.000-10.499		77		18,940,734.70		8.81			10.234			358		86.75			606
10.500-10.999		84		16,597,159.68		7.72			10.732			358		87.09			598
11.000-11.499		25		4,013,366.46		1.87			11.222			358		88.59			605
11.500-11.999		36		8,556,183.54		3.98			11.782			359		86.68			588
12.000-12.499		8		1,382,591.44		0.64			12.198			359		89.81			577
12.500-12.999		3		500,773.26		0.23			12.551			359		93.04			548
Total		769	$	215,003,158.88		100.00	%		9.171	%		358		84.08	%		631

Weighted Average: 9.153% (approximate)

S-74

Next Interest Adjustment Date of the Initial Group II ARM Loans

Date of Next Rate Change Date	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
July 2007		1	$	58,828.75		0.03	%		11.375	%		290		80.00	%		646
August 2007		1		155,831.34		0.07			9.250			333		100.00			638
October 2007		2		166,310.30		0.08			7.734			314		80.00			585
November 2007		1		118,470.41		0.06			9.500			300		95.00			581
January 2008		1		107,177.37		0.05			9.950			344		80.00			582
February 2008		2		267,188.93		0.12			9.730			345		86.99			537
March 2008		1		58,241.29		0.03			9.000			346		90.00			551
April 2008		5		693,041.08		0.32			9.312			347		82.18			607
May 2008		12		2,149,973.10		1.00			9.288			348		89.58			563
June 2008		4		757,389.54		0.35			8.665			349		80.46			556
July 2008		9		1,698,838.97		0.79			8.872			350		81.61			582
August 2008		6		2,661,711.35		1.24			9.361			351		78.48			650
September 2008		2		818,718.11		0.38			9.785			352		87.67			592
October 2008		7		2,137,469.53		0.99			9.742			353		86.23			588
November 2008		4		2,216,101.22		1.03			8.430			354		88.41			632
December 2008		12		5,546,713.15		2.58			8.756			355		86.17			616
January 2009		17		5,642,580.95		2.62			8.885			356		84.36			629
February 2009		95		32,727,362.39		15.22			8.718			357		83.42			628
March 2009		157		41,227,657.79		19.18			8.752			358		80.46			634
April 2009		221		58,249,662.53		27.09			9.257			359		83.94			635
May 2009		194		52,805,581.20		24.56			9.826			360		87.08			636
October 2009		2		964,040.55		0.45			6.930			353		71.87			666
November 2009		2		485,483.33		0.23			9.354			354		100.00			657
December 2009		1		498,577.60		0.23			8.875			355		100.00			600
February 2010		1		451,176.93		0.21			8.525			357		80.00			664
March 2010		4		847,469.36		0.39			8.167			358		74.00			632
April 2010		2		707,711.81		0.33			9.973			359		93.35			630
May 2010		2		696,100.00		0.32			7.512			360		81.19			618
May 2012		1		87,750.00		0.04			11.200			360		75.00			685
Total		769	$	215,003,158.88		100.00	%		9.171	%		358		84.08	%		631

The weighted average remaining months to the next interest adjustment date of the Group II ARM loans as of the cut-off date will be approximately 22 months.

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Gross Margins of the Initial Group II ARM Loans

Range of Gross Margins (%)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
3.000-3.499		1	$	76,436.67		0.04	%		6.950	%		359		60.47	%		596
3.500-3.999		3		1,095,560.95		0.51			6.729			356		65.03			693
4.000-4.499		12		4,139,647.76		1.93			7.753			358		75.39			691
4.500-4.999		84		26,372,211.85		12.27			7.931			358		78.56			703
5.000-5.499		127		36,981,283.32		17.20			8.591			358		82.01			651
5.500-5.999		166		48,512,987.07		22.56			9.167			358		85.10			633
6.000-6.499		171		43,528,840.94		20.25			9.617			358		86.55			612
6.500-6.999		128		34,342,330.23		15.97			10.149			358		86.39			594
7.000-7.499		72		18,356,936.02		8.54			9.665			357		85.94			583
7.500-7.999		2		926,762.38		0.43			9.621			355		84.25			568
8.000-8.499		1		415,670.81		0.19			9.225			354		100.00			669
9.000-9.499		2		254,490.88		0.12			11.214			353		96.37			610
Total		769	$	215,003,158.88		100.00	%		9.171	%		358		84.08	%		631

Weighted Average: 5.870% (approximate)

ARM Loan Types of the Initial Group II ARM Loans

Adjustable Rate Loan Types	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
ARM - 2 Year/6 Month		452	$	105,751,556.85		49.19	%		9.409	%		358		84.62	%		622
ARM - 3 Year/6 Month		10		3,281,691.95		1.53			9.026			356		93.08			642
ARM - 5 Year/6 Month		1		87,750.00		0.04			11.200			360		75.00			685
ARM - 2 Year/6 Month - Interest Only*		53		24,265,299.47		11.29			8.691			358		82.15			675
ARM - 2 Year/6 Month - Interest Only*		2		1,125,000.00		0.52			6.438			357		65.21			646
ARM - 2 Year/6 Month - 40/30 Balloon		249		80,247,992.98		37.32			9.049			358		83.99			630
ARM - 3 Year/6 Month - 40/30 Balloon		2		243,867.63		0.11			7.530			358		42.11			568
Total		769	$	215,003,158.88		100.00	%		9.171	%		358		84.08	%		631

* (5 Year Interest Only Term)

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Distribution by Amortization of the Initial Group II Mortgage Loans

Amortization Types	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
Interest Only		55	$	25,390,299.47		9.95	%		8.591	%		357		81.40	%		674
Not Interest Only		1,050		229,752,325.03		90.05			9.326			346		84.57			626
Total		1,105	$	255,142,624.50		100.00	%		9.253	%		347		84.25	%		631

Distribution of Seasoning of the Initial Group II Mortgage Loans

Seasoning (months)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
0		226	$	61,843,095.20		24.24	%		9.686	%		358		84.95	%		632
1		304		67,731,884.85		26.55			9.384			348		84.86			636
2		263		52,722,428.01		20.66			8.927			344		81.51			634
3		155		39,603,705.10		15.52			8.904			343		84.30			629
4		29		6,571,148.42		2.58			9.246			331		86.11			636
5		29		8,090,901.18		3.17			8.865			335		88.04			621
6		9		2,895,048.50		1.13			8.768			342		91.13			636
7 or More		90		15,684,413.24		6.15			9.251			334		83.93			606
Total		1,105	$	255,142,624.50		100.00	%		9.253	%		347		84.25	%		631

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Original Prepayment Penalty Terms of the Initial Group II Mortgage Loans

Original Prepayment Penalty Terms (in months)	Number of Mortgage Loans		Aggregate Cut-off Date Principal Balance		Percentage of Aggregate Cut-off Date Principal Balance			Weighted Average Gross Coupon			Weighted Average Stated Remaining Term (Months)		Weighted Average Original LTV			Weighted Average FICO
No prepayment penalty		382	$	90,272,008.12		35.38	%		9.558	%		344		84.85	%		634
12		11		5,202,897.25		2.04			9.173			346		84.64			658
24		409		91,787,038.39		35.97			9.222			349		83.86			633
36		299		67,587,340.14		26.49			8.895			349		83.94			624
60		4		293,340.60		0.11			9.212			182		85.66			570
Total		1,105	$	255,142,624.50		100.00	%		9.253	%		347		84.25	%		631

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Conveyance of Subsequent Mortgage Loans and the Pre-Funding Account

On the closing date, the original pre-funded amount of approximately $456,392,220 will be deposited in a pre-funding account which will be in the name of the trustee and will be part of the trust estate and which amount will be used to acquire subsequent mortgage loans. Of the original pre-funded amount, approximately $332,988,077 will be used to acquire subsequent mortgage loans for inclusion in Group I and approximately $123,404,143 will be used to acquire subsequent mortgage loans for inclusion in Group II. During the pre-funding period, the related original pre-funded amount will be reduced by the amount used to purchase subsequent mortgage loans. The “pre-funding period” is the period commencing on the closing date and ending on the earlier to occur of (i) the date on which the amount on deposit in the pre-funding account is less than $10,000 and (ii) a date not later than August 31, 2007.

If required by the rating agencies, a portion of the sales proceeds of the certificates will be deposited on the closing date in an interest coverage account for application to cover shortfalls in interest attributable to the pre-funding feature. This shortfall will exist during the pre-funding period because the aggregate principal balance of the certificates, and interest accrued thereon, during the pre-funding period will be greater than the aggregate principal balance of the mortgage loans, and interest accrued thereon, during such period. Funds on deposit in the interest coverage account will be withdrawn monthly during the pre-funding period to fund shortfalls resulting from the pre-funding feature.

The trustee will invest funds deposited in the pre-funding account and the interest coverage account, if any, as directed by the servicer in writing in eligible investments with a maturity date (i) no later than the business day immediately preceding the date on which such funds are required to be withdrawn from such account pursuant to the pooling and servicing agreement, if a person other than the trustee or an affiliate manages or advises such investment, and (ii) no later than the date on which such funds are required to be withdrawn from such account pursuant to the pooling and servicing agreement, if the trustee or an affiliate manages or advises such investment. If the trustee does not receive such written investment instructions it will retain such funds uninvested. All income and gain realized from investment of funds deposited in the pre-funding account will be withdrawn and deposited in the interest coverage account, and all income and gain realized from investment of funds deposited in the interest coverage account will be remitted by the trustee to the servicer.

The purchase price for each subsequent mortgage loan will be 100% of the principal balance as of the related cut-off date.

With respect to the subsequent mortgage loans, no more than approximately 0.50% of the subsequent mortgage loans may be between 30 and 59 days delinquent (based on the OTS methodology) as of the applicable cut-off date. No less than approximately 18% of the subsequent mortgage loans that are underwritten to the seller’s underwriting standards for all credit risks will be covered by a mortgage insurance policy or have a loan-to-value ratio less than or equal to 60%, and each such mortgage insurance policy will insure losses to the extent that the uninsured exposure of the related mortgage loan is reduced to an amount equal to 55%, 50% or 51% of the original loan-to-value ratio of such mortgage loan, as more fully described in the related policy.

Each subsequent mortgage loan will be acquired from the sponsor, and will have been underwritten in accordance with the criteria applicable to the sponsor, as described under “The Originator.”

Confirmation from the rating agencies that the acquisition of any subsequent mortgage loans will not result in a downgrade, withdrawal or qualification of the ratings then in effect for the outstanding certificates will be required in connection with the subsequent transfer of mortgage loans. The consent of the rating agencies will be required for all subsequent transfers and an officer’s certificate from the sponsor will be required confirming that each subsequent mortgage loan satisfies the following criteria (among other criteria described in the pooling and servicing agreement):

the remaining stated term to maturity will not exceed 360 months;

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the subsequent mortgage loan must have an outstanding principal balance of at least $10,000;

the subsequent mortgage loan must have a loan-to-value ratio equal to or less than 100%;

the stated maturity of the subsequent mortgage loan will be no later than August 1, 2037;

the subsequent mortgage loan shall not provide for negative amortization; and

the subsequent mortgage loan if it is a fixed rate loan, must have a fixed mortgage rate of at least 4.50% or, if an ARM loan, a minimum mortgage rate of at least 4.00%.

Following the purchase of the subsequent mortgage loans by the issuing entity, all mortgage loans must have a weighted average mortgage rate and a weighted average loan-to-value ratio which will not vary materially from those statistics with respect to the pool of initial mortgage loans.

The Originator

All of the initial mortgage loans were originated or purchased by NovaStar Mortgage, Inc., a Virginia corporation and a wholly-owned subsidiary of NFI Holding Corporation, Inc., a Delaware corporation, in the ordinary course of business on a loan-by-loan basis directly from mortgage brokers and mortgage loan originators. NovaStar Mortgage, Inc. also acts as the sponsor and servicer, as described herein.

The sponsor originates non-conforming residential mortgage loans through a network of unaffiliated wholesale loan brokers. The sponsor utilizes a network of approximately 10,800 wholesale loan brokers in 50 different states. In addition, the sponsor services loans nationwide, and is licensed to do business as a foreign corporation in 50 states. The sponsor’s principal executive offices are located at 8140 Ward Parkway, Suite 300, Kansas City, Missouri 64114. The principal offices for the sponsor’s mortgage lending operations are in Lake Forest, California and Independence, Ohio. The sponsor is an approved HUD lender. The sponsor has operated as an originator of mortgage loans since 1997.

Underwriting Standards for the Mortgage Loans

The underwriting guidelines of the sponsor are intended to evaluate the credit history of the potential borrower, the capacity and willingness of the borrower to repay the loan and the adequacy of the collateral securing the loan. Each loan applicant completes an application that includes information with respect to the applicant’s income, liabilities and employment history. Prior to issuing an approval on the loan, the loan underwriter runs an independent credit report or pulls a reissue of the clients credit through an independent 3^rd party vendor, which provides detailed information concerning the payment history of the borrower on all of their debts to verify that the information submitted by the broker is still accurate and up to date. An appraisal is also required on all loans and in many cases a review appraisal or second appraisal may be required depending on the value of the property and the underwriter’s comfort with the original valuation. 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 generally on forms acceptable to Fannie Mae. The properties securing the mortgage loans are appraised by qualified independent appraisers who are generally approved by the related originator. A streamline appraisal program is offered by our Retention division for borrowers that currently have a mortgage loan with the sponsor. Under this program an AVM can be used to determine valuation if the full appraisal from the previous loan is less than two years old. The maximum increase in value that can be supported with an AVM is 10%. The mortgagor may also include information regarding verification of deposits at financial institutions where the mortgagor had demand or savings accounts. In the case of investment properties, income derived from the mortgaged property may have been used for underwriting purposes.

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The underwriting guidelines include six levels of applicant documentation requirements, referred to as “Full Documentation,” “Limited Documentation,” “Stated Income,” “No Documentation,” “No Income/No Asset,” “Streamline” and “Full Doc/12-Month Personal Bank Statement.” Under the Full Documentation program applicants generally are required to submit verification of employment and most recent pay stub or up to prior two years W-2 forms and most recent pay stub. Under the Limited Documentation program, no such verification is required, however, bank statements for the most recent consecutive 6-month period are required to evidence cash flow. Under the Stated Income program, an applicant may be qualified based on monthly income as stated in the loan application. Under the “No Documentation” program, an applicant provides no information as it relates to their income. Under the “No Income/No Asset” program, the applicant’s income and assets are not verified, however the applicant’s employment is verified. Under the Streamline program, this is allowed only for our Retention division for borrowers that currently have a mortgage with the sponsor. The documentation required for this loan is based on previous documentation type. If a “Streamline loan’s original documentation type was “Full Documentation,” then a verification of the applicant’s employment is the only requirement. Mortgage loans originated under any program other than the “Full Documentation” program require less documentation and verification than do traditional “Full Documentation” programs. The Full Doc/12 Months Personal Bank Statement Program allows self-employed or fixed income borrowers to substitute most recent consecutive 12-months bank statements for wage earner’s W-2 forms and recent pay stubs. Given that the sponsor primarily lends to non-conforming borrowers, it places great emphasis on the ability of collateral to protect against losses in the event of default by borrowers.

On a case-by-case basis, exceptions to the underwriting guidelines are made where the sponsor believes compensating factors exist. Compensating factors may consist of factors like length of time in residence, lowering of the borrower’s monthly debt service payments, the loan-to-value ratio on the loan, as applicable, or other criteria that in the judgment of the loan underwriter warrant an exception. All loans in excess of $350,000 currently require the approval of the underwriting supervisor or designee approved by the supervisor. All loans over $750,000 require the approval of the VP of Operations and Corporate Credit Department or its approved designees. In addition, the President of the sponsor approves all loans in excess of $1,100,000.

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Underwriting Standards

Alt-A (NINA)

Alt-A

(NoDoc)

Alt-A

(Full/Stated)

Piggybacks

Mortgage History

No 30 day lates within last 12 months

Unlimited 30 day lates within the last 12 months

Unlimited 60 day lates within last 12 months

Unlimited 90 day lates within last 12 months

No 30 day lates within the last 24 months

No 30 day lates within the last 12 months if first is M Series or within the last 24 months if first is Alt-A

Minimum FICO

520

500

520

620

620 Alt-A/600 M1

Consumer Credit

N/A

Bankruptcy Filings

Chapter 7: 2 years since discharge date (100%, 97%) LTV, or 12 months discharge

Chapter 7: 1 year since discharge date.

Chapter 7: discharged

Chapter 7: 4 years since discharge date.

Chapter 7: 2 years since discharge date.

Chapter 13: >12 months discharge (>90%) discharged at closing <=90% LTV w/ 0 X 30 BK rating)

Chapter 13: Discharged at closing (0 x 30 BK Rating)

Chapter 13: discharged at closing (w/ 0 X 30 BK rating)

Chapter 13: 4 years since discharge date.

Chapter 13: 2 years since discharge date.

Prior Foreclosure/ NOD

24 months

12 months

48 months

24 months

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Underwriting Standards (continued)

Alt-A (NINA)

Alt-A

(NoDoc)

Alt-A

(Full/Stated)

Piggybacks

Adverse Accounts

Not considered unless they effect title

Not

considered unless they effect title

Debt-to-Income Ratio

50% (60% at lowered LTV)

55%

n/a

50%; 45% if 100% LTV

50%

Maximum Loan-to-Value Ratio

100% (600 score) or 95% (580 score) or 90%

100% (600 score purchase and rate/term only) or 95% (580 score),

85% (560 score)

75% (520 score)

100% (720 score)

100% (620 score full doc, 660 score stated); 95% (620 score)

100% CLTV

Maximum Combined Loan-to-Value Ratio

100%

90%

85%

100%

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Close attention is paid to geographic diversification in managing credit risk. The sponsor believes one of the best tools for managing credit risk is to diversify the markets in which it originates and purchases mortgage loans. The sponsor has established a diversification policy to be followed in managing this credit risk which states that no one market can represent a percentage of total mortgage loans owned by the sponsor higher than twice that market’s percentage of the total national market share.

Quality control reviews are conducted to ensure that all mortgage loans meet quality standards. The type and extent of the reviews depend on the production channel through which the mortgage loan was obtained and the characteristics of the mortgage loan. The sponsor reviews 8 to 10% of each month’s production. The random audit selection criteria includes a proportional representation of loan type, loan product, loan purpose, FICO score, LTV, underwriting grade, state and broker.

Credit scores for the borrowers on loans originated prior to April 10, 2007 were calculated by averaging all the available individual borrower and co-borrower credit scores on loans originated prior to April 10, 2007. Credit scores for the borrowers on loans originated after April 10, 2007 are calculated by using the primary borrower’s middle of three or lower of two, as applicable, credit score.

Delinquency and Loss Information for the Initial Mortgage Loans

The following table sets forth certain information regarding the delinquency performance in the past twelve months as of the cut-off date for all of the initial mortgage loans. No initial mortgage loan has been delinquent more than 240 days in the past twelve months. Delinquency is calculated on the OTS method.

Historical Delinquency of the Initial Mortgage Loans⁽¹⁾

30-59 Days (times)	Number of Mortgage Loans		Principal Balance Outstanding as of the Cut-off Date ($)		% of Aggregate Principal Balance Outstanding as of the Cut-off Date
0		5,834	$	934,492,828.94		99.03	%
1		41		8,965,084.55		0.95
2		2		149,866.32		0.02
Total		5,877	$	943,607,779.81		100.00	%

60-89 Days (times)	Number of Mortgage Loans		Principal Balance Outstanding as of the Cut-off Date ($)		% of Aggregate Principal Balance Outstanding as of the Cut-off Date
0		5,846	$	938,125,575.05		99.42	%
1		29		5,252,922.44		0.56
2		1		122,015.50		0.01
4		1		107,266.82		0.01
Total		5,877	$	943,607,779.81		100.00	%

90 Plus Days (times)	Number of Mortgage Loans		Principal Balance Outstanding as of the Cut-off Date ($)		% of Aggregate Principal Balance Outstanding as of the Cut-off Date
0		5,819	$	934,815,361.37		99.07	%
1		22		3,207,188.64		0.34
2		24		3,866,176.49		0.41
3		3		806,023.50		0.09
4		3		388,606.37		0.04
5		2		217,165.51		0.02
8		1		107,266.82		0.01
9		2		141,162.36		0.01
11		1		58,828.75		0.01
Total		5,877	$	943,607,779.81		100.00	%

(1) Over the previous 12 months.

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Private Mortgage Insurance Policies

Mortgage Guaranty Insurance Corporation (“MGIC”). Approximately 100.00% and 98.35% of the initial Group I mortgage loans and the initial Group II mortgage loans that have mortgage insurance, respectively, are covered by a mortgage insurance policy issued by MGIC (the "MGIC Policy"). MGIC, a wholly owned subsidiary of MGIC Investment Corporation (“MGIC Investment”), is a Wisconsin corporation, founded in 1985, that is a private mortgage insurance company with its administrative offices located in Milwaukee, Wisconsin.

On February 6, 2007, MGIC Investment announced that it had entered into an agreement to merge with Radian Group, with the new company to be called MGIC Radian Financial Group Inc. Radian Group is a global credit risk management company and offers mortgage guaranty insurance and other financial products and services through its subsidiaries. The merger will result in shares of MGIC Investment’s common stock being exchanged for shares of Radian Group’s common stock. The transaction has been approved by the shareholders and boards of directors of MGIC Investment and Radian Group and is subject to regulatory approvals. More information concerning the merger is contained in certain public filings made by MGIC Investment and/or Radian Group with the SEC on or after February 6, 2007.. All information contained in such filings is hereby incorporated by reference.

As of the date of this prospectus supplement, MGIC had insurer financial strength ratings of “AA” from S&P, “AA+” from Fitch and “Aa2” from Moody’s. As a result of the merger announcement described above, S&P did not change its rating of MGIC, Fitch placed MGIC’s AA+ rating on “rating watch negative”, and Moody’s, in affirming its Aa2 rating of MGIC, changed the outlook for its rating from stable to negative. The rating agencies issuing the insurer financial strength rating with respect to MGIC can withdraw or change their ratings at any time.

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Set forth below is selected financial data of Mortgage Guaranty Insurance Corporation and its consolidated subsidiaries, prepared in accordance with U.S. generally accepted accounting principles.

	Year ended December 31,
	2006			2005		2004		2003		2002
Summary of Operations:				(In thousands of dol (In thousands of dollars)
Revenues:
Net premiums written	$	1,138,644		$	1,177,862	$	1,232,791	$	1,283,006	$	1,111,284

Net premiums earned		1,116,063			1,170,681		1,256,141		1,284,081		1,116,454

Investment income, net of expenses		224,021			216,780		205,650		194,591		198,325
Realized investment gains, net		(2,582	)		15,017		16,853		34,939		27,708
Other revenue (loss)		10,548			1,794		4,984		8,505		4,171

Total revenues		1,348,050			1,404,272		1,483,628		1,522,116		1,346,658

Losses and expenses:
Losses incurred, net		581,761			523,535		664,228		706,337		356,146
Underwriting and other expenses		209,815			191,485		191,723		197,281		177,969

Total losses and expenses		791,576			715,020		855,951		903,618		534,115

Income before tax and joint ventures		556,474			689,252		627,677		618,498		812,543
Provision for income tax		143,438			190,718		173,799		162,731		241,211
Income from joint ventures, net of tax		169,807			147,312		120,757		64,109		53,760

Net income	$	582,843		$	645,846	$	574,635	$	519,876	$	625,092


Balance sheet data:
Total investments	$	4,935,881		$	5,047,475	$	5,184,296	$	4,847,418	$	4,462,147
Total assets		6,194,986			6,176,281		6,206,340		5,736,084		5,140,243
Loss reserves		1,125,715			1,124,454		1,185,594		1,061,788		733,181
Shareholder's equity		4,651,141			4,650,531		4,601,784		4,211,564		3,921,590

The MGIC Policy. The MGIC Policy does not cover any mortgage loans 60 days or more delinquent in payment as of the Cut-off Date. Each mortgage loan covered by the MGIC Policy is covered for losses up to the policy limits; provided, however, that the MGIC Policy will not cover special hazard, bankruptcy or fraud losses or certain other types of losses as provided in the MGIC Policy. Claims on an insured mortgage loan generally will reduce uninsured exposure to an amount equal to 55% of the lesser of the appraised value as of the origination date or the purchase price, as the case may be, of the related mortgaged property, subject to conditions, exceptions and exclusions and assuming that any pre-existing primary mortgage insurance policy covering the mortgage loan remains in effect and a full claim settlement is made thereunder.

The MGIC Policy is required to remain in force with respect to each mortgage loan covered thereunder until: (i) the principal balance of the mortgage loan is paid in full or (ii) the principal balance of the mortgage loan has amortized down to a level that results in a loan-to-value ratio for the mortgage loan of 50% or less (provided, however, that no coverage of any mortgage loan under the MGIC Policy is required where prohibited by applicable law); or (iii) any event specified in the MGIC Policy occurs that allows for the termination of the MGIC Policy by MGIC or cancellation of the MGIC Policy by the servicer on behalf of the insured.

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The MGIC Policy may not be assigned or transferred without the prior written consent of MGIC; provided, however, that MGIC has previously provided written consent to the assignment of coverage on all mortgage loans from the seller to the issuing entity.

The MGIC Policy generally requires that delinquencies on any mortgage loan insured thereunder must be reported to MGIC within four months of default, that reports regarding the delinquency of the mortgage loan must be submitted to MGIC on a monthly basis thereafter, and that appropriate proceedings to obtain title to the property securing such mortgage loan must be commenced within six months of default. As a condition to submitting a claim under the MGIC Policy, the servicer on behalf of the insured must have (i) acquired, and tendered to MGIC, good and merchantable title to the property securing the mortgage loan, free and clear of all liens and encumbrances, including, but not limited to, any right of redemption by the mortgagor unless such acquisition of good and merchantable title is excused under the terms of such MGIC Policy, and (ii) if the mortgage loan is covered by a pre-existing primary mortgage insurance policy, a claim must be submitted by the servicer on behalf of the insured and settled under such pre-existing primary mortgage insurance policy within the time frames specified in the MGIC Policy.

The claim amount generally includes unpaid principal, accrued interest to the date of such tender to MGIC by the servicer on behalf of the insured, and certain expenses (less the amount of a full claim settlement under any pre-existing primary mortgage insurance policy covering the mortgage loan). When a claim is presented, MGIC will have the option of either (i) paying the claim amount and taking title to the property securing the mortgage loan, (ii) paying the insured a percentage of the claim amount (without deduction for a claim settlement under any pre-existing primary mortgage insurance policy covering the mortgage loan) and with the insured retaining title to the property securing such mortgage loan, or (iii) if the property securing the mortgage loan has been sold to a third party with the prior approval of MGIC, paying the claim amount reduced by the net sale proceeds as described in the MGIC Policy to reflect the actual loss.

Claims generally must be filed by the servicer on behalf of the insured within 60 days after the insured has acquired good and merchantable title to the property securing the mortgage loan or such property has been sold to a third party with the prior approval of MGIC. A claim generally must be paid within 60 days after the claim is filed by the servicer on behalf of the insured. No payment for a loss will be made under the MGIC Policy unless the property securing the mortgage loan is in the same physical condition as when such mortgage loan was originally insured, except for reasonable wear and tear, and unless premiums on the standard homeowners’ insurance policy, real estate taxes and foreclosure protection and preservation expenses have been advanced by or on behalf of the insured.

If a claim submitted under the MGIC Policy is incomplete, MGIC is required to provide notification of all information and documentation required to perfect the claim within 20 days of MGIC’s receipt of such incomplete claim. In such case, payment of the claim will be suspended until such information and documentation are provided to MGIC, provided that MGIC is not required to pay the claim if it is not perfected within 180 days after its initial filing.

Unless approved in writing by MGIC, no changes may be made to the terms of the mortgage loan, including the borrowed amount, interest rate, term or amortization schedule, except as specifically permitted by the terms of the mortgage loan; nor may the lender make any change in the property or other collateral securing the mortgage loan, nor may any mortgagor be released under the mortgage loan from liability. In addition, with respect to any mortgage loan covered by the MGIC Policy, the servicer must obtain the prior approval of MGIC in connection with any acceptance of a deed in lieu of foreclosure or of any sale of the property securing the mortgage loan.

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The MGIC Policy excludes coverage of: (i) any claim where the insurer under any pre-existing primary mortgage insurance policy has acquired the property securing the mortgage loan, (ii) any claim resulting from a default occurring after lapse or cancellation of coverage, (iii) certain claims resulting from a default existing at the inception of coverage; (iv) certain claims where there is an environmental condition which existed on the property securing the mortgage loan (whether or not known by the person or persons submitting an application for coverage of the mortgage loan) as of the effective date of coverage; (v) any claim, if the mortgage, deed of trust or other similar instrument did not provide the insured at origination with a first lien on the property securing the mortgage loan; (vi) certain claims involving or arising out of any breach by the insured of its obligations under, or its failure to comply with, the terms of the MGIC Policy or of its obligations as imposed by operation of law; (vii) certain claims resulting from physical damage to a property securing a mortgage loan; (viii) any claim arising from the failure of the borrower under a covered mortgage loan to make any balloon payment, if applicable, under such mortgage loan, and (ix) any claim submitted in connection with a mortgage loan if the mortgage loan did not meet MGIC’s requirements applicable to the origination of the mortgage loan.

In issuing the MGIC Policy, MGIC has relied upon certain information and data regarding the mortgage loans furnished to them by the sponsor. The MGIC Policy will not insure against certain losses sustained by reason of a default arising from or involving certain matters, including (i) misrepresentation made, or knowingly participated in, by the lender, other persons involved in the origination of the mortgage loan or the application for insurance, or made by any appraiser or other person providing valuation information regarding the property securing the mortgage loan; (ii) negligence or fraud by the applicable servicer of the mortgage loan, and (iii) failure to construct a property securing a mortgage loan in accordance with specified plans. The MGIC Policy permits MGIC to cancel coverage of a mortgage loan under the MGIC Policy or deny any claim submitted under the MGIC Policy in connection with a mortgage loan if the servicer on behalf of the insured fails to furnish MGIC with copies of all documents in connection with the origination or servicing of a covered mortgage loan.

The preceding description of the MGIC Policy is only a brief outline and does not purport to summarize or describe the provisions, terms and conditions of the MGIC Policy.

Other Private Mortgage Insurance Providers. Approximately 1.20%, of the initial Group II mortgage loans by aggregate principal balance having lender paid mortgage insurance policies are covered by a mortgage insurance policy issued by PMI Mortgage Insurance Co. (“PMI”). PMI, an Arizona corporation with its administrative offices in Walnut Creek, California, is a private mortgage insurance company founded in 1972. PMI is rated “AA” by S&P, “Aa2” by Moody’s and “AA+” by Fitch Ratings with respect to its claims-paying ability. Approximately 0.45% of the initial Group II mortgage loans by aggregate principal balance having lender paid mortgage insurance policies are covered by a mortgage insurance policy issued by Radian Guaranty Inc. (“Radian”). Radian, a Pennsylvania corporation with its administrative offices in Philadelphia, Pennsylvania, is a private mortgage insurance company founded in 1999. Radian is rated “AA” by S&P, “Aa3” by Moody’s and “AA” by Fitch Ratings with respect to its claim paying ability. The mortgage insurance policies provided by PMI and Radian insure a portion of the loss on the related mortgage loan to a level where the uninsured exposure of the mortgage loan is reduced to an amount equal to 51% and 50%, respectively, of the original loan-to-value ratio of such mortgage loan, as more fully described in the related mortgage insurance policy.

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Additional Information

Prior to the issuance of the certificates, certain of the mortgage loans may be removed from the trust estate as a result of incomplete documentation or otherwise, if the depositor deems such removal necessary or appropriate. A limited number of other mortgage loans may be included in the mortgage pool prior to the issuance of the certificates. The depositor believes that the information set forth herein will be substantially representative of the characteristics of the mortgage pool as it will be constituted at the time the certificates are issued, although the range of mortgage rates and maturities and certain other characteristics of the mortgage loans in the mortgage pool may vary, although such variance will not be material.

The Sponsor

The sponsor is NovaStar Mortgage, Inc. NovaStar Financial, Inc. has guaranteed the sponsor’s obligations with respect to the representations and warranties respecting the mortgage loans and the remedies for any breach thereof that are assigned to the trustee for the benefit of the certificateholders. See “NovaStar Financial” below. NovaStar Financial, Inc. and the sponsor have only limited assets available to perform the repurchase obligations in respect of any breach of such representations and warranties, relative to the potential amount of repurchase liability, and the total potential amount of repurchase liability is expected to increase over time as the sponsor and NovaStar Financial, Inc. continue to originate, acquire and sell mortgage loans. There can be no assurance that either the sponsor or NovaStar Financial, Inc. will generate operating earnings, or that it will be successful under its current business plan. Therefore, prospective investors in the certificates should consider the possibility that the sponsor or NovaStar Financial, Inc. will not have sufficient assets with which to satisfy its repurchase obligations in the event that a substantial amount of mortgage loans are required to be repurchased due to breaches of representations and warranties.

The sponsor has been securitizing mortgage loans for nine years. On all of the loans that the sponsor securitizes or sells with retained interests, the sponsor retains the rights to service the loans.

The sponsor’s total annual mortgage loan production has increased steadily as follows: approximately $1.33 billion in 2001, approximately $2.49 billion in 2002, approximately $5.25 billion in 2003, approximately $8.42 billion in 2004, approximately $9.28 billion in 2005, and approximately $10.23 billion in 2006.

The sponsor disposes of its loans primarily by selling them to third parties and through securitizations. The decision by the sponsor to sell or to securitize loans is based on a risk adjusted return framework and utilizes in house credit and prepayment modeling.

The sponsor completed its first securitization in 1997 and has closed additional securitizations in each year since 1997. The securitizations completed prior to 2002 and two of three securitizations completed in 2002 have each been terminated as a result of the sponsor exercising a clean-up call. For the years 2003, 2004, 2005, and 2006, the sponsor closed nineteen securitizations selling loans totaling approximately $5.7 billion, $7.7 billion, $7.9 billion and $8.2 billion respectively, from its own shelf registration statement. The sponsor retains the servicing for loans securitized from its own shelf registration statement. None of the pools that the sponsor has securitized have defaulted or experienced an early amortization target.

The sponsor serves in two roles in connection with its securitization program. The sponsor works with the underwriters and the rating agencies to select the pool of mortgage loans and structure the transaction. Generally in structuring each transaction, the sponsor looks to achieve the most efficient execution, that is to achieve the lowest cost of funds. As the servicer, the sponsor is responsible for servicing each pool of mortgage loans.

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The certificates issued in each securitization do not represent an interest in or obligation of, nor are the mortgage loans guaranteed by the sponsor, nor are the securitized mortgage loans insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency or instrumentality.

Limitations on Liability

The sponsor and its directors, officers, employees or agents are not under any liability to the issuing entity or the related certificateholders for any action taken, or for refraining from the taking of any action, in good faith pursuant to the pooling and servicing agreement, or for errors in judgment. However, the sponsor is not protected from liability for any breach of warranties or representations made by the sponsor in the pooling and servicing agreement, or against any specific liability imposed on the sponsor pursuant to the pooling and servicing agreement or against any liability which would otherwise be imposed upon the sponsor by reason of willful misfeasance, bad faith or negligence in the performance of its duties or by reason of failure to perform its obligations or duties under the pooling and servicing agreement.

The Servicer

NovaStar Mortgage, Inc. will also act as the servicer of the mortgage loans. The servicer’s servicing portfolio currently includes only non-conforming residential mortgage loans.

The servicer performs the servicing functions for its loan originations prior to sale or securitization, during an interim servicing period for mortgage loans sold on a whole loan basis, and for its loan originations sold or securitized on a servicing-retained basis. As of March 31, 2007, the servicer performed the servicing functions for residential mortgage loans with an aggregate unpaid principal balance of approximately $16.2 billion. See “Matters Regarding the Servicer” in the prospectus for more information regarding the terms of the pooling and servicing agreement and the servicer’s duties thereunder.

The servicer does not have custodial responsibility for the mortgage loans. The custodian has custodial responsibility for the mortgage loans as described under “The Custodian” in this prospectus supplement.

The servicer has serviced assets of this type for nine years. The servicer has instituted policies and procedures in accordance with the standard policies and procedures followed by other servicers in the subprime mortgage loan industry.

The servicer’s portfolio of serviced assets of the same type as that which is included in this prospectus supplement has grown as follows: approximately $3.7 billion as of year end 2002, approximately $7.2 billion as of year end 2003, approximately $12.2 billion as of year end 2004, approximately $14.0 billion as of year end 2005 and approximately $16.7 billion as of year end 2006.

There have been no material changes to the servicer’s policies or procedures in the servicing function it will perform in the current transaction for assets of the same type included in the current transaction during the past 3 years.

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There is currently no information on the servicer’s financial condition that would have a material impact on pool performance or performance of the securities.

See “The Pooling and Servicing Agreement” in this prospectus supplement and “Servicing” in the prospectus for more information regarding the pooling and servicing agreement, the servicer’s fees, the servicer’s removal and the transfer of servicing duties to a successor servicer.

Foreclosure and Delinquency Experience with Non-Conforming Mortgage Loans

The following table summarizes the delinquency and foreclosure experience, respectively, as of the date indicated, of the non-conforming mortgage loans serviced by the servicer. The information should not be considered as a basis for assessing the likelihood, amount or severity of delinquencies or foreclosures on the mortgage loans securing the certificates.

Delinquency and Foreclosure

	March 31, 2007					December 31, 2006					December 31, 2005
	incipal Balance (1)		Percent			Principal Balance (1)		Percent			Principal Balance (1)		Percent
Mortgage Loan Portfolio	$	16,236,020				$	16,669,728				$	14,032,118

Delinquency Percentage (2)
30-59 Days		248,940		1.53	%		332,281		1.99	%		101,260		0.72	%
60-89 Days		164,933		1.02	%		187,793		1.13	%		71,032		0.51	%
90+ Days		699,586		4.31	%		530,216		3.18	%		322,609		2.30	%
Total	$	1,113,459		6.86	%	$	1,050,290		6.30	%	$	494,901		3.53	%

Foreclosure Rate (3)	$	465,353		2.87	%	$	374,574		2.25	%	$	155,097		1.11	%

REO	$	368,564		2.27	%	$	290,935		1.75	%	$	99,575		0.71	%

(1) Numbers in thousands.

(2) The period of delinquency is based on the number of days that payments are contractually past due.

(3) “Foreclosure Rate” is the dollar amount of the mortgage loans in the process of foreclosure as a percentage of the total principal balance of the mortgage loans outstanding as of the date indicated.

There can be no assurance that the delinquency experience of the mortgage loans securing the certificates will correspond to the delinquency and foreclosure experience of the servicing portfolio of the servicer set forth in the foregoing table. The statistics shown above represent the respective delinquency and foreclosure experiences only at the date presented, whereas the aggregate delinquency and foreclosure experience on the mortgage loans securing the certificates will depend on the results obtained over the life of the certificates. The servicer’s servicing portfolio may include non-conforming mortgage loans underwritten pursuant to guidelines not necessarily representative of those applicable to the mortgage loans securing the certificates. It should be noted that if the residential real estate market should experience an overall decline in property values, the actual rates of delinquencies and foreclosures could be higher than those previously experienced by the servicer. In addition, adverse economic conditions may affect the timely payment by mortgagors of scheduled payments of principal and interest on the mortgage loans and, accordingly, the actual rates of delinquencies and foreclosures with respect to the mortgage loans.

Static Pool Information

Static pool information for the sponsor’s amortizing asset pools is available at www.novastarbondinvestors.com. This website has unrestricted access, is free of charge and does not require user registration for immediate access. The static pool information will remain available on the website for a period of not less than five years from the date of this prospectus supplement and any subsequent modification or update to such information will be clearly indicated on the website as of the date of such modification or update.

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The static pool information posted on this website that relates to securitizations sponsored by the sponsor prior to January 1, 2006 and, if applicable, that relates to the pool of mortgage loans being securitized in the current transaction for periods prior to January 1, 2006 is not deemed to be part of this prospectus supplement or the accompanying prospectus or the registration statement related to the securities being offered pursuant to this prospectus supplement and the accompanying prospectus.

NovaStar Financial

NovaStar Financial, Inc. was incorporated in the State of Maryland on September 13, 1996. The common stock of NovaStar Financial, Inc. is registered under the Securities Act of 1933 and traded on the New York Stock Exchange. NovaStar Financial, Inc. is subject to the reporting requirements of the Securities and Exchange Act of 1934, and in accordance therewith, files reports and other information with the Commission.

NovaStar Financial, Inc. is a specialty finance company that:

originates, acquires, and services residential non-conforming mortgage loans;

leverages its assets using bank warehouse lines and repurchase agreements;

issues securities through special purpose subsidiaries to finance its non-conforming mortgage loans on a long-term basis;

purchases high quality mortgage securities in the secondary mortgage market; and

manages the resulting combined portfolio of mortgage loans in its current structure as a real estate investment trust (a “REIT”).

NovaStar Financial, Inc. has elected to be taxed for federal income tax purposes as a REIT. As a result, NovaStar Financial, Inc. is generally not subject to federal income tax to the extent that it distributes its earnings to stockholders and maintains its qualifications as a REIT. The principal executive offices of NovaStar Financial, Inc. are at 8140 Ward Parkway, Suite 300, Kansas City, Missouri 64114.

The Depositor

NovaStar Mortgage Funding Corporation, a Delaware corporation, was incorporated in the State of Delaware on January 7, 1998. The depositor is a wholly-owned subsidiary of the sponsor.

On the closing date, the sponsor will convey the mortgage loans and the related mortgage insurance policies to the depositor, who will in turn convey the mortgage loans and the related mortgage insurance policies to the trustee.

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The Trustee

General

Deutsche Bank National Trust Company (“DBNTC”), will act as trustee and as successor servicer. A copy of the pooling and servicing agreement, without certain exhibits, will be provided by the trustee upon written request. Requests should be addressed to the trustee at 1761 East St. Andrew Place, Santa Ana, CA 92705. As the successor servicer, the trustee will assume the function of servicer if NovaStar Mortgage, Inc. has been removed as such and another successor servicer has not been appointed under the pooling and servicing agreement. The trustee will also act as the initial certificate registrar and initial paying agent. The trustee may appoint a co-trustee as described in the pooling and servicing agreement.

No resignation or removal of the trustee and no appointment of a successor trustee pursuant to the pooling and servicing agreement shall become effective until the acceptance of appointment by the successor trustee. The trustee may resign at any time by giving written notice thereof to the depositor, sponsor and each rating agency. If an instrument of acceptance by a successor trustee shall not have been delivered to the trustee within thirty (30) days after the giving of such notice of resignation, the resigning trustee may petition any court of competent jurisdiction for the appointment of a successor trustee.

The trustee may be removed at any time upon 30 days prior notice by the majority certificateholders by written notice delivered to the trustee and to the servicer.

Every successor trustee appointed under the pooling and servicing agreement will be required to execute, acknowledge and deliver to the retiring trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring trustee.

DBNTC

DBNTC will act as trustee. DBNTC is a national banking association and has an office in Santa Ana, California. DBNTC has previously been appointed to the role of trustee for numerous mortgage-backed transactions in which residential mortgages comprised the asset pool and has significant experience in this area. As trustee, DBNTC will be calculating certain items and reporting as set forth in the pooling and servicing agreement. DBNTC has acted as calculation agent and paying agent in numerous mortgage-backed transactions since 1991. DBNTC has no pending legal proceedings that would materially affect its ability to perform its duties as trustee on behalf of the certificateholders. DBNTC may perform certain of its obligations through one or more third party vendors. However, DBNTC will remain liable for the duties and obligations required of it under the pooling and servicing agreement

DBNTC is providing the information in the foregoing paragraph at the depositor’s request in order to assist the depositor with the preparation of its disclosure documents to be filed with the SEC pursuant to Regulation AB. Otherwise, DBNTC has not participated in the preparation of such disclosure documents and assumes no responsibility or liability for their contents.

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The Custodian

U.S. Bank National Association, a national banking association (“U.S. Bank”), will act as custodian. In its capacity as custodian, U.S. Bank will perform certain custodial duties as more fully described in the pooling and servicing agreement.

U.S. Bank will act as custodian of the mortgage files pursuant to the pooling and servicing agreement. As custodian, U.S. Bank is responsible for holding the mortgage files on behalf of the trustee. U.S. Bank will hold the mortgage files in one of its custodial vaults, which are located in Maryland. The mortgage files are tracked electronically to identify that they are held by U.S. Bank pursuant to the pooling and servicing agreement. U.S. Bank uses a barcode tracking system to track the location of, and owner or secured party with respect to, each file that it holds as custodian, including the mortgage files held on behalf of the trustee.

The Back-Up Servicer

Countrywide Home Loans Servicing LP

The information in the following paragraphs has been provided by Countrywide Home Loans Servicing LP.

General

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

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

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

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

Countrywide Home Loans

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

Countrywide Home Loans has historically sold substantially all the mortgage loans that it has originated and purchased, generally through securitizations. Countrywide Home Loans does not always sell mortgage loans immediately after origination or acquisition, but may decide to sell certain mortgage loans in later periods as part of its overall management of interest rate risk. Countrywide Home Loans has been involved in the securitization of mortgage loans since 1969 when it was approved as a Federal National Mortgage Association seller/servicer. Countrywide Home Loans reviews the structure of its securitizations and discusses the structure with the related underwriters.

Except as otherwise indicated, reference in the remainder of this prospectus supplement to “Countrywide Home Loans” should be read to include Countrywide Home Loans and its consolidated subsidiaries, including Countrywide Servicing. Countrywide Home Loans services substantially all of the mortgage loans it originates or acquires. In addition, Countrywide Home Loans has purchased in bulk the rights to service mortgage loans originated by other lenders. Countrywide Home Loans has in the past and may in the future sell to mortgage bankers and other institutions a portion of its portfolio of loan servicing rights. As of December 31, 2002, December 31, 2003, December 31, 2004, December 31, 2005, December 31, 2006 and March 31, 2007, Countrywide Home Loans provided servicing for mortgage loans with an aggregate principal balance of approximately $452.405 billion, $644.855 billion, $838.322 billion, $1,111.090 billion, $1,298.394 billion and $1,351.598 billion, respectively, substantially all of which were being serviced for unaffiliated persons. As of December 31, 2006 and March 31, 2007, Countrywide Home Loans provided servicing for subprime mortgage loans (excluding mortgage loans being subserviced by Countrywide Home Loans) with an aggregate principal balance of approximately $124.537 billion and $131.528 billion, respectively.

Loan Servicing

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

a) collecting, aggregating and remitting mortgage loan payments;

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b) accounting for principal and interest;

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

d) making inspections as required of the mortgaged properties;

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

f) supervision of delinquent mortgage loans;

g) loss mitigation efforts;

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

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

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

Collection Procedures

Subprime Mortgage Loans. When a borrower fails to make a payment on a subprime mortgage loan, Countrywide Servicing attempts to cause the deficiency to be cured by corresponding with the borrower. In most cases, deficiencies are cured promptly. Pursuant to Countrywide Servicing’s servicing procedures for subprime loans, Countrywide Servicing generally mails to the borrower a notice of intent to foreclose after the loan becomes 31 days past due (two payments due but not received) and, generally within 59 days thereafter, if the loan remains delinquent, institutes appropriate legal action to foreclose on the mortgaged property. Foreclosure proceedings may be terminated if the delinquency is cured. Mortgage loans to borrowers in bankruptcy proceedings may be restructured in accordance with law and with a view to maximizing recovery of the loans, including any deficiencies.

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

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

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

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Obligations of the Back-up Servicer

Upon the removal or resignation of the servicer, the Back-up Servicer has agreed to become the successor servicer effective upon the minimum of twenty (20) days written notice from the Trustee of the effective date of the transfer. In order to ensure that the Back-up Servicer is prepared for an immediate transfer of the servicing obligations and duties on twenty (20) days written notice, the Servicer must provide to the Back-up Servicer a monthly pool activity data tape and loan level information. Each month, the Back-up Servicer must determine the readability of such tape and loan level information and must convert and upload the pool level data to its staging servicing platform. Further, on a quarterly basis, the Servicer will be required to provide to the Trustee and the Back-up Servicer a report detailing the present status of the pool assets, which shall include, but not be limited to, information relating to historic collections activity, loss mitigations, foreclosures, bankruptcies, customer service, escrow administration and such other information that is necessary for the Back-up Servicer to be able to succeed to the duties of the Servicer on twenty (20) days written notice.

The Back-up Servicer will have no other reporting, monitoring or servicing duties unless and until it becomes the successor servicer. The Back-up Servicer, if it becomes successor servicer, will be subject to all the responsibilities and duties of the servicer, including making advances unless it determines reasonably and in good faith that such advances would not be recoverable. The Back-up Servicer, as successor servicer, will not be liable for any actions of any prior servicer. If the Back-up Servicer is removed or resigns, the successor Back-up Servicer, if any, will be designated by the servicer, or, if the servicing rights have been pledged, then by the pledgee of the servicing rights, in each case with the consent of the rating agencies rating the transaction. The trustee has the right to appoint a successor Back-up Servicer if the servicer fails to do so and there is no servicing rights pledgee, acting at the direction of the majority certificateholders.

Back-up Servicer Compensation

The Back-up Servicer will receive a fee equal to 0.01% per annum (subject to a minimum of $2,250 per month in the aggregate) with respect to each mortgage loan on each distribution date as compensation for standing by to act as successor servicer. If the Back-up Servicer becomes the successor servicer, the Back-up Servicer will be entitled to servicing compensation of the greater of (a) 0.50% per annum with respect to each mortgage loan on each distribution date and (b) the fees described in the following table together with reimbursement of any compensating interest and prepayment interest shortfall obligation:

	Minimum Servicing Fee per loan/month
Delinquency Status	First Lien		Second Lien ($)
Current	$	10.00	$	10.00
30 - 59 days	$	35.00	$	35.00
60 - 89 days	$	75.00	$	75.00
90 - 119 days	$	90.00	$	65.00
120+ days	$	90.00	$	35.00
Foreclosure	$	150.00	$	225.00
Bankruptcy	$	35.00	$	35.00
REO	$	300.00	$	300.00

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The Hedge Providers

Wachovia Bank, National Association

Wachovia Bank, National Association (“Wachovia”) is a national banking association that has, as of the date of this prospectus supplement, long-term debt ratings from S&P, Fitch Ratings and Moody’s of “AA”, “AA-” and “Aa1”, respectively, and short-term debt ratings from S&P, Fitch Ratings and Moody’s of “A-1+”, “Fl+” and “P-1”, respectively. The ratings reflect the respective rating agency’s current assessment of the creditworthiness of Wachovia and may be subject to revision or withdrawal at any time by the rating agencies. Wachovia will provide upon request, without charge, to each person to whom this prospectus supplement is delivered, a copy of the most recent audited annual financial statements of the Wachovia Corporation, the parent company of Wachovia. Requests for such information should be directed to Wachovia Corporation - Investor Relations, (704) 374-6782 or in writing at Wachovia Corporation, Investor Relations, 301 South College Street, Charlotte, NC 28288-0206.

The Royal Bank of Scotland plc

The Royal Bank of Scotland plc (“RBS”) is a company limited by shares incorporated under the law of Scotland and is the principal operating subsidiary of The Royal Bank of Scotland Group plc (“RBS Group”), which, together with its subsidiaries, is a diversified financial services group engaged in a wide range of banking, financial and finance related activities in the United Kingdom and internationally. The short-term unsecured and unguaranteed debt obligations of RBS are currently rated “A-1+” by S&P, “P-1” by Moody’s and “F1+” by Fitch Ratings. The long-term, unsecured, unsubordinated and unguaranteed debt obligations of RBS are currently rated “AA” by S&P, “Aa1” by Moody’s and “AA+” by Fitch Ratings. Except for the information provided in this paragraph, neither RBS nor the RBS Group has been involved in the preparation of, and do not accept responsibility for, this prospectus supplement or the accompanying prospectus. RBS is an affiliate of Greenwich Capital Markets, Inc., an underwriter.

Deutsche Bank AG

Deutsche Bank Aktiengesellschaft ("Deutsche Bank" or the "Bank") originated from the reunification of Norddeutsche Bank Aktiengesellschaft, Hamburg, Rheinisch-Westfälische Bank Aktiengesellschaft, Duesseldorf and Süddeutsche Bank Aktiengesellschaft, Munich; pursuant to the Law on the Regional Scope of Credit Institutions, these had been disincorporated in 1952 from Deutsche Bank which was founded in 1870. The merger and the name were entered in the Commercial Register of the District Court Frankfurt am Main on May 2, 1957. Deutsche Bank is a banking institution and a stock corporation incorporated under the laws of Germany under registration number HRB 30 000. The Bank has its registered office in Frankfurt am Main, Germany. It maintains its head office at Taunusanlage 12, 60325 Frankfurt am Main and branch offices in Germany and abroad including in London, New York, Sydney, Tokyo and an Asia-Pacific Head Office in Singapore which serve as hubs for its operations in the respective regions.

The Bank is the parent company of a group consisting of banks, capital market companies, fund management companies, a real estate finance company, instalment financing companies, research and consultancy companies and other domestic and foreign companies (the "Deutsche Bank Group").

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As of December 31, 2006, Deutsche Bank’s issued share capital amounted to Euro 1,343,406,103.04 consisting of 524,768,009 ordinary shares of no par value. The shares are fully paid up and in registered form. The shares are listed for trading and official quotation on all the German Stock Exchanges. They are also listed on the New York Stock Exchange. The Management Board has decided to pursue delisting on certain stock exchanges other than Germany and New York in order to benefit from the integration of financial markets. In respect of the stock exchanges Amsterdam, Brussels, London, Luxembourg, Paris, Vienna, Zurich and Tokyo, this decision has completely been implemented.

As of December 31, 2006, Deutsche Bank Group had total assets of EUR 1,126,230 million, total liabilities of EUR 1,093,422 million and total shareholders' equity of EUR 32,808 million on the basis of United States Generally Accepted Accounting Principles. The consolidated financial statements for fiscal years starting January 1, 2007 will be prepared in compliance with the International Financial Reporting Standards.

Deutsche Bank’s long-term senior debt has been assigned a rating of AA- (outlook positive) by Standard & Poor's, Aa1 (outlook stable) by Moody's Investors Services and AA- (outlook stable) by Fitch Ratings.

Deutsche Bank AG, New York Branch (the “Branch”) was established in 1978 and is licensed by the New York Superintendent of Banks. Its office is currently located at 60 Wall Street, New York, NY 10005-2858. The Branch is examined by the New York State Banking Department and is subject to the banking laws and regulations applicable to a foreign bank that operates a New York branch. The Branch is also examined by the Federal Reserve Bank of New York.

Legal Proceedings

See “Recent developments affecting NovaStar” in this prospectus supplement for information relating to legal proceedings affecting NFI and the Servicer.

Affiliations

The depositor is an affiliate of the sponsor. The Royal Bank of Scotland plc is an affiliate of Greenwich Capital Markets, Inc., an underwriter. Deutsche Bank AG is an affiliate of Deutsche Bank Securities Inc., an underwriter and the trustee, Deutsche Bank National Trust Company. Wachovia Bank, N.A. is an affiliate of Wachovia Capital Markets, LLC, an underwriter.

Description of the Certificates

General

The certificates will be issued pursuant to a pooling and servicing agreement among the depositor, the servicer, the trustee and the custodian.

The issuing entity will issue:

the Class A-1A Certificates, the Class A-2A Certificates, the Class A-2B Certificates, the Class A-2C Certificates and the Class A-2D Certificates (collectively, the “Class A Certificates”);

the Class M-1 Certificates, the Class M-2 Certificates, the Class M-3 Certificates, the Class M-4 Certificates, the Class M-5 Certificates, the Class M-6 Certificates, the Class M-7 Certificates, the Class M-8 Certificates, the Class M-9 Certificates and the Class M-10 Certificates (collectively, the “Mezzanine Certificates” or the “Class M Certificates”);

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the Class I Certificates;

the Class C Certificates; and

the residual certificates.

The Class A Certificates, the Mezzanine Certificates, the Class I Certificates, the Class C Certificates and the residual certificates are collectively referred to as the “Certificates.” The Class A Certificates and the Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8 and Class M-9 Certificates are collectively referred to as the “offered certificates” which are offered hereby or as the “underwritten certificates.” The Class A-1A, Class A-2A, Class A-2B, Class A-2C, Class A-2D and Class M Certificates are collectively referred to as the “LIBOR Certificates."

The Mezzanine Certificates and the Class C Certificates are collectively referred to as the “subordinate certificates.”

The offered certificates will have the original certificate principal balances specified on the cover (subject to a variance of 10%).

The Class M-10, Class I and Class C Certificates and the residual certificates are not being offered by this prospectus supplement.

The Class C Certificates represent (i) the right to receive excess interest, which is the interest due on the mortgage loans in excess of the administrative fees, the certificate interest on the Class A and Mezzanine Certificates and the Class I Certificates, amounts necessary to maintain or restore the Required Overcollateralization Amount, any Available Funds Cap Shortfall and certain amounts payable to the hedge providers, (ii) the right to receive all prepayment penalties collected in respect of the mortgage loans and (iii) the Overcollateralization Amount. The Class I Certificates represent the right to receive payments of interest on a notional amount and are senior to all other classes of certificates.

The Class A and Mezzanine Certificates will be issued in book-entry form as described below. The Class A and Mezzanine Certificates will be issued in minimum dollar denominations of $25,000 and integral multiples of $1,000 in excess thereof, with a minimum investment of $100,000. The final scheduled distribution date for the certificates is the distribution date in September 2037.

The certificates will be backed by the issuing entity created by the pooling and servicing agreement (which may include one or more subtrusts), which consists of the following:

the mortgage loans;

collections in respect of principal and interest of the mortgage loans received after the cut-off date (other than payments due on or before the cut-off date);

the amounts on deposit in the collection account, including the payment account in which amounts are deposited prior to payment to the certificateholders;

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the mortgage insurance policies and certain other insurance policies maintained by the mortgagors or by or on behalf of the servicer or any subservicer;

an assignment of the depositor’s rights under the purchase agreement;

amounts on deposit in the pre-funding account and the interest coverage account, if any (which accounts are not part of any REMIC);

certain hedge agreements (which are not part of any REMIC); and

proceeds of the above.

Payments

Payments on the certificates will be made by the paying agent on each “distribution date,” which is the 25th day of each month or, if such day is not a business day, then the next succeeding business day, commencing on June 25, 2007. Payments on the certificates will be made to the persons in whose names such certificates are registered on the record date. For so long as there are no definitive certificates, the record date is the business day prior to the related distribution date. If definitive certificates have been issued, the record date is the last business day of the month prior to the related distribution date. Payments will be made by wire transfer (or upon written request, at least five business days prior to the related record date by check or money order and mailed to the address of the holder as it appears on the certificate register on the related record date). However, the final payment in respect of the certificates will be made only upon presentation and surrender of the certificates at the office or the agency of the trustee specified in the notice to holders of such final payment. A “business day” is any day other than (i) a Saturday or Sunday or (ii) a day on which banking institutions in New York or Missouri, or in the city in which the corporate trust office of the trustee is located, are required or authorized by law to be closed.

Certificates Supported by Each Group

The Group I Certificates receive distributions primarily from the Group I mortgage loans, with a contingent right to receive certain amounts from the Group II mortgage loans, as described herein. The Group II Certificates receive distributions primarily from the Group II mortgage loans, with a contingent right to receive certain amounts from the Group I mortgage loans, as described herein. The Mezzanine Certificates, the Class I Certificates and the Class C Certificates receive distributions from both Groups of mortgage loans.

Available Funds

The available funds for each distribution date will equal the amount received by the trustee and available in the payment account on that distribution date. The available funds will generally be equal to the sum of, net of amounts reimbursable to the servicer and back-up servicer, the following amounts:

the aggregate amount of scheduled payments on the mortgage loans due on the prior due date and received on or prior to the determination date;

miscellaneous fees and collections, including assumption fees and prepayment penalties, but excluding late fees;

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any unscheduled payments and receipts, including mortgagor prepayments on the mortgage loans, received during the prior prepayment period and proceeds of repurchases, and adjustments in the case of substitutions and terminations, net liquidation proceeds, insurance proceeds and proceeds from any mortgage insurance policy and subsequent recoveries;

all advances made and compensating interest paid for that distribution date;

on the distribution date which follows the termination of the pre-funding period, the remaining amount on deposit in the pre-funding account at that time;

amounts available in any interest coverage account; and

on the distribution date on which the issuing entity is to be terminated, the related termination price.

For any distribution date, for substantially all of the mortgage loans, the due date is the first day of the month in which the distribution date occurs, and the determination date is the 15th day of the month in which the distribution date occurs, or if such day is not a business day, the immediately preceding business day.

Interest Payments on the Certificates

On each distribution date, the holders of each class of Class A and Mezzanine Certificates will be entitled to receive an interest payment amount equal to interest accrued on the related Certificate Balance immediately prior to such distribution date at the related pass-through rate for the related accrual period reduced for certain shortfalls as described herein.

The formula rate for each class of Class A and Mezzanine Certificates (other than the Class A-2A Certificates) is the lesser of (1) the LIBOR Rate and (2) a maximum rate of 11%. The formula rate for the Class A-2A Certificates is the related LIBOR Rate. There is no maximum rate for the Class A-2A Certificates.

The LIBOR Rate for each class of certificates is as follows:

Prior to the clean-up call date.

Class		LIBOR Rate
Class A-1A Certificates		LIBOR plus 0.20000%
Class A-2A Certificates		LIBOR plus 0.09000%
Class A-2B Certificates		LIBOR plus 0.16000%
Class A-2C Certificates		LIBOR plus 0.18000%
Class A-2D Certificates		LIBOR plus 0.27000%
Class M-1 Certificates		LIBOR plus 0.30000%
Class M-2 Certificates		LIBOR plus 0.32000%
Class M-3 Certificates		LIBOR plus 0.34000%
Class M-4 Certificates		LIBOR plus 0.50000%
Class M-5 Certificates		LIBOR plus 0.68000%
Class M-6 Certificates		LIBOR plus 0.95000%
Class M-7 Certificates		LIBOR plus 1.75000%
Class M-8 Certificates		LIBOR plus 2.50000%
Class M-9 Certificates		LIBOR plus 2.50000%
Class M-10 Certificates		LIBOR plus 2.50000%

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On and after the first distribution date to occur after the clean-up call date.

Class		LIBOR Rate After Step Up
Class A-1A Certificates		LIBOR plus 0.40000%
Class A-2A Certificates		LIBOR plus 0.18000%
Class A-2B Certificates		LIBOR plus 0.32000%
Class A-2C Certificates		LIBOR plus 0.36000%
Class A-2D Certificates		LIBOR plus 0.54000%
Class M-1 Certificates		LIBOR plus 0.45000%
Class M-2 Certificates		LIBOR plus 0.48000%
Class M-3 Certificates		LIBOR plus 0.51000%
Class M-4 Certificates		LIBOR plus 0.75000%
Class M-5 Certificates		LIBOR plus 1.02000%
Class M-6 Certificates		LIBOR plus 1.42500%
Class M-7 Certificates		LIBOR plus 2.62500%
Class M-8 Certificates		LIBOR plus 3.75000%
Class M-9 Certificates		LIBOR plus 3.75000%
Class M-10 Certificates		LIBOR plus 3.75000%

The available funds cap rate for the certificates for each distribution date is the per annum rate equal to the product of (i) 12 and (ii) a fraction (adjusted with respect to the LIBOR Certificates, for the actual number of days elapsed in the related accrual period), the numerator of which is (a) an amount equal to (x) the aggregate Interest Remittance Formula Amount for the Group I and Group II mortgage loans, less (y) the servicing fee, back-up servicing fee, trustee fee, custodian fee, mortgage insurance fees allocable to the mortgage loans, and less (z) the Class I Monthly Interest Distributable Amount, and the denominator of which is (b) the aggregate principal balance of the mortgage loans (the “Available Funds Cap Rate”).

With respect to each class of Class A and Mezzanine Certificates and any distribution date, to the extent that the amount of interest paid to a class is reduced because the formula rate exceeds the available funds cap rate (such excess amount, the “Available Funds Cap Shortfall”) such amount will be paid to such class on that same distribution date or future distribution dates out of the supplemental interest trust, to the extent of funds available in the priority described in this prospectus supplement.

If the funds in the supplemental interest trust (as described below) on a distribution date are insufficient to pay the Available Funds Cap Shortfall for that same distribution date, the remaining unpaid amount shall be carried forward and distributed, to the extent of funds available, (together with interest on that amount at the related formula rate applicable from time to time) on future distribution dates.

Interest on the certificates will accrue during each accrual period. The accrual period for the LIBOR Certificates is the period from the prior distribution date through and including the day preceding the related distribution date, except in the case of the first distribution date, for which interest begins to accrue on the closing date. Interest on the LIBOR Certificates will accrue on the basis of the actual number of days in the accrual period and a 360 day year.

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Supplemental Interest Trust

The Class A and Mezzanine Certificates are entitled to payments from a supplemental interest trust on each distribution date that an Available Funds Cap Shortfall exists.

On each distribution date through and including the distribution date occurring in May 2010 (such date the “Class I Termination Date”), funds deposited into the supplemental interest trust will equal the sum of (i) any payments received under the multiple hedge agreements described below, (ii) the Class I Monthly Interest Distributable Amount and (iii) any Excess Cashflow remaining after paying amounts to maintain or restore the Required Overcollateralization Amount. On each distribution date commencing in June 2010, funds deposited into the supplemental interest trust will equal any Excess Cashflow after paying amounts to maintain or restore the Required Overcollateralization Amount.

On each distribution date, from the aggregate amounts on deposit in the supplemental interest trust (using amounts other than the Excess Cashflow, and if such amounts are insufficient, from the Excess Cashflow as described in clause (iii) of the paragraph immediately above), the trustee will make the following distributions in the following order:

(i) on each distribution date up to and including the Class I Termination Date, to each Hedge Provider, its respective net swap payments and cap fixed rate payments due for such distribution date, plus any unpaid termination payments due to a Hedge Provider other than Defaulted Hedge Termination Payments;

(ii) the amount necessary, if any, to eliminate any Overcollateralization Deficiency, after taking into account any Excess Cashflow previously applied to such purpose on such distribution date; provided, however, the amount paid pursuant to this clause on any distribution date cannot exceed the excess of (a) realized losses sustained with respect to such distribution date and all prior distribution dates over (b) the sum of all amounts paid pursuant to this clause on all prior distribution dates;

(iii) the sum of (x) any Available Funds Cap Shortfall arising on such distribution date, and (y) any Available Funds Cap Shortfall not paid on prior distribution dates plus interest on such unpaid amount at a rate equal to the related formula rate, first, concurrently to each Class of Class A Certificates pro rata based on their respective amounts of Available Funds Cap Shortfall, and second, sequentially to the classes of Mezzanine Certificates in descending order of seniority (in each case only up to the amount necessary to pay any such Available Funds Cap Shortfall);

(iv) to the Hedge Providers, pro rata, any Defaulted Hedge Termination Payments; and

(v) any remaining amounts will be paid to the holders of the Class C Certificates.

Summary of Interest Rate Hedge Agreements

By the end of the pre-funding period, the supplemental interest trust will enter into two interest rate swap agreements and fourteen interest rate cap agreements (collectively, the “Hedge Agreements”). The counterparties under the Hedge Agreements are: Deutsche Bank AG (“Deutsche Bank”), The Royal Bank of Scotland plc (“RBS”) and Wachovia Bank, National Association (“Wachovia,” and together with Deutsche Bank and RBS, the “Hedge Providers”).

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Swap Agreements

A “swap amount” for any distribution date on or prior to the Class I Termination Date is equal to (x) the product of (i) the related fixed rate of interest, (ii) 30 divided by 360 and (iii) the related notional amount less (y) the product of (i) LIBOR, (ii) the actual number of days elapsed in the related Accrual Period divided by 360 and (iii) the related notional amount (so long as such calculation results in a positive number). If the calculation mentioned above results in a negative number, the supplemental interest trust will be entitled to receive from the related swap counterparty the absolute value of such negative number. The swap agreements have terms and maturities as follows:

Hedge Provider	Notional Amount ($)		Fixed Rate			Maturity Date
Wachovia		80,000,000		4.9200	%		March 2009
Deutsche Bank		20,000,000		4.8680	%		March 2010

Cap Agreements

A “cap amount” for any distribution date on or prior to the Class I Termination Date is equal to the product of (i) the related fixed rate of interest, (ii) 30 divided by 360 and (iii) the related notional amount. The supplemental interest trust will receive a payment with respect to a cap agreement if LIBOR exceeds the related strike rate equal to the product of (i) the difference between LIBOR and the related strike rate, (ii) the actual number of days elapsed in the related Accrual Period divided by 360 and (iii) the related notional amount. The cap agreements have terms and maturities as follows:

Hedge Provider	Notional Amount ($)		Fixed Rate			Strike Rate			Maturity Date
Wachovia		160,000,000		0.1260	%		5.3000	%		July 2008
Wachovia		80,000,000		0.1560	%		5.2500	%		August 2008
Wachovia		80,000,000		0.1710	%		5.2000	%		November 2008
RBS		80,000,000		0.1990	%		5.3000	%		February 2009
RBS		40,000,000		0.2300	%		5.2000	%		July 2009
RBS		40,000,000		0.2250	%		5.3500	%		August 2009
Wachovia		40,000,000		0.2290	%		5.2000	%		August 2009
RBS		40,000,000		0.2700	%		5.1000	%		November 2009
RBS		40,000,000		0.2650	%		5.1000	%		November 2009
RBS		20,000,000		0.2500	%		5.2000	%		January 2010
Deutsche Bank		20,000,000		0.2860	%		5.2500	%		February 2010
Deutsche Bank		40,000,000		0.2590	%		5.3500	%		February 2010
RBS		20,000,000		0.3000	%		5.1000	%		May 2010
Deutsche Bank		40,000,000		0.2950	%		5.1000	%		May 2010

Although an aggregate cap notional amount of $740,000,000 is expected to be assigned to the supplemental interest trust by the end of the pre-funding period, only a portion of the aggregate cap notional amount will be assigned to the supplemental interest trust on the closing date. The entire aggregate cap notional amount will be assigned to the supplemental interest trust on subsequent dates during the pre-funding period depending on the amount of the mortgage loans assigned to the issuing entity on such dates.

All payments due to a Hedge Provider under the related Hedge Agreement will be paid from available funds on each distribution date in accordance with the priority of payments described herein. On each distribution date amounts received by the supplemental interest trust in respect of the Hedge Agreements will be available to cover Available Funds Cap Shortfall amounts as described herein.

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Each Hedge Agreement may be terminated in accordance with its terms, whether or not the certificates have been paid in full or redeemed prior to such termination, upon the earliest to occur of (i) certain events of bankruptcy, conservatorship, dissolution, reorganization or other related events of the supplemental interest trust or the related Hedge Provider, (ii) failure on the part of the supplemental interest trust or the related Hedge Provider to make any payment under certain circumstances under the related Hedge Agreement that is unremedied within the applicable grace period, (iii) the failure of the Hedge Provider under certain circumstances to conform to or maintain the credit support annex entered into as part of the Hedge Agreement or other credit support document or the failure of the supplemental interest trust to comply with such credit support annex; (iv) a representation of the Hedge Provider in the Hedge Agreement proves to have been incorrect or misleading in any material respect; (v) if the Hedge Provider defaults on obligations equal to 3 percent of its shareholder’s equity (excluding deposits); (vi) the Hedge Provider or the supplemental interest trust merges or otherwise consolidates with another entity without assuming its obligations under the Hedge Agreement; (vii) a change in law making it illegal for either the supplemental interest trust or the related Hedge Provider to be a party to, or perform an obligation under, the related Hedge Agreement, (viii) any change in tax law resulting in, or there is a substantial likelihood that such action or change will result in, certain unfavorable tax consequences to the supplemental interest trust or the related Hedge Provider, (ix) the supplemental interest trust or the related Hedge Provider engages in a consolidation, merger, sale of substantially all of its assets or similar transaction that results in certain unfavorable tax consequences on the other party, (x) receipt by the trustee of a notice from the servicer or its designee that the clean-up call will be exercised and no more than five business days remain prior to the proposed termination date, (xi) an amendment of the pooling and servicing agreement without the prior written consent of the related Hedge Provider (where such consent is required under the pooling and servicing agreement) that materially and adversely affects the rights of such Hedge Provider under the pooling and servicing agreement or the related Hedge Agreement or (xii) the date specified in the related Hedge Agreement. In the case of the Hedge Agreements where Deutsche Bank is the Hedge Provider, the condition in clause (x) above does not apply.

Except to the extent otherwise approved by the rating agencies, each Hedge Agreement may also be terminated if the respective Hedge Provider fails to comply with the ratings downgrade provisions as described in the Hedge Agreements.

The supplemental interest trust also has the right to terminate any Hedge Agreement if the sponsor notifies the affected Hedge Provider that the “aggregate significance percentage” of all derivative instruments (as such term is defined in Item 1115 of Regulation AB) provided by that Hedge Provider and any of its affiliates to the supplemental interest trust (the “Significance Percentage”) is 10% or more (a “Hedge Disclosure Event”) and at least one of the following events has not occurred within the time period specified in the related Hedge Agreement:

(a) (i) if the Significance Percentage is 10% or more, but less than 20%, that Hedge Provider shall provide the information set forth in Item 1115(b)(1) of Regulation AB (provided, however, that in the case of the Hedge Agreements where RBS is the Hedge Provider, RBS has the option to supply the information set forth in Item 1115(b)(2) of Regulation AB instead) for that Hedge Provider (or for the group of affiliated entities, if applicable) or (ii) if the Significance Percentage is 20% or more, that Hedge Provider shall provide the information set forth in Item 1115(b)(2) of Regulation AB for that Hedge Provider (or for the group of affiliated entities, if applicable) (collectively, the “Additional Hedge Disclosure Information”) to the sponsor; or

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(b) that Hedge Provider shall assign all of its rights and obligations under one or more transactions under the related Hedge Agreement (such that the significance percentage of such Hedge Provider no longer exceeds 10%) to a replacement counterparty that is an Eligible Substitute Counterparty, pursuant to documentation substantially similar to the documentation then in place and subject to prior notification to the rating agencies, which such counterparty is willing to provide the Additional Hedge Disclosure Information (with respect to itself or for its group of affiliated entities, if applicable) to the sponsor in the event that the significance percentage of the Hedge Agreements to which it is a counterparty is 10% or more.

If a Hedge Disclosure Event occurs and the events in (a) or (b) above have not occurred within the time period specified in the related Hedge Agreement, the date that the supplemental interest trust or the affected Hedge Provider, as the case may be, specifies in its notice of its election to terminate shall be the early termination date for the related Hedge Agreement.

If the supplemental interest trust is unable to or, if applicable, chooses not to obtain a substitute Hedge Agreement in the event that a Hedge Agreement is terminated, interest due on the corresponding portion of the certificates will be paid from amounts received on the corresponding portion of the mortgage loans without the benefits of a Hedge Agreement or a substitute Hedge Agreement. There can be no assurance that such amounts will be sufficient to provide for the full payment of interest on the corresponding portion of the certificates at the applicable certificate interest rate.

A termination of any Hedge Agreement does not constitute an event of default under the pooling and servicing agreement.

The occurrence of any redemption of the certificates following the exercise by the servicer or its designee of the clean-up call will most likely lead to the termination of each Hedge Agreement then outstanding. Such termination may require the supplemental interest trust to make a termination payment to the related Hedge Provider, and the servicer may be unable to effect an optional redemption despite having sufficient proceeds prior to making such termination payment to pay or redeem the certificates and certain expenses in full.

Each Hedge Agreement will terminate by its terms after the distribution date occurring in the month and year indicated in the table above and, after payment of all amounts owing to the related Hedge Provider, no further amounts will be paid to the related Hedge Provider by the supplemental interest trust and no further amounts will be paid to the supplemental interest trust by the related Hedge Provider.

Each Hedge Agreement will be governed by, and construed in accordance with, the laws of the State of New York without regard to the conflict of laws principles thereof and shall contain appropriate limited recourse and non-petition provisions as against the supplemental interest trust.

Interest Allocations

On each distribution date the trustee will first distribute the prepayment penalties collected on the Group I mortgage loans and the Group II mortgage loans during the prior prepayment period to the holders of the Class C Certificates. After making that distribution, the trustee will apply that portion of the remaining available funds, pro-rata from the Group I mortgage loans and the Group II mortgage loans, which represents the Interest Remittance Amount for that distribution date to the payment of all administrative fees of the issuing entity which are due on that distribution date. The trustee will then apply the remaining Interest Remittance Amount to the payment of interest then due on the certificates in the following order:

(i) first, payable from the Group I Interest Remittance Amount and the Group II Interest Remittance Amount, (and, if such amounts are insufficient, then from the Group I Principal Remittance Amount and the Group II Principal Remittance Amount) to the holders of the Class I Certificates, the Class I Monthly Interest Distributable Amount;

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(ii) second, concurrently, with equal priority of payment:

(A) payable solely from the Group I Interest Remittance Amount for that distribution date, to the holders of the Class A-1A Certificates, the related Monthly Interest Distributable Amount for the Class A-1A Certificates, and to the extent that the Group I Interest Remittance Amount is less than the related Monthly Interest Distributable Amount, from the Group II Cross Collateralization Amount for that distribution date, to the holders of the Class A-1A Certificates, the unpaid portion of the Monthly Interest Distributable Amount for the Class A-1A Certificates; and

(B) payable solely from the Group II Interest Remittance Amount for that distribution date, concurrently to the holders of the Class A-2A, Class A-2B, Class A-2C and Class A-2D Certificates, the Monthly Interest Distributable Amount for the Class A-2A, Class A-2B, Class A-2C and Class A-2D Certificates pro-rata based on the amounts of interest each such class is otherwise entitled to receive on that date, and to the extent that the Group II Interest Remittance Amount is less than the related aggregate Monthly Interest Distributable Amount, from the Group I Cross Collateralization Amount for that distribution date, to the holders of the Class A-2A, Class A-2B, Class A-2C and Class A-2D Certificates, the unpaid portion of the aggregate Monthly Interest Distributable Amount for the Class A-2A, Class A-2B, Class A-2C and Class A-2D Certificates, pro-rata based on the amounts of interest each such class is otherwise entitled to receive on that date;

(iii) third, payable from the remaining Group I Interest Remittance Amount and the remaining Group II Interest Remittance Amount in the following order:

(A) first, to the holders of the Class M-1 Certificates, the Monthly Interest Distributable Amount for the Class M-1 Certificates;

(B) second, to the holders of the Class M-2 Certificates, the Monthly Interest Distributable Amount for the Class M-2 Certificates;

(C) third, to the holders of the Class M-3 Certificates, the Monthly Interest Distributable Amount for the Class M-3 Certificates;

(D) fourth, to the holders of the Class M-4 Certificates, the Monthly Interest Distributable Amount for the Class M-4 Certificates;

(E) fifth, to the holders of the Class M-5 Certificates, the Monthly Interest Distributable Amount for the Class M-5 Certificates;

(F) sixth, to the holders of the Class M-6 Certificates, the Monthly Interest Distributable Amount for the Class M-6 Certificates;

(G) seventh, to the holders of the Class M-7 Certificates, the Monthly Interest Distributable Amount for the Class M-7 Certificates;

(H) eighth, to the holders of the Class M-8 Certificates, the Monthly Interest Distributable Amount for the Class M-8 Certificates;

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(I) ninth, to the holders of the Class M-9 Certificates, the Monthly Interest Distributable Amount for the Class M-9 Certificates;

(J) tenth, to the holders of the Class M-10 Certificates, the Monthly Interest Distributable Amount for the Class M-10 Certificates;

(iv) fourth, any remainder to be distributed as Excess Cashflow as described herein.

On any distribution date, any shortfalls resulting from the application of the Relief Act and any prepayment interest shortfalls to the extent not covered by compensating interest paid by the servicer will be applied to reduce first, the Excess Cashflow and second, the Monthly Interest Distributable Amounts with respect to the each class of Class A and Mezzanine Certificates on a pro-rata basis, based on the respective amounts of interest accrued on such certificates for such distribution date. The holders of the certificates will not be entitled to reimbursement for any such interest shortfalls.

Principal Allocations

(1) On each distribution date (a) prior to the Crossover Date or (b) on which a Trigger Event is in effect, the holders of each class of certificates will be entitled to receive distributions in respect of principal to the extent of the Principal Remittance Amount and the Extra Principal Distribution Amount (after making payments to the holders of the Class I Certificates in respect of any Class I Monthly Interest Distributable Amount remaining unpaid from the Interest Remittance Amount) in the following amounts and order:

(i) first, concurrently, with equal priority of distribution:

(A) payable solely from the Group I Principal Distribution Amount, to the holders of the Class A-1A Certificates, the entire amount of the Group I Principal Distribution Amount until the Certificate Balance of the Class A-1A Certificates has been reduced to zero; and

(B) payable solely from the Group II Principal Distribution Amount, to the holders of the Group II Certificates as described below, the entire amount of the Group II Principal Distribution Amount until the aggregate Certificate Balance of the Group II Certificates has been reduced to zero;

(ii) second,

(A) if the aggregate Certificate Balance of the Group I Certificates has been reduced to zero, then to the holders of the Group II Certificates the amount of any remaining Group I Principal Distribution Amount until the aggregate Certificate Balance of the Group II Certificates has been reduced to zero; or

(B) if the aggregate Certificate Balance of the Group II Certificates has been reduced to zero, then to the holders of the Class A-1A Certificates the amount of any remaining Group II Principal Distribution Amount until the Certificate Balance of the Class A-1A Certificates has been reduced to zero;

(iii) third, payable from the remaining Group I Principal Distribution Amount and the remaining Group II Principal Distribution Amount in the following order:

(A) first, to the holders of the Class M-1 Certificates, the entire remaining amount of the Principal Distribution Amount until the Certificate Balance of the Class M-1 Certificates has been reduced to zero;

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(B) second, to the holders of the Class M-2 Certificates, the entire remaining amount of the Principal Distribution Amount until the Certificate Balance of the Class M-2 Certificates has been reduced to zero;

(C) third, to the holders of the Class M-3 Certificates, the entire remaining amount of the Principal Distribution Amount until the Certificate Balance of the Class M-3 Certificates has been reduced to zero;

(D) fourth, to the holders of the Class M-4 Certificates, the entire remaining amount of the Principal Distribution Amount until the Certificate Balance of the Class M-4 Certificates has been reduced to zero;

(E) fifth, to the holders of the Class M-5 Certificates, the entire remaining amount of the Principal Distribution Amount until the Certificate Balance of the Class M-5 Certificates has been reduced to zero;

(F) sixth, to the holders of the Class M-6 Certificates, the entire remaining amount of the Principal Distribution Amount until the Certificate Balance of the Class M-6 Certificates has been reduced to zero;

(G) seventh, to the holders of the Class M-7 Certificates, the entire remaining amount of the Principal Distribution Amount until the Certificate Balance of the Class M-7 Certificates has been reduced to zero;

(H) eighth, to the holders of the Class M-8 Certificates, the entire remaining amount of the Principal Distribution Amount until the Certificate Balance of the Class M-8 Certificates has been reduced to zero;

(I) ninth, to the holders of the Class M-9 Certificates, the entire remaining amount of the Principal Distribution Amount until the Certificate Balance of the Class M-9 Certificates has been reduced to zero;

(J) tenth, to the holders of the Class M-10 Certificates, the entire remaining amount of the Principal Distribution Amount until the Certificate Balance of the Class M-10 Certificates has been reduced to zero;

(iv) fourth, payable from the remaining Principal Remittance Amount, to the holders of the Class C Certificates to be distributed as Excess Cashflow; and

(v) fifth, the remaining Principal Remittance Amount, to the holders of the residual certificates.

(2) On each distribution date (a) on or after the Crossover Date and (b) on which a Trigger Event is not in effect, the holders of each class of certificates will be entitled to receive distributions in respect of principal to the extent of the Principal Remittance Amount and the Extra Principal Distribution Amount (after making payments to the holders of the Class I Certificates in respect of any Class I Monthly Interest Distributable Amount remaining unpaid from the Interest Remittance Amount) in the following amounts and order:

(i) first, concurrently, with equal priority of distribution:

(A) payable solely from the Group I Principal Distribution Amount, to the holders of the Class A-1A Certificates, the Group I Certificate Principal Distribution Amount until the Certificate Balance of the Class A-1A Certificates has been reduced to zero; and

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(B) payable solely from the Group II Principal Distribution Amount, to the holders of the Group II Certificates as described below, the Group II Certificate Principal Distribution Amount until the aggregate Certificate Balance of the Group II Certificates has been reduced to zero;

(ii) second, concurrently, with equal priority of distribution:

(A) if the Group I Principal Distribution Amount was insufficient to pay the Group I Certificate Principal Distribution Amount, then payable from the remaining Group II Principal Distribution Amount, to the holders of the Class A-1A Certificates, the unpaid portion of the Group I Certificate Principal Distribution Amount; and

(B) if the Group II Principal Distribution Amount was insufficient to pay the Group II Certificate Principal Distribution Amount, then payable from the remaining Group I Principal Distribution Amount, to the holders of the Group II Certificates, the unpaid portion of the Group II Certificate Principal Distribution Amount;

(iii) third, payable from the remaining Group I Principal Distribution Amount and the remaining Group II Principal Distribution Amount in the following order:

(A) first, to the holders of the Class M-1 Certificates, the Class M-1 Principal Distribution Amount until the Certificate Balance of the Class M-1 Certificates has been reduced to zero;

(B) second, to the holders of the Class M-2 Certificates, the Class M-2 Principal Distribution Amount until the Certificate Balance of the Class M-2 Certificates has been reduced to zero;

(C) third, to the holders of the Class M-3 Certificates, the Class M-3 Principal Distribution Amount until the Certificate Balance of the Class M-3 Certificates has been reduced to zero;

(D) fourth, to the holders of the Class M-4 Certificates, the Class M-4 Principal Distribution Amount until the Certificate Balance of the Class M-4 Certificates has been reduced to zero;

(E) fifth, to the holders of the Class M-5 Certificates, the Class M-5 Principal Distribution Amount until the Certificate Balance of the Class M-5 Certificates has been reduced to zero;

(F) sixth, to the holders of the Class M-6 Certificates, the Class M-6 Principal Distribution Amount until the Certificate Balance of the Class M-6 Certificates has been reduced to zero;

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(G) seventh, to the holders of the Class M-7 Certificates, the Class M-7 Principal Distribution Amount until the Certificate Balance of the Class M-7 Certificates has been reduced to zero;

(H) eighth, to the holders of the Class M-8 Certificates, the Class M-8 Principal Distribution Amount until the Certificate Balance of the Class M-8 Certificates has been reduced to zero;

(I) ninth, to the holders of the Class M-9 Certificates, the Class M-9 Principal Distribution Amount until the Certificate Balance of the Class M-9 Certificates has been reduced to zero;

(J) tenth, to the holders of the Class M-10 Certificates, the Class M-10 Principal Distribution Amount until the Certificate Balance of the Class M-10 Certificates has been reduced to zero;

(iv) fourth, payable from the remaining Principal Remittance Amount, to the holders of the Class C Certificates to be distributed as Excess Cashflow, the remaining Principal Remittance Amount, up to the extent of the Overcollateralization Amount; and

(v) fifth, the remaining Principal Remittance Amount, to the holders of the residual certificates.

All principal amounts distributed to the Group II Certificates will be distributed in the following order:

(i)

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

(ii)

to the Class A-2B Certificates until its Certificate Balance has been reduced to zero,

(iii)

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

(iv)

to the Class A-2D Certificates until its Certificate Balance has been reduced to zero.

However, if all of the Mezzanine Certificates are reduced or written down to zero, any principal amounts to be distributed to the Group II Certificates will be distributed among the Classes of Group II Certificates pro rata, based on Certificate Balance, until their Certificate Balances are reduced to zero.

The allocation of principal with respect to the Class A Certificates on each distribution date prior to the Crossover Date or on which a Trigger Event has occurred will have the effect of accelerating the amortization of the Class A Certificates while, in the absence of realized losses, increasing the relative proportion of the trust’s assets represented by the Mezzanine Certificates and the Overcollateralization Amount. Increasing the relative proportion of the trust’s assets evidenced by the Mezzanine Certificates and the Overcollateralization Amount relative to that of the Class A Certificates is intended to preserve the availability of the subordination provided by the Mezzanine Certificates and the Overcollateralization Amount.

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Credit Enhancement

The credit enhancement provided for the benefit of the holders of the Certificates consists of subordination, as described below, Excess Cashflow and overcollateralization, as described under “Description of the Certificates—Overcollateralization Provisions, Allocation of Losses and Subsequent Recoveries,” mortgage insurance, as described in “Description of the Mortgage Pool—Private Mortgage Insurance Policies” and cross-collateralization, as described under “Description of the Certificates - Cross-Collateralization Provisions.”

The rights of the holders of the Class I Certificates to receive distributions are senior to all other certificates. The rights of the holders of the subordinate certificates to receive distributions will be subordinated, to the extent described herein, to the rights of the holders of the Class A Certificates and the Class I Certificates. The subordinate certificates include the Mezzanine and Class C Certificates. This subordination is intended to enhance the likelihood of regular receipt by the holders of the Class A Certificates and the Class I Certificates of the full amount of their scheduled monthly distributions of interest and principal, as applicable, and to afford such holders protection against realized losses.

The protection afforded to the holders of the Class A Certificates and Class I Certificates by means of the subordination of the subordinate certificates will be accomplished by (i) the preferential right of the holders of the Class A Certificates and Class I Certificates to receive on any distribution date, prior to distribution on the subordinate certificates, distributions in respect of interest and principal, as applicable, subject to funds available for such distributions and (ii) if necessary, the right of the holders of the Class A Certificates and Class I Certificates to future distributions of amounts that would otherwise be payable to the holders of the subordinate certificates.

The rights of the holders of Mezzanine Certificates with lower numerical class designations will be senior to the rights of the holders of Mezzanine Certificates with higher numerical class designations, and the rights of the holders of the Mezzanine Certificates to receive distributions in respect of the mortgage loans (other than any prepayment penalties collected, which will be paid to the Class C Certificates) will be senior to the rights of the holders of the Class C Certificates. This subordination is intended to enhance the likelihood of regular receipt by the holders of more senior certificates of distributions in respect of interest and principal and to afford such holders protection against realized losses.

Overcollateralization Provisions, Allocation of Losses and Subsequent Recoveries

The issuing entity will initially have an overcollateralization level of approximately 4.25% meaning that the initial aggregate Certificate Balance of the Class A Certificates and Mezzanine Certificates will equal approximately 95.75% of the sum of (i) the aggregate principal balance of the initial mortgage loans as of the cut-off date and (ii) the original pre-funded amount.

The dollar amount of the excess of (i) the aggregate principal balance of the mortgage loans plus any amount on deposit in the pre-funding account over (ii) and the aggregate Certificate Balance of the Class A Certificates and Mezzanine Certificates is the “Overcollateralization Amount.” Realized losses on the mortgage pool will be allocated first to the Excess Cashflow and second to the Overcollateralization Amount. The Overcollateralization Amount is represented by the Class C Certificates, which will receive distributions of that portion of the Principal Remittance Amount not required to be distributed to any class of Class A or Mezzanine Certificates.

The Overcollateralization Amount, if reduced, will thereafter be increased through the application of available Excess Cashflow until the Required Overcollateralization Amount is restored.

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The pooling and servicing agreement requires that, on each distribution date, the Excess Cashflow, if any, be applied on such distribution date as an accelerated payment of principal on the class or classes of Class A and Mezzanine Certificates then entitled to receive distributions in respect of principal, but only to the limited extent hereafter described.

With respect to any distribution date, any Excess Cashflow will be distributed as follows (the “Excess Cashflow Distribution”):

(i) to the class or classes of Class A and Mezzanine Certificates then entitled to receive distributions in respect of principal, in an amount equal to any Extra Principal Distribution Amount, distributable to such classes in the same order of priority as the Group I Principal Distribution Amount and the Group II Principal Distribution Amount as described under “Description of the Certificates—Principal Allocations” above;

(ii) to the supplemental interest trust to be distributed as described under “Description of the Certificates — Supplemental Interest Trust;”

(iii) any remaining amounts to the holders of the residual certificates, as provided in the pooling and servicing agreement.

Any realized losses on the mortgage loans will be allocated:

(i) first, to the Excess Cashflow;

(ii) second, to the Overcollateralization Amount, which is represented by the Class C Certificates;

(iii) third, to the Class M-10 Certificates;

(iv) fourth, to the Class M-9 Certificates;

(v) fifth, to the Class M-8 Certificates;

(vi) sixth, to the Class M-7 Certificates;

(vii) seventh, to the Class M-6 Certificates;

(viii) eighth, to the Class M-5 Certificates;

(ix) ninth, to the Class M-4 Certificates;

(x) tenth, to the Class M-3 Certificates;

(xi) eleventh, to the Class M-2 Certificates; and

(xii) twelfth, to the Class M-1 Certificates;

until each respective Certificate Balance is reduced to zero.

The pooling and servicing agreement does not permit the allocation of realized losses to the Class A Certificates or the Class I Certificates.

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Once realized losses have been allocated to the Class C Certificates or Mezzanine Certificates, such amounts with respect to such certificates will no longer accrue interest (if applicable), however such amounts may thereafter be reinstated as a result of Subsequent Recoveries on the mortgage loans, and with respect to the Class C Certificates such amounts may be reinstated through the application of Excess Cashflow.

Any allocation of a realized loss to a class of certificates will be made by reducing that certificate’s Certificate Balance by the amount allocated to that class as of the distribution date in the month following the calendar month in which the realized loss was incurred.

Subsequent Recoveries on the mortgage loans will be allocated to increase the Certificate Balances as follows: first, to the Class M-1 Certificates, second, to the Class M-2 Certificates, third, to the Class M-3 Certificates, fourth, to the Class M-4 Certificates, fifth, to the Class M-5 Certificates, sixth, to the Class M-6 Certificates, seventh, to the Class M-7 Certificates, eighth, to the Class M-8 Certificates, ninth, to the Class M-9 Certificates and tenth, to the Class M-10 Certificates, in each case only to the extent that the Certificate Balance of such class had previously been reduced in accordance with the realized loss allocation provisions above or written-down. Any excess Subsequent Recoveries after the allocations just described will be allocated to the Overcollateralization Amount, which is represented by the Class C Certificates.

The Group I mortgage loans primarily support the Group I Certificates. The Group II mortgage loans primarily support the Group II Certificates. Both groups of mortgage loans provide support to the Class I Certificates, Mezzanine Certificates and Class C Certificates. To the extent that available funds from one group of mortgage loans are insufficient to make a required distribution of interest to its related Class A Certificates, then any remaining available funds from the other group, after distribution of interest to its related Class A Certificates, may be used to make up the deficit in such required distribution. Likewise, remaining funds from a group after making the required distribution of principal to its related Class A Certificates may be used to make up the deficit in such required principal distribution on the other classes of Class A Certificates.

Definitions

The “Certificate Balance” of any Class A Certificate or Mezzanine Certificate immediately prior to any distribution date will be equal to the Certificate Balance of that certificate on the closing date reduced by the sum of all amounts actually distributed as principal to that class and realized losses allocated to that certificate on all prior distribution dates plus any Reinstatement Amounts previously allocated to that class.

The “Class A Principal Distribution Amount” for a distribution date is the sum of the Group I Certificate Principal Distribution Amount and the Group II Certificate Principal Distribution Amount for such distribution date.

The “Class I Monthly Interest Distributable Amount,” for each distribution date up to and including the distribution date on which the latest maturing hedge agreements terminate, is an amount generally equal to the sum of (a) the aggregate of, with respect to each hedge agreement outstanding on that distribution date, the product of (i) the fixed rate borne (accrued on a 30/360 basis) by each such hedge agreement then in effect, and (ii) the related hedge agreement’s notional amount described in this prospectus supplement and (b) any unpaid termination payments due to a Hedge Provider other than Defaulted Hedge Termination Payments.

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The “Class M-1 Principal Distribution Amount” for a distribution date is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Balance of the Class A Certificates (after taking into account the payment of the Class A Principal Distribution Amount on such distribution date) and (ii) the Certificate Balance of the Class M-1 Certificates immediately prior to such distribution date over (y) the lesser of (A) the product of (i) 62.70% and (ii) the aggregate principal balance of the mortgage loans as of the last day of the related due period (after giving effect to scheduled payments of principal due during the related due period, to the extent received or advanced, and unscheduled collections of principal received during the related prepayment period) together with any amount then on deposit in the pre-funding account on such distribution date and (B) the aggregate principal balance of the mortgage loans as of the last day of the related due period (after giving effect to scheduled payments of principal due during the related due period, to the extent received or advanced, and unscheduled collections of principal received during the related prepayment period) together with any amount then on deposit in the pre-funding account on such distribution date, minus approximately $7,000,000.

The “Class M-2 Principal Distribution Amount” for a distribution date is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Balance of the Class A Certificates (after taking into account the payment of the Class A Principal Distribution Amount on such distribution date) (ii) the Certificate Balance of the Class M-1 Certificates (after taking into account the payment of the Class M-1 Principal Distribution Amount on such distribution date) and (iii) the Certificate Balance of the Class M-2 Certificates immediately prior to such distribution date over (y) the lesser of (A) the product of (i) 69.80% and (ii) the aggregate principal balance of the mortgage loans as of the last day of the related due period (after giving effect to scheduled payments of principal due during the related due period, to the extent received or advanced, and unscheduled collections of principal received during the related prepayment period) together with any amount then on deposit in the pre-funding account on such distribution date and (B) the aggregate principal balance of the mortgage loans as of the last day of the related due period (after giving effect to scheduled payments of principal due during the related due period, to the extent received or advanced, and unscheduled collections of principal received during the related prepayment period) together with any amount then on deposit in the pre-funding account on such distribution date, minus approximately $7,000,000.

The “Class M-3 Principal Distribution Amount” for a distribution date is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Balance of the Class A Certificates (after taking into account the payment of the Class A Principal Distribution Amount on such distribution date) (ii) the Certificate Balance of the Class M-1 Certificates (after taking into account the payment of the Class M-1 Principal Distribution Amount on such distribution date), (iii) the Certificate Balance of the Class M-2 Certificates (after taking into account the payment of the Class M-2 Principal Distribution Amount on such distribution date) and (iv) the Certificate Balance of the Class M-3 Certificates immediately prior to such distribution date over (y) the lesser of (A) the product of (i) 73.20% and (ii) the aggregate principal balance of the mortgage loans as of the last day of the related due period (after giving effect to scheduled payments of principal due during the related due period, to the extent received or advanced, and unscheduled collections of principal received during the related prepayment period) together with any amount then on deposit in the pre-funding account on such distribution date and (B) the aggregate principal balance of the mortgage loans as of the last day of the related due period (after giving effect to scheduled payments of principal due during the related due period, to the extent received or advanced, and unscheduled collections of principal received during the related prepayment period) together with any amount then on deposit in the pre-funding account on such distribution date, minus approximately $7,000,000.

The “Class M-4 Principal Distribution Amount” for a distribution date is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Balance of the Class A Certificates (after taking into account the payment of the Class A Principal Distribution Amount on such distribution date), (ii) the Certificate Balance of the Class M-1 Certificates (after taking into account the payment of the Class M-1 Principal Distribution Amount on such distribution date), (iii) the Certificate Balance of the Class M-2 Certificates (after taking into account the payment of the Class M-2 Principal Distribution Amount on such distribution date), (iv) the Certificate Balance of the Class M-3 Certificates (after taking into account the payment of the Class M-3 Principal Distribution Amount on such distribution date) and (v) the Certificate Balance of the Class M-4 Certificates immediately prior to such distribution date over (y) the lesser of (A) the product of (i) 76.30% and (ii) the aggregate principal balance of the mortgage loans as of the last day of the related due period (after giving effect to scheduled payments of principal due during the related due period, to the extent received or advanced, and unscheduled collections of principal received during the related prepayment period) together with any amount then on deposit in the pre-funding account on such distribution date and (B) the aggregate principal balance of the mortgage loans as of the last day of the related due period (after giving effect to scheduled payments of principal due during the related due period, to the extent received or advanced, and unscheduled collections of principal received during the related prepayment period) together with any amount then on deposit in the pre-funding account on such distribution date, minus approximately $7,000,000.

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The “Class M-5 Principal Distribution Amount” for a distribution date is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Balance of the Class A Certificates (after taking into account the payment of the Class A Principal Distribution Amount on such distribution date), (ii) the Certificate Balance of the Class M-1 Certificates (after taking into account the payment of the Class M-1 Principal Distribution Amount on such distribution date), (iii) the Certificate Balance of the Class M-2 Certificates (after taking into account the payment of the Class M-2 Principal Distribution Amount on such distribution date), (iv) the Certificate Balance of the Class M-3 Certificates (after taking into account the payment of the Class M-3 Principal Distribution Amount on such distribution date), (v) the Certificate Balance of the Class M-4 Certificates (after taking into account the payment of the Class M-4 Principal Distribution Amount on such distribution date) and (vi) the Certificate Balance of the Class M-5 Certificates immediately prior to such distribution date over (y) the lesser of (A) the product of (i) 79.40% and (ii) the aggregate principal balance of the mortgage loans as of the last day of the related due period (after giving effect to scheduled payments of principal due during the related due period, to the extent received or advanced, and unscheduled collections of principal received during the related prepayment period) together with any amount then on deposit in the pre-funding account on such distribution date and (B) the aggregate principal balance of the mortgage loans as of the last day of the related due period (after giving effect to scheduled payments of principal due during the related due period, to the extent received or advanced, and unscheduled collections of principal received during the related prepayment period) together with any amount then on deposit in the pre-funding account on such distribution date, minus approximately $7,000,000.

The “Class M-6 Principal Distribution Amount” for a distribution date is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Balance of the Class A Certificates (after taking into account the payment of the Class A Principal Distribution Amount on such distribution date), (ii) the Certificate Balance of the Class M-1 Certificates (after taking into account the payment of the Class M-1 Principal Distribution Amount on such distribution date), (iii) the Certificate Balance of the Class M-2 Certificates (after taking into account the payment of the Class M-2 Principal Distribution Amount on such distribution date), (iv) the Certificate Balance of the Class M-3 Certificates (after taking into account the payment of the Class M-3 Principal Distribution Amount on such distribution date), (v) the Certificate Balance of the Class M-4 Certificates (after taking into account the payment of the Class M-4 Principal Distribution Amount on such distribution date), (vi) the Certificate Balance of the Class M-5 Certificates (after taking into account the payment of the Class M-5 Principal Distribution Amount on such distribution date) and (vii) the Certificate Balance of the Class M-6 Certificates immediately prior to such distribution date over (y) the lesser of (A) the product of (i) 82.10% and (ii) the aggregate principal balance of the mortgage loans as of the last day of the related due period (after giving effect to scheduled payments of principal due during the related due period, to the extent received or advanced, and unscheduled collections of principal received during the related prepayment period) together with any amount then on deposit in the pre-funding account on such distribution date and (B) the aggregate principal balance of the mortgage loans as of the last day of the related due period (after giving effect to scheduled payments of principal due during the related due period, to the extent received or advanced, and unscheduled collections of principal received during the related prepayment period) together with any amount then on deposit in the pre-funding account on such distribution date, minus approximately $7,000,000.

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The “Class M-7 Principal Distribution Amount” for a distribution date is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Balance of the Class A Certificates (after taking into account the payment of the Class A Principal Distribution Amount on such distribution date), (ii) the Certificate Balance of the Class M-1 Certificates (after taking into account the payment of the Class M-1 Principal Distribution Amount on such distribution date), (iii) the Certificate Balance of the Class M-2 Certificates (after taking into account the payment of the Class M-2 Principal Distribution Amount on such distribution date), (iv) the Certificate Balance of the Class M-3 Certificates (after taking into account the payment of the Class M-3 Principal Distribution Amount on such distribution date), (v) the Certificate Balance of the Class M-4 Certificates (after taking into account the payment of the Class M-4 Principal Distribution Amount on such distribution date), (vi) the Certificate Balance of the Class M-5 Certificates (after taking into account the payment of the Class M-5 Principal Distribution Amount on such distribution date), (vii) the Certificate Balance of the Class M-6 Certificates (after taking into account the payment of the Class M-6 Principal Distribution Amount on such distribution date) and (viii) the Certificate Balance of the Class M-7 Certificates immediately prior to that distribution date over (y) the lesser of (A) the product of (i) 84.80% and (ii) the aggregate principal balance of the mortgage loans as of the last day of the related due period (after giving effect to scheduled payments of principal due during the related due period, to the extent received or advanced, and unscheduled collections of principal received during the related prepayment period) together with any amount then on deposit in the pre-funding account on such distribution date and (B) the aggregate principal balance of the mortgage loans as of the last day of the related due period (after giving effect to scheduled payments of principal due during the related due period, to the extent received or advanced, and unscheduled collections of principal received during the related prepayment period) together with any amount then on deposit in the pre-funding account on such distribution date, minus approximately $7,000,000.

The “Class M-8 Principal Distribution Amount” for a distribution date is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Balance of the Class A Certificates (after taking into account the payment of the Class A Principal Distribution Amount on such distribution date), (ii) the Certificate Balance of the Class M-1 Certificates (after taking into account the payment of the Class M-1 Principal Distribution Amount on such distribution date), (iii) the Certificate Balance of the Class M-2 Certificates (after taking into account the payment of the Class M-2 Principal Distribution Amount on such distribution date), (iv) the Certificate Balance of the Class M-3 Certificates (after taking into account the payment of the Class M-3 Principal Distribution Amount on such distribution date), (v) the Certificate Balance of the Class M-4 Certificates (after taking into account the payment of the Class M-4 Principal Distribution Amount on such distribution date), (vi) the Certificate Balance of the Class M-5 Certificates (after taking into account the payment of the Class M-5 Principal Distribution Amount on such distribution date), (vii) the Certificate Balance of the Class M-6 Certificates (after taking into account the payment of the Class M-6 Principal Distribution Amount on such distribution date), (viii) the Certificate Balance of the Class M-7 Certificates (after taking into account the payment of the Class M-7 Principal Distribution Amount on such distribution date) and (ix) the Certificate Balance of the Class M-8 Certificates immediately prior to such distribution date over (y) the lesser of (A) the product of (i) 87.00% and (ii) the aggregate principal balance of the mortgage loans as of the last day of the related due period (after giving effect to scheduled payments of principal due during the related due period, to the extent received or advanced, and unscheduled collections of principal received during the related prepayment period) together with any amount then on deposit in the pre-funding account on such distribution date and (B) the aggregate principal balance of the mortgage loans as of the last day of the related due period (after giving effect to scheduled payments of principal due during the related due period, to the extent received or advanced, and unscheduled collections of principal received during the related prepayment period) together with any amount then on deposit in the pre-funding account on such distribution date, minus approximately $7,000,000.

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The “Class M-9 Principal Distribution Amount” for a distribution date is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Balance of the Class A Certificates (after taking into account the payment of the Class A Principal Distribution Amount on such distribution date), (ii) the Certificate Balance of the Class M-1 Certificates (after taking into account the payment of the Class M-1 Principal Distribution Amount on such distribution date), (iii) the Certificate Balance of the Class M-2 Certificates (after taking into account the payment of the Class M-2 Principal Distribution Amount on such distribution date), (iv) the Certificate Balance of the Class M-3 Certificates (after taking into account the payment of the Class M-3 Principal Distribution Amount on such distribution date), (v) the Certificate Balance of the Class M-4 Certificates (after taking into account the payment of the Class M-4 Principal Distribution Amount on such distribution date), (vi) the Certificate Balance of the Class M-5 Certificates (after taking into account the payment of the Class M-5 Principal Distribution Amount on such distribution date), (vii) the Certificate Balance of the Class M-6 Certificates (after taking into account the payment of the Class M-6 Principal Distribution Amount on such distribution date), (viii) the Certificate Balance of the Class M-7 Certificates (after taking into account the payment of the Class M-7 Principal Distribution Amount on such distribution date), (ix) the Certificate Balance of the Class M-8 Certificates (after taking into account the payment of the Class M-8 Principal Distribution Amount on such distribution date) and (x) the Certificate Balance of the Class M-9 Certificates immediately prior to such distribution date over (y) the lesser of (A) the product of (i) 89.20% and (ii) the aggregate principal balance of the mortgage loans as of the last day of the related due period (after giving effect to scheduled payments of principal due during the related due period, to the extent received or advanced, and unscheduled collections of principal received during the related prepayment period) together with any amount then on deposit in the pre-funding account on such distribution date and (B) the aggregate principal balance of the mortgage loans as of the last day of the related due period (after giving effect to scheduled payments of principal due during the related due period, to the extent received or advanced, and unscheduled collections of principal received during the related prepayment period) together with any amount then on deposit in the pre-funding account on such distribution date, minus approximately $7,000,000.

The “Class M-10 Principal Distribution Amount” for a distribution date is an amount equal to the excess of (x) the sum of (i) the aggregate Certificate Balance of the Class A Certificates (after taking into account the payment of the Class A Principal Distribution Amount on such distribution date), (ii) the Certificate Balance of the Class M-1 Certificates (after taking into account the payment of the Class M-1 Principal Distribution Amount on such distribution date), (iii) the Certificate Balance of the Class M-2 Certificates (after taking into account the payment of the Class M-2 Principal Distribution Amount on such distribution date), (iv) the Certificate Balance of the Class M-3 Certificates (after taking into account the payment of the Class M-3 Principal Distribution Amount on such distribution date), (v) the Certificate Balance of the Class M-4 Certificates (after taking into account the payment of the Class M-4 Principal Distribution Amount on such distribution date), (vi) the Certificate Balance of the Class M-5 Certificates (after taking into account the payment of the Class M-5 Principal Distribution Amount on such distribution date), (vii) the Certificate Balance of the Class M-6 Certificates (after taking into account the payment of the Class M-6 Principal Distribution Amount on such distribution date), (viii) the Certificate Balance of the Class M-7 Certificates (after taking into account the payment of the Class M-7 Principal Distribution Amount on such distribution date), (ix) the Certificate Balance of the Class M-8 Certificates (after taking into account the payment of the Class M-8 Principal Distribution Amount on such distribution date), (x) the Certificate Balance of the Class M-9 Certificates (after taking into account the payment of the Class M-9 Principal Distribution Amount on such distribution date) and (xi) the Certificate Balance of the Class M-10 Certificates immediately prior to such distribution date) over (y) the lesser of (A) the product of (i) 91.50% and (ii) the aggregate principal balance of the mortgage loans as of the last day of the related due period (after giving effect to scheduled payments of principal due during the related due period, to the extent received or advanced, and unscheduled collections of principal received during the related prepayment period) together with any amount then on deposit in the pre-funding account on such distribution date and (B) the aggregate principal balance of the mortgage loans as of the last day of the related due period (after giving effect to scheduled payments of principal due during the related due period, to the extent received or advanced, and unscheduled collections of principal received during the related prepayment period) together with any amount then on deposit in the pre-funding account on such distribution date, minus approximately $7,000,000.

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The “Crossover Date” means the earlier to occur of (i) the distribution date after the distribution date on which the aggregate Certificate Balance of the Class A Certificates is reduced to zero; and (ii) the later to occur of (x) the distribution date in June 2010 and (y) the first distribution date on which the Senior Credit Enhancement Percentage (calculated for this purpose only after taking into account distributions of principal on the mortgage loans but prior to the principal distributions to the certificates) is greater than or equal to 47.40%.

The “Current Interest” for any distribution date and each class of Class A and Mezzanine Certificates equals the amount of interest accrued during the related accrual period at the related pass-through rate on the Certificate Balance of such class immediately prior to such distribution date, in each case, reduced by any prepayment interest shortfalls allocated to that class and shortfalls resulting from the application of the Relief Act (allocated to each certificate based on its respective entitlements to interest irrespective of any prepayment interest shortfalls or shortfalls resulting from the application of the Relief Act for that distribution date).

A “Defaulted Hedge Termination Payment” is any termination payment required to be made by the supplemental interest trust to any Hedge Provider pursuant to a Hedge Agreement as a result of an “Event of Default” with respect to which the related Hedge Provider is the “Defaulting Party” or a “Termination Event” (other than “Illegality” or “Tax Event”) (each as defined in the Hedge Agreements) with respect to which the Hedge Provider is the sole “Affected Party.”

A mortgage loan is “delinquent” if any monthly payment due on a due date is not made by the close of business on the next scheduled due date. A mortgage loan is “30 days delinquent” if such monthly payment has not been received by the close of business on the corresponding day of the month immediately succeeding the month in which such monthly payment was due or, if there was no such corresponding day (e.g., as when a 30-day month follows a 31-day month in which a payment was due on the 31st day of such month), then on the last day of such immediately succeeding month; and similarly for “60 days delinquent” and “90 days delinquent,” etc.

A “due period” with respect to any distribution date is the period commencing on the second day of the month preceding the month in which such distribution date occurs and ending on the first day of the month in which such distribution date occurs.

The “Excess Cashflow” for any distribution date is equal to the sum of (i) the Overcollateralization Release Amount and (ii) the excess of (a) the Interest Remittance Amount over (b) the sum of the Monthly Interest Distributable Amounts for the Class I, Class A and Mezzanine Certificates and any administrative fees.

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The “Extra Principal Distribution Amount” for any distribution date is the lesser of (x) the sum of (a) Excess Cashflow for such distribution date and (b) the amount remaining in the supplemental interest trust after funding amounts in clause (i) under “Description of the Certificates—Supplemental Interest Trust” above, for such distribution date, and (y) the Overcollateralization Deficiency Amount for such distribution date.

A “Group” means the Group I mortgage loans or the Group II mortgage loans, as applicable.

The “Group I Allocation Percentage” for any distribution date is the percentage equivalent of a fraction, the numerator of which is (i) the Group I Principal Remittance Amount for such distribution date and the denominator of which is (ii) the Principal Remittance Amount for such distribution date.

The “Group I Basic Principal Distribution Amount” means with respect to any distribution date the excess of (i) the Group I Principal Remittance Amount for such distribution date over (ii) the Overcollateralization Release Amount, if any, for such distribution date multiplied by the Group I Allocation Percentage.

The “Group I Certificate Principal Distribution Amount” for a distribution date is an amount equal to the excess of (x) the Certificate Balance of the Class A-1A Certificates immediately prior to that distribution date over (y) the lesser of (A) the product of (i) 52.60% and (ii) the aggregate principal balance of the Group I mortgage loans as of the last day of the related due period (after giving effect to scheduled payments of principal due during the related due period, to the extent received or advanced, and unscheduled collections of principal received during the related prepayment period) together with any amount then on deposit in the pre-funding account on such distribution date and (B) the aggregate principal balance of the Group I mortgage loans as of the last day of the related due period (after giving effect to scheduled payments of principal due during the related due period, to the extent received or advanced, and unscheduled collections of principal received during the related prepayment period) together with any amount then on deposit in the pre-funding account on such distribution date, minus approximately $5,107,266.

The “Group I Cross Collateralization Amount” for any distribution date is the portion of the Group I Interest Remittance Amount remaining after payment of the Monthly Interest Distributable Amount on the Group I Certificates, the related proportional amount of the Class I Monthly Interest Distributable Amount and the related proportional amount of administrative fees.

The “Group I Interest Remittance Amount” for any distribution date is the portion of the Interest Remittance Amount that was collected or advanced on the Group I mortgage loans plus the amount, if any, transferred from the interest coverage account.

The “Group I Principal Distribution Amount” with respect to any distribution date is the sum of (i) the Group I Basic Principal Distribution Amount for such distribution date and (ii) the Extra Principal Distribution Amount for such distribution date multiplied by the Group I Allocation Percentage.

The “Group I Principal Remittance Amount” for any distribution date is that portion of the Principal Remittance Amount that was collected or advanced on the Group I mortgage loans.

The “Group II Allocation Percentage” for any distribution date is the percentage equivalent of a fraction, the numerator of which is (i) the Group II Principal Remittance Amount for such distribution date and the denominator of which is (ii) the Principal Remittance Amount for such distribution date.

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The “Group II Basic Principal Distribution Amount” means with respect to any distribution date the excess of (i) the Group II Principal Remittance Amount for such distribution date over (ii) the Overcollateralization Release Amount, if any, for such distribution date multiplied by the Group II Allocation Percentage.

The “Group II Certificate Principal Distribution Amount” for a distribution date is an amount equal to the excess of (x) the aggregate Certificate Balance of the Group II Certificates immediately prior to that distribution date over (y) the lesser of (A) the product of (i) 52.60% and (ii) the aggregate principal balance of the Group II mortgage loans as of the last day of the related due period (after giving effect to scheduled payments of principal due during the related due period, to the extent received or advanced, and unscheduled collections of principal received during the related prepayment period) together with any amount then on deposit in the pre-funding account on such distribution date and (B) the aggregate principal balance of the Group II mortgage loans as of the last day of the related due period (after giving effect to scheduled payments of principal due during the related due period, to the extent received or advanced, and unscheduled collections of principal received during the related prepayment period) together with any amount then on deposit in the pre-funding account on such distribution date, minus approximately $1,892,734.

The “Group II Cross Collateralization Amount” for any distribution date is the portion of the Group II Interest Remittance Amount remaining after payment of the aggregate Monthly Interest Distributable Amounts on the Group II Certificates, the related proportional amount of the Class I Monthly Interest Distributable Amount and the related proportional amount of administrative fees.

The “Group II Interest Remittance Amount” for any distribution date is the portion of the Interest Remittance Amount that was collected or advanced on the Group II mortgage loans plus the amount, if any, transferred from the interest coverage account.

The “Group II Principal Distribution Amount” with respect to any distribution date is the sum of (i) the Group II Basic Principal Distribution Amount for such distribution date and (ii) the Extra Principal Distribution Amount for such distribution date multiplied by the Group II Allocation Percentage.

The “Group II Principal Remittance Amount” for any distribution date is that portion of the Principal Remittance Amount that was collected or advanced on the Group II mortgage loans.

The “Interest Remittance Amount” for any distribution date is that portion of the Available Funds for that distribution date allocable to interest (excluding prepayment penalties).

The “Interest Remittance Formula Amount” as of any distribution date and any Group, is an amount equal to (1) the product of (x) 1/12 of the weighted average coupon rate of the related Group as of the beginning of the related due period and (y) the aggregate principal balance of the mortgage loans related to such Group as of the beginning of the related due period minus (2) the aggregate amount of Relief Act shortfalls and prepayment interest shortfalls on such Group for the related prepayment period.

The “Monthly Interest Distributable Amount” for any distribution date and class of Class A or Mezzanine Certificates is the sum of (1) the Unpaid Interest Shortfall Amount for that class and distribution date and (2) the Current Interest for that class and distribution date. In the event of a shortfall in the full amount necessary to pay both the Unpaid Interest Shortfall Amount and the Current Interest for a class, distributions will first be applied to the Unpaid Interest Shortfall Amount and then to the Current Interest.

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The “Overcollateralization Amount” on a distribution date is equal to (a) the sum of (i) the aggregate principal balance of the mortgage loans after giving effect to distributions of principal on the mortgage loans and (ii) any remaining pre-funded amount, minus (b) the aggregate Certificate Balance of the Class A and Mezzanine Certificates after giving effect to principal distributions on the Class A and Mezzanine Certificates on such distribution date.

The “Overcollateralization Deficiency Amount” with respect to any distribution date equals the amount, if any, by which the Required Overcollateralization Amount exceeds the Overcollateralization Amount on such distribution date (after giving effect to any distributions in respect of the Group I Basic Principal Distribution Amount and the Group II Basic Principal Distribution Amount on such distribution date).

The “Overcollateralization Release Amount” means, with respect to any distribution date, the lesser of (x) the Principal Remittance Amount for such distribution date and (y) the excess, if any, of (i) the Overcollateralization Amount for such distribution date (assuming that 100% of the Principal Remittance Amount is applied as a principal payment on such distribution date) over (ii) the Required Overcollateralization Amount for such distribution date.

The “Prepayment Period” for any distribution date is the period commencing on the day after the determination date in the month preceding the month in which such distribution date falls (or, in the case of the first distribution date, from the cut-off date) and ending on the determination date of the calendar month in which such distribution date falls.

The “Principal Distribution Amount” with respect to any distribution date, is the sum of the Group I Principal Distribution Amount and the Group II Principal Distribution Amount for such distribution date.

The “Principal Remittance Amount” means with respect to any distribution date, the sum of (i) all scheduled payments of principal collected or advanced on the mortgage loans by the servicer that were due during the related due period, (ii) the principal portion of all partial and full principal prepayments of the mortgage loans applied by the servicer during such prepayment period, (iii) the principal portion of all related net liquidation proceeds and insurance proceeds received during such prepayment period, (iv) that portion of the purchase price, representing principal of any repurchased mortgage loan, deposited to the collection account during such prepayment period, (v) the principal portion of any related substitution adjustments deposited in the collection account during such prepayment period, (vi) on the distribution date which follows the termination of the pre-funding period, the remaining amount on deposit in the pre-funding account at that time, (vii) Subsequent Recoveries to pay certain certificates amounts in respect of realized losses allocated to such certificates and (viii) on the distribution date on which the issuing entity is to be terminated, that portion of the termination price relating to principal.

The “Reinstatement Amount” means with respect to any distribution date, the aggregate amount of all Subsequent Recoveries received during the related due period.

The “Required Overcollateralization Amount” for any distribution date is equal to:

(i) prior to the Crossover Date, 4.25% of the sum of (x) aggregate principal balance of the initial mortgage loans as of the cut-off date and (y) the original pre-funded amount.

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(ii) on or after the Crossover Date, the greater of:

(a) 0.50% of the sum of (i) the aggregate principal balance of the initial mortgage loans as of the cut-off date and (ii) the original pre-funded amount; and

(b) 8.50% of the current aggregate principal balance of the mortgage loans as of the end of the related due period (after giving effect to principal prepayments in the related prepayment period) and amounts remaining in the pre-funding account.

On any distribution date on which a Trigger Event is in effect, the Required Overcollateralization Amount will be equal to the Required Overcollateralization Amount as of the preceding distribution date.

The “Senior Credit Enhancement Percentage” for a distribution date is equal to (i) the sum of (a) the aggregate principal balance of the Subordinate Certificates and (b) the Overcollateralization Amount divided by (ii) the aggregate principal balance of the mortgage loans (calculated prior to taking into account distributions of principal on the mortgage loans and prior to taking into account distributions on the related certificates on such distribution date) and any pre-funded amount remaining.

A “Subsequent Recovery” with respect to any liquidated mortgage loan that had previously been the subject of a realized loss, is any principal amount subsequently received in connection with such mortgage loan.

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A “Trigger Event” is in effect with respect to any distribution date on or after the Crossover Date if either (i) the three month average 60+ day delinquency percentage exceeds 33.76% of the current Senior Credit Enhancement Percentage or (ii) cumulative realized losses as a percentage of the sum of (x) the aggregate principal balance of the initial mortgage loans as of the cut-off date and (y) the original pre-funded amount are greater than the applicable percentage set forth below with respect to such distribution date:

Distribution Date Occurring In:		Percentage
June 2009		1.60%
July 2009		1.76%
August 2009		1.93%
September 2009		2.09%
October 2009		2.25%
November 2009		2.41%
December 2009		2.58%
January 2010		2.74%
February 2010		2.90%
March 2010		3.06%
April 2010		3.23%
May 2010		3.39%
June 2010		3.55%
July 2010		3.73%
August 2010		3.90%
September 2010		4.08%
October 2010		4.25%
November 2010		4.43%
December 2010		4.60%
January 2011		4.78%
February 2011		4.95%
March 2011		5.13%
April 2011		5.30%
May 2011		5.48%
June 2011		5.65%
July 2011		5.79%
August 2011		5.93%
September 2011		6.06%
October 2011		6.20%
November 2011		6.34%
December 2011		6.48%
January 2012		6.61%
February 2012		6.75%
March 2012		6.89%
April 2012		7.03%
May 2012		7.16%
June 2012		7.30%

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Distribution Date Occurring In:		Percentage
July 2012		7.38%
August 2012		7.47%
September 2012		7.55%
October 2012		7.63%
November 2012		7.72%
December 2012		7.80%
January 2013		7.88%
February 2013		7.97%
March 2013		8.05%
April 2013		8.13%
May 2013		8.22%
June 2013 and thereafter		8.30%

The “Unpaid Interest Shortfall Amount” means (i) for each class of Class A and Mezzanine Certificates and the first distribution date, zero, and (ii) with respect to each class of Class A and Mezzanine Certificates and the Class I Certificates and any distribution date after the first distribution date, the amount, if any, by which (a) the Monthly Interest Distributable Amount for such class for the immediately preceding distribution date exceeds (b) the aggregate amount distributed on such class in respect of interest on such preceding distribution date, plus interest on that amount to the extent permitted by law, at the pass-through rate for such class for the related accrual period.

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Fees and Expenses

The following table provides an itemized list of the administrative fees and expenses that will be paid on each distribution date.

Fee	General Purpose of the Fee	Party Receiving the Fee	Amount or Calculation of Fee
Servicing Fee(1)	performance of the servicer’s duties under the pooling and servicing agreement	NovaStar Mortgage, Inc.	on each distribution date 1/12 of 0.50% per annum times the aggregate principal balance of the mortgage loans as of such date.

Trustee Fee(1)	performance of the trustee’s duties under the pooling and servicing agreement	Deutsche Bank National Trust Company	on each distribution date 1/12 of 0.0025% times the sum of (a) the aggregate principal balance of the mortgage loans and (b) any amounts in the pre-funding account as of such date as well as any due and unpaid fees.

Custodian Fee(1)	performance of the custodian’s duties under the pooling and servicing agreement	U.S. Bank National Association	set up fee of $1.50 per mortgage loan and $0.20 per loan per month thereafter.

Hedge Provider Fees(2)	performance of the Hedge Providers’ duties under the hedge agreements	Deutsche Bank AG, The Royal Bank of Scotland plc and Wachovia Bank, N.A.	see the schedule under the heading “Description of the Certificates — Summary of Interest Rate Hedge Agreements” herein.

Lender-Paid Mortgage Insurance(1)	in consideration of providing mortgage insurance	Mortgage Guaranty Insurance Corp. PMI Mortgage Insurance Co. Radian Guaranty, Inc.	ranges from 0.310% to 2.595% annually on those loans with lender-paid mortgage insurance.(3)

Back-up Servicing Fee(1)	performance of the servicer’s duties under the pooling and servicing agreement only if the servicer is removed	Countrywide Home Loans Servicing LP	on each distribution date, from the first distribution date and thereafter, 1/12 of 0.01% per annum times the aggregate principal balance of the mortgage loans as of such date.

(1) The servicing fee, the custodian fee, the trustee fee, the lender paid mortgage insurance and the back-up servicing fee are paid on a first priority basis.

(2) The Hedge Provider fees are paid from Available Funds after amounts described in footnote (1), but before any payments are made to any of the offered certificates.

(3) This range applies to the initial mortgage loans only. Fees paid on the subsequent mortgage loans could be outside of this range.

Calculation of One-Month LIBOR

The trustee will determine the London interbank offered rate for one-month United States dollar deposits for each accrual period for the LIBOR certificates on the second London business day preceding such accrual period (each such date, an “interest determination date”) on the basis of the offered rates for one-month United States dollar deposits, as such rates appear on the Reuters Screen LIBOR01, as of 11:00 a.m. (London time) on such interest determination date. If such rate does not appear on Reuters Screen LIBOR01, the rate for that day will be determined on the basis of the rates at which deposits in United States dollars are offered by the reference banks at approximately 11:00 a.m., London time, on that day to prime banks in the London interbank market for a period equal to the relevant accrual period (commencing on the first day of such accrual period). The trustee will request the principal London office of each of the reference banks to provide a quotation of its rate. If at least two such quotations are provided, the rate for that day will be the arithmetic mean of the quotations. If fewer than two quotations are provided as requested, the rate for that day will be the arithmetic mean of the rates quoted by major banks in New York City, selected by the trustee (after consultation with the depositor), at approximately 11:00 a.m., New York City time, on that day for loans in United States dollars to leading European banks for a period equal to the relevant accrual period (commencing on the first day of such accrual period).

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“Reuters Screen LIBOR01” means, when used in connection with any designated page and any floating rate, the display page so designated on the Reuters service, or any successor service.

The establishment of one-month LIBOR on each interest determination date by the trustee and the trustee’s calculation of the rate of interest applicable to the certificates for the related accrual period shall (in the absence of manifest error) be final and binding.

Notwithstanding the foregoing, in the case of each interest rate hedge agreement, LIBOR will be determined by the applicable Hedge Provider.

Advances

Prior to each distribution date, the servicer is required under the pooling and servicing agreement to make “advances” (out of its own funds, or funds held in the collection account for future payment or withdrawal) with respect to any payments of principal and interest (net of the servicing fee) which were due on the mortgage loans on the immediately preceding due date and which are delinquent on the business day next preceding the related determination date.

Such advances are required to be made only to the extent they are deemed by the servicer to be recoverable from related late collections, insurance proceeds, or liquidation proceeds. The purpose of making such advances is to maintain a regular cash flow to the certificateholders, rather than to guarantee or insure against losses. Any failure by the servicer to make an advance as required under the pooling and servicing agreement will constitute an event of default thereunder, in which case the successor servicer will be obligated to make any such advance, in accordance with the terms of the pooling and servicing agreement.

Advances made from funds held in the collection account may be made by the servicer from subsequent collections of principal and interest received on other mortgage loans and deposited into the collection account. Advances made from the collection account are not limited to subsequent collections of principal and interest received on the delinquent mortgage loan with respect to which an advance is made. If on the fourth business day prior to any distribution date funds in the collection account are less than the amount that would have been paid to the certificateholders on such distribution date had the servicer not withdrawn such funds, then the servicer will deposit its own funds into the collection account in the amount of the lesser of (i) any unreimbursed advances previously made by the servicer with funds held in the collection account or (ii) the shortfall in the collection account; but in no event will the servicer deposit into the collection account an amount that is less than any shortfall in the collection account attributable to delinquent payments on mortgage loans which the servicer deems to be recoverable and which has not been covered by an advance from the servicer’s own corporate funds.

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All advances will be reimbursable to the servicer on a first priority basis from late collections, insurance proceeds or liquidation proceeds from the mortgage loan as to which such unreimbursed advance was made. In addition, any advances previously made which are deemed by the servicer to be nonrecoverable from related late collections, insurance proceeds and liquidation proceeds may be reimbursed to the servicer out of any funds in the collection account prior to payments on the certificates.

The pooling and servicing agreement provides that the servicer, on behalf of the issuing entity, may enter into a facility with any person which provides that such person (an “Advancing Person”) may directly or indirectly fund advances and/or servicing advances, although no such facility will reduce or otherwise affect the servicer’s obligation to fund such advances and/or servicing advances. Such facility will not require the consent of the certificateholders. Any advances and/or servicing advances made by an Advancing Person would be reimbursed to the Advancing Person in the same manner as reimbursements would be made to the servicer if such advances were funded by the servicer.

Book-Entry Certificates

The Class A and Mezzanine Certificates will be book-entry certificates. Persons acquiring beneficial ownership interests in the certificates may elect to hold their certificates through the Depository Trust Company (“DTC”) in the United States, or upon request through Clearstream Banking Luxembourg or Euroclear (in Europe) if they are participants of such systems, or indirectly through organizations which are participants in such systems. Each class of book-entry certificates will be issued in one or more certificates which equal the aggregate principal amount of the certificates of each class and will initially be registered in the name of Cede & Co., the nominee of DTC. Clearstream and Euroclear will hold omnibus positions on behalf of their participants through customers’ securities accounts in Clearstream’s and Euroclear’s names on the books of their respective depositaries which in turn will hold such positions in customers’ securities accounts in the depositaries’ names on the books of DTC. Citibank, N.A., will act as depositary for Clearstream and JPMorgan Chase Bank, National Association, will act as depositary for Euroclear. Investors may hold such beneficial interests in the book-entry certificates in minimum denominations representing Certificate Balances of $25,000 and in multiples of $1,000 in excess thereof, with a minimum investment of $100,000. Except as described below, no beneficial owner acquiring a book-entry certificate will be entitled to receive a physical certificate representing such certificate. Unless and until definitive certificates are issued, it is anticipated that the only “certificateholders” of the certificates will be Cede & Co., as nominee of DTC. Certificate owners will not be certificateholders as that term is used in the pooling and servicing agreement. Certificate owners are only permitted to exercise their rights indirectly through the participating organizations that utilize the services of DTC, including securities brokers and dealers, banks and trust companies and clearing corporations and certain other organizations and DTC.

A certificate owner’s ownership of a book-entry certificate will be recorded on the records of the brokerage firm, bank, thrift institution or other financial intermediary that maintains the beneficial owner’s account for such purpose. In turn, the financial intermediary’s ownership of such book-entry certificate will be recorded on the records of DTC (or of a participating firm that acts as agent for the financial intermediary, whose interests will in turn be recorded on the records of DTC, if the beneficial owner’s financial intermediary is not a DTC participant, and on the records of Clearstream or Euroclear, as appropriate). Certificate owners will receive all payments of principal of, and interest on, the certificates from the trustee through DTC and DTC participants. While the certificates are outstanding (except under the circumstances described below), under the rules, regulations and procedures creating and affecting DTC and its operations, DTC is required to make book-entry transfers among participants on whose behalf it acts with respect to the certificates and is required to receive and transmit payments of principal of, and interest on, the certificates. Participants and indirect participants which have indirect access to the DTC system, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly, with whom certificate owners have accounts with respect to certificates are similarly required to make book-entry transfers and receive and transmit such payments on behalf of their respective certificate owners. Accordingly, although certificate owners will not possess certificates, the rules provide a mechanism by which certificate owners will receive payments and will be able to transfer their interest.

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

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

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

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

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

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Clearstream is incorporated under the laws of Luxembourg as a professional depository. Clearstream holds securities for its participating organizations and facilitates the clearance and settlement of securities transactions between Clearstream participants through electronic book-entry changes in accounts of Clearstream participants, thereby eliminating the need for physical movement of certificates. Transactions may be settled in Clearstream in multiple currencies, including United States dollars. Clearstream provides to its Clearstream participants, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Clearstream interfaces with domestic markets in several countries. As a professional depository, Clearstream is subject to regulation by the Luxembourg Commission for the Supervision of the Financial Sector. Clearstream participants are recognized financial institutions around the world, including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. Indirect access to Clearstream is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Clearstream participant, either directly or indirectly.

Euroclear was created in 1968 to hold securities for its participants and to clear and settle transactions between its participants through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates and any risk from lack of simultaneous transfers of securities and cash. The Euroclear System is owned by Euroclear Clearance System Public Limited Company (ECSplc) and operated through a license agreement by Euroclear Bank S.A./N.V., a bank incorporated under the laws of the Kingdom of Belgium (the “Euroclear Operator”).

The Euroclear Operator holds securities and book-entry interests in securities for participating organizations and facilitates the clearance and settlement of securities transactions between Euroclear Participants, and between Euroclear Participants and Participants of certain other securities intermediaries through electronic book-entry changes in accounts of such Participants or other securities intermediaries. The Euroclear Operator provides Euroclear Participants, among other things, with safekeeping, administration, clearance and settlement, securities lending and borrowing, and related services.

Non-Participants of Euroclear may hold and transfer book-entry interests in the securities through accounts with a direct Participant of Euroclear or any other securities intermediary that holds a book-entry interest in the securities through one or more securities intermediaries standing between such other securities intermediary and the Euroclear Operator.

The Euroclear Operator is regulated and examined by the Belgian Banking and Finance Commission and the National Bank of Belgium.

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

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Payments on the book-entry certificates will be made on each distribution date by the trustee to DTC. DTC will be responsible for crediting the amount of such payments to the accounts of the applicable DTC participants in accordance with DTC’s normal procedures. Each DTC participant will be responsible for disbursing such payments to the beneficial owners of the book- entry certificates that it represents and to each financial intermediary for which it acts as agent. Each such financial intermediary will be responsible for disbursing funds to the beneficial owners of the book-entry certificates that it represents.

Under a book-entry format, beneficiary owners of the book-entry certificates may experience some delay in their receipt of payments, since such payments will be forwarded by the trustee to Cede & Co., as nominee of DTC. Payments with respect to certificates held through Clearstream or Euroclear will be credited to the cash accounts of Clearstream participants or Euroclear participants in accordance with the relevant system’s rules and procedures, to the extent received by the relevant depository. Such payments will be subject to tax reporting in accordance with relevant United States tax laws and regulations. See “Material Federal Income Tax Consequences—Foreign Investors” and “—Backup Withholding” in the prospectus. Because DTC can only act on behalf of financial intermediaries, the ability of a beneficial owner to pledge book-entry certificates to persons or entities that do not participate in the depository system, or otherwise take actions in respect of such book-entry certificate, may be limited due to the lack of physical certificates for such book-entry certificates. In addition, issuance of the book-entry certificates in book-entry form may reduce the liquidity of such certificates in the secondary market since certain potential investors may be unwilling to purchase certificates for which they cannot obtain physical certificates.

Monthly and annual reports on the issuing entity will be provided to Cede & Co., as nominee of DTC, and may be made available by Cede & Co., to beneficial owners upon request, in accordance with the rules, regulations and procedures creating and affecting DTC or the relevant depository, and to the financial intermediaries to whose DTC accounts the book-entry certificates of such beneficial owners are credited.

DTC has advised the trustee that, unless and until definitive certificates are issued, DTC will take any action permitted to be taken by the holders of the book-entry certificates under the pooling and servicing agreement only at the direction of one or more financial intermediaries to whose DTC accounts the book-entry certificates are credited, to the extent that such actions are taken on behalf of financial intermediaries whose holdings include such book-entry certificates. Clearstream or the Euroclear operator, as the case may be, will take any other action permitted to be taken by a certificateholder under the pooling and servicing agreement on behalf of a Clearstream participant or Euroclear participant only in accordance with its relevant rules and procedures and subject to the ability of the relevant depository to effect such actions on its behalf through DTC. DTC may take actions, at the direction of the related participants, with respect to some certificates which conflict with actions taken with respect to other certificates.

Definitive certificates will be issued to beneficial owners of the book-entry certificates, or their nominees rather than to DTC, only if (a) DTC or the issuing entity advises the trustee in writing that DTC is no longer willing, qualified or able to discharge properly its responsibilities as nominee and depositary with respect to the book-entry certificates and the issuing entity is unable to locate a qualified successor or (b) if after occurrence of an event of default under the transaction documents, owners of beneficial interests in a book entry certificate representing in the aggregate more than 50% of the aggregate outstanding principal amount of the certificates of that series advise the trustee through DTC participants in writing that the continuation of a book-entry system with respect to the securities through DTC is no longer in the best interests of those owners.

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Upon the occurrence of any of the events described in the immediately preceding paragraph, the trustee will be required to notify all beneficial owners of the occurrence of such event and the availability through DTC of the definitive certificates. Upon surrender by DTC of the global certificate or certificates representing the book-entry certificates and instructions for re-registration, the trustee, as certificate registrar, will issue definitive certificates, and thereafter the trustee will recognize the holders of such definitive certificates as certificateholders under the pooling and servicing agreement.

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

Neither the depositor, the servicer, the custodian nor the trustee will have any responsibility for any aspect of the records relating to or payments made on account of beneficial ownership interests of the book-entry certificates held by Cede & Co., as nominee of DTC, or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.

For additional information regarding DTC and the book-entry certificates, see Annex I hereto and “The Agreements—Form of the Securities” in the prospectus.

Assignment of Mortgage Loans

The sponsor will deliver to the custodian the mortgage files, which consist of the mortgage notes endorsed by the sponsor, or the last holder of record, without recourse to the trustee, the related mortgages or deeds of trust, all intervening mortgage assignments, if any, and certain other documents relating to the mortgage loans. The sponsor will be required to cause to be prepared and recorded, at its expense and within the time period specified in the purchase agreement, assignments of the mortgages from the sponsor, or the last holder of record, to the trustee.

The custodian, on behalf of the trustee, will review the mortgage files delivered to it within 45 days after delivery, and if any document required to be included in any mortgage file is found to be missing or to be defective in any material respect and such defect is not cured within 45 days following notification thereof to the sponsor, the custodian will inform the trustee and the trustee will require either that the related mortgage loan be removed from the mortgage pool or that a mortgage loan conforming to the requirements of the pooling and servicing agreement be substituted for the related mortgage loan within 90 days.

In connection with the transfer of the mortgage loans pursuant to the purchase agreement, the sponsor will make certain representations and warranties as to the accuracy in all material respects of the information set forth on a schedule identifying and describing each mortgage loan. In addition, the sponsor will make certain other representations and warranties regarding the mortgage loans, including, for instance, that each mortgage loan, at its origination, complied in all material respects with applicable state and federal laws, that each mortgage is a valid first or second priority lien, that, as of the applicable cut-off date, no mortgage loan included in the mortgage pool as of the closing date was more than 89 days past due, that each mortgaged property consists of a manufactured dwelling, a multi-unit dwelling, unit in a condominium, planned unit development or a single family residence, that the sponsor had good title to each mortgage loan prior to such transfer and that the originator was authorized to originate each mortgage loan. The trustee will be entitled to enforce remedies for breaches of these representations and warranties.

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If with respect to any mortgage loan (1) a defect in any document constituting a part of the related mortgage file remains uncured within the specified period and materially and adversely affects the value of the mortgage loan or materially and adversely affects the interest of the trustee, or the certificateholders in that mortgage loan or (2) a breach of any representation or warranty made by the sponsor relating to the mortgage loan occurs and such breach materially and adversely affects the value of the mortgage loan or materially and adversely affects the interests of the trustee or the certificateholders in that mortgage loan, then the trustee will enforce the remedies for such defects or breaches against the sponsor by making demand that the sponsor purchase the defective mortgage loan from the issuing entity at a price of par plus accrued interest at the mortgage rate (net of the applicable servicing fee rate). The sponsor will also have the option, but not the obligation, to substitute for such defective mortgage loan a qualified replacement mortgage loan, but only if such substitution is made within two years after the closing date.

The obligation of the sponsor to cure, purchase or substitute any defective mortgage loan as described above will constitute the sole remedy available to certificateholders or the trustee for a defective mortgage loan.

The Paying Agent

The paying agent will initially be the trustee. The paying agent will have the revocable power to withdraw funds from the payment account for the purpose of making payments to the certificateholders.

Optional Termination

The mortgage loans may be purchased by the servicer or its designee on any distribution date on or after the distribution date on which the aggregate principal balance of the mortgage loans as of the end of the related due period is equal to or less than 10% of the sum of (i) the aggregate principal balance of the initial mortgage loans as of the cut-off date and (ii) the original pre-funded amount. This will result in a retirement of the certificates. The purchase price for the mortgage loans is expected to be an amount sufficient to pay 100% of the aggregate outstanding Certificate Balance of each class of certificates and accrued and unpaid interest thereon at the related pass-through rate through the date on which the issuing entity is terminated together with all amounts due and owing to the servicer, the custodian, the hedge providers and the trustee.

Optional Purchase Pledge

The servicer may pledge its right to optionally purchase the mortgage loans to lenders under various financing agreements with the underwriters or affiliates of the underwriters. If an event of default occurs under those agreements, one of the underwriters or its affiliate will have the right to require the servicer either to exercise or to refrain from exercising its optional purchase right

Certain Yield and Prepayment Considerations

The yield to maturity of the certificates will depend on the prices paid by the holders of such certificates, the pass-through rate and the rate and timing of principal payments (including payments in excess of required installments, prepayments or terminations, liquidations and repurchases) on the mortgage loans and the allocation thereof. Such yield may be adversely affected by a higher or lower than anticipated rate of principal payments on the mortgage loans and the amount, if any, distributed from the pre-funding account at the end of the pre-funding period. The rate of principal payments on such mortgage loans will in turn be affected by the amortization schedules of the mortgage loans, the rate and timing of principal prepayments thereon by the mortgagors and liquidations of defaulted mortgage loans, and purchases of mortgage loans due to certain breaches of representations and warranties and optional repurchases of delinquent loans by the servicer. The timing of changes in the rate of prepayments, liquidations and repurchases of the mortgage loans may, and the timing of losses will, significantly affect the yield to an investor, even if the average rate of principal payments experienced over time is consistent with an investor’s expectation. Since the rate and timing of principal payments on the mortgage loans will depend on future events and on a variety of factors (as described more fully herein and in the prospectus under “Yield Considerations”), no assurance can be given as to such rate or the timing of principal payments on the certificates.

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The mortgage loans generally may be prepaid in full or in part at any time; however, prepayments may subject the mortgagor to a prepayment penalty. The mortgage loans are secured by senior or junior liens on the related mortgaged properties. Generally, mortgage loans secured by junior liens are not viewed by mortgagors as permanent financing. Accordingly, such mortgage loans may experience a higher rate of prepayment than the first-lien mortgage loans. All of the adjustable-rate mortgage loans are assumable under certain circumstances if, in the sole judgment of the servicer, the prospective purchaser of a mortgaged property is creditworthy and the security for such mortgage loan is not impaired by the assumption. All of the mortgage loans contain a customary “due on sale” provision. The servicer shall enforce any due-on-sale clause contained in any mortgage note or mortgage, to the extent permitted under applicable law and governmental regulation. However, if the servicer determines that it is reasonably likely that any mortgagor will bring, or if any mortgagor does bring, legal action to declare invalid or otherwise avoid enforcement of a due-on-sale clause contained in any mortgage note or mortgage, the servicer shall not be required to enforce the due-on-sale clause or to contest such action. The extent to which the mortgage loans are assumed by purchasers of the mortgaged properties rather than prepaid by the related mortgagors in connection with the sales of the mortgaged properties will affect the weighted average life of the certificates and may result in a prepayment experience on the mortgage loans that differs from that on other conventional mortgage loans. Prepayments, liquidations and purchases of the mortgage loans will result in payments to holders of the certificates of principal amounts which would otherwise be distributed over the remaining terms of the mortgage loans. Factors affecting prepayment (including defaults and liquidations) of mortgage loans include changes in mortgagors’ housing needs, job transfers, unemployment, mortgagors’ net equity in the mortgaged properties, changes in the value of the mortgaged properties, mortgage market interest rates and servicing decisions.

The rate of defaults on the mortgage loans will also affect the rate and timing of principal payments on the mortgage loans. In general, defaults on mortgage loans are expected to occur with greater frequency in their early years. Increases in the monthly payments of the adjustable rate mortgage loans to an amount in excess of the monthly payment required at the time of origination may result in a default rate higher than that on level payment mortgage loans, particularly since the mortgagor under each adjustable rate mortgage loan was qualified on the basis of the mortgage rate in effect at origination. The repayment of such adjustable rate mortgage loans will be dependent on the ability of the mortgagor to make larger monthly payments as the mortgage rate increases. In addition, the rate of default on mortgage loans which are refinance or limited documentation mortgage loans, and on mortgage loans with high loan-to-value ratios, may be higher than for other types of mortgage loans. Furthermore, the rate and timing of prepayments, defaults and liquidations on the mortgage loans will be affected by the general economic condition of the region of the country in which the related mortgaged properties are located. The risk of delinquencies and loss is greater and prepayments are less likely in regions where a weak or deteriorating economy exists, as may be evidenced by, among other factors, increasing unemployment or falling property values.

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The recordation of the mortgages in the name of MERS is a new practice in the mortgage lending industry. The depositor expects that the servicer or successor servicer will be able to commence foreclosure proceedings on the mortgaged properties, when necessary and appropriate; however, public recording officers and others may have limited, if any, experience with lenders seeking to foreclose mortgages, assignments of which are registered with MERS. Accordingly, delays and additional costs in commencing, prosecuting and completing foreclosure proceedings, defending litigation commenced by third parties and conducting foreclosure sales of the mortgaged properties could result. Those delays and additional costs could in turn delay the distribution of liquidation proceeds to the certificateholders and increase the amount of realized losses on the mortgage loans.

To the extent that the issuing entity does not fully use amounts on deposit in the pre-funding account to purchase subsequent mortgage loans by the end of the pre-funding period, the issuing entity will apply the remaining amounts as a prepayment of principal to the related classes of certificates on the distribution date immediately following the end of the pre-funding period. Although no assurance is possible, we do not anticipate that a material amount of principal will be prepaid on the certificates from amounts in the pre-funding account. Although no assurance can be given, it is anticipated by the depositor that the principal amount of subsequent mortgage loans sold to the issuing entity for inclusion in the trust estate will require the application of substantially all amounts on deposit in the pre-funding account and that there will be no material amount of principal prepaid to such certificateholders. However, it is unlikely that the sponsor will be able to deliver subsequent mortgage loans with an aggregate principal balance identical to the original pre-funded amount.

In addition, the yield to maturity of the certificates will depend on, among other things, the price paid by the holders of the certificates and the then applicable pass-through rate. The extent to which the yield to maturity of a certificate is sensitive to prepayments will depend, in part, upon the degree to which it is purchased at a discount or premium. In general, if a certificate is purchased at a premium and principal payments thereon occur at a rate faster than anticipated at the time of purchase, the investor’s actual yield to maturity will be lower than that assumed at the time of purchase. Conversely, if a certificate is purchased at a discount and principal payments thereon occur at a rate slower than that assumed at the time of purchase, the investor’s actual yield to maturity will be lower than that assumed at the time of purchase.

Furthermore, the yield to maturity on the certificates may be affected by the limitation posed by the available funds cap rate.

Weighted average life refers to the average amount of time that will elapse from the date of issuance of a security to the date of payment to the investor of each dollar distributed in reduction of principal of such security (assuming no losses). The weighted average life of the certificates will be influenced by, among other things, the rate at which the principal of the mortgage loans is paid, which may be in the form of scheduled amortization, prepayments or liquidations. Because the amortization schedule of substantially all of the adjustable rate mortgage loans will be recalculated semi-annually with respect to the Six-Month LIBOR mortgage loans and semi-annually after the initial adjustment date with respect to 2/28 Six-Month LIBOR mortgage loans, 3/27 Six-Month LIBOR mortgage loans, 5/25 Six-Month LIBOR mortgage loans and 7/23 Six-Month LIBOR mortgage loans, any partial prepayments thereof will not reduce the term to maturity of such adjustable rate mortgage loan. In addition, an increase in the mortgage rate on an adjustable rate mortgage loan will result in a larger monthly payment and in a larger percentage of such monthly payment being allocated to interest and a smaller percentage being allocated to principal, and conversely, a decrease in the mortgage rate on the adjustable rate mortgage loan will result in a lower monthly payment and in a larger percentage of each monthly payment being allocated to principal and a smaller percentage being allocated to interest.

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Prepayments on mortgage loans are commonly measured relative to a prepayment standard or model. The model used in this prospectus supplement, the Constant Prepayment Rate model (“CPR”), assumes that the outstanding principal balance of a pool of mortgage loans prepays each month at a specified annual rate or CPR. In generating monthly cash flows, this annual rate is converted to an equivalent monthly rate. With respect to the fixed rate mortgage loans, the model assumes a CPR of 2% per annum in the first month of the life of the fixed rate mortgage loans, then the model assumes an additional 2.5556% (precisely 23%/9) per annum in each month thereafter until the 10th month; beginning in the 10th month and in each month thereafter, the model assumes a CPR of 25% per annum (such model, a “prepayment assumption”). With respect to the adjustable rate mortgage loans, the model assumes a CPR of 2% per annum in the first month of the life of the adjustable rate mortgage loans, then the model assumes an additional 2.5455% (precisely 28%/11) per annum in each month thereafter until the 12th month; beginning in the 13th month until the 22nd month, the model assumes a CPR of 30%; beginning in the 23rd month until the 28th month, the model assumes a CPR of 60% per annum; beginning in the 29th month and in each month thereafter, the model assumes a CPR of 35% per annum (such model, also a “prepayment assumption”). The levels of CPR used above in defining the prepayment assumptions represent 100% of the related prepayment assumption. To assume a CPR percentage in either prepayment model is to assume that the stated percentage of the outstanding principal balance of the pool would be prepaid over the course of a year. No representation is made that the mortgage loans will prepay at the percentages of CPR specified in either prepayment model.

The tables set forth below have been prepared on the basis of certain assumptions (the “Modeling Assumptions”) as described below regarding the weighted average characteristics of the mortgage loans that are expected to be included in the trust estate as described under “Description of the Mortgage Pool” herein and the performance thereof. The tables assume, among other things, that: (i) the mortgage pool consists of mortgage loans with the following characteristics:

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Group I Mortgage Loans

Initial/ Prefunding	Loan Type	Principal Balance ($)	Initial Gross Mortgage Rate (%)	Net Mortgage Rate (%)	Original Term to Maturity (Months)	Original Amortization Term (Months)	Remaining Term to Maturity (Months)	Original Interest Only Term (Months)	Gross Margin (%)	Months to Next Rate Adjustment Date	Initial Periodic Rate Cap (%)	Periodic Rate Cap (%)	Maximum Mortgage Rate (%)	Minimum Mortgage Rate (%)	Index	Rate Adjustment Frequency (Months)
INITIAL	2/28 6 Month LIBOR ARM	179,846.75	10.20000	9.68000	360	360	358	N/A	7.00000	22	3.00000	1.00000	17.20000	10.20000	6MOLIBOR	6
INITIAL	2/28 6 Month LIBOR ARM	4,170,128.22	9.88584	9.17960	360	360	358	N/A	6.27897	22	3.00000	1.00000	16.88584	9.88584	6MOLIBOR	6
INITIAL	2/28 6 Month LIBOR ARM	209,086.34	9.09202	8.57202	360	360	359	N/A	5.71933	23	3.00000	1.00000	16.09202	9.09202	6MOLIBOR	6
INITIAL	2/28 6 Month LIBOR ARM	1,173,721.15	9.84335	8.73368	360	360	358	N/A	6.57721	22	3.00000	1.00000	16.84335	9.84335	6MOLIBOR	6
INITIAL	2/28 6 Month LIBOR ARM	131,309.12	7.85000	7.33000	360	360	359	N/A	4.85000	23	3.00000	1.00000	14.85000	7.85000	6MOLIBOR	6
INITIAL	2/28 6 Month LIBOR ARM	80,234,765.45	9.70322	8.99436	360	360	358	N/A	6.00857	22	3.00000	1.00000	16.69669	9.70322	6MOLIBOR	6
INITIAL	2/28 6 Month LIBOR ARM	13,597,637.49	8.99147	7.98390	360	360	358	N/A	5.44354	22	3.00000	1.00000	15.98597	8.99147	6MOLIBOR	6
INITIAL	2/28 6 Month LIBOR ARM	1,837,944.81	9.39477	8.23016	360	360	355	N/A	6.76036	19	3.00000	1.00000	15.91716	9.39477	6MOLIBOR	6
INITIAL	2/28 6 Month LIBOR ARM	505,521.93	8.57245	7.30258	360	360	354	N/A	5.98321	18	3.00000	1.00000	14.69024	8.57245	6MOLIBOR	6
INITIAL	2/28 6 Month LIBOR ARM	74,890,304.81	9.38497	8.65789	360	360	358	N/A	6.22067	22	3.00000	1.00000	16.37559	9.36359	6MOLIBOR	6
INITIAL	2/28 6 Month LIBOR ARM	9,073,129.91	8.72479	8.11380	360	360	358	N/A	5.75557	22	3.00000	1.00000	15.75050	8.72479	6MOLIBOR	6
INITIAL	2/28 6 Month LIBOR ARM	40,793,074.75	9.36463	8.77402	360	360	358	N/A	6.29060	22	3.00000	1.00000	16.35766	9.36463	6MOLIBOR	6
INITIAL	2/28 6 Month LIBOR ARM	3,766,500.31	9.01501	8.49501	360	360	359	N/A	5.70270	23	3.00000	1.00000	16.01501	9.01501	6MOLIBOR	6
INITIAL	2/28 6 Month LIBOR ARM IO	4,203,420.00	9.10940	7.92079	360	360	358	60	5.42614	22	3.00000	1.00000	16.10940	9.10940	6MOLIBOR	6
INITIAL	2/28 6 Month LIBOR ARM IO	2,368,898.00	9.23886	8.31841	360	360	359	60	5.09601	23	3.00000	1.00000	16.23886	9.23886	6MOLIBOR	6
INITIAL	2/28 6 Month LIBOR ARM IO	229,500.00	9.60000	9.08000	360	360	355	60	6.55000	19	3.00000	1.00000	16.60000	9.60000	6MOLIBOR	6
INITIAL	2/28 6 Month LIBOR ARM IO	3,061,185.93	8.24605	7.61256	360	360	358	60	5.51794	22	3.00000	1.00000	15.24605	8.24605	6MOLIBOR	6
INITIAL	2/28 6 Month LIBOR ARM IO	2,868,946.25	8.27205	6.92887	360	360	359	60	5.28964	23	3.00000	1.00000	15.27205	8.27205	6MOLIBOR	6
INITIAL	2/28 6 Month LIBOR ARM IO	1,381,850.00	9.24781	8.31374	360	360	359	60	6.08791	23	3.00000	1.00000	16.24781	9.24781	6MOLIBOR	6
INITIAL	2/28 6 Month LIBOR ARM IO	541,100.00	8.07672	7.55672	360	360	358	60	5.23849	22	3.00000	1.00000	15.07672	8.07672	6MOLIBOR	6
INITIAL	2/28 ARM 30/40 Balloon	1,324,037.82	9.91733	9.39733	360	480	358	N/A	6.46202	22	3.00000	1.00000	16.91733	9.91733	6MOLIBOR	6
INITIAL	2/28 ARM 30/40 Balloon	431,235.76	9.65201	9.13201	360	480	358	N/A	6.60022	22	3.00000	1.00000	16.65201	9.65201	6MOLIBOR	6
INITIAL	2/28 ARM 30/40 Balloon	41,773,861.20	9.31080	8.69231	360	480	358	N/A	5.90042	22	3.00000	1.00000	16.31080	9.31080	6MOLIBOR	6
INITIAL	2/28 ARM 30/40 Balloon	5,883,967.49	8.89272	8.19957	360	480	359	N/A	5.26200	23	3.00000	1.00000	15.89272	8.89272	6MOLIBOR	6
INITIAL	2/28 ARM 30/40 Balloon	424,097.29	9.82427	6.82020	360	480	357	N/A	6.67543	21	3.00000	1.00000	16.82427	9.82427	6MOLIBOR	6
INITIAL	2/28 ARM 30/40 Balloon	39,276,663.84	9.11991	8.49795	360	480	359	N/A	6.05501	23	3.00000	1.00000	16.11991	9.11991	6MOLIBOR	6
INITIAL	2/28 ARM 30/40 Balloon	7,559,550.17	8.42872	7.90872	360	480	359	N/A	5.31067	23	3.00000	1.00000	15.42872	8.42872	6MOLIBOR	6
INITIAL	2/28 ARM 30/40 Balloon	29,111,124.88	8.90201	8.29692	360	480	359	N/A	6.16895	23	3.00000	1.00000	15.89737	8.90201	6MOLIBOR	6
INITIAL	2/28 ARM 30/40 Balloon	4,257,053.91	8.11795	7.59795	360	480	359	N/A	5.51640	23	3.00000	1.00000	15.11795	8.11795	6MOLIBOR	6
INITIAL	3/27 6 Month LIBOR ARM	67,345.39	9.30000	8.78000	360	360	357	N/A	6.30000	33	3.00000	1.00000	16.30000	9.30000	6MOLIBOR	6
INITIAL	3/27 6 Month LIBOR ARM	72,602.47	9.45000	8.93000	360	360	358	N/A	6.00000	34	3.00000	1.00000	16.45000	9.45000	6MOLIBOR	6
INITIAL	3/27 6 Month LIBOR ARM	2,385,006.85	9.22889	7.87078	360	360	355	N/A	6.35886	31	3.00000	1.00000	16.22889	9.22889	6MOLIBOR	6
INITIAL	3/27 6 Month LIBOR ARM	666,446.46	8.87324	8.35324	360	360	356	N/A	5.39068	32	3.00000	1.00000	15.87324	8.87324	6MOLIBOR	6
INITIAL	3/27 6 Month LIBOR ARM	348,463.43	8.87222	6.84692	360	360	354	N/A	6.55726	30	3.00000	1.00000	15.75769	8.87222	6MOLIBOR	6
INITIAL	3/27 6 Month LIBOR ARM	104,742.79	10.50000	8.05000	360	360	355	N/A	5.00000	31	3.00000	1.00000	17.50000	10.50000	6MOLIBOR	6
INITIAL	3/27 6 Month LIBOR ARM	488,997.26	8.31963	7.34816	360	360	357	N/A	6.51964	33	3.00000	1.00000	15.31963	8.31963	6MOLIBOR	6
INITIAL	3/27 6 Month LIBOR ARM	129,425.00	6.99000	6.47000	360	360	360	N/A	4.30000	36	3.00000	1.00000	13.99000	6.99000	6MOLIBOR	6
INITIAL	3/27 6 Month LIBOR ARM	12,038,166.45	8.53308	7.71048	360	360	357	N/A	6.23957	33	3.00000	1.00000	15.45032	8.53308	6MOLIBOR	6
INITIAL	3/27 6 Month LIBOR ARM	480,406.47	8.00360	7.06315	360	360	357	N/A	6.22341	33	3.00000	1.00000	14.50895	8.00360	6MOLIBOR	6
INITIAL	3/27 6 Month LIBOR ARM IO	516,200.00	8.46412	7.94412	360	360	359	60	6.37201	35	3.00000	1.00000	15.46412	8.46412	6MOLIBOR	6
INITIAL	3/27 6 Month LIBOR ARM IO	206,450.00	8.37500	6.15500	360	360	354	60	6.37500	30	3.00000	1.00000	15.37500	8.37500	6MOLIBOR	6
INITIAL	3/27 6 Month LIBOR ARM IO	993,161.00	8.17289	7.65289	360	360	358	60	6.41471	34	3.00000	1.00000	15.17289	8.17289	6MOLIBOR	6
INITIAL	3/27 ARM 30/40 Balloon	142,434.88	8.99000	8.47000	360	480	358	N/A	6.35000	34	3.00000	1.00000	15.99000	8.99000	6MOLIBOR	6
INITIAL	3/27 ARM 30/40 Balloon	746,493.08	9.20968	8.68968	360	480	357	N/A	6.05704	33	3.00000	1.00000	16.20968	9.20968	6MOLIBOR	6
INITIAL	3/27 ARM 30/40 Balloon	135,504.77	7.30000	6.78000	360	480	358	N/A	4.45000	34	3.00000	1.00000	14.30000	7.30000	6MOLIBOR	6
INITIAL	3/27 ARM 30/40 Balloon	1,005,106.14	9.24379	8.72379	360	480	359	N/A	6.25084	35	3.00000	1.00000	16.24379	9.24379	6MOLIBOR	6
INITIAL	3/27 ARM 30/40 Balloon	466,811.41	7.90018	6.30478	360	480	359	N/A	5.15389	35	3.00000	1.00000	14.90018	7.90018	6MOLIBOR	6
INITIAL	5/25 6 Month LIBOR ARM	182,750.00	9.10000	8.58000	360	360	360	N/A	5.05000	60	3.00000	1.00000	16.10000	9.10000	6MOLIBOR	6
INITIAL	5/25 6 Month LIBOR ARM	425,508.35	10.28122	9.76122	360	360	358	N/A	5.70228	58	3.00000	1.00000	17.28122	10.28122	6MOLIBOR	6
INITIAL	5/25 6 Month LIBOR ARM	118,000.00	6.37500	4.27500	360	360	355	N/A	4.37500	55	3.00000	1.00000	13.37500	6.37500	6MOLIBOR	6
INITIAL	5/25 6 Month LIBOR ARM	95,571.64	6.87500	4.77500	360	360	355	N/A	4.87500	55	3.00000	1.00000	13.87500	6.87500	6MOLIBOR	6
INITIAL	5/25 6 Month LIBOR ARM	491,847.73	7.45506	6.93506	360	360	357	N/A	4.61051	57	3.00000	1.00000	14.45506	7.45506	6MOLIBOR	6
INITIAL	5/25 6 Month LIBOR ARM IO	87,163.52	10.62500	10.10500	360	360	357	120	5.55000	57	3.00000	1.00000	17.62500	10.62500	6MOLIBOR	6
INITIAL	5/25 6 Month LIBOR ARM IO	372,000.00	7.87495	7.35495	360	360	359	120	5.04301	59	3.00000	1.00000	14.87495	7.87495	6MOLIBOR	6
INITIAL	5/25 ARM 30/40 Balloon	300,057.23	8.65000	8.13000	360	480	358	N/A	4.95000	58	3.00000	1.00000	15.65000	8.65000	6MOLIBOR	6
INITIAL	5/25 ARM 30/40 Balloon	156,434.86	9.10000	8.58000	360	480	358	N/A	6.25000	58	3.00000	1.00000	16.10000	9.10000	6MOLIBOR	6
INITIAL	5/25 ARM 30/40 Balloon	120,000.00	8.99000	8.47000	360	480	360	N/A	5.95000	60	3.00000	1.00000	15.99000	8.99000	6MOLIBOR	6
INITIAL	7/23 6 Month LIBOR ARM	346,353.57	6.62500	4.52500	360	360	355	N/A	4.62500	79	5.00000	2.00000	11.62500	6.62500	6MOLIBOR	6
INITIAL	Fixed Rate Balloon	815,688.35	9.06146	8.19771	360	480	359	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
INITIAL	Fixed Rate Balloon	273,375.00	8.29428	7.77428	360	480	360	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
INITIAL	Fixed Rate Balloon	118,959.39	11.20000	10.68000	180	360	179	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
INITIAL	Fixed Rate Balloon	9,414,976.31	9.31059	8.79059	360	480	359	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
INITIAL	Fixed Rate Balloon	3,587,972.02	8.16291	7.51223	360	480	359	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
INITIAL	Fixed Rate Balloon	353,092.80	8.84400	7.96184	180	360	178	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
INITIAL	Fixed Rate Balloon	206,665.49	7.62500	5.83500	180	360	175	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
INITIAL	Fixed Rate Balloon	167,978.89	10.75000	10.23000	360	480	359	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A

S-138

Group I Mortgage Loans

Initial/

Prefunding

Loan Type

Principal Balance ($)

Initial Gross Mortgage Rate (%)

Net Mortgage Rate (%)

Original Term to Maturity (Months)

Original Amortization Term (Months)

Remaining Term to Maturity (Months)

Original Interest Only Term (Months)

Gross Margin (%)

Months to Next Rate Adjustment Date

Initial Periodic Rate Cap (%)

Periodic Rate Cap (%)

Maximum Mortgage Rate (%)

Minimum Mortgage Rate (%)

Index

Rate Adjustment Frequency (Months)

INITIAL

Fixed Rate Balloon

655,329.45

8.40642

7.88642

360

480

359

N/A

INITIAL

Fixed Rate Balloon

21,582,293.87

8.88805

8.29280

360

480

359

N/A

INITIAL

Fixed Rate Balloon

5,019,284.47

8.11608

7.51458

360

480

359

N/A

INITIAL

Fixed Rate Fully Amortizing

750,009.92

9.11669

8.05288

180

178

N/A

INITIAL

Fixed Rate Fully Amortizing

72,685.34

8.60000

8.08000

240

239

N/A

INITIAL

Fixed Rate Fully Amortizing

77,891.75

7.85000

7.33000

360

358

N/A

INITIAL

Fixed Rate Fully Amortizing

4,827,224.18

9.19774

8.55670

360

359

N/A

INITIAL

Fixed Rate Fully Amortizing

992,788.13

9.02606

8.50606

360

359

N/A

INITIAL

Fixed Rate Fully Amortizing

585,938.51

7.32679

6.80679

120

119

N/A

INITIAL

Fixed Rate Fully Amortizing

5,443,053.30

8.68957

7.90835

180

178

N/A

INITIAL

Fixed Rate Fully Amortizing

1,514,315.74

8.06349

7.32023

180

177

N/A

INITIAL

Fixed Rate Fully Amortizing

3,841,286.61

8.69939

7.80953

240

238

N/A

INITIAL

Fixed Rate Fully Amortizing

774,342.20

7.85890

6.67808

240

236

N/A

INITIAL

Fixed Rate Fully Amortizing

57,345,231.30

9.16892

8.46919

360

358

N/A

INITIAL

Fixed Rate Fully Amortizing

13,316,588.88

7.93689

7.04371

360

358

N/A

INITIAL

Fixed Rate Fully Amortizing

248,372.63

5.87500

4.08500

120

114

N/A

INITIAL

Fixed Rate Fully Amortizing

682,403.83

8.13726

7.52646

120

119

N/A

INITIAL

Fixed Rate Fully Amortizing

517,273.87

6.59960

5.72243

120

115

N/A

INITIAL

Fixed Rate Fully Amortizing

46,228.39

7.00000

6.48000

180

175

N/A

INITIAL

Fixed Rate Fully Amortizing

8,120,317.31

8.17682

7.58855

180

178

N/A

INITIAL

Fixed Rate Fully Amortizing

2,969,462.98

7.16428

6.30818

180