-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VU/Cdq3KvZCmc2+qr39DOc30KDWjP9vHjAsH8zbp3TSAu1CP5QC7qY87/BDM0KXl A+KEm6fjjhYedy5J0cR2qA== 0001020242-07-000422.txt : 20070329 0001020242-07-000422.hdr.sgml : 20070329 20070329151838 ACCESSION NUMBER: 0001020242-07-000422 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20070329 FILED AS OF DATE: 20070329 DATE AS OF CHANGE: 20070329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Novastar Mortgage Funding Trust Series 2006-4 CENTRAL INDEX KEY: 0001372832 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-134461-03 FILM NUMBER: 07727453 BUSINESS ADDRESS: STREET 1: 1901 W 47TH PLACE STREET 2: STE 105 CITY: WESTWOOD STATE: KS ZIP: 66205 BUSINESS PHONE: 9135143500 MAIL ADDRESS: STREET 1: 1901 W 47TH PLACE STREET 2: STE 105 CITY: WESTWOOD STATE: KS ZIP: 66205 10-K 1 ns060410k.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2006 Commission file number: 333-134461-03 NovaStar Mortgage Funding Trust, Series 2006-4 (Exact name of issuing entity as specified in its Charter) NovaStar Mortgage Funding Corporation (Exact name of depositor as specified in its Charter) NovaStar Mortgage Inc. (Exact name of sponsor as specified in its Charter) Delaware 48-1195807 (State or other jurisdiction (I.R.S. Employer incorporation or organization) Identification Number) 8140 Ward Parkway, Suite 300 Kansas City, Missouri 64114 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (816) 237-7000 Securities registered pursuant to Section 12(b) of the Act: None. Securities registered pursuant to Section 12(g) of the Act: None. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No[X] Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes[ ] No[X] Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-K or any amendment to this Form 10-K. [X] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer" in Rule 12b-2 of the Exchange Act. (Check One): Large accelerated filer [ ] Accelerated Filer [ ] Non-accelerated Filer [X] Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Act). [ ] Yes [X] No State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the of the last business day of the registrant's most recently completed second fiscal quarter. Not Applicable. DOCUMENTS INCORPORATED BY REFERENCE None. PART I ITEM 1. Business. Not Applicable. ITEM 1A. Risk Factors. Not Applicable. ITEM 1B. Unresolved Staff Comments. Not Applicable. ITEM 2. Properties. Not Applicable. ITEM 3. Legal Proceedings. Not Applicable. ITEM 4. Submission of Matters to a Vote of Security Holders. Not Applicable. PART II ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Not Applicable. ITEM 6. Selected Financial Data. Not Applicable. ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Not Applicable. ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk. Not Applicable. ITEM 8. Financial Statements and Supplementary Data. Not Applicable. ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. ITEM 9A. Controls and Procedures. Not Applicable. ITEM 9B. Other Information. Not Applicable. PART III ITEM 10. Directors, Executive Officers and Corporate Governance. Not Applicable. ITEM 11. Executive Compensation. Not Applicable. ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Not Applicable. ITEM 13. Certain Relationships and Related Transactions, and Director Independence. Not Applicable. ITEM 14. Principal Accounting Fees and Services. Not Applicable. PART IV Additional Items Required by General Instruction J (2) Item 1112(b) of Regulation AB, Significant Obligor Financial Information. None. Item 1114(b)(2) and Item 1115(b) of Regulation AB , Significant Enhancement Provider Information. None. Item 1117 of Regulation AB, Legal Proceedings. In December 2005, a putative class action was filed against NovaStar Mortgage,Inc.("NMI") in the United States District Court for the Western District of Washington entitled Pierce et al. v. NovaStar Mortgage, Inc. Plaintiffs contend that NMI failed to disclose prior to closing that a broker payment would be made on their loans, which was an unfair and deceptive practice in violation of the Washington Consumer Protection Act. Plaintiffs seek excess interest charged, and treble damages as provided in the Washington Consumer Protection Act and attorney's fees. On October 31, 2006, the district court granted plaintiffs' motion to certify a Washington state class. NMI sought to appeal the grant of class certification; however, a panel of the Ninth Circuit Court of Appeals denied the request for interlocutory appeal so review of the class certification order must wait until after a final judgment is entered, if necessary. The case is set for trial on April 23, 2007. NMI believes that it has valid defenses to plaintiffs' claims and it intends to vigorously defend against them. In addition, NMI is currently a party to various other legal proceedings and claims, including, but not limited to, breach of contract claims, class action 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. 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 NMI 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 NMI financial condition and results of operations. Item 1119 of Regulation AB, Affiliations and Certain Relationships and Related Transactions. None. Item 1122 of Regulation AB, Compliance with Applicable Servicing Criteria. See Item 15, Exhibit 33. The following parties have reported one or more instances of material noncompliance with applicable servicing criteria in their reports on assessments of compliance: The Servicer has reported material noncompliance with applicable servicing criteria. The Servicer's report on assessment of compliance is attached as Exhibit 33.1. Item 1123 of Regulation AB, Servicer Compliance Statement. See Item 15, Exhibit 35. ITEM 15. Exhibits, Financial Statement Schedules. (a) List the following documents filed as a part of the report: (1) Not Applicable. (2) Not Applicable. (3) [Provide any additional Exhibits as required pursuant to Regulation S-K] Exhibit 31 Section 302 Certification. Exhibit 33.1 Servicer's Annual Report on Assessment of Compliance for Year End December 31, 2006. Exhibit 33.2 Trustee's Annual Report on Assessment of Compliance for Year End December 31, 2006. Exhibit 33.3 U.S. Bank's Annual Report on Assessment of Compliance for Year End December 31, 2006. Exhibit 33.4 Wachovia's Annual Report on Assessment of Compliance for Year End December 31, 2006. Exhibit 34.1 Servicer's Annual Attestation Report on Assessment of Compliance with Servicing Criteria for Year End December 31, 2006. Exhibit 34.2 Trustee's Annual Attestation Report on Assessment of Compliance with Servicing Criteria for Year End December 31, 2006. Exhibit 34.3 U.S. Bank's Annual Attestation Report on Assessment of Compliance with Servicing Criteria for Year End December 31, 2006. Exhibit 34.4 Wachovia's Annual Attestation Report on Assessment of Compliance with Servicing Criteria for Year End December 31, 2006. Exhibit 35.1 Servicer's Annual Statement of Compliance for Year End December 31, 2006. (b) See (a) above. (c) Not Applicable. SIGNATURE Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. By: NovaStar Mortgage Funding Corporation as Depositor on behalf of the Registrant By: /s/: Matt Kaltenrieder Matt Kaltenrieder Vice President Date: March 28, 2007 EXHIBIT INDEX Exhibit Document 31 Section 302 Certification. 33.1 Servicer's Annual Report on Assessment of Compliance for Year End December 31, 2006. 33.2 Trustee's Annual Report on Assessment of Compliance for Year End December 31, 2006. 33.3 U.S. Bank's Annual Report on Assessment of Compliance for Year End December 31, 2006. 33.4 Wachovia's Annual Report on Assessment of Compliance for Year End December 31, 2006. 34.1 Servicer's Annual Attestation Report on Assessment of Compliance with Servicing Criteria for Year End December 31, 2006. 34.2 Trustee's Annual Attestation Report on Assessment of Compliance with Servicing Criteria for Year End December 31, 2006. 34.3 U.S. Bank's Annual Attestation Report on Assessment of Compliance with Servicing Criteria for Year End December 31, 2006. 34.4 Wachovia's Annual Attestation Report on Assessment of Compliance with Servicing Criteria for Year End December 31, 2006. 35.1 Servicer's Annual Statement of Compliance for Year End December 31, 2006. EX-34.4 2 usbankwachoviacustodian344.txt Exhibit 34.4 [ERNST & YOUNG LOGO] Ernst & Young LLP Phone: (612) 343-1000 220 South Sixth Street, Ste. 1400 www.ey.com Minneapolis, MN 55402-4509 Report of Independent Registered Public Accounting Firm We have examined management's assertion, included in the accompanying Report on Assessment of Compliance with SEC Regulation AB Servicing Criteria, that U.S. Bank National Association (the Company) complied with the servicing criteria set forth in Item 1122 (d) of the Securities and Exchange Commission's Regulation AB for the Wachovia Document Custody Services platform (the Platform) as of September 5, 2006, and for the period from January 1, 2006 through September 5, 2006, except for criteria 1122 (d)(1)(i), 1122 (d)(1)(iii), 1122 (d)(1)(iv), 1122 (d)(2)(i) through 1122 (d)(2)(vii), 1122 (d)(3)(i) through 1122 (d)(3)(iv), and 1122 (d)(4)(iv) through 1122 (d)(4)(xv), which the Company has determined are not applicable to the activities performed by them with respect to the servicing platform covered by this report. Management is responsible for the Company's compliance with those servicing criteria. Our responsibility is to express an opinion on management's assertion about the Company's compliance with the servicing criteria based on our examination. Our examination was conducted in accordance with standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included examining, on a test basis, evidence about the Company's compliance with the applicable servicing criteria and performing such other procedures as we considered necessary in the circumstances. Our examination included testing of less than all of the individual asset backed transactions and securities that comprise the Platform, testing of less than all of the servicing activities related to the Platform, and determining whether the Company processed those selected transactions and performed those selected activities in compliance with the servicing criteria. Furthermore, our procedures were limited to the selected transactions and servicing activities performed by the Company during the period covered by this report. Our procedures were not designed to determine whether errors may have occurred either prior to or subsequent to our tests that may have affected the balances or amounts calculated or reported by the Company during the period covered by this report for the selected transactions or any other transactions. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the Company's compliance with the servicing criteria. In our opinion, management's assertion that the Company complied with the aforementioned servicing criteria as of September 5, 2006, and for the period from January 1, 2006 through September 5, 2006, for the Wachovia Document Custody Services platform is fairly stated, in all material respects. /s/ Ernst & Young LLP ---------------------------------------- February 26, 2007 A Member of Ernst & Young Global EX-33.2 3 dbcert332.txt Exhibit 33.2 Appendix I MANAGEMENT'S ASSERTION OF COMPLIANCE Management of the Trust & Securities Services department of Deutsche Bank National Trust Company and Deutsche Bank Trust Company Americas (collectively the "Company") is responsible for assessing compliance with the servicing criteria set forth in Item 1122(d) of Regulation AB promulgated by the Securities and Exchange Commission. Management has determined that the servicing criteria are applicable in regard to the servicing platform for the period as follows: Platform: Publicly-issued (i.e., transaction-level reporting required under the Securities Exchange Act of 1934, as amended) residential mortgage-backed securities and other asset-backed securities issued on or after January 1, 2006 for which the Company provides trustee, securities administration or paying agent services, excluding any publicly issued transactions sponsored or issued by any government sponsored entity (the "Platform"). Applicable Servicing Criteria: All servicing criteria set forth in Item 1122(d), except for the following criteria: 1122(d)(2)(iii), 1122(d)(4)(iv), 1122(d)(4)(v), 1122(d)(4)(vi), 1122(d)(4)(vii), 1122(d)(4)(viii), 1122(d)(4)(ix), 1122(d)(4)(x), 1122(d)(4)(xi), 1122(d)(4)(xii), 1122(d)(4)(xiii) and 1122(d)(4)(xiv), which management has determined are not applicable to the activities the Company performs with respect to the Platform (the "Applicable Servicing Criteria"). Period: Twelve months ended December 31, 2006 (the "Period"). Management's interpretation of Applicable Servicing Criteria: The Company's management has determined that servicing criteria 1122(d)(1)(iii) is applicable only with respect to its continuing obligation to act as, or locate a, successor servicer under the circumstances referred to in certain governing documents. It is management's interpretation that Deutsche Bank Trust Company America has no other active back-up servicing responsibilities in regards to 1122(d)(1)(iii) as of and for the Period. Third parties classified as vendors: With respect to servicing criteria 1122(d)(2)(i), 1122(d)(4)(i), and 1122(d)(4)(ii), management has engaged various vendors to perform the activities required by these servicing criteria. The Company's management has determined that these vendors are not considered a "servicer" as defined in Item 1101(j) of Regulation AB, and the Company's management has elected to take responsibility for assessing compliance with the servicing criteria applicable to each vendor as permitted by Interpretation 17.06 of the SEC Division of Corporation Finance Manual of Publicly Available Telephone Interpretations ("Interpretation 17.06"). As permitted by Interpretation 17.06, management has asserted that it has policies and procedures in place to provide reasonable assurance that the vendor's activities comply in all material respects with the servicing criteria applicable to each vendor. The Company's management is solely responsible for determining that it meets the SEC requirements to apply Interpretation 17.06 for the vendors and related criteria. With respect to the Platform, the Company's management provides the following assertion of compliance with respect to the Applicable Servicing Criteria: 1. The Company's management is responsible for assessing the Company's compliance with the Applicable Servicing Criteria as of and for the Period. 2. The Company's management has assessed compliance with the Applicable Servicing Criteria, including servicing criteria for which compliance is determined based on Interpretation 17.06 as described above, as of and for the Period. In performing this assessment, management used the criteria set forth by the Securities and Exchange Commission in paragraph (d) of Item 1122 of Regulation AB. 3. Based on such assessment, as of and for the Period, the Company has complied, in all material respects, with the Applicable Servicing Criteria. KPMG LLP, a registered public accounting firm, has issued an attestation report with respect to the management's assertion of compliance with the Applicable Servicing Criteria as of and for the Period. Appendix I DEUTSCHE BANK NATIONAL TRUST COMPANY By: /s/ Gary R. Vaughan -------------------------------- Name: Gary R. Vaughan Its: Managing Director By: /s/ David Co -------------------------------- Name: David Co Its: Director By: /s/ Jose Sicilia -------------------------------- Name: Jose Sicilia Its: Managing Director By: /s/ Kevin Fischer -------------------------------- Name: Kevin Fischer Its: Vice President By: /s/ Robert Frier -------------------------------- Name: Robert Frier Its: Director DEUTSCHE BANK TRUST COMPANY AMERICAS By: /s/ Kevin C. Weeks -------------------------------- Name: Kevin C. Weeks Its: Managing Director By: /s/ Jenna Kaufman -------------------------------- Name: Jenna Kaufman Its: Director EX-34.2 4 dbcert342.txt Exhibit 34.2 [LOGO] KPMG KPMG LLP 303 East Wacker Drive Chicago, IL 60601-5212 Report of Independent Registered Public Accounting Firm The Board of Directors The Trust & Securities Services department of Deutsche Bank National Trust Company and Deutsche Bank Trust Company Americas: We have examined management's assertion, included in the accompanying Appendix I, that the Trust & Securities Services department of Deutsche Bank National Trust Company and Deutsche Bank Trust Company Americas (collectively the "Company") complied with the servicing criteria set forth in Item 1122(d) of the Securities and Exchange Commission's Regulation AB for publicly-issued (i.e., transaction-level reporting required under the Securities Exchange Act of 1934, as amended) residential mortgage-backed securities and other asset-backed securities issued on or after January 1, 2006, for which the Company provides trustee, securities administration or paying agent services, excluding any publicly issued transactions, sponsored or issued by any government sponsored entity (the Platform), except for servicing criteria 1122(d)(2)(iii), 1122(d)(4)(iv), 1122(d)(4)(v), 1122(d)(4)(vi), 1122(d)(4)(vii), 1122(d)(4)(viii), 1122(d)(4)(ix), 1122(d)(4)(x), 1122(d)(4)(xi), 1122(d)(4)(xii), 1122(d)(4)(xiii) and 1122(d)(4)(xiv), which the Company has determined are not applicable to the activities it performs with respect to the Platform, as of and for the twelve months ended December 31, 2006. Management is responsible for the Company's compliance with those servicing criteria. Our responsibility is to express an opinion on management's assertion about the Company's compliance based on our examination. Our examination was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included examining, on a test basis, evidence about the Company's compliance with the servicing criteria specified above and performing such other procedures as we considered necessary in the circumstances. Our examination included testing of less than all of the individual asset-backed transactions and securities that comprise the Platform, testing of less than all of the servicing activities related to the Platform, and determining whether the Company processed those selected transactions and performed those selected activities in compliance with the servicing criteria. Furthermore, our procedures were limited to the selected transactions and servicing activities performed by the Company during the period covered by this report. Our procedures were not designed to determine whether errors may have occurred either prior to or subsequent to our tests that may have affected the balances or amounts calculated or reported by the Company during the period covered by this report for the selected transactions or any other transactions. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the Company's compliance with the servicing criteria. As described in management's assertion included in the accompanying Appendix I, for servicing criteria 1122 (d)(2)(i), 1122 (d)(4)(i) and 1122(d)(4)(ii), the Company has engaged various vendors to perform the activities required by these servicing criteria. The Company has determined that these vendors are not considered a "servicer" as defined in Item 1101(j) of Regulation AB, and the Company has elected to take responsibility for assessing compliance with the servicing criteria applicable to each vendor as permitted by Interpretation 17.06 of the SEC Division of Corporation Finance Manual of Publicly Available Telephone Interpretations ("Interpretation 17.06"). As permitted by Interpretation 17.06, the Company has asserted that it has policies and procedures in place designed to provide reasonable assurance that the vendors' activities comply in all material respects with the servicing criteria applicable to each vendor. The Company is solely responsible for determining that it meets the SEC requirements to apply Interpretation 17.06 for the vendors and related criteria as described in its assertion, and we performed no procedures with respect to the Company's eligibility to apply Interpretation 17.06. KPMG LLP, a U.S. limited liability partnership, is the U.S. member firm of KPMG International, a Swiss cooperative. [LOGO] KPMG In our opinion, management's assertion that the Company complied with the aforementioned servicing criteria, including servicing criteria 1122 (d)(2)(i), 1122 (d)(4)(i) and 1122(d)(4)(ii) for which compliance is determined based on Interpretation 17.06 as described above, as of and for the twelve months ended December 31, 2006 is fairly stated, in all material respects. /s/ KPMG LLP Chicago, Illinois February 28, 2007 Appendix I MANAGEMENT'S ASSERTION OF COMPLIANCE Management of the Trust & Securities Services department of Deutsche Bank National Trust Company and Deutsche Bank Trust Company Americas (collectively the "Company") is responsible for assessing compliance with the servicing criteria set forth in Item 1122(d) of Regulation AB promulgated by the Securities and Exchange Commission. Management has determined that the servicing criteria are applicable in regard to the servicing platform for the period as follows: Platform: Publicly-issued (i.e., transaction-level reporting required under the Securities Exchange Act of 1934, as amended) residential mortgage-backed securities and other asset-backed securities issued on or after January 1, 2006 for which the Company provides trustee, securities administration or paying agent services, excluding any publicly issued transactions sponsored or issued by any government sponsored entity (the "Platform"). Applicable Servicing Criteria: All servicing criteria set forth in Item 1122(d), except for the following criteria: 1122(d)(2)(iii), 1122(d)(4)(iv), 1122(d)(4)(v), 1122(d)(4)(vi), 1122(d)(4)(vii), 1122(d)(4)(viii), 1122(d)(4)(ix), 1122(d)(4)(x), 1122(d)(4)(xi), 1122(d)(4)(xii), 1122(d)(4)(xiii) and 1122(d)(4)(xiv), which management has determined are not applicable to the activities the Company performs with respect to the Platform (the "Applicable Servicing Criteria"). Period: Twelve months ended December 31, 2006 (the "Period"). Management's interpretation of Applicable Servicing Criteria: The Company's management has determined that servicing criteria 1122(d)(1)(iii) is applicable only with respect to its continuing obligation to act as, or locate a, successor servicer under the circumstances referred to in certain governing documents. It is management's interpretation that Deutsche Bank Trust Company America has no other active back-up servicing responsibilities in regards to 1122(d)(1)(iii) as of and for the Period. Third parties classified as vendors: With respect to servicing criteria 1122(d)(2)(i), 1122(d)(4)(i), and 1122(d)(4)(ii), management has engaged various vendors to perform the activities required by these servicing criteria. The Company's management has determined that these vendors are not considered a "servicer" as defined in Item 1101(j) of Regulation AB, and the Company's management has elected to take responsibility for assessing compliance with the servicing criteria applicable to each vendor as permitted by Interpretation 17.06 of the SEC Division of Corporation Finance Manual of Publicly Available Telephone Interpretations ("Interpretation 17.06"). As permitted by Interpretation 17.06, management has asserted that it has policies and procedures in place to provide reasonable assurance that the vendor's activities comply in all material respects with the servicing criteria applicable to each vendor. The Company's management is solely responsible for determining that it meets the SEC requirements to apply Interpretation 17.06 for the vendors and related criteria. With respect to the Platform, the Company's management provides the following assertion of compliance with respect to the Applicable Servicing Criteria: 1. The Company's management is responsible for assessing the Company's compliance with the Applicable Servicing Criteria as of and for the Period. 2. The Company's management has assessed compliance with the Applicable Servicing Criteria, including servicing criteria for which compliance is determined based on Interpretation 17.06 as described above, as of and for the Period. In performing this assessment, management used the criteria set forth by the Securities and Exchange Commission in paragraph (d) of Item 1122 of Regulation AB. 3. Based on such assessment, as of and for the Period, the Company has complied, in all material respects, with the Applicable Servicing Criteria. KPMG LLP, a registered public accounting firm, has issued an attestation report with respect to the management's assertion of compliance with the Applicable Servicing Criteria as of and for the Period. Appendix I DEUTSCHE BANK NATIONAL TRUST COMPANY By: /s/ Gary R. Vaughan -------------------------------- Name: Gary R. Vaughan Its: Managing Director By: /s/ David Co -------------------------------- Name: David Co Its: Director By: /s/ Jose Sicilia -------------------------------- Name: Jose Sicilia Its: Managing Director By: /s/ Kevin Fischer -------------------------------- Name: Kevin Fischer Its: Vice President By: /s/ Robert Frier -------------------------------- Name: Robert Frier Its: Director DEUTSCHE BANK TRUST COMPANY AMERICAS By: /s/ Kevin C. Weeks -------------------------------- Name: Kevin C. Weeks Its: Managing Director By: /s/ Jenna Kaufman -------------------------------- Name: Jenna Kaufman Its: Director EX-31 5 novastar31.txt Exhibit 31 CERTIFICATION I, Matthew Kaltenrieder, certify that: 1. I have reviewed this report on Form 10-K and all reports on Form 10-D required to be filed in respect of the period covered by this report on Form 10-K of NovaStar Mortgage Funding Trust, Series 2006-4 (the "Exchange Act periodic reports"); 2. Based on my knowledge, the Exchange Act periodic reports, taken as a whole, do not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, all of the distribution, servicing and other information required to be provided under Form 10-D for the period covered by this report is included in the Exchange Act periodic reports; 4. Based on my knowledge and the servicer compliance statement required in this report under Item 1123 of Regulation AB, and except as disclosed in the Exchange Act periodic reports, the servicer has fulfilled its obligations under the servicing agreement; and 5. All of the reports on assessment of compliance with servicing criteria for asset-backed securities and their related attestation reports on assessment of compliance with servicing criteria for asset-backed securities required to be included in this report in accordance with Item 1122 of Regulation AB and Exchange Act Rules 13a-18 and 15d-18 have been included as an exhibit to this report, except as otherwise disclosed in this report. Any material instances of noncompliance described in such reports have been disclosed in this report on Form 10-K. In giving the certifications above, I have reasonably relied on information provided to me by the following unaffiliated parties: U.S. Bank National Association, as Custodian and Deutsche Bank National Trust Compnay, as Trustee. Date: March 22, 2007 /s/ Matthew Kaltenrieder ------------------------ Matthew Kaltenrieder Vice President EX-35 6 novastar35.txt Exhibit 35.1 NovaStar Mortgage, Inc. 8140 Ward Parkway Suite 300 Kansas City, MO 64114 [NOVASTAR LOGO] NOVASTAR MORTGAGE, INC. OFFICER'S CERTIFICATE REGARDING ANNUAL STATEMENT OF COMPLIANCE March 9, 2007 I, Christopher S. Miller, Senior Vice President of Servicing, hereby certify that I am a duly appointed officer of NovaStar Mortgage, Inc., a Virginia corporation, (the "Servicer") and further certify as follows: (i) I have reviewed the Servicer's activities during the preceding calendar year and the Servicer's performance under the various Pooling and Servicing Agreements and Sale and Servicing Agreements (see attached Exhibit A) under which the Servicer is party has been made under my supervision, (ii) To the best of my knowledge, based on such review, the Servicer has fulfilled its obligations under this Agreement in all material respects for such year, except 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. Control activities related to these items have been implemented and individual instances of noncompliance have been or are in the process of being corrected. (iii) No Subservicers have performed any duties on behalf of NovaStar Mortgage, Inc. /s/ Christopher S. Miller - ------------------------------------- Christopher S. Miller Senior Vice President of Servicing NovaStar Mortgage, Inc. Exhibit A to Certificate of Officer March 9, 2007 Description Date of Agreement - --------------------------------------------------------- ----------------- Pooling and Servicing Agreements: NovaStar Mortgage Funding Trust, Series 2002 - 3 September 1, 2002 NovaStar Mortgage Funding Trust, Series 2003 - 1 February 1, 2003 NovaStar Mortgage Funding Trust, Series 2003 - 2 June 1, 2003 NovaStar Mortgage Funding Trust, Series 2003 - 3 September 1, 2003 NovaStar Mortgage Funding Trust, Series 2003 - 4 November 1, 2003 NovaStar Mortgage Funding Trust, Series 2004 - 1 March 1, 2004 NovaStar Mortgage Funding Trust, Series 2004 - 2 June 1, 2004 NovaStar Mortgage Funding Trust, Series 2004 - 3 September 1, 2004 NovaStar Mortgage Funding Trust, Series 2004 - 4 November 1, 2004 NovaStar Mortgage Funding Trust, Series 2005 - 1 February 1, 2005 NovaStar Mortgage Funding Trust, Series 2005 - 2 May 1, 2005 NovaStar Mortgage Funding Trust, Series 2005 - 3 September 1, 2005 NovaStar Mortgage Funding Trust, Series 2005 - 4 December 1, 2005 NovaStar Mortgage Funding Trust, Series 2006 - 2 June 1, 2006 NovaStar Mortgage Funding Trust, Series 2006 - 3 June 1, 2006 NovaStar Mortgage Funding Trust, Series 2006 - 4 August 1, 2006 NovaStar Mortgage Funding Trust, Series 2006 - 5 September 1, 2006 NovaStar Mortgage Funding Trust, Series 2006 - 6 December 1, 2006 Sale and Servicing Agreements: NovaStar Mortgage Funding Trust, Series 2006 - 1 April 1, 2006 NovaStar Mortgage Funding Trust, Series 2006 - MTA1 May 1, 2006 EX-33.1 7 novastar331.txt Exhibit 33.1 MANAGEMENT'S REPORT ON ASSESSMENT OF COMPLIANCE WITH SEC REGULATION AB SERVICING CRITERIA Management of NovaStar Mortgage, Inc., a Virginia corporation, (Servicer) provides this platform-level assessment of compliance with the servicing criteria specified in Item 1122(d) of Regulation AB promulgated by the Securities and Exchange Commission. Management has determined that the following servicing criteria are applicable in regards to the following servicing platform for the following period as follows. Platform: Publicly-issued (i.e. transaction-level reporting initially required under the Securities Exchange Act of 1934, as amended) residential mortgage-backed securities and other mortgage-related asset-backed securities issued on or after January 1, 2006 for which we served as the Servicer. The platform includes the following transactions: Date of PSA ----------------- NovaStar Mortgage Funding Trust, Series 2006 - 1 April 1, 2006 NovaStar Mortgage Funding Trust, Series 2006 - MTA1 May 1, 2006 NovaStar Mortgage Funding Trust, Series 2006 - 2 June 1, 2006 NovaStar Mortgage Funding Trust, Series 2006 - 3 June 1, 2006 NovaStar Mortgage Funding Trust, Series 2006 - 4 August 1, 2006 NovaStar Mortgage Funding Trust, Series 2006 - 5 September 1, 2006 NovaStar Mortgage Funding Trust, Series 2006 - 6 December 1, 2006 Applicable Servicing Criteria: All servicing criteria set forth in Item 1122(d), to the extent required by the related transaction agreements as to any transaction, except for the following criteria: 1122 (d) (3) (ii), (3) (iii), (3) (iv), (4)(ii), and (4) (xv). Third party classified as a vendor: With respect to servicing criteria 1122(d) (4) (xi) and (xii) management engaged Proctor Financial Inc. (January 1 2006 to September 15, 2006) to perform activities required by these servicing criteria. The company's management has determined that this vendor is not considered a "servicer" as defined in Item 110(j) of Regulation AB, and the Company's management has elected to take responsibility for assessing compliance with the servicing criteria applicable to this vendor as permitted by ("Interpretation 17.06"). As permitted by Interpretation 17.06, management has asserted that it has policies and procedures in place to provide reasonable assurance that the vendor's activities comply in all material respects with the servicing criteria applicable to each vendor. The Company's management is solely responsible for determining that it meets the SEC requirements to apply Interpretation 17.06 for the vendors and related criteria. Period: January 1, 2006 to December 31, 2006. With respect to the Platform and the Period, the Company provides the following assessment of compliance in respect of the Applicable Servicing Criteria: 1 o The Company is responsible for assessing its compliance with the Applicable Servicing Criteria. o The Company has assessed compliance with the Applicable Servicing Criteria. o As of December 31, 2006 and for the Period, the Company was in material compliance with all Applicable Servicing Criteria with respect with the Platform taken as a whole, except 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 insurance coverage was not at the level required by the servicing agreements. Control activities related to these items have been implemented and individual instances of non compliance have been or are in the process of being corrected. Deloitte & Touche LLP, an independent registered public accounting firm, has issued an attestation report with respect to the Company's assertion of compliance with the Applicable Servicing Criteria as of and for the Period. BY: /s/ Christopher S. Miller ------------------------------------------------- Christopher S. Miller Senior Vice President of Servicing BY: /s/ Gregory S. Metz ------------------------------------------------- Gregory S. Metz Senior Vice President and Chief Financial Officer Date: March 9, 2007 2 REPORT ON ASSESSMENT OF COMPLIANCE First American Real Estate Solutions of Texas, L.P.( the "Asserting Party") is responsible for assessing compliance as of December 31, 2006, and for the period from January 1,2006 through December 31, 2006 (the "Reporting Period") with the servicing criteria set forth in Title 17, Sections 229.1122 (d)(l)(iv), (d)(2)(v),(d)(2)(vi), (d)(2)(vii), (d)(4)(xi), (d)(4)(xii) and (d)(4)(xiii) of the Code of Federal Regulations (the "CFR") applicable to the Asserting Party (the "Applicable Servicing Criteria"). The transactions covered by this report the asset-backed securities transactions that were registered with the Securities and Exchange Commission pursuant to the Securities Act of 1933 (the "Platform Transactions") for which the the Asserting Party served as the tax provider. The Asserting Party has assessed its compliance with the Applicable Servicing Criteria for the Reporting Period and has concluded that, except as set forth hereinbelow, the Asserting Party has complied, in all material respects, with the Applicable Servicing Criteria as of December 31, 2006, and for the Reporting Period with respect to the Platform Transactions taken as a whole. The Asserting Party assessed its compliance with the Applicable Servicing Criteria for the Reporting Period and has identified a material instance of noncompliance with the servicing criterion set forth in Section 229.1122(d)(2)(vii)(B) of the CFR with respect to the Platform. Specifically, the Asserting Party did not prepare reconciliations for all asset-backed securities related bank accounts within 30 calendar days after the bank statement cut-off date or such number of days specified in the transaction agreements. PricewaterhouseCoopers LLP, an independent registered public accounting firm, has issued an attestation report on the assessment of compliance with the Applicable Servicing Criteria as of December 31, 2006, and for the Reporting Period as set forth in this assertion. FIRST AMERICAN REAL ESTATE SOLUTIONS OF TEXAS, LP. By: First American Real Estate Solutions LLC General Partner /s/ Lucy A. Przybyla - ------------------------------------- Lucy A. Przybyla Senior Vice President February 28, 2007 REPORT ON ASSESSMENT OF COMPLIANCE WITH Section 1122(d)(2)(vi) and Section 1122(d)(4)(xi) of REGULATION AB SERVICING CRITERIA American Security Insurance Company, Standard Guaranty Insurance Company and Safeco Financial Institution Solutions, Inc. (affiliates of Assurant Inc., collectively the "Asserting Party") is responsible for assessing compliance as of December 31, 2006 and for the period from January 1, 2006 through December 31, 2006 (the "Reporting Period") with the servicing criteria set forth in Section ll22(d)(2)(vi), Section 1122(d)(4)(xi) and Section 1122(d)(4)(xii) of Title 17, Section 229.1122(d) of the Code of Federal Regulations, which the Asserting Party has concluded are applicable to the insurance escrow servicing activities it performs with respect to all mortgage loan-tracking transactions covered by this report. The transactions covered by this report include all mortgage loan-tracking transactions for which the Asserting Party served as a Vendor on behalf of Servicers for such asset-backed securities transactions that were registered after January 1, 2006 with the Securities and Exchange Commission pursuant to the Securities Act of 1933 (the "Platform"). The scope of the Asserting Party assertions excludes Section 1122(d)(4)(xii) of Title 17, Section 229.1122(d) of the Code of Federal Regulations, which relates to servicing activities that are performed by the Asserting Party with respect to the Platform, but are not reported on herein. The Asserting Party has assessed its compliance with Section 1122(d)(2)(vi) and Section 1122(d)(4)(xi) ("the Applicable Servicing Criteria") for the Reporting Period and has concluded that the Asserting Party has complied, in all material respects, with the Applicable Servicing Criteria for the Reporting Period with respect to the Platform taken as a whole. The Asserting Party used the criteria set forth in paragraph (d) of Item 1122 of Regulation AB to assess the compliance with the Applicable Servicing Criteria. The Asserting Party has complied, in all material respects, with the Applicable Servicing Criteria for the Reporting Period. PricewaterhouseCoopers LLP, an independent registered public accounting firm, has issued an attestation report on the assessment of compliance with the Applicable Servicing Criteria as of and for the Reporting Period ending December 31, 2006 as set forth in this assertion. American Security Insurance Company Standard Guaranty Insurance Company Safeco Financial Institution Solutions, Inc. /s/ John Frobose - ------------------------------------- By: John Frobose Senior Vice President Date: February 23, 2007 EX-34.1 8 novastar341.txt Exhibit 34.1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors of NovaStar Mortgage, Inc. Kansas City, Missouri We have examined NovaStar Mortgage, Inc.'s (the "Company's") compliance with the servicing criteria set forth in Item 1122 (d) of the Securities and Exchange Commission's Regulation AB for residential mortgage-backed securities and other mortgage-related asset-backed securities issued on or after January 1, 2006, for which the Company served as the servicer (the "Platform") described in the accompanying Management's Report on Assessment of Compliance with SEC Regulation AB Servicing Criteria as of and for the year ended December 31, 2006, excluding criteria 1122 Sections (d)(3)(ii), (d)(3)(iii), (d)(3)(iv), (d)(4)(ii), and (d)(4)(xv) which management has determined are not applicable to the activities performed by the Company with respect to the Platform. Management's assertion identifies the individual asset-backed transactions defined by management as constituting the Platform. Management is responsible for the Company's compliance with the servicing criteria. Our responsibility is to express an opinion on the Company's compliance with the servicing criteria based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants, as adopted by the Public Company Accounting Oversight Board (United States) and, accordingly, included examining, on a test basis, evidence about the Company's compliance with the applicable servicing criteria, including tests on a sample basis of the servicing activities related to the Platform, determining whether the Company performed those selected activities in compliance with the servicing criteria during the specified period and performing such other procedures as we considered necessary in the circumstances. Our procedures were limited to selected servicing activities performed by the Company during the period covered by this report and, accordingly, such samples may not have included servicing activities related to each asset-backed transaction included in the Platform. Further, an examination is not designed to detect noncompliance arising from errors that may have occurred prior to the period specified above that may have affected the balances or amounts calculated or reported by the Company during the period covered by this report. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the Company's compliance with the servicing criteria. As described in management's assertion, for servicing criteria 1122 (d)(4)(xi) and (d)(4)(xii) related to payments made for insurance and late penalties associated with payments not made timely, the Company has engaged a vendor to perform certain activities required by these servicing criteria. The Company has determined that this vendor is not considered a "servicer" as defined in Item 1101(j) of Regulation AB, and the Company has elected to take responsibility for assessing compliance with the servicing criteria applicable to this vendor as permitted by Interpretation 17.06 of the SEC Division of Corporation Finance Manual of Publicly Available Telephone Interpretations ("Interpretation 17.06"). As permitted by Interpretation 17.06, the Company has asserted that it has policies and procedures in place designed to provide reasonable assurance that the vendor's activities comply in all material respects with the servicing criteria applicable to this vendor. The Company is solely responsible for determining that it meets the SEC requirements to apply Interpretation 17.06 for the vendor and related criteria as described in its assertion, and we performed no procedures with respect to the Company's determination of its eligibility to use Interpretation 17.06. Our examination disclosed the following instances of material noncompliance with 1122 (d)(1)(iv), 1122 (d)(2)(vii) and 1122 (d)(4)(i) applicable to the Company during the year ended December 31, 2006: o The Company did not maintain fidelity bond insurance coverage at the level required by the servicing agreements. o Certain monthly bank reconciliations were not prepared and reviewed timely. Additionally, certain monthly bank reconciliations contained reconciling items that had not been cleared timely. o The Company did not re-assign loans within the Mortgage Electronic Registration System (MERS) in accordance with the servicing agreements. In our opinion, except for the instances of material noncompliance described in the preceding paragraph, the Company complied, in all material respects, with the aforementioned applicable servicing criteria for the Platform as of and for the year ended December 31, 2006. Management's assertion includes management's responses to the material noncompliance identified in our examination. Such responses have not been subjected to the procedures applied in our examination and, accordingly, we do not express an opinion or provide any form of assurance on the appropriateness of the responses or the effectiveness of any corrective actions described herein. /s/ Deloitte & Touche LLP - -------------------------- Kansas City, Missouri March 9, 2007 -2- Report of Independent Registered Public Accounting Firm To the Board of Directors of The First American Corporation: We have examined First American Real Estate Solutions of Texas, L.P.'s (the "Company" and an indirect subsidiary of The First American Corporation), compliance with the servicing criteria set forth in Item 1122(d) of the Securities and Exchange Commission's Regulation AB for all loans for residential mortgage loan outsourcing customers for which the Company served as the residential tax service provider (the "Platform") described in the accompanying Report on Assessment of Compliance, as of December 31, 2006 and for the year then ended, excluding criteria 1122(d)(1)(l)-(iii), 1122(d)(2)(l)-(iv), 1122(d)(3)(l)(iv), 1122(d)(4)(i)-(x) and 1122(d)(4)(xiv)-(xv), which the Company has determined are not applicable to the servicing activities performed by it with respect to the Platform. Management is responsible for the Company's compliance with the servicing criteria. Our responsibility is to express an opinion on the Company's compliance with the servicing criteria based on our examination. Our examination was conducted in accordance with standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included examining, on a test basis, evidence about the Company's compliance with the applicable servicing criteria and performing such other procedures as we considered necessary in the circumstances. Our examination included testing of selected securities that comprise the Platform, testing of selected servicing activities related to the Platform, and determining whether the Company processed those selected transactions and performed those selected activities in compliance with the applicable servicing criteria. Our procedures were limited to the selected transactions and servicing activities performed by the Company during the period covered by this report. Our procedures were not designed to detect noncompliance arising from errors that may have occurred prior to or subsequent to our tests that may have affected the balances or amounts calculated or reported by the Company during the period covered by this report. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the Company's compliance with the servicing criteria. Our examination disclosed the following material instance of noncompliance with the servicing criteria set forth in Item 1122(d)(2)(vii)(B) of Regulation AB applicable to the Company during year ended December 31, 2006. Account reconciliations for all asset-backed securities related bank accounts were not prepared within 30 calendar days after the bank statement cutoff date, or such other number of days specified in the transaction agreements as required by Item 1122(d)(2)(vii)(B) of Regulation AB. In our opinion, except for the material instance of noncompliance described in the preceding paragraph, First American Real Estate Solutions of Texas, L.P. complied with the aforementioned applicable servicing criteria as of and for the year ended December 31, 2006 for all loans for residential mortgage loan outsourcing customers for which the Company served as the residential tax service provider, in all material respects. /s/ PricewaterhouseCoopers LLP February 28, 2007 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Assurant, Inc.: We have examined management's assertion, included in the accompanying management's Report on Assessment of Compliance with 1122(d)(2)(vi) and 1122(d)(4)(xi) of Regulation AB Servicing Criteria, that American Security Insurance Company, Standard Guaranty Insurance Company and Safeco Financial Institution Solutions, Inc. (affiliates of Assurant Inc., collectively the "Asserting Party") complied with the servicing criteria set forth in Item 1122(d) of the Securities and Exchange Commission's Regulation AB for all mortgage loan-tracking transactions for which the Asserting Party served as a Vendor on behalf of Servicers for such asset-backed securities transactions that were registered after January 1, 2006 with the Securities and Exchange Commission pursuant to the Securities Act of 1933 (the "Platform"), as of December 31, 2006 and for the year then ended, excluding (i) criteria 1122(d)(1)(i) through 1122 (d)(1)(iv), 1122 (d)(2)(i) through 1122(d)(2)(v), 1122(d)(2)(vii), 1122(d)(3)(i) through 1122(d)(3)(iv), 1122(d)(4)(i) through 1122(d)(4)(x) and 1122(d)(4)(xiii) through 1122(d)(4)(xv), which the Asserting Party has determined are not applicable to the activities performed by it with respect to the Platform and (ii), criterion 1122(d)(4)(xii), which relates to servicing activities that are applicable to the Platform, but are excluded from the scope of management's assertion and are not reported on herein. Management is responsible for the Company's compliance with the servicing criteria. Our responsibility is to express an opinion on management's assertion based on our examination. Our examination was conducted in accordance with standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included examining, on a test basis, evidence about the Company's compliance with the applicable servicing criteria and performing such other procedures as we considered necessary in the circumstances. Our examination included testing of selected asset-backed transactions and securities that comprise the Platform, testing of selected servicing activities related to the Platform, and determining whether the Company processed those selected transactions and performed those selected activities in compliance with the applicable servicing criteria. Our procedures were limited to the selected transactions and servicing activities performed by the Company during the period covered by this report. Our procedures were not designed to detect noncompliance arising from errors that may have occurred prior to or subsequent to our tests that may 1 have affected the balances or amounts calculated or reported by the Company during the period covered by this report. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the Company's compliance with the servicing criteria. In our opinion, management's assertion that the Asserting Party complied with the aforementioned applicable servicing criteria as of and for the year ended December 31, 2006 for the Platform is fairly stated, in all material respects. /s/ PricewaterhouseCooopers LLP Atlanta, Georgia February 23, 2007 2 EX-33.3 9 usbankcustodian333.txt Exhibit 33.3 Managements Assertion Report on Compliance with Applicable Servicing Criteria Pursuant to Item 1122 of Regulation AB under the Securities Exchange Act of 1934 U.S. Bank National Association ('U.S. Bank') as a party participating in the servicing function for the following transactions: U.S. Bank Corporate Trust Asset Backed Securities Platform(1) hereby provides the following report on its assessment of compliance with the servicing criteria set forth in Item 1122 of Regulation AB applicable to it and as described on Exhibit A hereto: 1 U.S. Bank is responsible for assessing its compliance with the servicing criteria applicable to it as noted on the accompanying Exhibit A; 2 U.S. Bank used the criteria set forth in paragraph(d) of Item 1122 of Regulation AB to assess its compliance with the applicable servicing criteria; 3 U.S. Bank's assessment of its compliance with the applicable servicing criteria is as of and for the period beginning on January 1, 2006 and ending December 31, 2006, the end of the fiscal year covered by the Form 10-K report U.S. Bank's participation in the servicing function complied in all material respects with the applicable servicing criteria 4 Ernst & Young, a registered public accounting firm, has issued an attestation report on U.S. Bank's assessment of compliance with the applicable servicing criteria as of and for the period beginning on January 1, 2006 and ending December 31, 2006, the end of the fiscal year covered by the Form 10-K report U.S. BANK NATIONAL ASSOCIATION /s/ Bryan R. Calder -------------------------------- Name: Bryan R. Calder Title: Executive Vice President Date: February 26, 2007 - ----------------------------- (1) The U.S. Bank Corporate Trust ABS Platform (the "Platform") consists of the activities involved in the performance of servicing functions for (i) publicly issued asset-backed and mortgage-backed transactions the securities of which were offered on or after January 1, 2006 and (ii) certain asset-backed transactions offered prior to January 1, 2006 for which the Issuer has voluntarily elected to make Regulation AB compliant filings under the Securities Exchange Act of 1934, as amended. The Platform does not include transactions comprised of the repackaging of corporate debt and/or other agency securities EXHIBIT A to Management's Assertion Reg AB Servicing Criteria Reference
General Servicing Considerations - -------------------------------- 1122(d)(1)(i) Policies and procedures are instituted to monitor any performance Not Applicable or other triggers and events of default in accordance with the transaction agreements. 1122(d)(1)(ii) If any material servicing activities are outsourced to third parties, policies and procedures are instituted to monitor the third party's performance and compliance with such servicing activities. 1122(d)(1)(iii) Any requirements in the transaction agreements to maintain a Not Applicable back-up servicer for the Pool Assets are maintained. 1122(d)(1)(iv) A fidelity bond and errors and omissions policy is in effect on the party participating in the servicing function throughout the reporting period in the amount of coverage required by and otherwise in accordance with the terms of the transaction agreements. Cash Collection and Administration - ---------------------------------- 1122(d)(2)(i) Payments on pool assets are deposited into the appropriate Not Applicable custodial bank accounts and related bank clearing no more than two business days following receipt or such other number of days specified in the transaction agreements. 1122(d)(2)(ii) Disbursements made via wire transfer on behalf of an obligor Not Applicable or to an investor are made only by authorized personnel. 1122(d)(2)(iii) Advances of funds or guarantees regarding collections, cash flows Not Applicable or distributions and any interest or other fees charged for such advances are made reviewed and approved as specified in the transaction agreements. 1122(d)(2)(iv) The related accounts for the transaction, such as cash reserve Not Applicable accounts or accounts established as a form of over collateralization, are separately maintained (e.g. with respect to commingling of cash) as set forth in the transaction agreements. 1122(d)(2)(v) Each custodial account is maintained at a federally insured Not Applicable depository institution as set forth in the transaction agreements. For purposes of this criterion, "federally insured depository institution" with respect to a foreign financial institution means a foreign financial institution that meets the requirements of Rule 13k-1(b)(1) of the Securities Exchange Act. 1122(d)(2)(vi) Unissued checks are safeguarded so as to prevent unauthorized access. Not Applicable 1122(d)(2)(vii) Reconciliations are prepared on a monthly basis for all asset-backed Not Applicable securities related bank accounts including custodial accounts and related bank clearing accounts. These reconciliations are (A) mathematically accurate: (B) prepared within 30 calendar days after the bank statement cutoff date or such other number of days specified in the transaction agreements; (C) reviewed and approved by someone other than the person who prepared the reconciliation; and (D) contain explanations for reconciling items. These reconciling items are resolved within 90 calendar days of their original identification or such other number of days specified in the transaction agreements. Investor Remittances and Reporting 1122(d)(3)(i) Reports to investors, including those to be filed with the Commission Not Applicable are maintained in accordance with the transaction agreements and applicable Commission requirement. Specifically, such reports (A) are prepared in accordance with timeframes and other terms set forth in the transaction agreements; (B) provide information calculated in accordance with the terms specified in the transaction agreements; (C) are filed with the Commission as required by its rules and regulations; and (D) agree with investors' or the trustee's records as to the total unpaid principal balance and number of Pool Assets serviced by the Servicer.
1 1122(d)(3)(ii) Amounts due to investors are allocated and remitted in accordance Not Applicable with time frames, distribution priority and other terms set forth in the transaction agreements. 1122(d)(3)(iii) Disbursements made to an investor are posted within two business days Not Applicable to the Servicer's investor records or such other number of days specified in the transaction agreements. 1122(d)(3)(iv) Amounts remitted to investors per the investor reports agree with Not Applicable cancelled checks or other form of payment or custodial bank statements. Pool Asset Administration - ------------------------- 1122(d)(4)(i) Collateral or security on pool assets is maintained as required by the transaction agreements or related pool asset documents. 1122(d)(4)(ii) Pool assets and related documents are safeguarded as required by the transaction agreements. 1122(d)(4)(iii) Any additions removals or substitutions to the asset pool are made, reviewed and approved in accordance with any conditions or requirements in the transaction agreements. 1122(d)(4)(iv) Payments on pool assets including any payoffs, made in accordance Not Applicable with the related pool asset documents are posted to the Servicer's obligor records maintained no more than two business days after receipt or such other number of days specified in the transaction agreements and allocated to principal, interest or other items (e.g. escrow) in accordance with the related pool asset documents. 1122(d)(4)(v) The Servicer's records regarding the pool assets agree with the Not Applicable Servicer's records with respect to an obligor's unpaid principal balance. 1122(d)(4)(vi) Changes with respect to the terms or status of an obligor's pool Not Applicable assets (e.g. loan modifications or re-agings) are made reviewed and approved by authorized personnel in accordance with the transaction agreements and related pool asset documents. 1122(d)(4)(vii) Loss mitigation or recovery actions (e.g. forbearance plans, Not Applicable modifications and deeds in lieu of foreclosure, foreclosures and repossessions as applicable) are initiated conducted and concluded in accordance with the timeframes or other requirements established by the transaction agreements. 1122(d)(4)(viii) Records documenting collection efforts are maintained during the Not Applicable period a pool asset is delinquent in accordance with the transaction agreements. Such records are maintained on at least a monthly basis or such other period specified in the transaction agreements, and describe the entity's activities in monitoring delinquent pool assets including, for example phone calls letters and payment rescheduling plans in cases where delinquency is deemed temporary (e.g. illness or unemployment). 1122(d)(4)(ix) Adjustments to interest rates or rates of return for pool assets with Not Applicable variable rates are computed based on the related pool asset documents. 1122(d)(4)(x) Regarding any funds held in trust for an obligor (such as escrow Not Applicable accounts); (A) such funds are analyzed, in accordance with the obligor's pool asset documents, on at least an annual basis or such other period specified in the transaction agreements; (B) interest on such funds is paid, or credited, to obligors in accordance with applicable pool asset documents and state laws; and (C) such funds are returned to the obligor within 30 calendar days of full repayment of the related pool assets or such other number of days specified in the transaction agreements.
2 1122(d)(4)(xi) Payments made on behalf of an obligor (such as tax or insurance Not Applicable payments) are made on or before the related penalty or expiration dates as indicated on the appropriate bills or notices for such payments provided that such support has been received by the servicer at least 30 calendar days prior to these dates or such other number of days specified in the transaction agreements. 1122(d)(4)(xii) Any late payment penalties in connection with any payment to be made Not Applicable on behalf of an obligor are paid from the Servicer's funds and not charged to the obligor unless the late payment was due to the obligor's error or omission. 1122(d)(4)(xiii) Disbursements made on behalf of an obligor are posted within two Not Applicable business days to the obligor's records maintained by the servicer or such other number of days specified in the transaction agreements. 1122(d)(4)(xiv) Delinquencies, charge-offs and uncollectible accounts are recognized and recorded in accordance with the transaction agreements. 1122(d)(4)(xv) Any external enhancement or other support, identified in Item 1114(a)(1) Not Applicable through (3) or Item 1115 of Regulation AB is maintained as set forth in the transaction agreements.
3 EX-34.3 10 usbankcustodian343.txt Exhibit 34.3 [ERNST & YOUNG LOGO] Ernst & Young LLP Phone: (612) 343-1000 220 South Sixth Street, Ste. 1400 www.ey.com Minneapolis, MN 55402-4509 Report of Independent Registered Public Accounting Firm We have examined management's assertion, included in the accompanying Report on Assessment of Compliance with SEC Regulation AB Servicing Criteria, that U.S. Bank National Association (the Company) complied with the servicing criteria set forth in Item 1122 (d) of the Securities and Exchange Commission's Regulation AB for the Corporate Trust Asset Backed Securities platform (the Platform) as of and for the year ended December 31, 2006, except for criteria 1122 (d)(1)(i), 1122 (d)(1)(iii), 1122 (d)(2)(i) through 1122 (d)(2)(vii), 1122 (d)(3)(i) through 1122 (d)(3)(iv), and 1122 (d)(4)(iv) through 1122 (d)(4)(xv), which the Company has determined are not applicable to the activities performed by them with respect to the servicing platform covered by this report. Management is responsible for the Company's compliance with those servicing criteria. Our responsibility is to express an opinion on management's assertion about the Company's compliance with the servicing criteria based on our examination. Our examination was conducted in accordance with standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included examining, on a test basis, evidence about the Company's compliance with the applicable servicing criteria and performing such other procedures as we considered necessary in the circumstances. Our examination included testing of less than all of the individual asset backed transactions and securities that comprise the Platform, testing of less than all of the servicing activities related to the Platform, and determining whether the Company processed those selected transactions and performed those selected activities in compliance with the servicing criteria. Furthermore, our procedures were limited to the selected transactions and servicing activities performed by the Company during the period covered by this report. Our procedures were not designed to determine whether errors may have occurred either prior to or subsequent to our tests that may have affected the balances or amounts calculated or reported by the Company during the period covered by this report for the selected transactions or any other transactions. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the Company's compliance with the servicing criteria. In our opinion, management's assertion that the Company complied with the aforementioned servicing criteria as of and for the year ended December 31, 2006, for the Corporate Trust Asset Backed Securities platform is fairly stated, in all material respects. /s/ Ernst & Young LLP ---------------------------------------- February 26, 2007 A Member Practice of Ernst & Young Global EX-33.4 11 usbankwachoviacustodian334.txt Exhibit 33.4 Management's Assertion Report on Compliance with Applicable Servicing Criteria Pursuant to Item 1122 or Regulation AB under the Securities Exchange Act of 1934 U.S. Bank National Association ("U.S. Bank") as a party participating in the servicing function for the following transactions: Wachovia Document Custody Services Platform(1) hereby provides the following report on its assessment of compliance with the servicing criteria set forth in Item 1122 of Regulation AB applicable to it and as described on Exhibit A hereto: 1 U.S. Bank is responsible for assessing its compliance with the servicing criteria applicable to it as noted on the accompanying Exhibit A: 2 U.S. Bank used the criteria set forth in paragraph (d) of Item 1122 of Regulation AB to assess its compliance with the applicable servicing criteria; 3 U.S. Bank's assessment of its compliance with the applicable servicing criteria is as of and for the period beginning on January 1, 2006 and ending September 5, 2006, the end of the conversion period covered by the Form 10-K report U.S. Bank's participation in the servicing function complied in all material respects with the applicable servicing criteria 4 Ernst & Young, a registered public accounting firm, has issued an attestation report on U.S. Bank's assessment of compliance with the applicable servicing criteria as of and for the period beginning on January 1, 2006 and ending September 5, 2006, the end of the conversion period covered by the Form 10-K report U.S. BANK NATIONAL ASSOCIATION /s/ Bryan R Calder ------------------------------- Name: Bryan R Calder Title: Executive Vice President Date: February 26, 2007 - -------------------- (1) The Wachovia DCS Platform (the "Platform") consists of the activities involved in the performance of document custodian servicing functions for publicly issued mortgage-backed transactions the securities of which were offered on or after January 1, 2006 located at the former Wachovia sites during the period beginning on January 1, 2006 and ending on September 5, 2006. the Conversion Period, at which date the transactions were formally acquired by U.S. Bank Corporate Trust and subject to U.S. Bank Corporate Trust's operating systems, policies, and procedures EXHIBIT A to Management's Assertion Reg AB Servicing Criteria Reference
General Servicing Considerations - -------------------------------- 1122(d)(l)(ii) Policies and procedures are instituted to monitor any performance or other triggers and Not Applicable events of default in accordance with the transaction agreements 1122(d)(l)(ii) If any material servicing activities are outsourced to third parties policies and procedures are instituted to monitor the third party's performance and compliance with such servicing activities 1122(d)(l)(iii) Any requirements in the transaction agreements to maintain a back-up servicer for the Not Applicable Pool Assets are maintained 1122(d](l)(iv) A fidelity bond and errors and omissions policy is in effect on the party participating Not Applicable in the servicing function throughout the reporting period in the amount of coverage required by and otherwise in accordance with the terms of the transaction agreements Cash Collection and Administration - ---------------------------------- 1122(d)(2)(i) Payments on pool assets are deposited into the appropriate custodial bank accounts Not Applicable and related bank clearing accounts no more than two business days following receipt or such other number of days specified in the transaction agreements 1122(d)(2)(ii) Disbursements made via wire transfer on behalf of an obligor or to an investor are Not Applicable made only by authorized personnel 1122(d)(2)(iii) Advances of funds or guarantees regarding collections, cash flows or distributions and Not Applicable any interest or other fees charged for such advances are made reviewed and approved as specified in the transaction agreements 1122(d)(2)(iv) The related accounts for the transaction such as cash reserve accounts or accounts Not Applicable established as a form of over collateralization are separately maintained (e.g. with respect to commingling of cash) as set forth in the transaction agreements 1122(d)(2)(v) Each custodial account is maintained at a federally insured depositor institution as set Not Applicable forth in the transaction agreements. For purposes of this criterion federally insured depository institution' with respect to a foreign financial institution means a foreign financial institution that meets the requirements of Rule 13k-1(b)(1)of the Securities Exchange Act 1122(d)(2)(vi) Unissued checks are safeguarded so as to prevent unauthorized access Not Applicable 1122(d)(2)(vii) Reconciliations are prepared on a monthly basis for all asset-backed securities related Not Applicable bank accounts including custodial accounts and related bank clearing accounts These reconciliations are (A) mathematically accurate; (B) prepared within 30 calendar days after the bank statement cutoff date or such other number of days specified in the transaction agreements; (C) reviewed and approved by someone other than the person who prepared the reconciliation; and (D) contain explanations for reconciling items These reconciling items are resolved within 90 calendar days of their original identification, or such other number of days specified in the transaction agreements Investor Remittances and Reporting - ---------------------------------- 1122(d)(3)(i) Reports to investors, including those to be filed with the Commission are maintained Not Applicable in accordance with the transaction agreements and applicable Commission requirements Specifically, such reports (A) are prepared in accordance with timeframes and other terms set forth in the transaction agreements: (B) provide information calculated in accordance with the terms specified in the transaction agreements: (C) are filed with the Commission as required by its rules and regulations: and (D) agree with investors" or the trustee's records as to the total unpaid principal balance and number of Pool Assets serviced by the Servicer.
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1122(d)(3)(ii) Amounts due to investors are allocated and remitted in accordance with timeframes Not Applicable distribution priority and other terms set forth in the transaction agreements. 1122(d)(3)(iii) Disbursements made to an investor are posted within two business days to the Not Applicable Servicer's investor records or such other number of days specified in the transaction agreements. 1122(d)(3)(iv) Amounts remitted to investors per the investor reports agree with cancelled checks or Not Applicable other form of payment or custodial bank statements. Pool Asset Administration - ------------------------- 1122(d)(4)(i) Collateral or security on pool assets is maintained as required by the transaction agreements or related pool asset documents. 1122(d)(4)(ii) Pool assets and related documents are safeguarded as required by the transaction agreements. 1122(d)(4)(iii) Any additions removals or substitutions to the asset pool are made reviewed and approved in accordance with any conditions or requirements in the transaction agreements. 1122(d)(4)(iv) Payments on pool assets including any payoffs, made in accordance with the related Not Applicable pool asset documents are posted to the Servicer's obligor records maintained no more than two business days after receipt or such other number of days specified in the transaction agreements and allocated to principal interest or other items (e.g. escrow) in accordance with the related pool asset documents. 1122(d)(4)(v) The Servicer's records regarding the pool assets agree with the Servicer's records with Not Applicable respect to an obligor's unpaid principal balance. 1122(d)(4)(vi) Changes with respect to the terms or status of an obligor's pool assets (e.g. loan Not Applicable modifications or re-agings) are made reviewed and approved by authorized personnel in accordance with the transaction agreements and related pool asset documents. 1122(d)(4)(vii) Loss mitigation or recovery actions (e.g. forbearance plans modifications and deeds Not Applicable in lieu of foreclosure, foreclosures and repossessions as applicable) are initiated, conducted and concluded in accordance with the timeframes or other requirements established by the transaction agreements. 1122(d)(4)(viii) Records documenting collection efforts are maintained during the period a pool asset Not Applicable is delinquent in accordance with the transaction agreements. Such records are maintained on at least a monthly basis or such other period specified in the transaction agreements, and describe the entity's activities in monitoring delinquent pool assets including for example, phone calls, letters and payment rescheduling plans in cases where delinquency is deemed temporary (e.g. illness or unemployment). 1122(d)(4)(ix) Adjustments to interest rates or rates of return for pool assets with variable rates are Not Applicable computed based on the related pool asset documents. 1122(d)(4)(x) Regarding any funds held in trust for an obligor {such as escrow accounts). (A) such Not Applicable funds are analyzed in accordance with the obligor's pool asset documents, on at least an annual basis or such other period specified in the transaction agreements; (B) interest on such funds is paid or credited to obligors in accordance with applicable pool asset documents and state laws; and (C) such funds are returned to the obligor within 30 calendar days of full repayment of the related pool assets or such other number of days specified in the transaction agreements.
2 1122(d)(4)(xi) Payments made on behalf of an obligor (such as tax or insurance payments) are made Not Applicable on or before the related penalty or expiration dates as indicated on the appropriate bills or notices for such payments provided that such support has been received by the servicer at least 30 calendar days prior to these dates or such other number of days specified in the transaction agreements 1122(d)(4)(xii) Any late payment penalties in connection with any payment to be made on behalf of Not Applicable an obligor are paid from the Servicer's funds and not charged to the obligor unless the late payment was due to the obligor's error or omission 1l22(d)(4)(xiii) Disbursements made on behalf of an obligor are posted within two business days to Not Applicable the obligor's records maintained by the servicer or such other number of days specified in the transaction agreements 1122(d)(4)(xiv) Delinquencies change-offs and uncollectible accounts are recognized and recorded in Not Applicable accordance with the transaction agreements 1122(d)(4)(xv) Any external enhancement or other support, identified in Item 1114 (a)(1) through (3) Not Applicable or Item 1115 of Regulation AB is maintained as set forth in the transaction agreements.
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