HSBC HOME EQUITY LOAN CORPORATION II, as Depositor, HSBC FINANCE CORPORATION, as Servicer, [ ], as Administrator, and [ ], as Trustee POOLING AND SERVICING AGREEMENT Dated as of [ ], 200[ ] [ ] Home Equity Loan Asset Backed Certificates, Series 200[ ]-[ ]

Exhibit 4.3

HSBC HOME EQUITY LOAN CORPORATION II,
as Depositor,

HSBC FINANCE CORPORATION,
as Servicer,

[ ],
as Administrator,

and

[ ],
as Trustee

POOLING AND SERVICING AGREEMENT

Dated as of [ ], 200[ ]

[ ] Home Equity Loan Asset Backed Certificates,

Series 200[ ]-[ ]

TABLE OF CONTENTS


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ARTICLE I

DEFINITIONS

Section 1.01.	Definitions		2
Section 1.02.	Interest Calculations		23
Section 1.03.	Usage of Terms		23

ARTICLE II

CONVEYANCE OF HOME EQUITY LOANS; ORIGINAL ISSUANCE OF CERTIFICATES; TAX TREATMENT

Section 2.01.	Acknowledgment; Conveyance of Home Equity Loans; Custody of Mortgage Files		24
Section 2.02.	Acceptance by Trustee; Repurchase of Home Equity Loans; Conveyance of Eligible Substitute Home Equity Loans		27
Section 2.03.	Representations, Warranties and Covenants of the Servicer		29
Section 2.04.	Representations and Warranties of the Depositor Regarding this Agreement and the Home Equity Loans; Repurchases and Substitutions		30
Section 2.05.	Execution and Authentication of Certificates		35
Section 2.06.	Delivery of Opinion of Counsel in Connection with Substitutions		35
Section 2.07.	REMIC Matters		35

ARTICLE III

ADMINISTRATION AND SERVICING OF HOME EQUITY LOANS

Section 3.01.	The Servicer		36
Section 3.02.	Collection of Certain Home Equity Loan Payments		38
Section 3.03.	Withdrawals from the Collection Account		40
Section 3.04.	Maintenance of Hazard Insurance; Property Protection Expenses		41
Section 3.05.	Assumption and Modification Agreements		42
Section 3.06.	Realization Upon Defaulted Home Equity Loans		43
Section 3.07.	[Reserved]		44
Section 3.08.	Trustee to Cooperate		44
Section 3.09.	Servicing Compensation; Payment of Certain Expenses by Servicer		45
Section 3.10.	Annual Statement as to Compliance		45
Section 3.11.	Access to Certain Documentation and Information Regarding the Home Equity Loans		47
Section 3.12.	Maintenance of Certain Servicing Insurance Policies		47
Section 3.13.	[Reserved]		47
Section 3.14.	Information Required by the Internal Revenue Service Generally and Reports of Foreclosures and Abandonments of Mortgaged Property		48
Section 3.15.	Additional Covenants of HSBC Finance		48

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Section 3.16.	Servicing Certificate		49

ARTICLE IV

[THE CERTIFICATE INSURANCE POLICY]

Section 4.01.	The Certificate Insurance Policy		52
Section 4.02.	[Reserved]		52
Section 4.03.	Claims Upon the Certificate Insurance Policy		52

ARTICLE V

DISTRIBUTIONS AND STATEMENTS TO CERTIFICATEHOLDERS; RIGHTS OF CERTIFICATEHOLDERS

Section 5.01.	Distributions		54
Section 5.02.	Statements to Certificateholders		56

ARTICLE VI

THE CERTIFICATES

Section 6.01.	The Certificates		60
Section 6.02.	Certificate Register; Registration of Transfer and Exchange of Certificates		60
Section 6.03.	Mutilated, Destroyed, Lost or Stolen Certificates		64
Section 6.04.	Persons Deemed Owners		64
Section 6.05.	Appointment of Paying Agent		64
Section 6.06.	Actions of Certificateholders		65

ARTICLE VII

THE SERVICER AND THE DEPOSITOR

Section 7.01.	Liability of the Servicer and the Depositor		66
Section 7.02.	Merger or Consolidation of, or Assumption of the Obligations of, the Servicer or the Depositor		66
Section 7.03.	Limitation on Liability of the Servicer, the Depositor and Others		66
Section 7.04.	Servicer Not to Resign		67
Section 7.05.	Delegation of Duties		68

ARTICLE VIII

SERVICER TERMINATION EVENTS

Section 8.01.	Servicer Termination Events		69
Section 8.02.	Trustee to Act; Appointment of Successor		70
Section 8.03.	Notification to Certificateholders		71

ARTICLE IX

THE TRUSTEE AND THE ADMINISTRATOR

Section 9.01.	Duties of Trustee		73

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		Page
Section 9.02.	Certain Matters Affecting the Trustee		74
Section 9.03.	Trustee Not Liable for Certificates or Home Equity Loans		75
Section 9.04.	Trustee May Own Certificates		76
Section 9.05.	Servicer to Pay Trustee’s Fees and Expenses		76
Section 9.06.	Eligibility Requirements for Trustee		76
Section 9.07.	Resignation or Removal of Trustee		77
Section 9.08.	Successor Trustee		77
Section 9.09.	Merger or Consolidation of Trustee		78
Section 9.10.	Appointment of Co-Trustee or Separate Trustee		78
Section 9.11.	Trustee May Enforce Claims Without Possession of Certificates		80
Section 9.12.	Inspection of Mortgage Files		80
Section 9.13.	Duties of Administrator		80
Section 9.14.	Certain Matters Affecting the Administrator		81
Section 9.15.	Administrator May Own Certificates		81
Section 9.16.	Servicer to Pay Administrator’s Fees and Expenses		81
Section 9.17.	Eligibility Requirements for Administrator		82
Section 9.18.	Resignation or Removal of Administrator		82
Section 9.19.	Successor Administrator		83
Section 9.20.	Merger or Consolidation of Administrator		83
Section 9.21.	Tax Matters		84
Section 9.22.	[Rights of the Certificate Insurer to Exercise Rights of Class [A] Certificateholders]		86
Section 9.23.	[Trustee to Act Solely with Consent of the Certificate Insurer.]		87
Section 9.24.	[Home Equity Loans, Trust and Accounts Held for Benefit of the Certificate Insurer.]		87
Section 9.25.	[Certificate Insurer Default.]		87

ARTICLE X

TERMINATION

Section 10.01.	Termination		89

ARTICLE XI

MISCELLANEOUS PROVISIONS

Section 11.01.	Amendment		93
Section 11.02.	Recordation of Agreement		95
Section 11.03.	Limitation on Rights of Certificateholders		95
Section 11.04.	Governing Law		96
Section 11.05.	Notices		96
Section 11.06.	Severability of Provisions		96
Section 11.07.	Assignment		96
Section 11.08.	Certificates Nonassessable and Fully Paid		97
Section 11.09.	Third-Party Beneficiaries		97
Section 11.10.	Counterparts		97
Section 11.11.	Effect of Headings and Table of Contents		97
Section 11.12.	Limitation on Voting of Preferred Stock		97

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		Page
Section 11.13.	Perfection Representations		97
Section 11.14.	No Petition		97

ARTICLE XII

EXCHANGE ACT REPORTING

Section 12.01.	Regulation AB		98
Section 12.02.	Information to Be Provided by the Trustee and the Administrator		98
EXHIBITS

Schedule 1	Perfection Representations, Warranties and Covenants

Exhibit A-1	Form of Class [A] Certificate
Exhibit A-2	Form of Class [IO] Certificate
Exhibit B	Form of Class R Certificate
Exhibit C	Class [IO] Notional Amount
Exhibit D	Home Equity Loan Schedule
Exhibit E	Form of Transfer Affidavit
[Exhibit F	Form of Certificate Insurance Policy]

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This Pooling and Servicing Agreement, dated as of [ ], 200[ ], among HSBC HOME EQUITY LOAN CORPORATION II, as Depositor, HSBC FINANCE CORPORATION, as Servicer, [ ], as Administrator, and [ ], as Trustee,

WITNESSETH THAT:

In consideration of the mutual agreements herein contained, the parties hereto agree as follows:

PRELIMINARY STATEMENT

The Depositor is the owner of the Trust Fund that is hereby conveyed to the Trustee in return for the Certificates. The Trust Fund for federal income tax purposes will consist of three REMICs (“REMIC 1,” “REMIC 2” and the “Master REMIC”). Each Certificate, other than the Class A-R Certificate, will represent ownership of one or more regular interests in the Master REMIC for purposes of the REMIC Provisions. The Class R Certificate represents ownership of the sole class of residual interest in REMIC 1, REMIC 2 and the Master REMIC. The Master REMIC will hold as assets the several classes of uncertificated REMIC 2 Interests (other than the R-2-R Interest). Each REMIC 2 Interest (other than the R-2-R Interest) is hereby designated as a regular interest in REMIC 2. REMIC 2 will hold as assets the several classes of REMIC 1 Interests (other than the R-1-R Interest). Each REMIC 1 Interest (other than the R-1-R Interest) is hereby designated as a regular interest in REMIC 1. REMIC 1 will hold as assets all property of the Trust Fund. The latest possible maturity date of all REMIC regular interests created in this Agreement shall be the Latest Possible Maturity Date.

REMIC 1:

The REMIC 1 Interests will have the principal balances and pass-through rates as set forth below.


[Insert chart and footnotes]

On each Distribution Date, the Interest Collections and the Principal Distribution Amount shall be distributed with respect to the REMIC 1 Interests in the following manner:

(1) Interest. Interest is to be distributed with respect to each REMIC 1 Interest at the rate, or according to the formulas, described above.

(2) Principal. For any Distribution Date, the Principal Distribution Amount with respect to all Home Equity Loans shall be allocated in proportion to its corresponding REMIC 1 Interests.

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REMIC 2:

The REMIC 2 Interests will have the principal balances and pass-through rates as set forth below.


[Insert chart and footnotes]

On each Distribution Date, the Interest Collections and the Principal Distribution Amount payable with respect to the REMIC 1 Interests shall be payable with respect to the REMIC 2 Interests in the following manner:

(1) Interest. Interest is to be distributed with respect to each REMIC 2 Interest at the rate, or according to the formulas, described above.

(2) Principal. Principal Distribution Amount shall be allocated among the REMIC 2 Interests as described above.

Master REMIC:

The following table specifies the class designation, interest rate, and principal amount for each class of Master REMIC Interest:


[Insert chart and footnotes]

ARTICLE I

DEFINITIONS

Section 1.01. Definitions. Whenever used in this Agreement, the following words and phrases, unless the context otherwise requires, shall have the meanings specified in this Article.

Accrual Period: As to the Class [A] and Class [IO] Certificates, for each Distribution Date is the calendar month immediately preceding the month in which the Distribution Date occurs.

Additional Principal Distribution Amount: As to any Distribution Date, the outstanding Pool Balance as of the first day of the related Collection Period less the sum of (x) the outstanding Pool Balance as of the last day of the related Collection Period and (y) the Principal Collections for such Distribution Date.

Administrator: [ ], or any successor Administrator appointed in accordance with this Agreement that has accepted such appointment in accordance with this Agreement.

Affiliate: As to any Person, any other Person controlling, controlled by or under common control with such Person. For purposes of this definition, “control” means the power to direct

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the management and policies of a Person, directly or indirectly, whether through ownership of voting securities, by contract or otherwise, and “controlling” and “controlled” shall have meanings correlative to the foregoing.

Agreement: This Pooling and Servicing Agreement and all amendments hereof and supplements hereto.

Appraised Value: As to any Home Equity Loan, the appraised value of the related Mortgaged Property based upon the appraisal used by the applicable Seller at the time of origination of such Home Equity Loan (or any mortgage loan made by the Seller on the Mortgaged Property that the Home Equity Loan replaced); provided that if the Home Equity Loan was originated simultaneously with or not more than 12 months after another mortgage was placed on the related Mortgaged Property, the lesser of the Appraised Value at origination of the other mortgage and the sales price, if any, of the related Mortgaged Property.

Available Distribution Amount: As to any Distribution Date, the sum of (A) the sum, without duplication, of all amounts described in clauses (i) through (iv), inclusive, of Section 3.02(b) received by the Servicer with respect to the related Collection Period and deposited in the Collection Account, and (B) Insured Payments, if any.

Available Funds Cap: With respect to any Distribution Date, a per annum rate equal to the excess of (i) the weighted average of the Net Loan Rates of each Home Equity Loan, in each case outstanding as of the first day of the related Collection Period over (ii) the Pass-Through Rate of the Class [IO] Certificates for such Distribution Date times a fraction, the numerator of which is the Notional Amount of the Class [IO] Certificates immediately prior to such Distribution Date and the denominator of which is the outstanding Pool Balance as of the last day of the related Collection Period.

BIF: The Bank Insurance Fund, as from time to time constituted, created under the Financial Institutions Reform, Recovery and Enhancement Act of 1989 or, if at any time after the execution of this instrument the Bank Insurance Fund is not existing and performing duties now assigned to it, the body performing such duties on such date.

Book-Entry Certificate: Any Class [A] or Class [IO] Certificate registered in the name of the Depository or its nominee, ownership of which is reflected on the books of the Depository or on the books of a person maintaining an account with such Depository (directly or as an indirect participant in accordance with the rules of such Depository).

Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a day on which banking institutions in the State of New York or Illinois are required or authorized by law to be closed.

Certificate: A [Class A,] Class [IO] or Class R Certificate.

[Certificate Insurance Policy: The Certificate Guaranty Insurance Policy (No. [ ]) with respect to the Class [A] Certificates and all endorsements thereto dated the Closing Date, issued by the Certificate Insurer to the Trustee for the benefit of the Holders of each Class of Class [A] Certificates, a copy of which is attached hereto as Exhibit F.]

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[Certificate Insurer: [ ], a stock insurance company organized and created under the laws of the State of [ ], or any successor thereto.]

[Certificate Insurer Default: (i) Any failure of the Certificate Insurer to make a payment required under the Certificate Insurance Policy in accordance with its terms; (ii) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Certificate Insurer in an involuntary case or proceeding under any applicable United States federal or state bankruptcy, insolvency, rehabilitation, reorganization or other similar law or (B) a decree or order adjudging the Certificate Insurer as bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, rehabilitation, arrangement, adjustment or composition of or in respect of the Certificate Insurer under any applicable United States federal or state law, or appointing a custodian, receiver, liquidator, rehabilitator, assignee, trustee, sequestrator or other similar official of the Certificate Insurer or of any substantial part of its property, or ordering the winding-up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in each case in effect for a period of 60 consecutive days; or (iii) the commencement by the Certificate Insurer of a voluntary case or proceeding under any applicable United States federal or state bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated as bankrupt or insolvent, or the consent by the Certificate Insurer to the entry of a decree or order for relief in respect of the Certificate Insurer in an involuntary case or proceeding under any applicable United States federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against the Certificate Insurer, or the filing by the Certificate Insurer of a petition or answer or consent seeking reorganization or relief under any applicable United States federal or state law, or the consent by the Certificate Insurer to the filing of such petition or to the appointment of or the taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Certificate Insurer or of any substantial part of its property, or the making by the Certificate Insurer of an assignment for the benefit of its creditors, or the failure by the Certificate Insurer to pay debts generally as they become due, or the admission by the Certificate Insurer in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Certificate Insurer in furtherance of any such action.]

Certificate Owner: The Person who is the beneficial owner of a Book-Entry Certificate.

Certificate Principal Balance: As to any Class [A] or Class R Certificate and any Distribution Date, the Original Class Certificate Principal Balance thereof reduced by all amounts previously distributed to the holders of such Class and allocable to principal. The Class IO Certificates have no Certificate Principal Balance.

Certificate Register and Certificate Registrar: The register maintained and the registrar appointed pursuant to Section 6.02.

Certificateholder or Holder: The Person in whose name a Certificate is registered in the Certificate Register, except that, solely for the purpose of giving any consent, direction, waiver or request pursuant to this Agreement, (i) any Certificate registered in the name of the Depositor (unless to the knowledge of a Responsible Officer of the Trustee the Depositor is acting as trustee or nominee for a Person who is not an Affiliate of the Depositor and who makes the

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voting decision with respect to such Certificate) or the Servicer or any Person known to a Responsible Officer of the Trustee to be an Affiliate of either the Depositor or the Servicer and (ii) any Certificate for which the Depositor (unless to the knowledge of a Responsible Officer of the Trustee (A) the Depositor is acting as trustee or nominee for a Person who is not an Affiliate of the Depositor and who makes the voting decision with respect to such Certificate or (B) the Depositor is the owner of all the Certificates) or the Servicer or any Person known to a Responsible Officer of the Trustee to be an Affiliate (other than an Affiliate that has purchased any Certificate on the Closing Date) of either the Depositor or the Servicer is the Certificate Owner shall be deemed not to be outstanding and the Percentage Interest evidenced thereby shall not be taken into account in determining whether the requisite amount of Percentage Interests necessary to effect any such consent, direction, waiver or request has been obtained.

Charge Off Amount: As to any Charged Off Home Equity Loan and Collection Period, an amount equal to the amount of the Principal Balance that the Servicer has charged off on its servicing records during such Collection Period.

Charged Off Home Equity Loan: A defaulted Home Equity Loan that is not a Liquidated Home Equity Loan and as to which (i) collection procedures are ongoing and (ii) the Servicer has charged off all or a portion of the related Principal Balance.

Class: Any of the Class [A], Class [IO] or [Class R] Certificates.

Class [A] Certificate: A Class [A-1] or Class [A-2] Certificate.

Class [A] Certificateholder: A Holder of a Class [A] Certificate.

Class [A-1] Certificate: Any Certificate designated as a Class [A-1] Certificate on the face thereof, substantially in the form of Exhibit A-1 hereto.

Class [A-1] Certificateholder: A Holder of a Class [A-1] Certificate.

Class [A-2] Certificate: Any Certificate designated as a Class [A-2] Certificate on the face thereof, substantially in the form of Exhibit A-1 hereto.

Class [A-2] Certificateholder: A Holder of a Class [A-2] Certificate.

Class [IO] Certificate: Any Certificate designated as a Class [IO] Certificate on the face thereof, substantially in the form of Exhibit A-2 hereto.

Class [IO] Certificateholder: A Holder of a Class [IO] Certificate.

Class R Certificate: Any Certificate designated as a Class R Certificate on the face thereof, in the form of Exhibit B hereto.

Class R Certificateholder: A Holder of a Class R Certificate.

Closing Date: [ ].

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Code: The Internal Revenue Code of 1986, as the same may be amended from time to time (or any successor statute thereto).

Collection Account: The custodial account or accounts created and maintained for the benefit of the Certificateholders pursuant to Section 3.02(b). The Collection Account shall be an Eligible Account.

Collection Period: As to any Distribution Date and Home Equity Loan, the calendar month immediately preceding the month in which such Distribution Date occurs, except that with respect to the initial Distribution Date, the Collection Period is the period from the Cut-Off Date to [ ].

Combined Loan-to-Value Ratio or CLTV: As to each Home Equity Loan, a ratio, expressed as a percentage, the numerator of which is the sum of (a) the original Principal Balance of the Home Equity Loan and (b) the aggregate unpaid principal balance, at the time of origination of the Home Equity Loan, of all other mortgage loans, if any, secured by liens senior to that Home Equity Loan on the related Mortgaged Property, and the denominator of which is the Appraised Value of the Mortgaged Property.

Corporate Trust Office: With respect to the Trustee, the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office on the Closing Date is located at the address therefor set forth in Section 11.05; and with respect to the Administrator, the principal office of the Administrator at which at any particular time its corporate trust business shall be administered, which office on the Closing Date is located at the address thereabove set forth in Section 11.05.

Cumulative Loss Percentage: As to any Distribution Date on or after the Stepdown Date, the fraction (expressed as a percentage) obtained by dividing (i) the Cumulative Realized Losses for the related Collection Period, by (ii) the Cut-Off Date Pool Balance.

Cumulative Loss Percentage Trigger: As to any Distribution Date on or after the Stepdown Date, means (i) for the [ ] Distribution Date through the [ ] Distribution Date, ___%; (ii) for the [ ] Distribution Date through the [ ] Distribution Date, ___%; (iii) for the [ ] Distribution Date through the [ ] Distribution Date, ___%; and for the [ ] Distribution Date and each Distribution Date thereafter, ___%.

Cumulative Realized Losses: With respect to the Home Equity Loans and any Collection Period, an amount equal to the excess, if any, of (a) the sum of the aggregate Realized Losses on the Home Equity Loans from the Cut-Off Date through the last day of such Collection Period over (b) the sum of any Recovered Charge Off Amounts on the Home Equity Loans from the Cut-Off Date through the last day of such Collection Period.

Current Interest: As to the Class [A] and Class [IO] Certificates and any Distribution Date, the interest accrued at the applicable Pass-Through Rate during the Accrual Period on the aggregate Certificate Principal Balance or Notional Amount, as the case may be, of such Class of Certificates.

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Cut-Off Date: As to each Home Equity Loan, the close of business on [ ].

Cut-Off Date Pool Balance: The aggregate of the Cut-Off Date Principal Balances of the Home Equity Loans.

Cut-Off Date Principal Balance: As to any Home Equity Loan, the unpaid principal balance thereof as of the Cut-Off Date or, as to any Eligible Substitute Home Equity Loan, as of the date of substitution of such Eligible Substitute Home Equity Loan.

Defective Home Equity Loan: A Home Equity Loan subject to repurchase or substitution pursuant to Section 2.02 or 2.04.

[Deficiency Amount: As defined in the Certificate Insurance Policy.]

Definitive Certificates: As defined in Section 6.02(f).

Deposit Date: As to any Distribution Date, the Business Day immediately preceding such Distribution Date.

Deposit Event: The lowering of the Servicer’s short-term debt rating below “[P-1]” by ▇▇▇▇▇’▇, “[A-1]” by Standard & Poor’s or “[F1]” by Fitch or any time in which HSBC Finance shall cease to be the Servicer.

Depositor: HSBC Home Equity Loan Corporation II, a Delaware corporation, and its successors in interest.

Depository: The initial Depository shall be The Depository Trust Company, the nominee of which is Cede & Co., as the registered Holder of each Class of Book-Entry Certificates. The Depository shall at all times be a “clearing corporation” as defined in Section 8-102(3) of the UCC of the State of New York.

Depository Participant: A broker, dealer, bank or other financial institution or other Person for whom from time to time the Depository effects book-entry transfers and pledges of securities deposited with the Depository.

Determination Date: As to any Distribution Date, the second Business Day prior to such Distribution Date.

Distribution Date: The [ ] day of each month (or if such [ ] day is not a Business Day, then the next succeeding Business Day), commencing [ ].

▇▇▇▇▇: The SEC’s Electronic Data Gathering, Analysis and Retrieval System.

Electronic Ledger: The electronic master record of home equity loans (including the Home Equity Loans) maintained by the Servicer.

Eligible Account: An account that is either (i) maintained with a depository institution whose short-term debt obligations at the time of any deposit therein are rated in the highest short-

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term debt rating category by the Rating Agencies, (ii) an account or accounts maintained with a depository institution with a long-term unsecured debt rating by each Rating Agency that is at least investment grade, provided that the deposits in such account or accounts are fully insured by either the BIF or the SAIF, (iii) a segregated trust account maintained on the corporate trust side with the Administrator in its fiduciary capacity, or (iv) an account otherwise acceptable to each Rating Agency, as evidenced by a letter to such effect from each such Rating Agency to the Administrator, without reduction or withdrawal of the then-current ratings of the Class [A] or Class [IO] Certificates.

Eligible Substitute Home Equity Loan: A Home Equity Loan substituted by the Depositor or the Servicer for a Defective Home Equity Loan pursuant to Section 2.02(a) or 2.04, which on the date of such substitution must

(i) have a Principal Balance not substantially greater or less than the Principal Balance of such Defective Home Equity Loan;

(ii) have a current Loan Rate of not less than the Loan Rate of the Defective Home Equity Loan and not more than 500 basis points in excess thereof;

(iii) have a remaining term to maturity not more than six months earlier or later than the remaining term to maturity of the Defective Home Equity Loan;

(iv) comply with the representations and warranties set forth in Section 2.04(b), to the extent such representations and warranties do not pertain exclusively to the Home Equity Loans transferred on the Closing Date;

(v) have a Combined Loan-to-Value Ratio that is not greater than the Combined Loan-to-Value Ratio of the Defective Home Equity Loan as of the date of origination of such Defective Home Equity Loan;

(vi) have a lien position at least equal to the lien position of the Mortgage relating to the Defective Home Equity Loan; and

(vii) be the obligation of a Mortgagor whose credit profile is substantially similar to that of the Mortgagor under the Defective Home Equity Loan,

provided, however, that with respect to (i) through (vii) above, a home equity loan may qualify as an Eligible Substitute Home Equity Loan if each of the Rating Agencies consents to such substitution.

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Enhancement Percentage: As to any Distribution Date, the percentage obtained by dividing (x) the Interim Overcollateralization Amount by (y) the Pool Balance as of the last day of the related Collection Period.

ERISA-Restricted Certificate: The [Class R] Certificates.

Exchange Act: The Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

Extra Principal Distribution Amount: As to any Distribution Date, the lesser of (x) the Monthly Excess Cashflow and (y) the Interim Overcollateralization Deficiency.

▇▇▇▇▇▇ ▇▇▇: ▇▇▇▇▇▇ ▇▇▇, formerly known as The Federal National Mortgage Association, or any successor thereto.

FDIC: The Federal Deposit Insurance Corporation or any successor thereto.

Final Scheduled Distribution Date: With respect to the Class [A] Certificates, the Distribution Date occurring in [ ].

[Fiscal Agent: As defined in the Certificate Insurance Policy.]

Fitch: Fitch Ratings, or its successor in interest.

Foreclosure Profit: As to any Liquidated Home Equity Loan, the amount, if any, by which Net Liquidation Proceeds exceeds the sum of (i) the Principal Balance thereof immediately prior to the final recovery of its Liquidation Proceeds, (ii) accrued and unpaid interest (including imputed interest on REO) at the applicable Loan Rate from the date interest was last paid through the date of receipt of the final Liquidation Proceeds and (iii) the sum of all related Charge Off Amounts.

Form 8-K: A current report pursuant to Section 13 or 15(d) of the Exchange Act.

Formula Rate: With respect to the Class [A-1] Certificates and any Accrual Period, ___% per annum, and with respect to the Class [A-2] Certificates and any Accrual Period, ___% per annum.

▇▇▇▇▇▇▇ Mac: ▇▇▇▇▇▇▇ Mac, formerly known as The Federal Home Loan Mortgage Corporation, or any successor thereto.

HSBC Finance: HSBC Finance Corporation, a Delaware corporation, and its successors.

Home Equity Loan: Such of the home equity loans (together with the related Mortgage Notes and Mortgages) transferred and assigned to the Trustee pursuant to Section 2.01 and pursuant to the Transfer Agreement together with the Related Documents, as from time to time are held as a part of the Trust, the home equity loans originally so held being identified in the Home Equity Loan Schedule delivered on the Closing Date. As applicable, the term Home

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Equity Loan shall be deemed to refer to the Mortgaged Property that has been converted to ownership by the Servicer prior to the final recovery of related Liquidation Proceeds.

Home Equity Loan Purchase Agreement: The home equity loan purchase agreement dated as of [ ], between the Depositor and the Sellers pursuant to which the Sellers convey to the Depositor all of their right, title and interest in and to the unpaid Principal Balance of the Home Equity Loans, including all interest and principal payments in respect thereof received on or after the Cut-Off Date, and certain other rights with respect to the collateral supporting the Home Equity Loans.

Home Equity Loan Schedule: As to any date, the schedule of Home Equity Loans, including any Eligible Substitute Home Equity Loans, included in the Trust on such date. The initial Home Equity Loan Schedule is the schedule delivered by the Depositor to the Trustee and the Administrator on the Closing Date and delivered as Exhibit D hereto, which schedule may be in the form of a computer file or an electronic or magnetic tape and sets forth as to each Home Equity Loan (i) the account number, (ii) the Cut-Off Date Principal Balance, (iii) the Loan Rate, (iv) the lien position of the related Mortgage and (v) the CLTV. The Home Equity Loan Schedule will be amended from time to time to reflect the removal of Home Equity Loans and the addition of any Eligible Substitute Home Equity Loans to the Trust, and when so amended shall include the information set forth above with respect to each Eligible Substitute Home Equity Loan as of its related date of substitution.

HSBC Finance: HSBC Finance Corporation, a Delaware corporation, and its successors.

[Insurance Agreement: The Insurance Agreement dated as of [ ] among the Depositor, the Trustee, the Administrator, the Servicer and the Certificate Insurer, including any amendments and supplements thereto.]

Insurance Proceeds: Proceeds paid by any insurer [(other than the Certificate Insurer)] pursuant to any insurance policy covering a Home Equity Loan, or by the Servicer pursuant to the last sentence of Section 3.04, net of any component thereof covering any expenses incurred by or on behalf of the Servicer in connection with obtaining such Insurance Proceeds and exclusive of any portion thereof that is applied to the restoration or repair of the related Mortgaged Property, released to the Mortgagor in accordance with the Servicer’s normal servicing procedures or required to be paid to any holder of a mortgage senior to such Home Equity Loan.

[Insured Payment: With respect to any Distribution Date, the sum of (i) any Deficiency Amount and (ii) any Preference Amount.]

Interest Carry Forward Amount: As to the Class [A] or Class [IO] Certificates and any Distribution Date, the sum of (x) the amount, if any, by which (i) the sum of the Current Interest and all prior unpaid Interest Carry Forward Amounts for such Class as of the immediately preceding Distribution Date exceeded (ii) the amount of the actual distribution with respect to interest made to such Class on such Distribution Date plus (y) with respect to the Class [A] Certificates only, interest on such amount calculated for the related Accrual Period at the related Pass-Through Rate in effect with respect to such Class.

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Interest Collections: As to any Distribution Date, the sum, without duplication, of:

(i) the portion allocable to interest of all scheduled monthly payments on the Home Equity Loans received during the related Collection Period;

(ii) all Net Liquidation Proceeds actually collected by the Servicer during the related Collection Period (to the extent such Net Liquidation Proceeds relate to interest);

(iii) the interest portion of the Purchase Price for any Home Equity Loan repurchased from the Trust pursuant to the terms of this Agreement during the related Collection Period;

(iv) the interest portion of all Substitution Adjustment Amounts with respect to the related Collection Period;

(v) the interest portion of all other unscheduled collections on the Home Equity Loans received by the Servicer during the related Collection Period, to the extent not previously distributed; and

(vi) the interest portion of all Insurance Proceeds on any Home Equity Loan collected by the Servicer during the related Collection Period.

Interim Overcollateralization Amount: As to any Distribution Date, the excess, if any, of (x) the Pool Balance as of the last day of the preceding Collection Period over (y) (i) the aggregate Certificate Principal Balance of all Class [A] Certificates (before taking into account any distributions of principal on such Distribution Date) less (ii) the Principal Collections for such Distribution Date.

Interim Overcollateralization Deficiency: As to any Distribution Date, the excess, if any, of (x) the Targeted Overcollateralization Amount over (y) the Interim Overcollateralization Amount.

[Late Payment Rate: As defined in the Insurance Agreement.]

Latest Possible Maturity Date: The Distribution Date following the third anniversary of the scheduled maturity date of the Mortgage Loan having the latest scheduled maturity date as of the Cut-Off Date.

Lien: Any mortgage, deed of trust, pledge, conveyance, hypothecation, assignment, participation, deposit arrangement, encumbrance, lien (statutory or other), preference, priority right or interest or other security agreement or preferential arrangement of any kind or nature whatsoever, including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing or the filing of any financing statement under the UCC (other than any such financing statement filed for informational purposes only) or comparable law of any jurisdiction to evidence any of the foregoing.

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Liquidated Home Equity Loan: As to any Distribution Date, any Home Equity Loan in respect of which the Servicer has determined as of the end of the related Collection Period that all Liquidation Proceeds which it expects to recover on such Home Equity Loan have been recovered (exclusive of any possibility of a deficiency judgment).

Liquidation Expenses: Out-of-pocket expenses (exclusive of overhead) that are incurred by the Servicer in connection with the liquidation of any Home Equity Loan and not recovered under any insurance policy, such expenses including, without limitation, reasonable legal fees and expenses, any unreimbursed amount expended pursuant to Section 3.06 (including, without limitation, amounts advanced to correct defaults on any mortgage loan that is senior to such Home Equity Loan and amounts advanced to keep current or pay off a mortgage loan that is senior to such Home Equity Loan) with respect to the related Home Equity Loan and any related and unreimbursed expenditures for real estate property taxes, mechanics liens, title perfection, property management or for property restoration, preservation or insurance against casualty loss or damage.

Liquidation Proceeds: Proceeds (including Insurance Proceeds) received in connection with the liquidation of any Home Equity Loan, whether through trustee’s sale, foreclosure sale or otherwise.

Loan Rate: As to any Home Equity Loan and day, the per annum rate of interest applicable under the related Mortgage Note to the calculation of interest for such day on the Principal Balance.

Lockout Percentage: With respect to any Distribution Date, the product of (x) a fraction, the numerator of which is the Certificate Principal Balance of the Class [A-2] Certificates immediately prior to such Distribution Date and the denominator of which is the aggregate Certificates Principal Balance of the Class [A] Certificates immediately prior to such Distribution Date and (y) the percentage shown for that Distribution Date in the following table:


Distribution Date		Percentage

___20___through ___20___		0%
___20___through ___20___		45%
___20___through ___20___		80%
___20___through ___20___		100%
___20___through ___20___		300%

Master REMIC: As described in the Preliminary Statement.

Monthly Excess Cashflow: As to any Distribution Date, the excess, if any, of (i) the excess, if any, of (x) Interest Collections (for clarity purposes only, net of any Servicing Fee) over (y) the Current Interest plus the Interest Carry Forward Amount, if any, of all Class [A] and Class [IO] Certificates (after taking into account all distributions of interest on such Distribution Date) over (ii) the Additional Principal Distribution Amount.

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Monthly Report: The monthly statement to Certificateholders described in Section 5.02 hereof.

Moody’s: ▇▇▇▇▇’▇ Investors Service, Inc., or its successor in interest.

Mortgage: The mortgage, deed of trust or other instrument creating a first, second or third lien on an estate in fee simple interest in real property securing a Home Equity Loan.

Mortgage File: The mortgage documents (including without limitation the related Mortgage Note) listed in Section 2.01 pertaining to a particular Home Equity Loan and any additional documents required to be added to the Mortgage File pursuant to this Agreement, which documents may be physical documents or, pursuant to the terms of Section 2.01, may be optical images or other representations thereof.

Mortgage Note: As to a Home Equity Loan, the mortgage note or other evidence of indebtedness under which the related Mortgagor agrees to pay the indebtedness evidenced thereby and secured by the related Mortgage.

Mortgaged Property: The underlying property securing a Home Equity Loan.

Mortgagor: The obligor or obligors under a Mortgage.

Net Interest Collections: As to any Distribution Date:

(i) Interest Collections received during the related Collection Period; less

(ii) the Servicing Fee for the related Collection Period; plus

(iii) Recovered Charge Off Amounts actually collected by the Servicer during the related Collection Period; plus

(iv) to the extent advanced by the Servicer pursuant to Section 3.01(f) and not previously distributed, the amount of any Skip-A-Pay Advance deposited by the Servicer into the Collection Account with respect to such Distribution Date; less

(v) the amount of any Skip-A-Pay Reimbursement Amount withdrawn by the Servicer from the Collection Account with respect to such Distribution Date.

Net Liquidation Proceeds: As to any Liquidated Home Equity Loan, Liquidation Proceeds less Liquidation Expenses.

Net Loan Rate: As to any Home Equity Loan, the Loan Rate less the Servicing Fee Rate.

Notional Amount: As to any Class [IO] Certificate and any Distribution Date, the notional amount shown on Exhibit C hereto.

Officer’s Certificate: A certificate signed by the President, a Senior Vice President, a Vice President, the Treasurer, Assistant Treasurer, Controller or Assistant Controller of the

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Depositor or the Servicer, as the case may be, and delivered to the Trustee and/or the Administrator.

Opinion of Counsel: A written opinion of counsel reasonably acceptable to the Trustee and/or the Administrator, who may be internal counsel for the Servicer or the Depositor; provided, however, that with respect to the interpretation or application of the REMIC Provisions, such counsel must (i) in fact be independent of the Seller, the Depositor and the Servicer, (ii) not have any direct financial interest in the Seller, the Depositor or the Servicer or in any affiliate thereof, and (iii) not be connected with the Seller, the Depositor or the Servicer as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions.

Original Class Certificate Principal Balance: With respect to the Class [A-1] and Class [A-2] Certificates, the amount set forth below:


Class		Original Class Certificate Principal Balance

[A-1]		$[ ]
[A-2]		$[ ]

Overcollateralization Amount: As to any Distribution Date, the excess, if any, of (x) the Pool Balance as of the last day of the preceding Collection Period over (y) the aggregate Certificate Principal Balance of all Class [A] Certificates calculated after taking into account all distributions in respect of principal on such Distribution Date.

Overcollateralization Release Amount: As to any Distribution Date, the amount (but not in excess of the Principal Collections for such Distribution Date) equal to the excess, if any, of (i) the Interim Overcollateralization Amount over (ii) the Targeted Overcollateralization Amount.

Ownership Interest: As to any Certificate, any ownership or security interest in such Certificate, including any interest in such Certificate as the Holder thereof and any other interest therein, whether direct or indirect, legal or beneficial, as owner or as pledgee.

Pass-Through Rate: With respect to [either Class of Class A Certificates] and any Accrual Period, the lesser of (i) the applicable Formula Rate for such Class and Accrual Period and (ii) the Available Funds Cap for the related Distribution Date. With respect to the Class [IO] Certificates and (i) any Accrual Period relating to any Distribution Date on or prior to the [ ] Distribution Date, a per annum rate equal to [ ]%, and (ii) any Accrual Period relating to any Distribution Date after the [ ] Distribution Date, 0.00%.

Paying Agent: Any Person appointed as paying agent pursuant to Section 6.05.

Percentage Interest: For purposes of making distributions among Certificates of the Class [A-1], Class [A-2] or Class [IO] Certificates, the percentage obtained by dividing the principal or notional denomination, as applicable, of such Certificate by the aggregate of the principal or

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notional denominations, as applicable, of all Certificates of such Class. In the case of any Class R Certificate, the percentage interest set forth on the face of such Certificate.

Perfection Representations: The representations, warranties and covenants set forth in Schedule 1 attached hereto.

Permitted Investments: One or more of the following (excluding any callable investments purchased at a premium):

(i) direct obligations of, or obligations fully guaranteed as to timely payment of principal and interest by, the United States or any agency or instrumentality thereof, provided that such obligations are backed by the full faith and credit of the United States;

(ii) repurchase agreements on obligations specified in clause (i) maturing not more than three months from the date of acquisition thereof, provided that the short-term unsecured debt obligations of the party agreeing to repurchase such obligations are at the date of acquisition rated by each Rating Agency in its highest short-term rating category (which is “F1” for Fitch, “A-1+” for Standard & Poor’s and “P-1” for Moody’s);

(iii) certificates of deposit, time deposits and bankers’ acceptances (which, if ▇▇▇▇▇’▇ is a Rating Agency, shall each have an original maturity of not more than 90 days and, in the case of bankers’ acceptances, shall in no event have an original maturity of more than 365 days) of any U.S. depository institution or trust company incorporated under the laws of the United States or any state thereof and subject to supervision and examination by federal and/or state banking authorities, provided that the unsecured short-term debt obligations of such depository institution or trust company at the date of acquisition thereof have been rated by each of Moody’s, Standard & Poor’s and Fitch in its highest unsecured short-term debt rating category;

(iv) commercial paper (having original maturities of not more than 270 days) of any corporation incorporated under the laws of the United States or any state thereof which on the date of acquisition has been rated by Fitch, Standard & Poor’s and Moody’s in their highest short-term rating categories;

(v) short term investment funds sponsored by any trust company or national banking association incorporated under the laws of the United States or any state thereof which on the date of acquisition has been rated by Fitch, Standard & Poor’s and Moody’s in their respective highest rating category for long-term unsecured debt, or any other short-term investment fund the funds in which are invested in securities rated in the highest rating category by Fitch, Standard & Poor’s and Moody’s and which mature on demand or prior to the next Distribution Date;

(vi) interests in any money market fund which at the date of acquisition has a rating of “Aaa” by Moody’s and “AAA” by Fitch and Standard & Poor’s or such lower rating as will not result in the qualification, downgrading or withdrawal of the then

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current ratings assigned to the Class [A] and Class [IO] Certificates by each Rating Agency; and

(vii) other obligations or securities that are indebtedness in registered form for U.S. federal income tax purposes and that are acceptable to each Rating Agency [and the Certificate Insurer] as a Permitted Investment hereunder and will not result in a reduction in the then-current ratings of the Class [A] and Class [IO] Certificates, as evidenced by a confirmation or letter to such effect from such Rating Agency [and the Certificate Insurer];

provided that no instrument described hereunder shall evidence either the right to receive (a) only interest with respect to the obligations underlying such instrument or (b) both principal and interest payments derived from obligations underlying such instrument if such interest and principal payments provide a yield to maturity at par greater than 120% of the yield to maturity at par of the underlying obligations; and provided, further, that no instrument described hereunder may be purchased at a price greater than par if such instrument may be prepaid or called at a price less than its purchase price prior to its stated maturity.

Permitted Transferee: Any person other than (i) the United States, any State or political subdivision thereof, or any agency or instrumentality of any of the foregoing, (ii) a foreign government, International Organization or any agency or instrumentality of either of the foregoing, (iii) an organization (except certain farmers’ cooperatives described in Section 521 of the Code) which is exempt from tax imposed by Chapter 1 of the Code (including the tax imposed by Section 511 of the Code on unrelated business taxable income) on any excess inclusions (as defined in Section 860E(c)(1) of the Code) with respect to any Residual Certificate, (iv) rural electric and telephone cooperatives described in Section 1381(a)(2)(C) of the Code, (v) an “electing large partnership” as defined in Section 775 of the Code, (vi) a Person that is not a citizen or resident of the United States, a corporation, partnership, or other entity created or organized in or under the laws of the United States, any state thereof or the District of Columbia, or an estate or trust whose income from sources without the United States is includible in gross income for United States federal income tax purposes regardless of its connection with the conduct of a trade or business within the United States or a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust unless such Person has furnished the transferor and the Administrator with a duly completed Internal Revenue Service Form W-8ECI or any applicable successor form, and (vii) any other Person so designated by the Depositor based upon an Opinion of Counsel that the Transfer of an Ownership Interest in a Residual Certificate to such Person may cause any REMIC created under this Agreement to fail to qualify as a REMIC at any time that the Certificates are outstanding. The terms “United States,” “State” and “International Organization” shall have the meanings set forth in Section 7701 of the Code or successor provisions. A corporation will not be treated as an instrumentality of the United States or of any State or political subdivision thereof for these purposes if all of its activities are subject to tax and, with the exception of the Federal Home Loan Mortgage Corporation, a majority of its board of directors is not selected by such government unit.

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Person: Any individual, corporation, partnership, joint venture, association, limited liability company, joint-stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof.

Pool Balance: As to any date, the aggregate of the outstanding Principal Balances of all Home Equity Loans as of such date.

Pool Factor: As to any Distribution Date, the percentage, carried to seven places, obtained by dividing the aggregate Certificate Principal Balance of the Class [A] Certificates for such Distribution Date by the aggregate Original Class Certificate Principal Balance of the Class [A] Certificates.

[Preference Amount: As defined in the Certificate Insurance Policy.]

Preferred Stock: As defined in Section 11.12.

[Premium Amount: As to any Distribution Date, the product of the Premium Percentage and the aggregate Certificate Principal Balance after giving effect to distributions to be made on such Distribution Date.]

[Premium Percentage: As defined in the Insurance Agreement.]

Principal Balance: As to any Home Equity Loan (other than a Liquidated Home Equity Loan) and date, the related Cut-Off Date Principal Balance, minus the sum of (x) all collections credited against the principal balance of such Home Equity Loan in accordance with the terms of the related Mortgage Note and (y) any related Charge Off Amounts credited against the principal balance of such Home Equity Loan prior to such date. For purposes of this definition, a Liquidated Home Equity Loan shall be deemed to have a Principal Balance equal to the Principal Balance of the related Home Equity Loan immediately prior to the final recovery of related Liquidation Proceeds and a Principal Balance of zero thereafter.

Principal Collections: As to any Distribution Date, the sum, without duplication, of:

(i) the principal portion of all scheduled monthly payments on the Home Equity Loans received by the Servicer during the related Collection Period;

(ii) the principal portion of the Purchase Price for any Home Equity Loan repurchased from the Trust pursuant to the terms of this Agreement during the related Collection Period;

(iii) the principal portion of all Substitution Adjustment Amounts with respect to the related Collection Period;

(iv) all Net Liquidation Proceeds allocable to principal (excluding Foreclosure Profits and Recovered Charge Off Amounts) actually received by the Servicer during the related Collection Period;

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(v) the principal portion of all other unscheduled collections on the Home Equity Loans received by the Servicer during the related Collection Period (including, without limitation, full and partial prepayments of principal made by the Mortgagors), to the extent not previously distributed; and

(vi) the principal portion of all Insurance Proceeds on any Home Equity Loan collected by the Servicer during the related Collection Period.

Principal Distribution Amount: As to any Distribution Date, (i) the Principal Collections minus (ii) for Distribution Dates occurring on and after the Stepdown Date and for which a Trigger Event is not in effect, the Overcollateralization Release Amount, if any.

Purchase Price: As to any Home Equity Loan purchased from the Trust on any date pursuant to Section 2.02, 2.04, 3.01 or 10.01, an amount equal to the sum of (i) the Principal Balance thereof plus any related Charge Off Amount as of the end of the related Collection Period preceding the date of repurchase, and (ii) accrued and unpaid interest as of the end of such Collection Period and (iii) any costs and damages incurred by the Trust with respect to such Home Equity Loan in connection with any violation by such Home Equity Loan of any “predatory” or “abusive” lending laws.

Rating Agencies: ▇▇▇▇▇’▇, Standard & Poor’s and Fitch. If such agency or a successor is no longer in existence, “Rating Agency” shall be such nationally recognized statistical credit rating agency, or other comparable Person, designated by the Depositor [and acceptable to the Certificate Insurer], notice of which designation shall be given to the Trustee and the Administrator. References herein to the highest short term unsecured rating category of a Rating Agency shall mean “P-1” or better in the case of Moody’s, “A-1+” or better in the case of Standard & Poor’s and “F1” in the case of Fitch and in the case of any other Rating Agency shall mean such equivalent ratings. References herein to the highest long-term rating category of a Rating Agency shall mean “AAA” in the case of Fitch and Standard & Poor’s and “Aaa” in the case of Moody’s and in the case of any other Rating Agency, such equivalent rating.

Realized Loss: With respect to any (i) Charged Off Home Equity Loan and any Collection Period (other than the Collection Period in which all or a portion of such Charged Off Home Equity Loan becomes a Liquidated Home Equity Loan), the related Charge Off Amount and (ii) Liquidated Home Equity Loan, the excess of the related Principal Balance at the end of the related Collection Period in which such Home Equity Loan became a Liquidated Home Equity Loan over the related Net Liquidation Proceeds.

Record Date: As to any Distribution Date, the last Business Day of the month immediately preceding the month in which the related Distribution Date occurs.

Recovered Charge Off Amount: As to any Home Equity Loan that became a Liquidated Home Equity Loan in a Collection Period, the amount, if any, by which (i) its Net Liquidation Proceeds that are allocable to principal in accordance with the related Mortgage Note exceeds (ii) its Principal Balance immediately prior to foreclosure up to an amount of all related Charge Off Amounts, but in no event less than zero.

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Regulation AB: Subpart 229.1100 — Asset-Backed Securities (Regulation AB), 17 C.F.R. §§229.1100 — 229.1123, as such may be amended from time to time, and subject to such clarification and interpretation as have been provided by the SEC in the adopting release (Asset-Backed Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff of the SEC, or as may be provided by the SEC or its staff from time to time.

[Reimbursement Amount: As of any Distribution Date, the sum of (x)(i) Insured Payments previously received by the Administrator and not previously re-paid to the Certificate Insurer pursuant to Section 5.01(a)(vi) plus (ii) interest accrued on such Insured Payment not previously repaid, calculated at the Late Payment Rate from the date the Administrator received such Insured Payment and (y)(i) the amount of any Premium Amount not paid on the date due plus (ii) interest on such amount at the Late Payment Rate from the date such premium was due.]

Related Documents: As such term is defined in Section 2.01.

Remittance Report: As such term is defined in Section 3.11(b).

REO: A Mortgaged Property that is acquired by the Trust in a foreclosure or by grant of deed in lieu of foreclosure.

Required Excess Cashflow: As to any Distribution Date, means [2.50]%, divided by 12, multiplied by the Pool Balance as of the first day of the related Collection Period.

Residual Certificates: The Class R Certificates.

Responsible Officer: When used with respect to the Trustee or the Administrator, any officer at the Corporate Trust Office of the Trustee or the Administrator, as applicable, with direct responsibility for the administration of this Agreement, and any officer of the Trustee or the Administrator, as applicable, to whom matters under this Agreement may be referred.

SAIF: The Savings Association Insurance Fund, as from time to time constituted, created under the Financial Institutions Reform, Recovery and Enhancement Act of 1989, or if at any time after the execution of this instrument the Savings Association Insurance Fund is not existing and performing duties now assigned to it, the body performing such duties on such date.

SEC: The U.S. Securities and Exchange Commission.

Securities Act: The Securities Act of 1933, as amended.

Sellers: [ ].

Servicer: HSBC Finance Corporation, a Delaware corporation, or its successor in interest, or any successor servicer appointed as herein provided.

Servicer Termination Events: As defined in Section 8.01.

Servicing Certificate: A certificate completed by and executed on behalf of the Servicer in accordance with Section 3.10.

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Servicing Criteria: The “servicing criteria” set forth in Item 1122(d) of Regulation AB, as the same may be from time to time amended.

Servicing Fee: The fee payable to the Servicer pursuant to Section 3.09, equal to 1/12th of the Servicing Fee Rate for each Home Equity Loan in the Home Equity Loan Schedule multiplied by the outstanding Principal Balance of such Home Equity Loan as of the first day of the related Collection Period.

Servicing Fee Rate: A rate equal to [0.50]% per annum.

Servicing Officer: Any officer of the Servicer or other individual designated by an officer of the Servicer involved in, or responsible for, the administration and servicing of the Home Equity Loans, whose name and specimen signature appear on a list of servicing officers furnished to the Trustee [(with a copy to the Certificate Insurer)] on the Closing Date by the Servicer, as such list may be amended from time to time.

60 Day Delinquency Percentage: As to any Collection Period, (a) the aggregate of the Principal Balances of all Home Equity Loans that are 60 or more days contractually delinquent, in bankruptcy, in foreclosure and REO, over (b) the Pool Balance as of the end of such Collection Period.

60 Day+ Rolling Average: As to any Distribution Date, the average of the 60 Day Delinquency Percentage for each of the three (3) immediately preceding Collection Periods.

Skip-A-Pay Advance: For any Collection Period, means the positive result, if any, of the Required Excess Cashflow on the related Distribution Date, minus the Monthly Excess Cashflow on the related Distribution Date. For the avoidance of doubt, if the result of the foregoing calculation is not a positive number, the Skip-A-Pay Advance for the related Collection Period shall be zero.

Skip-A-Pay Reimbursement Amount: As of any Distribution Date means, the positive result, if any, of the Monthly Excess Cashflow on such Distribution Date, minus the Required Excess Cashflow on such Distribution Date.

Standard & Poor’s: Standard & Poor’s, a division of the ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or its successor in interest.

Statistical Cut-Off Date: The close of business on [ ].

Stepdown Date: The later to occur of (a) the Distribution Date in [ ] and (b) the first Distribution Date on which the Pool Balance has been reduced to 50.00% of the Cut-Off Date Pool Balance.

Subsequent Cut-Off Date: As to each Eligible Substitute Home Equity Loan, the close of business on the day designated as the “Subsequent Cut-Off Date” with respect to the Eligible Substitute Home Equity Loan.

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Subservicer: As to each Home Equity Loan, the related Seller that sold such Home Equity Loan to the Depositor pursuant to the Home Equity Loan Purchase Agreement.

Substitution Adjustment Amount: As to any Defective Home Equity Loan and the date on which a substitution thereof occurs pursuant to Sections 2.02 or 2.04, the sum of:

(i) the excess, if any, of (a) the Principal Balance of such Defective Home Equity Loan plus any related Charge Off Amount as of the end of the related Collection Period preceding the date of substitution (after the application of any principal payments received on such Defective Home Equity Loan on or before the date of the substitution of the applicable Eligible Substitute Home Equity Loan or Loans) over (b) the aggregate Principal Balance of the applicable Eligible Substitute Home Equity Loan or Loans, plus

(ii) accrued and unpaid interest to the end of such Collection Period computed on a daily basis at the Net Loan Rate on the Principal Balance of such Defective Home Equity Loan outstanding from time to time.

Supplemental Interest Amount: With respect to [either Class of Class A] Certificates and any Distribution Date, the sum of (i) the excess, if any, of (a) interest accrued on such Class of Certificates at the applicable Formula Rate for such Class for the related Accrual Period over (b) interest accrued on such Class of Certificates at the applicable Pass-Through Rate for the related Accrual Period, (ii) any Supplemental Interest Amount for such Class remaining unpaid from prior Distribution Dates and (iii) interest on the amount in clause (ii) at the applicable Formula Rate for such Class and such Distribution Date.

Targeted Overcollateralization Amount: As to any Distribution Date, (x) prior to the Stepdown Date, [ ]% of the Cut-Off Date Pool Balance, and (y) on and after the Stepdown Date and assuming a Trigger Event is not in effect, the greater of (i) [ ]% of the Pool Balance as of the last day of the related Collection Period and (ii) [ ]% of the Cut-Off Date Pool Balance. If a Trigger Event is in effect on and after the Stepdown Date, the Targeted Overcollateralization Amount shall be equal to the Targeted Overcollateralization Amount for the immediately preceding Distribution Date.

Tax Matters Person Certificate: With respect to REMIC 1 and REMIC 2, the Class R Certificate with a percentage interest of [ ]% issued to the Administrator.

Transaction Documents: This Agreement, the Home Equity Loan Purchase Agreement, [the Certificate Insurance Policy] and any other document or agreement entered into in connection with the Trust, the Certificates or the Home Equity Loans.

Transfer: Any direct or indirect transfer, sale, pledge, hypothecation or other form of assignment of any Ownership Interest in a Certificate.

Transfer Agreement: The transfer agreement dated as of [ ], between the Trustee and each Seller pursuant to which the Sellers will assign to the Trust all of their right,

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title and interest in and on the Transferred Assets not otherwise transferred pursuant to the Home Equity Loan Purchase Agreement.

Transfer Date: As to any Home Equity Loan transferred to or retransferred from the Trust hereunder, the date on which such transfer or retransfer is made under the terms hereof, which date shall be (i) in the case of the Home Equity Loans originally listed on the Home Equity Loan Schedule, the Closing Date, and (ii) in the case of any Eligible Substitute Home Equity Loan, the date on which such Eligible Substitute Home Equity Loan is conveyed to the Trust under the terms hereof.

Transferred Assets: All aspects, rights, title or interests of, in, to or under the Home Equity Loans that are not otherwise conveyed hereunder pursuant to Section 2.01, including, without limitation, all agreements, instruments and other documents evidencing or governing the Mortgagor’s obligations under the Home Equity Loans or otherwise related thereto or establishing or setting forth the terms and conditions thereof, and any amendments or modifications thereto, and all property and collateral securing the borrowers obligations thereunder.

Trigger Event: Will be in effect on any Distribution Date on or after the Stepdown Date on which either (i) the Two Payment-Plus Rolling Average for such Distribution Date equals or exceeds [ ]%, or (ii) the Cumulative Loss Percentage for such Distribution Date exceeds the Cumulative Loss Percentage Trigger for such Distribution Date.

Trust: The trust created by this Agreement and designated “HSBC Home Equity Loan Trust (USA) 200[ ]-[ ]”, the corpus of which consists of the Trust Fund.

Trust Fund: Consists of the Home Equity Loans, such assets as shall from time to time be identified as deposited in the Collection Account (exclusive of net earnings thereon), the Mortgage Notes and other Mortgage File documents for the Home Equity Loans, any property that secured a Home Equity Loan and that has become REO, the interest of the Depositor in certain hazard insurance policies maintained by the Mortgagors or the Servicer in respect of the Home Equity Loans, the Collection Account, the proceeds of each of the foregoing and one share of Preferred Stock of the Depositor.

Trustee: [ ], or any successor Trustee appointed in accordance with this Agreement that has accepted such appointment in accordance with this Agreement.

Two Payment-Plus Delinquency Percentage: As to any Collection Period, (a) the aggregate of the Principal Balances of all Mortgage Loans that are two (2) or more payments contractually delinquent, including those Mortgage Loans in bankruptcy, foreclosure and REO as of the end of such Collection Period, over (b) the Pool Balance as of the end of such Collection Period.

Two Payment-Plus Rolling Average: As to any Distribution Date, the average of the Two Payment-Plus Delinquency Percentage for each of the three (3) immediately preceding Collection Periods.

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UCC: The Uniform Commercial Code, as in effect from time to time in any specified jurisdiction.

Section 1.02. Interest Calculations. All calculations of interest hereunder that are made in respect of the Principal Balance of a Home Equity Loan shall be made based on the number of days elapsed between the date that interest was last paid on such Home Equity Loan and the date of receipt of the related Mortgagor’s most current payment. All calculations of interest on the Class [A] and Class [IO] Certificates shall be made on the basis of a 360-day year consisting of twelve 30-day months.

Section 1.03. Usage of Terms. As to all terms in this Agreement the singular includes the plural and the plural the singular; words importing any gender include the other gender; references to “writing” include printing, typing, lithography, optical imaging, and other means of reproducing words in a visible form; references to agreements and other contractual instruments include all subsequent amendments thereto or changes therein entered into in accordance with their respective terms and not prohibited by this Agreement; references to Persons include their permitted successors and assigns; and the term “including” means “including without limitation.” The term “related Collection Period” as used herein with respect to any Distribution Date shall mean the Collection Period immediately preceding such Distribution Date and the term “preceding Collection Period” as used herein with respect to any Distribution Date shall mean the Collection Period preceding the related Collection Period for such Distribution Date.

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ARTICLE II

Conveyance of Home Equity Loans; Original Issuance of Certificates; Tax Treatment

Section 2.01. Acknowledgment; Conveyance of Home Equity Loans; Custody of Mortgage Files.

(a) The Depositor, concurrently with the execution and delivery of this Agreement, does hereby irrevocably transfer, assign, sell, set over and otherwise convey to the Trustee for the benefit of the Certificateholders without recourse (subject to Sections 2.02 and 2.04) (i) all of its right, title and interest in and to the unpaid principal balance of each Home Equity Loan and each Eligible Substitute Home Equity Loan, including all Interest Collections and Principal Collections in respect of any such Home Equity Loan received after the Cut-Off Date with respect to each Initial Home Equity Loan and after the Subsequent Cut-Off Date with respect to each Eligible Substitute Home Equity Loan pursuant to the Home Equity Loan Purchase Agreement; (ii) property which secured such Home Equity Loan and which has been acquired by foreclosure or deed in lieu of foreclosure; (iii) its interest in any insurance policies in respect of the Home Equity Loans; (iv) all proceeds of any of the foregoing; and (v) one share of the Depositor’s Preferred Stock. [In addition, on or prior to the Closing Date, the Depositor shall cause the Certificate Insurer to deliver the Certificate Insurance Policy to the Trustee.]

(b) The Depositor agrees to take, or to cause to be taken, such actions and to execute such documents (including without limitation the filing of all necessary continuation statements for the UCC-1 financing statement filed in the State of Illinois and the State of Delaware, as applicable (which shall have been filed as promptly as practicable, but in no event later than 10 days following the effective date of this Agreement), describing the Home Equity Loans and naming the Depositor as seller and the Trustee as buyer, and any amendments or other filings to the UCC-1 financing statement required to reflect a change in the applicable UCC, or a change of the name or corporate structure of the Depositor, or the filing of any additional UCC-1 financing statement due to any change in the principal office of the Depositor) as are necessary to perfect and protect the Certificateholders’ interests in the Trust created hereunder, including each Home Equity Loan and the proceeds thereof (other than delivering to the Trustee possession of the Mortgage Files, which possession will, subject to the terms hereof, be maintained by the Subservicers on behalf of the Servicer as custodian and bailee for the Trustee). The parties hereto intend that the transactions set forth herein constitute a sale and not a pledge by the Depositor to the Trust of all the Depositor’s right, title and interest in and to the Home Equity Loans and other Trust property as and to the extent described above. In the event the transactions set forth herein are characterized as a pledge and not a sale, the Depositor hereby grants to the Trustee a security interest in all of the Depositor’s right, title and interest in, to and under the Home Equity Loans and such other Trust property, to secure all of the Depositor’s obligations hereunder, and this Agreement shall constitute a security agreement under applicable law. With respect to the Home Equity Loans sold by each Seller to the Depositor, the Servicer shall cause such Seller to file as promptly as practicable, but in no event later than ten days following the effective date of this Agreement, in the appropriate public filing office or offices UCC-1 financing statements and continuation statements describing such Home Equity Loans and naming such Seller as seller and the Depositor as buyer, to file appropriate continuation statements thereto, to file amendments thereto in the case of a change in the applicable UCC,

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name change or change in corporate structure and to file appropriate additional UCC-1 financing statements, if any, if such Seller changes its jurisdiction of incorporation.

(c) In connection with such transfer and assignment by the Depositor and the Servicer, acting through the Subservicers, the Trustee and the Servicer hereby acknowledge that the Subservicers are holding, with respect to the Home Equity Loans transferred on the Closing Date, and will hold, with respect to each Eligible Substitute Home Equity Loan, on and from the applicable Transfer Date, as custodian and bailee for the Trustee, the following documents or instruments with respect to each such Home Equity Loan (the “Related Documents”):

(i) the original Mortgage Note with all intervening endorsements showing a complete chain of title from the originator of such Home Equity Loan to the Seller or a copy of such original Mortgage Note with an accompanying lost note affidavit;

(ii) the original Mortgage, with evidence of recording thereon, provided that if the original Mortgage has been delivered for recording to the appropriate public recording office of the jurisdiction in which the Mortgaged Property is located but has not yet been returned to the Seller by such recording office, the Seller may hold a copy of such original Mortgage; and

(iii) originals of any amendments to the Mortgage Note or Mortgage, any modification or assumption agreements and any previous assignments of such Home Equity Loan;

provided, however, that as to any Home Equity Loan, if, as evidenced by an Opinion of Counsel delivered to and in form and substance satisfactory to the Trustee, (x) an optical image or other electronic representation of the related documents specified in clauses (i) through (iii) above are enforceable in the relevant jurisdictions to the same extent as the original of such document and (y) such optical image or other representation does not impair the ability of an owner of such Home Equity Loan to transfer its interest in such Home Equity Loan, such optical image or other representation may be held by the Servicer, acting through the Subservicers, as custodian and bailee for the Trustee, in lieu of the physical documents specified above.

(d) Except as hereinafter provided, the Servicer, acting through the Subservicers, shall be entitled to maintain possession of all of the foregoing documents and instruments, shall not be required to deliver any of them to the Trustee and shall not be required to record an assignment of Mortgage in favor of the Trustee with respect to any Home Equity Loan. In the event, however, that possession of any of such documents or instruments is required by any Person (including the Trustee) acting as successor servicer pursuant to Section 7.04 or 8.02 in order to carry out the duties of Servicer hereunder, then such successor shall be entitled to request delivery, at the expense of the Servicer, of such documents or instruments by the Servicer and to retain such documents or instruments for servicing purposes; provided that the Trustee or such servicers shall maintain such documents at such offices as may be required by any regulatory body having jurisdiction over such Home Equity Loans.

(e) The Servicer’s right to maintain possession, directly or through the Subservicers, of the documents enumerated above shall continue so long as (i) at least two of ▇▇▇▇▇’▇,

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Standard & Poor’s and Fitch assign a long-term senior unsecured debt rating to HSBC Finance of at least “Baa3”, in the case of ▇▇▇▇▇’▇, “BBB”, in the case of Fitch, and “BBB-”, in the case of Standard & Poor’s, or such lower ratings as shall be acceptable to the Rating Agencies in order to maintain their current ratings of the Class [A] and Class [IO] Certificates, and (ii) each of the Subservicers remains an Affiliate of HSBC Finance. At such time as either of the conditions specified in the preceding sentence is not satisfied, as promptly as practicable, but in no event more than 90 days thereafter in the case of clause (i) below and 60 days in the case of clause (ii) below, the Servicer shall cause each Subservicer, at such Subservicer’s expense or, at the Servicer’s discretion, the Servicer’s expense, to (i) either (x) record an assignment of Mortgage in favor of the Trustee (which may be a blanket assignment if permitted by applicable law) with respect to each of the Home Equity Loans being serviced by such Subservicer in the appropriate real property or other records or (y) deliver to the Trustee the assignment of such Mortgage in favor of the Trustee in form for recordation, together with an Opinion of Counsel addressed to the Trustee to the effect that recording is not required to protect the Trustee’s right, title and interest in and to the related Home Equity Loan or to perfect a first priority security interest in favor of the Trustee in the related Home Equity Loan, which Opinion of Counsel also shall be reasonably acceptable to each of the Rating Agencies [and the Certificate Insurer] (as evidenced in writing), and (ii) unless an Opinion of Counsel, reasonably acceptable to the Trustee and the Rating Agencies [and the Certificate Insurer] (as evidenced in writing), is delivered to the Trustee to the effect that delivery of the Mortgage Files is not necessary to protect the Trustee’s right, title and interest in and to the related Home Equity Loans or to perfect a first priority security interest in favor of the Trustee in the related Home Equity Loans, deliver the related Mortgage Files to the Trustee to be held by the Trustee in trust, upon the terms herein set forth, for the use and benefit of all present and future Certificateholders, and the Trustee shall retain possession thereof except to the extent the Servicer or Subservicers require any Mortgage Files for normal servicing as contemplated by Section 3.08. The Servicer shall cause the Subservicers to appoint the Trustee their attorney-in-fact to prepare, execute and record any assignments of Mortgages required under this Section 2.01 in the event that the Subservicers or the Servicer should fail to do so on a timely basis.

(f) Within 90 days following delivery, if any, of the Mortgage Files to the Trustee pursuant to the preceding subsection, the Trustee shall review each such Mortgage File to ascertain that all required documents set forth in this Section 2.01 have been executed and received and that such documents relate to the Home Equity Loans identified on the Home Equity Loan Schedule, and in so doing the Trustee may rely on the purported due execution and genuineness of any signature thereon. If within such 90-day period the Trustee finds any document constituting a part of a Mortgage File not to have been executed or received or to be unrelated to the Home Equity Loans identified in said Home Equity Loan Schedule or, if in the course of its review, the Trustee determines that such Mortgage File is otherwise defective in any material respect, the Trustee shall promptly upon the conclusion of its review notify the Depositor and the Servicer, and the Depositor and the Servicer shall have a period of 90 days after such notice within which to correct or cure any such defect; provided, however, that if such defect shall not have been corrected or cured within such 90-day period due to the failure of the related office of real property or other records to return any document constituting a part of a Mortgage File, the Depositor or the Servicer shall so notify the Trustee and the period during which such defect may be corrected or cured shall be extended for one additional 90-day period.

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(g) The Trustee shall have no responsibility for reviewing any Mortgage File except as expressly provided in this Section 2.01. In reviewing any Mortgage File pursuant to this Section 2.01, the Trustee shall have no responsibility for determining whether any document is valid and binding, whether the text of any assignment or endorsement is in proper or recordable form (except, if applicable, to determine if the Trustee is the assignee or endorsee), whether any document has been recorded in accordance with the requirements of any applicable jurisdiction, or whether a blanket assignment is permitted in any applicable jurisdiction, whether any Person executing any document is authorized to do so or whether any signature thereon is genuine, but shall only be required to determine whether a document has been executed, that it appears to be what it purports to be and, where applicable, that it purports to be recorded.

(h) The Servicer hereby confirms to the Trustee that on or prior to the Closing Date and on or prior to the applicable Transfer Date with respect to any Eligible Substitute Home Equity Loan, the portions of the Electronic Ledger relating to such Home Equity Loans have been or will have been clearly and unambiguously marked, and the appropriate entries have been or will have been made in its general accounting records, to indicate that such Home Equity Loans have been transferred to the Trustee and constitute part of the Trust in accordance with the terms hereof.

Section 2.02. Acceptance by Trustee; Repurchase of Home Equity Loans; Conveyance of Eligible Substitute Home Equity Loans.

(a) The Trustee hereby acknowledges receipt of all the right, title and interest of the Depositor in and to the assets described Section 2.01(a)(i) through (v), and all of the right, title and interest of the Sellers in and to the Transferred Assets pursuant to the Transfer Agreement, including but not limited to the transfer and assignment of the Mortgage Notes and the Mortgages, and declares that it holds and will hold such documents and interests and all amounts received by it in trust, upon the terms herein set forth, for the use and benefit of all present and future Certificateholders. If the time to cure any defect of which the Trustee has notified the Depositor and the Servicer following the Trustee’s review of the Home Equity Loan Files pursuant to Section 2.01 has expired or if any loss is suffered by the Trustee, on behalf of the Certificateholders, in respect of any Home Equity Loan as a result of (i) a defect in any document constituting a part of a Mortgage File or (ii) the related Seller’s retention of such Mortgage File or an assignment of Mortgage not having been recorded, the Depositor shall, in the case of a defect in such document, or the Servicer shall, in the case of a loss resulting from such Seller’s retention of a Mortgage File or assignment of Mortgage not having been recorded, on the Business Day next preceding the Distribution Date in the month following the end of the Collection Period in which the time to cure such defect expired or such loss occurred, either (i) repurchase the related Home Equity Loan (a “Defective Home Equity Loan”) (including any property acquired in respect thereof and any insurance policy or insurance proceeds with respect thereto) from the Trust at a price equal to the Purchase Price which shall be accomplished by deposit by the Depositor or the Servicer, as applicable, in the Collection Account pursuant to Section 3.02 on such next preceding Business Day, or (ii) if such next preceding Business Day occurs prior to the second anniversary of the Closing Date, remove such Defective Home Equity Loan from the Trust and substitute in its place an Eligible Substitute Home Equity Loan or Loans; provided, however, that any such substitution pursuant to clause (ii) above shall not be effected prior to the delivery to the Trustee of the Opinion of Counsel required by Section 2.06.

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(b) [RESERVED]

(c) As to any Eligible Substitute Home Equity Loan or Loans, the Servicer shall cause the related Seller to deliver to the Trustee with respect to such Eligible Substitute Home Equity Loan or Loans an acknowledgment that the related Seller is holding as custodian for the Trustee such documents and agreements, if any, as are permitted to be held by the related Seller in accordance with Section 2.01. An assignment of the Mortgage in favor of the Trustee with respect to such Eligible Substitute Home Equity Loan or Loans shall be required to be recorded in the appropriate real property or other records or delivered to the Trustee with the Opinion of Counsel referred to in Section 2.01 under the same circumstances that all other assignments of Mortgage are required to be recorded hereunder. For any Collection Period during which the Depositor or the Servicer substitutes one or more Eligible Substitute Home Equity Loans, the Servicer shall determine the Substitution Adjustment Amount. The Depositor or the Servicer, as applicable, shall deposit the Substitution Adjustment Amount in the Collection Account no later than the Business Day next preceding the Distribution Date in the month following the end of the Collection Period in which such substitution occurs. The Servicer shall amend the Home Equity Loan Schedule to reflect the removal of the Defective Home Equity Loan from the terms of this Agreement and the substitution of the Eligible Substitute Home Equity Loan or Loans. Upon such substitution, the Eligible Substitute Home Equity Loan or Loans shall be subject to the terms of this Agreement in all respects, and the Depositor shall be deemed to have made with respect to such Eligible Substitute Home Equity Loan or Loans, as of the date of substitution, the covenants, representations and warranties set forth in Section 2.04(b). The Trustee shall upon satisfaction of the conditions in this subsection immediately take any action requested by the Depositor, if any, to effect the reconveyance of such Defective Home Equity Loan so removed from the Trust to the Depositor or the Servicer, as applicable. The procedures applied by the Depositor or the Servicer in selecting each Eligible Substitute Home Equity Loan shall not be adverse to the interests of the Certificateholders and shall be comparable to the selection procedures applicable to the Home Equity Loans originally conveyed hereunder.

(d) Upon receipt by the Trustee of (i) in the case of a repurchase, a Servicing Certificate to the effect that the Purchase Price for any such Defective Home Equity Loan has been so deposited in the Collection Account or (ii) in the case of a substitution, (A) a Servicing Certificate to the effect that the Substitution Adjustment Amount, if any, has been so deposited in the Collection Account and (B) an Officer’s Certificate reciting the transfer and assignment of the Eligible Substitute Home Equity Loan(s) to the Trustee and, if required at such time, that the related Mortgage File(s) for such Eligible Substitute Home Equity Loan(s) have been delivered to the Trustee and the assignment(s) of Mortgage have been recorded, the Trustee shall execute and deliver such instrument of transfer or assignment presented to it by the Servicer, in each case without recourse, as shall be necessary to vest in the Depositor or the Servicer, as applicable, legal and beneficial ownership of such Defective Home Equity Loan

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for which the Servicer has made a substitution election (including any property acquired in respect thereof or proceeds of any insurance policy with respect thereto). It is understood and agreed that the obligation of the Depositor or the Servicer to repurchase or substitute for (to the extent permitted herein) any Defective Home Equity Loan shall constitute the sole remedy respecting such defect available to Certificateholders or the Trustee against the Depositor or the Servicer, and such obligation on the part of the Servicer shall survive any resignation or termination of the Servicer hereunder.

Section 2.03. Representations, Warranties and Covenants of the Servicer. The Servicer represents, warrants and covenants that as of the Closing Date:

(a) The Servicer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the corporate power to own its assets and to transact the business in which it is currently engaged. The Servicer is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the character of the business transacted by it or properties owned or leased by it require such qualification and in which the failure to so qualify would have a material adverse effect on the business, properties, assets, or condition (financial or other) of the Servicer;

(b) The Servicer has the power and authority to make, execute, deliver and perform its obligations under this Agreement and to perform its obligations with respect to all of the transactions contemplated under this Agreement, and has taken all necessary corporate action to authorize the execution, delivery and performance of its obligations under this Agreement. When executed and delivered, this Agreement will constitute the legal, valid and binding obligation of the Servicer enforceable in accordance with its terms, except as enforcement of such terms may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally and by the availability of equitable remedies (whether in a proceeding at law or in equity);

(c) The Servicer is not required to obtain the consent of any other Person or any consent, license, approval or authorization from, or registration or declaration with, any governmental authority, bureau or agency in connection with the execution, delivery, performance, validity or enforceability of this Agreement, except for such consents, licenses, approvals or authorizations, or registrations or declarations, as shall have been obtained or filed, as the case may be;

(d) The execution and delivery of this Agreement and the performance of the transactions contemplated hereby by the Servicer will not violate any provision of any existing law or regulation or any order or decree of any court applicable to the Servicer or any provision of the Certificate of Incorporation or Bylaws of the Servicer, or constitute a material breach of any mortgage, indenture, contract or other agreement to which the Servicer is a party or by which the Servicer may be bound; and

(e) No litigation or administrative proceeding of or before any court, tribunal or governmental body is currently pending, or to the knowledge of the Servicer threatened, against the Servicer or any of its properties or with respect to this Agreement or the Certificates which in

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the opinion of the Servicer has a reasonable likelihood of resulting in a material adverse effect on the transactions contemplated by this Agreement.

The representations and warranties set forth in this Section 2.03 shall survive the sale and assignment of the Home Equity Loans to the Trust. Upon discovery of a breach of any representations and warranties which materially and adversely affects the interests of the Certificateholders, the Person discovering such breach shall give prompt written notice to the other parties. Within 60 days (or such longer period as permitted by prior written consent of a Responsible Officer of the Trustee) of its discovery or its receipt of notice of such breach, the Servicer shall cure such breach in all material respects.

Section 2.04. Representations and Warranties of the Depositor Regarding this Agreement and the Home Equity Loans; Repurchases and Substitutions.

(a) The Depositor represents and warrants that as of the Closing Date:

(i) The Depositor is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the corporate power to own its assets and to transact the business in which it is currently engaged. The Depositor is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the character of the business transacted by it or properties owned or leased by it require such qualification and in which the failure to so qualify would have a material adverse effect on the business, properties, assets or condition (financial or other) of the Depositor;

(ii) The Depositor has the power and authority to make, execute, deliver and perform its obligations under this Agreement and to perform its obligations with respect to all of the transactions contemplated under this Agreement, and has taken all necessary corporate action to authorize the execution, delivery and performance of its obligations under this Agreement. When executed and delivered, this Agreement will constitute the legal, valid and binding obligation of the Depositor enforceable in accordance with its terms, except as enforcement of such terms may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally and by the availability of equitable remedies (whether in a proceeding at law or in equity);

(iii) The Depositor is not required to obtain the consent of any other Person or any consent, license, approval or authorization from, or registration or declaration with, any governmental authority, bureau or agency in connection with the execution, delivery, performance, validity or enforceability of this Agreement, except for such consents, licenses, approvals or authorizations, or registrations or declarations, as shall have been obtained or filed, as the case may be;

(iv) The execution and delivery of this Agreement and the performance of the transactions contemplated hereby by the Depositor will not violate any provision of any existing law or regulation or any order or decree of any court applicable to the Depositor or any provision of the Certificate of Incorporation or Bylaws of the Depositor, or

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constitute a material breach of any mortgage, indenture, contract or other agreement to which the Depositor is a party or by which the Depositor may be bound; and

(v) No litigation or administrative proceeding of or before any court, tribunal or governmental body is currently pending, or to the knowledge of the Depositor threatened, against the Depositor or any of its properties or with respect to this Agreement or the Certificates which in the opinion of the Depositor has a reasonable likelihood of resulting in a material adverse effect on the transactions contemplated by this Agreement.

(b) The Depositor represents and warrants with respect to each Home Equity Loan that as of the Closing Date with respect to the Initial Home Equity Loans and the applicable Transfer Date with respect to any Eligible Substitute Home Equity Loans (or to the extent expressly stated herein as of such other time):

(i) This Agreement and the Transfer Agreement constitute a valid transfer and assignment to the Trustee of all right, title and interest of the Depositor and the Sellers, respectively, in and to the Home Equity Loans, all monies due or to become due with respect thereto, all proceeds thereof, such funds as are from time to time deposited in the Collection Account (excluding any investment earnings thereon) and all other property specified in the definition of “Trust” as being part of the corpus of the Trust conveyed to the Trust by the Depositor;

(ii) The information set forth in the Home Equity Loan Schedule with respect to such Home Equity Loan is true and correct in all material respects;

(iii) Immediately prior to the transfer and assignment by the related Seller to the Depositor and the Trustee pursuant to the Home Equity Loan Purchase Agreement and the Transfer Agreement, the Home Equity Loan has not been assigned or pledged, and the related Seller has good and marketable title thereto, and the related Seller is the sole owner and holder of such Home Equity Loan free and clear of any and all liens, claims, encumbrances, participation interests, equities, pledges, charges or security interests of any nature, and has full right and authority, under all governmental and regulatory bodies having jurisdiction over the ownership of such Home Equity Loan, to transfer and assign the same pursuant to the Home Equity Loan Purchase Agreement and the Transfer Agreement;

(iv) Immediately prior to the transfer and assignment by the Depositor to the Trustee pursuant to this Agreement, the Home Equity Loan has not been assigned or pledged, and the Depositor has good and marketable title thereto, and the Depositor is the sole owner and holder of such Home Equity Loan free and clear of any and all liens, claims, encumbrances, participation interests, equities, pledges, charges or security interests of any nature, and has full right and authority, under all governmental and regulatory bodies having jurisdiction over the ownership of such Home Equity Loan, to transfer and assign the same pursuant to this Agreement;

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(v) The related Mortgage is a valid and subsisting first or second lien, as set forth on the Home Equity Loan Schedule with respect to such Home Equity Loan, on the property therein described, and the related Mortgaged Property is free and clear of all encumbrances and liens having priority over the first or second lien, as applicable, of such Mortgage except for liens for (a) real estate taxes and special assessments not yet delinquent; (b) any first and, if applicable, second mortgage loan secured by such Mortgaged Property and specified on the Home Equity Loan Schedule; (c) covenants, conditions and restrictions, rights of way, easements and other matters of public record as of the date of recording that are acceptable to mortgage lending institutions generally; and (d) other matters to which like properties are commonly subject which do not materially interfere with the benefits of the security intended to be provided by such Mortgage;

(vi) To the best knowledge of the Depositor, there is no valid offset, defense or counterclaim of any obligor under the Mortgage;

(vii) To the best knowledge of the Depositor, there is no delinquent recording or other tax or fee or assessment lien against the related Mortgaged Property;

(viii) To the best knowledge of the Depositor, there is no proceeding pending or threatened for the total or partial condemnation of the related Mortgaged Property, and such property is free of material damage and is in good repair;

(ix) There are no mechanics’ or similar liens or claims which have been filed for work, labor or material affecting the related Mortgaged Property which are, or may be, liens prior or equal to the lien of the related Mortgage, except (a) liens which are fully insured against by the title insurance policy referred to in clause (xiii) or (b) liens which do not materially interfere with the collection of the Home Equity Loan upon foreclosure or otherwise;

(x) As of the Cut-Off Date for the Initial Home Equity Loans (or as of the applicable Transfer Date for any Eligible Substitute Home Equity Loan), no scheduled monthly payment is more than 29 days delinquent (measured on a contractual basis);

(xi) The related Mortgage File contains each of the documents and instruments specified to be included therein (including, if applicable, an appraisal (which may be an appraisal prepared using a statistical data base));

(xii) The related Mortgage Note and the related Mortgage at the time they were made complied in all material respects with applicable state and federal laws, including, without limitation, usury, truth-in-lending, real estate settlement procedures, consumer credit protection, equal credit opportunity or disclosure laws applicable to the Home Equity Loan;

(xiii) A lender’s title insurance policy or binder was issued on the date of origination of each Home Equity Loan for home equity loans in excess of $50,000 (in excess of $75,000 in Oklahoma), and each such policy is valid and remains in full force and effect, and a title search or other assurance of title customary in the relevant

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jurisdiction was obtained with respect to each Home Equity Loan as to which no title insurance policy or binder was issued;

(xiv) The related Mortgaged Property is not a mobile home or a manufactured housing unit that is not permanently attached to its foundation;

(xv) As of the Statistical Cut-Off Date for the Initial Home Equity Loans, no more than [ ]% of such Home Equity Loans (by Pool Balance as of the Statistical Cut-Off Date) are secured by Mortgaged Properties located in one United States postal zip code;

(xvi) As of the Statistical Cut-Off Date, the Combined Loan-to-Value Ratio for each Initial Home Equity Loan was not in excess of [ ]%;

(xvii) No selection procedure reasonably believed by the Depositor to be adverse to the interests of the Certificateholders [or the Certificate Insurer] was utilized in selecting the Home Equity Loan;

(xviii) The Depositor has not transferred the Home Equity Loans to the Trust with any intent to hinder, delay or defraud any of its creditors;

(xix) Each Mortgage Note and each Mortgage is in substantially the form previously provided to the Trustee by the Depositor and each Home Equity Loan is an enforceable obligation of the related Mortgagor;

(xx) The Depositor has not received a notice of default of any senior mortgage loan with respect to the related Mortgaged Property that has not been cured by a party other than the related Subservicer;

(xxi) The Initial Home Equity Loan does not have an original term to maturity in excess of [ ] months; and as of the Statistical Cut-Off Date for the Initial Home Equity Loans, the weighted average remaining term to maturity of the Initial Home Equity Loans on a contractual basis is approximately [ ] months.

(xxii) The related Mortgaged Property consists of a single parcel of real property with a one-to-four unit single family residence erected thereon, or an individual condominium unit, planned unit development unit or townhouse;

(xxiii) As of the Cut-Off Date, the average Principal Balance of the Initial Home Equity Loans was $[ ]; and

(xxiv) As of the Statistical Cut-Off Date, approximately [ ]% (by Pool Balance as of the Statistical Cut-Off Date) and [ ]% (by Pool Balance as of the Statistical Cut-Off Date) of the Initial Home Equity Loans are first and second liens, respectively.

(c) It is understood and agreed that the representations and warranties set forth in this Section 2.04 shall survive the transfer and assignment of the Home Equity Loans to the Trustee.

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Upon discovery by the Depositor, the Servicer [, the Certificate Insurer] or the Trustee of a breach of any of the representations and warranties set forth in this Section 2.04, without regard to any limitation set forth in such representation or warranty concerning the knowledge of the Depositor as to the facts stated therein, which materially and adversely affects the interests of the Certificateholders [or the Certificate Insurer] in the related Home Equity Loan, the person discovering such breach shall give prompt written notice to the other parties [, the Certificate Insurer] and each Rating Agency. Within 60 days of its discovery or its receipt of notice of such breach, or, with the prior written consent of a Responsible Officer of the Trustee, such longer period not to exceed 90 days specified in such consent, the Depositor or, as necessary, the Servicer shall cure such breach in all material respects. With regard to any such breach of the representations and warranties set forth in Section 2.04(b), unless, at the expiration of such 60 day or longer period, such breach has been cured in all material respects or otherwise does not exist or continue to exist, the Depositor or the Servicer shall, not later than the Business Day next preceding the Distribution Date in the month following the end of the Collection Period in which any such cure period expired, either (i) repurchase such Defective Home Equity Loan (including any property acquired in respect thereof and any insurance policy or insurance proceeds with respect thereto) or (ii) if such next preceding Business Day occurs prior to the second anniversary of the Closing Date, remove such Home Equity Loan from the Trust and substitute in its place an Eligible Substitute Home Equity Loan or Loans, in the same manner and subject to the same conditions as set forth in Section 2.02. Upon making any such repurchase or substitution the Depositor or the Servicer, as applicable, shall be entitled to receive an instrument of assignment or transfer from the Trustee to the same extent as set forth in Section 2.02 with respect to the repurchase or replacement of Home Equity Loans under that Section. Subject to Section 2.04(d), it is understood and agreed that the obligation of the Depositor or the Servicer to purchase or substitute for any such Defective Home Equity Loan (or property acquired in respect thereof) shall constitute the sole remedy against the Depositor or the Servicer respecting such breach of the foregoing representations or warranties available to Certificateholders [, the Certificate Insurer] or the Trustee against the Depositor or the Servicer, and such obligation on the part of the Servicer shall survive any resignation or termination of the Servicer hereunder.

(d) The Depositor and the Servicer, jointly and not severally, agree to indemnify and hold harmless the Trust against any and all out-of-pocket financial losses, claims, expenses, damages or liabilities to which the Trust may become subject, insofar as such out-of-pocket financial losses, claims, expenses, damages or liabilities (or actions in respect thereof) arise out of or are based upon any representation or warranty made by the Depositor in this Section 2.04 on which the Trust has relied, being, or alleged to be, untrue or incorrect in any material respect. This indemnity will be in addition to any liability which the Depositor or the Servicer may otherwise have.

(e) Promptly after receipt by the Trust of notice of the commencement of any action or proceeding in any way relating to or arising from this Agreement, the Trustee will notify the Depositor [, the Certificate Insurer] and the Servicer of the commencement thereof, but the omission so to notify the party from whom indemnification is sought (the “Indemnifying Party”) will not relieve the Indemnifying Party from any liability which it may have to the party seeking indemnification (the “Indemnified Party”) except to the extent that the Indemnifying Party is adversely affected by the lack of notice. In case any such action is brought against the Indemnified Party, and it notifies the Indemnifying Party of the commencement thereof, the

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Indemnifying Party will be entitled to participate in the defense (with the consent of the Indemnified Party which shall not be unreasonably withheld) of such action at the Indemnifying Party’s expense.

Section 2.05. Execution and Authentication of Certificates. The Trustee on behalf of the Trust shall execute, and the Administrator shall authenticate and deliver on the Closing Date to or upon the order of the Depositor, in exchange for the Home Equity Loans, concurrently with the assignment and conveyance to the Trustee of the Home Equity Loans, the Class [A] and Class [IO] Certificates in authorized denominations and the Residual Certificates, together evidencing the ownership of the entire Trust.

Section 2.06. Delivery of Opinion of Counsel in Connection with Substitutions.

(a) Notwithstanding any contrary provision of this Agreement, no substitution pursuant to Section 2.02 or Section 2.04 shall be made more than 90 days after the Closing Date unless the Depositor or the Servicer, as the case may be, delivers to the Trustee and the Administrator an Opinion of Counsel, which Opinion of Counsel shall not be at the expense of the Trustee, the Administrator or the Trust Fund, addressed to the Trustee and the Administrator, to the effect that such substitution will not (i) result in the imposition of the tax on “prohibited transactions” on the Trust Fund or contributions after the Startup Date, as defined in Sections 860F(a)(2) and 860G(d) of the Code, respectively, or (ii) cause any REMIC created under this Agreement to fail to qualify as a REMIC at any time that any Certificates are outstanding.

(b) Upon discovery by the Depositor, the Servicer, or the Trustee that any Home Equity Loan does not constitute a “qualified mortgage” within the meaning of Section 860G(a)(3) of the Code, the party discovering such fact shall promptly (and in any event within five (5) Business Days of discovery) give written notice thereof to the other parties. In connection therewith, the Trustee shall require at its option, to either (i) substitute, if the conditions in Section 2.03(c) with respect to substitutions are satisfied, an Eligible Substitute Home Equity Loan for the affected Home Equity Loan, or (ii) repurchase the affected Home Equity Loan within 90 days of such discovery in the same manner as it would a Home Equity Loan for a breach of representation or warranty made pursuant to Section 2.04. The Trustee shall reconvey to the Depositor or the Servicer, as the case may be, the Home Equity Loan to be released pursuant to this Section in the same manner, and on the same terms and conditions, as it would a Home Equity Loan repurchased for breach of a representation or warranty contained in Section 2.04.

Section 2.07. REMIC Matters. The Preliminary Statement sets forth the designations and “latest possible maturity date” for federal income tax purposes of all interests created hereby. The “Startup Day” for purposes of the REMIC Provisions shall be the Closing Date. The “tax matters person” with respect to each REMIC hereunder shall be the Administrator and the Administrator shall hold the Tax Matters Person Certificate. Each REMIC’s fiscal year shall be the calendar year.

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ARTICLE III

Administration and Servicing of Home Equity Loans

Section 3.01. The Servicer.

(a) The Servicer shall, or shall cause the Subservicers to, service and administer the Home Equity Loans in a manner consistent with the terms of this Agreement and with general industry practice and shall have full power and authority, acting alone or through the Subservicers, to do any and all things in connection with such servicing and administration which it may deem necessary or desirable, it being understood, however, that the Servicer shall at all times remain responsible to the Trustee, the Administrator and the Certificateholders for the performance of its duties and obligations hereunder in accordance with the terms hereof. Any amounts received by the related Subservicer in respect of a Home Equity Loan shall be deemed to have been received by the Servicer whether or not actually received by it. The Servicer shall represent and protect the interests of the Trust Fund in the same manner as it protects its own interests in mortgage loans in its own portfolio in any claim, proceeding or litigation regarding a Mortgage Loan, and shall not make or permit any modification, waiver or amendment of any Mortgage Loan which would cause any REMIC created under this Agreement to fail to qualify as a REMIC or result in the imposition of any tax under section 860F(a) or section 860G(d) of the Code.

Without limiting the generality of the foregoing, the Servicer shall continue, and is hereby authorized and empowered by the Trustee, to execute and deliver, on behalf of itself, the Certificateholders and the Trustee or any of them, any and all instruments of satisfaction or cancellation, or of partial or full release or discharge and all other comparable instruments, with respect to the Home Equity Loans and with respect to the Mortgaged Properties. Upon the written request of the Servicer, the Depositor and the Trustee shall furnish the Servicer with any powers of attorney and other documents necessary or appropriate to enable the Servicer to carry out its servicing and administrative duties hereunder. The Servicer in such capacity may also consent to the placing of a proposed lien senior to that of the Mortgage on the related Mortgaged Property, provided that such proposed lien is not secured by a note providing for negative amortization and:

(x) (i) the Mortgage relating to the Home Equity Loan was in a first lien position as of the Cut-Off Date and was in a first lien position immediately prior to the placement of the proposed senior lien, and (ii) the ratio of (a) the sum of the Principal Balance of the Home Equity Loan and the principal balance of the mortgage loan to be secured by the proposed senior lien to (b) the Appraised Value of the Mortgaged Property at the time the Home Equity Loan was originated is not greater than (1) with respect to Home Equity Loans with an original CLTV of 85% or less, 85%, (2) with respect to Home Equity Loans with an original CLTV in excess of 85% and not greater than 95%, 95% and (3) with respect to Home Equity Loans with an original CLTV in excess of 95% and not greater than 115%, 115%;

(y) (i) the Mortgage relating to the Home Equity Loan was in a first or second lien position at the time the related Home Equity Loan was conveyed to the Trust and,

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immediately following the placement of such proposed senior lien, such Mortgage will be in a second or, if such Mortgage was in a second lien position at the time the related Home Equity Loan was conveyed to the Trust, a third lien position and (ii) the principal balance of the mortgage loan to be secured by the proposed senior lien and the rate at which interest accrues thereon are no greater than those of the related Home Equity Loan as of the date it was first conveyed to the Trust; or

(z) the Mortgage relating to the Home Equity Loan was in a second lien position as of the Cut-Off Date and the proposed senior lien secures a mortgage loan that refinances an existing first mortgage loan and the outstanding principal amount of such mortgage loan immediately following such refinancing and the rate at which interest accrues thereon are not greater than that of such existing first mortgage loan at the date the mortgage loan was originated.

(b) If (i) foreclosure proceedings are commenced with respect to any Home Equity Loan with respect to which the Servicer has consented to the placing of a subsequent senior lien pursuant to clause (x) in Section 3.01(a), or (ii) any loss is suffered by the Trustee on behalf of the Certificateholders in respect of any Home Equity Loan as a result of (x) a failure to file on or within ten days following the effective date of this Agreement the UCC-l financing statements referred to in Section 2.01 or (y) a failure to publish on or prior to the Closing Date such notices reflecting the sale of the Home Equity Loans as are described in Section 3440.1(h) of the California Civil Code, then the Servicer shall repurchase or substitute for any adversely affected Home Equity Loan on the Business Day preceding the next Distribution Date following the end of the Collection Period during which such foreclosure proceedings were commenced or such losses were suffered. Such repurchase or substitution shall be accomplished in the same manner and subject to the same conditions as set forth in Section 2.02. Upon making any such repurchase or substitution the Servicer shall be entitled to receive an instrument of assignment or transfer from the Trustee to the same extent as set forth in Section 2.02.

(c) Upon the request of a Mortgagor or at the Servicer’s own initiative, the Servicer (or the related Subservicer on behalf of the Servicer) may waive, modify or vary any term of any Home Equity Loan or consent to the postponement of strict compliance with any such term or in any manner grant indulgence to any Mortgagor if:

(i) in the Servicer’s (or such Subservicer’s) good faith determination such waiver, modification, postponement or indulgence will enhance recovery with respect to such Home Equity Loan; and

(ii) the Mortgagor is in default with respect to the Home Equity Loan, or such default is, in the judgment of the Servicer (or such Subservicer) imminent.

(d) Subject to subparagraph (e) below, in addition to the circumstances described under Section 3.01(c), the Servicer (or the related Subservicer on behalf of the Servicer) may waive, modify or vary any term of any Home Equity Loan, if the purpose of such action is to reduce the likelihood of prepayment or of default of such Home Equity Loan, to increase the likelihood of repayment or repayment upon default of such Home Equity Loan, to increase the

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likelihood of repayment in full of or recoveries under such Home Equity Loan, or to otherwise benefit the Certificateholders, all in the reasonable judgment of the Servicer.

(e) Notwithstanding any provision in this Agreement to the contrary, the Servicer may not defer the scheduled monthly interest and principal payment on any Home Equity Loan that is not in default or (in the judgment of the Servicer (or the related Subservicer on behalf of the Servicer)) for which default is not imminent unless (i) the Servicer elects to make a Skip-A-Pay Advance pursuant to subparagraph (f) below or (ii) each Rating Agency advises in writing that as a result of such deferment the then current ratings of the Class [A] and Class [IO] Certificates will not be withdrawn, suspended or reduced; provided, however, that the Servicer may not defer the scheduled monthly payment on any Home Equity Loan in reliance on clause (i) above unless the Servicer determines, in its good faith judgment, that such Skip-A-Pay Advance will be recoverable from future payments on the Home Equity Loans.

(f) If during any Collection Period the Servicer deferred the scheduled monthly payment on any Home Equity Loan that was not in default or for which default was not imminent in reliance on clause (i) of subparagraph (e) above, no later than 12:00 noon Chicago time on each Deposit Date, the Servicer shall deposit into the Collection Account an amount equal to the Skip-A-Pay Advance for such Collection Period. On each Distribution Date, the Servicer shall be entitled to reimburse itself for all previously unreimbursed Skip-A-Pay Advances from funds on deposit in the Collection Account, before making any distributions to Certificateholders pursuant to Section 5.01, up to an amount equal to the Skip-A-Pay Reimbursement Amount on such Distribution Date; provided, however, that the Skip-A-Pay Reimbursement Amount that the Servicer is entitled to receive on such Distribution Date shall be reduced by the portion of such amount, if any, that was applied to reduce the amount of funds that the Servicer was required to deposit or to cause to be deposited into the Collection Account on the preceding Deposit Date pursuant to Section 3.02(b).

(g) The relationship of the Servicer (and of any successor to the Servicer as servicer under this Agreement) to each of the Trustee and the Administrator under this Agreement is intended by the parties to be that of an independent contractor and not that of a joint venturer, partner or agent.

(h) In the event that the rights, duties and obligations of the Servicer are terminated hereunder, any successor to the Servicer in its sole discretion may, to the extent permitted by applicable law, terminate the existing subservicer arrangements with any Subservicer or assume the terminated Servicer’s rights under such subservicing arrangements which termination or assumption will not violate the terms of such arrangements.

Section 3.02. Collection of Certain Home Equity Loan Payments.

(a) The Servicer shall make reasonable efforts to collect all payments called for under the terms and provisions of the Home Equity Loans, and shall, to the extent such procedures shall be consistent with this Agreement, follow such collection procedures as it follows with respect to home equity loans in its servicing portfolio comparable to the Home Equity Loans. Consistent with, and without limiting the generality of, the foregoing, the Servicer may in its discretion (i) waive any late payment charge or any assumption fees or other fees that may be

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collected in the ordinary course of servicing the Home Equity Loans, (ii) arrange with a Mortgagor a schedule for the payment of delinquent amounts, so long as such arrangement is consistent with the Servicer’s policies with respect to the home equity loans it owns or services, (iii) sell the Home Equity Loan at its fair market value to a third party for collection activity or (iv) treat a Home Equity Loan as current if the Mortgagor has made one scheduled payment (which, for the purposes of this Section 3.02(a)(iii) only, is in accordance with the Servicer’s customary servicing practices and may be less than 100% of the scheduled payment) to cure the delinquency status of such Home Equity Loan.

(b) The Servicer shall establish and maintain with the Administrator a separate trust account (the “Collection Account”) titled “[ ], as Administrator, on behalf of the Trustee, in trust for the registered holders of [ ] Home Equity Loan Asset Backed Certificates, Series 200[ ]-[ ]”. In the event that a successor Administrator is appointed as provided in Section 9.19, a new Collection Account shall be promptly established at and maintained by such successor Administrator, and the title of the new Collection Account shall be “[Successor Administrator], as Administrator, on behalf of the Trustee, in trust for the registered holders of [ ] Home Equity Loan Asset Backed Certificates, Series 200[ ]-[ ]”, and any amounts in the old Collection Account shall be transferred to the new Collection Account. The Collection Account shall be an Eligible Account. No later than 12:00 noon Chicago time on each Deposit Date (or, if a Deposit Event has occurred and the Servicer has not provided credit enhancement acceptable to each of the Rating Agencies, within two (2) Business Days following receipt thereof), the Servicer shall deposit or cause to be deposited into the Collection Account the following payments and collections received or made by it with respect to the Home Equity Loans (without duplication):

(i) Interest Collections (net of any Servicing Fee) on the Home Equity Loans;

(ii) Principal Collections on the Home Equity Loans;

(iii) Insurance Proceeds (including, for this purpose, any amount required to be paid by the Servicer pursuant to Section 3.04 and excluding any portion thereof constituting Principal Collections); and

(iv) amounts required to be paid by the Servicer in connection with the termination of the Trust pursuant to Section 10.01;

provided, however, that so long as a Deposit Event has not occurred (unless the Servicer has provided credit enhancement acceptable to each of the Rating Agencies [and the Certificate Insurer]), the amount of funds that the Servicer is required to deposit or to cause to be deposited into the Collection Account on or before such Deposit Date shall be reduced by the Skip-A-Pay Reimbursement Amount the Servicer is entitled to receive on the next Distribution Date.

The foregoing requirements respecting deposits to the Collection Account are exclusive, it being understood that, without limiting the generality of the foregoing, fees (including annual fees) or late charge penalties payable by Mortgagors, prepayment penalties, or amounts received by the Servicer or a Subservicer for the accounts of Mortgagors for application towards the payment of

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taxes, insurance premiums, assessments and similar items for the account of the related Subservicer, if any, need not be deposited in the Collection Account.

(c) The Administrator shall hold amounts deposited in the Collection Account on behalf of the Trustee for the benefit of the Certificateholders [and the Certificate Insurer]. In addition, the Servicer shall notify the Administrator in writing on each Determination Date of the amount of payments and collections to be deposited in the Collection Account with respect to the related Distribution Date.

(d) The Servicer may cause the institution maintaining the Collection Account to invest any funds in the Collection Account in Permitted Investments (including obligations of the Servicer or of any of its affiliates, if such obligations otherwise qualify as Permitted Investments), which shall mature or otherwise be available not later than the Business Day next preceding the Distribution Date or on the Distribution Date next following the date of such investment as long as such action does not result in a withdrawal or downgrading of the then current ratings on the Class [A] and Class [IO] Certificates by the Rating Agencies (except that any investment in an obligation of the institution with which the Collection Account is maintained may mature on or before 12:00 noon, Chicago time, on such Distribution Date) and shall not be sold or disposed of prior to its maturity. In the event the Administrator is at any time maintaining the Collection Account, any request by the Servicer to invest funds on deposit in the Collection Account shall be in writing, shall be delivered to the Administrator at or before 10:30 A.M., Chicago time, if such investment is to be made on such day, and shall certify that the requested investment is a Permitted Investment that matures at or prior to the time required hereby. Any such investment shall be registered in the name of or controlled by the Administrator on behalf of the Trustee or in the name of its nominee and to the extent such investments are certificated they shall be maintained in the possession or control of the Administrator on behalf of the Trustee in the state of the Administrator’s Corporate Trust Office. Except as provided above, all income and gain realized from any such investment shall be for the benefit of the Servicer and shall be subject to its withdrawal or order from time to time. The amount of any losses incurred in respect of the principal amount of any such investments shall be deposited in the Collection Account by the Servicer out of its own funds immediately as realized.

(e) The Administrator is hereby authorized to execute purchases and sales of Permitted Investments as directed by the Servicer through the facilities of its own trading or capital markets operations. The Administrator shall send to the Servicer statements reflecting the monthly activity for each such purchase and sale made for the preceding month. Although the Servicer recognizes that it may obtain a broker confirmation or written monthly statement containing comparable information at no additional cost, the Servicer hereby agrees that confirmations of investments are not required to be issued by the Trustee for each month in which a monthly statement is rendered. No statement need be rendered pursuant to the provision of this subsection if no activity occurred in the account for such month.

Section 3.03. Withdrawals from the Collection Account.

(a) The Administrator shall withdraw or cause to be withdrawn funds from the Collection Account for the following purposes:

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(i) On each Distribution Date, to make distributions and payments to [the Certificate Insurer and] Certificateholders pursuant to Section 5.01;

(ii) From time to time, to make investments in Permitted Investments and to pay to the Servicer all income and gain earned in respect of Permitted Investments or on funds deposited in the Collection Account;

(iii) To reimburse the Depositor or the Servicer to the extent permitted by Section 7.03;

(iv) To withdraw any funds deposited in the Collection Account that were not required to be deposited therein or were deposited therein in error and to pay such funds to the appropriate Person;

(v) To pay to the party legally entitled by a final order of a court of competent jurisdiction in an insolvency proceeding an amount equal to any preference claim made with respect to amounts paid with respect to the Home Equity Loans; provided that, if any such amount is later determined not to be a preference by such court of competent jurisdiction and is returned to the Servicer or any Subservicer, such amount shall be redeposited into the Collection Account by the Servicer;

(vi) to clear and terminate the Collection Account upon the termination of this Agreement and to pay any amounts remaining therein to the Class R Certificateholder; and

(vii) to reimburse the Servicer for Skip-A-Pay Advances to the extent permitted by Section 3.01(f).

(b) If the Servicer deposits in the Collection Account any amount not required to be deposited therein or credited thereto or any amount in respect of payments by Mortgagors made by checks subsequently returned for insufficient funds or other reason for non-payment, it may at any time withdraw such amount from the Collection Account pursuant to Section 3.03(a)(iv), and any such amounts shall not be included in Interest Collections and Principal Collections, any provision herein to the contrary notwithstanding. Any withdrawal or debit permitted by Section 3.03(a) may be accomplished by delivering an Officer’s Certificate to the Administrator which describes the purpose of such withdrawal (including, without limitation, that any such amount was deposited in the Collection Account in error or, in the case of returned checks, that such amounts were properly debited, respectively). Upon receipt of any such Officer’s Certificate, the Administrator shall withdraw such amount for the account of the Servicer. All funds deposited by the Servicer in the Collection Account shall be held by the Administrator on behalf of the Trustee in trust for the Certificateholders, until disbursed in accordance with Section 5.01 or withdrawn or debited in accordance with this Section.

Section 3.04. Maintenance of Hazard Insurance; Property Protection Expenses. Each Home Equity Loan requires that the borrower thereunder maintain hazard insurance naming the Servicer or the related Subservicer as loss payee providing extended coverage in an amount which is at least equal to the lesser of (i) the maximum insurable value of the Mortgaged Property or (ii) the combined principal balance owing on such Home Equity Loan and any

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mortgage loan senior to such Home Equity Loan from time to time. The Servicer represents and warrants that it or the applicable Seller verified the existence of such hazard insurance at the origination of the Home Equity Loan. The Servicer shall also maintain on property acquired upon foreclosure, or by grant of deed in lieu of foreclosure, hazard insurance with extended coverage in an amount which is at least equal to the lesser of (i) the maximum insurable value of the Mortgaged Property or (ii) the combined unpaid principal balance owing on such Home Equity Loan and any mortgage loans senior to such Home Equity Loans at the time of such foreclosure or grant of deed in lieu of foreclosure plus accrued interest thereon. Amounts collected by the Servicer under any such policies shall be deposited in the Collection Account to the extent called for by Section 3.02. In cases in which any Mortgaged Property is located in a federally designated flood area, the hazard insurance to be maintained for the related Home Equity Loan shall include flood insurance. All such flood insurance shall be in such amounts as are required under applicable guidelines of ▇▇▇▇▇▇ ▇▇▇. The Servicer shall be under no obligation to require that any Mortgagor maintain earthquake or other additional insurance and shall be under no obligation itself to maintain any such additional insurance on property acquired in respect of a Home Equity Loan, other than pursuant to such applicable laws and regulations as shall at any time be in force and as shall require such additional insurance. As to Mortgaged Properties acquired by the Servicer as provided herein, the Servicer may satisfy its obligation set forth in the first sentence of this Section 3.04 by self insuring Mortgaged Properties for which the aggregate unpaid principal balance of the related Home Equity Loans plus the outstanding balance of any mortgage loans senior to such Home Equity Loans at the time title was acquired, plus accrued interest (the “Combined Exposure”), was less than $500,000 (or such other amount as the Servicer may in good faith determine from time to time) and by causing hazard policies to be maintained with respect to Mortgaged Properties for which the Combined Exposure equals or exceeds the self insurance threshold established from time to time by the Servicer by maintaining a blanket policy consistent with prudent industry standards insuring against hazard losses on the Mortgaged Properties. Such policy may contain a deductible clause, in which case the Servicer shall, in the event that there shall not have been maintained on the related Mortgaged Property a policy complying with the first sentence of this Section 3.04, and there shall have been a loss which would have been covered by such policy, deposit in the Collection Account the amount not otherwise payable under the blanket policy because of such deductible clause.

Section 3.05. Assumption and Modification Agreements. In any case in which a Mortgaged Property has been or is about to be conveyed by the Mortgagor, the Servicer shall exercise or refrain from exercising its right to accelerate the maturity of such Home Equity Loan consistent with the then-current practice of the Servicer and without regard to the inclusion of such Home Equity Loan in the Trust and not in the Servicer’s portfolio. If it elects not to enforce its right to accelerate or if it is prevented from doing so by applicable law, the Servicer (so long as such action conforms with the Servicer’s underwriting standards at the time for new originations) is authorized to take or enter into an assumption and modification agreement from or with the Person to whom such Mortgaged Property has been or is about to be conveyed, pursuant to which such Person becomes liable under the Mortgage Note and, to the extent permitted by applicable law, the Mortgagor remains liable thereon. The Servicer shall notify the Trustee that any assumption and modification agreement has been completed by delivering to the Trustee [(with a copy to the Certificate Insurer)] an Officer’s Certificate certifying that such agreement is in compliance with this Section and by forwarding to the applicable Subservicer on behalf of the Depositor or the Trustee, as applicable, the original copy of such assumption and

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modification agreement. Any such assumption and modification agreement shall, for all purposes, be considered a part of the related Mortgage File to the same extent as all other documents and instruments constituting a part thereof. No change in the terms of the related Mortgage Note may be made by the Servicer in connection with any such assumption to the extent that such change would not be permitted to be made in respect of the original Mortgage Note pursuant to Section 3.01 unless the conditions specified in Section 3.01 are satisfied. Any fee collected by the Servicer for entering into any such agreement will be retained by the Servicer as additional servicing compensation.

Section 3.06. Realization Upon Defaulted Home Equity Loans.

(a) The Servicer (or the Servicer together with the related Seller as called for by the Home Equity Loan Purchase Agreement) shall foreclose upon or otherwise comparably convert to ownership Mortgaged Properties securing such of the Home Equity Loans as come into and continue in default when, in the opinion of the Servicer based upon the practices and procedures referred to in the following sentence, no satisfactory arrangements can be made for collection of delinquent payments pursuant to Section 3.02; provided that if the Servicer has actual knowledge or reasonably believes that any Mortgaged Property is affected by hazardous or toxic wastes or substances and that the acquisition of such Mortgaged Property would not be commercially reasonable, then the Servicer will not cause the Trust to acquire title to such Mortgaged Property in a foreclosure or similar proceeding. Subject to (c) below, in connection with such foreclosure or other conversion, the Servicer shall follow such practices (including, in the case of any default on a related senior mortgage loan, the advancing of funds to correct such default) and procedures as it shall deem necessary or advisable and as shall be normal and usual in its general mortgage servicing activities. The foregoing is subject to the proviso that the Servicer shall not be required to expend its own funds in connection with any foreclosure or towards the correction of any default on a related senior mortgage loan or restoration of any property unless it shall determine that such expenditure will increase Net Liquidation Proceeds. The Servicer will be reimbursed out of Liquidation Proceeds for advances of its own funds to pay Liquidation Expenses before any Net Liquidation Proceeds are deposited in the Collection Account.

(b) In the event that title to any Mortgaged Property is acquired in foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale shall (i) so long as at least two of ▇▇▇▇▇’▇, Standard & Poor’s and Fitch assign a long-term unsecured debt rating to the Servicer of at least “Baa3”, in the case of ▇▇▇▇▇’▇, “BBB”, in the case of Fitch, and “BBB-” in the case of Standard & Poor’s, be issued in the name of the related Subservicer or (ii) if the rating requirements in clause (i) are not satisfied, be issued to the Trustee, or to its nominee on behalf of Certificateholders.

(c) Pursuant to its efforts to sell REO, the Servicer shall either itself or through an agent selected by the Servicer protect and conserve such REO in the same manner and to such extent as is customary in the locality where such REO is located and may, incident to its conservation and protection of the interests of the Certificateholders, rent the same, or any part thereof, as the Servicer deems to be in the best interest of the Certificateholders for the period prior to the sale of such REO. The Servicer shall prepare for and deliver to the Administrator a statement with respect to each REO that has been rented showing the aggregate rental income received and all expenses incurred in connection with the maintenance of such REO at such

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times as is necessary to enable the Administrator to comply with the reporting requirements of the REMIC Provisions. The net monthly rental income, if any, from such REO shall be deposited in the Certificate Account no later than the close of business on each Determination Date. The Servicer shall perform the tax reporting and withholding required by Sections 1445 and 6050J of the Code with respect to foreclosures and abandonments, the tax reporting required by Section 6050H of the Code with respect to the receipt of mortgage interest from individuals and any tax reporting required by Section 6050P of the Code with respect to the cancellation of indebtedness by certain financial entities, by preparing such tax and information returns as may be required, in the form required, and delivering the same to the Administrator for filing.

In the event that the Trust Fund acquires any Mortgaged Property as aforesaid or otherwise in connection with a default or imminent default on a Home Equity Loan, the Servicer shall dispose of such Mortgaged Property as soon as practicable in a manner that maximizes the Liquidation Proceeds thereof, but in no event later than three years after its acquisition by the Trust Fund. In that event, the Administrator shall have been supplied with an Opinion of Counsel to the effect that the holding by the Trust Fund of such Mortgaged Property subsequent to a three-year period, if applicable, will not result in the imposition of taxes on “prohibited transactions” of any REMIC hereunder as defined in Section 860F of the Code or cause any REMIC hereunder to fail to qualify as a REMIC at any time that any Certificates are outstanding, and that the Trust Fund may continue to hold such Mortgaged Property (subject to any conditions contained in such Opinion of Counsel) after the expiration of such three-year period. Notwithstanding any other provision of this Agreement, no Mortgaged Property acquired by the Trust Fund shall be rented (or allowed to continue to be rented) or otherwise used for the production of income by or on behalf of the Trust Fund in such a manner or pursuant to any terms that would (i) cause such Mortgaged Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code or (ii) subject any REMIC hereunder to the imposition of any federal, state or local income taxes on the income earned from such Mortgaged Property under Section 860G(c) of the Code or otherwise, unless the Servicer has agreed to indemnify and hold harmless the Trust Fund with respect to the imposition of any such taxes.

(d) In the event of a default on a Mortgage Loan one or more of whose obligor is not a United States Person, as that term is defined in Section 7701(a)(30) of the Code, in connection with any foreclosure or acquisition of a deed in lieu of foreclosure (together, “foreclosure”) in respect of such Mortgage Loan, the Servicer will cause compliance with the provisions of Treasury Regulation Section 1.1445-2(d)(3) (or any successor thereto) necessary to assure that no withholding tax obligation arises with respect to the proceeds of such foreclosure except to the extent, if any, that proceeds of such foreclosure are required to be remitted to the obligors on such Home Equity Loan.

Section 3.07. [Reserved].

Section 3.08. Trustee to Cooperate.

(a) Upon any payment in full of the Principal Balance of any Home Equity Loan, the Servicer is authorized to execute, pursuant to the authorization contained in Section 3.01, if the assignments of Mortgage have been recorded as required hereunder, an instrument of satisfaction

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regarding the related Mortgage, which instrument of satisfaction shall be recorded by the Servicer if required by applicable law and be delivered to the Person entitled thereto. It is understood and agreed that no expenses incurred in connection with such instrument of satisfaction or transfer shall be reimbursed from amounts deposited in the Collection Account. If the Trustee is holding the Mortgage Files, from time to time and as appropriate for the servicing or foreclosure of any Home Equity Loan, the Trustee shall, upon request of the Servicer and delivery to the Trustee of a trust receipt signed by a Servicing Officer, release the related Mortgage File to the Servicer, and the Trustee shall execute such documents as shall be necessary to the prosecution of any such proceedings or the taking of other servicing actions. Such trust receipt shall obligate the Servicer to return the Mortgage File to the Trustee when the need therefor by the Servicer no longer exists unless the Home Equity Loan shall be liquidated, in which case, upon receipt of an Officer’s Certificate of the Servicer, the trust receipt shall be released by the Trustee to the Servicer.

(b) In order to facilitate the foreclosure of the Mortgage securing any Home Equity Loan that is in default following recordation of the assignments of Mortgage in accordance with the provisions hereof, the Trustee shall, if the Servicer so requests in writing and supplies the Trustee with appropriate forms therefor, assign such Home Equity Loan for the purpose of collection to the Servicer or to the related Subservicer (any such assignment shall unambiguously indicate that the assignment is for the purpose of collection only), and, upon such assignment, such assignee for collection will thereupon bring all required actions in its own name and otherwise enforce the terms of the Home Equity Loan and deposit or credit the Net Liquidation Proceeds received with respect thereto in the Collection Account. In the event that all delinquent payments due under any such Home Equity Loan are paid by the Mortgagor and any other defaults are cured then the assignee for collection shall promptly reassign such Home Equity Loan to the Trustee and return it to the place where the related Mortgage File was being maintained.

Section 3.09. Servicing Compensation; Payment of Certain Expenses by Servicer. The Servicer shall be entitled to receive the Servicing Fee as compensation for its services in connection with servicing the Home Equity Loans. The Servicing Fee for each Collection Period shall be paid to the Servicer out of Interest Collections prior to their deposit in the Collection Account and shall not be the responsibility or liability of the Trust, the Trustee, the Administrator or the Class [A] or Class [IO] Certificateholders. Additional servicing compensation in the form of late payment charges or other receipts not required to be deposited in the Collection Account shall be retained by the Servicer. The Servicer shall be required to pay all expenses incurred by it in connection with its activities hereunder (including payment of Trustee fees, Administrator fees and all other fees and expenses not expressly stated hereunder to be for the account of the Certificateholders) and shall not be entitled to reimbursement therefor except as specifically provided herein.

Section 3.10. Annual Statement as to Compliance.

(a) The Servicer shall deliver, and, to the extent required by Section 1123 of Regulation AB, shall cause each Subservicer to deliver, to the Depositor, the Trustee and the Administrator an Officer’s Certificate satisfying the requirements of Section 1123 of Regulation AB signed by a responsible officer of the Servicer or such Subservicer, as applicable, for the year

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ended December 31 (or other applicable date) of the immediately preceding year, and stating that (i) a review of the activities of the Servicer or such Subservicer, as applicable, during the preceding 12-month period (or such shorter or longer, as applicable, period since the Closing Date) and of its performance under this Agreement has been made under such officer’s supervision, and (ii) to such officer’s knowledge, based on such review, the Servicer or such Subservicer, as applicable, has fulfilled in all material respects all of its obligations under this Agreement throughout such period, or, if there has been a failure to fulfill any such obligation in any material respect, specifying each such failure known to such officer and the nature and status thereof.

(b) The Officer’s Certificates referred to in Section 3.10(a) will be delivered on or before March 15 of each calendar year, beginning March 15, 200[ ], unless the Depositor is not required to file periodic reports with respect to the Trust under the Exchange Act, in which case the certificates may be delivered within 90 days after the end of each calendar year.

(c) The Servicer shall deliver to the Trustee, with a copy to each of the Rating Agencies, promptly after having obtained knowledge thereof, but in no event later than five Business Days thereafter, written notice by means of an Officer’s Certificate of any event which with the giving of notice or the lapse of time or both, would become a Servicer Termination Event.

(d) The Servicer shall, and, to the extent required by Section 1122 of Regulation AB, shall cause each Subservicer to:

(i) deliver to the Trustee and the Administrator, a report, for the year ended December 31 of the preceding calendar year, on its assessment of compliance during the preceding calendar year with the Servicing Criteria applicable to it, including disclosure of any material instance of non-compliance identified by the Servicer or such Subservicer, as applicable, that satisfies the requirements of Rule 13a-18 and 15d-18 under the Exchange Act and Item 1122 of Regulation AB under the Securities Act; and

(ii) cause an independent registered public accounting firm that is qualified and independent within the meaning of Rule 2-01 of Regulation S-X under the Securities Act to deliver to the Trustee and the Administrator an attestation report that satisfies the requirements of Rule 13a-18 or Rule 15d-18 under the Exchange Act and Item 1122 of Regulation AB, with respect to each assessment of compliance with Servicing Criteria delivered pursuant to clause (i) above. Such attestation report will be addressed to the board of directors of the Servicer or such Subservicer, as applicable, and to the Trustee and the Administrator and will be in accordance with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act. The firm may render other services to the Servicer, such Subservicer or the Seller, but the firm must indicate in each attestation report that it is qualified and independent within the meaning of Rule 2-01 of Regulation S-X under the Securities Act.

(e) The reports referred to in Section 3.10(d) will be delivered on or before March 15 of each calendar year, beginning March 15, 200[ ], unless the Depositor is not required

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to file periodic reports with respect to the Trust under the Exchange Act, in which case the reports may be delivered within 90 days after the end of each calendar year.

(f) If directed by the Depositor, the Servicer will prepare, execute, file and deliver all reports, statements, information, certificates or other documentation required to be delivered by the Depositor with respect to the Trust pursuant to the Exchange Act and the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules thereunder.

Section 3.11. Access to Certain Documentation and Information Regarding the Home Equity Loans.

(a) The Servicer and the Subservicers shall provide to the Trustee, the Administrator, [the Certificate Insurer,] Class [A] or Class [IO] Certificateholders that are federally insured savings and loan associations, the Office of Thrift Supervision, the successor to the Federal Home Loan Bank Board, the FDIC and the supervisory agents and examiners of the Office of Thrift Supervision access to the documentation regarding the Home Equity Loans required by applicable regulations of the Office of Thrift Supervision and the FDIC (acting as operator of the SAIF or the BIF), such access being afforded without charge but only upon reasonable request and during normal business hours at the offices of the Servicer or the Subservicers. Nothing in this Section shall derogate from the obligation of the Servicer to observe any applicable law prohibiting disclosure of information regarding the Mortgagors, and the failure of the Servicer to provide access as provided in this Section as a result of such obligation shall not constitute a breach of this Section.

(b) No later than the Determination Date preceding the related Distribution Date, the Servicer shall supply information (each, a “Remittance Report”) in such form as the Administrator shall reasonably request to the Administrator and the Paying Agent as is required in the Administrator’s reasonable judgment to enable the Paying Agent or the Administrator, as the case may be, to make the required distributions and to furnish the required reports to Certificateholders on such Distribution Date.

Section 3.12. Maintenance of Certain Servicing Insurance Policies. The Servicer shall during the term of its service as servicer maintain in force (i) a policy or policies of insurance covering errors and omissions in the performance of its obligations as servicer hereunder and (ii) a fidelity bond in respect of its officers, employees or agents. Each such policy or policies and bond shall, together, comply with the requirements from time to time of ▇▇▇▇▇▇ Mae for Persons performing servicing for mortgage loans purchased by such association.

Section 3.13. [Reserved].

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Section 3.14. Information Required by the Internal Revenue Service Generally and Reports of Foreclosures and Abandonments of Mortgaged Property. The Servicer shall prepare and deliver, or cause to be prepared, mailed and filed all federal and state information reports for the Home Equity Loans when and as required by all applicable state and federal income tax laws including, to the extent applicable, returns reporting a cancellation of indebtedness as prescribed by Section 6050P of the Code. In particular, with respect to the requirement under Section 6050J of the Code, to the effect that a lender shall be required to report foreclosures and abandonments of any mortgaged property for each year beginning in 200[ ], the Servicer shall prepare, mail and file in a timely fashion each year as required by law information statements in accordance with the reporting requirements imposed by Section 6050J with respect to each instance occurring during the previous calendar year in which the Servicer or any Subservicer (i) on behalf of the Trustee acquired an interest in any Mortgaged Property through foreclosure or other comparable conversion in full or partial satisfaction of a Home Equity Loan or (ii) knew or had reason to know that any Mortgaged Property has been abandoned. The information statements from the Servicer shall be in form and substance sufficient to meet the reporting requirements imposed by Section 6050J of the Code.

Section 3.15. Additional Covenants of HSBC Finance. HSBC Finance hereby agrees that:

(a) it will maintain its books and records to clearly note the separate corporate existence of the Depositor, each Subservicer and the Servicer;

(b) the Depositor, the Subservicers and HSBC Finance will share certain overhead expenses, although the amount the Depositor will be charged for such use will be based on actual use to the extent practicable and, to the extent such allocation is not practicable, on a basis reasonably related to use;

(c) separate financial records will be maintained to reflect the assets and liabilities of the Depositor, HSBC Finance and each Subservicer, which financial records are and will be subject to audit by independent public accountants at the reasonable request of the Board of Directors of the Depositor, HSBC Finance or such Subservicer, as the case may be;

(d) except as permitted hereunder, there will be no commingling of the assets of the Depositor with the assets of HSBC Finance or any Subservicer. All demand deposit accounts and other bank accounts of the Depositor will be maintained separately from those of HSBC Finance and the Subservicers. Monetary transactions between the Depositor and HSBC Finance or any Subservicer are and will continue to be properly reflected in their respective financial records;

(e) HSBC Finance at all times will recognize, and will take all steps within its power to maintain, the corporate existence of the Depositor and Subservicers as being separate and apart from its own corporate existence and will not refer to the Depositor or any Subservicer as a department or division of HSBC Finance; and

(f) Except as otherwise expressly provided herein, the Depositor and HSBC Finance will not guaranty or advance the proceeds for payment of any obligations of the Trust.

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Section 3.16. Servicing Certificate. Not later than each Determination Date, the Servicer shall deliver to the Administrator, the Paying Agent [, the Certificate Insurer] and each Rating Agency a Servicing Certificate (in written form or the form of computer readable media or such other form as may be agreed to by the Administrator and the Servicer), together with an Officer’s Certificate to the effect that such Servicing Certificate is true and correct in all material respects, stating the related Collection Period, Distribution Date, the series number of the Certificates, the date of this Agreement, and:

(i) the Available Distribution Amount for such Distribution Date, separately stating the amount of Interest Collections and Principal Collections;

(ii) the amount of the payments due to Holders of the each Class of Certificates for such Distribution Date, separately stating the portions thereof allocable to interest and allocable to principal;

(iii) the amount of any Interest Carry Forward Amount and Supplemental Interest Amount for each Class of Certificates paid on such Distribution Date and the amount of any Interest Carry Forward Amount or Supplemental Interest Amount for each Class of Certificates remaining after giving effect to the payments on such Distribution Date;

(iv) the amount of any Additional Principal Distribution Amount for such Distribution Date, including the amounts payable in respect thereof to each Class of Class [A] Certificates on such Distribution Date;

(v) the amount of any Extra Principal Distribution Amount for such Distribution Date, including the amounts payable in respect thereof to each Class of Class [A] Certificates on such Distribution Date;

(vi) the Principal Distribution Amount for such Distribution Date, separately stating the components thereof, including in each case the amounts payable in respect thereof to each Class of Class [A] Certificates on such Distribution Date;

(vii) the Certificate Principal Balance of each Class of Class [A] Certificates, the Pool Balance as reported in the prior Monthly Report or, in the case of the first Determination Date, the Original Class Certificate Principal Balance for each Class of Class [A] Certificates and the Cut-Off Date Pool Balance;

(viii) the Certificate Principal Balance of each Class of Class [A] Certificates after giving effect to the distribution on such Distribution Date;

(ix) the number and aggregate Principal Balance of any Home Equity Loan purchased or substituted by the Depositor or the Servicer with respect to the related Collection Period pursuant to Section 2.02;

(x) the number and aggregate Principal Balance of any Home Equity Loan purchased or substituted by the Depositor or the Servicer with respect to the related Collection Period pursuant to Section 2.04;

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(xi) the number and aggregate Principal Balance of any Home Equity Loan purchased or substituted by the Depositor or the Servicer with respect to the related Collection Period pursuant to Section 3.01;

(xii) the number and aggregate Principal Balance of any Home Equity Loan that the Servicer has consented to the placement of a senior lien during the related Collection Period pursuant to Section 3.01(a);

(xiii) the amount of any Substitution Adjustment Amounts for such Distribution Date;

(xiv) the amount, if any, to be distributed to the Holders of the Class R Certificates on such Distribution Date;

(xv) the Servicing Fee for such Collection Period and any accrued amounts thereof that remain unpaid for previous Collection Periods;

(xvi) the amount of all payments or reimbursements to the Servicer pursuant to the terms hereof during the related Collection Period, excluding earnings on investments;

(xvii) the Overcollateralization Amount, the Interim Overcollateralization Amount, the Interim Overcollateralization Deficiency, the Overcollateralization Release Amount, the Targeted Overcollateralization Amount and the Monthly Excess Cashflow for such Distribution Date;

(xviii) the number of Home Equity Loans outstanding at the beginning and end of such Collection Period;

(xix) the Pool Balance as of the end of such Collection Period;

(xx) the number and aggregate Principal Balances of Home Equity Loans (x) as to which the scheduled monthly payment is contractually delinquent for 30-59 days, 60-89 days and 90 or more days, respectively and (y) that have become REO, in each case as of the end of such Collection Period;

(xxi) the Cumulative Realized Losses on the Home Equity Loans as of the end of the related Collection Period;

(xxii) the Two Payment-Plus Delinquency Percentage for the related Collection Period;

(xxiii) the Two Payment-Plus Rolling Average for such Distribution Date;

(xxiv) whether a Servicer Termination Event has occurred since the prior Determination Date, specifying each Servicer Termination Event if one has occurred;

(xxv) whether an Event of Default has occurred and is continuing;

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(xxvi) the Formula Rate for each Class of Class [A] Certificates for such Distribution Date and the Pass-Through Rate for each Class of Class [A] and Class [IO] Certificates for such Distribution Date;

(xxvii) the amount of any Skip-A-Pay Advances for the related Collection Period;

(xxviii) the Skip-A-Pay Reimbursement Amount for such Distribution Date;

(xxix) the Cumulative Loss Percentage for the related Collection Period;

(xxx) whether a Trigger Event has occurred or is continuing;

(xxxi) [the Premium Amount for such Distribution Date and any Reimbursement Amount paid to the Certificate Insurer for such Distribution Date;]

(xxxii) [the amount of any draw on the Certificate Insurance Policy for such Distribution Date;] and

(xxxiii) such other information as is required by the Code and regulations thereunder to be made available to Holders of the Class [A] and Class [IO] Certificates.

The Administrator shall conclusively rely upon the information contained in a Servicing Certificate for purposes of making distributions pursuant to Section 5.01, shall have no duty to inquire into such information and shall have no liability in so relying. The format and content of the Servicing Certificate may be modified by the mutual agreement of the Servicer and the Administrator or as may be required by the rules and regulations of the Securities and Exchange Commission. The Servicer shall give notice of any such change to the Rating Agencies [and the Certificate Insurer].

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ARTICLE IV

[The Certificate Insurance Policy]

Section 4.01. The Certificate Insurance Policy. As soon as possible, and in no event later than 3:00 p.m., New York time, on the third Business Day immediately preceding each Distribution Date, the Administrator shall determine the Available Distribution Amount (net of any Insured Payments) for such Distribution Date minus the amount of any Premium Amount to be paid on such Distribution Date.

If for any Distribution Date a Deficiency Amount exists, the Administrator shall complete a notice in the form set forth as Exhibit A to the Certificate Insurance Policy (the “Notice”) and shall submit such Notice to the Fiscal Agent no later than 12:00 noon, New York time, on the second Business Day preceding such Distribution Date. The Notice shall constitute a claim for an Insured Payment pursuant to the Certificate Insurance Policy for an amount equal to the Deficiency Amount. Upon receipt of the Insured Payment, at or prior to the latest time payments of the Insured Payment are to be made by the Certificate Insurer pursuant to the Certificate Insurance Policy, on behalf of the Class [A] Certificateholders, the Administrator shall deposit such Insured Payments in the Distribution Account and shall distribute such Insured Payments only in accordance with Section 5.01(a)(i), (ii), (iii) and (iv).

The Administrator shall receive, as attorney-in-fact of each Holder of a Class [A] Certificate, any Insured Payment from the Certificate Insurer and disburse the same to each Holder of a Class [A] Certificate in accordance with the provisions of Article V. Insured Payments disbursed by the Administrator from proceeds of the Certificate Insurance Policy shall not be considered payment by the Trust nor shall such payments discharge the obligation of the Trust with respect to such Class [A] Certificate, and the Certificate Insurer shall become the owner of such unpaid amounts due from the Trust in respect of such Insured Payments as the deemed assignee of such Holder and shall be entitled to be reimbursed therefore in accordance with Section 5.01. The Administrator hereby agrees on behalf of each Holder of a Class [A] Certificate for the benefit of the Certificate Insurer that it and they recognize that to the extent the Certificate Insurer makes Insured Payments, either directly or indirectly (as by paying through the Trustee), to the Class [A] Certificateholders, the Certificate Insurer will be entitled to be reimbursed therefore in accordance with Section 5.01.

Section 4.02. [Reserved]

Section 4.03. Claims Upon the Certificate Insurance Policy. The Administrator shall comply with the provisions of the Certificate Insurance Policy with respect to claims upon the Certificate Insurance Policy.

The Administrator shall keep a complete and accurate record of the amount of interest and principal paid in respect of any Class [A] Certificate from moneys received under the Certificate Insurance Policy. The Certificate Insurer shall have the right to inspect such records at reasonable times during normal business hours upon one Business Day’s prior written notice to the Administrator.

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The Trustee and the Administrator shall promptly notify the Certificate Insurer of any proceeding or the institution of any action, of which a Responsible Officer of the Trustee or the Administrator , as the case may be, has actual knowledge, seeking the avoidance as a preferential transfer under the Bankruptcy Code (a “Preference Claim”) of any distribution made with respect to the Class [A] Certificates. Each Certificateholder of Class [A] Certificates, by its purchase of Class [A] Certificates, the Servicer, the Administrator and the Trustee hereby agree that the Certificate Insurer (so long as no Certificate Insurer Default exists) may at any time during the continuation of any proceeding relating to a Preference Claim direct all matters relating to such Preference Claim, including, without limitation, (i) the direction of any appeal of any order relating to such Preference Claim and (ii) the posting of any surety, supersedeas or performance bond pending any such appeal.]

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ARTICLE V

Distributions and Statements to Certificateholders; Rights of Certificateholders

Section 5.01. Distributions. (a) On each Distribution Date, the Administrator shall withdraw an amount equal to the Available Distribution Amount from the Collection Account and make distributions thereof as described below (to the extent of the Available Distribution Amount) to Holders of the Certificates in the following order of priority:

(i) to the Class [A-1], Class [A-2] and Class [IO] Certificates, the Current Interest plus the Interest Carry Forward Amount for such Class and such Distribution Date, pro rata on the basis of their respective entitlements pursuant to this clause (i);

(ii) to the Class [A] Certificates, in the amounts and order of priority specified in Section 5.01(b), the Principal Distribution Amount for such Distribution Date, until the Certificate Principal Balance of such Class [A] Certificates has been reduced to zero;

(iii) to the Class [A] Certificates, in the amounts and order of priority specified in Section 5.01(b), the Additional Principal Distribution Amount for such Distribution Date, until the Certificate Principal Balance of such Class [A] Certificates has been reduced to zero;

(iv) to the Class [A] Certificates, in the amounts and order of priority specified in Section 5.01(b), the Extra Principal Distribution Amount for such Distribution Date, until the Certificate Principal Balance of such Class [A] Certificates has been reduced to zero;

(v) [to the Certificate Insurer, the Premium Amount owing to the Certificate Insurer under the Insurance Agreement;]

(vi) [to the Certificate Insurer, the Reimbursement Amount owing to the Certificate Insurer hereunder;]

(vii) concurrently, to each Class of Class [A] Certificates, any unpaid Supplemental Interest Amounts for such Classes and such Distribution Date, pro rata on the basis of their respective entitlements pursuant to this clause (vii);

(viii) to the Class R Certificates, any remaining Available Distribution Amount; provided, however, that on any Distribution Date after the date on which the first auction conducted by the [Trustee] pursuant to Section 10.01(c) does not produce any bid at least equal to the Termination Price, any remaining amount available for distribution pursuant to this Section 5.01(a)(viii) shall instead be distributed to the Class A Certificates in the amounts and order of priority specified in Section 5.01(b), until the Certificate Principal Balance of such Class [A] Certificates has been reduced to zero.

(b) Any amount distributed as principal on the Class [A] Certificates pursuant to Section 5.01(a) and any amount drawn on the Certificate Insurance Policy relating to principal distributable to the Class [A] Certificates shall be distributed as follows:

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(i) first, to the Class [A-2] Certificates, an amount equal to the Lockout Percentage of the subject distribution of principal, until its Certificate Principal Balance has been reduced to zero;

(ii) second, to the Class [A-1] Certificates, until its Certificate Principal Balance has been reduced to zero; and

(iii) third, to the Class [A-2] Certificates, until its Certificate Principal Balance has been reduced to zero.

(c) Method of Distribution. The Administrator shall make distributions in respect of a Distribution Date to each Certificateholder of record on the related Record Date (other than as provided in Section 10.01 respecting the final distribution) by check or money order mailed to such Certificateholder at the address appearing in the Certificate Register, or upon written request by a Certificateholder delivered to the Administrator at least five Business Days prior to such Record Date, by wire transfer (but only if such Certificateholder is the Depository or such Certificateholder owns of record one or more Class of Certificates having principal denominations aggregating at least $[ ]), or by such other means of payment as such Certificateholder and the Administrator shall agree. Distributions among Certificateholders shall be made in proportion to the Percentage Interests evidenced by the Certificates held by such Certificateholders.

(d) Distributions on Book-Entry Certificates. Each distribution with respect to a Book-Entry Certificate shall be paid to the Depository, which shall credit the amount of such distribution to the accounts of its Depository Participants in accordance with its normal procedures. Each Depository Participant shall be responsible for disbursing such distribution to the Certificate Owners that it represents and to each indirect participating brokerage firm (a “brokerage firm” or “indirect participating firm”) for which it acts as agent. Each brokerage firm shall be responsible for disbursing funds to the Certificate Owners that it represents. All such credits and disbursements with respect to a Book-Entry Certificate are to be made by the Depository and the Depository Participants in accordance with the provisions of the Class [A] Certificates. None of the Trustee, the Administrator, the Paying Agent, the Certificate Registrar, the Depositor [, the Certificate Insurer] or the Servicer shall have any responsibility therefor except as otherwise provided by applicable law.

(e) Distribution of Insured Payments. [With respect to any Distribution Date, in the event of an Insured Payment, the Administrator shall make such payments from the amount drawn under the Certificate Insurance Policy pursuant to Section 4.01 for such Distribution Date in accordance with Section 5.01(a)(i), (ii), (iii) and (iv). The Certificate Insurer shall be deemed to be the assignee of the Holders of the Class [A] Certificates to the extent of any amount of Insured Payments disbursed by the Administrator from proceeds of the Certificate Insurance Policy and to such extent, shall be the subrogee of each such Holder of the Class [A] Certificates; provided, however, that any such right of subrogation inuring to the Certificate Insurer hereunder or otherwise shall be and is subordinated to the rights under this Agreement of the Holders of the Class [A] Certificates and in accordance with Section 5.01(a).]

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Section 5.02. Statements to Certificateholders. (a) On each Determination Date, the Servicer shall provide the Administrator [, the Certificate Insurer] and the Paying Agent access to a statement in order to make available to each Certificateholder, and concurrently with each distribution to Certificateholders the Administrator shall make available to them such statement with respect to their distribution setting forth:

(i) the Available Distribution Amount for such Distribution Date, separately stating the amount of Interest Collections and Principal Collections;

(ii) the amount of the payments due to Holders of the each Class of Certificates for such Distribution Date, separately stating the portions thereof allocable to interest and allocable to principal;

(viii) the Certificate Principal Balance of each Class of Class [A] Certificates after giving effect to the distribution on such Distribution Date;

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